##### Table of Contents



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, 2002

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
incorporation or organization) |  | (I.R.S. Employer
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, 2002, the registrant had 39,199,724 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 38.





---

TABLE OF CONTENTS



|                              |                                                                                               |                                                            |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION            
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME                         
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                            
|                              | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 2. Changes in Securities and Use of Proceeds                                            
|                              | Item 3. Defaults Upon Senior Securities                                                      
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|CERTIFICATIONS               
|EXHIBIT 99.1                 



---



##### Table of Contents



WESTCORP AND SUBSIDIARIES

FORM 10-Q

September 30, 2002

TABLE OF CONTENTS
______________

|               |  |                                                           |    |                                                                                                                           |    |          |   | 
|-------------- |  | --------------------------------------------------------- | -- | ------------------------------------------------------------------------------------------------------------------------- | -- | -------- | - | 
|               |  |                                                           |    |                                                                                                                           |    | Page No.
|               |  |                                                           |    |                                                                                                                           |    |         
|PART I.        |  | FINANCIAL INFORMATION                                     |    |                                                                                                                           |    |         
|              
|              
|              
|              
|Item 1.        |  | Financial Statements                                      |    |                                                                                                                           |    |         
|              
|              
|              
|              
|               |  |                                                           |    | Consolidated Statements of Financial Condition at
September 30, 2002 and December 31, 2001                                |    |          | 3 | 
|              
|              
|              
|              
|               |  |                                                           |    | Consolidated Statements of Income for the Three and
Nine Months Ended September 30, 2002 and 2001                         |    |          | 4 | 
|              
|              
|              
|              
|               |  |                                                           |    | Consolidated Statements of Changes in Shareholders Equity for
the Periods Ended September 30, 2002 and December 31, 2001 |    |          | 5 | 
|              
|              
|              
|              
|               |  |                                                           |    | Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2002 and 2001                               |    |          | 6 | 
|              
|              
|              
|              
|               |  |                                                           |    | Notes to Consolidated Financial Statements                                                                                |    |          | 7 | 
|              
|              
|              
|              
|Item 2.        |  | Managements Discussion and Analysis of Financial         |    |                                                                                                                           | 12 |         
|              
|              
|              
|              
|               |  |                                                           |    | Condition and Results of Operations                                                                                       |    |          |   | 
|              
|              
|              
|              
|Item 3.        |  | Quantitative and Qualitative Disclosure about Market Risk |    |                                                                                                                           | 31 |         
|              
|              
|              
|              
|Item 4.        |  | Controls and Procedures                                   |    |                                                                                                                           | 33 |         
|              
|              
|              
|              
|PART II.       |  | OTHER INFORMATION                                         |    |                                                                                                                           |    |         
|              
|              
|              
|              
|Item 1.        |  | Legal Proceedings                                         |    |                                                                                                                           | 35 |         
|              
|              
|              
|              
|Item 2.        |  | Changes in Securities and Use of Proceeds                 |    |                                                                                                                           | 35 |         
|              
|              
|              
|              
|Item 3.        |  | Defaults Upon Senior Securities                           |    |                                                                                                                           | 35 |         
|              
|              
|              
|              
|Item 4.        |  | Submission of Matters to a Vote of Security Holders       |    |                                                                                                                           | 35 |         
|              
|              
|              
|              
|Item 5.        |  | Other Information                                         |    |                                                                                                                           | 35 |         
|              
|              
|              
|              
|Item 6.        |  | Exhibits and Reports on Form 8-K                          |    |                                                                                                                           | 35 |         
|              
|              
|              
|              
|SIGNATURES     |  |                                                           | 36 |                                                                                                                          
|              
|              
|              
|              
|CERTIFICATIONS |  |                                                           | 37 |                                                                                                                          

2



---



##### Table of Contents












PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |           |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------- | ------------------------------------------ | --------- | ---------------------- | ---------- | ------------ | --------- | --------- | ---------- | 
|                                                                                                                                                                   |                       |                                            |           | September 30,          |            | December 31,
|                                                                                                                                                                   |                       |                                            |           | 2002                   |            | 2001        
|                                                                                                                                                                   |                       |                                            |           |                        |            |             
|                                                                                                                                                                   |                       |                                            |           | (Dollars in thousands)
|ASSETS                                                                                                                                                             |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Cash and cash equivalents                                                                                                                                          |                       | $                                          | 289,793   |                        |            | $            | 104,327   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Investment securities available for sale                                                                                                                           |                       |                                            | 11,299    |                        |            |              | 10,511    |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Mortgage-backed securities available for sale                                                                                                                      |                       |                                            | 2,489,300 |                        |            |              | 2,092,225 |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Loans receivable                                                                                                                                                   |                       |                                            | 9,145,593 |                        |            |              | 7,533,150 |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Allowance for credit losses                                                                                                                                        |                       |                                            | (235,709  | )                      |            |              | (171,432  | )        
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                   | Loans receivable, net |                                            |           | 8,909,884              |            |              |           | 7,361,718 |           
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Amounts due from trusts                                                                                                                                            |                       |                                            | 116,149   |                        |            |              | 136,131   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Retained interest in securitized assets                                                                                                                            |                       |                                            | 4,027     |                        |            |              | 37,392    |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Premises and equipment, net                                                                                                                                        |                       |                                            | 78,612    |                        |            |              | 79,258    |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Other assets                                                                                                                                                       |                       |                                            | 281,650   |                        |            |              | 250,835   |          
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                   |                       | TOTAL ASSETS                               |           | $                      | 12,180,714 |              |           | $         | 10,072,397 | 
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          
|LIABILITIES                                                                                                                                                        |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Deposits                                                                                                                                                           |                       | $                                          | 1,871,791 |                        |            | $            | 2,329,326 |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Notes payable on automobile secured financing                                                                                                                      |                       |                                            | 8,015,546 |                        |            |              | 5,886,227 |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Securities sold under agreements to repurchase                                                                                                                     |                       |                                            | 323,755   |                        |            |              | 155,190   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Federal Home Loan Bank advances                                                                                                                                    |                       |                                            | 445,810   |                        |            |              | 543,417   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Amounts held on behalf of trustee                                                                                                                                  |                       |                                            | 213,283   |                        |            |              | 280,496   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Subordinated debentures                                                                                                                                            |                       |                                            | 428,899   |                        |            |              | 147,714   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Other borrowings                                                                                                                                                   |                       |                                            | 8,296     |                        |            |              | 25,068    |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Other liabilities                                                                                                                                                  |                       |                                            | 188,411   |                        |            |              | 85,994    |          
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                   |                       | TOTAL LIABILITIES                          |           |                        | 11,495,791 |              |           |           | 9,453,432  | 
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Minority interest                                                                                                                                                  |                       |                                            | 98,214    |                        |            |              | 78,261    |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|SHAREHOLDERS EQUITY                                                                                                                                               |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Common stock (par value $1.00 per share;
authorized 65,000,000 shares; issued and
outstanding 39,192,789 shares in September 2002
and 35,802,491 in December 2001) |                       |                                            | 39,193    |                        |            |              | 35,802    |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Paid-in capital                                                                                                                                                    |                       |                                            | 349,356   |                        |            |              | 301,955   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Retained earnings                                                                                                                                                  |                       |                                            | 310,749   |                        |            |              | 263,853   |          
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Accumulated other comprehensive loss, net of tax                                                                                                                   |                       |                                            | (112,589  | )                      |            |              | (60,906   | )        
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                   |                       | TOTAL SHAREHOLDERS EQUITY                 |           |                        | 586,709    |              |           |           | 540,704    | 
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          
|                                                                                                                                                                   |                       | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |           | $                      | 12,180,714 |              |           | $         | 10,072,397 | 
|                                                                                                                                                                   |                       |                                            |           |                        |            |              |           |          

3



---



##### Table of Contents






See accompanying notes to consolidated financial statements.

WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |         |            | 
|----------------------------------------------------- | -------------------------- | --------------------------------------------- | ------- | ---------------------------------------------------------- | ---------- | ----------------- | ------- | ------- | ---------- | ---- | ------- | ------- | ---------- | - | ------- | ------- | ---------- | 
|                                                      |                            |                                               |         | Three Months Ended                                         |            | Nine Months Ended
|                                                      |                            |                                               |         | September 30,                                              |            | September 30,    
|                                                      |                            |                                               |         |                                                            |            |                  
|                                                      |                            |                                               |         | 2002                                                       |            | 2001              |         | 2002    |            | 2001
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |     
|                                                      |                            |                                               |         | (Dollars in thousands, except share and per share amounts)
|Interest income:                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Loans, including fees                         |         | $                                                          | 265,814    |                   |         | $       | 218,910    |      |         | $       | 748,589    |   |         | $       | 590,284    | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Mortgage-backed securities                    |         |                                                            | 30,808     |                   |         |         | 32,116     |      |         |         | 86,534     |   |         |         | 104,242    | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Other                                         |         |                                                            | 2,384      |                   |         |         | 2,015      |      |         |         | 6,087      |   |         |         | 6,782      | 
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                      | TOTAL INTEREST INCOME      |                                               |         | 299,006                                                    |            |                   |         | 253,041 |            |      |         | 841,210 |            |   |         | 701,308 |           
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense:                                     |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Deposits                                      |         |                                                            | 20,447     |                   |         |         | 26,370     |      |         |         | 61,642     |   |         |         | 92,123     | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Notes payable on automobile secured financing |         |                                                            | 105,911    |                   |         |         | 90,464     |      |         |         | 301,083    |   |         |         | 244,482    | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Other                                         |         |                                                            | 13,618     |                   |         |         | 8,564      |      |         |         | 30,431     |   |         |         | 34,871     | 
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                      | TOTAL INTEREST EXPENSE     |                                               |         | 139,976                                                    |            |                   |         | 125,398 |            |      |         | 393,156 |            |   |         | 371,476 |           
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|NET INTEREST INCOME                                   |                            |                                               | 159,030 |                                                            |            |                   | 127,643 |         |            |      | 448,054 |         |            |   | 329,832 |        
|                                                     
|                                                     
|                                                     
|                                                     
|Provision for credit losses                           |                            |                                               | 80,996  |                                                            |            |                   | 60,501  |         |            |      | 209,043 |         |            |   | 127,124 |        
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|NET
INTEREST INCOME AFTERPROVISION FOR CREDIT LOSSES  |                            |                                               | 78,034  |                                                            |            |                   | 67,142  |         |            |      | 239,011 |         |            |   | 202,708 |        
|                                                     
|                                                     
|                                                     
|                                                     
|Noninterest income:                                   |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Automobile lending                            |         |                                                            | 15,985     |                   |         |         | 3,948      |      |         |         | 43,740     |   |         |         | 54,311     | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Other                                         |         |                                                            | 10,402     |                   |         |         | 4,378      |      |         |         | 20,537     |   |         |         | 10,972     | 
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |         |            | 
|                                                      | TOTAL NONINTEREST INCOME   |                                               |         | 26,387                                                     |            |                   |         | 8,326   |            |      |         | 64,277  |            |   |         | 65,283  |           
|                                                     
|                                                     
|                                                     
|                                                     
|Noninterest expenses:                                 |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Salaries and associate benefits               |         |                                                            | 34,684     |                   |         |         | 33,804     |      |         |         | 105,738    |   |         |         | 107,412    | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Credit and collections                        |         |                                                            | 8,442      |                   |         |         | 7,468      |      |         |         | 26,695     |   |         |         | 20,329     | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Data processing                               |         |                                                            | 4,485      |                   |         |         | 4,176      |      |         |         | 13,625     |   |         |         | 13,612     | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Other                                         |         |                                                            | 14,596     |                   |         |         | 14,432     |      |         |         | 41,783     |   |         |         | 42,809     | 
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |         |            | 
|                                                      | TOTAL NONINTEREST EXPENSES |                                               |         | 62,207                                                     |            |                   |         | 59,880  |            |      |         | 187,841 |            |   |         | 184,162 |           
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |         |            | 
|INCOME BEFORE INCOME TAX                              |                            |                                               | 42,214  |                                                            |            |                   | 15,588  |         |            |      | 115,447 |         |            |   | 83,829  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Income tax                                            |                            |                                               | 16,801  |                                                            |            |                   | 6,119   |         |            |      | 44,950  |         |            |   | 32,967  |        
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|INCOME BEFORE MINORITY INTEREST                       |                            |                                               | 25,413  |                                                            |            |                   | 9,469   |         |            |      | 70,497  |         |            |   | 50,862  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Minority interest in earnings of subsidiaries         |                            |                                               | 3,740   |                                                            |            |                   | 1,255   |         |            |      | 10,263  |         |            |   | 8,036   |        
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|NET INCOME                                            |                            | $                                             | 21,673  |                                                            |            | $                 | 8,214   |         |            | $    | 60,234  |         |            | $ | 42,826  |        
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|Net income per common share                           |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Basic                                         |         | $                                                          | 0.55       |                   |         | $       | 0.23       |      |         | $       | 1.57       |   |         | $       | 1.27       | 
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                      |                            | Diluted                                       |         | $                                                          | 0.55       |                   |         | $       | 0.23       |      |         | $       | 1.55       |   |         | $       | 1.26       | 
|                                                      |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|Weighted average number of common shares outstanding: |                            |                                               |         |                                                            |            |                   |         |         |            |      |         |         |            |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Basic                                         |         |                                                            | 39,189,744 |                   |         |         | 35,792,418 |      |         |         | 38,382,794 |   |         |         | 33,765,085 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                            | Diluted                                       |         |                                                            | 39,506,307 |                   |         |         | 36,091,155 |      |         |         | 38,751,631 |   |         |         | 33,987,939 | 

See accompanying notes to consolidated financial statements.

4



---



##### Table of Contents






WESTCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Unaudited)

|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |        |          |  
|----------------------------- | ---------- | ------------------------------------------------------------------------------------------------------------- | ---------- | -------------------------------------------- | --------- | ----- | ------ | ------- | ----- | -------- | ------- | ---------- | ------ | -------------- | ------- | ------ | ------- | - | -------- | ------------- | -------- | - | ------- | ------ | -------- | -
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          | Accumulated   |          |   |         |       
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          | Other         |          |   |         |       
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          | Comprehensive |          |   |         |       
|                              |            |                                                                                                               |            |                                              |           |       |        | Common  |       | Paid-in  |         | Retained   |        | Income (Loss), |         |        |         |  
|                              |            |                                                                                                               |            | Shares                                       |           | Stock |        | Capital |       | Earnings |         | Net of Tax |        | Total         
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |               
|                              |            |                                                                                                               |            | (Dollars in thousands, except share amounts)
|Balance at January 1, 2001    |            |                                                                                                               | 31,931,826 |                                              |           | $     | 31,932 |         |       | $        | 246,889 |            |        | $              | 223,163 |        |         | $ | (14,816  | )             |          | $ | 487,168 |       
|                             
|                             
|                             
|                             
|                              |            | Net income                                                                                                    |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        | 55,690  |   |          |               |          |   |         |        | 55,690   |  
|                             
|                             
|                             
|                             
|                              |            | Unrealized gains on securities
available for sale and retained
interest in securitized assets,
net of tax (1) |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | 12,309   |   |         |        | 12,309   |  
|                             
|                             
|                             
|                             
|                              |            | Reclassification adjustment for
losses on securities available for
sale included in net income (2)            |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | 1,050    |   |         |        | 1,050    |  
|                             
|                             
|                             
|                             
|                              |            | Unrealized hedge losses on cash
flow hedges, net of tax (3)                                                   |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | (75,048  | ) |         |        | (75,048  | )
|                             
|                             
|                             
|                             
|                              |            | Reclassification adjustment for
losses on cash flow hedges
included in income (4)                             |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | 15,599   |   |         |        | 15,599   |  
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |       
|                              |            | Comprehensive income                                                                                          |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |        | 9,600    |  
|                             
|                             
|                             
|                             
|                              |            | Issuance of subsidiary common stock                                                                           |            |                                              |           |       |        |         |       |          |         |            | (3,205 | )              |         |        |         |   |          |               |          |   |         |        | (3,205   | )
|                             
|                             
|                             
|                             
|                              |            | Issuance of common stock                                                                                      |            |                                              | 3,870,665 |       |        |         | 3,870 |          |         |            | 58,271 |                |         |        |         |   |          |               |          |   |         |        | 62,141   |  
|                             
|                             
|                             
|                             
|                              |            | Cash dividends                                                                                                |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        | (15,000 | ) |          |               |          |   |         |        | (15,000  | )
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |       
|Balance at December 31, 2001  |            |                                                                                                               | 35,802,491 |                                              |           |       | 35,802 |         |       |          | 301,955 |            |        |                | 263,853 |        |         |   | (60,906  | )             |          |   | 540,704 |       
|                             
|                             
|                             
|                             
|                              | Net income |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         | 60,234 |         |   |          |               |          |   |         | 60,234 |         
|                             
|                             
|                             
|                             
|                              |            | Unrealized gain on securities
available for sale and retained
interest in securitized assets,
net of tax (1)  |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | 26,588   |   |         |        | 26,588   |  
|                             
|                             
|                             
|                             
|                              |            | Unrealized hedge losses on cash
flow hedges, net of tax (3)                                                   |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | (127,864 | ) |         |        | (127,864 | )
|                             
|                             
|                             
|                             
|                              |            | Reclassification adjustment for
losses on cash flow hedges
included in income (4)                             |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               | 49,593   |   |         |        | 49,593   |  
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |       
|                              |            | Comprehensive income                                                                                          |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |        | 8,551    |  
|                             
|                             
|                             
|                             
|                              |            | Issuance of subsidiary common stock                                                                           |            |                                              |           |       |        |         |       |          |         |            | (1,969 | )              |         |        |         |   |          |               |          |   |         |        | (1,969   | )
|                             
|                             
|                             
|                             
|                              |            | Issuance of common stock                                                                                      |            |                                              | 3,390,298 |       |        |         | 3,391 |          |         |            | 49,370 |                |         |        |         |   |          |               |          |   |         |        | 52,761   |  
|                             
|                             
|                             
|                             
|                              |            | Cash dividends                                                                                                |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        | (13,338 | ) |          |               |          |   |         |        | (13,338  | )
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |       
|Balance at September 30, 2002 |            |                                                                                                               | 39,192,789 |                                              |           | $     | 39,193 |         |       | $        | 349,356 |            |        | $              | 310,749 |        |         | $ | (112,589 | )             |          | $ | 586,709 |       
|                              |            |                                                                                                               |            |                                              |           |       |        |         |       |          |         |            |        |                |         |        |         |   |          |               |          |   |         |       



---

|(1) |  | The pre-tax amount in unrealized gains on securities available for sale
and retained interest in securitized assets was $45.1 million for the nine
months ended September 30, 2002 compared with $20.9 million for the period
ended December 31, 2001.   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | There was no pre-tax amount of unrealized gains or losses on securities
available for sale reclassified into earnings for the nine months ended
September 30, 2002 compared with an unrealized loss of $1.8 million for
the year ended December 31, 2001.
|   
|   
|   
|   
|(3) |  | The pre-tax amount of unrealized losses on cash flow hedges was $217
million for the nine months ended September 30, 2002 compared with $127
million for the year ended December 31, 2001.                                                               
|   
|   
|   
|   
|(4) |  | The pre-tax amount of unrealized losses on cash flow hedges reclassified
into earnings was $84.1 million for the nine months ended September 30,
2002 compared with $26.4 million for the year ended December 31, 2001.                                  

See accompanying notes to consolidated financial statements.

5



---



##### Table of Contents



WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                                                  |                                                         |   |                        |            |      |   |            |            |  
|--------------------------------------------------------------------------------- | ------------------------------------------------------- | - | ---------------------- | ---------- | ---- | - | ---------- | ---------- | -
|                                                                                  |                                                         |   | Nine Months Ended     
|                                                                                  |                                                         |   | September 30,         
|                                                                                  |                                                         |   |                       
|                                                                                  |                                                         |   | 2002                   |            | 2001
|                                                                                  |                                                         |   |                        |            |     
|                                                                                  |                                                         |   | (Dollars in thousands)
|OPERATING ACTIVITIES                                                              |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net income                                                                        |                                                         | $ | 60,234                 |            |      | $ | 42,826     |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments to reconcile net income to net cash provided by
operating activities: |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Provision for credit losses                             |   |                        | 209,043    |      |   |            | 127,124    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Depreciation and amortization                           |   |                        | 145,205    |      |   |            | 83,865     |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Amortization of retained interest in securitized assets |   |                        | 32,612     |      |   |            | 59,312     |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Loss due to hedge redesignation                         |   |                        | 6,033      |      |   |            |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Loans held for sale:                                                              |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Proceeds from sale of mortgage loans                    |   |                        | 554        |      |   |            | 2,902      |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease (increase) in other assets                                               |                                                         |   | 11,686                 |            |      |   | (95,138    | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in other liabilities                                                     |                                                         |   | 102,417                |            |      |   | 14,149     |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Other, net                                                                        |                                                         |   | 11,254                 |            |      |   | 5,354      |           
|                                                                                  |                                                         |   |                        |            |      |   |            |           
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |                                                         |   | 579,038                |            |      |   | 240,394    |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|INVESTING ACTIVITIES                                                              |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Loans receivable:                                                                 |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Origination of loans                                    |   |                        | (4,427,803 | )    |   |            | (3,977,505 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Participation paid to dealers                           |   |                        | (99,706    | )    |   |            | (93,260    | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Loan payments and payoffs                               |   |                        | 2,701,770  |      |   |            | 1,743,332  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Investment securities available for sale:                                         |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Purchases                                               |   |                        | (4,842     | )    |   |            | (2,568     | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Proceeds from sale                                      |   |                        | 485        |      |   |            |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Proceeds from maturities                                |   |                        | 821        |      |   |            | 1,096      |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Mortgage-backed securities:                                                       |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Purchases                                               |   |                        | (1,081,335 | )    |   |            | (1,004,454 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Proceeds from sale                                      |   |                        |            |      |   |            | 468,600    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Payments received                                       |   |                        | 704,194    |      |   |            | 628,104    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in amounts due from trusts                                               |                                                         |   | 19,983                 |            |      |   | 188,063    |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Purchase of premises and equipment                                                |                                                         |   | (14,424                | )          |      |   | (8,174     | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from sale of premises and equipment                                      |                                                         |   | 4,132                  |            |      |   | 12         |           
|                                                                                  |                                                         |   |                        |            |      |   |            |           
|NET CASH USED IN INVESTING ACTIVITIES                                             |                                                         |   | (2,196,725             | )          |      |   | (2,056,754 | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|FINANCING ACTIVITIES                                                              |                                                         |   |                        |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in deposits                                                              |                                                         |   | (532,505               | )          |      |   | (248,301   | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase (decrease) in securities sold under agreements to repurchase             |                                                         |   | 165,148                |            |      |   | (39,737    | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from notes payable on automobile secured financing                       |                                                         |   | 5,564,768              |            |      |   | 3,563,030  |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments on notes payable on automobile secured financing                         |                                                         |   | (3,472,399             | )          |      |   | (1,215,875 | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in other borrowings                                                      |                                                         |   | (16,772                | )          |      |   | (22,626    | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in amounts held on behalf of trustee                                     |                                                         |   | (67,213                | )          |      |   | (174,858   | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in FHLB advances                                                         |                                                         |   | (97,607                | )          |      |   | (19,114    | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from issuance of subordinated debentures                                 |                                                         |   | 292,472                |            |      |   |            |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments on subordinated debentures                                               |                                                         |   | (12,986                | )          |      |   | (42,663    | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from issuance of common stock                                            |                                                         |   | 52,761                 |            |      |   | 62,069     |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from issuance of subsidiary common stock                                 |                                                         |   | 10,980                 |            |      |   | 15,834     |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash dividends                                                                    |                                                         |   | (13,338                | )          |      |   | (11,062    | )         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments on cash flow hedges                                                      |                                                         |   | (70,156                | )          |      |   | (47,022    | )         
|                                                                                  |                                                         |   |                        |            |      |   |            |           
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                         |                                                         |   | 1,803,153              |            |      |   | 1,819,675  |           
|                                                                                  |                                                         |   |                        |            |      |   |            |           
|INCREASE IN CASH AND CASH EQUIVALENTS                                             |                                                         |   | 185,466                |            |      |   | 3,315      |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash and cash equivalents at beginning of period                                  |                                                         |   | 104,327                |            |      |   | 128,763    |           
|                                                                                  |                                                         |   |                        |            |      |   |            |           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        |                                                         | $ | 289,793                |            |      | $ | 132,078    |           
|                                                                                  |                                                         |   |                        |            |      |   |            |           

See accompanying notes to consolidated financial statements.

6



---



##### Table of Contents






WESTCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Basis of Presentation

The accompanying unaudited consolidated financial statements include our
accounts and the accounts of our wholly owned subsidiary, Western Financial
Bank, also known as the Bank, and its majority owned subsidiary, WFS Financial
Inc, also known as WFS. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain prior year amounts have been
reclassified to conform with the current years 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 nine months ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. These unaudited consolidated financial statements should
be read in conjunction with the audited consolidated financial statements and
footnotes thereto for the year ended December 31, 2001 included in our Form
10-K.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations, also known as SFAS No. 143, in which retirement obligations would
be recorded as a liability using the present value of the estimated cash flows
and a corresponding amount would be capitalized as part of the assets
carrying amount. The capitalized asset retirement cost would be amortized to
expense over the assets useful life using a systematic and rational
allocation method. The estimate of the asset retirement obligation will change
and have to be revised over time. SFAS No. 143 is effective for fiscal years
beginning after September 15, 2002. If applicable, an accounting change to
adopt the standard would be made as of the beginning of the companys fiscal
year. We do not expect SFAS No. 143 to have a material effect on our earnings
or financial position.

Note 2  Mortgage-Backed Securities Available for Sale

Mortgage-backed securities available for sale consisted of the following:

|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 
|-------------------------------- |  | ---------------------- | --------- | ---------- |  | ---------- | ------ | ----- |  | - | ----- |  |  | - | --------- | 
|                                 |  | September 30, 2002    
|                                 |  |                       
|                                 |  |                        |           |            |  | Gross      |        | Gross |  |   |       | 
|                                 |  | Amortized              |           | Unrealized |  | Unrealized |        | Fair 
|                                 |  | Cost                   |           | Gain       |  | Loss       |        | Value
|                                 |  |                        |           |            |  |            |        |      
|                                 |  | (Dollars in thousands)
|GNMA certificates                |  | $                      | 2,402,754 |            |  | $          | 42,862 |       |  | $ | 1,407 |  |  | $ | 2,444,209 | 
|                                
|                                
|                                
|                                
|FNMA participation certificates  |  |                        | 41,176    |            |  |            | 506    |       |  |   |       |  |  |   | 41,682    | 
|                                
|                                
|                                
|                                
|FHLMC participation certificates |  |                        | 1,309     |            |  |            | 28     |       |  |   |       |  |  |   | 1,337     | 
|                                
|                                
|                                
|                                
|Other                            |  |                        | 2,072     |            |  |            |        |       |  |   |       |  |  |   | 2,072     | 
|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 
|                                 |  | $                      | 2,447,311 |            |  | $          | 43,396 |       |  | $ | 1,407 |  |  | $ | 2,489,300 | 
|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 

7



---



##### Table of Contents



|                                 |  |                        |           |            |  |            |        |       |  |   |        |  |  |   |           | 
|-------------------------------- |  | ---------------------- | --------- | ---------- |  | ---------- | ------ | ----- |  | - | ------ |  |  | - | --------- | 
|                                 |  | December 31, 2001     
|                                 |  |                       
|                                 |  |                        |           |            |  | Gross      |        | Gross |  |   |        | 
|                                 |  | Amortized              |           | Unrealized |  | Unrealized |        | Fair 
|                                 |  | Cost                   |           | Gain       |  | Loss       |        | Value
|                                 |  |                        |           |            |  |            |        |      
|                                 |  | (Dollars in thousands)
|GNMA certificates                |  | $                      | 2,040,110 |            |  | $          | 12,527 |       |  | $ | 16,268 |  |  | $ | 2,036,369 | 
|                                
|                                
|                                
|                                
|FNMA participation certificates  |  |                        | 51,353    |            |  |            | 541    |       |  |   |        |  |  |   | 51,894    | 
|                                
|                                
|                                
|                                
|FHLMC participation certificates |  |                        | 1,679     |            |  |            | 13     |       |  |   |        |  |  |   | 1,692     | 
|                                
|                                
|                                
|                                
|Other                            |  |                        | 2,270     |            |  |            |        |       |  |   |        |  |  |   | 2,270     | 
|                                 |  |                        |           |            |  |            |        |       |  |   |        |  |  |   |           | 
|                                 |  | $                      | 2,095,412 |            |  | $          | 13,081 |       |  | $ | 16,268 |  |  | $ | 2,092,225 | 
|                                 |  |                        |           |            |  |            |        |       |  |   |        |  |  |   |           | 

Note 3  Net Loans Receivable

Net loans receivable consisted of the following:

|                            |                                                     |   |                        |           |              |   |           |           |  
|--------------------------- | --------------------------------------------------- | - | ---------------------- | --------- | ------------ | - | --------- | --------- | -
|                            |                                                     |   | September 30,          |           | December 31,
|                            |                                                     |   | 2002                   |           | 2001        
|                            |                                                     |   |                        |           |             
|                            |                                                     |   | (Dollars in thousands)
|Consumer:                   |                                                     |   |                        |           |              |   |           |          
|                           
|                           
|                           
|                           
|                            | Automobile contracts                                |   | $                      | 8,701,700 |              |   | $         | 7,045,578 |  
|                           
|                           
|                           
|                           
|                            | Dealer participation, net of deferred contract fees |   |                        | 152,736   |              |   |           | 128,148   |  
|                           
|                           
|                           
|                           
|                            | Other                                               |   |                        | 7,302     |              |   |           | 8,826     |  
|                           
|                           
|                           
|                           
|                            | Unearned discounts                                  |   |                        | (100,599  | )            |   |           | (108,169  | )
|                            |                                                     |   |                        |           |              |   |           |          
|                            |                                                     |   | 8,761,139              |           |              |   | 7,074,383 |          
|                           
|                           
|                           
|                           
|Real Estate:                |                                                     |   |                        |           |              |   |           |          
|                           
|                           
|                           
|                           
|                            | Mortgage                                            |   |                        | 300,072   |              |   |           | 361,115   |  
|                           
|                           
|                           
|                           
|                            | Construction                                        |   |                        | 7,423     |              |   |           | 15,638    |  
|                            |                                                     |   |                        |           |              |   |           |          
|                            |                                                     |   | 307,495                |           |              |   | 376,753   |          
|                           
|                           
|                           
|                           
|Undisbursed loan proceeds   |                                                     |   | (1,561                 | )         |              |   | (3,298    | )        
|                            |                                                     |   |                        |           |              |   |           |          
|                            |                                                     |   | 305,934                |           |              |   | 373,455   |          
|                           
|                           
|                           
|                           
|Commercial                  |                                                     |   | 78,520                 |           |              |   | 85,312    |          
|                            |                                                     |   |                        |           |              |   |           |          
|                            |                                                     |   | 9,145,593              |           |              |   | 7,533,150 |          
|                           
|                           
|                           
|                           
|Allowance for credit losses |                                                     |   | (235,709               | )         |              |   | (171,432  | )        
|                            |                                                     |   |                        |           |              |   |           |          
|                            |                                                     | $ | 8,909,884              |           |              | $ | 7,361,718 |          
|                            |                                                     |   |                        |           |              |   |           |          

Loans managed by us, excluding dealer participation, totaled $9.7 billion as of
September 30, 2002 compared with $8.6 billion at December 31, 2001. Of the
$9.7 billion managed at September 30, 2002, $9.0 billion were owned by us and
$0.7 billion were owned by securitization trusts. Of the $8.6 billion managed
at December 31, 2001, $7.4 billion were owned by us and $1.2 billion were owned
by securitization trusts.

There were no impaired loans at September 30, 2002 and December 31, 2001.

8



---



##### Table of Contents



Note 4  Retained Interest in Securitized Assets

The following table presents the activity of the retained interest in
securitized assets, otherwise known as RISA:

|                                           |  |                    |        |                   |  |                        |         |      |  |   |         |   |  |   |         |  
|------------------------------------------ |  | ------------------ | ------ | ----------------- |  | ---------------------- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                           |  | Three Months Ended |        | Nine Months Ended
|                                           |  | September 30,      |        | September 30,    
|                                           |  |                    |        |                  
|                                           |  | 2002               |        | 2001              |  | 2002                   |         | 2001
|                                           |  |                    |        |                   |  |                        |         |     
|                                           |  |                    |        |                   |  | (Dollars in thousands) |         |      |  |  
|Beginning balance                          |  | $                  | 11,183 |                   |  | $                      | 80,602  |      |  | $ | 37,392  |   |  | $ | 111,558 |  
|                                          
|                                          
|                                          
|                                          
|Amortization                               |  |                    | (7,700 | )                 |  |                        | (26,881 | )    |  |   | (32,612 | ) |  |   | (59,312 | )
|                                          
|                                          
|                                          
|                                          
|Change in unrealized gain/loss on RISA (1) |  |                    | 544    |                   |  |                        | 396     |      |  |   | (753    | ) |  |   | 1,871   |  
|                                           |  |                    |        |                   |  |                        |         |      |  |   |         |   |  |   |         |  
|Balance at end of period (2)               |  | $                  | 4,027  |                   |  | $                      | 54,117  |      |  | $ | 4,027   |   |  | $ | 54,117  |  
|                                           |  |                    |        |                   |  |                        |         |      |  |   |         |   |  |   |         |  



---

|(1) |  | The change in unrealized gain/loss on RISA represents temporary changes
in valuation including changes in the discount rate based on the current
interest rate environment. Such amounts will not be realized unless the
RISA is sold. Changes in prepayment and credit loss assumptions for the
RISA are other than temporary in nature and impact the value of the RISA.
Such other than temporary differences are immediately recognized in income
as a component of retained interest income.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | There are no restrictions on the RISA.                                                                                                                                                                                                                                                                                                                                                                                                                                                           

The following table presents the estimated future undiscounted retained
interest earnings to be received from securitizations:

|                                                                                                         |  |                        |         |              |  |   |           |  
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ------------ |  | - | --------- | -
|                                                                                                         |  | September 30,          |         | December 31,
|                                                                                                         |  | 2002                   |         | 2001        
|                                                                                                         |  |                        |         |             
|                                                                                                         |  | (Dollars in thousands)
|Estimated net undiscounted RISA earnings                                                                 |  | $                      | 33,261  |              |  | $ | 87,358    |  
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Off balance sheet allowance for credit losses                                                            |  |                        | (28,991 | )            |  |   | (47,235   | )
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Discount to present value                                                                                |  |                        | (243    | )            |  |   | (2,731    | )
|                                                                                                         |  |                        |         |              |  |   |           |  
|Retained interest in securitized assets                                                                  |  | $                      | 4,027   |              |  | $ | 37,392    |  
|                                                                                                         |  |                        |         |              |  |   |           |  
|Outstanding balance of automobile contracts
sold through securitizations                                 |  | $                      | 668,166 |              |  | $ | 1,215,058 |  
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Off balance sheet allowance for losses as a
percent of automobile contracts sold through
securitizations |  |                        | 4.34    | %            |  |   | 3.89      | %

The decline in the off balance sheet allowance for credit losses on a dollar
basis is the result of our securitization transactions no longer being treated
as sales since the first quarter of 2000. We expect the RISA to be fully
amortized or otherwise eliminated by the end of 2002. Older transactions
treated as sales have lower losses each month after securitization as
estimated future credit losses are realized. We believe that the off balance
sheet allowance for credit losses is adequate to absorb probable losses in the
sold portfolio that can be reasonably estimated.

9



---



##### Table of Contents



Note 5  Deposits

Deposits consisted of the following:

|                              |  |              |     |               |  |                        |           |  |  |   |           | 
|----------------------------- |  | ------------ | --- | ------------- |  | ---------------------- | --------- |  |  | - | --------- | 
|                              |  | Weighted     |     |               |  |                        |           |  |  |  
|                              |  | Average Rate |     | September 30, |  | December 31,          
|                              |  | 2002         |     | 2002          |  | 2001                  
|                              |  |              |     |               |  |                       
|                              |  |              |     |               |  | (Dollars in thousands)
|Noninterest bearing deposits  |  |              |    |               |  | $                      | 150,155   |  |  | $ | 100,170   | 
|                             
|                             
|                             
|                             
|Demand deposit accounts       |  |              | 0.2 | %             |  |                        | 1,780     |  |  |   | 1,124     | 
|                             
|                             
|                             
|                             
|Passbook accounts             |  |              | 0.4 |               |  |                        | 6,790     |  |  |   | 11,192    | 
|                             
|                             
|                             
|                             
|Money market deposit accounts |  |              | 2.1 |               |  |                        | 674,016   |  |  |   | 858,371   | 
|                             
|                             
|                             
|                             
|Brokered certificate accounts |  |              | 4.9 |               |  |                        |           |  |  |   | 56,302    | 
|                             
|                             
|                             
|                             
|Certificate accounts          |  |              | 5.1 |               |  |                        | 1,039,050 |  |  |   | 1,302,167 | 
|                              |  |              |     |               |  |                        |           |  |  |   |           | 
|                              |  |              |     |               |  | $                      | 1,871,791 |  |  | $ | 2,329,326 | 
|                              |  |              |     |               |  |                        |           |  |  |   |           | 

The decline in deposits was the result of us selling our seven Northern
California retail banking branches for a gain of $6.0 million ($3.6 million,
net of tax).

Note 6  Notes Payable on Automobile Secured Financing

For the three and nine months ended September 30, 2002, we issued $1.3 billion
and $5.6 billion of notes secured by automobile contracts, respectively. The
$1.3 billion was through a public transaction. Of the $5.6 billion, $4.8
billion was through public transactions and $775 million was through a private
placement. The private placement was through a conduit facility established in
January 2002. There were $8.0 billion of notes payable on automobile secured
financing outstanding at September 30, 2002 compared with $5.9 billion at
December 31, 2001. Of these amounts, we had no amounts outstanding on a
conduit facility at September 30, 2002, compared to $650 million at December
31, 2001. In May 2002, we redeemed our $775 million conduit facility.

Interest payments on the public transactions are due quarterly or monthly, in
arrears, based on the respective notes interest rate. Interest payments on
the conduit facilities were due monthly, in arrears, based on the respective
notes interest rate. For the three and nine months ended September 30, 2002,
interest expense on all notes payable on automobile secured financing,
including interest payments under interest rate swap agreements, totaled $106
million and $301 million, respectively, compared with $90.5 million and $245
million for the same respective periods in 2001.

10



---



##### Table of Contents



Note 7  Accumulated Other Comprehensive Loss, Net of Tax

The following table summarizes the components of accumulated other
comprehensive loss, net of tax:

|                                                |                                                |   |                        |         |              |   |         |         |  
|----------------------------------------------- | ---------------------------------------------- | - | ---------------------- | ------- | ------------ | - | ------- | ------- | -
|                                                |                                                |   | September 30,          |         | December 31,
|                                                |                                                |   | 2002                   |         | 2001        
|                                                |                                                |   |                        |         |             
|                                                |                                                |   | (Dollars in thousands)
|Unrealized gain/(loss) on marketable securities |                                                | $ | 25,131                 |         |              | $ | (1,457  | )      
|                                               
|                                               
|                                               
|                                               
|Unrealized
loss on interest rate swaps: (1)    
|                                               
|                                               
|                                               
|                                               
|                                                | Deposits                                       |   | (52,894                | )       |              |   | (12,222 | )      
|                                               
|                                               
|                                               
|                                               
|                                                | Automobile secured financing                   |   |                        | (45,863 | )            |   |         | (29,954 | )
|                                               
|                                               
|                                               
|                                               
|                                                | Securities sold under agreements to repurchase |   |                        | (3,066  | )            |   |         | (845    | )
|                                                |                                                |   |                        |         |              |   |         |        
|                                                |                                                |   | (101,823               | )       |              |   | (43,021 | )      
|                                               
|                                               
|                                               
|                                               
|Realized loss on settled cash flow hedges: (1) 
|                                               
|                                               
|                                               
|                                               
|                                                | Deposits                                       |   | (16,091                | )       |              |   | (7,910  | )      
|                                               
|                                               
|                                               
|                                               
|                                                | Automobile secured financing                   |   |                        | (19,806 | )            |   |         | (8,518  | )
|                                                |                                                |   |                        |         |              |   |         |        
|                                                |                                                |   | (35,897                | )       |              |   | (16,428 | )      
|                                                |                                                |   |                        |         |              |   |         |        
|Total other accumulated comprehensive income    |                                                | $ | (112,589               | )       |              | $ | (60,906 | )      
|                                                |                                                |   |                        |         |              |   |         |        



---

|(1) |  | All cash flow hedges are structured to hedge future interest payments on
deposits or borrowings.
|--- |  | ------------------------------------------------------------------------------------------------

Note 8  Dividends

On August 20, 2002, we paid a $0.12 per share cash dividend to shareholders of
record as of August 6, 2002.

Note 9  Withdrawal of Merger Proposal

On July 17, 2002, we had announced a merger proposal, authorized by a special
committee of our independent directors, whereby the public holders of WFS
common shares would receive 0.9204 of Westcorp common share for each
outstanding WFS common share. On September 26, 2002, we announced that our
proposal to acquire the outstanding 16% minority interest in WFS had been
withdrawn. In our notice, we indicated that we had withdrawn our proposal
because the two special committees were unable to reach an agreement on a
mutually acceptable exchange ratio for the proposed transaction.

Note 10  Subsequent Event

On November 7, 2002, we declared a cash dividend of $0.12 per share for
shareholders of record as of February 4, 2003 with a payable date of February
18, 2003.

11



---



##### Table of Contents






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

Overview

We are a diversified financial services holding company that provides
automobile lending services through our second tier subsidiary, WFS Financial
Inc, also known as WFS, and retail and commercial banking services through our
wholly owned subsidiary, Western Financial Bank, also known as the Bank. The
Bank currently owns 84% of the capital stock of WFS.

Our primary sources of revenue are net interest income and noninterest income.
Net interest income is the difference between the income earned on interest
earning assets and the interest paid on interest bearing liabilities. We
generate interest income from our loan portfolio, which consists of consumer,
mortgage and commercial loans, and from investments in mortgage-backed
securities and other short-term investments. We fund our loan portfolio and
investments with deposits, advances from the Federal Home Loan Bank, also known
as FHLB, securities sold under agreements to repurchase, securitizations, other
borrowings, and equity.

Noninterest income is primarily made up of revenues generated from the sale and
servicing of automobile contracts and mortgage loans. The primary components of
noninterest income include retained interest income on automobile contracts
sold, contractually specified servicing fees for the servicing of loans, late
charges, and other miscellaneous servicing fee income. Since March 2000, we
have structured our securitizations as secured financings and no longer record
non-cash gain on sale or subsequent contractual servicing and retained interest
income. Instead, the earnings of the automobile contracts in the trust and the
related financing costs are reflected over the life of the underlying pool of
automobile contracts as net interest income. Other components of noninterest
income include gains and losses from the sale of investment securities and
mortgage-backed securities, insurance income, fees related to the sales of
investment products such as mutual funds and annuities, and fee income from
depository accounts. The primary components of noninterest expense are
salaries, credit and collection expenses, and data processing costs.

Critical Accounting Policies

Management believes critical accounting policies are very important to the
portrayal of our financial condition and results of operations. Critical
accounting policies require difficult and complex judgments because they rely
on estimates about the effect of matters that are inherently uncertain due to
the impact of changing market conditions. The following is a summary of
accounting policies we consider critical.

Retained Interest in Securitized Assets

Retained interest in securitized assets, also known as RISA, is capitalized
upon the sale of automobile contracts to securitization trusts for transactions
treated as sales for accounting purposes. RISA represents the present value of
the estimated future cash flows to be received by us from the excess spread
created in securitization transactions. Future cash flows are calculated by
taking the coupon rate of the automobile contracts securitized less the
interest rate paid to the investors less contractually specified servicing fees
and guarantor fees, after giving effect to estimated credit losses and
prepayments.

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 by
discounting the estimated cash flows using a current market discount rate. Any
changes in the market value of the RISA are reported as a separate component of
shareholders equity on our Consolidated Statements of Financial Condition as
accumulated other comprehensive income (loss), net of applicable taxes. On a
quarterly basis, we evaluate the carrying value of the RISA in light of the
actual performance of the underlying automobile contracts and make adjustments
to reduce the carrying value, if appropriate.

12



---



##### Table of Contents



Allowance for Credit Losses

Management determines the amount of the allowance for credit losses based on a
review of various quantitative and qualitative analyses. Quantitative analyses
include the review of chargeoff trends by loan program and loan type on an
owned and managed basis; evaluation of cumulative loss curves on both a managed
and sold basis; and evaluation of credit loss experience by credit tier and
geographic location. Other quantitative analyses include the evaluation of the
size of any particular asset group; the concentration of any credit tier; the
level of non-performance and the percentage of delinquency.

Qualitative analyses include trends in chargeoffs over various time periods and
at various statistical midpoints and high points; the severity of depreciated
values of repossessions or foreclosures; trends in the number of days
repossessions are held in inventory; trends in the number of loan
modifications; trends in delinquency roll rates; trends in deficiency balance
collections both internally and from collection agencies; trends in custom
scores and the effectiveness of our custom scores; and trends in the economy
generally or in specific geographic locations. Despite these analyses, we
recognize that establishing allowance for credit losses is not an exact science
and can be highly judgmental in nature.

The analysis of the adequacy of the allowance for credit losses is not only
dependent upon effective quantitative and qualitative analyses, but also
effective loan review and asset classification. We classify our assets in
accordance with regulatory guidance. Our multifamily and commercial loan
portfolios are evaluated individually while our single family and consumer
portfolios are evaluated in pools. We classify our loan portfolios into five
categories: Pass, Special Mention, Substandard, Doubtful and Loss. Based upon
our asset classifications, we establish general and specific valuation
allowances.

General valuation allowances are established based on analysis of individual
assets or asset pools and other qualitative factors. Specific valuation
allowances are established based on analysis of individual assets or asset
pools that are classified as Loss. General valuation allowances are determined
by applying various factors to loan balances that are classified as Pass,
Special Mention, Substandard or Doubtful. Specific valuation allowances
represent loan amounts that are classified as Loss. Some assets may be split
into more than one asset classification due to fair value or net realizable
value calculations. This approach allows for enhanced analysis as it highlights
the need for more allowance than would be generally allocated if held in one
classification.

All loans that are 60 to 90 days delinquent are automatically classified as
Special Mention. Real estate loans that are manifesting a weakness in
performance are classified as Special Mention. Any loan that is 90 or more days
delinquent is automatically classified as Substandard. Real estate loans that
are manifesting a significant weakness in performance are also classified as
Substandard. Any multifamily loan that is impaired is classified as
Substandard. Any consumer loan where the borrower has filed for bankruptcy or
any consumer loan where the vehicle has been repossessed by us and is subject
to a redemption period is classified as Substandard, with the difference
between the wholesale book value and loan balance classified as Loss.

The allowance for credit losses is reduced by net chargeoffs as well as
decreases in required allowances due to sales of loans and by lowering the
level of required reserves based upon improved loan performance. The allowance
for credit losses is increased by recording amounts to the provision for credit
losses.

13



---



##### Table of Contents



Hedging Activities

Deposits and Securities Sold Under Agreements to Repurchase

We may enter into cash flow hedges that will protect against potential changes
in interest rates affecting interest payments on future deposits gathered by us
and future securities sold under agreements to repurchase. The fair value of
the interest rate swap agreements is included in deposits and securities sold
under agreements to repurchase, respectively, and any change in the fair value
is reported as accumulated other comprehensive income (loss), net of tax, on
our Consolidated Statements of Financial Condition. Related interest income or
expense is settled on a quarterly basis and is recorded in accumulated other
comprehensive income (loss) and reclassified into earnings in the period during
which cash flows on the hedged items affect income.

Notes Payable on Automobile Secured Financing

The contracts originated and held by us are fixed rate and, accordingly, we
have exposure to changes in interest rates. To protect against potential
changes in interest rates affecting interest payments on future securitization
transactions, we may enter into various hedge agreements. The market value of
these hedge agreements is designed to respond inversely to changes in interest
rates. Because of this inverse relationship, we can effectively lock in a
gross interest rate spread at the time of entering into the hedge transaction.
Gains and losses on these agreements are recorded in accumulated other
comprehensive income (loss), net of tax, on our Consolidated Statements of
Financial Condition. Any ineffective portion is recognized in interest
expense during that period if the hedge is greater than 100% effective. Upon
completion of the securitization transaction, the gains or losses are
recognized in full as an adjustment to the gain or loss on the sale of the
contracts if the securitization transaction is treated as a sale or amortized
on a level yield basis over the duration of the notes issued if the
transaction is treated as a secured financing.

As we issue certain variable rate notes payable, we may also enter into
interest rate swap agreements in order to hedge our variable interest rate
exposure on future interest payments. The fair value of the interest rate swap
agreements is included in notes payable on automobile secured financing, and
any change in the fair value is reported as accumulated other comprehensive
income (loss), net of tax, on our Consolidated Statements of Financial
Condition. Any ineffective portion is recorded in interest expense during that
period if the hedge is greater than 100% effective. Related interest income or
expense is settled on a quarterly basis and recognized as an adjustment to
interest expense in our Consolidated Statements of Income.

Results of Operations

Net Interest Income

Net interest income is affected by the difference between the rate earned on
our interest earning assets and the rate paid on our interest bearing
liabilities (interest rate spread) and the relative amounts of our interest
earning assets and interest bearing liabilities. For the three and nine months
ended September 30, 2002, net interest income totaled $159 million and $448
million, respectively, compared with $128 million and $330 million for the
same respective periods in 2001. The increase in net interest income is the
result of us holding more automobile contracts on the balance sheet as we
utilized our own liquidity sources and completed $4.8 billion in public
securitizations and $775 million in conduit financing, both of which were
accounted for as secured financings.

14



---



##### Table of Contents



Interest rates for interest earning assets and interest bearing liabilities for
the three and nine months ended September 30, 2002 and 2001 were as follows:

|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |      |  |       |       | 
|-------------------------------------------- | ---------------------------------------------- | ------------------ | -------------------------- | ---------------------------------- |  | ------------------ | ----- | ----------------- |  | ------ | ----- | ------ |  | ----- | ----- | ---- |  | ----- | ----- | 
|                                             |                                                |                    |                            |                                    |  | Three Months Ended |       | Nine Months Ended
|                                             |                                                |                    |                            |                                    |  | September 30,      |       | September 30,    
|                                             |                                                |                    |                            |                                    |  |                    |       |                  
|                                             |                                                |                    |                            |                                    |  | 2002               |       | 2001              |  | 2002   |       | 2001  
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |       
|                                             |                                                |                    |                            |                                    |  | Yield/             |       | Yield/            |  | Yield/ |       | Yield/
|                                             |                                                |                    |                            |                                    |  | Rate               |       | Rate              |  | Rate   |       | Rate  
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |       
|Interest earning assets:                     |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|                                            
|                                            
|                                            
|                                            
|                                             |                                                | Total investments: |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |      |  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                |                    | Mortgage-backed securities |                                    |  | 5.40               | %     |                   |  | 5.67   | %     |        |  | 5.37  | %     |      |  | 6.09  | %    
|                                            
|                                            
|                                            
|                                            
|                                             |                                                |                    | Other investments          |                                    |  | 2.18               |       |                   |  | 4.03   |       |        |  | 2.41  |       |      |  | 5.02  |      
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|                                             |                                                |                    |                            | Total investments                  |  |                    | 4.89  |                   |  |        | 5.54  |        |  |       | 4.97  |      |  |       | 6.01  | 
|                                            
|                                            
|                                            
|                                            
|                                             |                                                | Total loans:       |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |      |  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                |                    | Consumer loans             |                                    |  | 12.32              |       |                   |  | 13.48  |       |        |  | 12.56 |       |      |  | 13.71 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                |                    | Mortgage loans (1)         |                                    |  | 6.19               |       |                   |  | 7.62   |       |        |  | 6.29  |       |      |  | 8.06  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                |                    | Commercial loans           |                                    |  | 5.79               |       |                   |  | 6.88   |       |        |  | 6.11  |       |      |  | 7.79  |      
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|                                             |                                                |                    |                            | Total loans                        |  |                    | 12.03 |                   |  |        | 13.01 |        |  |       | 12.33 |      |  |       | 13.17 | 
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|                                             |                                                |                    |                            | Total interest earning assets      |  |                    | 10.34 |                   |  |        | 11.00 |        |  |       | 10.54 |      |  |       | 11.08 | 
|                                            
|                                            
|                                            
|                                            
|Interest bearing liabilities:                |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|                                            
|                                            
|                                            
|                                            
|                                             | Deposits                                       |                    |                            | 3.64                               |  |                    |       | 4.62              |  |        |       | 3.66   |  |       |       | 5.31 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Notes payable on automobile secured financing  |                    |                            | 5.40                               |  |                    |       | 6.40              |  |        |       | 5.64   |  |       |       | 6.81 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Securities sold under agreements to repurchase |                    |                            | 2.37                               |  |                    |       | 4.07              |  |        |       | 2.62   |  |       |       | 4.86 | 
|                                            
|                                            
|                                            
|                                            
|                                             | FHLB advances and other borrowings             |                    |                            | 2.59                               |  |                    |       | 3.92              |  |        |       | 2.33   |  |       |       | 5.91 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Subordinated debentures                        |                    |                            | 10.34                              |  |                    |       | 9.47              |  |        |       | 10.03  |  |       |       | 9.29 | 
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|                                             |                                                |                    |                            | Total interest bearing liabilities |  |                    | 5.13  |                   |  |        | 5.85  |        |  |       | 5.20  |      |  |       | 6.34  | 
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|Interest rate spread                         |                                                |                    | 5.21                       | %                                  |  |                    | 5.15  | %                 |  |        | 5.34  | %      |  |       | 4.74  | %   
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     
|Net yield on average interest earning assets |                                                |                    | 5.47                       | %                                  |  |                    | 5.51  | %                 |  |        | 5.62  | %      |  |       | 5.20  | %   
|                                             |                                                |                    |                            |                                    |  |                    |       |                   |  |        |       |        |  |       |       |     



---

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

Provision for Credit Losses

We maintain an allowance for credit losses to cover probable losses that can be
reasonably estimated for the loans held on the balance sheet. The allowance for
credit losses is increased by charging the provision for credit losses and
decreased by actual losses on the loans or reversing the allowance for credit
losses through the provision for credit losses when the amount of loans held on
balance sheet is reduced through loan sales. The level of allowance is based
principally on the outstanding balance of loans held on balance sheet and
historical loss trends. We believe that the allowance for credit losses is
currently adequate to absorb probable losses in our owned loan portfolio that
can be reasonably estimated.

For the three and nine months ended September 30, 2002, the provision for
credit losses totaled $81.0 million and $209 million, respectively, compared
with $60.5 million and $127 million for the same respective periods a year
earlier. For the three and nine months ended September 30, 2002 and 2001, net
chargeoffs were $55.1 million and $143 million, compared with $33.0 million and
$77.3 million for the same respective periods a year earlier. The increase in
the provision for credit losses was a result of our loans held on balance sheet
increasing by approximately $1.6 billion or 21.4% from December 31, 2001 as
well as an increase in chargeoffs due to the slowdown in the economy. For the
three and nine months ended September 30, 2002, we recorded $25.9 million and
$66.0 million, respectively, in provisions for credit losses in excess of
chargeoffs as a result of the transitional effects related to the elimination
of off balance sheet accounting for securitizations. The allowance for credit
losses as a percentage of owned loans outstanding was 2.6% at September 30,
2002 compared with 2.3% at December 31, 2001.

15



---



##### Table of Contents



Noninterest Income

Automobile Lending

We regularly securitize automobile contracts in the public asset-backed
securities market and retain the servicing rights. For accounting purposes,
these transactions are treated as either secured financings or sales to a
securitization trust. Since the first quarter of 2000, we have not completed
a securitization that has been accounted for as a sale. For transactions
treated as sales prior to April 2000, we recorded non-cash gain equal to the
present value of the estimated future cash flows from the portfolio of
automobile contracts sold less the write-off of dealer participation balances
and the effect of hedging activities. For these securitizations, net interest
earned on the automobile contracts sold and fees earned for servicing the
contract portfolios are recognized over the life of the transactions as
contractual servicing income, retained interest income and other fee income.

The components of automobile lending income were as follows:

|                                               |                                 |   |                        |        |                   |   |         |       |      |   |         |        |  |   |         |        | 
|---------------------------------------------- | ------------------------------- | - | ---------------------- | ------ | ----------------- | - | ------- | ----- | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                               |                                 |   | Three Months Ended     |        | Nine Months Ended
|                                               |                                 |   | September 30,          |        | September 30,    
|                                               |                                 |   |                        |        |                  
|                                               |                                 |   | 2002                   |        | 2001              |   | 2002    |       | 2001
|                                               |                                 |   |                        |        |                   |   |         |       |     
|                                               |                                 |   | (Dollars in thousands)
|Retained interest expense, net of amortization |                                 | $ | (6,588                 | )      |                   | $ | (17,867 | )     |      | $ | (25,252 | )      |  | $ | (14,790 | )     
|                                              
|                                              
|                                              
|                                              
|Contractual servicing income                   |                                 |   | 2,380                  |        |                   |   | 5,212   |       |      |   | 8,833   |        |  |   | 18,712  |       
|                                              
|                                              
|                                              
|                                              
|Other fee income                               |                                 |   | 20,193                 |        |                   |   | 16,603  |       |      |   | 60,159  |        |  |   | 50,389  |       
|                                               |                                 |   |                        |        |                   |   |         |       |      |   |         |        |  |   |         |       
|                                               | Total automobile lending income |   | $                      | 15,985 |                   |   | $       | 3,948 |      |   | $       | 43,740 |  |   | $       | 54,311 | 
|                                               |                                 |   |                        |        |                   |   |         |       |      |   |         |        |  |   |         |       

For the three and nine months ended September 30, 2002, contract
securitizations totaled $1.3 billion and $5.6 billion, respectively, compared
with $1.2 billion and $3.6 billion for the same respective periods in 2001. All
transactions have been treated as secured financings.

For the three and nine months ended September 30, 2002, retained interest
expense totaled $6.6 million and $25.3 million, respectively, compared with
$17.9 million and $14.8 million for the same respective periods in 2001. The
retained interest expense recognized in 2002 is the result of higher chargeoffs
on our sold portfolio as well as revised estimates of future charge-offs due to
the slowdown in the economy.

According to the terms of each securitization transaction, contractual
servicing income is generally earned at rates ranging from 1.0% to 1.25% per
annum on the outstanding balance of contracts securitized. For accounting
purposes, this income is only recognized on contracts sold through
securitizations treated as sales. For the three and nine months ended
September 30, 2002, contractual servicing income totaled $2.4 million and $8.8
million, respectively, compared with $5.2 million and $18.7 million for the
same respective periods in 2001. The decline was the result of the decrease in
the average balance of the sold portfolio over those periods.

Other fee income consists primarily of documentation fees, late charges and
deferment fees on our managed portfolio, including loans securitized in
transactions accounted for as sales and secured financings, as well as
automobile contracts not securitized. The increase in other fee income is due
to the growth in our average managed automobile contract portfolio to $9.1
billion and $8.7 billion for the three and nine months ended September 30,
2002, respectively, compared with $7.8 billion and $7.4 billion for the same
respective periods in 2001.

16



---



##### Table of Contents



Noninterest Expense

For the three months and nine months ended September 30, 2002, noninterest
expense totaled $62.2 million and $188 million, respectively, compared with
$59.9 million and $184 million for the same respective periods in 2001.
Noninterest expense as a percent of total revenues improved to 34% and 37% for
the three and nine months ended September 30, 2002 compared to 44% and 47% for
the same respective periods a year ago as a result of improved operating
efficiencies.

Income Taxes

We file federal and certain state tax returns on a consolidated basis. Other
state tax returns are filed for each subsidiary separately. Our effective tax
rate was 40% and 39% for the three and nine months ended September 30, 2002,
compared with 39% for both the same respective periods in 2001.

Portfolio Basis Statements of Income

During the first quarter of 2000, we changed the structure of our
securitizations so that they would no longer be accounted for as sales but
rather be recorded as secured financings. This decision is consistent with our
business strategy to record high quality earnings and to maintain a
conservative, well-capitalized balance sheet. If treated as secured financings,
no gain on sale or subsequent contractual servicing and retained interest
income is recognized. Instead, the earnings of the automobile contracts in the
trust and the related financing costs are reflected over the life of the
underlying pool of automobile contracts as net interest income. Additionally,
no RISA is recorded on the balance sheet, which must be written off over the
life of a securitization. This asset is subject to impairment if assumptions
made about the performance of a securitization are not realized.

Over time, our securitizations that were recorded as sales will mature and an
increasing percentage of securitized automobile contracts will be represented
by securitizations that are accounted for as secured financings. In the
interim, we will present portfolio basis statements of income that present our
results under the assumption that all our outstanding securitizations are
treated as secured financings rather than as sales. During the fourth quarter
of 2002, we will have substantially completed our transition to portfolio basis
earnings and will no longer report portfolio basis earnings after the end of
the year.

We believe that such a presentation is an important performance measure of our
operations during this transitory period. Differences between portfolio basis
earnings and reported earnings represent the transitional effect of treating
securitizations as secured financings rather than sales. We refer to these
results as portfolio basis statements of income since all automobile
contracts would have remained in our on balance sheet contract portfolio if we
accounted for the transactions as secured financings.

The growth in our portfolio basis earnings reflects the growth in our managed
automobile contract portfolio to $9.3 billion at September 30, 2002 compared
with $8.0 billion at September 30, 2001. We monitor the periodic portfolio
basis earnings of our managed contract portfolio and believe these portfolio
basis statements assist in better understanding our business.

17



---



##### Table of Contents



The following tables present the portfolio basis statements of income and
reconciliation to net income as reflected in our Consolidated Statements of
Income presented in accordance with Generally Accepted Accounting Principles,
also known as GAAP:

PORTFOLIO BASIS STATEMENTS OF INCOME
(Unaudited)

|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |         | 
|----------------------------------------------------- | ----------------------------------------------------- | - | ------------------------------------------------ | ------- | ----------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                      |                                                       |   | Three Months Ended                               |         | Nine Months Ended
|                                                      |                                                       |   | September 30,                                    |         | September 30,    
|                                                      |                                                       |   |                                                  |         |                  
|                                                      |                                                       |   | 2002                                             |         | 2001              |   | 2002    |         | 2001
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |     
|                                                      |                                                       |   | (Dollars in thousands, except per share amounts)
|Interest income                                       |                                                       | $ | 322,366                                          |         |                   | $ | 304,087 |         |      | $ | 926,801 |         |  | $ | 884,712 |        
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense                                      |                                                       |   | 154,789                                          |         |                   |   | 156,828 |         |      |   | 447,021 |         |  |   | 481,794 |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                      | Net interest income                                   |   |                                                  | 167,577 |                   |   |         | 147,259 |      |   |         | 479,780 |  |   |         | 402,918 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Net chargeoffs (1)                                    |                                                       |   | 62,330                                           |         |                   |   | 44,995  |         |      |   | 166,797 |         |  |   | 114,242 |        
|                                                     
|                                                     
|                                                     
|                                                     
|Provision for growth (2)                              |                                                       |   | 5,337                                            |         |                   |   | 5,725   |         |      |   | 15,225  |         |  |   | 18,524  |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                      | Provision for credit losses                           |   |                                                  | 67,667  |                   |   |         | 50,720  |      |   |         | 182,022 |  |   |         | 132,766 | 
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                      | Net interest income after provision for credit losses |   |                                                  | 99,910  |                   |   |         | 96,539  |      |   |         | 297,758 |  |   |         | 270,152 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Noninterest income                                    |                                                       |   | 30,594                                           |         |                   |   | 20,981  |         |      |   | 80,696  |         |  |   | 61,361  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Noninterest expense                                   |                                                       |   | 62,213                                           |         |                   |   | 59,902  |         |      |   | 187,903 |         |  |   | 184,235 |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                      | Income before income tax                              |   |                                                  | 68,291  |                   |   |         | 57,618  |      |   |         | 190,551 |  |   |         | 147,278 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Income tax (3)                                        |                                                       |   | 27,180                                           |         |                   |   | 22,619  |         |      |   | 74,307  |         |  |   | 57,813  |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                      | Income before minority interest                       |   |                                                  | 41,111  |                   |   |         | 34,999  |      |   |         | 116,244 |  |   |         | 89,465  | 
|                                                     
|                                                     
|                                                     
|                                                     
|Minority interest in earnings                         |                                                       |   | 5,309                                            |         |                   |   | 5,432   |         |      |   | 15,429  |         |  |   | 14,541  |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Portfolio basis net income                            |                                                       | $ | 35,802                                           |         |                   | $ | 29,567  |         |      | $ | 100,815 |         |  | $ | 74,924  |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Portfolio basis net income per common share  diluted |                                                       | $ | 0.91                                             |         |                   | $ | 0.82    |         |      | $ | 2.60    |         |  | $ | 2.20    |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        
|GAAP basis net income per common share  diluted      |                                                       | $ | 0.55                                             |         |                   | $ | 0.23    |         |      | $ | 1.55    |         |  | $ | 1.26    |        
|                                                      |                                                       |   |                                                  |         |                   |   |         |         |      |   |         |         |  |   |         |        



---

|(1) |  | Represents actual chargeoffs incurred during the period, net of
recoveries.                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Represents additional allowance for credit losses we would set aside due
to an increase in the managed contract portfolio.
|   
|   
|   
|   
|(3) |  | Such tax effect is based upon our tax rate for the respective period.                                                     

18



---



##### Table of Contents



RECONCILIATION OF GAAP BASIS NET INCOME
TO PORTFOLIO BASIS NET INCOME
(Unaudited)

|                             |                              |                                   |        |                        |        |                   |        |         |        |      |         |         |        |   |        |         |        | 
|---------------------------- | ---------------------------- | --------------------------------- | ------ | ---------------------- | ------ | ----------------- | ------ | ------- | ------ | ---- | ------- | ------- | ------ | - | ------ | ------- | ------ | 
|                             |                              |                                   |        | Three Months Ended     |        | Nine Months Ended
|                             |                              |                                   |        | September 30,          |        | September 30,    
|                             |                              |                                   |        |                        |        |                  
|                             |                              |                                   |        | 2002                   |        | 2001              |        | 2002    |        | 2001
|                             |                              |                                   |        |                        |        |                   |        |         |        |     
|                             |                              |                                   |        | (Dollars in thousands)
|GAAP net income              |                              | $                                 | 21,673 |                        |        | $                 | 8,214  |         |        | $    | 60,234  |         |        | $ | 42,826 |        
|                            
|                            
|                            
|                            
|Portfolio basis adjustments: |                              |                                   |        |                        |        |                   |        |         |        |      |         |         |        |   |        |        
|                            
|                            
|                            
|                            
|                             | Retained interest expense    |                                   |        | 6,588                  |        |                   |        | 17,867  |        |      |         | 25,252  |        |   |        | 14,790  |       
|                            
|                            
|                            
|                            
|                             | Contractual servicing income |                                   |        | (2,380                 | )      |                   |        | (5,212  | )      |      |         | (8,833  | )      |   |        | (18,712 | )     
|                            
|                            
|                            
|                            
|                             | Net interest income          |                                   |        | 8,547                  |        |                   |        | 19,616  |        |      |         | 31,726  |        |   |        | 73,086  |       
|                            
|                            
|                            
|                            
|                             | Provision for credit losses  |                                   |        | 20,555                 |        |                   |        | 21,752  |        |      |         | 50,785  |        |   |        | 31,329  |       
|                            
|                            
|                            
|                            
|                             | Net chargeoffs               |                                   |        | (7,226                 | )      |                   |        | (11,971 | )      |      |         | (23,764 | )      |   |        | (36,971 | )     
|                            
|                            
|                            
|                            
|                             | Operating expenses           |                                   |        | (7                     | )      |                   |        | (23     | )      |      |         | (62     | )      |   |        | (73     | )     
|                            
|                            
|                            
|                            
|                             | Minority interest            |                                   |        | (1,569                 | )      |                   |        | (4,177  | )      |      |         | (5,166  | )      |   |        | (6,505  | )     
|                             |                              |                                   |        |                        |        |                   |        |         |        |      |         |         |        |   |        |        
|                             |                              | Total portfolio basis adjustments |        |                        | 24,508 |                   |        |         | 37,852 |      |         |         | 69,938 |   |        |         | 56,944 | 
|                            
|                            
|                            
|                            
|Net tax effect               |                              |                                   | 10,379 |                        |        |                   | 16,499 |         |        |      | 29,357  |         |        |   | 24,846 |        
|                             |                              |                                   |        |                        |        |                   |        |         |        |      |         |         |        |   |        |        
|Portfolio basis net income   |                              | $                                 | 35,802 |                        |        | $                 | 29,567 |         |        | $    | 100,815 |         |        | $ | 74,924 |        
|                             |                              |                                   |        |                        |        |                   |        |         |        |      |         |         |        |   |        |        

Financial Condition

Overview

Total assets increased $2.0 billion or 20.9% to $12.1 billion at September 30,
2002 from $10.1 billion at December 31, 2001. The increase was primarily a
result of $4.2 billion of automobile contracts originated for the nine months
ended September 30, 2002.

Loan Portfolio

The following table sets forth the composition of our loan portfolio by type of
loan as of the dates indicated:

|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |      |       |  
|------------------------------- | ------------------- | -------------------- | --------- | ---------------------- | --------- | ----------------- | ---- | ------ | ----- | - | --------- | --------- | --------- |  | ---- | ---- | ----- | -
|                                |                     |                      |           | September 30, 2002     |           | December 31, 2001
|                                |                     |                      |           |                        |           |                  
|                                |                     |                      |           | Amount                 |           | %                 |      | Amount |       | %
|                                |                     |                      |           |                        |           |                   |      |        |       |  
|                                |                     |                      |           | (Dollars in thousands)
|Consumer loans:                 |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                               
|                               
|                               
|                               
|                                | Automobile contract |                      | $         | 8,854,436              |           |                   |      | 96.8   | %     |   | $         | 7,173,726 |           |  |      | 95.2 | %    
|                               
|                               
|                               
|                               
|                                | Other               |                      |           | 7,302                  |           |                   |      | 0.1    |       |   |           | 8,826     |           |  |      | 0.1  |      
|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                                |                     |                      | 8,861,738 |                        |           |                   | 96.9 |        |       |   | 7,182,552 |           |           |  | 95.3 |     
|                               
|                               
|                               
|                               
|Less: unearned interest         |                     |                      | 100,599   |                        |           |                   | 1.1  |        |       |   | 108,169   |           |           |  | 1.4  |     
|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                                |                     | Total consumer loans |           |                        | 8,761,139 |                   |      |        | 95.8  |   |           |           | 7,074,383 |  |      |      | 93.9  |  
|                               
|                               
|                               
|                               
|Mortgage loans:                 |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                               
|                               
|                               
|                               
|                                | Existing properties |                      |           | 300,072                |           |                   |      | 3.3    |       |   |           | 361,115   |           |  |      | 4.8  |      
|                               
|                               
|                               
|                               
|                                | Construction        |                      |           | 7,423                  |           |                   |      | 0.1    |       |   |           | 15,638    |           |  |      | 0.2  |      
|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                                |                     |                      | 307,495   |                        |           |                   | 3.4  |        |       |   | 376,753   |           |           |  | 5.0  |     
|                               
|                               
|                               
|                               
|Less: undisbursed loan proceeds |                     |                      | 1,561     |                        |           |                   |      |        |       |   | 3,298     |           |           |  |      |     
|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                                |                     | Total mortgage loans |           |                        | 305,934   |                   |      |        | 3.4   |   |           |           | 373,455   |  |      |      | 5.0   |  
|                               
|                               
|                               
|                               
|Commercial loans                |                     |                      | 78,520    |                        |           |                   | 0.8  |        |       |   | 85,312    |           |           |  | 1.1  |     
|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     
|                                |                     | Total loans          |           | $                      | 9,145,593 |                   |      |        | 100.0 | % |           | $         | 7,533,150 |  |      |      | 100.0 | %
|                                |                     |                      |           |                        |           |                   |      |        |       |   |           |           |           |  |      |     

19



---



##### Table of Contents



Mortgage Loan Portfolio

Our total mortgage loan portfolio consisted of the following:

|                                 |                    |                      |         |                        |         |                   |       |        |       |   |         |         |         |  |       |      |       |  
|-------------------------------- | ------------------ | -------------------- | ------- | ---------------------- | ------- | ----------------- | ----- | ------ | ----- | - | ------- | ------- | ------- |  | ----- | ---- | ----- | -
|                                 |                    |                      |         | September 30, 2002     |         | December 31, 2001
|                                 |                    |                      |         |                        |         |                  
|                                 |                    |                      |         | Amount                 |         | %                 |       | Amount |       | %
|                                 |                    |                      |         |                        |         |                   |       |        |       |  
|                                 |                    |                      |         | (Dollars in thousands)
|Single family residential loans: |                    |                      |         |                        |         |                   |       |        |       |   |         |         |         |  |       |     
|                                
|                                
|                                
|                                
|                                 | First trust deeds  |                      | $       | 108,126                |         |                   |       | 35.3   | %     |   | $       | 146,895 |         |  |       | 39.3 | %    
|                                
|                                
|                                
|                                
|                                 | Second trust deeds |                      |         | 3,445                  |         |                   |       | 1.2    |       |   |         | 4,645   |         |  |       | 1.3  |      
|                                 |                    |                      |         |                        |         |                   |       |        |       |   |         |         |         |  |       |     
|                                 |                    |                      | 111,571 |                        |         |                   | 36.5  |        |       |   | 151,540 |         |         |  | 40.6  |     
|                                
|                                
|                                
|                                
|Multifamily residential loans    |                    |                      | 145,359 |                        |         |                   | 47.5  |        |       |   | 180,850 |         |         |  | 48.4  |     
|                                
|                                
|                                
|                                
|Construction loans               |                    |                      | 7,423   |                        |         |                   | 2.4   |        |       |   | 15,638  |         |         |  | 4.2   |     
|                                
|                                
|                                
|                                
|Other                            |                    |                      | 43,142  |                        |         |                   | 14.1  |        |       |   | 28,725  |         |         |  | 7.7   |     
|                                 |                    |                      |         |                        |         |                   |       |        |       |   |         |         |         |  |       |     
|                                 |                    |                      | 307,495 |                        |         |                   | 100.5 |        |       |   | 376,753 |         |         |  | 100.9 |     
|                                
|                                
|                                
|                                
|Less: undisbursed loan proceeds  |                    |                      | 1,561   |                        |         |                   | 0.5   |        |       |   | 3,298   |         |         |  | 0.9   |     
|                                 |                    |                      |         |                        |         |                   |       |        |       |   |         |         |         |  |       |     
|                                 |                    | Total mortgage loans |         | $                      | 305,934 |                   |       |        | 100.0 | % |         | $       | 373,455 |  |       |      | 100.0 | %
|                                 |                    |                      |         |                        |         |                   |       |        |       |   |         |         |         |  |       |     

Commercial Loan Portfolio

We had outstanding loan commitments of $143 million at September 30, 2002
compared with $141 million at December 31, 2001. For the three and nine months
ended September 30, 2002, we originated $66.4 million and $197 million of
commercial loans, respectively, compared with $85.6 million and $218 million
for the same respective periods in 2001. Amounts outstanding at September 30,
2002 and December 31, 2001 were $78.5 million and $85.3 million, respectively.
Though we continue to focus on expanding our commercial banking operation, it
has not been a significant source of revenue.

Amounts Due From Trusts

The amounts due from trusts represent initial advances made to spread accounts
and excess cash flows that are still under obligation to be held in the spread
account on securitization transactions treated as sales. As these spread
accounts reach the balances required by the trust, excess amounts are released
to us and are used to pay down these amounts. The amounts due from trusts at
September 30, 2002 was $116 million compared with $136 million at December 31,
2001. The decrease is the result of a reduction in the required amount held
in spread accounts for securitizations treated as sales for accounting
purposes.

Asset Quality

Overview

Nonperforming assets, repossessions, loan delinquency and credit losses are
considered by us as key measures of asset quality. Asset quality, in turn,
affects our determination of the allowance for credit losses. We also take into
consideration general economic conditions in the markets we serve, individual
loan reviews, and the level of assets relative to reserves in determining the
adequacy of the allowance for credit losses.

Automobile Contract Quality

We provide financing in a market where there is a risk of default by borrowers.
Chargeoffs directly impact our earnings and cash flows. To minimize the amount
of credit losses we incur, we monitor delinquent accounts, promptly repossess
and remarket vehicles, and seek to collect on deficiency balances.

20



---



##### Table of Contents



At September 30, 2002, the percentage of managed accounts
delinquent 30 days or greater was 3.43% compared with 3.72% at December 31,
2001. We calculate delinquency based on the contractual due date. For the three
and nine months ended September 30, 2002, net chargeoffs on average automobile
contracts managed were 2.73% and 2.56%, respectively, compared with 2.30% and
2.04% for the same respective periods in 2001. The increase in credit loss
experience is primarily a result of the current recession.

The following table sets forth information with respect to the delinquency of
our portfolio of automobile contracts managed, which includes automobile
contracts that are owned by us and automobile contracts that have been sold but
are managed by us:

|                                                                                                        |                 |   |                    |         |                   |  |                        |      |   |   |           |         |  |  |      |      |  
|------------------------------------------------------------------------------------------------------- | --------------- | - | ------------------ | ------- | ----------------- |  | ---------------------- | ---- | - | - | --------- | ------- |  |  | ---- | ---- | -
|                                                                                                        |                 |   | September 30, 2002 |         | December 31, 2001
|                                                                                                        |                 |   |                    |         |                  
|                                                                                                        |                 |   | Amount             |         | %                 |  | Amount                 |      | %
|                                                                                                        |                 |   |                    |         |                   |  |                        |      |  
|                                                                                                        |                 |   |                    |         |                   |  | (Dollars in thousands) |      |   |   |          
|Automobile contracts managed                                                                            |                 | $ | 9,269,265          |         |                   |  |                        |      |   | $ | 8,152,882 |         |  |  |      |     
|                                                                                                        |                 |   |                    |         |                   |  |                        |      |   |   |           |         |  |  |      |     
|Period of delinquency                                                                                   |                 |   |                    |         |                   |  |                        |      |   |   |           |         |  |  |      |     
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | 30-59 days      |   | $                  | 225,912 |                   |  |                        | 2.44 | % |   | $         | 217,873 |  |  |      | 2.67 | %
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | 60 days or more |   |                    | 92,381  |                   |  |                        | 0.99 |   |   |           | 85,290  |  |  |      | 1.05 |  
|                                                                                                        |                 |   |                    |         |                   |  |                        |      |   |   |           |         |  |  |      |     
|Total automobile contracts delinquent
and delinquencies as a
percentage of automobile
contracts managed |                 | $ | 318,293            |         |                   |  | 3.43                   | %    |   | $ | 303,163   |         |  |  | 3.72 | %   
|                                                                                                        |                 |   |                    |         |                   |  |                        |      |   |   |           |         |  |  |      |      |  

The following table sets forth information with respect to repossessions in
our portfolio of managed automobile contracts:

|                                                                                          |  |                     |         |                   |  |                        |           |        |  |  |         |   |  |   |           |  
|----------------------------------------------------------------------------------------- |  | ------------------- | ------- | ----------------- |  | ---------------------- | --------- | ------ |  |  | ------- | - |  | - | --------- | -
|                                                                                          |  | September 30, 2002  |         | December 31, 2001
|                                                                                          |  |                     |         |                  
|                                                                                          |  | Number of Contracts |         | Amount            |  | Number of Contracts    |           | Amount
|                                                                                          |  |                     |         |                   |  |                        |           |       
|                                                                                          |  |                     |         |                   |  | (Dollars in thousands) |           |        |  | 
|Automobile contracts managed                                                              |  |                     | 751,654 |                   |  | $                      | 9,269,265 |        |  |  | 690,401 |   |  | $ | 8,152,882 |  
|                                                                                          |  |                     |         |                   |  |                        |           |        |  |  |         |   |  |   |           |  
|Repossessed vehicles                                                                      |  |                     | 1,562   |                   |  | $                      | 10,557    |        |  |  | 1,168   |   |  | $ | 7,553     |  
|                                                                                          |  |                     |         |                   |  |                        |           |        |  |  |         |   |  |   |           |  
|Repossessed vehicles as a percentage
of number and amount of automobile
contracts managed |  |                     | 0.21    | %                 |  |                        | 0.11      | %      |  |  | 0.17    | % |  |   | 0.09      | %

21



---



##### Table of Contents



The following table sets forth information with respect to actual credit loss
experience on our portfolio of automobile contracts managed:

|                                                                                     |  |                    |           |                   |  |                        |           |      |  |   |           |   |  |   |           |  
|------------------------------------------------------------------------------------ |  | ------------------ | --------- | ----------------- |  | ---------------------- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                                     |  | Three Months Ended |           | Nine Months Ended
|                                                                                     |  | September 30,      |           | September 30,    
|                                                                                     |  |                    |           |                  
|                                                                                     |  | 2002               |           | 2001              |  | 2002                   |           | 2001
|                                                                                     |  |                    |           |                   |  |                        |           |     
|                                                                                     |  |                    |           |                   |  | (Dollars in thousands) |           |      |  |  
|Average automobile
contracts managed
during period                                   |  | $                  | 9,102,663 |                   |  | $                      | 7,801,032 |      |  | $ | 8,672,049 |   |  | $ | 7,403,432 |  
|                                                                                     |  |                    |           |                   |  |                        |           |      |  |   |           |   |  |   |           |  
|Gross chargeoffs                                                                     |  | $                  | 80,916    |                   |  | $                      | 63,810    |      |  | $ | 229,216   |   |  | $ | 162,747   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Recoveries                                                                           |  |                    | 18,688    |                   |  |                        | 19,045    |      |  |   | 62,548    |   |  |   | 49,375    |  
|                                                                                     |  |                    |           |                   |  |                        |           |      |  |   |           |   |  |   |           |  
|Net chargeoffs                                                                       |  | $                  | 62,228    |                   |  | $                      | 44,765    |      |  | $ | 166,668   |   |  | $ | 113,372   |  
|                                                                                     |  |                    |           |                   |  |                        |           |      |  |   |           |   |  |   |           |  
|Net chargeoffs as a
percentage of
average automobile
contracts managed
during period |  |                    | 2.73      | %                 |  |                        | 2.30      | %    |  |   | 2.56      | % |  |   | 2.04      | %
|                                                                                     |  |                    |           |                   |  |                        |           |      |  |   |           |   |  |   |           |  

22



---



##### Table of Contents



The following table sets forth the cumulative static pool losses by month for
all outstanding public securitized pools:

CUMULATIVE STATIC POOL LOSS CURVES
AT SEPTEMBER 30, 2002
(Unaudited)

|              |    |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   | 
|------------- | -- | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - |  | -- | ---- | - | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - | 
|Period (1)    |    | 1998-A |    | 1998-B |   | 1998-C |    | 1999-A |   | 1999-B |    | 1999-C |   | 2000-A |    | 2000-B |   | 2000-C |    | 2000-D |   | 2001-A |    | 2001-B |   | 2001-C |    | 2002-1 |   | 2002-2 |    | 2002-3
|              |    |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |       
|              | 1  |        |    | 0.00   | % |        |    | 0.00   | % |        |    | 0.00   | % |        |    | 0.00   | % |        |    | 0.00   | % |        |    | 0.00   | % |        |    | 0.00   | % |        |    | 0.00   | % |  |    | 0.00 | % |    | 0.00 | % |  |    | 0.00 | % |  |    | 0.00 | % |  |    | 0.00 | % |  |    | 0.00 | % |  |    | 0.00 | % |  |    | 0.00 | %
|              | 2  |        |    | 0.04   | % |        |    | 0.02   | % |        |    | 0.04   | % |        |    | 0.04   | % |        |    | 0.04   | % |        |    | 0.02   | % |        |    | 0.03   | % |        |    | 0.02   | % |  |    | 0.04 | % |    | 0.04 | % |  |    | 0.03 | % |  |    | 0.03 | % |  |    | 0.04 | % |  |    | 0.01 | % |  |    | 0.00 | % |  |    | 0.02 | %
|             
|             
|             
|             
|              | 3  |        |    | 0.11   | % |        |    | 0.08   | % |        |    | 0.11   | % |        |    | 0.11   | % |        |    | 0.11   | % |        |    | 0.10   | % |        |    | 0.10   | % |        |    | 0.09   | % |  |    | 0.13 | % |    | 0.11 | % |  |    | 0.09 | % |  |    | 0.10 | % |  |    | 0.09 | % |  |    | 0.06 | % |  |    | 0.03 | % |  |    |      |  
|             
|             
|             
|             
|              | 4  |        |    | 0.25   | % |        |    | 0.18   | % |        |    | 0.23   | % |        |    | 0.20   | % |        |    | 0.26   | % |        |    | 0.25   | % |        |    | 0.20   | % |        |    | 0.24   | % |  |    | 0.27 | % |    | 0.24 | % |  |    | 0.20 | % |  |    | 0.21 | % |  |    | 0.20 | % |  |    | 0.15 | % |  |    | 0.10 | % |  |    |      |  
|             
|             
|             
|             
|              | 5  |        |    | 0.44   | % |        |    | 0.38   | % |        |    | 0.39   | % |        |    | 0.33   | % |        |    | 0.47   | % |        |    | 0.40   | % |        |    | 0.36   | % |        |    | 0.39   | % |  |    | 0.46 | % |    | 0.39 | % |  |    | 0.33 | % |  |    | 0.33 | % |  |    | 0.35 | % |  |    | 0.29 | % |  |    | 0.18 | % |  |    |      |  
|             
|             
|             
|             
|              | 6  |        |    | 0.66   | % |        |    | 0.59   | % |        |    | 0.50   | % |        |    | 0.46   | % |        |    | 0.66   | % |        |    | 0.56   | % |        |    | 0.55   | % |        |    | 0.59   | % |  |    | 0.65 | % |    | 0.54 | % |  |    | 0.50 | % |  |    | 0.50 | % |  |    | 0.49 | % |  |    | 0.43 | % |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 7  |        |    | 0.95   | % |        |    | 0.83   | % |        |    | 0.61   | % |        |    | 0.62   | % |        |    | 0.87   | % |        |    | 0.71   | % |        |    | 0.71   | % |        |    | 0.78   | % |  |    | 0.81 | % |    | 0.74 | % |  |    | 0.70 | % |  |    | 0.69 | % |  |    | 0.65 | % |  |    | 0.60 | % |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 8  |        |    | 1.23   | % |        |    | 1.03   | % |        |    | 0.75   | % |        |    | 0.76   | % |        |    | 1.00   | % |        |    | 0.86   | % |        |    | 0.91   | % |        |    | 0.99   | % |  |    | 0.93 | % |    | 0.93 | % |  |    | 0.84 | % |  |    | 0.87 | % |  |    | 0.81 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 9  |        |    | 1.50   | % |        |    | 1.21   | % |        |    | 0.86   | % |        |    | 0.92   | % |        |    | 1.13   | % |        |    | 1.01   | % |        |    | 1.10   | % |        |    | 1.17   | % |  |    | 1.07 | % |    | 1.13 | % |  |    | 1.04 | % |  |    | 1.05 | % |  |    | 0.95 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 10 |        |    | 1.79   | % |        |    | 1.40   | % |        |    | 1.00   | % |        |    | 1.11   | % |        |    | 1.24   | % |        |    | 1.14   | % |        |    | 1.27   | % |        |    | 1.33   | % |  |    | 1.24 | % |    | 1.34 | % |  |    | 1.24 | % |  |    | 1.22 | % |  |    | 1.07 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 11 |        |    | 2.03   | % |        |    | 1.53   | % |        |    | 1.17   | % |        |    | 1.30   | % |        |    | 1.35   | % |        |    | 1.34   | % |        |    | 1.45   | % |        |    | 1.44   | % |  |    | 1.41 | % |    | 1.50 | % |  |    | 1.45 | % |  |    | 1.36 | % |  |    | 1.20 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 12 |        |    | 2.21   | % |        |    | 1.62   | % |        |    | 1.32   | % |        |    | 1.47   | % |        |    | 1.44   | % |        |    | 1.52   | % |        |    | 1.58   | % |        |    | 1.57   | % |  |    | 1.62 | % |    | 1.74 | % |  |    | 1.67 | % |  |    | 1.53 | % |  |    | 1.37 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 13 |        |    | 2.39   | % |        |    | 1.74   | % |        |    | 1.48   | % |        |    | 1.61   | % |        |    | 1.58   | % |        |    | 1.74   | % |        |    | 1.73   | % |        |    | 1.72   | % |  |    | 1.86 | % |    | 1.95 | % |  |    | 1.90 | % |  |    | 1.67 | % |  |    | 1.55 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 14 |        |    | 2.49   | % |        |    | 1.84   | % |        |    | 1.66   | % |        |    | 1.73   | % |        |    | 1.74   | % |        |    | 1.94   | % |        |    | 1.85   | % |        |    | 1.86   | % |  |    | 2.04 | % |    | 2.21 | % |  |    | 2.09 | % |  |    | 1.81 | % |  |    | 1.74 | % |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 15 |        |    | 2.60   | % |        |    | 1.96   | % |        |    | 1.79   | % |        |    | 1.81   | % |        |    | 1.85   | % |        |    | 2.09   | % |        |    | 2.00   | % |        |    | 2.04   | % |  |    | 2.25 | % |    | 2.48 | % |  |    | 2.25 | % |  |    | 2.00 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 16 |        |    | 2.72   | % |        |    | 2.10   | % |        |    | 1.91   | % |        |    | 1.89   | % |        |    | 2.03   | % |        |    | 2.27   | % |        |    | 2.15   | % |        |    | 2.24   | % |  |    | 2.45 | % |    | 2.71 | % |  |    | 2.41 | % |  |    | 2.19 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 17 |        |    | 2.85   | % |        |    | 2.22   | % |        |    | 2.01   | % |        |    | 2.00   | % |        |    | 2.16   | % |        |    | 2.39   | % |        |    | 2.37   | % |        |    | 2.39   | % |  |    | 2.68 | % |    | 2.89 | % |  |    | 2.54 | % |  |    | 2.37 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 18 |        |    | 2.98   | % |        |    | 2.40   | % |        |    | 2.07   | % |        |    | 2.10   | % |        |    | 2.30   | % |        |    | 2.53   | % |        |    | 2.52   | % |        |    | 2.55   | % |  |    | 2.88 | % |    | 3.08 | % |  |    | 2.73 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 19 |        |    | 3.11   | % |        |    | 2.55   | % |        |    | 2.11   | % |        |    | 2.24   | % |        |    | 2.42   | % |        |    | 2.67   | % |        |    | 2.67   | % |        |    | 2.73   | % |  |    | 3.08 | % |    | 3.22 | % |  |    | 2.93 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 20 |        |    | 3.25   | % |        |    | 2.69   | % |        |    | 2.17   | % |        |    | 2.35   | % |        |    | 2.50   | % |        |    | 2.81   | % |        |    | 2.83   | % |        |    | 2.93   | % |  |    | 3.23 | % |    | 3.40 | % |  |    | 3.11 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 21 |        |    | 3.35   | % |        |    | 2.79   | % |        |    | 2.24   | % |        |    | 2.46   | % |        |    | 2.58   | % |        |    | 2.92   | % |        |    | 2.99   | % |        |    | 3.12   | % |  |    | 3.38 | % |    | 3.59 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 22 |        |    | 3.48   | % |        |    | 2.85   | % |        |    | 2.34   | % |        |    | 2.55   | % |        |    | 2.67   | % |        |    | 3.10   | % |        |    | 3.16   | % |        |    | 3.27   | % |  |    | 3.54 | % |    | 3.78 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 23 |        |    | 3.62   | % |        |    | 2.89   | % |        |    | 2.43   | % |        |    | 2.63   | % |        |    | 2.77   | % |        |    | 3.28   | % |        |    | 3.34   | % |        |    | 3.38   | % |  |    | 3.67 | % |    | 3.96 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 24 |        |    | 3.70   | % |        |    | 2.92   | % |        |    | 2.52   | % |        |    | 2.71   | % |        |    | 2.87   | % |        |    | 3.38   | % |        |    | 3.49   | % |        |    | 3.52   | % |  |    | 3.83 | % |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   | 
|             
|             
|             
|             
|              | 25 |        |    | 3.75   | % |        |    | 2.97   | % |        |    | 2.62   | % |        |    | 2.77   | % |        |    | 3.01   | % |        |    | 3.55   | % |        |    | 3.63   | % |        |    | 3.63   | % |  |    | 4.00 | % |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 26 |        |    | 3.80   | % |        |    | 3.04   | % |        |    | 2.71   | % |        |    | 2.82   | % |        |    | 3.14   | % |        |    | 3.68   | % |        |    | 3.75   | % |        |    | 3.73   | % |  |    | 4.16 | %
|             
|             
|             
|             
|              | 27 |        |    | 3.87   | % |        |    | 3.13   | % |        |    | 2.80   | % |        |    | 2.89   | % |        |    | 3.16   | % |        |    | 3.84   | % |        |    | 3.86   | % |        |    | 3.84   | % |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 28 |        |    | 3.92   | % |        |    | 3.18   | % |        |    | 2.87   | % |        |    | 2.96   | % |        |    | 3.29   | % |        |    | 3.98   | % |        |    | 3.97   | % |        |    | 3.97   | %
|             
|             
|             
|             
|              | 29 |        |    | 3.98   | % |        |    | 3.24   | % |        |    | 2.90   | % |        |    | 3.02   | % |        |    | 3.40   | % |        |    | 4.14   | % |        |    | 4.09   | % |        |    | 4.11   | % |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 30 |        |    | 4.06   | % |        |    | 3.32   | % |        |    | 2.95   | % |        |    | 3.09   | % |        |    | 3.50   | % |        |    | 4.19   | % |        |    | 4.21   | % |        |    |        |  
|             
|             
|             
|             
|              | 31 |        |    | 4.11   | % |        |    | 3.38   | % |        |    | 3.00   | % |        |    | 3.17   | % |        |    | 3.61   | % |        |    | 4.30   | % |        |    | 4.33   | % |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 32 |        |    | 4.17   | % |        |    | 3.43   | % |        |    | 3.02   | % |        |    | 3.20   | % |        |    | 3.68   | % |        |    | 4.38   | % |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 33 |        |    | 4.22   | % |        |    | 3.47   | % |        |    | 3.08   | % |        |    | 3.27   | % |        |    | 3.74   | % |        |    | 4.46   | % |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 34 |        |    | 4.27   | % |        |    | 3.48   | % |        |    | 3.14   | % |        |    | 3.35   | % |        |    | 3.81   | % |        |    | 4.57   | % |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 35 |        |    | 4.32   | % |        |    | 3.52   | % |        |    | 3.15   | % |        |    | 3.41   | % |        |    | 3.87   | % |        |    | 4.66   | % |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 36 |        |    | 4.34   | % |        |    | 3.54   | % |        |    | 3.21   | % |        |    | 3.47   | % |        |    | 3.91   | % |        |    | 4.76   | % |        |    |        |   |        |    |        |   |  |    |      |  
|             
|             
|             
|             
|              | 37 |        |    | 4.35   | % |        |    | 3.58   | % |        |    | 3.25   | % |        |    | 3.52   | % |        |    | 3.97   | % |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 38 |        |    | 4.38   | % |        |    | 3.63   | % |        |    | 3.30   | % |        |    | 3.55   | % |        |    | 4.03   | % |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 39 |        |    | 4.39   | % |        |    | 3.66   | % |        |    | 3.35   | % |        |    | 3.58   | % |        |    | 4.09   | % |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 40 |        |    | 4.43   | % |        |    | 3.65   | % |        |    | 3.39   | % |        |    | 3.61   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |     
|             
|             
|             
|             
|              | 41 |        |    | 4.45   | % |        |    | 3.69   | % |        |    | 3.39   | % |        |    | 3.63   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 42 |        |    | 4.50   | % |        |    | 3.73   | % |        |    | 3.42   | % |        |    | 3.66   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 43 |        |    | 4.47   | % |        |    | 3.75   | % |        |    | 3.45   | % |        |    | 3.68   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 44 |        |    | 4.50   | % |        |    | 3.79   | % |        |    | 3.47   | % |        |    | 3.72   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 45 |        |    | 4.52   | % |        |    | 3.81   | % |        |    | 3.48   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 46 |        |    | 4.55   | % |        |    | 3.81   | % |        |    | 3.50   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 47 |        |    | 4.56   | % |        |    | 3.83   | % |        |    | 3.52   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 48 |        |    | 4.56   | % |        |    | 3.84   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 49 |        |    | 4.56   | % |        |    | 3.85   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 50 |        |    | 4.56   | % |        |    | 3.86   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |     
|             
|             
|             
|             
|              | 51 |        |    | 4.57   | % |        |    | 3.87   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 52 |        |    | 4.57   | % |        |    | 3.88   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   | 
|             
|             
|             
|             
|              | 53 |        |    | 4.57   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 54 |        |    | 4.57   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|              | 55 |        |    | 4.57   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|             
|             
|             
|             
|Prime Mix (2) |    |        | 57 | %      |   |        | 67 | %      |   |        | 70 | %      |   |        | 70 | %      |   |        | 70 | %      |   |        | 67 | %      |   |        | 68 | %      |   |        | 69 | %      |   |  | 68 | %    |   | 68 | %    |   |  | 71 | %    |   |  | 71 | %    |   |  | 76 | %    |   |  | 70 | %    |   |  | 87 | %    |   |  | 85 | %   



---

|(1) |  | Represents the number of months since the inception of the securitization.                    
|--- |  | ----------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Represents the original percentage of prime automobile contracts
securitized within each pool.

23



---



##### Table of Contents



Real Estate Loan Quality

Our only category of mortgage delinquencies over 60 days was single family
mortgages. We had $4.4 million mortgage loans, or 2.79% of total mortgage
loans, past due over 60 days at September 30, 2002 compared with $7.0 million,
or 3.79% of total mortgage loans, at December 31, 2001.

Nonperforming Assets

Nonperforming assets, also known as NPAs, consist of nonperforming loans, also
known as NPLs, Chapter 13 bankruptcy accounts greater than 120 days delinquent,
repossessed automobiles, and real estate owned, also known as REO. For those
accounts that are in Chapter 13 bankruptcy and are contractually past due
greater than 120 days, all accrued interest is reversed and income is
recognized on a cash basis. REO is carried at lower of cost or fair value.
NPLs are defined as all nonaccrual loans. This includes mortgage loans 90 days
or more past due and impaired loans where full collection of principal and
interest is not reasonably assured. NPAs increased $7.4 million to $35.7
million at September 30, 2002 compared with $28.3 million at December 31, 2001.
NPAs represented 0.3% of total assets at both September 30, 2002 and December
31, 2001. There were no impaired loans at September 30, 2002 and December 31,
2001.

When a loan is designated as nonaccrual, all previously accrued but unpaid
interest is reversed. For the nine months ended September 30, 2002 and 2001,
interest on nonperforming loans excluded from interest income was $0.5 million.

Allowance for Credit Losses

Our allowance for credit losses was $236 million at September 30, 2002 compared
to $171 million at December 31, 2001. For the three and nine months ended
September 30, 2002 and 2001, the provision for credit losses was $81.0 million
and $209 million, respectively, compared with $60.5 million and $127 million
for the same respective periods in 2001. For the three and nine months ended
September 30, 2002, net chargeoffs totaled $55.1 million and $143 million,
respectively, compared with $33.0 million and $77.3 million for the same
respective periods in 2001. The increase in the allowance for credit losses
was the result of a higher level of automobile contracts held on balance sheet
as well as higher chargeoffs related to a slowing economy. The allowance for
credit losses as a percentage of owned loans outstanding was 2.6% at September
30, 2002 compared to 2.3% at December 31, 2001.

We believe that the allowance for credit losses is currently adequate to cover
probable losses in our owned portfolio that can be reasonably estimated. No
single loan, borrower or series of such loans comprises a significant portion
of the total portfolio. The provision and allowance for credit losses are
indicative of loan volumes, loss trends and managements analysis of market
conditions.

24



---



##### Table of Contents



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

|                                                                                                      |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |          |  
|----------------------------------------------------------------------------------------------------- | -------------- | - | ------------------ | ------- | ----------------- | - | ---------------------- | ------- | ---- | - | -------- | -------- | - | - | -------- | -------- | -
|                                                                                                      |                |   | Three Months Ended |         | Nine Months Ended
|                                                                                                      |                |   | September 30,      |         | September 30,    
|                                                                                                      |                |   |                    |         |                  
|                                                                                                      |                |   | 2002               |         | 2001              |   | 2002                   |         | 2001
|                                                                                                      |                |   |                    |         |                   |   |                        |         |     
|                                                                                                      |                |   |                    |         |                   |   | (Dollars in thousands) |         |      |   |         
|Balance at beginning of period                                                                        |                | $ | 210,273            |         |                   | $ | 122,576                |         |      | $ | 171,432  |          |   | $ | 104,006  |         
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Chargeoffs:                                                                                           |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Mortgage loans |   |                    | (105    | )                 |   |                        | (224    | )    |   |          | (176     | ) |   |          | (881     | )
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Consumer loans |   |                    | (70,143 | )                 |   |                        | (44,987 | )    |   |          | (192,238 | ) |   |          | (106,384 | )
|                                                                                                      |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|                                                                                                      |                |   | (70,248            | )       |                   |   | (45,211                | )       |      |   | (192,414 | )        |   |   | (107,265 | )       
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Recoveries:                                                                                           |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Mortgage loans |   |                    |         |                   |   |                        | 3       |      |   |          |          |   |   |          | 16       |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Consumer loans |   |                    | 15,144  |                   |   |                        | 12,184  |      |   |          | 49,381   |   |   |          | 29,977   |  
|                                                                                                      |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|                                                                                                      |                |   | 15,144             |         |                   |   | 12,187                 |         |      |   | 49,381   |          |   |   | 29,993   |         
|                                                                                                      |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|Net chargeoffs                                                                                        |                |   | (55,104            | )       |                   |   | (33,024                | )       |      |   | (143,033 | )        |   |   | (77,272  | )       
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Provision for credit losses                                                                           |                |   | 80,996             |         |                   |   | 60,501                 |         |      |   | 209,043  |          |   |   | 127,124  |         
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Write-down of non-performing assets (1)                                                               |                |   | (456               | )       |                   |   | (1,552                 | )       |      |   | (1,733   | )        |   |   | (5,357   | )       
|                                                                                                      |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|Balance at end of period                                                                              |                | $ | 235,709            |         |                   | $ | 148,501                |         |      | $ | 235,709  |          |   | $ | 148,501  |         
|                                                                                                      |                |   |                    |         |                   |   |                        |         |      |   |          |          |   |   |          |         
|Ratio of net chargeoffs during the
period (annualized) to average loans
outstanding during the period |                |   | 2.51               | %       |                   |   | 1.98                   | %       |      |   | 2.33     | %        |   |   | 1.72     | %       



---

|(1) |  | The write-down of nonperforming assets represents specific reserves
established on accounts that file for Chapter 13 Bankruptcy and are
greater than 120 days delinquent. To the extent that these accounts do
not perform under the court ordered plan, these specific reserves are
reversed and the account is charged off.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25



---



##### Table of Contents



The following table presents summarized data relative to the allowance for
credit and real estate losses at the dates indicated:

|                                                                                      |                                |   |                        |         |              |   |           |         |  
|------------------------------------------------------------------------------------- | ------------------------------ | - | ---------------------- | ------- | ------------ | - | --------- | ------- | -
|                                                                                      |                                |   | September 30,          |         | December 31,
|                                                                                      |                                |   | 2002                   |         | 2001        
|                                                                                      |                                |   |                        |         |             
|                                                                                      |                                |   | (Dollars in thousands)
|Total loans (1)                                                                       |                                | $ | 9,154,593              |         |              | $ | 7,533,150 |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Allowance for credit losses                                                           |                                |   | 235,709                |         |              |   | 171,432   |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Allowance for real estate owned losses                                                |                                |   | 250                    |         |              |   | 250       |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Loans past due 60 days or more                                                        |                                |   | 85,549                 |         |              |   | 74,851    |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Nonperforming loans (2)                                                               |                                |   | 3,622                  |         |              |   | 6,772     |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Nonperforming assets (3)                                                              |                                |   | 35,667                 |         |              |   | 28,341    |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Allowance for credit losses as a percent of:                                          |                                |   |                        |         |              |   |           |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Total loans (1)                |   |                        | 2.6     | %            |   |           | 2.3     | %
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Loans past due 60 days or more |   |                        | 275.5   | %            |   |           | 229.0   | %
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Nonperforming loans            |   |                        | 6,507.7 | %            |   |           | 2,531.5 | %
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Total allowance for credit losses and REO losses as a percent
of nonperforming assets |                                |   | 661.6                  | %       |              |   | 605.8     | %      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Nonperforming loans as a percent of total loans                                       |                                |   | 0.0                    | %       |              |   | 0.1       | %      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Nonperforming assets as a percent of total assets                                     |                                |   | 0.3                    | %       |              |   | 0.3       | %      



---

|(1) |  | Loans net of unearned interest and undisbursed loan proceeds.                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | All nonperforming loans are on nonaccrual.                                                                                                            
|   
|   
|   
|   
|(3) |  | Nonperforming loans, Chapter 13 bankruptcy accounts greater than 120
days delinquent, repossessed automobiles and real estate owned, net of
allowance.

Deposits

We attract both short-term and long-term deposits from the general public,
commercial enterprises and institutions by offering a variety of accounts and
rates. We offer regular passbook accounts, demand deposit accounts, money
market accounts, certificate of deposit accounts and individual retirement
accounts. Our retail banking division gathers deposits from 17 retail branch
locations throughout California. Our commercial banking division gathers
deposits by establishing commercial relationships with businesses located
throughout Southern California.

On September 13, 2002, we sold seven Northern California retail bank branches.
We believe that we can reduce costs, raise more deposits and reduce our cost of
funds by focusing our training, advertising, brand positioning and sales
efforts in a more concentrated geographic area. This decision reflects our
commitment to brand development and expansion in Southern California. The sale
of our Northern California branches reduced our total deposit base by
approximately $481 million. As a result of the sale, we recorded a gain of
$6.0 million ($3.6 million, net of tax).

26



---



##### Table of Contents



The following table sets forth the amount of our deposits by type at the dates
indicated:

|                      |                                      |   |                        |         |              |   |           |           | 
|--------------------- | ------------------------------------ | - | ---------------------- | ------- | ------------ | - | --------- | --------- | 
|                      |                                      |   | September 30,          |         | December 31,
|                      |                                      |   | 2002                   |         | 2001        
|                      |                                      |   |                        |         |             
|                      |                                      |   | (Dollars in thousands)
|No minimum term:      |                                      |   |                        |         |              |   |           |          
|                     
|                     
|                     
|                     
|                      | Demand deposit accounts              |   | $                      | 1,780   |              |   | $         | 1,124     | 
|                     
|                     
|                     
|                     
|                      | Passbook accounts                    |   |                        | 6,790   |              |   |           | 11,192    | 
|                     
|                     
|                     
|                     
|                      | Money market accounts                |   |                        | 674,016 |              |   |           | 858,371   | 
|                     
|                     
|                     
|                     
|                      | Noninterest bearing deposits         |   |                        | 150,155 |              |   |           | 100,170   | 
|                     
|                     
|                     
|                     
|Certificate accounts: |                                      |   |                        |         |              |   |           |          
|                     
|                     
|                     
|                     
|                      | Certificates (30 days to five years) |   |                        | 940,020 |              |   |           | 1,154,917 | 
|                     
|                     
|                     
|                     
|                      | IRAs                                 |   |                        | 99,030  |              |   |           | 147,250   | 
|                     
|                     
|                     
|                     
|Brokered deposits     |                                      |   |                        |         |              |   | 56,302    |          
|                      |                                      |   |                        |         |              |   |           |           | 
|                      |                                      | $ | 1,871,791              |         |              | $ | 2,329,326 |          
|                      |                                      |   |                        |         |              |   |           |          

The variety of deposits we offer has allowed us to remain competitive in
obtaining funds and provided us the flexibility to respond to changes in
customer demand and competitive pressures. Generally, as other financial
institutions, we have become more subject to short-term fluctuations in deposit
flows as customers have become more interest rate conscious. Our ability to
attract and maintain deposits and control our cost of funds has been,
and will continue to be, significantly affected by market conditions.

Capital Resources and Liquidity

Overview

We require substantial capital resources and cash to support our business. Our
ability to maintain positive cash flows from operations is the result of
consistent managed growth, favorable loss experience and efficient operations.

In addition to our indirect statement of cash flows as presented in accordance
with GAAP, we also analyze the key cash flows from our automobile lending
operations on a direct basis excluding certain items such as the purchase or
sale of loans. The following table shows our operating cash flows from our
automobile lending operations:

|                             |  |                        |         |      |  |   |         | 
|---------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                             |  | Nine Months Ended     
|                             |  | September 30,         
|                             |  |                       
|                             |  | 2002                   |         | 2001
|                             |  |                        |         |     
|                             |  | (Dollars in thousands)
|Cash flows from owned loans  |  | $                      | 342,355 |      |  | $ | 261,944 | 
|                            
|                            
|                            
|                            
|Cash flows from trusts       |  |                        | 7,360   |      |  |   | 44,172  | 
|                            
|                            
|                            
|                            
|Contractual servicing income |  |                        | 8,833   |      |  |   | 18,712  | 
|                            
|                            
|                            
|                            
|Other fee income             |  |                        | 66,488  |      |  |   | 54,728  | 
|                            
|                            
|                            
|                            
|                            
|Less:                        |  |                        |         |      |  |   |         | 
|                            
|                            
|                            
|                            
|Dealer participation         |  |                        | 99,706  |      |  |   | 93,260  | 
|                            
|                            
|                            
|                            
|Operating costs              |  |                        | 158,596 |      |  |   | 154,841 | 
|                             |  |                        |         |      |  |   |         | 
|Operating cash flows         |  | $                      | 166,734 |      |  | $ | 131,455 | 
|                             |  |                        |         |      |  |   |         | 

27



---



##### Table of Contents



Operating cash flows improved for the nine months ended September 30, 2002
compared with the nine months ended September 30, 2001 as a result of an
increase in the managed portfolio and improved operating efficiencies over the
prior year.

Principal Sources of Cash



| |  | Collections of Principal and Interest from Automobile
Contracts For the three and nine months ended September 30,
2002, principal and interest collections totaled $1.9 billion
and $5.4 billion, respectively, compared with $1.7 billion and
$4.7 billion for the same respective periods in 2001.                                                                                                       
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Deposits Deposits were $1.9 billion at September 30, 2002
compared with $2.3 billion at December 31, 2001.                                                                                                                                                                                                                                                                                                 
| 
| |  | Automobile Contract Securitizations For the three and nine
months ended September 30, 2002, securitizations totaled $1.3
billion and $5.6 billion, respectively. Of the $5.6 billion,
$4.8 billion was through public transactions and $775 million
was from a private placement through a conduit facility.
Securitizations totaled $1.2 billion and $3.6 billion for the
same respective periods in 2001.
| 
| |  | Subordinated Debentures Proceeds raised from the Banks
subordinated capital debenture offering in May 2002 totaled
$292 million, net of discount and issue costs.                                                                                                                                                                                                                                         
| 
| |  | Other Borrowings Other borrowings, which include securities
sold under agreements to repurchase and FHLB advances,
increased to $770 million at September 30, 2002 from $699
million at December 31, 2001.                                                                                                                                                                                                 

Principal Uses of Cash



| |  | Acquisition of Loans and Investment Securities For the three
and nine months ended September 30, 2002, loan originations
totaled $1.5 billion and $4.4 billion, respectively, compared
with $1.4 billion and $4.0 billion for the same periods in
2001. We purchased $1.1 billion of mortgage-backed securities
and other investment securities during the nine months ended
September 30, 2002 compared with $1.0 billion during the same
respective period in 2001.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Payments of Principal and Interest on SecuritizationsFor the
three and nine months ended September 30, 2002, payments of
principal and interest to noteholders and certificateholders
totaled $1.0 billion and $4.4 billion, respectively, compared
with $1.0 billion and $2.6 billion for the same respective
periods in 2001. Payments for the nine months ended September
30, 2002 include redemptions of $1.4 billion on our conduit
facilities.                 
| 
| |  | Amounts Paid to DealersFor the three and nine months ended
September 30, 2002, participation paid by us to dealers was
$34.5 million and $99.7 million, respectively, compared with
$31.4 million and $93.3 million for the same respective
periods in 2001.                                                                                                                                                                                                         
| 
| |  | Advances to Spread Accounts The amounts due from trusts,
including initial advances not yet returned, was $116 million
at September 30, 2002 compared with $136 million at December
31, 2001.                                                                                                                                                                                                                                                                        
| 
| |  | Operating Our Business For the three and nine months ended
September 30, 2002, operating expenses totaled $62.2 million
and $188 million, respectively, compared with $59.9 million
and $184 million for the same respective periods in 2001.                                                                                                                                                                                                                        

Capital Requirements

The Bank is a federally chartered savings bank. As such, it is subject to
certain minimum capital requirements imposed by the Financial Institutions
Reform, Recovery and Enforcement Act, also known as FIRREA and the Federal
Deposit Insurance Corporation Improvement Act, also known as FDICIA. FDICIA
separates all financial institutions into one of five capital categories: well
capitalized, adequately capitalized,

28



---



##### Table of Contents



undercapitalized, significantly undercapitalized, and critically
undercapitalized. In order to be considered well capitalized, an institution
must have a total risk-based capital ratio of 10.0% or greater, a Tier 1 or
core risk-based capital ratio of 6.0% or greater, a leverage ratio of 5.0% or
greater and not be subject to any Office of Thrift Supervision, also known as
OTS, order. The Bank currently meets all of the requirements of a well
capitalized institution.

The following table summarizes the Banks actual capital and required capital
as of September 30, 2002 and December 31, 2001:

|                                          |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |           |  
|----------------------------------------- | ------------- |  | -------- | ------- | ------- |  | ---------------------- | ------- | ---------- |  | ------ | ------- | - |  | - | --------- | -
|                                          |               |  |          |         |         |  |                        |         |            |  | Tier 1 |         |   |  |  
|                                          |               |  | Tangible |         | Core    |  | Risk-Based             |         | Risk-Based
|                                          |               |  | Capital  |         | Capital |  | Capital                |         | Capital   
|                                          |               |  |          |         |         |  |                        |         |           
|                                          |               |  |          |         |         |  | (Dollars in thousands) |         |            |  |       
|September 30, 2002                        |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|Actual Capital:                           |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Amount        |  | $        | 710,524 |         |  | $                      | 710,524 |            |  | $      | 627,624 |   |  | $ | 1,036,642 |  
|                                         
|                                         
|                                         
|                                         
|                                          | Capital ratio |  |          | 6.54    | %       |  |                        | 6.54    | %          |  |        | 7.63    | % |  |   | 12.60     | %
|                                         
|                                         
|                                         
|                                         
|FIRREA minimum required capital:          |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Amount        |  | $        | 162,903 |         |  | $                      | 325,807 |            |  |        | N/A     |   |  | $ | 658,334   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Capital ratio |  |          | 1.50    | %       |  |                        | 3.00    | %          |  |        | N/A     |   |  |   | 8.00      | %
|                                         
|                                         
|                                         
|                                         
|                                          | Excess        |  | $        | 547,621 |         |  | $                      | 384,717 |            |  |        | N/A     |   |  | $ | 378,308   |  
|                                         
|                                         
|                                         
|                                         
|FDICIA well capitalized required capital: |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Amount        |  |          | N/A     |         |  | $                      | 543,011 |            |  | $      | 493,751 |   |  | $ | 822,918   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Capital ratio |  |          | N/A     |         |  |                        | 5.00    | %          |  |        | 6.00    | % |  |   | 10.00     | %
|                                         
|                                         
|                                         
|                                         
|                                          | Excess        |  |          | N/A     |         |  | $                      | 167,513 |            |  | $      | 133,873 |   |  | $ | 213,724   |  
|                                         
|                                         
|                                         
|                                         
|December 31, 2001                         |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|Actual Capital:                           |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Amount        |  | $        | 602,491 |         |  | $                      | 602,491 |            |  | $      | 602,491 |   |  | $ | 841,144   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Capital ratio |  |          | 7.29    | %       |  |                        | 7.29    | %          |  |        | 8.49    | % |  |   | 11.86     | %
|                                         
|                                         
|                                         
|                                         
|FIRREA minimum required capital:          |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Amount        |  | $        | 123,957 |         |  | $                      | 247,915 |            |  |        | N/A     |   |  | $ | 567,523   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Capital ratio |  |          | 1.50    | %       |  |                        | 3.00    | %          |  |        | N/A     |   |  |   | 8.00      | %
|                                         
|                                         
|                                         
|                                         
|                                          | Excess        |  | $        | 478,534 |         |  | $                      | 354,576 |            |  |        | N/A     |   |  | $ | 273,621   |  
|                                         
|                                         
|                                         
|                                         
|FDICIA well capitalized required capital: |               |  |          |         |         |  |                        |         |            |  |        |         |   |  |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Amount        |  |          | N/A     |         |  | $                      | 413,192 |            |  | $      | 425,642 |   |  | $ | 709,404   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Capital ratio |  |          | N/A     |         |  |                        | 5.00    | %          |  |        | 6.00    | % |  |   | 10.00     | %
|                                         
|                                         
|                                         
|                                         
|                                          | Excess        |  |          | N/A     |         |  | $                      | 189,299 |            |  | $      | 176,849 |   |  | $ | 131,740   |  

29



---



##### Table of Contents



The following table reconciles the Banks capital in accordance with GAAP to
the Banks tangible, core and risk-based capital:

|                                           |                                               |   |                        |         |              |   |         |         |  
|------------------------------------------ | --------------------------------------------- | - | ---------------------- | ------- | ------------ | - | ------- | ------- | -
|                                           |                                               |   | September 30,          |         | December 31,
|                                           |                                               |   | 2002                   |         | 2001        
|                                           |                                               |   |                        |         |             
|                                           |                                               |   | (Dollars in thousands)
|Banks shareholders equity  GAAP basis   |                                               | $ | 508,738                |         |              | $ | 472,132 |        
|                                          
|                                          
|                                          
|                                          
|Adjustments for tangible and core capital: |                                               |   |                        |         |              |   |         |        
|                                          
|                                          
|                                          
|                                          
|                                           | Unrealized losses under SFAS 115 and SFAS 133 |   |                        | 103,729 |              |   |         | 52,214  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Non-permissible activities                    |   |                        | (157    | )            |   |         | (116    | )
|                                          
|                                          
|                                          
|                                          
|                                           | Minority interest in equity of subsidiaries   |   |                        | 98,214  |              |   |         | 78,261  |  
|                                           |                                               |   |                        |         |              |   |         |        
|Total tangible and core capital            |                                               |   | 710,524                |         |              |   | 602,491 |        
|                                          
|                                          
|                                          
|                                          
|Adjustments for risk-based capital:        |                                               |   |                        |         |              |   |         |        
|                                          
|                                          
|                                          
|                                          
|                                           | Subordinated debentures (1) (3)               |   |                        | 305,284 |              |   |         | 149,554 |  
|                                          
|                                          
|                                          
|                                          
|                                           | General loan valuation allowance (2)          |   |                        | 103,734 |              |   |         | 89,099  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Low-level recourse deduction                  |   |                        | (82,900 | )            |   |         |         |  
|                                           |                                               |   |                        |         |              |   |         |        
|Risk-based capital                         |                                               | $ | 1,036,642              |         |              | $ | 841,144 |        
|                                           |                                               |   |                        |         |              |   |         |        



---

|(1) |  | Excludes capitalized discounts and issue costs.                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Limited to 1.25% of risk-weighted assets.                                                                                                                                                                               
|   
|   
|   
|   
|(3) |  | Subordinated debentures at September 30, 2002 included $200 million of
the $300 million that was issued in May 2002. The additional $100 million
is still pending regulatory approval to be included as part of capital.

30



---



##### Table of Contents






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Credit and Pricing Committee is responsible for setting credit and pricing
policies and for monitoring credit quality. Our Asset/Liability Committee is
responsible for the management of interest rate and prepayment risks.
Asset/liability management is the process of measuring and controlling interest
rate risk through matching the maturity and repricing characteristics of
interest earning assets with those of interest bearing liabilities.

The Asset/Liability Committee closely monitors interest rate and prepayment
risks and recommends policies for managing such risks. 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 our assets and
liabilities and measures the resulting increase or decrease to our net
portfolio value, also known as NPV. NPV is the discounted value of the future
cash flows (or paths of cash flows in the presence of options based on
volatility assumptions and an arbitrage free Monte Carlo simulation method to
achieve the current market price) of all assets minus all liabilities whose
value is affected by interest rate changes plus the book value of non-interest
rate sensitive assets minus the book value of non-interest rate sensitive
liabilities. The NPV ratio is the ratio of the NPV to the market value of our
assets as calculated above. In general, an increase in interest rates would
more adversely affect our NPV than would a decrease in interest rates.

Another important measurement of our interest rate risk is GAP analysis. 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. We have more interest sensitive
liabilities rather than assets repricing in shorter term maturity buckets and
more interest sensitive assets rather than liabilities repricing in longer term
maturity buckets.

31



---



##### Table of Contents



The following table summarizes our maturity GAP position:

|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |           |           |            | 
|------------------------------------------------------------------ | -------------------------------------------------- | -------------------------------------------- | ---------------------------------- | --------- | -------------------------------------------------------- | --------- | --------- | --------- | --------- | --------- | ---------- | --------- | ---------------------- | --------- | --------- | --------- | ------- | --------- | -------- | ------- | ----- | ------- | ------- | --------- | --------- | ---------- | 
|                                                                   |                                                    |                                              |                                    |           | Interest Rate Sensitivity Analysis at September 30, 2002
|                                                                   |                                                    |                                              |                                    |           |                                                         
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           | 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) |           |           |           |         |           |          |         |      
|Interest earning assets:                                           |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Investment securities                              |                                              | $                                  | 10,276    |                                                          |           |           |           |           |           |            |           |                        |           | $         | 517       |         |           | $        | 506     |       |         | $       | 11,299    |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Other investments                                  |                                              |                                    | 192,319   |                                                          |           | $         | 310       |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         | 192,629   |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Mortgage-backed securities                         |                                              |                                    | 455,763   |                                                          |           |           | 893,739   |           |           | $          | 797,868   |                        |           |           | 232,526   |         |           |          | 109,404 |       |         |         | 2,489,300 |          
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|                                                                   |                                                    |                                              | Total investments                  |           |                                                          | 658,358   |           |           |           | 894,049   |            |           |                        | 797,868   |           |           |         | 233,043   |          |         |       | 109,910 |         |           |           | 2,693,228  | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Consumer loans (1)                                 |                                              |                                    | 743,718   |                                                          |           |           | 2,742,936 |           |           |            | 4,129,906 |                        |           |           | 1,117,523 |         |           |          | 27,056  |       |         |         | 8,761,139 |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Mortgage loans:                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |           |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                                                    | Adjustable rate (2)                          |                                    |           | 244,147                                                  |           |           |           | 39,986    |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |           | 284,133   |           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                                                    | Fixed rate (2)                               |                                    |           | 1,707                                                    |           |           |           | 4,020     |           |            |           | 5,816                  |           |           |           | 2,378   |           |          |         | 2,018 |         |         |           | 15,939    |           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Construction loans (2)                             |                                              |                                    | 5,862     |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         | 5,862     |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Commercial loans (2)                               |                                              |                                    | 72,692    |                                                          |           |           | 3,631     |           |           |            | 849       |                        |           |           | 256       |         |           |          | 1,092   |       |         |         | 78,520    |          
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|                                                                   |                                                    |                                              | Total interest
earning assets      |           |                                                          | 1,726,484 |           |           |           | 3,684,622 |            |           |                        | 4,934,439 |           |           |         | 1,353,200 |          |         |       | 140,076 |         |           |           | 11,838,821 | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Interest bearing liabilities:                                      |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Deposits:                                          |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |           |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                                                    | Passbook accounts (3)                        |                                    |           | 1,293                                                    |           |           |           | 3,483     |           |            |           | 2,014                  |           |           |           |         |           |          |         |       |         |         |           | 6,790     |           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                                                    | Demand deposit and money
market accounts (3) |                                    |           | 124,127                                                  |           |           |           | 189,616   |           |            |           | 362,053                |           |           |           |         |           |          |         |       |         |         |           | 675,796   |           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                                                    | Certificate accounts (4)                     |                                    |           | 326,517                                                  |           |           |           | 570,077   |           |            |           | 137,324                |           |           |           | 5,132   |           |          |         |       |         |         |           | 1,039,050 |           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | FHLB advances (4)                                  |                                              |                                    | 443,000   |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          | 2,810   |       |         |         | 445,810   |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Securities sold under agreements
to repurchase (4) |                                              |                                    | 323,755   |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         | 323,755   |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Subordinated debentures (4)                        |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           | 134,400   |         |           |          | 294,499 |       |         |         | 428,899   |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Notes payable on automobile
secured financing (4)  |                                              |                                    | 3,184,832 |                                                          |           |           | 2,226,527 |           |           |            | 2,368,131 |                        |           |           | 236,056   |         |           |          |         |       |         |         | 8,015,546 |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Other borrowings (4)                               |                                              |                                    | 8,296     |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         | 8,296     |          
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|                                                                   |                                                    |                                              | Total interest bearing
liabilities |           |                                                          | 4,411,820 |           |           |           | 2,989,703 |            |           |                        | 2,869,522 |           |           |         | 375,588   |          |         |       | 297,309 |         |           |           | 10,943,942 | 
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|Excess interest earning/bearing assets
(liabilities)               |                                                    |                                              | (2,685,336                         | )         |                                                          |           | 694,919   |           |           |           | 2,064,917  |           |                        |           | 977,612   |           |         |           | (157,233 | )       |       |         | 894,879 |          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Effect of hedging activities (5)                                   |                                                    |                                              | 2,607,119                          |           |                                                          |           | (723,524  | )         |           |           | (1,174,488 | )         |                        |           | (364,107  | )         |         |           | (345,000 | )       |       |         |         |          
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|Hedged excess (deficit)                                            |                                                    | $                                            | (78,217                            | )         |                                                          | $         | (28,605   | )         |           | $         | 890,429    |           |                        | $         | 613,505   |           |         | $         | (502,233 | )       |       | $       | 894,879 |          
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|Cumulative excess                                                  |                                                    | $                                            | (78,217                            | )         |                                                          | $         | (106,822  | )         |           | $         | 783,607    |           |                        | $         | 1,397,112 |           |         | $         | 894,879  |         |       | $       | 894,879 |          
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |                        |           |           |           |         |           |          |         |       |         |         |          
|Cumulative excess as a percentage
of total interest earning assets |                                                    |                                              | (0.66                              | )%        |                                                          |           | (0.90     | )%        |           |           | 6.62       | %         |                        |           | 11.80     | %         |         |           | 7.56     | %       |       |         | 7.56    | %        



---

|(1) |  | Based on contractual maturities adjusted by our historical prepayment
rate.                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Based on interest rate repricing adjusted for projected prepayments.                                                  
|   
|   
|   
|   
|(3) |  | Based on assumptions established by the OTS.                                                                          
|   
|   
|   
|   
|(4) |  | Based on contractual maturity.                                                                                        
|   
|   
|   
|   
|(5) |  | Includes effect of interest rate swaps designated against deposits and
securities sold under agreements to repurchase.

32



---



##### Table of Contents






Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of the design and operations of our disclosure controls and
procedures within 90 days of the filing date of this quarterly report. Based
on their evaluation, our Chief Executive Officer and Chief Financial Officer
have concluded that these controls and procedures are effective. There has
been no significant change in our internal controls or in other factors that
could significantly affect the controls and procedures subsequent to the date
of their evaluation.

Disclosure controls and procedures are designed to ensure that the information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act are recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us
in the reports that we file under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosures.

33



---



##### Table of Contents



Forward-Looking Statements

This Form 10-Q includes and incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements relate to analyses and other information, which are
based on forecasts of future results and estimates of amounts not yet
determinable. These statements also relate to our future prospects,
developments and business strategies. These statements are subject to
uncertainties and factors relating to our operations and business environment,
all of which are difficult to predict and many of which are beyond our
control, that could cause actual results to differ materially from those
expressed in or implied by these forward-looking statements.

These forward-looking statements are identified by use of terms and phrases
such as anticipate, believe, could, estimate, expect, intend,
may, plan, predict, project, will, and similar terms and phrases,
including references to assumptions.

The following factors are among those that may cause actual results to differ
materially from the forward-looking statements:



| |  |  | changes in general economic and business conditions;                             
| | - |  | ---------------------------------------------------------------------------------
|
| |  |  | interest rate fluctuations, including hedging activities;                        
|
| |  |  | our financial condition and liquidity, as well as future cash flows and earnings;
|
| |  |  | competition;                                                                     
|
| |  |  | our level of operating expenses;                                                 
|
| |  |  | the effect of new laws, regulations and court decisions;                         
|
| |  |  | the availability of sources of funding;                                          
|
| |  |  | the level of chargeoffs on the automobile contracts that we originate; and       
|
| |  |  | significant litigation.                                                          

If one or more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, our actual results may vary materially from those
expected, estimated or projected.

We do not undertake to update our forward-looking statements or risk factors
to reflect future events or circumstances.

Available Information

The company provides access to all filings with the Securities and Exchange
Commission on its Web site at http:\\www.westcorpinc.com free of charge on the
same day as these reports are electronically filed with the Commission. The
information contained in our Web site does not constitute part of this filing.

34



---



##### Table of Contents






PART II. OTHER INFORMATION

|        |  |                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1. |  | Legal Proceedings                                                                                                                                                                                                                                                                                                                                     
|       
|        |  | We or our subsidiaries are involved as parties to certain
legal proceedings incidental to our businesses, including
consumer class action lawsuits. We are vigorously defending
these actions and do not believe that the outcome of these
proceedings will have a material effect upon our financial
condition, results of operations and cash flows.
|       
|Item 2. |  | Changes in Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                             
|       
|        |  | 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                                                                                                                                                                                                                                                                                                                                              
|       
|        |  | 99.1Certification of CEO and CFO                                                                                                                                                                                                                                                                                                                      
|       
|(b)     |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                   

35



---



##### Table of Contents






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 13, 2002 |  | By: |  | /s/ Ernest S. Rady                                                                                                                        
|      |  |                   |  |     |  |                                                                                                                                           
|      |  |                   |  |     |  | Ernest S. Rady
Chairman of the Board and
Chief Executive Officer                                                                          
|     
|     
|     
|     
|      |  |                   |  |     |  |                                                                                                                                           
|     
|     
|     
|     
|Date: |  | November 13, 2002 |  | By: |  | /s/ Lee A. Whatcott                                                                                                                       
|      |  |                   |  |     |  |                                                                                                                                           
|      |  |                   |  |     |  | Lee A. Whatcott
Executive Vice President,
Chief Financial Officer and
Chief Operating Officer (Principal
Financial and Accounting Officer)

36



---



##### Table of Contents






CERTIFICATIONS

I, Ernest S. Rady, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Westcorp;                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have;                                                                                                     



| | a) |  | Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  



| | c) |  | Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |  |                                                  
|---- |  | -------------------------------------------------
|Date |  | November 13, 2002                                
|     |  |                                                  
|     |  |                                                  
|     |  |                                                  
|    
|    
|    
|    
|By   |  | /s/ Ernest S. Rady                               
|     |  |                                                  
|     |  | Chairman of the Board and
Chief Executive Officer

37



---



##### Table of Contents



I, Lee A. Whatcott, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Westcorp;                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have;                                                                                                     



| | a) |  | Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |  |                                                                                                                                           
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Date |  | November 13, 2002                                                                                                                         
|     |  |                                                                                                                                           
|     |  |                                                                                                                                           
|By   |  | /s/ Lee A. Whatcott                                                                                                                       
|     |  |                                                                                                                                           
|     |  | Lee A. Whatcott
Executive Vice President,
Chief Financial Officer and
Chief Operating Officer (Principal Financial and
Accounting Officer)

38



---



##### Table of Contents



EXHIBIT INDEX

|               |  |                             
|-------------- |  | ----------------------------
|Exhibit
Number |  | Description                 
|               |  |                             
|99.1           |  | Certification of CEO and CFO