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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, 2003

OR

o
    
    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 o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x
No o

As of October 31, 2003, the registrant had 45,428,523 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 35.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                            |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|                              | Forward-Looking Statements                                                                   
|                              | Available Information                                                                        
|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                   
|EXHIBIT INDEX                
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32.1                 
|EXHIBIT 32.2                 



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##### Table of Contents



WESTCORP AND SUBSIDIARIES

FORM 10-Q

September 30, 2003

TABLE OF CONTENTS
______________

|                                                     |  |                                                                                       |    |                                                                                                                           |    |          |   | 
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------- | -- | ------------------------------------------------------------------------------------------------------------------------- | -- | -------- | - | 
|                                                     |  |                                                                                       |    |                                                                                                                           |    | Page No.
|                                                     |  |                                                                                       |    |                                                                                                                           |    |         
|Forward-Looking Statements and Available Information |  |                                                                                       | 1  |                                                                                                                          
|PART I.                                              |  | FINANCIAL INFORMATION                                                                 |    |                                                                                                                           |    |         
|Item 1.                                              |  | Financial Statements                                                                  |    |                                                                                                                           | 2  |         
|                                                     |  |                                                                                       |    | Consolidated Statements of Financial Condition at
September 30, 2003 and December 31, 2002                                |    |          | 2 | 
|                                                     |  |                                                                                       |    | Consolidated Statements of Income for the Three and Nine
Months Ended September 30, 2003 and 2002                         |    |          | 3 | 
|                                                     |  |                                                                                       |    | Consolidated Statements of Changes in Shareholders Equity for
the Periods Ended September 30, 2003 and December 31, 2002 |    |          | 4 | 
|                                                     |  |                                                                                       |    | Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2003 and 2002                               |    |          | 5 | 
|                                                     |  |                                                                                       |    | Notes to Consolidated Financial Statements                                                                                |    |          | 6 | 
|Item 2.                                              |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |    |                                                                                                                           | 14 |         
|Item 3.                                              |  | Quantitative and Qualitative Disclosure about Market Risk                             |    |                                                                                                                           | 31 |         
|Item 4.                                              |  | Controls and Procedures                                                               |    |                                                                                                                           | 33 |         
|PART II.                                             |  | OTHER INFORMATION                                                                     |    |                                                                                                                           |    |         
|Item 1.                                              |  | Legal Proceedings                                                                     |    |                                                                                                                           | 34 |         
|Item 2.                                              |  | Changes in Securities and Use of Proceeds                                             |    |                                                                                                                           | 34 |         
|Item 3.                                              |  | Defaults Upon Senior Securities                                                       |    |                                                                                                                           | 34 |         
|Item 4.                                              |  | Submission of Matters to a Vote of Security Holders                                   |    |                                                                                                                           | 34 |         
|Item 5.                                              |  | Other Information                                                                     |    |                                                                                                                           | 34 |         
|Item 6.                                              |  | Exhibits and Reports on Form 8-K                                                      |    |                                                                                                                           | 34 |         
|SIGNATURES                                           |  |                                                                                       | 35 |                                                                                                                          
|CERTIFICATIONS                                       |  |                                                                                       |    |                                                                                                                          





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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, interpretation, or application of new or existing 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.

1



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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |           |            | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ------------------------------------------ | ---------- | ---------------------- | ---------- | ----------------- | --------- | --------- | ---------- | 
|                                                                                                                                                                                  |                       |                                            |            | (Unaudited)            |            |                   |           |          
|                                                                                                                                                                                  |                       |                                            |            | September 30, 2003     |            | December 31, 2002
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                  
|                                                                                                                                                                                  |                       |                                            |            | (Dollars in thousands)
|ASSETS                                                                                                                                                                            |                       |                                            |            |                        |            |                   |           |          
|Cash and due from banks                                                                                                                                                           |                       | $                                          | 182,963    |                        |            | $                 | 84,215    |          
|Restricted cash                                                                                                                                                                   |                       |                                            | 186,319    |                        |            |                   | 71,763    |          
|Investment securities available for sale                                                                                                                                          |                       |                                            | 57,634     |                        |            |                   | 10,425    |          
|Mortgage-backed securities available for sale                                                                                                                                     |                       |                                            | 2,664,156  |                        |            |                   | 2,649,657 |          
|Loans receivable                                                                                                                                                                  |                       |                                            | 11,010,857 |                        |            |                   | 9,443,901 |          
|Allowance for credit losses                                                                                                                                                       |                       |                                            | (298,278   | )                      |            |                   | (269,352  | )        
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          
|                                                                                                                                                                                  | Loans receivable, net |                                            |            | 10,712,579             |            |                   |           | 9,174,549 |           
|Amounts due from trusts                                                                                                                                                           |                       |                                            |            |                        |            |                   | 101,473   |          
|Premises and equipment, net                                                                                                                                                       |                       |                                            | 81,427     |                        |            |                   | 78,664    |          
|Other                                                                                                                                                                             |                       |                                            | 353,510    |                        |            |                   | 311,893   |          
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          
|                                                                                                                                                                                  |                       | TOTAL ASSETS                               |            | $                      | 14,238,588 |                   |           | $         | 12,482,639 | 
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          
|LIABILITIES                                                                                                                                                                       |                       |                                            |            |                        |            |                   |           |          
|Deposits                                                                                                                                                                          |                       | $                                          | 1,969,134  |                        |            | $                 | 1,974,984 |          
|Notes payable on automobile secured financing                                                                                                                                     |                       |                                            | 10,108,203 |                        |            |                   | 8,494,678 |          
|Securities sold under agreements to repurchase                                                                                                                                    |                       |                                            | 245,844    |                        |            |                   | 276,600   |          
|Federal Home Loan Bank advances                                                                                                                                                   |                       |                                            | 383,676    |                        |            |                   | 336,275   |          
|Subordinated debentures                                                                                                                                                           |                       |                                            | 394,494    |                        |            |                   | 400,561   |          
|Amounts held on behalf of trustee                                                                                                                                                 |                       |                                            |            |                        |            |                   | 177,642   |          
|Other                                                                                                                                                                             |                       |                                            | 153,359    |                        |            |                   | 107,036   |          
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          
|                                                                                                                                                                                  |                       | TOTAL LIABILITIES                          |            |                        | 13,254,710 |                   |           |           | 11,767,776 | 
|Minority interest                                                                                                                                                                 |                       |                                            | 124,525    |                        |            |                   | 101,666   |          
|SHAREHOLDERS EQUITY                                                                                                                                                              |                       |                                            |            |                        |            |                   |           |          
|Common stock (par value $1.00 per share; authorized 65,000,000
shares; issued and outstanding 45,402,592 shares at September 30, 2003
and 39,200,474 shares at December 31, 2002) |                       |                                            | 45,403     |                        |            |                   | 39,200    |          
|Paid-in capital                                                                                                                                                                   |                       |                                            | 508,775    |                        |            |                   | 350,018   |          
|Retained earnings                                                                                                                                                                 |                       |                                            | 394,315    |                        |            |                   | 325,529   |          
|Accumulated other comprehensive loss, net of tax                                                                                                                                  |                       |                                            | (89,140    | )                      |            |                   | (101,550  | )        
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          
|                                                                                                                                                                                  |                       | TOTAL SHAREHOLDERS EQUITY                 |            |                        | 859,353    |                   |           |           | 613,197    | 
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          
|                                                                                                                                                                                  |                       | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |            | $                      | 14,238,588 |                   |           | $         | 12,482,639 | 
|                                                                                                                                                                                  |                       |                                            |            |                        |            |                   |           |          

See accompanying notes to consolidated financial statements.

2



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WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |         | 
|----------------------------------------------------- | --------------------------------------------- | -------------------------- | ------- | ------------------------------------------------ | ------- | ------------------------- | ------- | ---------- | ------- | ---- | ------- | ---------- | ------- | - | ------- | ---------- | ------- | 
|                                                      |                                               |                            |         | For the Three Months Ended                       |         | For the Nine Months Ended
|                                                      |                                               |                            |         | September 30,                                    |         | September 30,            
|                                                      |                                               |                            |         |                                                  |         |                          
|                                                      |                                               |                            |         | 2003                                             |         | 2002                      |         | 2003       |         | 2002
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |     
|                                                      |                                               |                            |         | (Dollars in thousands, except per share amounts)
|Interest income:                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |           
|                                                      | Loans, including fees                         |                            | $       | 293,019                                          |         |                           | $       | 265,814    |         |      | $       | 861,169    |         |   | $       | 748,589    |        
|                                                      | Mortgage-backed securities                    |                            |         | 15,936                                           |         |                           |         | 30,778     |         |      |         | 61,950     |         |   |         | 86,440     |        
|                                                      | Investment securities                         |                            |         | 232                                              |         |                           |         | 108        |         |      |         | 412        |         |   |         | 341        |        
|                                                      | Other                                         |                            |         | 1,724                                            |         |                           |         | 2,306      |         |      |         | 4,805      |         |   |         | 5,840      |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|                                                      |                                               | TOTAL INTEREST INCOME      |         |                                                  | 310,911 |                           |         |            | 299,006 |      |         |            | 928,336 |   |         |            | 841,210 | 
|Interest expense:                                     |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |           
|                                                      | Deposits                                      |                            |         | 15,695                                           |         |                           |         | 20,447     |         |      |         | 50,269     |         |   |         | 61,642     |        
|                                                      | Notes payable on automobile secured financing |                            |         | 101,803                                          |         |                           |         | 105,911    |         |      |         | 319,136    |         |   |         | 301,083    |        
|                                                      | Other                                         |                            |         | 12,550                                           |         |                           |         | 13,618     |         |      |         | 37,852     |         |   |         | 30,431     |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|                                                      |                                               | TOTAL INTEREST EXPENSE     |         |                                                  | 130,048 |                           |         |            | 139,976 |      |         |            | 407,257 |   |         |            | 393,156 | 
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|NET INTEREST INCOME                                   |                                               |                            | 180,863 |                                                  |         |                           | 159,030 |            |         |      | 521,079 |            |         |   | 448,054 |           
|Provision for credit losses                           |                                               |                            | 73,150  |                                                  |         |                           | 80,996  |            |         |      | 221,071 |            |         |   | 209,043 |           
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES |                                               |                            | 107,713 |                                                  |         |                           | 78,034  |            |         |      | 300,008 |            |         |   | 239,011 |           
|Noninterest income:                                   |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |           
|                                                      | Automobile lending                            |                            |         | 23,471                                           |         |                           |         | 16,775     |         |      |         | 67,764     |         |   |         | 45,190     |        
|                                                      | Other                                         |                            |         | 4,362                                            |         |                           |         | 9,635      |         |      |         | 15,552     |         |   |         | 19,111     |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|                                                      |                                               | TOTAL NONINTEREST INCOME   |         |                                                  | 27,833  |                           |         |            | 26,410  |      |         |            | 83,316  |   |         |            | 64,301  | 
|Noninterest expenses:                                 |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |           
|                                                      | Salaries and associate benefits               |                            |         | 40,016                                           |         |                           |         | 34,684     |         |      |         | 120,950    |         |   |         | 105,738    |        
|                                                      | Credit and collections                        |                            |         | 8,655                                            |         |                           |         | 8,442      |         |      |         | 27,004     |         |   |         | 26,695     |        
|                                                      | Data processing                               |                            |         | 4,258                                            |         |                           |         | 4,485      |         |      |         | 13,690     |         |   |         | 13,625     |        
|                                                      | Occupancy                                     |                            |         | 4,041                                            |         |                           |         | 3,729      |         |      |         | 11,784     |         |   |         | 11,158     |        
|                                                      | Other                                         |                            |         | 9,775                                            |         |                           |         | 10,867     |         |      |         | 34,412     |         |   |         | 30,625     |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|                                                      |                                               | TOTAL NONINTEREST EXPENSES |         |                                                  | 66,745  |                           |         |            | 62,207  |      |         |            | 207,840 |   |         |            | 187,841 | 
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|INCOME BEFORE INCOME TAX                              |                                               |                            | 68,801  |                                                  |         |                           | 42,237  |            |         |      | 175,484 |            |         |   | 115,471 |           
|Income tax                                            |                                               |                            | 27,343  |                                                  |         |                           | 16,824  |            |         |      | 69,544  |            |         |   | 44,974  |           
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|INCOME BEFORE MINORITY INTEREST                       |                                               |                            | 41,458  |                                                  |         |                           | 25,413  |            |         |      | 105,940 |            |         |   | 70,497  |           
|Minority interest in earnings of subsidiaries         |                                               |                            | 12,123  |                                                  |         |                           | 3,740   |            |         |      | 21,453  |            |         |   | 10,263  |           
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|NET INCOME                                            |                                               | $                          | 29,335  |                                                  |         | $                         | 21,673  |            |         | $    | 84,487  |            |         | $ | 60,234  |           
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|Earnings per common share:                            |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |           
|                                                      | Basic                                         |                            | $       | 0.65                                             |         |                           | $       | 0.55       |         |      | $       | 2.05       |         |   | $       | 1.57       |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|                                                      | Diluted                                       |                            | $       | 0.64                                             |         |                           | $       | 0.55       |         |      | $       | 2.03       |         |   | $       | 1.55       |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|Weighted average number of common shares outstanding: |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |           
|                                                      | Basic                                         |                            |         | 45,033,836                                       |         |                           |         | 39,189,744 |         |      |         | 41,154,810 |         |   |         | 38,382,794 |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|                                                      | Diluted                                       |                            |         | 45,786,913                                       |         |                           |         | 39,506,307 |         |      |         | 41,680,576 |         |   |         | 38,751,631 |        
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        
|Dividends declared                                    |                                               | $                          | 0.13    |                                                  |         | $                         | 0.12    |            |         | $    | 0.39    |            |         | $ | 0.36    |           
|                                                      |                                               |                            |         |                                                  |         |                           |         |            |         |      |         |            |         |   |         |            |        

See accompanying notes to consolidated financial statements.

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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, 2002    |            |                                                                                                               | 35,802,491 |        |           | $     | 35,802 |         |       | $        | 301,955 |                                              |         | $              | 263,853 |        |         | $ | (60,906  | )             |          | $ | 540,704 |       
|                              |            | Net income                                                                                                    |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        | 79,718  |   |          |               |          |   |         |        | 79,718   |  
|                              |            | Unrealized gains on securities
available for sale and retained
interest in securitized assets,
net of tax (1) |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | 28,605   |   |         |        | 28,605   |  
|                              |            | Unrealized losses on cash flow
hedges, net of tax (2)                                                         |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | (135,422 | ) |         |        | (135,422 | )
|                              |            | Reclassification adjustment for
gains on securities available for
sale included in net income, net
of tax (3) |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | (3       | ) |         |        | (3       | )
|                              |            | Reclassification adjustment for
losses on cash flow hedges
included in income, net of tax (4)                 |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | 66,176   |   |         |        | 66,176   |  
|                              |            |                                                                                                               |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |       
|                              |            | Comprehensive income                                                                                          |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |        | 39,074   |  
|                              |            | Issuance of subsidiary common stock                                                                           |            |        |           |       |        |         |       |          |         |                                              | (1,405  | )              |         |        |         |   |          |               |          |   |         |        | (1,405   | )
|                              |            | Stock options exercised                                                                                       |            |        | 3,397,983 |       |        |         | 3,398 |          |         |                                              | 49,468  |                |         |        |         |   |          |               |          |   |         |        | 52,866   |  
|                              |            | Cash dividends                                                                                                |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        | (18,042 | ) |          |               |          |   |         |        | (18,042  | )
|                              |            |                                                                                                               |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |       
|Balance at December 31, 2002  |            |                                                                                                               | 39,200,474 |        |           |       | 39,200 |         |       |          | 350,018 |                                              |         |                | 325,529 |        |         |   | (101,550 | )             |          |   | 613,197 |       
|                              | Net income |                                                                                                               |            |        |           |       |        |         |       |          |         |                                              |         |                |         | 84,487 |         |   |          |               |          |   |         | 84,487 |         
|                              |            | Unrealized losses on securities
available for sale, net of tax (1)                                            |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | (7,926   | ) |         |        | (7,926   | )
|                              |            | Unrealized losses on cash flow
hedges, net of tax (2)                                                         |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | (30,667  | ) |         |        | (30,667  | )
|                              |            | Reclassification adjustment for
gains on securities available for
sale included in net income, net
of tax (3) |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | (2,987   | ) |         |        | (2,987   | )
|                              |            | Reclassification adjustment for
losses on cash flow hedges
included in income, net of tax (4)                 |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               | 53,990   |   |         |        | 53,990   |  
|                              |            |                                                                                                               |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |       
|                              |            | Comprehensive income                                                                                          |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |        | 96,897   |  
|                              |            | Issuance of subsidiary common stock                                                                           |            |        |           |       |        |         |       |          |         |                                              | (64     | )              |         |        |         |   |          |               |          |   |         |        | (64      | )
|                              |            | Stock options expensed (5)                                                                                    |            |        |           |       |        |         |       |          |         |                                              | 472     |                |         |        |         |   |          |               |          |   |         |        | 472      |  
|                              |            | Issuance of common stock                                                                                      |            |        | 6,104,000 |       |        |         | 6,104 |          |         |                                              | 157,000 |                |         |        |         |   |          |               |          |   |         |        | 163,104  |  
|                              |            | Stock options exercised                                                                                       |            |        | 98,118    |       |        |         | 99    |          |         |                                              | 1,349   |                |         |        |         |   |          |               |          |   |         |        | 1,448    |  
|                              |            | Cash dividends                                                                                                |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        | (15,701 | ) |          |               |          |   |         |        | (15,701  | )
|                              |            |                                                                                                               |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |       
|Balance at September 30, 2003 |            |                                                                                                               | 45,402,592 |        |           | $     | 45,403 |         |       | $        | 508,775 |                                              |         | $              | 394,315 |        |         | $ | (89,140  | )             |          | $ | 859,353 |       
|                              |            |                                                                                                               |            |        |           |       |        |         |       |          |         |                                              |         |                |         |        |         |   |          |               |          |   |         |       



---

|(1) |  | The pre-tax amount of unrealized gains and losses on securities available
for sale and retained interest in securitized assets was $13.2 million for
the nine months ended September 30, 2003 compared with $48.5 million for
the year ended December 31, 2002.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The pre-tax amount of unrealized losses on cash flow hedges was $51.1
million for the nine months ended September 30, 2003 compared with $230
million for the year ended December 31, 2002.                                                                    
|   
|(3) |  | The pre-tax amount of unrealized gains on securities available for sale
reclassified into earnings was $5.0 million for the nine months ended
September 30, 2003 compared with $5.0 thousand for the year ended December
31, 2002.                             
|   
|(4) |  | The pre-tax amount of unrealized losses on cash flow hedges reclassified
into earnings was $90.0 million for the nine months ended September 30,
2003 compared with $112 million for the year ended December 31, 2002.                                         
|   
|(5) |  | Amount represents expense related to stock options granted.                                                                                                                                                                                                    

See accompanying notes to consolidated financial statements.

4



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##### Table of Contents






WESTCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                                  |                                                         |   |                           |            |      |   |            |            |  
|--------------------------------------------------------------------------------- | ------------------------------------------------------- | - | ------------------------- | ---------- | ---- | - | ---------- | ---------- | -
|                                                                                  |                                                         |   | For the Nine Months Ended
|                                                                                  |                                                         |   | September 30,            
|                                                                                  |                                                         |   |                          
|                                                                                  |                                                         |   | 2003                      |            | 2002
|                                                                                  |                                                         |   |                           |            |     
|                                                                                  |                                                         |   | (Dollars in thousands)   
|OPERATING ACTIVITIES                                                              |                                                         |   |                           |            |      |   |            |           
|Net income                                                                        |                                                         | $ | 84,487                    |            |      | $ | 60,234     |           
|Adjustments to reconcile net income to net cash provided by
Operating activities: |                                                         |   |                           |            |      |   |            |           
|                                                                                  | Provision for credit losses                             |   |                           | 221,071    |      |   |            | 209,043    |  
|                                                                                  | Depreciation and amortization                           |   |                           | 11,720     |      |   |            | 29,134     |  
|                                                                                  | Amortization of losses on cash flow hedges              |   |                           | 43,665     |      |   |            | 23,735     |  
|                                                                                  | Amortization of premium on mortgage-backed securities   |   |                           | 55,134     |      |   |            | 25,241     |  
|                                                                                  | Amortization of participation paid to dealers           |   |                           | 81,384     |      |   |            | 67,095     |  
|                                                                                  | Amortization of retained interest in securitized assets |   |                           |            |      |   |            | 32,612     |  
|                                                                                  | (Gain) loss on sales, net                               |   |                           | (10,060    | )    |   |            | 6,033      |  
|Loans held for sale:                                                              |                                                         |   |                           |            |      |   |            |           
|                                                                                  | Proceeds from sale of mortgage loans                    |   |                           |            |      |   |            | 554        |  
|(Increase) decrease in other assets                                               |                                                         |   | (15,324                   | )          |      |   | 22,347     |           
|Increase in other liabilities                                                     |                                                         |   | 22,301                    |            |      |   | 102,417    |           
|Other, net                                                                        |                                                         |   | 22,070                    |            |      |   | 9,409      |           
|                                                                                  |                                                         |   |                           |            |      |   |            |           
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |                                                         |   | 516,448                   |            |      |   | 587,854    |           
|INVESTING ACTIVITIES                                                              |                                                         |   |                           |            |      |   |            |           
|Loans receivable:                                                                 |                                                         |   |                           |            |      |   |            |           
|                                                                                  | Origination of loans                                    |   |                           | (4,952,333 | )    |   |            | (4,427,803 | )
|                                                                                  | Participation paid to dealers                           |   |                           | (109,325   | )    |   |            | (99,706    | )
|                                                                                  | Loan payments and payoffs                               |   |                           | 3,745,284  |      |   |            | 2,691,814  |  
|Investment securities available for sale:                                         |                                                         |   |                           |            |      |   |            |           
|                                                                                  | Purchases                                               |   |                           | (51,406    | )    |   |            | (4,842     | )
|                                                                                  | Proceeds from sale                                      |   |                           | 1,030      |      |   |            | 485        |  
|                                                                                  | Proceeds from maturities                                |   |                           | 319        |      |   |            | 116        |  
|Mortgage-backed securities:                                                       |                                                         |   |                           |            |      |   |            |           
|                                                                                  | Purchases                                               |   |                           | (1,672,500 | )    |   |            | (1,081,335 | )
|                                                                                  | Proceeds from sale                                      |   |                           | 105,066    |      |   |            |            |  
|                                                                                  | Payments received                                       |   |                           | 1,476,522  |      |   |            | 704,194    |  
|Increase in amounts due from trust                                                |                                                         |   |                           |            |      |   | 19,983     |           
|Purchase of premises and equipment                                                |                                                         |   | (13,911                   | )          |      |   | (14,424    | )         
|Proceeds from sales of premises and equipment                                     |                                                         |   | 2,938                     |            |      |   | 5,977      |           
|                                                                                  |                                                         |   |                           |            |      |   |            |           
|NET CASH USED IN INVESTING ACTIVITIES                                             |                                                         |   | (1,468,316                | )          |      |   | (2,205,541 | )         
|FINANCING ACTIVITIES                                                              |                                                         |   |                           |            |      |   |            |           
|Increase (decrease) in deposits                                                   |                                                         |   | 5,486                     |            |      |   | (532,505   | )         
|(Decrease) increase in securities sold under agreements to repurchase             |                                                         |   | (30,437                   | )          |      |   | 165,148    |           
|Proceeds from notes payable on automobile secured financing                       |                                                         |   | 4,476,713                 |            |      |   | 5,564,768  |           
|Payments on notes payable on automobile secured financing                         |                                                         |   | (3,444,685                | )          |      |   | (3,472,399 | )         
|Increase (decrease) in borrowings                                                 |                                                         |   | 3,271                     |            |      |   | (16,772    | )         
|Decrease in amounts held on behalf of trustee                                     |                                                         |   |                           |            |      |   | (67,213    | )         
|Increase (decrease) in FHLB advances                                              |                                                         |   | 47,401                    |            |      |   | (97,607    | )         
|Payments on issuance of subordinated debentures                                   |                                                         |   | (7,315                    | )          |      |   | 279,486    |           
|Increase in restricted cash                                                       |                                                         |   | (114,556                  | )          |      |   | (53,740    | )         
|Proceeds from issuance of common stock                                            |                                                         |   | 164,551                   |            |      |   | 52,761     |           
|Proceeds from issuance of subsidiary common stock                                 |                                                         |   | 68                        |            |      |   | 10,980     |           
|Cash dividends                                                                    |                                                         |   | (15,701                   | )          |      |   | (13,338    | )         
|Payments on cash flow hedges                                                      |                                                         |   | (34,180                   | )          |      |   | (70,156    | )         
|                                                                                  |                                                         |   |                           |            |      |   |            |           
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                         |                                                         |   | 1,050,616                 |            |      |   | 1,749,413  |           
|                                                                                  |                                                         |   |                           |            |      |   |            |           
|INCREASE IN CASH AND DUE FROM BANKS                                               |                                                         |   | 98,748                    |            |      |   | 131,726    |           
|Cash and due from banks at beginning of year                                      |                                                         |   | 84,215                    |            |      |   | 104,327    |           
|                                                                                  |                                                         |   |                           |            |      |   |            |           
|CASH AND DUE FROM BANKS AT END OF PERIOD                                          |                                                         | $ | 182,963                   |            |      | $ | 236,053    |           
|                                                                                  |                                                         |   |                           |            |      |   |            |           

See accompanying notes to consolidated financial statements.

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WESTCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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, also known as GAAP, 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, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. 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, 2002 included in our Form
10-K.

During the second quarter of 2003, various amounts related to certain
securitization transactions were reclassified to restricted cash on the
Statement of Financial Condition. Previously, such amounts were reported as a
reduction of notes payable on automobile secured financing on the Statement of
Financial Condition. The 2002 amounts have been reclassified accordingly.
Restricted cash represents amounts that are held by the trustee until such
cash is released by the trustee.

During the first quarter of 2003, Chapter 13 bankruptcy accounts greater than
120 days were reclassified to contracts receivable and the related reserves
were reclassified to the allowance for credit losses on the Statement of
Financial Condition. Previously, such amounts were reported as nonperforming
assets and were included in other assets on the Statement of Financial
Condition. The 2002 amounts have been reclassified accordingly. These loans
were considered in the overall evaluation of the adequacy of our allowance for
credit losses for the periods reported. See Asset Quality  Managements
Discussion and Analysis of Financial Condition and Results of Operations.

Effective January 1, 2003, we regained control over assets of the
securitization trusts for all of our outstanding securitization transactions
treated as sales for accounting purposes. We regained control of these assets
when each trust was given the ability to invest in financial assets not
related to the securitization of contracts. In accordance with paragraph 55
of Statement of Financial Accounting Standards No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, also known as SFAS No. 140, and Emerging Issues Task Force 02-9,
Accounting for Changes that Result in a Transferor Regaining Control of
Financial Assets Sold, we recorded $525 million of automobile contracts and
the related notes payable on automobile secured financings on our Consolidated
Statements of Financial Condition and have eliminated all remaining amounts
due from trusts and amounts held on behalf of trustee. We no longer recognize
retained interest income or expense or contractual servicing income on our
Consolidated Statements of Income. Rather, we recognize interest income on
automobile contracts held in these trusts and record interest expense on notes
payable on automobile secured financings. These loans were considered in the
overall evaluation of the adequacy of our allowance for credit losses. See
Asset Quality  Managements Discussion and Analysis of Financial Condition
and Results of Operations.

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In April 2003, the FASB issued Statement of Financial Accounting Standards No.
149,Amendment of Statement 133 on Derivative Instruments and Hedging
Activities, also known as SFAS No. 149. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under FASB Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. The adoption of SFAS No. 149 did not have a material
effect on our earnings or financial position.

In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, also known as SFAS No. 150. SFAS No. 150 establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). Many of those instruments were
previously classified as equity. The adoption of SFAS No. 150 did not 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, 2003    
|                                 |  |                       
|                                 |  |                        |           |            |  | Gross      |        | Gross |  |   |       | 
|                                 |  | Amortized              |           | Unrealized |  | Unrealized |        | Fair 
|                                 |  | Cost                   |           | Gain       |  | Loss       |        | Value
|                                 |  |                        |           |            |  |            |        |      
|                                 |  | (Dollars in thousands)
|GNMA certificates                |  | $                      | 2,606,940 |            |  | $          | 30,061 |       |  | $ | 4,018 |  |  | $ | 2,632,983 | 
|FNMA participation certificates  |  |                        | 28,327    |            |  |            | 466    |       |  |   |       |  |  |   | 28,793    | 
|FHLMC participation certificates |  |                        | 538       |            |  |            | 11     |       |  |   |       |  |  |   | 549       | 
|Other                            |  |                        | 1,831     |            |  |            |        |       |  |   |       |  |  |   | 1,831     | 
|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 
|                                 |  | $                      | 2,637,636 |            |  | $          | 30,538 |       |  | $ | 4,018 |  |  | $ | 2,664,156 | 
|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 

|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 
|-------------------------------- |  | ---------------------- | --------- | ---------- |  | ---------- | ------ | ----- |  | - | ----- |  |  | - | --------- | 
|                                 |  | December 31, 2002     
|                                 |  |                       
|                                 |  |                        |           |            |  | Gross      |        | Gross |  |   |       | 
|                                 |  | Amortized              |           | Unrealized |  | Unrealized |        | Fair 
|                                 |  | Cost                   |           | Gain       |  | Loss       |        | Value
|                                 |  |                        |           |            |  |            |        |      
|                                 |  | (Dollars in thousands)
|GNMA certificates                |  | $                      | 2,562,459 |            |  | $          | 46,008 |       |  | $ | 1,010 |  |  | $ | 2,607,457 | 
|FNMA participation certificates  |  |                        | 38,647    |            |  |            | 477    |       |  |   |       |  |  |   | 39,124    | 
|FHLMC participation certificates |  |                        | 1,046     |            |  |            | 22     |       |  |   |       |  |  |   | 1,068     | 
|Other                            |  |                        | 2,008     |            |  |            |        |       |  |   |       |  |  |   | 2,008     | 
|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 
|                                 |  | $                      | 2,604,160 |            |  | $          | 46,507 |       |  | $ | 1,010 |  |  | $ | 2,649,657 | 
|                                 |  |                        |           |            |  |            |        |       |  |   |       |  |  |   |           | 

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Note 3  Net Loans Receivable

Net loans receivable consisted of the following:

|                            |                                                     |   |                        |            |              |   |           |           |  
|--------------------------- | --------------------------------------------------- | - | ---------------------- | ---------- | ------------ | - | --------- | --------- | -
|                            |                                                     |   | September 30,          |            | December 31,
|                            |                                                     |   | 2003                   |            | 2002        
|                            |                                                     |   |                        |            |             
|                            |                                                     |   | (Dollars in thousands)
|Consumer:                   |                                                     |   |                        |            |              |   |           |          
|                            | Automobile contracts                                |   | $                      | 10,545,852 |              |   | $         | 8,993,266 |  
|                            | Dealer participation, net of deferred contract fees |   |                        | 174,789    |              |   |           | 154,671   |  
|                            | Other                                               |   |                        | 7,924      |              |   |           | 7,531     |  
|                            | Unearned discounts                                  |   |                        | (69,905    | )            |   |           | (91,713   | )
|                            |                                                     |   |                        |            |              |   |           |           |  
|                            |                                                     |   | 10,658,660             |            |              |   | 9,063,755 |          
|Real estate:                |                                                     |   |                        |            |              |   |           |          
|                            | Mortgage                                            |   |                        | 231,538    |              |   |           | 277,233   |  
|                            | Construction                                        |   |                        | 28,509     |              |   |           | 14,150    |  
|                            |                                                     |   |                        |            |              |   |           |           |  
|                            |                                                     |   | 260,047                |            |              |   | 291,383   |          
|Undisbursed loan proceeds   |                                                     |   | (13,515                | )          |              |   | (8,453    | )        
|                            |                                                     |   |                        |            |              |   |           |           |  
|                            |                                                     |   | 246,532                |            |              |   | 282,930   |          
|Commercial                  |                                                     |   | 105,665                |            |              |   | 97,216    |          
|                            |                                                     |   |                        |            |              |   |           |           |  
|                            |                                                     |   | 11,010,857             |            |              |   | 9,443,901 |          
|Allowance for credit losses |                                                     |   | (298,278               | )          |              |   | (269,352  | )        
|                            |                                                     |   |                        |            |              |   |           |           |  
|                            |                                                     | $ | 10,712,579             |            |              | $ | 9,174,549 |          
|                            |                                                     |   |                        |            |              |   |           |           |  

8



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##### Table of Contents



Note 4  Allowance for Credit Losses

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

|                                                                                                      |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |          |  
|----------------------------------------------------------------------------------------------------- | -------------- | - | -------------------------- | ------- | ------------------------- | - | ------- | ------- | ---- | - | -------- | -------- | - | - | -------- | -------- | -
|                                                                                                      |                |   | For the Three Months Ended |         | For the Nine Months Ended
|                                                                                                      |                |   | September 30,              |         | September 30,            
|                                                                                                      |                |   |                            |         |                          
|                                                                                                      |                |   | 2003                       |         | 2002                      |   | 2003    |         | 2002
|                                                                                                      |                |   |                            |         |                           |   |         |         |     
|                                                                                                      |                |   | (Dollars in thousands)    
|Balance at beginning of period                                                                        |                | $ | 291,459                    |         |                           | $ | 218,337 |         |      | $ | 269,352  |          |   | $ | 178,218  |         
|Chargeoffs:                                                                                           |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|                                                                                                      | Consumer loans |   |                            | (88,345 | )                         |   |         | (70,143 | )    |   |          | (258,495 | ) |   |          | (192,238 | )
|                                                                                                      | Mortgage loans |   |                            | (7      | )                         |   |         | (105    | )    |   |          | (344     | ) |   |          | (176     | )
|                                                                                                      |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|                                                                                                      |                |   | (88,352                    | )       |                           |   | (70,248 | )       |      |   | (258,839 | )        |   |   | (192,414 | )       
|Recoveries:                                                                                           |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|                                                                                                      | Consumer loans |   |                            | 22,003  |                           |   |         | 15,144  |      |   |          | 66,593   |   |   |          | 49,382   |  
|                                                                                                      | Mortgage loans |   |                            | 18      |                           |   |         |         |      |   |          | 101      |   |   |          |          |  
|                                                                                                      |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|                                                                                                      |                |   | 22,021                     |         |                           |   | 15,144  |         |      |   | 66,694   |          |   |   | 49,382   |         
|                                                                                                      |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|Net chargeoffs                                                                                        |                |   | (66,331                    | )       |                           |   | (55,104 | )       |      |   | (192,145 | )        |   |   | (143,032 | )       
|Provision for credit losses                                                                           |                |   | 73,150                     |         |                           |   | 80,996  |         |      |   | 221,071  |          |   |   | 209,043  |         
|                                                                                                      |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|Balance at end of period                                                                              |                | $ | 298,278                    |         |                           | $ | 244,229 |         |      | $ | 298,278  |          |   | $ | 244,229  |         
|                                                                                                      |                |   |                            |         |                           |   |         |         |      |   |          |          |   |   |          |         
|Ratio of net chargeoffs
during the period
(annualized) to average loans
outstanding during the period |                |   | 2.5                        | %       |                           |   | 2.5     | %       |      |   | 2.5      | %        |   |   | 2.3      | %       
|Ratio of allowance for credit
losses to loans at the end of
the period                                |                |   | 2.7                        | %       |                           |   | 2.7     | %       |      |   | 2.7      | %        |   |   | 2.7      | %       

Note 5  Deposits

Deposits consisted of the following:

|                              |  |                 |     |                     |  |               |     |              |  |                        |           |  |  |   |           | 
|----------------------------- |  | --------------- | --- | ------------------- |  | ------------- | --- | ------------ |  | ---------------------- | --------- |  |  | - | --------- | 
|                              |  |                 |     |                     |  | Weighted      |     |              |  |                        |           |  |  |  
|                              |  | Weighted        |     | Average Rate        |  |               |     |              |  |                        |           | 
|                              |  | Average Rate at |     | For the Nine Months |  |               |     |              |  |                        |           | 
|                              |  | September 30,   |     | Ended September 30, |  | September 30, |     | December 31,
|                              |  | 2003(1)         |     | 2003 (2)            |  | 2003          |     | 2002        
|                              |  |                 |     |                     |  |               |     |             
|                              |  |                 |     |                     |  |               |     |              |  | (Dollars in thousands)
|Noninterest bearing deposits  |  |                 |     |                     |  |               |     |              |  | $                      | 177,211   |  |  | $ | 165,844   | 
|Demand deposit accounts       |  |                 | 0.1 | %                   |  |               | 0.2 | %            |  |                        | 999       |  |  |   | 1,037     | 
|Passbook accounts             |  |                 | 0.1 |                     |  |               | 0.3 |              |  |                        | 6,826     |  |  |   | 6,688     | 
|Money market deposit accounts |  |                 | 1.4 |                     |  |               | 1.4 |              |  |                        | 866,349   |  |  |   | 730,245   | 
|Brokered certificate accounts |  |                 | 2.0 |                     |  |               | 2.3 |              |  |                        | 109,150   |  |  |   | 98,992    | 
|Certificate accounts          |  |                 | 2.2 |                     |  |               | 5.8 |              |  |                        | 808,599   |  |  |   | 972,178   | 
|                              |  |                 |     |                     |  |               |     |              |  |                        |           |  |  |   |           | 
|                              |  |                 |     |                     |  |               |     |              |  | $                      | 1,969,134 |  |  | $ | 1,974,984 | 
|                              |  |                 |     |                     |  |               |     |              |  |                        |           |  |  |   |           | 



---

|(1) |  | Contractual rate.                      
|--- |  | ---------------------------------------
|   
|(2) |  | Includes effects of hedging activities.

9



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Note 6  Notes Payable on Automobile Secured Financing

In connection with our asset-backed securitization activities, we issued $1.7
billion and $4.5 billion of notes secured by automobile contracts for the three
and nine months ended September 30, 2003, respectively, compared with $1.3
billion and $5.6 billion for the same respective periods in 2002. The $4.5
billion issued during 2003 was through public transactions. Of the $5.6 billion
issued during 2002, $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. We had no amounts outstanding on
a conduit facility at September 30, 2002. There were $10.1 billion of notes
payable on automobile secured financing outstanding at September 30, 2003
compared with $8.5 billion at December 31, 2002.

Interest payments on the public transactions based on the respective notes
interest rate are due either monthly or quarterly, in arrears. Interest
payments on the conduit facility were due monthly, in arrears, based on the
respective notes interest rate. Interest expense on all notes payable on
automobile secured financing, including interest payments under interest rate
swap agreements, totaled $102 million and $319 million for the three and nine
months ended September 30, 2003, respectively, compared with $106 million and
$301 million for the same respective periods in 2002.

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,
|                                               |                                                |   | 2003                   |         | 2002        
|                                               |                                                |   |                        |         |             
|                                               |                                                |   | (Dollars in thousands)
|Unrealized gain on marketable securities       |                                                | $ | 16,232                 |         |              | $ | 27,145   |        
|Unrealized loss on interest rate swaps: (1)    |                                                |   |                        |         |              |   |          |        
|Deposits                                       |                                                |   | (47,179                | )       |              |   | (53,081  | )      
|                                               | Automobile secured financing                   |   |                        | (30,793 | )            |   |          | (43,624 | )
|                                               | Securities sold under agreements to repurchase |   |                        | (2,663  | )            |   |          | (3,092  | )
|                                               |                                                |   |                        |         |              |   |          |        
|                                               |                                                |   | (80,635                | )       |              |   | (99,797  | )      
|Realized loss on settled cash flow hedges: (1) |                                                |   |                        |         |              |   |          |        
|                                               | Deposits                                       |   |                        | (9,694  | )            |   |          | (11,367 | )
|                                               | Automobile secured financing                   |   |                        | (15,043 | )            |   |          | (17,531 | )
|                                               |                                                |   |                        |         |              |   |          |        
|                                               |                                                |   | (24,737                | )       |              |   | (28,898  | )      
|                                               |                                                |   |                        |         |              |   |          |        
|Total other accumulated comprehensive loss     |                                                | $ | (89,140                | )       |              | $ | (101,550 | )      
|                                               |                                                |   |                        |         |              |   |          |        



---

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

Note 8  Stock Options

In May 2001, we adopted the 2001 Westcorp Stock Option Plan, also known as the
2001 Plan, an incentive stock option plan for certain associates and directors.
The 2001 Plan replaced the 1991 Stock Option Plan, also known as the 1991 Plan
that expired on April 15, 2001. Those who received options prior to the
approval of the 2001 Plan are still subject to the 1991 Plan and may continue
to exercise the remaining shares that are outstanding and exercisable until
they expire under the terms of their grant. However, any and all shares
reserved for the 1991 Plan are no longer available for future grants. As such,
no further grants will be made under the expired 1991 Plan.

10



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Options outstanding and exercisable at September 30, 2003 were as follows:

|                |  |             |                     |      |                     |       |          |             |          |       |          |  |  |  |          |  |  |   |       |  | 
|--------------- |  | ----------- | ------------------- | ---- | ------------------- | ----- | -------- | ----------- | -------- | ----- | -------- |  |  |  | -------- |  |  | - | ----- |  | 
|                |  |             | Options Outstanding |      | Options Exercisable
|                |  |             |                     |      |                    
|                |  |             |                     |      |                     |       | Weighted |             | Weighted |       |          |  |  |  | Weighted
|                |  |             |                     |      |                     |       | Average  |             | Average  |       |          |  |  |  | Average 
|                |  |             | Number              |      | Remaining           |       | Exercise |             | Number   |       | Exercise
|Exercise Prices |  | Outstanding |                     | Life |                     | Price |          | Exercisable |          | Price
|                |  |             |                     |      |                     |       |          |             |          |      
|$9.00  10.00   |  |             | 750                 |      |                     |       | 1.87     |             |          | $     | 9.94     |  |  |  | 750      |  |  | $ | 9.94  | 
|12.00  13.00   |  |             | 197,467             |      |                     |       | 2.26     |             |          |       | 12.62    |  |  |  | 197,467  |  |  |   | 12.62 | 
|13.00  14.00   |  |             | 199,875             |      |                     |       | 3.39     |             |          |       | 13.25    |  |  |  | 137,592  |  |  |   | 13.25 | 
|15.00  16.00   |  |             | 1,000               |      |                     |       | 4.11     |             |          |       | 15.25    |  |  |  | 500      |  |  |   | 15.25 | 
|17.00  18.00   |  |             | 289,500             |      |                     |       | 4.40     |             |          |       | 17.32    |  |  |  | 130,125  |  |  |   | 17.32 | 
|18.00  19.00   |  |             | 794,250             |      |                     |       | 4.83     |             |          |       | 18.56    |  |  |  | 79,375   |  |  |   | 18.30 | 
|19.00  20.00   |  |             | 5,000               |      |                     |       | 5.85     |             |          |       | 19.85    |  |  |  | 1,250    |  |  |   | 19.85 | 
|20.00  21.00   |  |             | 3,000               |      |                     |       | 6.10     |             |          |       | 20.41    |  |  |  |          |  |  |   |      
|                |  |             |                     |      |                     |       |          |             |          |       |          |  |  |  |          |  |  |   |       | 
|9.00  21.00    |  |             | 1,490,842           |      |                     |       | 4.22     |             |          | $     | 16.82    |  |  |  | 547,059  |  |  | $ | 14.74 | 
|                |  |             |                     |      |                     |       |          |             |          |       |          |  |  |  |          |  |  |   |       | 

Stock option activity is summarized as follows:

|                                  |           |  |           |          |                |   |                  |       | 
|--------------------------------- | --------- |  | --------- | -------- | -------------- | - | ---------------- | ----- | 
|                                  |           |  |           |          |                |   | Weighted Average
|                                  |           |  | Shares    |          | Exercise Price
|                                  |           |  |           |          |               
|Outstanding at January 1, 2002    |           |  | 1,076,814 |          |                | $ | 14.67            |      
|                                  | Granted   |  |           | 414,500  |                |   |                  | 18.33 | 
|                                  | Exercised |  |           | (143,251 | )              |   |                  | 13.29 | 
|                                  | Canceled  |  |           | (180,625 | )              |   |                  | 16.06 | 
|                                  |           |  |           |          |                |   |                  |      
|Outstanding at December 31, 2002  |           |  | 1,167,438 |          |                |   | 15.91            |      
|                                  | Granted   |  |           | 444,000  |                |   |                  | 18.78 | 
|                                  | Exercised |  |           | (98,118  | )              |   |                  | 14.75 | 
|                                  | Canceled  |  |           | (22,478  | )              |   |                  | 17.08 | 
|                                  |           |  |           |          |                |   |                  |      
|Outstanding at September 30, 2003 |           |  | 1,490,842 |          |                | $ | 16.82            |      
|                                  |           |  |           |          |                |   |                  |      

Option valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Our stock options have
characteristics significantly different from traded options, and changes in the
subjective input assumptions can materially affect the fair value estimate. In
2002, we utilized the Black-Scholes option valuation model to determine the
fair value of the options granted. During 2003, we decided to utilize the
Binomial option valuation model for all stock options expensed as part of our
implementation of SFAS No. 148 as we feel it provides a better measure of value
for companies that pay dividends. In addition, in 2003 we utilized the
Binomial option valuation model to value all outstanding options, including
those granted prior to 2003. In our opinion, neither of these models
necessarily provides a reliable single measure of the fair value of our
employee stock options. The weighted average fair value of options granted
during the period ending September 30, 2003 was $5.48, compared to $6.11 for
the year ended December 31, 2002.

Pro forma information regarding net income and earnings per share is required
by SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
No. 148 and has been determined as if we had accounted for our employee stock
options under the fair value method of that statement. We adopted the
disclosure provisions of SFAS No. 148 on December 31, 2002 and the prospective
application method of transition to the fair value based method of accounting
for stock options in the first quarter of 2003.

11



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Pro forma net income and diluted earnings per share for the respective periods
were as follows:

|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | - | ------------------------------------------------ | ---- | ------------------------- | - | ------ | ---- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                                                            |                       |   | For the Three Months Ended                       |      | For the Nine Months Ended
|                                                                                                                                            |                       |   | September 30,                                    |      | September 30,            
|                                                                                                                                            |                       |   |                                                  |      |                          
|                                                                                                                                            |                       |   | 2003                                             |      | 2002                      |   | 2003   |      | 2002
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |     
|                                                                                                                                            |                       |   | (Dollars in thousands, except per share amounts)
|Net income, as reported                                                                                                                     |                       | $ | 29,335                                           |      |                           | $ | 21,673 |      |      | $ | 84,487 |      |  | $ | 60,234 |     
|Add: Stock-based employee
compensation expense
included in reported net
income, net of related
tax effects                                  |                       |   | 122                                              |      |                           |   |        |      |      |   | 285    |      |  |   |        |     
|Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects |                       |   | 315                                              |      |                           |   | 215    |      |      |   | 919    |      |  |   | 644    |     
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|Pro forma net income                                                                                                                        |                       | $ | 29,142                                           |      |                           | $ | 21,458 |      |      | $ | 83,853 |      |  | $ | 59,590 |     
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|Earnings per share                                                                                                                          |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Basic  as reported   |   | $                                                | 0.65 |                           |   | $      | 0.55 |      |   | $      | 2.05 |  |   | $      | 1.57 | 
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Basic  pro forma     |   | $                                                | 0.65 |                           |   | $      | 0.55 |      |   | $      | 2.04 |  |   | $      | 1.55 | 
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|Earnings per share                                                                                                                          |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Diluted  as reported |   | $                                                | 0.64 |                           |   | $      | 0.55 |      |   | $      | 2.03 |  |   | $      | 1.55 | 
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Diluted  pro forma   |   | $                                                | 0.64 |                           |   | $      | 0.54 |      |   | $      | 2.01 |  |   | $      | 1.54 | 
|                                                                                                                                            |                       |   |                                                  |      |                           |   |        |      |      |   |        |      |  |   |        |     

Note 9  Comprehensive income

The following table presents the components of comprehensive income (loss),
net of related tax, for the periods indicated:

|                                                                                          |  |                            |        |                           |  |      |         |      |  |   |         |   |  |   |          |  
|----------------------------------------------------------------------------------------- |  | -------------------------- | ------ | ------------------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                                                                          |  | For the Three Months Ended |        | For the Nine Months Ended
|                                                                                          |  | September 30,              |        | September 30,            
|                                                                                          |  |                            |        |                          
|                                                                                          |  | 2003                       |        | 2002                      |  | 2003 |         | 2002
|                                                                                          |  |                            |        |                           |  |      |         |     
|                                                                                          |  | (Dollars in thousands)    
|Net income                                                                                |  | $                          | 29,335 |                           |  | $    | 21,673  |      |  | $ | 84,487  |   |  | $ | 60,234   |  
|Unrealized (losses) gains
on securities available
for sale, net of tax                    |  |                            | (2,184 | )                         |  |      | 14,298  |      |  |   | (7,926  | ) |  |   | 26,588   |  
|Unrealized gains (losses)
on cash flow hedges, net
of tax                                 |  |                            | 7,276  |                           |  |      | (65,630 | )    |  |   | (30,667 | ) |  |   | (127,864 | )
|Reclassification
adjustment for gains on
securities available for
sale, net of tax        |  |                            | (2,983 | )                         |  |      |         |      |  |   | (2,987  | ) |  |   |          |  
|Reclassification
adjustment for losses on
cash flow hedges included
in income, net of tax |  |                            | 20,022 |                           |  |      | 18,596  |      |  |   | 53,990  |   |  |   | 49,593   |  
|                                                                                          |  |                            |        |                           |  |      |         |      |  |   |         |   |  |   |          |  
|Comprehensive income (loss)                                                               |  | $                          | 51,466 |                           |  | $    | (11,063 | )    |  | $ | 96,897  |   |  | $ | 8,551    |  
|                                                                                          |  |                            |        |                           |  |      |         |      |  |   |         |   |  |   |          |  

Note 10   Dividends

On August 7, 2003, we declared a cash dividend of $0.13 per share for
shareholders of record as of November 4, 2003 with a payable date of November
18, 2003.

Note 11  Common stock offering

We completed a common stock offering in July 2003 in which we raised a total
of $163 million through the issuance of 6.1 million additional common shares
at a price of $28.00 per share. With the completion of this offering, our
total number of common shares issued and outstanding increased 15.7% to 45.4
million shares at September 30, 2003.

12



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##### Table of Contents



Note 12  Whole loan sale

We purchased $1.7 billion of contracts from WFS in a whole loans sale for the
nine months ended September 30, 2003. In this transaction, WFS received cash
for the amount of the principal outstanding on the contracts plus a premium of
$49.7 million. This premium was recorded by WFS as a cash gain on sale, net
of the write-off of outstanding dealer participation balances and the effect
of hedging activities. These contracts were subsequently securitized by us
and continue to be managed by WFS under the terms of the transaction. This
whole loan sale transaction is eliminated upon consolidation for accounting
purposes.

13



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##### 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 funds derived from deposits, notes payable on automobile
secured financing, advances from the Federal Home Loan Bank, also known as the
FHLB, securities sold under agreements to repurchase, other borrowings and
equity.

Noninterest income is primarily made up of revenues generated from the
servicing of automobile contracts and mortgage loans. The primary components of
noninterest income include late charges and other miscellaneous servicing fee
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.

Selected Financial Data

The following table presents summary unaudited financial data for the three and
nine months ended September 30, 2003 and 2002. Since this table is only a
summary and does not provide all of the information contained in our financial
statements, including the related notes, you should read our Consolidated
Financial Statements contained elsewhere herein. Certain amounts from the prior
years Consolidated Financial Statements have been reclassified to conform to
the current year presentation.

|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |         | 
|------------------------------------------------------------------------ | ----------------------------------------------------- | - | ------------------------------------------------ | ------- | ------------------------- | - | ---------- | ------- | ---- | - | ---------- | ------- |  | - | ---------- | ------- | 
|                                                                         |                                                       |   | For the Three Months Ended                       |         | For the Nine Months Ended
|                                                                         |                                                       |   | September 30,                                    |         | September 30,            
|                                                                         |                                                       |   |                                                  |         |                          
|                                                                         |                                                       |   | 2003                                             |         | 2002                      |   | 2003       |         | 2002
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |     
|                                                                         |                                                       |   | (Dollars in thousands, except per share amounts)
|Consolidated Statements of Operations Data:                              |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|Interest income                                                          |                                                       | $ | 310,911                                          |         |                           | $ | 299,006    |         |      | $ | 928,336    |         |  | $ | 841,210    |        
|Interest expense                                                         |                                                       |   | 130,048                                          |         |                           |   | 139,976    |         |      |   | 407,257    |         |  |   | 393,156    |        
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|                                                                         | Net interest income                                   |   |                                                  | 180,863 |                           |   |            | 159,030 |      |   |            | 521,079 |  |   |            | 448,054 | 
|Provision for credit losses                                              |                                                       |   | 73,150                                           |         |                           |   | 80,996     |         |      |   | 221,071    |         |  |   | 209,043    |        
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|                                                                         | Net interest income after provision for credit losses |   |                                                  | 107,713 |                           |   |            | 78,034  |      |   |            | 300,008 |  |   |            | 239,011 | 
|Noninterest income                                                       |                                                       |   | 27,833                                           |         |                           |   | 26,410     |         |      |   | 83,316     |         |  |   | 64,301     |        
|Noninterest expense                                                      |                                                       |   | 66,745                                           |         |                           |   | 62,207     |         |      |   | 207,840    |         |  |   | 187,841    |        
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|Income before income tax                                                 |                                                       |   | 68,801                                           |         |                           |   | 42,237     |         |      |   | 175,484    |         |  |   | 115,471    |        
|Income tax                                                               |                                                       |   | 27,343                                           |         |                           |   | 16,824     |         |      |   | 69,544     |         |  |   | 44,974     |        
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|Income before minority interest                                          |                                                       |   | 41,458                                           |         |                           |   | 25,413     |         |      |   | 105,940    |         |  |   | 70,497     |        
|Minority interest in earnings of subsidiaries                            |                                                       |   | 12,123                                           |         |                           |   | 3,740      |         |      |   | 21,453     |         |  |   | 10,263     |        
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|Net income                                                               |                                                       | $ | 29,335                                           |         |                           | $ | 21,673     |         |      | $ | 84,487     |         |  | $ | 60,234     |        
|                                                                         |                                                       |   |                                                  |         |                           |   |            |         |      |   |            |         |  |   |            |        
|Weighted average number of shares and common share
equivalents  diluted |                                                       |   | 45,786,913                                       |         |                           |   | 39,506,307 |         |      |   | 41,680,576 |         |  |   | 38,751,631 |        
|Earnings per common share  diluted                                      |                                                       | $ | 0.64                                             |         |                           | $ | 0.55       |         |      | $ | 2.03       |         |  | $ | 1.55       |        
|Dividends per share                                                      |                                                       | $ | 0.13                                             |         |                           | $ | 0.12       |         |      | $ | 0.39       |         |  | $ | 0.36       |        
|Dividend payout ratio                                                    |                                                       |   | 20.3                                             | %       |                           |   | 21.8       | %       |      |   | 19.2       | %       |  |   | 23.2       | %      

14



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|                                                     |                                               |              |                                            |            |                        |            |              |           |           |            | 
|---------------------------------------------------- | --------------------------------------------- | ------------ | ------------------------------------------ | ---------- | ---------------------- | ---------- | ------------ | --------- | --------- | ---------- | 
|                                                     |                                               |              |                                            |            | September 30,          |            | December 31,
|                                                     |                                               |              |                                            |            | 2003                   |            | 2002        
|                                                     |                                               |              |                                            |            |                        |            |             
|                                                     |                                               |              |                                            |            | (Dollars in thousands)
|Consolidated Statements of Financial Condition Data: |                                               |              |                                            |            |                        |            |              |          
|Assets:                                              |                                               |              |                                            |            |                        |            |              |          
|                                                     | Cash and other assets                         |              | $                                          | 70,204     |                        |            | $            | 201,547   |          
|                                                     | Loans:                                        |              |                                            |            |                        |            |              |           |          
|                                                     |                                               | Consumer (1) |                                            |            | 10,658,660             |            |              |           | 9,063,755 |           
|                                                     |                                               | Mortgage (2) |                                            |            | 246,532                |            |              |           | 282,930   |           
|                                                     |                                               | Commercial   |                                            |            | 105,665                |            |              |           | 97,216    |           
|                                                     | Mortgage-backed securities                    |              |                                            | 2,664,156  |                        |            |              | 2,649,657 |          
|                                                     | Investments and time deposits                 |              |                                            | 493,371    |                        |            |              | 187,534   |          
|                                                     |                                               |              |                                            |            |                        |            |              |           |          
|                                                     |                                               |              | Total assets                               |            | $                      | 14,238,588 |              |           | $         | 12,482,639 | 
|                                                     |                                               |              |                                            |            |                        |            |              |          
|Liabilities:                                         |                                               |              |                                            |            |                        |            |              |          
|                                                     | Deposits                                      |              | $                                          | 1,969,134  |                        |            | $            | 1,974,984 |          
|                                                     | Notes payable on automobile secured financing |              |                                            | 10,108,203 |                        |            |              | 8,494,678 |          
|                                                     | FHLB advances and other borrowings            |              |                                            | 638,682    |                        |            |              | 618,766   |          
|                                                     | Subordinated debentures                       |              |                                            | 394,494    |                        |            |              | 400,561   |          
|                                                     | Amounts held on behalf of trustee             |              |                                            |            |                        |            |              | 177,642   |          
|                                                     | Other liabilities                             |              |                                            | 144,197    |                        |            |              | 101,145   |          
|                                                     |                                               |              |                                            |            |                        |            |              |          
|                                                     |                                               |              | Total liabilities                          |            |                        | 13,254,710 |              |           |           | 11,767,776 | 
|                                                     | Minority interest in equity of subsidiaries   |              |                                            | 124,525    |                        |            |              | 101,666   |          
|                                                     | Shareholders equity                          |              |                                            | 859,353    |                        |            |              | 613,197   |          
|                                                     |                                               |              |                                            |            |                        |            |              |           |          
|                                                     |                                               |              | Total liabilities and shareholders equity |            | $                      | 14,238,588 |              |           | $         | 12,482,639 | 
|                                                     |                                               |              |                                            |            |                        |            |              |          

|                                                   |                    |                         |            |                        |           |                   |           |           |           |      |           |           |           |   |           |           |           | 
|-------------------------------------------------- | ------------------ | ----------------------- | ---------- | ---------------------- | --------- | ----------------- | --------- | --------- | --------- | ---- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                   |                    |                         |            | At or For the          |           | At or For the    
|                                                   |                    |                         |            | Three Months Ended     |           | Nine Months Ended
|                                                   |                    |                         |            | September 30,          |           | September 30,    
|                                                   |                    |                         |            |                        |           |                  
|                                                   |                    |                         |            | 2003                   |           | 2002              |           | 2003      |           | 2002
|                                                   |                    |                         |            |                        |           |                   |           |           |           |     
|                                                   |                    |                         |            | (Dollars in thousands)
|Other Selected Financial Data:                     |                    |                         |            |                        |           |                   |           |           |           |      |           |           |           |   |           |          
|Average automobile contracts managed               |                    | $                       | 10,284,067 |                        |           | $                 | 9,102,663 |           |           | $    | 9,885,681 |           |           | $ | 8,672,049 |          
|Return on average automobile contracts
managed (3) |                    |                         | 1.14       | %                      |           |                   | 0.96      | %         |           |      | 1.14      | %         |           |   | 0.93      | %        
|Average shareholders equity (4)                   |                    | $                       | 908,530    |                        |           | $                 | 689,966   |           |           | $    | 791,998   |           |           | $ | 659,799   |          
|Return on average shareholders equity (4)         |                    |                         | 12.92      | %                      |           |                   | 12.56     | %         |           |      | 14.22     | %         |           |   | 12.17     | %        
|Total equity to assets (5)                         |                    |                         | 7.54       |                        |           |                   | 6.55      |           |           |      | 7.54      |           |           |   | 6.55      |          
|Book value per share (4)                           |                    | $                       | 20.89      |                        |           | $                 | 17.84     |           |           | $    | 20.89     |           |           | $ | 17.84     |          
|Originations:                                      |                    |                         |            |                        |           |                   |           |           |           |      |           |           |           |   |           |          
|                                                   | Consumer loans (1) |                         | $          | 1,684,198              |           |                   | $         | 1,445,948 |           |      | $         | 4,626,928 |           |   | $         | 4,207,743 |          
|                                                   | Mortgage loans (2) |                         |            | 2,016                  |           |                   |           | 2,071     |           |      |           | 21,326    |           |   |           | 23,535    |          
|                                                   | Commercial loans   |                         |            | 108,422                |           |                   |           | 66,351    |           |      |           | 304,078   |           |   |           | 196,525   |          
|                                                   |                    |                         |            |                        |           |                   |           |           |           |      |           |           |           |   |           |          
|                                                   |                    | Total loan originations |            | $                      | 1,794,636 |                   |           | $         | 1,514,370 |      |           | $         | 4,952,332 |   |           | $         | 4,427,803 | 
|                                                   |                    |                         |            |                        |           |                   |           |           |           |      |           |           |           |   |           |          
|Interest rate spread                               |                    |                         | 4.86       | %                      |           |                   | 4.93      | %         |           |      | 4.94      | %         |           |   | 5.12      | %        



---

|(1) |  | Net of unearned discounts.                                              
|--- |  | ------------------------------------------------------------------------
|(2) |  | Net of undisbursed loan proceeds.                                       
|(3) |  | Net income (annualized) divided by average automobile contracts managed.
|(4) |  | Excludes other comprehensive loss.                                      
|(5) |  | Excludes other comprehensive loss and includes minority interest.       

Critical Accounting Policies

Management believes critical accounting policies are 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

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summary of accounting policies we consider critical.

Securitization Transactions

Contracts sold by us to our special purpose entity subsidiaries in connection
with securitization transactions are treated as having been sold for bankruptcy
remoteness purposes, thereby isolating those assets in our special purpose
entity subsidiaries, and upon transfer to the securitization trust as secured
financings under Generally Accepted Accounting Principles, also known as GAAP.
For GAAP purposes, the contracts are retained on the balance sheet with the
securities issued to finance the contracts recorded as notes payable on
automobile secured financing. We record interest income on the securitized
contracts and interest expense on the notes issued through the securitization
transactions.

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, analysis of cumulative losses 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 nonperformance 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 assets 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 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 contracts 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 contract 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 contract where the borrower has filed for bankruptcy or 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. All vehicles repossessed by us that have
not been sold are recorded at fair value and classified as Substandard.

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.

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Derivatives and 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 prior to closing the
transaction. 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. If a hedge is greater than
100% effective, the effective portion of the gain or loss on such hedge is
reported in other comprehensive income and the ineffective portion (the amount
in excess of 100%) is immediately reported in interest expense. Upon closing
of the securitization transaction, the gains or losses are amortized on a
level yield basis over the duration of the notes issued.

If we issue variable rate notes payable in connection with our securitization
activities, 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. If a hedge is greater than
100% effective, the effective portion of the gain or loss on such hedge is
reported in other comprehensive income and the ineffective portion (the amount
in excess of 100%) is immediately reported in interest expense. 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.

We may also enter into interest rate swap agreements or other derivatives that
do not qualify for hedge accounting under Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, also known as SFAS No. 133, or that we choose not to designate as
hedges. These derivatives pertain to variable rate notes issued in conjunction
with the securitization of our contracts. Any change in the market value of
such derivatives and related income or expense is recorded to other
noninterest income each month.

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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. Net interest income totaled
$181 million and $521 million for the three and nine months ended September
30, 2003, respectively, compared to $159 million and $448 million for the same
respective periods in 2002. The increase in net interest income was the result
of us holding more automobile contracts on the balance sheet even as overall
net interest margins declined for the nine months ended September 30, 2003.

The following table presents information relative to the average balances and
interest rates on an owned basis for the periods indicated:

|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |       |       | 
|-------------------------------------------- | ---------------------------------------------- | ------------------------------------- | ---------------------------------- | --------- | ---------------------------------------- | ---------- | -------- | ------- | ------- | ------- | ------- | ---- | -------- | ----- | ---- | --------- | --------- | ---------- | ------- | ------- | ------- | ------- | ---- | ----- | ----- | ----- | 
|                                             |                                                |                                       |                                    |           | For the Three Months Ended September 30,
|                                             |                                                |                                       |                                    |           |                                         
|                                             |                                                |                                       |                                    |           | 2003                                     |            | 2002    
|                                             |                                                |                                       |                                    |           |                                          |            |         
|                                             |                                                |                                       |                                    |           | Average                                  |            |          |         |         |         | Yield/  |      | Average  |       |      |           |           |            | Yield/ 
|                                             |                                                |                                       |                                    |           | Balance                                  |            | Interest |         | Rate    |         | Balance |      | Interest |       | Rate
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |     
|                                             |                                                |                                       |                                    |           | (Dollars in thousands)                  
|Interest earning assets:                     |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             | Total investments:                             |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |      
|                                             |                                                | Mortgage-backed securities            |                                    | $         | 2,516,193                                |            |          | $       | 15,936  |         |         |      | 2.53     | %     |      | $         | 2,272,590 |            |         | $       | 30,778  |         |      |       | 5.42  | %    
|                                             |                                                | Other short-term investments          |                                    |           | 473,758                                  |            |          |         | 1,713   |         |         |      | 1.43     |       |      |           | 444,900   |            |         |         | 2,279   |         |      |       | 2.03  |      
|                                             |                                                | Investment securities                 |                                    |           | 33,208                                   |            |          |         | 231     |         |         |      | 2.79     |       |      |           | 8,137     |            |         |         | 108     |         |      |       | 5.33  |      
|                                             |                                                | Interest earning deposits with others |                                    |           | 6,803                                    |            |          |         | 12      |         |         |      | 0.70     |       |      |           | 8,016     |            |         |         | 27      |         |      |       | 1.37  |      
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             |                                                |                                       | Total investments                  |           |                                          | 3,029,962  |          |         |         | 17,892  |         |      |          | 2.36  |      |           |           | 2,733,643  |         |         |         | 33,192  |      |       |       | 4.86  | 
|                                             | Total loans: (1)                               |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |      
|                                             |                                                | Consumer loans                        |                                    |           | 10,463,303                               |            |          |         | 288,138 |         |         |      | 10.93    |       |      |           | 8,543,283 |            |         |         | 259,706 |         |      |       | 12.06 |      
|                                             |                                                | Mortgage loans                        |                                    |           | 239,544                                  |            |          |         | 3,204   |         |         |      | 5.35     |       |      |           | 311,449   |            |         |         | 4,844   |         |      |       | 6.22  |      
|                                             |                                                | Commercial loans                      |                                    |           | 131,575                                  |            |          |         | 1,677   |         |         |      | 4.99     |       |      |           | 86,792    |            |         |         | 1,264   |         |      |       | 5.70  |      
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             |                                                |                                       | Total loans                        |           |                                          | 10,834,422 |          |         |         | 293,019 |         |      |          | 10.73 |      |           |           | 8,941,524  |         |         |         | 265,814 |      |       |       | 11.80 | 
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |       |      
|                                             |                                                |                                       | Total interest earning assets      |           | $                                        | 13,864,384 |          |         |         | 310,911 |         |      |          | 8.90  |      |           | $         | 11,675,167 |         |         |         | 299,006 |      |       |       | 10.17 | 
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|Interest bearing liabilities:                |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             | Deposits                                       |                                       | $                                  | 1,968,859 |                                          |            |          | 15,695  |         |         |         | 3.16 |          |       | $    | 2,166,683 |           |            |         | 20,447  |         |         |      | 3.74  |      
|                                             | Securities sold under agreements to repurchase |                                       |                                    | 203,641   |                                          |            |          | 1,032   |         |         |         | 1.98 |          |       |      | 142,443   |           |            |         | 1,752   |         |         |      | 2.40  |      
|                                             | FHLB advances and other borrowings             |                                       |                                    | 515,980   |                                          |            |          | 1,689   |         |         |         | 1.29 |          |       |      | 105,233   |           |            |         | 672     |         |         |      | 2.52  |      
|                                             | Notes payable on automobile secured financing  |                                       |                                    | 9,763,149 |                                          |            |          | 101,803 |         |         |         | 4.17 |          |       |      | 7,827,404 |           |            |         | 105,911 |         |         |      | 5.41  |      
|                                             | Subordinated debentures                        |                                       |                                    | 394,804   |                                          |            |          | 9,829   |         |         |         | 9.96 |          |       |      | 433,026   |           |            |         | 11,194  |         |         |      | 10.34 |      
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |       |      
|                                             |                                                |                                       | Total interest bearing liabilities |           | $                                        | 12,846,433 |          |         |         | 130,048 |         |      |          | 4.04  |      |           | $         | 10,674,789 |         |         |         | 139,976 |      |       |       | 5.24  | 
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|Net interest income and interest rate spread |                                                |                                       |                                    |           |                                          | $          | 180,863  |         |         |         | 4.86    | %    |          |       |      |           |           | $          | 159,030 |         |         |         | 4.93 | %    
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|Net yield on average interest earning assets |                                                |                                       |                                    |           |                                          |            |          |         |         |         | 5.22    | %    |          |       |      |           |           |            |         |         |         |         | 5.45 | %    
|                                             |                                                |                                       |                                    |           |                                          |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      



---

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

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|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |       |       | 
|-------------------------------------------- | ---------------------------------------------- | ------------------------------------- | ---------------------------------- | --------- | --------------------------------------- | ---------- | -------- | ------- | ------- | ------- | ------- | ---- | -------- | ----- | ---- | --------- | --------- | ---------- | ------- | ------- | ------- | ------- | ---- | ----- | ----- | ----- | 
|                                             |                                                |                                       |                                    |           | For the Nine Months Ended September 30,
|                                             |                                                |                                       |                                    |           |                                        
|                                             |                                                |                                       |                                    |           | 2003                                    |            | 2002    
|                                             |                                                |                                       |                                    |           |                                         |            |         
|                                             |                                                |                                       |                                    |           | Average                                 |            |          |         |         |         | Yield/  |      | Average  |       |      |           |           |            | Yield/ 
|                                             |                                                |                                       |                                    |           | Balance                                 |            | Interest |         | Rate    |         | Balance |      | Interest |       | Rate
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |     
|                                             |                                                |                                       |                                    |           | (Dollars in thousands)                 
|Interest earning assets:                     |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             | Total investments:                             |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |      
|                                             |                                                | Mortgage-backed securities            |                                    | $         | 2,514,424                               |            |          | $       | 61,950  |         |         |      | 3.29     | %     |      | $         | 2,140,819 |            |         | $       | 86,440  |         |      |       | 5.38  | %    
|                                             |                                                | Other short-term investments          |                                    |           | 374,964                                 |            |          |         | 4,750   |         |         |      | 1.69     |       |      |           | 356,517   |            |         |         | 5,770   |         |      |       | 2.16  |      
|                                             |                                                | Investment securities                 |                                    |           | 15,581                                  |            |          |         | 412     |         |         |      | 3.53     |       |      |           | 6,908     |            |         |         | 341     |         |      |       | 6.58  |      
|                                             |                                                | Interest earning deposits with others |                                    |           | 8,383                                   |            |          |         | 55      |         |         |      | 0.87     |       |      |           | 6,245     |            |         |         | 70      |         |      |       | 1.50  |      
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             |                                                |                                       | Total investments                  |           |                                         | 2,913,352  |          |         |         | 67,167  |         |      |          | 3.07  |      |           |           | 2,510,489  |         |         |         | 92,621  |      |       |       | 4.92  | 
|                                             | Total loans: (1)                               |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |      
|                                             |                                                | Consumer loans                        |                                    |           | 10,056,540                              |            |          |         | 846,270 |         |         |      | 11.25    |       |      |           | 7,921,167 |            |         |         | 728,566 |         |      |       | 12.30 |      
|                                             |                                                | Mortgage loans                        |                                    |           | 255,896                                 |            |          |         | 10,543  |         |         |      | 5.49     |       |      |           | 333,479   |            |         |         | 15,844  |         |      |       | 6.33  |      
|                                             |                                                | Commercial loans                      |                                    |           | 120,639                                 |            |          |         | 4,356   |         |         |      | 4.76     |       |      |           | 93,124    |            |         |         | 4,179   |         |      |       | 5.92  |      
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             |                                                |                                       | Total loans                        |           |                                         | 10,433,075 |          |         |         | 861,169 |         |      |          | 11.03 |      |           |           | 8,347,770  |         |         |         | 748,589 |      |       |       | 11.99 | 
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |       |      
|                                             |                                                |                                       | Total interest earning assets      |           | $                                       | 13,346,427 |          |         |         | 928,336 |         |      |          | 9.30  |      |           | $         | 10,858,259 |         |         |         | 841,210 |      |       |       | 10.35 | 
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|Interest bearing liabilities:                |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|                                             | Deposits                                       |                                       | $                                  | 1,981,146 |                                         |            |          | 50,269  |         |         |         | 3.39 |          |       | $    | 2,216,250 |           |            |         | 61,642  |         |         |      | 3.72  |      
|                                             | Securities sold under agreements to repurchase |                                       |                                    | 218,569   |                                         |            |          | 3,433   |         |         |         | 2.07 |          |       |      | 191,654   |           |            |         | 3,849   |         |         |      | 2.65  |      
|                                             | FHLB advances and other borrowings             |                                       |                                    | 444,529   |                                         |            |          | 4,775   |         |         |         | 1.45 |          |       |      | 206,733   |           |            |         | 3,566   |         |         |      | 2.32  |      
|                                             | Notes payable on automobile secured financing  |                                       |                                    | 9,426,038 |                                         |            |          | 319,136 |         |         |         | 4.51 |          |       |      | 7,112,337 |           |            |         | 301,083 |         |         |      | 5.64  |      
|                                             | Subordinated debentures                        |                                       |                                    | 396,742   |                                         |            |          | 29,644  |         |         |         | 9.96 |          |       |      | 305,939   |           |            |         | 23,016  |         |         |      | 10.03 |      
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |       |      
|                                             |                                                |                                       | Total interest bearing liabilities |           | $                                       | 12,467,024 |          |         |         | 407,257 |         |      |          | 4.36  |      |           | $         | 10,032,913 |         |         |         | 393,156 |      |       |       | 5.23  | 
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      
|Net interest income and interest rate spread |                                                |                                       |                                    |           |                                         | $          | 521,079  |         |         |         | 4.94    | %    |          |       |      |           |           | $          | 448,054 |         |         |         | 5.12 | %    
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |       |      
|Net yield on average interest earning assets |                                                |                                       |                                    |           |                                         |            |          |         |         |         | 5.21    | %    |          |       |      |           |           |            |         |         |         |         | 5.50 | %    
|                                             |                                                |                                       |                                    |           |                                         |            |          |         |         |         |         |      |          |       |      |           |           |            |         |         |         |         |      |      



---

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

The total interest rate spread decreased 7 basis points for the three months
ended September 30, 2003 compared with the three months ended September 30,
2002 due to a decrease of 127 basis points in the yield on interest earning
assets combined with an 120 basis point decrease in the cost of funds. The
total interest rate spread decreased 18 basis points for the nine months ended
September 30, 2003 compared with the nine months ended September 30, 2002 due
to a decrease of 105 basis points in the yield on interest earning assets
combined with an 87 basis point decrease in the cost of funds. The decrease in
the yield on interest earning assets in 2003 is primarily due to our shift to
originating a higher percentage of prime credit quality contracts, higher
prepayments on our MBS portfolio, and a lower interest rate environment. The
decrease in the cost of funds in 2003 compared with 2002 is due primarily to a
lower interest rate environment. Net interest income increased as more
automobile contracts were held on the balance sheet.

19



---



##### Table of Contents



The following table sets forth the changes in net interest income attributable
to changes in volume (change in average portfolio volume multiplied by prior
period average rate) and changes in rates (change in weighted average interest
rate multiplied by prior period average portfolio balance):

|                                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |         |        | 
|--------------------------------- | ---------------------------------------------- | ---------------------------------- | - | -------------------------------------------------------- | ------- | ---- | - | ------- | -------- | - | ------ | ------- | ------ | 
|                                  |                                                |                                    |   | For the Nine Months Ended September 30, 2003            
|                                  |                                                |                                    |   | Compared to the Nine Months Ended September 30, 2002 (1)
|                                  |                                                |                                    |   | Volume                                                   |         | Rate |   | Total  
|                                  |                                                |                                    |   |                                                          |         |      |   |        
|                                  |                                                |                                    |   | (Dollars in thousands)                                  
|Interest income:                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |        
|                                  | Mortgage-backed securities                     |                                    | $ | 20,147                                                   |         |      | $ | (44,637 | )        |   | $      | (24,490 | )     
|                                  | Other short-term investments                   |                                    |   | 448                                                      |         |      |   | (1,468  | )        |   |        | (1,020  | )     
|                                  | Investment securities                          |                                    |   | 360                                                      |         |      |   | (289    | )        |   |        | 71      |       
|                                  | Interest earning deposits with others          |                                    |   | 28                                                       |         |      |   | (43     | )        |   |        | (15     | )     
|Total loans:                      |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |        
|                                  | Consumer loans                                 |                                    |   | 215,733                                                  |         |      |   | (98,029 | )        |   |        | 117,704 |       
|                                  | Mortgage loans                                 |                                    |   | 701                                                      |         |      |   | (6,002  | )        |   |        | (5,301  | )     
|                                  | Commercial loans                               |                                    |   | 1,405                                                    |         |      |   | (1,228  | )        |   |        | 177     |       
|                                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |         |       
|                                  |                                                | Total interest earning assets      |   | $                                                        | 238,822 |      |   | $       | (151,696 | ) |        | $       | 87,126 | 
|                                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |        
|Interest expense:                 |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |        
|                                  | Deposits                                       |                                    | $ | (6,194                                                   | )       |      | $ | (5,179  | )        |   | $      | (11,373 | )     
|                                  | Securities sold under agreements to repurchase |                                    |   | 743                                                      |         |      |   | (1,159  | )        |   |        | (416    | )     
|                                  | FHLB advances and other borrowings             |                                    |   | 1,794                                                    |         |      |   | (585    | )        |   |        | 1,209   |       
|                                  | Notes payable on automobile secured financings |                                    |   | 46,999                                                   |         |      |   | (28,946 | )        |   |        | 18,053  |       
|                                  | Subordinated debentures                        |                                    |   | 6,787                                                    |         |      |   | (159    | )        |   |        | 6,628   |       
|                                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |         |       
|                                  |                                                | Total interest bearing liabilities |   | $                                                        | 50,129  |      |   | $       | (36,028  | ) |        | $       | 14,101 | 
|                                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |        
|Net change in net interest income |                                                |                                    |   |                                                          |         |      |   |         |          | $ | 73,025 |        
|                                  |                                                |                                    |   |                                                          |         |      |   |         |          |   |        |        



---

|(1) |  | In the analysis of interest changes due to volume and rate, the
changes due to the volume/rate variance (the combined effect of change
in weighted average interest rate and change in average portfolio
balance) have been allocated proportionately based on the absolute
value of the volume and rate variances.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 loan portfolio that can be
reasonably estimated.

The provision for credit losses totaled $73.2 million and $221 million for the
three and nine months ended September 30, 2003, respectively, compared with
$81.0 million and $209 million for the same respective periods a year earlier.
Net chargeoffs totaled $66.3 million and $192 million for the three and nine
months ended September 30, 2003, respectively, compared with $55.1 million and
$143 million for the same respective periods in 2002. The allowance for credit
losses as a percentage of owned loans outstanding was 2.7% at September 30,
2003, compared with 2.9% at December 31, 2002.

20



---



##### Table of Contents



Contract Securitizations

The following table lists each of our public securitizations. All
securitizations prior to 1999-B were paid in full on or before their
contractual maturity dates:

Securitizations

|                       |  |                 |  |         |            |                       |  |                  |            |             |  |                     |        |                  |       |          |       |          |       |   |      |  |       |       |       |  |  | 
|---------------------- |  | --------------- |  | ------- | ---------- | --------------------- |  | ---------------- | ---------- | ----------- |  | ------------------- | ------ | ---------------- | ----- | -------- | ----- | -------- | ----- | - | ---- |  | ----- | ----- | ----- |  |  | 
|                       |  |                 |  |         |            |                       |  |                  |            |             |  |                     |        | Remaining        |       |          |       |          |       |   |      |  |       | Gross
|                       |  |                 |  |         |            |                       |  |                  |            | Remaining   |  | Balance as a        |        | Original         |       | Original |       | Interest
|Issue                  |  |                 |  |         |            | Original              |  | Balance at       |            | Percent of  |  | Weighted            |        | Weighted Average |       | Rate    
|Number                 |  | Close Date      |  | Balance |            | September 30, 2003(1) |  | Original Balance |            | Average APR |  | Securitization Rate |        | Spread (2)      
|                       |  |                 |  |         |            |                       |  |                  |            |             |  |                     |        |                 
|(Dollars in thousands)
|1985-A                 |  | December, 1985  |  | $       | 110,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 18.50 | %        |       |          | 8.38  | % |      |  | 10.12 | %    
|1986-A                 |  | November, 1986  |  |         | 191,930    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.20 |          |       |          | 6.63  |   |      |  | 7.57  |      
|1987-A                 |  | March, 1987     |  |         | 125,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 12.42 |          |       |          | 6.75  |   |      |  | 5.67  |      
|1987-B                 |  | July, 1987      |  |         | 110,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 12.68 |          |       |          | 7.80  |   |      |  | 4.88  |      
|1988-A                 |  | February, 1988  |  |         | 155,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 13.67 |          |       |          | 7.75  |   |      |  | 5.92  |      
|1988-B                 |  | May, 1988       |  |         | 100,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.01 |          |       |          | 8.50  |   |      |  | 5.51  |      
|1988-C                 |  | July, 1988      |  |         | 100,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.41 |          |       |          | 8.50  |   |      |  | 6.91  |      
|1988-D                 |  | October, 1988   |  |         | 105,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.95 |          |       |          | 8.85  |   |      |  | 6.10  |      
|1989-A                 |  | March, 1989     |  |         | 75,000     |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.88 |          |       |          | 10.45 |   |      |  | 5.43  |      
|1989-B                 |  | June, 1989      |  |         | 100,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.96 |          |       |          | 9.15  |   |      |  | 6.81  |      
|1990-A                 |  | August, 1990    |  |         | 150,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 16.05 |          |       |          | 8.35  |   |      |  | 7.70  |      
|1990-1                 |  | November, 1990  |  |         | 150,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.56 |          |       |          | 8.50  |   |      |  | 7.06  |      
|1991-1                 |  | April, 1991     |  |         | 200,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 16.06 |          |       |          | 7.70  |   |      |  | 8.36  |      
|1991-2                 |  | May, 1991       |  |         | 200,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.75 |          |       |          | 7.30  |   |      |  | 8.45  |      
|1991-3                 |  | August, 1991    |  |         | 175,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.69 |          |       |          | 6.75  |   |      |  | 8.94  |      
|1991-4                 |  | December, 1991  |  |         | 150,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.53 |          |       |          | 5.63  |   |      |  | 9.90  |      
|1992-1                 |  | March, 1992     |  |         | 150,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.49 |          |       |          | 5.85  |   |      |  | 8.64  |      
|1992-2                 |  | June, 1992      |  |         | 165,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.94 |          |       |          | 5.50  |   |      |  | 9.44  |      
|1992-3                 |  | September, 1992 |  |         | 135,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.45 |          |       |          | 4.70  |   |      |  | 9.75  |      
|1993-1                 |  | March, 1993     |  |         | 250,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 13.90 |          |       |          | 4.45  |   |      |  | 9.45  |      
|1993-2                 |  | June, 1993      |  |         | 175,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 13.77 |          |       |          | 4.70  |   |      |  | 9.07  |      
|1993-3                 |  | September, 1993 |  |         | 187,500    |                       |  | Paid in full     |            |             |  |                     |        |                  | 13.97 |          |       |          | 4.25  |   |      |  | 9.72  |      
|1993-4                 |  | December, 1993  |  |         | 165,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 12.90 |          |       |          | 4.60  |   |      |  | 8.30  |      
|1994-1                 |  | March, 1994     |  |         | 200,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 13.67 |          |       |          | 5.10  |   |      |  | 8.57  |      
|1994-2                 |  | May, 1994       |  |         | 230,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.04 |          |       |          | 6.38  |   |      |  | 7.66  |      
|1994-3                 |  | August, 1994    |  |         | 200,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.59 |          |       |          | 6.65  |   |      |  | 7.94  |      
|1994-4                 |  | October, 1994   |  |         | 212,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.58 |          |       |          | 7.10  |   |      |  | 8.48  |      
|1995-1                 |  | January, 1995   |  |         | 190,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.71 |          |       |          | 8.05  |   |      |  | 7.66  |      
|1995-2                 |  | March, 1995     |  |         | 190,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 16.36 |          |       |          | 7.10  |   |      |  | 9.26  |      
|1995-3                 |  | June, 1995      |  |         | 300,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.05 |          |       |          | 6.05  |   |      |  | 9.00  |      
|1995-4                 |  | September, 1995 |  |         | 375,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.04 |          |       |          | 6.20  |   |      |  | 8.84  |      
|1995-5                 |  | December, 1995  |  |         | 425,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.35 |          |       |          | 5.88  |   |      |  | 9.47  |      
|1996-A                 |  | March, 1996     |  |         | 485,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.46 |          |       |          | 6.13  |   |      |  | 9.33  |      
|1996-B                 |  | June, 1996      |  |         | 525,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.74 |          |       |          | 6.75  |   |      |  | 8.99  |      
|1996-C                 |  | September, 1996 |  |         | 535,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.83 |          |       |          | 6.60  |   |      |  | 9.23  |      
|1996-D                 |  | December, 1996  |  |         | 545,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.43 |          |       |          | 6.17  |   |      |  | 9.26  |      
|1997-A                 |  | March, 1997     |  |         | 500,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.33 |          |       |          | 6.60  |   |      |  | 8.73  |      
|1997-B                 |  | June, 1997      |  |         | 590,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.36 |          |       |          | 6.37  |   |      |  | 8.99  |      
|1997-C                 |  | September, 1997 |  |         | 600,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.43 |          |       |          | 6.17  |   |      |  | 9.26  |      
|1997-D                 |  | December, 1997  |  |         | 500,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 15.19 |          |       |          | 6.34  |   |      |  | 8.85  |      
|1998-A                 |  | March, 1998     |  |         | 525,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.72 |          |       |          | 6.01  |   |      |  | 8.71  |      
|1998-B                 |  | June, 1998      |  |         | 660,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.68 |          |       |          | 6.06  |   |      |  | 8.62  |      
|1998-C                 |  | November, 1998  |  |         | 700,000    |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.42 |          |       |          | 5.81  |   |      |  | 8.61  |      
|1999-A                 |  | January, 1999   |  |         | 1,000,000  |                       |  | Paid in full     |            |             |  |                     |        |                  | 14.42 |          |       |          | 5.70  |   |      |  | 8.72  |      
|1999-B                 |  | July, 1999      |  |         | 1,000,000  |                       |  |                  | 78,460     |             |  |                     | 7.85   | %                |       |          | 14.62 |          |       |   | 6.36 |  |       |       | 8.26  | 
|1999-C                 |  | November, 1999  |  |         | 500,000    |                       |  |                  | 58,514     |             |  |                     | 11.70  |                  |       |          | 14.77 |          |       |   | 7.01 |  |       |       | 7.76  | 
|2000-A                 |  | March, 2000     |  |         | 1,200,000  |                       |  |                  | 162,305    |             |  |                     | 13.53  |                  |       |          | 14.66 |          |       |   | 7.28 |  |       |       | 7.38  | 
|2000-B                 |  | May, 2000       |  |         | 1,000,000  |                       |  |                  | 150,222    |             |  |                     | 15.02  |                  |       |          | 14.84 |          |       |   | 7.78 |  |       |       | 7.06  | 
|2000-C                 |  | August, 2000    |  |         | 1,390,000  |                       |  |                  | 282,194    |             |  |                     | 20.30  |                  |       |          | 15.04 |          |       |   | 7.32 |  |       |       | 7.72  | 
|2000-D                 |  | November, 2000  |  |         | 1,000,000  |                       |  |                  | 261,382    |             |  |                     | 26.14  |                  |       |          | 15.20 |          |       |   | 6.94 |  |       |       | 8.26  | 
|2001-A                 |  | January, 2001   |  |         | 1,000,000  |                       |  |                  | 291,189    |             |  |                     | 29.12  |                  |       |          | 14.87 |          |       |   | 5.77 |  |       |       | 9.10  | 
|2001-B                 |  | May, 2001       |  |         | 1,370,000  |                       |  |                  | 419,028    |             |  |                     | 30.59  |                  |       |          | 14.41 |          |       |   | 4.23 |  |       |       | 10.18 | 
|2001-C                 |  | August, 2001    |  |         | 1,200,000  |                       |  |                  | 462,147    |             |  |                     | 38.51  |                  |       |          | 13.90 |          |       |   | 4.50 |  |       |       | 9.40  | 
|2002-1                 |  | March, 2002     |  |         | 1,800,000  |                       |  |                  | 941,933    |             |  |                     | 52.33  |                  |       |          | 13.50 |          |       |   | 4.26 |  |       |       | 9.24  | 
|2002-2                 |  | May, 2002       |  |         | 1,750,000  |                       |  |                  | 1,061,076  |             |  |                     | 60.63  |                  |       |          | 12.51 |          |       |   | 3.89 |  |       |       | 8.62  | 
|2002-3                 |  | August, 2002    |  |         | 1,250,000  |                       |  |                  | 832,456    |             |  |                     | 66.60  |                  |       |          | 12.30 |          |       |   | 3.06 |  |       |       | 9.24  | 
|2002-4                 |  | November, 2002  |  |         | 1,350,000  |                       |  |                  | 1,045,074  |             |  |                     | 77.41  |                  |       |          | 12.18 |          |       |   | 2.66 |  |       |       | 9.52  | 
|2003-1                 |  | February, 2003  |  |         | 1,343,250  |                       |  |                  | 1,073,279  |             |  |                     | 79.90  |                  |       |          | 11.79 |          |       |   | 2.42 |  |       |       | 9.37  | 
|2003-2                 |  | May, 2003       |  |         | 1,492,500  |                       |  |                  | 1,346,912  |             |  |                     | 90.25  |                  |       |          | 11.57 |          |       |   | 2.13 |  |       |       | 9.44  | 
|2003-3                 |  | August, 2003    |  |         | 1,650,000  |                       |  |                  | 1,650,000  |             |  |                     | 100.00 |                  |       |          | 10.59 |          |       |   | 2.66 |  |       |       | 7.93  | 
|                       |  |                 |  |         |            |                       |  |                  |            |             |  |                     |        |                  |       |          |       |          |       |   |      |  |       |       |       |  |  | 
|                       |  | Total           |  | $       | 33,207,180 |                       |  | $                | 10,116,171 |             |  |                     |        |                  |       |          |       |          |       |   |      |  |       |       |       | 
|                       |  |                 |  |         |            |                       |  |                  |            |             |  |                     |        |                  |       |          |       |          |       |   |      |  |       |       |       |  |  | 



---

|(1) |  | Represents only the note payable amounts outstanding at the period
indicated.                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Represents the difference between the original weighted average annual
percentage rate, also known as APR, and the estimated weighted average
securitization rate on the closing date of the securitization.

21



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##### Table of Contents



Noninterest Expense

Noninterest expense totaled $66.7 million and $208 million for the three and
nine months ended September 30, 2003, compared with $62.2 million and $188
million for the same respective periods in 2002. Noninterest expense as a
percent of total revenues improved to 32% and 34% for both the three and nine
months ended September 30, 2003, compared to 34% and 37% for the same
respective periods a year ago as a result of fully amortizing our retained
interest in securitized assets during 2002.

Income Taxes

We file federal and certain state tax returns as part of a consolidated group
that includes the Bank and WFS. We file other state tax returns as a separate
entity. Tax liabilities from the consolidated returns are allocated in
accordance with a tax sharing agreement based on the relative income or loss
of each entity on a stand-alone basis. Our effective tax rate was 40% for
both the three and nine months ended September 30, 2003, respectively,
compared to 40% and 39% for the same respective periods in 2002.

Financial Condition

Overview

Total assets increased $1.8 billion or 14.1% to $14.2 billion at September 30,
2003 from $12.5 billion at December 31, 2002. The increase is due primarily to
retaining contracts originated on our balance sheet and regaining control over
all assets of the trusts for all our outstanding securitizations previously
treated as sales for accounting purposes.

Loan Portfolio

The following table presents a summary of our automobile contracts purchased:

|                   |              |   |                            |           |                           |   |           |           |      |   |           |           |  |   |           |           | 
|------------------ | ------------ | - | -------------------------- | --------- | ------------------------- | - | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | 
|                   |              |   | For the Three Months Ended |           | For the Nine Months Ended
|                   |              |   | September 30,              |           | September 30,            
|                   |              |   |                            |           |                          
|                   |              |   | 2003                       |           | 2002                      |   | 2003      |           | 2002
|                   |              |   |                            |           |                           |   |           |           |     
|                   |              |   | (Dollars in thousands)    
|New vehicles       |              | $ | 586,648                    |           |                           | $ | 425,840   |           |      | $ | 1,462,024 |           |  | $ | 1,199,312 |          
|Pre-owned vehicles |              |   | 1,096,754                  |           |                           |   | 1,018,345 |           |      |   | 3,160,047 |           |  |   | 3,005,406 |          
|                   |              |   |                            |           |                           |   |           |           |      |   |           |           |  |   |           |          
|                   | Total volume |   | $                          | 1,683,402 |                           |   | $         | 1,444,185 |      |   | $         | 4,622,071 |  |   | $         | 4,204,718 | 
|                   |              |   |                            |           |                           |   |           |           |      |   |           |           |  |   |           |          
|Prime              |              | $ | 1,406,674                  |           |                           | $ | 1,152,043 |           |      | $ | 3,829,825 |           |  | $ | 3,335,984 |          
|Non-prime          |              |   | 276,728                    |           |                           |   | 292,142   |           |      |   | 792,246   |           |  |   | 868,734   |          
|                   |              |   |                            |           |                           |   |           |           |      |   |           |           |  |   |           |          
|                   | Total volume |   | $                          | 1,683,402 |                           |   | $         | 1,444,185 |      |   | $         | 4,622,071 |  |   | $         | 4,204,718 | 
|                   |              |   |                            |           |                           |   |           |           |      |   |           |           |  |   |           |          

Commercial Loan Portfolio

We had outstanding loan commitments of $214 million at September 30, 2003
compared with $199 million at December 31, 2002. We originated $108 million
and $304 million of commercial loans for the three and nine months ended
September 30, 2003, respectively, compared with $66.4 million and $197 million
for the same respective periods in 2002. Amounts outstanding at September 30,
2003 and December 31, 2002 were $106 million and $97.2 million, respectively.
Though we continue to focus on expanding our commercial banking operation, it
has not been a significant source of revenue.

22



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##### Table of Contents



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.

At September 30, 2003, the percentage of accounts delinquent 30 days or greater
was 2.70% compared with 3.50% at December 31, 2002. We calculate delinquency
based on the contractual due date. The improvement in delinquency is primarily
the result of us shifting to a higher concentration of prime credit quality
contracts and normal seasonal trends. Net chargeoffs on average automobile
contracts were 2.58% and 2.59% for the three and nine months ended September
30, 2003, respectively, compared with 2.73% and 2.56% for the same respective
periods in 2002. The decrease in credit loss experience for the three months
ended September 30, 2003 is primarily a result of our continued shift to a
higher percentage of prime automobile contracts and some stabilization of the
used car market.

The following table sets forth information with respect to the delinquency of
our portfolio of managed contracts:

|                                                                                      |                     |   |                        |         |                   |  |        |      |   |   |           |         |  |  |      |      |  
|------------------------------------------------------------------------------------- | ------------------- | - | ---------------------- | ------- | ----------------- |  | ------ | ---- | - | - | --------- | ------- |  |  | ---- | ---- | -
|                                                                                      |                     |   | September 30, 2003     |         | December 31, 2002
|                                                                                      |                     |   |                        |         |                  
|                                                                                      |                     |   | Amount                 |         | %                 |  | Amount |      | %
|                                                                                      |                     |   |                        |         |                   |  |        |      |  
|                                                                                      |                     |   | (Dollars in thousands)
|Contracts managed at end of period                                                    |                     | $ | 10,475,948             |         |                   |  |        |      |   | $ | 9,389,974 |         |  |  |      |     
|                                                                                      |                     |   |                        |         |                   |  |        |      |   |   |           |         |  |  |      |     
|Period of delinquency                                                                 |                     |   |                        |         |                   |  |        |      |   |   |           |         |  |  |      |     
|                                                                                      | 30-59 days          |   | $                      | 201,990 |                   |  |        | 1.93 | % |   | $         | 238,204 |  |  |      | 2.54 | %
|                                                                                      | 60 days or more (1) |   |                        | 80,398  |                   |  |        | 0.77 |   |   |           | 90,291  |  |  |      | 0.96 |  
|                                                                                      |                     |   |                        |         |                   |  |        |      |   |   |           |         |  |  |      |     
|Total contracts delinquent and
delinquencies as a percentage of
contracts managed (1) |                     | $ | 282,388                |         |                   |  | 2.70   | %    |   | $ | 328,495   |         |  |  | 3.50 | %   
|                                                                                      |                     |   |                        |         |                   |  |        |      |   |   |           |         |  |  |      |     



---

|(1) |  | Excludes Chapter 13 bankruptcy accounts greater than 120 days past
due of $44.4 million and $41.5 million at September 30, 2003 and
December 31, 2002, respectively.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|                                                                                   |  |                        |         |                   |  |           |            |           |  |  |         |   |  |   |           |  
|---------------------------------------------------------------------------------- |  | ---------------------- | ------- | ----------------- |  | --------- | ---------- | --------- |  |  | ------- | - |  | - | --------- | -
|                                                                                   |  | September 30, 2003     |         | December 31, 2002
|                                                                                   |  |                        |         |                  
|                                                                                   |  | Number of              |         |                   |  |           |            | Number of |  |  |         |  
|                                                                                   |  | Contracts              |         | Amount            |  | Contracts |            | Amount   
|                                                                                   |  |                        |         |                   |  |           |            |          
|                                                                                   |  | (Dollars in thousands)
|Contracts managed                                                                  |  |                        | 818,125 |                   |  | $         | 10,475,948 |           |  |  | 757,269 |   |  | $ | 9,389,974 |  
|                                                                                   |  |                        |         |                   |  |           |            |           |  |  |         |   |  |   |           |  
|Repossessed vehicles                                                               |  |                        | 1,629   |                   |  | $         | 11,025     |           |  |  | 2,375   |   |  | $ | 16,433    |  
|                                                                                   |  |                        |         |                   |  |           |            |           |  |  |         |   |  |   |           |  
|Repossessed
vehicles as a
percentage of
number and amount
of contracts
outstanding |  |                        | 0.20    | %                 |  |           | 0.11       | %         |  |  | 0.31    | % |  |   | 0.18      | %
|                                                                                   |  |                        |         |                   |  |           |            |           |  |  |         |   |  |   |           |  

23



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##### Table of Contents



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

|                                                                          |  |                            |            |                           |  |      |           |      |  |   |           |   |  |   |           |  
|------------------------------------------------------------------------- |  | -------------------------- | ---------- | ------------------------- |  | ---- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                          |  | For the Three Months Ended |            | For the Nine Months Ended
|                                                                          |  | September 30,              |            | September 30,            
|                                                                          |  |                            |            |                          
|                                                                          |  | 2003                       |            | 2002                      |  | 2003 |           | 2002
|                                                                          |  |                            |            |                           |  |      |           |     
|                                                                          |  | (Dollars in thousands)    
|Average contracts managed during period                                   |  | $                          | 10,284,067 |                           |  | $    | 9,102,663 |      |  | $ | 9,885,681 |   |  | $ | 8,672,049 |  
|                                                                          |  |                            |            |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Gross chargeoffs                                                          |  | $                          | 88,343     |                           |  | $    | 80,916    |      |  | $ | 258,491   |   |  | $ | 229,216   |  
|Recoveries                                                                |  |                            | 21,916     |                           |  |      | 18,688    |      |  |   | 66,451    |   |  |   | 62,548    |  
|                                                                          |  |                            |            |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Net chargeoffs                                                            |  | $                          | 66,427     |                           |  | $    | 62,228    |      |  | $ | 192,040   |   |  | $ | 166,668   |  
|                                                                          |  |                            |            |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Net chargeoffs as a percentage of
average contracts managed during
period |  |                            | 2.58       | %                         |  |      | 2.73      | %    |  |   | 2.59      | % |  |   | 2.56      | %
|                                                                          |  |                            |            |                           |  |      |           |      |  |   |           |   |  |   |           |  

24



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##### 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, 2003

|           |     |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|---------- | --- | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - | ------ | -- | ------ | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | - |  | -- | ---- | -
|Period (1) |     | 1999-B |    | 1999-C |   | 2000-A |    | 2000-B |   | 2000-C |    | 2000-D |   | 2001-A |    | 2001-B |   | 2001-C |    | 2002-1 |   | 2002-2 |    | 2002-3 |   | 2002-4 |    | 2003-1 |   | 2003-2 |    | 2003-3
|           |     |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |       
|           | 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   | % |        |    | 0.03   | % |        |    | 0.02   | % |        |    | 0.04   | % |        |    | 0.04   | % |        |    | 0.03   | % |        |    | 0.03   | % |  |    | 0.04 | % |  |    | 0.01 | % |  |    | 0.00 | % |  |    | 0.02 | % |  |    | 0.02 | % |  |    | 0.01 | % |  |    | 0.00 | % |  |    |      |  
|           | 3   |        |    | 0.11   | % |        |    | 0.10   | % |        |    | 0.10   | % |        |    | 0.09   | % |        |    | 0.13   | % |        |    | 0.11   | % |        |    | 0.09   | % |        |    | 0.10   | % |  |    | 0.09 | % |  |    | 0.06 | % |  |    | 0.03 | % |  |    | 0.06 | % |  |    | 0.07 | % |  |    | 0.04 | % |  |    | 0.02 | % |  |    |      |  
|           | 4   |        |    | 0.26   | % |        |    | 0.25   | % |        |    | 0.20   | % |        |    | 0.24   | % |        |    | 0.27   | % |        |    | 0.24   | % |        |    | 0.20   | % |        |    | 0.21   | % |  |    | 0.20 | % |  |    | 0.15 | % |  |    | 0.10 | % |  |    | 0.14 | % |  |    | 0.16 | % |  |    | 0.11 | % |  |    | 0.06 | % |  |    |      |  
|           | 5   |        |    | 0.47   | % |        |    | 0.40   | % |        |    | 0.36   | % |        |    | 0.39   | % |        |    | 0.46   | % |        |    | 0.39   | % |        |    | 0.33   | % |        |    | 0.33   | % |  |    | 0.35 | % |  |    | 0.29 | % |  |    | 0.18 | % |  |    | 0.27 | % |  |    | 0.26 | % |  |    | 0.18 | % |  |    | 0.14 | % |  |    |      |  
|           | 6   |        |    | 0.66   | % |        |    | 0.56   | % |        |    | 0.55   | % |        |    | 0.59   | % |        |    | 0.65   | % |        |    | 0.54   | % |        |    | 0.50   | % |        |    | 0.50   | % |  |    | 0.49 | % |  |    | 0.43 | % |  |    | 0.32 | % |  |    | 0.44 | % |  |    | 0.38 | % |  |    | 0.29 | % |  |    |      |   |  |    |      |  
|           | 7   |        |    | 0.87   | % |        |    | 0.71   | % |        |    | 0.71   | % |        |    | 0.78   | % |        |    | 0.81   | % |        |    | 0.74   | % |        |    | 0.70   | % |        |    | 0.69   | % |  |    | 0.65 | % |  |    | 0.60 | % |  |    | 0.49 | % |  |    | 0.57 | % |  |    | 0.50 | % |  |    | 0.41 | % |  |    |      |   |  |    |      |  
|           | 8   |        |    | 1.00   | % |        |    | 0.86   | % |        |    | 0.91   | % |        |    | 0.99   | % |        |    | 0.93   | % |        |    | 0.93   | % |        |    | 0.84   | % |        |    | 0.87   | % |  |    | 0.81 | % |  |    | 0.84 | % |  |    | 0.66 | % |  |    | 0.70 | % |  |    | 0.61 | % |  |    | 0.53 | % |  |    |      |   |  |    |      |  
|           | 9   |        |    | 1.13   | % |        |    | 1.01   | % |        |    | 1.10   | % |        |    | 1.17   | % |        |    | 1.07   | % |        |    | 1.13   | % |        |    | 1.04   | % |        |    | 1.05   | % |  |    | 0.95 | % |  |    | 1.06 | % |  |    | 0.82 | % |  |    | 0.82 | % |  |    | 0.78 | % |  |    |      |   |  |    |      |   |  |    |      |  
|           | 10  |        |    | 1.24   | % |        |    | 1.14   | % |        |    | 1.27   | % |        |    | 1.33   | % |        |    | 1.24   | % |        |    | 1.34   | % |        |    | 1.24   | % |        |    | 1.22   | % |  |    | 1.07 | % |  |    | 1.28 | % |  |    | 0.96 | % |  |    | 0.96 | % |  |    | 0.94 | % |  |    |      |   |  |    |      |   |  |    |      |  
|           | 11  |        |    | 1.35   | % |        |    | 1.34   | % |        |    | 1.45   | % |        |    | 1.44   | % |        |    | 1.41   | % |        |    | 1.50   | % |        |    | 1.45   | % |        |    | 1.36   | % |  |    | 1.20 | % |  |    | 1.48 | % |  |    | 1.10 | % |  |    | 1.10 | % |  |    | 1.08 | % |  |    |      |   |  |    |      |   |  |    |      |  
|           | 12  |        |    | 1.44   | % |        |    | 1.52   | % |        |    | 1.58   | % |        |    | 1.57   | % |        |    | 1.62   | % |        |    | 1.74   | % |        |    | 1.67   | % |        |    | 1.53   | % |  |    | 1.37 | % |  |    | 1.67 | % |  |    | 1.26 | % |  |    | 1.24 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 13  |        |    | 1.58   | % |        |    | 1.74   | % |        |    | 1.73   | % |        |    | 1.72   | % |        |    | 1.86   | % |        |    | 1.95   | % |        |    | 1.90   | % |        |    | 1.67   | % |  |    | 1.55 | % |  |    | 1.82 | % |  |    | 1.39 | % |  |    | 1.38 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 14  |        |    | 1.74   | % |        |    | 1.94   | % |        |    | 1.85   | % |        |    | 1.86   | % |        |    | 2.04   | % |        |    | 2.21   | % |        |    | 2.09   | % |        |    | 1.81   | % |  |    | 1.74 | % |  |    | 1.99 | % |  |    | 1.51 | % |  |    | 1.53 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 15  |        |    | 1.85   | % |        |    | 2.09   | % |        |    | 2.00   | % |        |    | 2.04   | % |        |    | 2.25   | % |        |    | 2.48   | % |        |    | 2.25   | % |        |    | 2.00   | % |  |    | 1.97 | % |  |    | 2.14 | % |  |    | 1.68 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 16  |        |    | 2.03   | % |        |    | 2.27   | % |        |    | 2.15   | % |        |    | 2.24   | % |        |    | 2.45   | % |        |    | 2.71   | % |        |    | 2.41   | % |        |    | 2.19   | % |  |    | 2.16 | % |  |    | 2.27 | % |  |    | 1.83 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 17  |        |    | 2.16   | % |        |    | 2.39   | % |        |    | 2.37   | % |        |    | 2.39   | % |        |    | 2.68   | % |        |    | 2.89   | % |        |    | 2.54   | % |        |    | 2.37   | % |  |    | 2.36 | % |  |    | 2.45 | % |  |    | 1.99 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 18  |        |    | 2.30   | % |        |    | 2.53   | % |        |    | 2.52   | % |        |    | 2.55   | % |        |    | 2.88   | % |        |    | 3.08   | % |        |    | 2.73   | % |        |    | 2.60   | % |  |    | 2.59 | % |  |    | 2.62 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 19  |        |    | 2.42   | % |        |    | 2.67   | % |        |    | 2.67   | % |        |    | 2.73   | % |        |    | 3.08   | % |        |    | 3.22   | % |        |    | 2.93   | % |        |    | 2.80   | % |  |    | 2.78 | % |  |    | 2.80 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 20  |        |    | 2.50   | % |        |    | 2.81   | % |        |    | 2.83   | % |        |    | 2.93   | % |        |    | 3.23   | % |        |    | 3.40   | % |        |    | 3.11   | % |        |    | 3.01   | % |  |    | 2.95 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 21  |        |    | 2.58   | % |        |    | 2.92   | % |        |    | 2.99   | % |        |    | 3.12   | % |        |    | 3.38   | % |        |    | 3.59   | % |        |    | 3.34   | % |        |    | 3.19   | % |  |    | 3.14 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 22  |        |    | 2.67   | % |        |    | 3.10   | % |        |    | 3.16   | % |        |    | 3.27   | % |        |    | 3.54   | % |        |    | 3.78   | % |        |    | 3.54   | % |        |    | 3.34   | % |  |    | 3.29 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 23  |        |    | 2.77   | % |        |    | 3.28   | % |        |    | 3.34   | % |        |    | 3.38   | % |        |    | 3.67   | % |        |    | 3.96   | % |        |    | 3.72   | % |        |    | 3.49   | % |  |    | 3.41 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 24  |        |    | 2.87   | % |        |    | 3.38   | % |        |    | 3.49   | % |        |    | 3.52   | % |        |    | 3.83   | % |        |    | 4.18   | % |        |    | 3.92   | % |        |    | 3.62   | % |  |    | 3.57 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 25  |        |    | 3.01   | % |        |    | 3.55   | % |        |    | 3.63   | % |        |    | 3.63   | % |        |    | 4.00   | % |        |    | 4.41   | % |        |    | 4.10   | % |        |    | 3.75   | % |  |    | 3.73 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 26  |        |    | 3.14   | % |        |    | 3.68   | % |        |    | 3.75   | % |        |    | 3.73   | % |        |    | 4.16   | % |        |    | 4.58   | % |        |    | 4.23   | % |        |    | 3.87   | % |  |    | 3.88 | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 27  |        |    | 3.16   | % |        |    | 3.84   | % |        |    | 3.86   | % |        |    | 3.84   | % |        |    | 4.35   | % |        |    | 4.79   | % |        |    | 4.36   | % |        |    | 4.00   | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 28  |        |    | 3.29   | % |        |    | 3.98   | % |        |    | 3.97   | % |        |    | 3.97   | % |        |    | 4.50   | % |        |    | 4.96   | % |        |    | 4.47   | % |        |    | 4.15   | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 29  |        |    | 3.40   | % |        |    | 4.14   | % |        |    | 4.09   | % |        |    | 4.11   | % |        |    | 4.64   | % |        |    | 5.08   | % |        |    | 4.56   | % |        |    | 4.28   | % |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 30  |        |    | 3.50   | % |        |    | 4.19   | % |        |    | 4.21   | % |        |    | 4.26   | % |        |    | 4.79   | % |        |    | 5.22   | % |        |    | 4.67   | % |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 31  |        |    | 3.61   | % |        |    | 4.30   | % |        |    | 4.33   | % |        |    | 4.40   | % |        |    | 4.92   | % |        |    | 5.34   | % |        |    | 4.81   | % |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 32  |        |    | 3.68   | % |        |    | 4.38   | % |        |    | 4.47   | % |        |    | 4.50   | % |        |    | 5.02   | % |        |    | 5.44   | % |        |    | 4.92   | % |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 33  |        |    | 3.74   | % |        |    | 4.46   | % |        |    | 4.59   | % |        |    | 4.61   | % |        |    | 5.12   | % |        |    | 5.54   | % |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 34  |        |    | 3.81   | % |        |    | 4.57   | % |        |    | 4.68   | % |        |    | 4.70   | % |        |    | 5.22   | % |        |    | 5.66   | % |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 35  |        |    | 3.87   | % |        |    | 4.66   | % |        |    | 4.79   | % |        |    | 4.78   | % |        |    | 5.29   | % |        |    | 5.76   | % |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 36  |        |    | 3.91   | % |        |    | 4.76   | % |        |    | 4.86   | % |        |    | 4.85   | % |        |    | 5.38   | % |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 37  |        |    | 3.97   | % |        |    | 4.84   | % |        |    | 4.93   | % |        |    | 4.94   | % |        |    | 5.47   | % |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 38  |        |    | 4.03   | % |        |    | 4.96   | % |        |    | 5.01   | % |        |    | 4.99   | % |        |    | 5.53   | % |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 39  |        |    | 4.09   | % |        |    | 5.03   | % |        |    | 5.08   | % |        |    | 5.05   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 40  |        |    | 4.13   | % |        |    | 5.13   | % |        |    | 5.13   | % |        |    | 5.12   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 41  |        |    | 4.18   | % |        |    | 5.20   | % |        |    | 5.18   | % |        |    | 5.18   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 42  |        |    | 4.23   | % |        |    | 5.24   | % |        |    | 5.24   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 43  |        |    | 4.28   | % |        |    | 5.28   | % |        |    | 5.29   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 44  |        |    | 4.33   | % |        |    | 5.34   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 45  |        |    | 4.35   | % |        |    | 5.38   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 46  |        |    | 4.38   | % |        |    | 5.42   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 47  |        |    | 4.39   | % |        |    | 5.44   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 48  |        |    | 4.41   | % |        |    | 5.46   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 49  |        |    | 4.43   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 50  |        |    | 4.44   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|           | 51  |        |    | 4.46   | % |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |        |    |        |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |   |  |    |      |  
|Prime Mix  | (2) |        | 70 | %      |   |        | 67 | %      |   |        | 68 | %      |   |        | 69 | %      |   |        | 68 | %      |   |        | 68 | %      |   |        | 71 | %      |   |        | 71 | %      |   |  | 76 | %    |   |  | 70 | %    |   |  | 87 | %    |   |  | 85 | %    |   |  | 80 | %    |   |  | 80 | %    |   |  | 82 | %    |   |  | 84 | %   



---

|(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.

25



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Real Estate Loan Quality

We had $3.1 million of single family mortgage loans, or 1.25% of total
mortgage loans, past due over 60 days at September 30, 2003 compared with $3.8
million, or 1.32% of total mortgage loans, at December 31, 2002.

Nonperforming Assets

Nonperforming assets, also known as NPAs, consist of repossessed automobiles
and real estate owned, also known as REO. REO is carried at lower of cost or
fair value. NPAs decreased $4.7 million to $14.1 million at September 30, 2003
compared with $18.8 million at December 31, 2002. The decrease in the NPAs was
primarily due to a $3.9 million decrease in repossessed automobiles. NPAs
represented 0.1% of total assets at September 30, 2003 and 0.2% of total assets
at December 31, 2002. There were no impaired loans at September 30, 2003 and
December 31, 2002.

Nonperforming loans, also known as 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. For
Chapter 13 bankruptcy accounts greater than 120 days delinquent, all accrued
interest is reversed and income is recognized on a cash basis. When a loan is
designated as nonaccrual, all previously accrued but unpaid interest is
reversed. Interest on NPLs excluded from interest income was $0.4 million and
$0.5 million for the nine months ended September 30, 2003 and 2002,
respectively.

Allowance for Credit Losses

Our allowance for credit losses was $298 million at September 30, 2003 compared
to $269 million at December 31, 2002. Net chargeoffs totaled $66.3 million and
$192 million for the three and nine months ended September 30, 2003,
respectively, compared with $55.1 million and $143 million for the same
respective periods in 2002. The increase in the allowance for credit losses
was the result of a higher level of automobile contracts held on balance sheet.
The allowance for credit losses as a percentage of owned loans outstanding was
2.7% at September 30, 2003 compared with 2.9% at December 31, 2002. Based on
the analysis we performed related to the allowance for credit losses as
described under Critical Accounting Policies, we believe that our allowance for
credit losses is currently adequate to cover probable losses in our loan
portfolio that can be reasonably estimated.

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##### 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,
|                                                                                      |                                |   | 2003                   |       | 2002        
|                                                                                      |                                |   |                        |       |             
|                                                                                      |                                |   | (Dollars in thousands)
|Total loans (1)                                                                       |                                | $ | 11,010,857             |       |              | $ | 9,443,901 |      
|Allowance for credit losses                                                           |                                |   | 298,278                |       |              |   | 269,352   |      
|Allowance for real estate owned losses                                                |                                |   | 100                    |       |              |   | 250       |      
|Loans past due 60 days or more (2)                                                    |                                |   | 83,652                 |       |              |   | 86,199    |      
|Nonperforming loans (3)                                                               |                                |   | 51,399                 |       |              |   | 39,231    |      
|Nonperforming assets (4)                                                              |                                |   | 14,139                 |       |              |   | 18,807    |      
|Allowance for credit losses as a percent of:                                          |                                |   |                        |       |              |   |           |      
|                                                                                      | Total loans (1)                |   |                        | 2.7   | %            |   |           | 2.9   | %
|                                                                                      | Loans past due 60 days or more |   |                        | 356.6 | %            |   |           | 312.5 | %
|                                                                                      | Nonperforming loans            |   |                        | 580.3 | %            |   |           | 686.6 | %
|Total allowance for credit losses and REO losses as a percent
of nonperforming assets |                                |   | 2,110.3                | %     |              |   | 1,433.5   | %    
|Nonperforming loans as a percent of total loans                                       |                                |   | 0.5                    | %     |              |   | 0.4       | %    
|Nonperforming assets as a percent of total assets                                     |                                |   | 0.1                    | %     |              |   | 0.2       | %    



---

|(1) |  | Loans net of unearned interest and undisbursed loan proceeds.          
|--- |  | -----------------------------------------------------------------------
|(2) |  | Excludes Chapter 13 bankruptcy accounts greater than 120 days past
due.
|(3) |  | All nonperforming loans are on nonaccrual.                             
|(4) |  | 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 18 retail branch
locations throughout Southern California. Our commercial banking division
gathers deposits by establishing commercial relationships with businesses
located throughout Southern California.

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

|                      |                                      |   |                        |         |              |   |           |         | 
|--------------------- | ------------------------------------ | - | ---------------------- | ------- | ------------ | - | --------- | ------- | 
|                      |                                      |   | September 30,          |         | December 31,
|                      |                                      |   | 2003                   |         | 2002        
|                      |                                      |   |                        |         |             
|                      |                                      |   | (Dollars in thousands)
|No minimum term:      |                                      |   |                        |         |              |   |           |        
|                      | Demand deposit accounts              |   | $                      | 999     |              |   | $         | 1,037   | 
|                      | Passbook accounts                    |   |                        | 6,826   |              |   |           | 6,688   | 
|                      | Money market accounts                |   |                        | 866,349 |              |   |           | 730,245 | 
|                      | Noninterest bearing deposits         |   |                        | 177,211 |              |   |           | 165,844 | 
|Certificate accounts: |                                      |   |                        |         |              |   |           |        
|                      | Certificates (30 days to five years) |   |                        | 719,093 |              |   |           | 878,096 | 
|                      | IRAs                                 |   |                        | 89,506  |              |   |           | 94,082  | 
|Brokered deposits     |                                      |   | 109,150                |         |              |   | 98,992    |        
|                      |                                      |   |                        |         |              |   |           |         | 
|                      |                                      | $ | 1,969,134              |         |              | $ | 1,974,984 |        
|                      |                                      |   |                        |         |              |   |           |        

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.

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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
our consistent managed growth, our ability to manage risk-adjusted returns and
our efficient operations. During the fourth quarter of 2002, we fully
amortized our retained interest in securitized assets. As a result, our net
income is an effective measurement of our operating cash flows. Therefore, we
will no longer report operating cash flows on a direct basis.

Principal Sources of Cash



| |  | Collections of Principal and Interest from Loans and MBS Principal and interest collections totaled $2.2 billion
and $6.1 billion for the three and nine months ended September 30, 2003, respectively, compared with $1.6 billion
and $4.8 billion for the same respective periods in 2002.                                                               
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Deposits Deposits were $2.0 billion at both September 30, 2003 and December 31, 2002, respectively.                                                                                                                                                                                                                                                        
| 
| |  | Automobile Contract Securitizations Securitizations totaled $1.7 billion and $4.5 billion for the three and nine
months ended September 30, 2003, respectively, compared with $1.3 billion and $5.6 billion for the same respective
periods in 2002.                                                                                                       
| 
| |  | Subordinated Debentures In 1997 and 2002, we issued $150 million of 8.875% and $300 million of 9.625%
subordinated capital debentures due in 2007 and 2012, respectively. At September 30, 2003 there was $101 million
and $300 million outstanding on the subordinated debentures due in 2007 and 2012, respectively, excluding discounts
and issue costs.
| 
| |  | Other Borrowings Other borrowings, which include securities sold under agreements to repurchase and FHLB
advances, increased to $630 million at September 30, 2003 from $613 million at December 31, 2002.                                                                                                                                                 

Principal Uses of Cash



| |  | Acquisition of Loans and Investment Securities Loan originations totaled $1.8 billion and $5.0 billion for the
three and nine months ended September 30, 2003, respectively, compared with $1.5 billion and $4.4 billion for the
same respective periods in 2002. We purchased $718 million and $1.7 billion of mortgage-backed securities and
other investment securities during the three and nine months ended September 30, 2003 compared with $639 million
and $1.1 billion during the same respective periods in 2002.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Payments of Principal and Interest on Securitizations Payments of principal and interest to noteholders and
certificateholders totaled $1.3 billion and $3.7 billion for the three and nine months ended September 30, 2003
respectively, compared to $1.0 billion and $4.4 billion for the same respective periods in 2002.                                                                                                                                                                                                
| 
| |  | Amounts Paid to Dealers Participation paid by us to dealers was $39.6 million and $109 million for the three and
nine months ended September 30, 2003, respectively, compared to $34.5 million and $99.7 million for the same
respective periods in 2002.                                                                                                                                                                                                                                                                   
| 
| |  | Operating Our Business Operating expenses totaled $66.7 million and $208 million for the three and nine months
ended September 30, 2003, respectively, compared to $62.2 million and $188 million for the same respective periods
in 2002.                                                                                                                                                                                                                                                                                  

28



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##### Table of Contents



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, 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 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, 2003 and December 31, 2002:

|                                          |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |           |  
|----------------------------------------- | ------------- |  | ---------------------- | ------- | ------- |  | ---------- | ------- | ---------- |  | ------ | ------- | - |  | - | --------- | -
|                                          |               |  |                        |         |         |  |            |         |            |  | Tier 1 |         |   |  |  
|                                          |               |  | Tangible               |         | Core    |  | Risk-Based |         | Risk-Based
|                                          |               |  | Capital                |         | Capital |  | Capital    |         | Capital   
|                                          |               |  |                        |         |         |  |            |         |           
|                                          |               |  | (Dollars in thousands)
|September 30, 2003                        |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|Actual Capital:                           |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|                                          | Amount        |  | $                      | 851,754 |         |  | $          | 851,754 |            |  | $      | 848,734 |   |  | $ | 1,318,548 |  
|                                          | Capital ratio |  |                        | 7.12    | %       |  |            | 7.12    | %          |  |        | 9.33    | % |  |   | 14.50     | %
|FIRREA minimum required capital:          |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|                                          | Amount        |  | $                      | 179,509 |         |  | $          | 359,018 |            |  |        | N/A     |   |  | $ | 727,541   |  
|                                          | Capital ratio |  |                        | 1.50    | %       |  |            | 3.00    | %          |  |        | N/A     |   |  |   | 8.00      | %
|                                          | Excess        |  | $                      | 672,245 |         |  | $          | 492,736 |            |  |        | N/A     |   |  | $ | 591,007   |  
|FDICIA well capitalized required capital: |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|                                          | Amount        |  |                        | N/A     |         |  | $          | 598,363 |            |  | $      | 545,656 |   |  | $ | 909,427   |  
|                                          | Capital ratio |  |                        | N/A     |         |  |            | 5.00    | %          |  |        | 6.00    | % |  |   | 10.00     | %
|                                          | Excess        |  |                        | N/A     |         |  | $          | 253,391 |            |  | $      | 303,078 |   |  | $ | 409,121   |  
|December 31, 2002                         |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|Actual Capital:                           |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|                                          | Amount        |  | $                      | 728,631 |         |  | $          | 728,631 |            |  | $      | 655,142 |   |  | $ | 1,143,345 |  
|                                          | Capital ratio |  |                        | 6.43    | %       |  |            | 6.43    | %          |  |        | 7.67    | % |  |   | 13.38     | %
|FIRREA minimum required capital:          |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|                                          | Amount        |  | $                      | 169,991 |         |  | $          | 339,981 |            |  |        | N/A     |   |  | $ | 683,481   |  
|                                          | Capital ratio |  |                        | 1.50    | %       |  |            | 3.00    | %          |  |        | N/A     |   |  |   | 8.00      | %
|                                          | Excess        |  | $                      | 558,640 |         |  | $          | 388,650 |            |  |        | N/A     |   |  | $ | 459,864   |  
|FDICIA well capitalized required capital: |               |  |                        |         |         |  |            |         |            |  |        |         |   |  |   |          
|                                          | Amount        |  |                        | N/A     |         |  | $          | 566,635 |            |  | $      | 512,611 |   |  | $ | 854,351   |  
|                                          | Capital ratio |  |                        | N/A     |         |  |            | 5.00    | %          |  |        | 6.00    | % |  |   | 10.00     | %
|                                          | Excess        |  |                        | N/A     |         |  | $          | 161,996 |            |  | $      | 142,531 |   |  | $ | 288,994   |  

29



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##### 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,
|                                       |                                                   |   | 2003                   |         | 2002        
|                                       |                                                   |   |                        |         |             
|                                       |                                                   |   | (Dollars in thousands)
|Bank shareholders equity  GAAP basis |                                                   | $ | 638,259                |         |              | $ | 532,902   |        
|                                       | Plus: net unrealized losses                       |   |                        | 89,127  |              |   |           | 94,220  |  
|                                       | Plus: minority interest in equity of subsidiaries |   |                        | 124,525 |              |   |           | 101,666 |  
|                                       | Less: non-permissible activities                  |   |                        | (157    | )            |   |           | (157    | )
|                                       |                                                   |   |                        |         |              |   |           |        
|Total tangible and core capital        |                                                   |   | 851,754                |         |              |   | 728,631   |        
|Adjustments for risk-based capital:    |                                                   |   |                        |         |              |   |           |        
|                                       | Subordinated debentures (1)                       |   |                        | 355,129 |              |   |           | 380,314 |  
|                                       | General loan valuation allowance (2)              |   |                        | 114,685 |              |   |           | 107,889 |  
|                                       | Low-level recourse deduction                      |   |                        | (3,020  | )            |   |           | (73,489 | )
|                                       |                                                   |   |                        |         |              |   |           |        
|Risk-based capital                     |                                                   | $ | 1,318,548              |         |              | $ | 1,143,345 |        
|                                       |                                                   |   |                        |         |              |   |           |        



---

|(1) |  | Excludes capitalized discounts and issue costs.
|--- |  | -----------------------------------------------
|(2) |  | Limited to 1.25% of risk-weighted assets.      

30



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Fluctuations in interest rates and early prepayment of contracts are the
primary market risks facing us. 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. It should be noted that shock analysis is objective but not
entirely realistic in that it assumes an instantaneous and isolated set of
events. 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.

The Asset/Liability Committee monitors our hedging activities to ensure that
the value of hedges, their correlation to the loans being hedged and the
amounts being hedged continue to provide effective protection against interest
rate risk. The amount and timing of hedging transactions are determined by our
senior management based upon the monitoring activities of the Asset/Liability
Committee. As a result of our approach to interest rate risk management and our
hedging strategies, we do not anticipate that changes in interest rates will
materially affect our results of operations or liquidity, although we can
provide no assurance in this regard. There were no material changes in market
risks in the current quarter.

31



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The following table summarizes our maturity GAP position:

|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |         |            | 
|------------------------------------------------------------------ | -------------------------------------------------- | -------------------------------------------- | ---------------------------------- | --------- | -------------------------------------------------------- | --------- | --------- | --------- | --------- | --------- | ---------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | ------- | ----- | ------- | --------- | ---------- | ------- | ---------- | 
|                                                                   |                                                    |                                              |                                    |           | Interest Rate Sensitivity Analysis at September 30, 2003
|                                                                   |                                                    |                                              |                                    |           |                                                         
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           | 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                              |                                              | $                                  | 7,634     |                                                          |           |           |           |           |           | $          | 50,000    |         |           |           |           |         |           |           |         |       |         | $         | 57,634     |        
|                                                                   | Other investments                                  |                                              |                                    | 209,187   |                                                          |           | $         | 310       |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           | 209,497    |        
|                                                                   | Mortgage-backed securities                         |                                              |                                    | 449,732   |                                                          |           |           | 764,174   |           |           |            | 992,832   |         |           | $         | 294,472   |         |           | $         | 162,946 |       |         |           | 2,664,156  |        
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|                                                                   |                                                    |                                              | Total investments                  |           |                                                          | 666,553   |           |           |           | 764,484   |            |           |         | 1,042,832 |           |           |         | 294,472   |           |         |       | 162,946 |           |            |         | 2,931,287  | 
|                                                                   | Consumer loans (1)                                 |                                              |                                    | 808,922   |                                                          |           |           | 3,081,020 |           |           |            | 4,999,576 |         |           |           | 1,723,125 |         |           |           | 46,017  |       |         |           | 10,658,660 |        
|                                                                   | Mortgage loans:                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|                                                                   |                                                    | Adjustable rate (2)                          |                                    |           | 184,866                                                  |           |           |           | 27,304    |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            | 212,170 |           
|                                                                   |                                                    | Fixed rate (2)                               |                                    |           | 1,396                                                    |           |           |           | 3,509     |           |            |           | 11,061  |           |           |           | 1,324   |           |           |         | 1,356 |         |           |            | 18,646  |           
|                                                                   | Construction loans (2)                             |                                              |                                    | 15,716    |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           | 15,716     |        
|                                                                   | Commercial loans (2)                               |                                              |                                    | 104,921   |                                                          |           |           | 675       |           |           |            | 69        |         |           |           |           |         |           |           |         |       |         |           | 105,665    |        
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|                                                                   |                                                    |                                              | Total interest earning assets      |           |                                                          | 1,782,374 |           |           |           | 3,876,992 |            |           |         | 6,053,538 |           |           |         | 2,018,921 |           |         |       | 210,319 |           |            |         | 13,942,144 | 
|Interest bearing liabilities:                                      |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |           
|                                                                   | Deposits:                                          |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|                                                                   |                                                    | Passbook accounts (3)                        |                                    |           | 705                                                      |           |           |           | 2,482     |           |            |           | 3,639   |           |           |           |         |           |           |         |       |         |           |            | 6,826   |           
|                                                                   |                                                    | Demand deposit and money market
accounts (3) |                                    |           | 174,541                                                  |           |           |           | 295,023   |           |            |           | 397,784 |           |           |           |         |           |           |         |       |         |           |            | 867,348 |           
|                                                                   |                                                    | Certificate accounts (4)                     |                                    |           | 344,308                                                  |           |           |           | 520,611   |           |            |           | 48,323  |           |           |           | 4,508   |           |           |         |       |         |           |            | 917,750 |           
|                                                                   | Notes payable on automobile secured
financing (4)  |                                              |                                    | 2,973,465 |                                                          |           |           | 2,582,027 |           |           |            | 3,685,931 |         |           |           | 866,780   |         |           |           |         |       |         |           | 10,108,203 |        
|                                                                   | Securities sold under agreements to
repurchase (4) |                                              |                                    | 245,844   |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           | 245,844    |        
|                                                                   | FHLB advances (4)                                  |                                              |                                    | 381,000   |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           | 2,676   |       |         |           | 383,676    |        
|                                                                   | Subordinated debentures (4)                        |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           | 99,863    |         |           |           | 294,631 |       |         |           | 394,494    |        
|                                                                   | Other borrowings (4)                               |                                              |                                    | 9,162     |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           | 9,162      |        
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|                                                                   |                                                    |                                              | Total interest bearing
liabilities |           |                                                          | 4,129,025 |           |           |           | 3,400,143 |            |           |         | 4,135,677 |           |           |         | 971,151   |           |         |       | 297,307 |           |            |         | 12,933,303 | 
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|Excess interest earning/bearing assets
(liabilities)               |                                                    |                                              | (2,346,651                         | )         |                                                          |           | 476,849   |           |           |           | 1,917,861  |           |         |           | 1,047,770 |           |         |           | (86,988   | )       |       |         | 1,008,841 |           
|Effect of hedging activities (5)                                   |                                                    |                                              | 2,409,031                          |           |                                                          |           | (530,300  | )         |           |           | (1,111,078 | )         |         |           | (323,153  | )         |         |           | (444,500  | )       |       |         |           |           
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |            |        
|Hedged excess (deficit)                                            |                                                    | $                                            | 62,380                             |           |                                                          | $         | (53,451   | )         |           | $         | 806,783    |           |         | $         | 724,617   |           |         | $         | (531,488  | )       |       | $       | 1,088,841 |           
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |           
|Cumulative excess                                                  |                                                    | $                                            | 62,380                             |           |                                                          | $         | 8,929     |           |           | $         | 815,712    |           |         | $         | 1,540,329 |           |         | $         | 1,008,841 |         |       | $       | 1,008,841 |           
|                                                                   |                                                    |                                              |                                    |           |                                                          |           |           |           |           |           |            |           |         |           |           |           |         |           |           |         |       |         |           |           
|Cumulative excess as a percentage
of total interest earning assets |                                                    |                                              | 0.45                               | %         |                                                          |           | 0.06      | %         |           |           | 5.85       | %         |         |           | 11.05     | %         |         |           | 7.24      | %       |       |         | 7.24      | %         



---

|(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.

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Item 4. Controls and Procedures

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.

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.

33



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##### 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 business, including Lee,
et al. v. WFS Financial Inc, United States District Court,
Middle District of Tennessee at Nashville, No. 3-02-0570
filed June 17, 2002 (a putative class action raising claims
under the Equal Credit Opportunity Act) and Thompson v. WFS
Financial Inc, Superior Court of the State of California,
County of Alameda, Case No. RG03088926 filed March 27, 2003
(a putative class action raising claims under the California
Business and Professions Code and the California Unruh Civil
Rights Act) along with two similar California state court
cases raising the same issues. 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                                
|        |  |                                         
|        |  | 31.1    Section 302 Certification of CEO
|        |  | 31.2    Section 302 Certification of CFO
|        |  | 32.1    Section 906 Certification of CEO
|        |  | 32.2    Section 906 Certification of CFO
|        |  |                                         
|(b)     |  | Reports on Form 8-K                     
|        |  |                                         
|        |  | Westcorp press release on July 21, 2003 

34



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##### 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 4, 2003 |  | By: |  | /S/ ERNEST S. RADY
Ernest S. Rady
Chairman of the Board and
Chief Executive Officer                                                                           
|     
|Date: |  | November 4, 2003 |  | By: |  | /S/ LEE A. WHATCOTT
Lee A. Whatcott
Executive Vice President,
Chief Financial Officer and
Chief Operating Officer (Principal
Financial and Accounting Officer)

35



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##### Table of Contents






EXHIBIT INDEX

|         |  |                                 
|-------- |  | --------------------------------
|Exhibits |  |                                 
|Number   |  | Description                     
|         |  |                                 
|         |  |                                 
|31.1     |  | Section 302 Certification of CEO
|         |  |                                 
|31.2     |  | Section 302 Certification of CFO
|         |  |                                 
|32.1     |  | Section 906 Certification of CEO
|         |  |                                 
|32.2     |  | Section 906 Certification of CFO

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