<PAGE>   1

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)
[ x ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

              For the transition period from _________ to _________

                         COMMISSION FILE NUMBER 33-13646

                                    WESTCORP
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           CALIFORNIA                                     51-0308535
   -------------------------------                    -------------------
   (State or other jurisdiction of                     (I.R.S. Employer
   incorporation or organization)                     Identification No.)

                    23 PASTEUR, IRVINE, CALIFORNIA 92618-3816
                    -----------------------------------------
                    (Address of principal executive offices)


                                 (949) 727-1002
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  x  No
                                       ---    ---

As of October 31, 1999, the registrant had 26,555,457 outstanding shares of
common stock, $1.00 par value. The shares of common stock represent the only
class of common stock of the registrant.

The total number of sequentially numbered pages is 34.

<PAGE>   2

                            WESTCORP AND SUBSIDIARIES

                                    FORM 10-Q

                               SEPTEMBER 30, 1999

                                TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
                                                                            Page No.
                                                                            --------
<S>                                                                         <C>
PART I.  FINANCIAL INFORMATION

   Item 1. Financial Statements

           Consolidated Statements of Financial Condition at
           September 30, 1999 and December 31, 1998                           3

           Consolidated Statements of Operations for the Three and
           Nine Months Ended September 30, 1999 and 1998                      4

           Consolidated Statements of Changes in Shareholders' Equity at
           September 30, 1999 and December 31, 1998                           5

           Consolidated Statements of Cash Flows for the
           Nine Months Ended September 30, 1999 and 1998                      6

           Notes to Unaudited Consolidated Financial Statements               7

   Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations                               15

   Item 3. Quantitative and Qualitative Disclosure about Market Risk         31

PART II. OTHER INFORMATION

   Item 1. Legal Proceedings                                                 33

   Item 2. Changes in Securities                                             33

   Item 3. Defaults Upon Senior Securities                                   33

   Item 4. Submission of Matters to a Vote of Security Holders               33

   Item 5. Other Information                                                 33

   Item 6. Exhibits and Reports on Form 8-K                                  33

SIGNATURES                                                                   34
</TABLE>


                                       2
<PAGE>   3

                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                            WESTCORP AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              September 30,     December 31,
                                                                                  1999              1998
                                                                               -----------      -----------
                                                                                  (Dollars in thousands)
<S>                                                                            <C>              <C>
ASSETS
Cash                                                                           $    14,008      $   114,375
Interest bearing deposits with other financial institutions                            720              515
Other short-term investments                                                       162,000           22,864
                                                                               -----------      -----------
    Cash and due from banks                                                        176,728          137,754
Investment securities available for sale                                             2,135           77,796
Mortgage-backed securities available for sale                                    1,475,283          980,044
Loans receivable                                                                   728,206          835,754
Loans held for sale                                                              1,249,205        1,157,079
Allowance for loan losses                                                          (62,031)         (37,660)
                                                                               -----------      -----------
    Net loans receivable                                                         1,915,380        1,955,173
Amounts due from trusts                                                            419,808          332,732
Retained interests in securitized assets                                           174,472          171,230
Premises and equipment, net                                                         84,401           86,417
Other assets                                                                        79,977           91,674
                                                                               -----------      -----------
                                                                               $ 4,328,184      $ 3,832,820
                                                                               ===========      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits                                                                       $ 2,253,949      $ 2,178,735
Securities sold under agreements to repurchase                                     256,793          265,644
Amounts held on behalf of trustee                                                  659,406          528,092
Other borrowings                                                                   509,263          160,853
Other liabilities                                                                   72,383          108,738
                                                                               -----------      -----------
                                                                                 3,751,794        3,242,062

SUBORDINATED DEBENTURES                                                            207,167          239,856
MINORITY INTERESTS                                                                  26,214           21,857
SHAREHOLDERS' EQUITY
     Common stock, par value $1.00 per share; authorized 45,000,000 Shares
     issued and outstanding 26,528,510 shares in 1999 and
     26,474,814 shares in 1998                                                      26,529           26,475
Paid-in capital                                                                    189,188          188,739
Retained earnings                                                                  143,340          110,138
Accumulated other comprehensive (loss) income, net of tax                          (16,048)           3,693
                                                                               -----------      -----------
                                                                                   343,009          329,045
                                                                               -----------      -----------
                                                                               $ 4,328,184      $ 3,832,820
                                                                               ===========      ===========
</TABLE>


-------------------------
See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>   4

                            WESTCORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three Months Ended            Nine Months Ended
                                                                       September 30,                September 30,
                                                                --------------------------    --------------------------
                                                                   1999           1998           1999           1998
                                                                -----------   ------------    -----------   ------------
                                                                    (Dollars in thousands, except per share amounts)
<S>                                                             <C>           <C>             <C>           <C>
Interest income:
     Loans, including fees                                      $    47,493   $     49,457    $   139,007   $    138,594
     Mortgage-backed securities                                      23,828         16,725         63,331         49,255
     Investment securities                                              148          1,430          1,495          4,876
     Other                                                            2,056          1,903          8,699          6,337
                                                                -----------   ------------    -----------   ------------
TOTAL INTEREST INCOME                                                73,525         69,515        212,532        199,062
Interest expense:
     Deposits                                                        26,592         26,658         77,836         80,869
     Federal Home Loan Bank advances and other borrowings             4,406          8,876         15,679         25,216
     Securities sold under agreements to repurchase                   4,667          5,058         15,608         13,677
                                                                -----------   ------------    -----------   ------------
TOTAL INTEREST EXPENSE                                               35,665         40,592        109,123        119,762
                                                                -----------   ------------    -----------   ------------
NET INTEREST INCOME                                                  37,860         28,923        103,409         79,300
Provision for loan losses                                            15,924          2,347         32,435         11,137
                                                                -----------   ------------    -----------   ------------
NET INTEREST INCOME AFTER
     PROVISION FOR LOAN LOSSES                                       21,936         26,576         70,974         68,163
Noninterest  income:
     Automobile lending                                              56,488         20,668        147,847         74,881
     Mortgage banking                                                 3,608          5,065          7,971          9,174
     Investment and mortgage-backed securities gains (losses)            29           (280)         1,303          2,259
     Insurance income                                                 1,777          1,404          4,829          4,174
     Miscellaneous                                                      584            394          4,005          1,996
                                                                -----------   ------------    -----------   ------------
TOTAL NONINTEREST INCOME                                             62,486         27,251        165,955         92,484
Noninterest expenses:
     Salaries and employee benefits                                  34,053         32,608         99,860        103,944
     Credit and collections                                           5,028          5,628         16,363         15,867
     Occupancy                                                        3,179          3,050          9,270         10,453
     Data processing                                                  3,646          3,407         10,728         10,615
     Telephone                                                        1,807          2,468          5,178          7,963
     Miscellaneous                                                    8,314          9,185         26,238         27,352
     Restructuring charge                                                            4,500                        15,000
                                                                -----------   ------------    -----------   ------------
TOTAL NONINTEREST EXPENSES                                           56,027         60,846        167,637        191,194
                                                                -----------   ------------    -----------   ------------
INCOME (LOSS) BEFORE INCOME TAX (BENEFIT)                            28,395         (7,019)        69,292        (30,547)
Income tax (benefit)                                                 11,947         (2,816)        29,255        (12,658)
                                                                -----------   ------------    -----------   ------------
INCOME (LOSS) BEFORE MINORITY INTEREST                               16,448         (4,203)        40,037        (17,889)
Minority interest in earnings (losses) of subsidiaries                1,706           (329)         4,797         (2,430)
                                                                -----------   ------------    -----------   ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                              14,742         (3,874)        35,240        (15,459)
Extraordinary gain from early extinguishment of debt
     (Net of income taxes of $228 and $1,400, respectively)             315                         1,934
                                                                -----------   ------------    -----------   ------------
NET INCOME (LOSS)                                               $    15,057   $     (3,874)   $    37,174   $    (15,459)
                                                                ===========   ============    ===========   ============
NET INCOME (LOSS) PER COMMON SHARE - BASIC
     Income (loss) before extraordinary item                    $      0.56   $      (0.15)   $      1.33   $      (0.59)
     Extraordinary item                                                0.01                          0.07
                                                                -----------   ------------    -----------   ------------
     Net income (loss)                                          $      0.57   $      (0.15)   $      1.40   $      (0.59)
                                                                ===========   ============    ===========   ============
NET INCOME (LOSS) PER COMMON SHARE - DILUTED
     Income (loss) before extraordinary item                    $      0.56   $      (0.15)   $      1.33   $      (0.59)
     Extraordinary item                                                0.01                          0.07
                                                                -----------   ------------    -----------   ------------
     Net income (loss)                                          $      0.57   $      (0.15)   $      1.40   $      (0.59)
                                                                ===========   ============    ===========   ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
     BASIC                                                       26,491,879     26,418,856     26,481,361     26,344,430
     DILUTED                                                     26,571,240     26,418,856     26,500,860     26,344,430
</TABLE>



-------------
See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>   5

                            WESTCORP AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                               Accumulated
                                                                                                  Other
                                                                                              Comprehensive
                                                             Common     Paid-in    Retained   Income (loss)
                                               Shares        Stock      Capital    Earnings    Net of tax      Total
                                             -----------    --------    --------   --------   -------------   -------
                                                            (Dollars in thousands, except per share amounts)
<S>                                           <C>           <C>         <C>        <C>           <C>          <C>
BALANCE DECEMBER 31, 1997                     26,278,593    $ 26,279    $185,187   $131,427      $  5,858     $348,751
    Net loss                                                                        (14,697)                   (14,697)
    Accumulated other comprehensive
       income, net of tax (1)
        Gross unrealized gain                                                                       2,021        2,021
        Reclassification adjustment for
               losses included in net
               income                                                                              (4,186)      (4,186)
                                                                                                              --------
    Comprehensive loss                                                                                         (16,862)
    Stock options exercised                      118,905         119         891                                 1,010
    Stock issued                                  77,316          77       1,135                                 1,212
    Cash dividends                                                                   (6,592)                    (6,592)
    Purchase of subsidiary stock                                           1,526                                 1,526
                                             -----------    --------    --------   --------      --------     --------
BALANCE DECEMBER 31, 1998                     26,474,814    $ 26,475    $188,739   $110,138      $  3,693     $329,045

    Net income                                                                       37,174                     37,174
    Accumulated other comprehensive
       income, net of tax (1)
        Gross unrealized loss                                                                     (18,879)     (18,879)
        Reclassification adjustment for
              gains included in net income                                                           (862)        (862)
                                                                                                              --------
    Comprehensive income                                                                                        17,433
    Stock options exercised                       53,696          54         227                                   281
    Purchase of subsidiary stock                                             222                                   222
    Cash dividends                                                                   (3,972)                    (3,972)
                                             -----------    --------    --------   --------      --------     --------
BALANCE SEPTEMBER 30, 1999                    26,528,510    $ 26,529    $189,188   $143,340      $(16,048)    $343,009
                                             ===========    ========    ========   ========      ========     ========
</TABLE>

(1)   The pre-tax increases in accumulated other comprehensive income (loss)
      were $32.6 million and $3.9 million for the nine month period ended
      September 30, 1999 and for the year ended December 31, 1998, respectively.



-----------
See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>   6

                            WESTCORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      Nine Months Ended September 30,
                                                                      -------------------------------
                                                                           1999           1998
                                                                        -----------    -----------
                                                                          (Dollars in thousands)
<S>                                                                     <C>            <C>
OPERATING ACTIVITIES
Net income (loss)                                                       $    37,174    $   (15,459)
Adjustments to reconcile net income (loss) to net cash
   (used in) provided by operating activities:
     Provision for loan losses                                               32,435         11,137
     Depreciation and amortization                                           12,506         29,862
     Amortization of retained interest in securitized assets                 86,983         81,421
     (Increase) decrease in assets:
       Origination of loans                                              (2,984,114)    (4,350,627)
       Proceeds from sale of loans                                        2,502,034      3,522,083
       Other changes in loans                                               484,327        464,930
       Other assets                                                          14,270          3,371
      Decrease in other liabilities                                         (28,460)       (13,174)
         Other, net                                                          29,683        (29,304)
                                                                        -----------    -----------
NET CASH  PROVIDED BY (USED IN) OPERATING ACTIVITIES                        186,838       (295,760)
INVESTING ACTIVITIES
Investment securities available for sale:
        Purchases                                                              (116)       (44,419)
        Proceeds from sale                                                   75,470         10,460
        Proceeds from maturities                                                 36         81,535
Mortgage-backed securities available for sale:
        Purchases                                                          (844,295)      (382,363)
        Proceeds from sale                                                  109,726        121,406
        Payments received                                                   204,301        127,069
Additions to premises and equipment                                         (19,604)       (14,034)
Increase in amounts due from trusts                                         (87,076)       (17,625)
Increase in retained interest in securitized assets                         (93,541)       (55,058)
Other, net                                                                    1,554         (5,016)
                                                                        -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                                      (653,545)      (178,045)
FINANCING ACTIVITIES
Increase in deposits                                                         75,214        129,203
(Decrease) increase in securities sold under agreements to repurchase        (8,851)        56,220
Increase in borrowings                                                      340,076        177,089
Increase in amounts held on behalf of trustee                               131,314         29,426
Decrease in subordinated debentures                                         (28,603)
Cash dividends                                                               (3,972)        (5,267)
Other, net                                                                      503          3,299
                                                                        -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                   505,681        389,970
                                                                        -----------    -----------
INCREASE (DECREASE )IN CASH AND CASH EQUIVALENTS                             38,974        (83,835)
Cash and equivalents at beginning of period                                 137,754        171,130
                                                                        -----------    -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $   176,728    $    87,295
                                                                        ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest                                                                $   113,733    $   123,036
Income taxes                                                                 41,292          1,820

SUPPLEMENTAL DISCLOSURES OF NONCASH TRANSACTIONS:
Acquisition of real estate acquired through foreclosure                 $     5,110    $    11,792
Loans to facilitate the sale of real estate owned                                               67
</TABLE>



-----------
See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>   7

                            WESTCORP AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The unaudited consolidated financial statements included herein have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

In the opinion of management, all adjustments (including normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. These consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and footnotes
thereto for the year ended December 31, 1998 included in the Westcorp (the
"Company") Form 10-K.

Certain amounts from the 1998 consolidated financial statement amounts have been
reclassified to conform to the 1999 presentation.

In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 137 "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133 ("SFAS 137"). This Statement defers for one year the effective date of FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"). These statements provide guidance for the way public enterprises
report information about derivatives and hedging in annual financial statements
and in interim financial reports. The derivatives and hedging disclosure is
required for financial statements of all fiscal quarters of all fiscal years
beginning after June 15, 2000. These Statements will require the Company to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the derivative
is a hedge, depending on the nature of the hedge, changes in fair value of
derivatives will either be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. The Company is in the process of evaluating
the effect that SFAS 137, if any, will have on the earnings and financial
position of the Company.

NOTE 2 - INVESTMENT SECURITIES AVAILABLE FOR SALE

Investment securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                               September 30, 1999
                                            --------------------------------------------------------
                                                              Gross           Gross
                                            Amortized       Unrealized      Unrealized          Fair
                                               Cost            Gain            Loss            Value
                                            ---------       ----------      ----------          ----
                                                              (Dollars in thousands)
<S>                                           <C>              <C>            <C>              <C>
Obligations of states and political
   subdivisions                               $1,510           $ 17           $    7           $1,520
Other                                            615                                              615
                                              ------           ----           ------           ------
                                              $2,125           $ 17           $    7           $2,135
                                              ======           ====           ======           ======
</TABLE>


                                       7
<PAGE>   8

                            WESTCORP AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                                  December 31, 1998
                                           -------------------------------------------------------------
                                                               Gross             Gross
                                           Amortized         Unrealized        Unrealized          Fair
                                              Cost             Gain               Loss             Value
                                           ---------         ----------        ----------          ----
                                                                (Dollars in thousands)
<S>                                         <C>               <C>              <C>                  <C>
U.S. Treasury securities and
   obligations of other U.S. Government
   agencies and corporations                $74,307           $ 1,285                             $75,592
Obligations of states and political
   subdivisions                               1,510                62                               1,572
Other                                           632                                                   632
                                            -------           -------           -------           -------
                                            $76,449           $ 1,347                             $77,796
                                            =======           =======           =======           =======
</TABLE>


NOTE 3 - MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE Mortgage-backed
securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                                    September 30, 1999
                                           ----------------------------------------------------------------------
                                                                 Gross              Gross
                                           Amortized          Unrealized          Unrealized             Fair
                                              Cost               Gain                Loss                Value
                                           ----------           -------           ----------           ----------
                                                                   (Dollars in thousands)
<S>                                        <C>                  <C>               <C>                  <C>
GNMA certificates                          $1,410,001           $18,429           $   43,339           $1,385,091
FNMA participation certificates                87,045                                  1,988               85,057
FHLMC participation certificates                2,274                                     59                2,215
Other                                           2,920                                                       2,920
                                           ----------           -------           ----------           ----------
                                           $1,502,240           $18,429           $   45,386           $1,475,283
                                           ==========           =======           ==========           ==========
</TABLE>


<TABLE>
<CAPTION>
                                                                 December 31, 1998
                                          ---------------------------------------------------------------
                                                              Gross             Gross
                                          Amortized         Unrealized        Unrealized            Fair
                                             Cost              Gain              Loss               Value
                                          ---------         ----------        ----------            -----
                                                               (Dollars in thousands)
<S>                                        <C>                <C>              <C>                <C>
GNMA certificates                          $858,682           $6,261           $  5,316           $859,627
FNMA participation certificates             112,351            1,511                 20            113,842
FHLMC participation certificates              3,600               58                                 3,658
Other                                         2,917                                                  2,917
                                           --------           ------           --------           --------
                                           $977,550           $7,830           $  5,336           $980,044
                                           ========           ======           ========           ========
</TABLE>


                                       8
<PAGE>   9

                            WESTCORP AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 4 - NET LOANS RECEIVABLE

Net loans receivable consisted of the following:

<TABLE>
<CAPTION>
                                 September 30,      December 31,
                                     1999               1998
                                 -------------      ------------
                                     (Dollars in thousands)
<S>                               <C>               <C>
Real Estate:
   Mortgage                       $   619,919       $   993,649
   Construction                        16,786            18,345
                                  -----------       -----------
                                      636,705         1,011,994
   Undisbursed loan proceeds          (13,865)           (5,057)
                                  -----------       -----------
                                      622,840         1,006,937
  Consumer:
       Automobile contracts         1,287,262           923,953
       Other                           51,334            57,024
       Unearned discounts             (51,888)          (48,015)
                                  -----------       -----------
                                    1,286,708           932,962
   Commercial                          67,863            52,934
                                  -----------       -----------
                                    1,977,411         1,992,833
Allowance for loan losses             (62,031)          (37,660)
                                  -----------       -----------
                                  $ 1,915,380       $ 1,955,173
                                  ===========       ===========

Loans held for sale:
       Mortgage                   $    42,533       $   309,013
       Consumer                     1,206,672           848,066
                                  -----------       -----------
                                  $ 1,249,205       $ 1,157,079
                                  ===========       ===========
</TABLE>

Loans serviced by the Company for the benefit of others totaled approximately
$4.1 billion and $5.1 billion at September 30, 1999 and December 31, 1998,
respectively. These amounts are not included in the unaudited consolidated
statements of financial condition.

NOTE 5 - SECURITIZED ASSETS AND CAPITALIZED SERVICING RIGHTS

Retained interest in securitized assets ("RISA") capitalized upon securitization
of contracts represents the present value of the estimated future earnings to be
received by the Company from the excess spread created in securitization
transactions. Excess spread is calculated by taking the difference between the
coupon rate of the contracts sold and the interest rate paid to the investors
less contractually specified servicing and guarantor fees.

Prepayment and credit loss assumptions are utilized to project future earnings
and are based upon historical experience. Credit losses are estimated using a
cumulative loss rate estimated by management to reduce the likelihood of asset
impairment. All assumptions used are evaluated each quarter and adjusted, if
appropriate, to reflect actual performance of the contracts.

Future earnings are discounted at a rate management believes to be
representative of the market at the time of securitization. The balance of the
RISA is amortized against actual excess spread income earned on a monthly basis
over the expected repayment life of the underlying contracts. RISA is classified
in a manner similar to available for sale securities and as such is marked to
market each quarter. Market value changes are calculated


                                       9
<PAGE>   10

                            WESTCORP AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


by discounting the excess spread using a current market discount rate. Any
changes in the market value of the RISA is reported as a separate component of
shareholders' equity as an unrealized gain or loss, net of applicable taxes.

The following table presents the activity of the RISA.

<TABLE>
<CAPTION>
                                                Three Months Ended           Nine Months Ended
                                                   September 30,               September 30,
                                              -----------------------     -----------------------
                                                1999          1998          1999          1998
                                              ---------     ---------     ---------     ---------
                                                             (Dollars in thousands)
<S>                                           <C>           <C>           <C>           <C>
Balance at beginning of period                $ 164,891     $ 179,069     $ 171,230     $ 181,177
Additions                                        43,582                      93,541        55,058
Amortization                                    (33,847)      (24,318)      (86,983)      (81,421)
Changes in accumulated other comprehensive
      income (loss)                                (154)        2,355        (3,316)        2,292
                                              ---------     ---------     ---------     ---------
Balance at end of period                      $ 174,472     $ 157,106     $ 174,472     $ 157,106
                                              =========     =========     =========     =========
</TABLE>

At the time of securitization, the Company utilizes prepayment speed, net credit
loss and discount rate assumptions to initially compute the value of the RISA.
These assumptions may change periodically based on actual performance or other
factors. During 1999 and 1998, the Company utilized prepayment rates of 1.6% ABS
in computing RISA. Original cumulative net credit loss assumptions utilized for
1999 and 1998 securitization transactions ranged from 6% to 7%. The Company used
a discount rate during 1999 and 1998 of 425 basis points over the two-year
Treasury rate at the time of securitization in discounting future earnings.

The following table presents the estimated future undiscounted retained interest
earnings to be received from securitizations. Estimated future undiscounted RISA
earnings are calculated by taking the difference between the coupon rate of the
contracts sold and the certificate rate paid to the investors, less the
contractually specified servicing fee and guarantor fees, after giving effect to
estimated prepayments and assuming no losses. To arrive at the RISA, this amount
is reduced by the off balance sheet allowance established for potential future
losses and by discounting to present value.

The following table sets forth the components of the RISA:

<TABLE>
<CAPTION>
                                                                          September 30,       December 31,
                                                                              1999                1998
                                                                          -------------       ------------
                                                                               (Dollars in thousands)
<S>                                                                       <C>                <C>
Estimated net undiscounted RISA earnings                                   $   410,530        $   361,209
Off balance sheet allowance for  losses                                       (212,253)          (170,664)
Discount to present value                                                      (23,805)           (19,315)
                                                                           -----------        -----------
Retained interest in securitized assets                                    $   174,472        $   171,230
                                                                           ===========        ===========

Outstanding balance of contracts sold through securitizations              $ 3,917,964        $ 3,491,452
Off balance sheet allowance for losses as a percent of contracts sold
  through securitizations                                                         5.42%              4.89%
</TABLE>

The Company believes that the off balance sheet allowance for losses is
currently adequate to absorb potential losses in the sold portfolio.


                                       10
<PAGE>   11

                            WESTCORP AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


CAPITALIZED SERVICING RIGHTS

Capitalized servicing rights consisted of the following:

<TABLE>
<CAPTION>
                                                  September 30,    December 31,
                                                      1999            1998
                                                  -------------    ------------
                                                         (Dollars in thousands)
<S>                                               <C>              <C>
Purchased mortgage servicing rights                  $   751         $ 6,360
Originated mortgage servicing rights                      32           6,136
Impairment allowance for mortgage servicing rights      (783)         (3,723)
                                                     -------         -------
                                                     $    --         $ 8,773
                                                     =======         =======
</TABLE>

CSR assets represent an allocation of the cost basis of loans sold between the
CSR and the loans based upon their relative fair value at the date the loans are
originated or purchased. The fair value of CSR is calculated by estimating
future servicing revenues, including servicing fees, late charges, other
ancillary income, and float benefit, less the actual cost to service loans.

As part of the Company's strategy to exit the mortgage banking business, the
Company sold $1.0 billion of mortgage servicing rights portfolio in the third
quarter of 1999. Amortization of capitalized servicing rights is reflected as a
component of mortgage banking income in non-interest income. Amortization
expense for the three and nine months ended September 30, 1999 was $1.3 million
and $2.3 million compared with $2.9 million and $11.6 million for the same
periods a year earlier.

NOTE 6 - NOTE PAYABLE

On September 30, 1999, the Company established a $500 million conduit facility
in a private placement. The Notes are rated AAA by Standard & Poor's and Aaa by
Moody's. Timely principal and interest payments on the Notes are guaranteed by
an insurance policy. Interest payments on the Notes are due quarterly, in
arrears, calculated at a commercial paper index rate plus 30 basis points.

NOTE 7 - DIVIDENDS

On July 27, 1999, the Company declared a cash dividend of $0.05 per share which
was paid on August 23, 1999. On October 27, 1999, the Company declared a cash
dividend of $0.05 per share for shareholders of record as of November 9, 1999
payable November 20, 1999.

NOTE 8 - EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income available to
common stockholders by the weighted average number of common share outstanding
and does not include the impact of any potentially dilutive common stock
equivalents. The diluted earnings per share is arrived at by dividing net income
by the weighted average number of shares outstanding, adjusted for the dilutive
effect of outstanding stock options.


                                       11
<PAGE>   12

                            WESTCORP AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                           Three Months Ended             Nine Months Ended
                                             September 30,                  September 30,
                                      ---------------------------     ---------------------------
                                          1999           1998             1999           1998
                                      -----------    ------------     -----------    ------------
                                           (Dollars in thousands, except per share amounts)
<S>                                   <C>            <C>              <C>            <C>
BASIC
Net income (loss)                     $    15,057    $     (3,874)    $    37,174    $    (15,459)
Average common shares outstanding      26,491,879      26,418,856      26,481,361      26,344,430
Net income (loss) per common share    $      0.57    $      (0.15)    $      1.40    $      (0.59)

DILUTED
Net income (loss)                     $    15,057    $     (3,874)    $    37,174    $    (15,459)
Average common shares outstanding      26,491,879      26,418,856      26,481,361      26,344,430
Stock option adjustment                    79,361                          19,499
Average common shares outstanding      26,571,240      26,418,856      26,500,860      26,344,430
Net income per common share           $      0.57    $      (0.15)    $      1.40    $      (0.59)
</TABLE>


Options to purchase 645,655 shares of common stock ranging from $7.37 to $22.75
at September 30, 1998 were not included in the computation of diluted earnings
per share because the Company experienced a loss from operations.


                                       12
<PAGE>   13

                            WESTCORP AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 9 - BUSINESS SEGMENT DATA

In addition to its principal operations in automobile lending, the Company
conducts a significant amount of banking operations as presented below:

<TABLE>
<CAPTION>
                                             Three Months Ended         Nine Months Ended
                                                September 30,             September 30,
                                           ----------------------     -----------------------
                                             1999          1998         1999          1998
                                           ---------     --------     ---------     ---------
                                                         (Dollars in thousands)
<S>                                        <C>           <C>          <C>           <C>
Revenues:
  Automobile lending
      Net interest income                  $  25,451     $ 18,143     $  70,542     $  44,074
      Total other income                      57,260       21,342       154,009        76,439
                                           ---------     --------     ---------     ---------
          Total automobile lending         $  82,711     $ 39,485     $ 224,551     $ 120,513
                                           =========     ========     =========     =========
  Banking operations
      Net interest income                  $  13,195     $ 11,578     $  35,470     $  37,805
      Total other income                       4,058        5,881         7,894        14,254
                                           ---------     --------     ---------     ---------
          Total banking operations         $  17,253     $ 17,459     $  43,364     $  52,059
                                           =========     ========     =========     =========
  Other operations
      Net interest income                  $    (786)    $   (792)    $  (2,604)    $  (2,563)
      Total other income                       1,168           22         4,053         1,775
                                           ---------     --------     ---------     ---------
          Total other operations                 382         (770)        1,449          (788)
                                           ---------     --------     ---------     ---------
Total revenues                             $ 100,346     $ 56,174     $ 269,364     $ 171,784
                                           =========     ========     =========     =========
Depreciation
  Automobile lending                       $   1,483     $  1,581     $   4,677     $   5,888
  Banking operations                              98           71           263           305
  Other operations                               550        1,098         1,818         3,039
                                           ---------     --------     ---------     ---------
   Consolidated total depreciation         $   2,131     $  2,750     $   6,758     $   9,232
                                           =========     ========     =========     =========
Segment profit or loss
  Automobile lending                       $  21,990     $ (6,835)    $  63,000     $ (29,377)
  Banking operations                           7,018        1,179         8,280         1,909
  Other operations                              (613)      (1,363)       (1,988)       (3,079)
                                           ---------     --------     ---------     ---------
   Consolidated operating income (loss)    $  28,395     $ (7,019)    $  69,292     $ (30,547)
                                           =========     ========     =========     =========
</TABLE>

<TABLE>
<CAPTION>
                                  September 30,     December 31,
                                      1999             1998
                                  -------------     ------------
<S>                               <C>               <C>
Segment assets
  Automobile lending               $1,914,226       $1,444,340
  Banking operations                2,402,055        2,219,870
  Other operations                     11,903          168,610
                                   ----------       ----------
   Consolidated total assets       $4,328,184       $3,832,820
                                   ==========       ==========
</TABLE>

The Company has two reportable segments: automobile lending and banking
operations. The automobile lending segment involves the purchase, origination,
sale and servicing of automobile loans. The banking operations segment includes
activities associated with commercial banking, mortgage banking, retail banking
and other ancillary services. Segments below the quantitative thresholds are
attributable to two operating segments of the Company. Those segments include a
life insurance business and a broker-dealer of securities business.


                                       13
<PAGE>   14

                            WESTCORP AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


The revenues for each segment are generated through lending and related
activities from unaffiliated customers. The Company derives a majority of its
revenues from interest. In addition, management primarily relies on net interest
revenue, not gross revenue and expense amounts, in managing the segments.
Therefore, as permitted by SFAS 131 "Disclosure About Segments of an Enterprise
and Related Information", the accounting policies of the segments are the same
as those described in the summary of significant accounting policies. The
Company evaluates performance based on profit or loss from operations before
income taxes.

The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires specific industry expertise in management and each business
requires different marketing strategies.

NOTE 10 - EXTRAORDINARY GAIN

During the nine months ended September 30, 1999, the Company has acquired $28.6
million of its subordinated debentures and subsequently retired these
debentures. As a result of these early retirements, the Company recorded an
extraordinary gain of $1.9 million net of taxes.


                                       14
<PAGE>   15

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

                               FINANCIAL CONDITION

Total assets increased $495 million or 12.9% to $4.3 billion at September 30,
1999 from $3.8 billion at December 31, 1998. This increase is primarily the
result of an increase in mortgage-backed securities available for sale.

LOANS

Loans (including loans held for sale), net of unearned discounts and undisbursed
loan proceeds remained constant at $2.0 billion at September 30, 1999 and
December 31, 1998. The Company has retained the servicing on automobile
contracts sold and receives a servicing fee therefrom. Included in the portfolio
are loans held for sale of which $43.0 million are mortgage loans secured
primarily by single family residences and $1.2 billion of which are contracts
secured by automobiles.

Automobile contracts purchased increased $206 million or 29.4% to $906 million
for the third quarter of 1999 compared with $700 million for the same period a
year earlier. For the nine months ended September 30, 1999, automobile contracts
purchased increased $506 million or 25.0% to $2.5 billion compared with $2.0
billion a year ago. Prime quality originations represented approximately 70.0%
of total automobile contracts purchased during 1999 compared with 68.0% for all
of 1998. As a result of higher automobile contracts purchased, the Company's
portfolio of serviced automobile contracts reached $5.2 billion at September 30,
1999, up from $4.4 billion at December 31, 1998.

Real estate originations decreased to $64.0 million and $265 million for the
three and nine months ended September 30, 1999 compared with $622 million and
$2.2 billion for the same respective periods in 1998. The decline is the result
of the Company's decision to sale its sub-prime mortgage division, Westworks, as
part of its strategy to exit the mortgage banking arena. The Company sold $79.7
million and $502 million of mortgage loans for the three and nine months ended
September 30, 1999 compared with $593 million and $2.3 billion for the same
respective periods in 1998.

Commercial originations increased to $59.4 million and $178 million for the
three and nine months ended September 30, 1999 compared with $42.1 million and
$88.0 for the same respective periods in 1998. Though the Company continues to
focus on expanding its commercial banking operations, it is not a significant
source of revenue.

The Company's real estate loan portfolio (including those held for sale)
consisted of the following:

<TABLE>
<CAPTION>
                                        September 30, 1999             December 31, 1998
                                       ---------------------        -----------------------
                                        Amount           %            Amount            %
                                       --------        -----        ----------        -----
                                                        (Dollars in thousands)
<S>                                    <C>             <C>        <C>                 <C>
Single family residential loans:
    First trust deeds                  $311,460         50.0%     $  617,915           61.4%
    Second trust deeds                    7,146          1.1          27,051            2.6
                                       --------        -----      ----------          -----
                                        318,606         51.1         644,966           64.0

Multifamily residential loans           285,062         45.8         331,652           33.0
Construction loans                       16,786          2.7          18,345            1.8
Other                                    16,251          2.6          17,031            1.7
                                       --------        -----      ----------          -----
                                        636,705        102.2       1,011,994          100.5
Less: undisbursed loan proceeds          13,865          2.2           5,057            0.5
                                       --------        -----      ----------          -----
                                       $622,840        100.0%     $1,006,937          100.0%
                                       ========        =====      ==========          =====
</TABLE>


                                       15
<PAGE>   16

The following table sets forth information on the amount of fixed rate mortgage
loans and adjustable rate mortgage loans in the Company's portfolio.

<TABLE>
<CAPTION>
                                          September 30, 1999            December 31, 1998
                                        ---------------------        -----------------------
                                         Amount           %            Amount            %
                                        --------        -----        ----------        -----
                                                        (Dollars in thousands)
<S>                                     <C>               <C>        <C>                <C>
Fixed rate loans                        $ 52,961          8.5%       $  280,589         27.9%
Adjustable rate loans:
    Negative amortization                414,893         66.6           514,819         51.1
    Without negative amortization        154,986         24.9           211,529         21.0
                                        --------        -----        ----------        -----
                                        $622,840        100.0%       $1,006,937        100.0%
                                        ========        =====        ==========        =====
</TABLE>

The composition of the consumer loan portfolio, all of which is fixed rate, was
as follows:

<TABLE>
<CAPTION>
                                  September 30, 1999             December 31, 1998
                                -----------------------        ---------------------
                                  Amount            %           Amount           %
                                ----------        -----        --------        -----
                                                 (Dollars in thousands)
<S>                             <C>                <C>         <C>              <C>
Automobile contracts, net       $1,235,374         96.0%       $875,938         93.9%
Other                               51,334          4.0          57,024          6.1
                                ----------        -----        --------        -----
                                $1,286,708        100.0%       $932,962        100.0%
                                ==========        =====        ========        =====
</TABLE>

MORTGAGE-BACKED SECURITIES

During the nine months ended September 30 1999, the Company purchased $844
million and sold $110 million of mortgage-backed securities ("MBS") compared
with $382 million and $121 million, respectively for the same period in 1998.


ASSET QUALITY

DELINQUENCY

The percent of loans 60 days or more delinquent decreased to 0.7% at September
30, 1999 compared with 0.8% at December 31, 1998. Delinquent loans by type of
loan and as a percentage of loans by type are summarized as follows at September
30, 1999 and December 31, 1998:

<TABLE>
<CAPTION>
                                                  September 30, 1999
                                               Number of Days Delinquent
                              ----------------------------------------------------------
                                   60-89             90 or more               Total
                              ---------------      ---------------      ----------------
                              Amount       %       Amount       %       Amount        %
                              ------      ---      ------      ---      -------      ---
                                                (Dollars in thousands)
<S>                           <C>         <C>      <C>         <C>      <C>          <C>
Single family residential     $2,043      0.6%     $6,965      2.2%     $ 9,008      2.8%
Multifamily residential                               191      0.1          191      0.1
Consumer                       3,506      0.3       1,408      0.1        4,914      0.4
                              ------      ---      ------      ---      -------      ---
                              $5,549      0.3%     $8,564      0.4%     $14,113      0.7%
                              ======      ===      ======      ===      =======      ===
</TABLE>


                                       16
<PAGE>   17

<TABLE>
<CAPTION>
                                                  December 31, 1998
                                              Number of Days Delinquent
                              -----------------------------------------------------------
                                    60-89             90 or more               Total
                              ---------------      ----------------      ----------------
                              Amount       %       Amount        %       Amount        %
                              ------      ---      -------      ---      -------      ---
                                                (Dollars in thousands)
<S>                           <C>         <C>      <C>          <C>      <C>          <C>
Single family residential     $1,416      0.2%     $ 6,172      1.0%     $ 7,588      1.2%
Multifamily residential                                669      0.2          669      0.2
Consumer                       3,969      0.4        3,174      0.4        7,143      0.8
Construction                     692      5.0          272      2.0          964      6.9
                              ------      ---      -------      ---      -------      ---
                              $6,077      0.3%     $10,287      0.5%     $16,364      0.8%
                              ======      ===      =======      ===      =======      ===
</TABLE>


NONPERFORMING ASSETS

Total nonperforming assets ("NPA") decreased to $14.7 million or 0.3% of total
assets at September 30, 1999 compared with $17.1 million or 0.4% of total assets
at December 31, 1998.

NPAs consist of nonperforming loans ("NPL") and real estate acquired through
foreclosure ("REO"). REOs are carried at lower of cost or fair value less
estimated disposition costs. NPLs are defined as all loans (other than consumer
loans which are charged off at 120 days) on nonaccrual, which include all
mortgage and commercial loans 90 days or more past due or impaired loans. When a
loan is designated as nonaccrual, all previously accrued but unpaid interest is
reversed. Interest on nonperforming loans excluded from interest income remained
constant at $0.5 million for the nine months ended September 30, 1999 and 1998,
respectively.

A loan is considered impaired when, based on current information and events, it
is probable that the Company will be unable to collect all amounts due according
to the contractual terms of the loan agreement. The Company measures impairment
based on, among other factors, the fair value of the loan's collateral. At
September 30, 1999 impaired loans remained constant at $4.0 million from
December 31, 1998.

NONPERFORMING LOANS

Nonperforming loans consisted of the following:

<TABLE>
<CAPTION>
                                     September 30,     December 31,
                                         1999             1998
                                     -------------     ------------
                                         (Dollars in thousands)
<S>                                     <C>              <C>
Unimpaired loans on nonaccrual          $ 7,333          $ 8,181
Impaired loans                            3,938            4,046
                                        -------          -------
                                        $11,271          $12,227
                                        =======          =======
</TABLE>


                                       17
<PAGE>   18

The migration of nonperforming loans and real estate owned from December 31,
1998 to September 30, 1999 is shown below:

<TABLE>
<CAPTION>
                                                  Single
                                                  Family       Multifamily    Multifamily
                                   Total         1-4 Units     5 - 36 Units    37+ Units     Construction
                                  --------       ---------     ------------   -----------    ------------
                                                          (Dollars in thousands)
<S>                               <C>             <C>            <C>            <C>            <C>
Balance, December 31, 1998        $ 12,227        $ 5,789        $ 1,082        $ 3,755        $ 1,601
New nonperforming loans             10,033          9,179            450                           404
REO                                 (3,109)        (2,421)          (653)                          (35)
Cures and payoffs                   (6,470)        (5,526)          (287)           (98)          (559)
Chargeoffs                          (1,410)          (202)                                      (1,208)
                                  --------        -------        -------        -------        -------
Balance, September 30, 1999       $ 11,271        $ 6,819        $   592        $ 3,657        $   203
                                  ========        =======        =======        =======        =======
</TABLE>

REAL ESTATE OWNED

<TABLE>
<CAPTION>
                                                 Single
                                                 Family       Multifamily      Multifamily
                                   Total        1-4 Units     5 - 36 Units      37+ Units       Construction
                                   -----        ---------     ------------     -----------      ------------
                                                           (Dollars in thousands)
<S>                               <C>           <C>           <C>              <C>              <C>
Balance, December 31, 1998        $ 4,861        $ 3,747        $ 1,114
New REO                             4,571          3,918            653
Sales                              (6,571)        (4,914)        (1,657)
Writedowns                            540            442             98
                                  -------        -------        -------         -------            -------
Balance, September 30, 1999       $ 3,401        $ 3,193        $   208
                                  =======        =======        =======         =======            =======
</TABLE>


Assets secured by single family residential properties comprised the largest
portion of nonperforming assets although no single loan or series of such loans
predominate. At September 30, 1999, $6.8 million or 60.5% of NPLs and $3.2
million or 93.9% of REOs were secured by single family residential properties.
The Company had an allowance for real estate losses of $784 thousand at
September 30, 1999 and December 31, 1998 respectively.

ALLOWANCE FOR LOAN AND REAL ESTATE LOSSES

Consistent with loan value, loan sales, losses, non-accrual loans and other
relevant factors, the Company increased its allowance for loan losses to $62.0
million at September 30, 1999 compared with $37.7 million at December 31, 1998.
The increase is the result of a higher level of automobile contracts held on the
balance sheet. The allowance for the loan losses is maintained at a level
believed by management to be adequate to absorb potential losses in the loan
portfolio.


                                       18
<PAGE>   19

The following table presents summarized data relative to the allowance for loan
losses:

<TABLE>
<CAPTION>
                                                             September 30,       December 31,
                                                                 1999                1998
                                                             ------------        ------------
                                                                  (Dollars in thousands)
<S>                                                          <C>                 <C>
Total loans (1)                                              $  1,977,411        $  1,992,833
Allowance for loan losses                                          62,031              37,660
Allowance for real estate losses                                      784                 784
Loans past due 60 days or more                                     14,113              17,364
Nonperforming loans                                                11,271              12,227
Nonperforming assets (2)                                           14,672              17,088
Allowance for loan losses as a percent of:
    Total loans (1)                                                   3.1%                1.9%
    Loans past due 60 days or more                                  439.5%              216.9%
    Nonperforming loans                                             550.4%              308.0%
Total allowance for loan losses and real estate losses
    as a percent of nonperforming assets                            428.1%              225.0%
Nonperforming loans as a percent of total loans                       0.6%                0.6%
Nonperforming assets as a percent of total assets                     0.3%                0.4%
</TABLE>


----------

(1)      Loans, net of unearned discounts and undisbursed loan proceeds.
(2)      Nonperforming loans and real estate owned.

The following table sets forth the activity in the allowance for loan losses:

<TABLE>
<CAPTION>
                                         Three Months Ended         Nine Months Ended
                                            September 30,             September 30,
                                        ---------------------     ---------------------
                                          1999         1998         1999         1998
                                        --------     --------     --------     --------
                                                    (Dollars in thousands)
<S>                                     <C>          <C>          <C>          <C>
Balance at beginning of period          $ 48,717     $ 35,747     $ 37,660     $ 33,834
Chargeoffs:
    Mortgage loans                          (181)      (1,046)      (2,190)      (3,184)
    Consumer loans                        (4,280)      (3,352)     (13,233)      (9,894)
                                        --------     --------     --------     --------
                                          (4,461)      (4,398)     (15,423)     (13,078)
Recoveries:
    Mortgage loans                            30          383        1,871          402
    Consumer loans                         1,821        1,050        5,488        2,834
                                        --------     --------     --------     --------
                                           1,851        1,433        7,359        3,236
                                        --------     --------     --------     --------
Net chargeoffs                            (2,610)      (2,965)      (8,064)      (9,842)
Provision for loan losses                 15,924        2,347       32,435       11,137
                                        --------     --------     --------     --------
Balance at end of period                $ 62,031     $ 35,129     $ 62,031     $ 35,129
                                        ========     ========     ========     ========

Ratio of net chargeoffs during period
    to average loans outstanding
    during the period (annualized)          0.67%        0.63%        0.68%        0.69%
                                        ========     ========     ========     ========
</TABLE>


                                       19
<PAGE>   20

                              RESULTS OF OPERATIONS

SUMMARY

The Company reported net income of $15.1 million or $0.57 per diluted share and
$37.2 million or $1.40 per diluted share for the three and nine months ended
September 30, 1999. This compares with a net loss of $3.9 million or $0.15 per
diluted share and $15.5 million or $0.59 per diluted share for the comparable
periods of 1998. The improvement in this quarter's results was primarily the
result of lower credit losses on automobile contracts and increased gain on sale
of auto contracts. Credit loss experience on automobile contracts for the third
quarter of 1999 declined 148 basis points to 1.8% of average serviced automobile
contracts compared with 3.3% a year earlier. For the nine months ended September
30, 1999, credit loss experience on automobile contracts was 2.0% compared with
3.3% for the same period a year earlier. Lower credit losses and gains on sale
of automobile contracts are reflected in automobile lending income. Gain on sale
of automobile contracts in the third quarter was $20.3 million. The Company did
not record a gain on sale of automobile contracts in the third quarter of 1998.
For the nine months ended September 30, 1999, gain on sale was $44.9 million
compared with $19.1 million for the same period of 1998. Improvement in
noninterest expenses is the result of the Company's restructuring initiatives
implemented last year.

NET INTEREST INCOME

Net interest income for the three and nine months ended September 30, 1999 was
$37.9 million and $103 million compared with $28.9 million and $79.3 million for
the same respective periods a year earlier. Interest rates for interest earning
assets and liabilities for the three and nine months ended September 30, 1999
and 1998 are summarized as follows:

<TABLE>
<CAPTION>
                                                           Three Months Ended      Nine Months Ended
                                                              September 30,          September 30,
                                                           ------------------      ------------------
                                                            1999        1998        1999        1998
                                                           ------      ------      ------      ------
                                                           Yield/      Yield/      Yield/      Yield/
                                                           Rate        Rate        Rate        Rate
                                                           ------      ------      ------      ------
<S>                                                        <C>         <C>         <C>         <C>
Interest earning assets:
    Investment securities                                   4.92%       5.45%       5.33%       5.45%
    Mortgage-backed securities                              6.29        6.59        6.16        6.75
    Other investments                                       4.94        4.99        4.92        5.47
Loans:
    Consumer                                               15.79       14.86       15.52       15.39
    Mortgage (1)                                            7.38        7.81        7.34        7.61
    Commercial                                              8.57        8.58        8.34        8.58
                                                           -----       -----       -----       -----
Total interest earning assets                               8.97        8.83        8.74        8.46
Interest bearing liabilities:
    Deposits                                                4.85        5.21        4.86        5.28
    Subordinated debentures                                 8.98        8.95        8.95        8.95
    Securities sold under agreements to repurchase          5.12        5.95        5.03        5.86
    FHLB advances and other borrowings                      5.39        7.38        5.70        7.53
                                                           -----       -----       -----       -----
Total interest bearing liabilities                          5.03        5.77        5.19        5.80
                                                           -----       -----       -----       -----
Interest rate spread                                        3.94%       3.06%       3.55%       2.66%
                                                           =====       =====       =====       =====
Net yield on average interest earning assets                4.99%       3.70%       4.37%       3.35%
                                                           =====       =====       =====       =====
</TABLE>

----------

(1)      For the purposes of these computations, non-accruing loans are included
         in the average loan amounts.


                                       20
<PAGE>   21

The increase in interest rate spread for the three and nine months ended
September 30, 1999 compared with the same respective periods a year earlier is
the result of higher yield on interest earning assets as the Company holds a
greater percentage of automobile contracts on the balance sheet and lower cost
of funds as the Company continues to increase the amount of its core deposits
generated from commercial and retail deposit accounts.

PROVISION FOR LOAN LOSSES

The Company maintains an allowance for credit losses to cover anticipated losses
for loans held on balance sheet. The allowance for loan losses is increased by
charging the provision for loan losses and decreased by actual losses on the
loans held on balance sheet or by the reduction of the amount of loans held on
balance sheet and expected losses. The Company believes that the allowance for
loan losses is currently adequate to absorb potential losses in the on balance
sheet portfolio. For the three and nine months ended September 30, 1999, the
provision for loan losses totaled $15.9 million and $32.4 million compared with
$2.3 million and $11.1 million for the same respective periods in 1998. The
increase is the result of a higher level of automobile contracts held on the
balance sheet.

NONINTEREST INCOME

For the three and nine months ended September 30, 1999, noninterest income
totaled $62.5 million and $166 million compared with $27.3 million and $92.5
million for the same respective periods in 1998. The increase is due to higher
automobile lending income.

Automobile Lending

The Company originates and sells automobile contracts in the asset-backed market
with servicing rights retained. Income from automobile lending includes gain
from the sale of contracts, as well as servicing income, net of amortization of
RISA, and other related income such as document fees and late charges. For the
three and nine months ended September 30, 1999 automobile lending generated
income of $56.5 million and $148 million compared with $20.7 million and $74.9
million for the same respective periods of 1998.

The Company recorded a gain on sale of automobile contracts in the third quarter
of 1999 of $20.3 million. The Company did not record a gain on sale of
automobile contracts in the third quarter of 1998. For the nine months ended
September 30, 1999, gain on sale was $44.9 million compared with $19.1 million
for the same period of 1998. Gain on sale on contracts declined compared to
prior years due to not executing a securitization transaction in the third
quarter of 1998, and as a result of changes in the gross interest rate spread on
contracts securitized, the amount of dealer participation paid, changes in
credit loss assumptions, and the effect of hedging activities. Gross interest
rate spread is affected by product mix, general market conditions and overall
market interest rates. The risks inherent in interest rate fluctuation are
reduced through hedging activities.

Loan servicing and retained interest income totaled $24.7 million and $72.3
million for the three and nine months ended September 30, 1999, compared with
$12.3 million and $29.7 million for the comparable periods of 1998. The increase
is due to higher retained interest income resulting from lower credit losses and
a higher level of securitized contracts.


                                       21
<PAGE>   22

Total automobile lending income for the three and nine months ended September
30, 1999 and 1998 is summarized as follows:

<TABLE>
<CAPTION>
                                                      Three Months              Nine Months
                                                  Ended September 30,       Ended September 30,
                                                  --------------------     --------------------
                                                   1999         1998         1999         1998
                                                  -------     --------     --------     -------
                                                              (Dollars in thousands)
<S>                                               <C>         <C>          <C>          <C>
Gain on sale of automobile contracts              $20,251                  $ 44,874     $19,133
Servicing income and retained interest income      24,742     $ 12,266       72,331      29,710
Other fee income                                   11,495        8,402       30,642      26,038
                                                  -------     --------     --------     -------
                                                  $56,488     $ 20,668     $147,847     $74,881
                                                  =======     ========     ========     =======
</TABLE>


Mortgage Banking

Mortgage banking operations include gains and losses on the sale of loans, loan
servicing income net of amortization of capitalized servicing rights and other
income (primarily late charges). During the three and nine months ended
September 30, 1999, mortgage banking income totaled $3.6 million and $8.0
million compared with $5.1 million and $9.2 million for the same respective
periods in 1998. The decline in mortgage banking income is due to the Company's
decision to exit the mortgage banking business. This decision resulted in the
sale of the Company's mortgage banking origination capabilities effective
September 16, 1999.

Mortgage banking income for the three and nine months ended September 30, 1999
and 1998 is summarized as follows:

<TABLE>
<CAPTION>
                                      Three Months             Nine Months
                                   Ended September 30,     Ended September 30,
                                   -------------------     -------------------
                                    1999       1998         1999        1998
                                   ------     -------      ------     --------
                                            (Dollars in thousands)
<S>                                <C>        <C>          <C>        <C>
Gain on sale of mortgage loans     $3,341     $ 7,507      $5,402     $ 13,815
Loan servicing income (loss)           60      (3,042)      1,817       (6,540)
Other fee income                      207         600         752        1,899
                                   ------     -------      ------     --------
                                   $3,608     $ 5,065      $7,971     $  9,174
                                   ======     =======      ======     ========
</TABLE>


NONINTEREST EXPENSE

Total noninterest expenses declined as the Company continued to experience the
positive impact of its restructuring programs as well as other operating
efficiencies achieved last year. Total noninterest expenses declined $4.8
million to $56.0 million for the third quarter of 1999 compared with $60.8
million for the same period a year ago. For the nine months ended September 30,
1999, total noninterest expenses declined $23.6 million to $168 million compared
with $191 million for the same period a year earlier.

INCOME TAXES

The effective tax rate for the nine months ended September 30, 1999 and 1998 was
42.2% and 41.4%, respectively.


                                       22
<PAGE>   23

PRO-FORMA STATEMENTS OF OPERATIONS

Under generally accepted accounting principles ("GAAP"), the Company's
securitization transactions of automobile contracts have been treated as sales.
At the time of sale, in accordance with SFAS 125, the Company records a gain
equal to the present value of the estimated future earnings from the portfolio
of contracts sold. Net interest earned on such contracts and fees earned for
servicing the loan portfolios are recognized over the life of the securitization
transaction as contractual servicing and retained interest income and other fee
income. Under SFAS 125, income recognition is effectively accelerated through
the recognition of a gain at the time of sale while the ultimate realization of
such income remains dependent on the actual performance, over time, of the loans
that were securitized.

The following pro-forma statements of operations present the Company's results
under the assumption that the securitization transactions are treated as
financings as opposed to sales. Management believes that such a presentation is
an important performance measure of the Company's operations. If treated as
financings, no gain on sale or subsequent contractual servicing and retained
interest income is recognized. Instead, the earnings of the contracts in the
trusts and the related financing costs are reflected over the life of the
underlying pool of loans. Management refers to these pro-forma results as
"portfolio based" statements of operations. Management monitors the periodic
"portfolio based" earnings of the Company's serviced contract portfolio and
believes these "portfolio based" statements assist in a better understanding of
the Company's business.

The following tables presents the "portfolio based" statements of operations and
a reconciliation to net income (loss) as reflected in the Company's consolidated
statements of operations.


                                       23
<PAGE>   24

                            WESTCORP AND SUBSIDIARIES
                     PORTFOLIO BASED STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Three Months Ended          Nine Months Ended
                                                             September 30,               September 30,
                                                         ----------------------      ----------------------
                                                           1999         1998           1999         1998
                                                         --------     ---------      --------     ---------
                                                                       (Dollars in thousand)
<S>                                                      <C>          <C>            <C>          <C>
Interest income                                          $205,877     $ 181,556      $583,406     $ 532,822
Interest expense                                          103,612        99,495       299,877       296,682
                                                         --------     ---------      --------     ---------
Net interest income                                       102,265        82,061       283,529       236,140

Provision for growth (1)                                    5,801         2,252        15,365        16,033
Net chargeoffs (2)                                         22,777        34,862        71,337       101,590
                                                         --------     ---------      --------     ---------
Provision for loan losses                                  28,578        37,114        86,702       117,623

Net interest income after provision for loan losses        73,687        44,947       196,827       118,517

Noninterest income                                         17,493        14,985        48,750        43,640
Noninterest expense                                        57,619        61,955       172,501       195,405
                                                         --------     ---------      --------     ---------

Income (loss) before income tax (benefit)                  33,561        (2,023)       73,076       (33,248)
Income tax (benefit) (3)                                   14,121          (811)       30,852       (13,778)
                                                         --------     ---------      --------     ---------

Income (loss) before minority interest                     19,440        (1,212)       42,224       (19,470)
Minority interest in earnings (losses)                      2,066          (154)        4,808        (2,670)
                                                         --------     ---------      --------     ---------

Income (loss) before extraordinary item                    17,374        (1,058)       37,416       (16,800)
Extraordinary gain from early extinguishment of debt          315                       1,934
                                                         --------     ---------      --------     ---------

Portfolio based net income (loss)                        $ 17,689     $  (1,058)     $ 39,350     $ (16,800)
                                                         ========     =========      ========     =========

Portfolio based net income (loss)
per common share - diluted                               $   0.67     $   (0.04)     $   1.48     $   (0.64)
                                                         ========     =========      ========     =========
</TABLE>

(1)      Provision for growth represents additional allowance for credit losses
         the Company would set aside due to an Increase in the serviced contract
         portfolio.

(2)      Represents actual chargeoffs incurred during the period.

(3)      Such tax effect is based upon the Company's tax rate for the respective
         period.


                                       24
<PAGE>   25

                            WESTCORP AND SUBSIDIARIES
     RECONCILIATION OF GAAP BASIS NET INCOME TO "PORTFOLIO BASED" NET INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                        Three Months Ended           Nine Months Ended
                                           September 30,               September 30,
                                      ----------------------      ------------------------
                                        1999          1998          1999           1998
                                      --------      --------      ---------      ---------
                                                     (Dollars in thousands)
<S>                                   <C>           <C>           <C>            <C>
GAAP net income (loss)                $ 15,057      $ (3,874)     $  37,174      $ (15,459)

Portfolio based adjustments:
    Gain on sales of  contracts        (20,251)           --        (44,874)       (19,133)
    Retained interest income           (12,308)       (2,658)       (37,888)        (2,228)
    Contractual servicing income       (12,434)       (9,608)       (34,443)       (27,482)
    Net interest income                 64,404        53,138        180,121        156,842
    Provision for growth                 7,513        (2,870)         9,005        (14,737)
    Net chargeoffs                     (20,168)      (31,897)       (63,273)       (91,748)
    Operating expenses                  (1,590)       (1,109)        (4,863)        (4,214)
    Minority interest                     (361)         (175)           (12)           240
                                      --------      --------      ---------      ---------
Total Portfolio based adjustments        4,805         4,821          3,773         (2,460)

Net tax effect (1)                       2,173         2,005          1,597         (1,119)
                                      --------      --------      ---------      ---------

Portfolio based net income (loss)     $ 17,689      $ (1,058)     $  39,350      $ (16,800)
                                      ========      ========      =========      =========
</TABLE>

(1)      Such tax effect is based upon the Company's tax rate for the respective
         period.


                         CAPITAL RESOURCES AND LIQUIDITY

OVERVIEW

The Company requires substantial capital resources to support its business. The
primary cash requirements related to operating activities include (i) amounts
needed to purchase loans or investment securities, (ii) amounts paid to brokers
and dealers, (iii) securitization costs, and (iv) principal and interest
advances to trusts. Sources available to the Company include (i) retail and
commercial deposits, (ii) loan sales or securitizations, (iii) collection of
principal and interest from loans and investment securities, (iv) other
borrowing sources. These sources provide the Company the liquidity needed to
fund its operations.

PRINCIPAL USES OF CASH

Acquisition of Loans or Investment Securities

The most significant cash flow requirement for the Company is the acquisition of
loans or investment securities. Total loan originations for the Company for the
nine months ended September 30, 1999 was $3.0 billion compared with $4.4 billion
in the same period in the prior year. The decline in originations is the result
of the Company exiting the mortgage banking business. The Company purchased $844
million of investment securities during the nine months ended September 30, 1999
compared with $382 million for the same period in 1998.


                                       25
<PAGE>   26

Amounts Paid to Brokers and Dealers

The Company acquires automobile contracts through its relationships with
franchised new and independent used car dealers. The Company pays an up-front
dealer participation to the originating dealer for most automobile contracts
purchased. Participation paid by the Company to dealers during the three and
nine months ended September 30, 1999 was $21.9 million and $63.9 million
compared with $20.2 million and $58.4 million for the same periods a year
earlier. The Company acquires its mortgage loans primarily through relationships
with real estate brokers and agents that assists property buyers, homebuilders
and thrifts.

Advances to Fund Spread Account

The Company is required to maintain spread accounts related to automobile
securitizations. At the time a securitization transaction closes, the Company is
required to advance monies to initially fund spread accounts. The Company funds
these spread accounts by foregoing receipt of excess cash flow until these
accounts exceed predetermined levels. The amounts due from trusts at September
30, 1999, including initial advances not yet returned, was $420 million compared
with $333 million at December 31, 1998.

PRINCIPAL SOURCES OF CASH

The Company employs various financing vehicles to fund its operations, including
deposits, securitizations, commercial paper, advances from the FHLB, repurchase
agreements, subordinated debentures and other borrowings. The sources used vary
depending on such factors as rates paid, maturities, and the impact on capital.

Deposits

The Company attracts both short-term and long-term deposits from the general
public, commercial enterprises and institutions by offering a variety of
accounts and rates. The Company offers regular passbook accounts, various money
market accounts, demand deposit accounts, fixed interest rate certificates with
varying maturities and individual retirement accounts. In 1999, the retail
banking division continued its strategy to lower overall cost of funds. This
strategy involved becoming the primary bank for its customers by providing
checking accounts, money market accounts, ATMs, debit cards, overdraft
protection and alternative investments (primarily mutual funds and annuities).
The Company's deposits are obtained primarily from the areas surrounding its
banking offices in California.

Loan Sales or Securitizations

The primary source of funds used by the Company for automobile loans is the sale
of such products through asset-backed securities in the secondary markets. The
Company has regularly securitized automobile loans through underwritten public
sales of securities since 1985. Although the underlying interest costs
associated with the securitizations fluctuate, they are primarily market driven
and not necessarily related to the operations of the Company. The Company
expects to continue to utilize securitization transactions as part of its
liquidity strategy when the appropriate market conditions exist. The Company
executed a $1.0 billion securitization transaction during the three months ended
September 30, 1999. The Company did not execute a securitization transaction in
the same period in 1998. The Company securitized $2.0 billion for the nine
months ended September 30, 1999 compared with $1.2 billion for the same periods
in 1998.

The primary source of funds used by the Company for mortgage loans is the sale
of such products. Historically, the Company has been active in the secondary
market, it has sold FHA and VA loans, as well as other conforming and
non-conforming loans to FNMA, FHLMC, and other established conduits. However,
during the quarter, the Company completed the sale of its sub-prime mortgage
division, Westworks, and the sale of $1.0 billion in mortgage servicing rights
as part of its strategy to exit the mortgage banking business.


                                       26
<PAGE>   27

Borrowings and Other Sources of Funds

The Company's other sources of funds include issuing commercial paper and
obtaining advances from the FHLB, selling securities under agreements to
repurchase and other borrowings as well as loan repayments and cash generated
from operations. On September 30, 1999, the Company issued $500 million in notes
to a conduit facility in a private placement. This arrangement provides the
Company with another source of liquidity. The Company selects from among these
funding alternatives based on the timing and duration of its cash needs, as well
as the costs, maturities and other requirements of each funding source.

The FHLB system functions in a reserve capacity for savings institutions. As a
member, the Company is required to own capital stock in the FHLB and is
authorized to apply for advances from the FHLB on security of such stock and on
certain residential mortgage loans. The Bank has been pre-approved for advances
up to 25% of its assets, based on remaining availability under credit facilities
established by the Bank with the FHLB, with 24 hours notice. Such borrowings may
be made pursuant to several different programs offered from time to time by the
FHLB. Additional funds are available subject to additional collateral and other
requirements. Each credit program has its own interest rate, which may be fixed
or variable, and range of maturities. The FHLB prescribes the acceptable uses to
which advances pursuant to each program may be put, as well as limitations on
the sizes of advances and repayment provisions.

Savings associations such as the Bank also have authority to borrow from the
Federal Reserve System ("FRS") "discount window". FRS regulations require these
institutions to exhaust all reasonable alternative sources of funds, including
FHLB sources, before borrowing from the FRS. Federal regulations have been
promulgated which connect CRA performance with access to long term advances from
FHLB to member institutions. The Bank received a "satisfactory" rating in its
most recent CRA evaluation.

Subordinated Capital Debentures

In 1993 and 1997, the Company, through the Bank, issued $125 million of 8.5% and
$150 million of 8.875% Subordinated Capital Debentures due 2003 and 2007,
respectively, of which $207 million is currently outstanding. In addition to
being a funding source, the Bank is permitted to include these Debentures,
subject to regulatory limitations, in supplementary capital for purposes of
determining compliance with risk-based capital requirements.

CAPITAL REQUIREMENTS

The Bank, a federally chartered savings bank, is subject to certain minimum
capital requirements imposed by the Financial Institution Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). FDICIA separates all financial institutions
into one of five capital categories: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." In order to be considered "well capitalized," an
institution must have a total risk-based capital ratio of 10% or greater, a Tier
1 (i.e., core) risk-based capital ratio of 6% or greater, a leverage ratio of 5%
or greater and not be subject to any OTS order. The Bank currently meets all of
the requirements of a "well capitalized" institution. Its regulatory capital
position at September 30, 1999 for this purpose, was as follows:


                                       27
<PAGE>   28

<TABLE>
<CAPTION>
                                                                           Tier 1
                                              Tangible       Core        Risk-Based    Risk-Based
                                              Capital       Capital       Capital       Capital
                                              --------      --------     ----------    ----------
                                                            (Dollars in thousands)
<S>                                           <C>           <C>           <C>           <C>
SEPTEMBER 30, 1999
------------------
Actual Capital:
  Amount                                      $382,260      $382,260      $382,260      $626,463
  Capital ratio                                   8.77%         8.77%         6.39%        10.47%
FIRREA minimum required capital:
  Amount                                      $ 65,374      $130,748           N/A      $478,637
  Capital ratio                                   1.50%         3.00%          N/A          8.00%
  Excess                                      $316,886      $251,512           N/A      $147,826
FDICIA well capitalized required capital:
  Amount                                           N/A      $217,913      $358,978      $598,296
  Capital ratio                                    N/A          5.00%         6.00%        10.00%
  Excess                                           N/A      $164,347      $ 23,282      $ 28,167

DECEMBER 31, 1998
-----------------
Actual Capital:
  Amount                                      $345,427      $345,427      $345,427      $604,552
  Capital ratio                                   9.02%         9.02%         6.42%        11.23%
FIRREA minimum required capital:
  Amount                                      $ 57,464      $114,929           N/A      $430,112
  Capital ratio                                   1.50%         3.00%          N/A          8.00%
  Excess                                      $287,963      $230,498           N/A      $174,440
FDICIA well capitalized required capital:
  Amount                                           N/A      $191,548      $322,584      $537,640
  Capital ratio                                    N/A          5.00%         6.00%        10.00%
  Excess                                           N/A      $153,879      $ 22,843      $ 66,912
</TABLE>

The following table reconciles the Bank's capital in accordance with generally
accepted accounting principles ("GAAP") to the Bank's tangible, core and
risk-based capital as of September 30, 1999 and December 31, 1998.

<TABLE>
<CAPTION>
                                                   September 30,    December 31,
                                                      1999             1998
                                                   -------------    ------------
                                                      (Dollars in thousands)
<S>                                                 <C>              <C>
Bank shareholder's equity-GAAP basis                $ 340,091        $ 332,951
Adjustments for tangible and core capital:
  Unrealized losses (gains)under SFAS 115              16,048           (3,693)
  Non-permissible activities (1)                          (93)          (4,811)
  Disallowed capitalized servicing rights                                 (877)
  Minority interest in equity of subsidiaries          26,214           21,857
                                                    ---------        ---------
Total tangible and core capital                       382,260          345,427
Adjustments for risk-based capital:
  Subordinated debentures (2)                         185,879          224,844
  General loan valuation allowance (3)                 58,324           34,281
                                                    ---------        ---------
  Risk-based capital                                $ 626,463        $ 604,552
                                                    =========        =========
</TABLE>


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

(1)      Does not include minority interest in joint venture subsidiaries.

(2)      Maximum includable is one-third of risk-based capital and excludes
         issue costs.

(3)      Limited to 1.25% of risk-weighted assets.


                                       28
<PAGE>   29

YEAR 2000

The Year 2000 issue arose because many existing computer programs use only the
last two digits to refer to a year. Therefore, these computer programs may not
properly recognize a year that begins with "20" instead of the familiar "19".
This problem is pervasive and complex. If not corrected, the potential impact is
that date sensitive calculations would be based on erroneous data or could cause
a system failure. This affects all forms of financial accounting (including
interest computation, due dates, pensions, personnel benefits, investments, and
legal commitments). It can also affect record keeping, such as inventory,
maintenance, and file retention. Reliable information is necessary for financial
institutions to conduct business.

In July 1997, the Company initiated a five-phase program to address Year 2000
related issues. These phases were awareness, assessment, remedition, validation
and implementation.

The Board of Directors provides oversight and direction through the Year 2000
Committee. The Year 2000 Committee is responsible for assessing all risks,
evaluating current systems, coordinating system upgrades and replacements, and
building facility management and reporting Year 2000 status. The Year 2000
Committee reports monthly to Executive Management and quarterly to the Board of
Directors on their Year 2000 efforts.

The Company has completed all five phases on our Year 2000 program. Nonetheless,
the Company is engaged in an ongoing due diligence process that includes
monitoring procedures to verify that key service providers are taking
appropriate Year 2000 action.

The Company recognizes that its business and operations could be adversely
affected if key service providers fail to achieve timely Year 2000 compliance.
Although the Company is establishing reasonable safeguards, there is no
assurance that all key service providers will adequately address their
respective Year 2000 issues.

The Company has incurred direct costs of $0.8 million in 1998 and $1.5 million
in 1999 and currently estimates that the Company will incur additional direct
costs of approximately $0.2 million to address the Year 2000 issues. The costs
incurred include conducting individual and integrated systems testing,
developing contingency plans, and monitoring the Year 2000 compliance
preparations of our key service providers. The estimated costs include the cost
of consultants to supplement our staff and management assigned to the project.
Any potential additional costs to implement contingency plans that address
possible Year 2000 failures of third-party systems or the Company's systems are
not included in the estimate. These estimated Year 2000 costs for 1999 have been
incorporated into the Company's 1999 operating expense budget. The costs
incurred in 1998 did not have a material effect on net income for 1998, and it
is not expected that costs currently estimated to be in incurred in 1999 will
have a material impact on net income for 1999.

This is a Year 2000 readiness disclosure, subject to the provisions of The Year
2000 Information and Readiness Disclosure Act. Please note that Year 2000
planning, assessment, renovation, validation, and implementation are iterative
processes. All statements made in this document are based on the Company's
reasonable belief, knowledge and investigation, and the Company believes it is
taking reasonable steps to address the Year 2000 issues within its control.
However, the Company makes no representation that all of its systems or those of
its service providers will be Year 2000-compliant or the Year 2000 issues will
not adversely affect the Company.

This document may contain forward-looking statements regarding the expectations,
intentions, and estimations of, among other things, the cost of remediations,
the timing of projects, the testing of systems, and plans for projections of
future events. These forward-looking statements involve risks or uncertainties,
and actual results may differ from anticipated results. These risks and
uncertainties may involve, among other things, unanticipated problems in
computer systems and applications and unexpected events or delays.


                                       29
<PAGE>   30

FORWARD-LOOKING STATEMENTS

The preceding Management Discussion and Analysis of Financial Condition and
Results of Operations section contains several "forward-looking" statements.
Forward-looking statements are those which use words such as "believe",
"expect", "anticipate", "intend", "plan", "may", "will", "should", "estimate",
"continue" or other comparable expressions. Theses words indicate future events
and trends. Forward-looking statements are our current views with respect to
future events and financial performance. These forward-looking statements are
subject to many risks and uncertainties which could cause actual results to
differ significantly from historical results or from those anticipated by us.
The most significant risks and uncertainties we face are:

         (1)      the level of chargeoffs, as an increase in the level of
                  chargeoffs will decrease our earnings;

         (2)      our ability to originate new loans in a sufficient amount to
                  reach our needs, as a decrease in the amount of loans we
                  originate will decrease our earnings;

         (3)      a decrease in the difference between the average interest rate
                  we receive on the loans we originate and the rate of interest
                  we must pay to fund our cost of originating those loans; as a
                  decrease will reduce our earnings;

         (4)      the continued availability of sources of funding for our
                  operations, as a reduction in the availability of funding will
                  reduce our ability to originate loans;

         (5)      maintaining the level of operating costs; as an increase in
                  those costs will reduce our net earnings; and

         (6)      the Year 2000 issues; as a disruption of our collection
                  efforts as a result of Year 2000 problems or an increase in
                  our costs to correct Year 2000 issues will reduce earnings.

There are other risks and uncertainties we face, including the effect of changes
in general economic conditions and the effect of new laws, regulations and court
decisions. You are cautioned not to place undue reliance on our forward-looking
statements. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.


                                       30
<PAGE>   31

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Credit risk and interest rate risk are the primary risks facing the Company. The
Company relies upon loan review and an adequate loan loss reserve in order to
address credit risk

The Company's Asset/Liability committee is responsible for the management of
interest rate risk. This committee closely monitors interest rate risk and
recommends policy for managing this risk. The primary measurement tool for
evaluating this risk is the use of interest rate shock analysis. This analysis
simulates the effects of an instantaneous and sustained change in interest rates
(in increments of 100 basis points) on the Company's assets and liabilities and
measures the resulting increase or decrease to the net present value ("NPV") of
the Company's assets and liabilities. Another important measurement of the
Company's interest rate risk is its "GAP". GAP is defined as the difference
between the amount of interest sensitive assets that reprice versus the amount
of interest-sensitive liabilities that also reprice within a defined period of
time. For the Company, more interest rate sensitive liabilities than assets are
repricing in the shorter maturity buckets and more interest rate sensitive
assets then liabilities are repricing in the longer maturity buckets. The
following table summarizes the maturity GAP position of the Company at September
30, 1999.


                                       31
<PAGE>   32

                       INTEREST RATE SENSITIVITY ANALYSIS
                               SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                                                                                     3 Years
                                         Within      3 Months        1 Year to         to          After 5
                                        3 Months     to 1 Year        3 Years        5 Years         Years          Total
                                        --------    -----------     -----------     ---------     -----------     ----------
                                                                       (Dollars in thousands)
<S>                                     <C>         <C>             <C>             <C>           <C>             <C>
Interest earning assets:
Investment securities                   $    620                                    $     488     $     1,027     $    2,135
Other investments                        162,410    $       310                                                      162,720
Mortgage-backed securities               188,524        268,565     $   476,485       246,177         295,532      1,475,283
Consumer loans (1)                        85,136        277,380         550,092       342,894          31,206      1,286,708
Mortgage loans:
  Adjustable rate (2)                    471,419         92,648                                                      564,067
  Fixed rate (2)                           1,445         15,873          10,925         6,580          18,138         52,961
Construction (2)                           5,749             63                                                        5,812
Commercial                                60,279          6,015             800           200             569         67,863
                                        --------    -----------     -----------     ---------     -----------     ----------
Total interest earning assets            975,582        660,854       1,038,302       596,339         346,472      3,617,549
Interest bearing liabilities:
Deposits:
  Savings accounts (3)                     2,696          7,292           4,260                                       14,248
  Money market deposit accounts (3)      212,440        153,122         279,866                                      645,428
  Certificate of deposit accounts (4)    433,129        984,258         116,325         6,752                      1,540,464
Securities sold under agreements
  to repurchase                          256,793                                                                     256,793
FHLB advances (4)                                                         6,500                         2,763          9,263
Subordinated debentures                                                                59,735         147,432        207,167
Other borrowings (4)                      56,093        450,000                                                      506,093
                                        --------    -----------     -----------     ---------     -----------     ----------
Total interest bearing liabilities       961,151      1,594,672         406,951        66,487         150,195      3,179,456
                                        --------    -----------     -----------     ---------     -----------     ----------
Excess interest earning assets
  (liabilities)                           14,431       (933,818)        631,351       529,852         196,277        438,093
Effect  of hedging activities            764,500                       (165,000)     (100,000)       (499,500)
                                        --------    -----------     -----------     ---------     -----------     ----------
Hedged excess (deficit)                 $778,931    $  (933,818)    $   466,351     $ 429,852     $  (303,223)    $  438,093
                                        ========    ===========     ===========     =========     ===========     ==========

Cumulative excess                       $778,931    $  (154,887)    $   311,464     $ 741,316     $   438,093     $  438,093
                                        ========    ===========     ===========     =========     ===========     ==========

Cumulative excess as a percentage
  of total interest earning assets         21.53%         (4.28%)          8.61%        20.49%          12.11%         12.11%
</TABLE>

(1)      Based on contractual maturities adjusted by the Company's historical
         prepayment rate.

(2)      Based on interest rate repricing adjusted for projected prepayments.

(3)      Based on assumptions established by the Office of Thrift Supervision
         ("OTS").

(4)      Based on contractual maturity.

The Company utilizes a variety of means in order to manage interest rate risk
including originating adjustable rate loans, securitizing loans with liabilities
that have similar repricing and maturity characteristics, matching fixed rate
loans held in the portfolio with FHLB advances and selling fixed rate loans. The
Company hedges its MBS portfolio with interest rate caps and swaps. Also, as an
originator of fixed rate mortgage loans, the Company enters into MBS forward
agreements in order to limit the risk of a change in interest rates related to
its pipeline of mortgage loans. Similarly, the Company utilizes two-year
Treasury securities forward agreements in order to limit interest rate risk
related to automobile loans prior to their inclusion in securitization
transactions.


                                       32
<PAGE>   33

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company or its subsidiaries are involved as parties to certain
         legal proceedings incidental to their businesses. The Company believes
         that the outcome of such proceedings will not have a material effect
         upon the Company's financial condition, results of operations and cash
         flows.

ITEM 2.  CHANGES IN SECURITIES

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         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)      EXHIBITS

                  Exhibit 27   Financial Data Schedule

         (b)      REPORTS ON FORM 8-K

                  None.


                                       33
<PAGE>   34

                                   SIGNATURES


Pursuant to the requirements 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.

                                    WESTCORP
--------------------------------------------------------------------------------
                                  (Registrant)





Date:  November 12, 1999          By: /s/ JOY SCHAEFER
       ------------------             ------------------------------------------
                                      Joy Schaefer
                                      President and Chief Operating Officer


Date:  November 12, 1999          By: /s/ LEE A. WHATCOTT
       ------------------             ------------------------------------------
                                      Lee A. Whatcott
                                      Senior Executive Vice President and
                                      Chief Financial Officer
                                      (Principal Financial and Accounting
                                       Officer)


                                       34