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                                                                   EXHIBIT 10.23


                              ALLOCATION AGREEMENT

         This ALLOCATION AGREEMENT ("Agreement") is made as of the 1st day of
January, 1997, by and among each of the undersigned companies (the "Companies",
or individually, "Company"):

                              WESTCORP ("Westcorp")
                       WESTCORP INVESTMENTS, INC. ("WII")
                       WESTRAN SERVICES CORP. ("Westran")
                   WESTERN FINANCIAL BANK. F.S.B. (the "Bank")
                            WFS FINANCIAL INC ("WFS")
                     WFS FINANCIAL AUTO LOANS, INC. ("WFAL")
                   WFS FINANCIAL AUTO LOANS 2, INC. ("WFAL2")
                         WFS INVESTMENTS, INC. ("WFSII")
                THE HAMMOND COMPANY, THE MORTGAGE BANKERS ("THC")
                     WESTERN CONSUMER SERVICES, INC. ("WCS")
                   WESTERN RECONVEYANCE COMPANY, INC. ("WRC")
                WESTERN FINANCIAL INSURANCE AGENCY, INC. ("WFIA")
                   WESTERN FINANCIAL INVESTMENTS, INC. ("WFI")
                     WESTHRIFT LIFE INSURANCE COMPANY ("WT")

         This Agreement shall replace and supersede all previous Administrative
Services, Allocation or Management Agreements, if any, existing among the
various Companies.

                                    RECITALS

     A. Westcorp is the sole shareholder of Westran and WII, each of which is a
California corporation, and is the sole shareholder of the Bank, a federally
chartered savings bank.

     B. The Bank is the majority shareholder of WFS, a California corporation,
and is the sole shareholder of THC, WCS, WRC, WFIA, and WFI each of which is a
California corporation, and of WT, an Arizona corporation.

     C. WFS is the sole shareholder of WFAL, WFAL2, and WFSII.

     D. Companies desire to obtain management and administrative services from
each other.

     E. Companies are willing to provide such management and administrative
services to each other on the terms and conditions described below.

     F. Westcorp, cognizant of the fact that WII does not have operations
generating income to cover the costs related to maintaining WII, desires to
reimburse or compensate the other Companies for all expenses incurred by
Companies on behalf of WII for the benefit of Westcorp.

     G. WFS, cognizant of the fact that WFAL, WFAL2, and WFSII ("Subsidiaries")
do not have operations generating income to cover the costs related to
maintaining Subsidiaries, desires to reimburse or compensate the other Companies
for all expenses incurred by Companies on behalf of Subsidiaries for the benefit
of WFS.

     H. Companies desire to set forth the terms of their relationship in order
to ensure that, in accordance with Office of Thrift Supervision ("OTS")
regulations, each Company functions as and remains a corporate entity separate
and apart from each other Company.

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                                    AGREEMENT

     In consideration of the mutual promises set forth herein, and in reliance
upon the recitals set forth above, the parties agree as follows:

     1. Services Performed By One Company For the Benefit of Other Companies.
Certain services are performed by one Company ("Performing Company") for itself
and for other Companies ("Benefiting Company"). These costs are not always
directly traceable to each Benefiting Company; or such tracing cannot be
economically or practically accomplished; or the value of such goods and
services are not sufficiently substantial, as a portion of Performing Company's
total expenditure for such goods and services, as to be separately calculated.
Therefore, each Benefiting Company agrees that it shall reimburse Performing
Company for aggregate categories of such goods and services at the rates and
using the methods specified for each category in the attached Exhibit "A", as
amended from time to time, which is incorporated herein and made part of this
Agreement. The Companies have determined that the method and rate for each
category most accurately reflect the amount of services devoted by Performing
Company to each Benefiting Company. Methods and rates shall be calculated as of
the effective date of this agreement and recalculated each January 1st for the
upcoming year, or more frequently if a material change occurs.

     Performing Companies and the services currently provided by them are set
out below. An amendment to Exhibit "A" is sufficient to amend this list.

                (a) Services Provided by Westcorp. Cash management and treasury
services, hedging, tax preparation and filing, purchasing, mail services,
facilities management, lease administration, security, payroll, and personnel
and human resources support services.

                (b) Services Provided by the Bank. Regulatory compliance,
internal asset review, and safety and soundness of asset quality.

                (c) Services Provided by WFS. Network and personal computer
operations, account processing, and some legal services.

     Pursuant to Recital F, above, Westcorp shall reimburse other Companies for,
or shall be directly responsible for, all direct costs incurred by a Company on
behalf of WII for the benefit of Westcorp.

     Pursuant to Recital G, above, WFS shall reimburse other Companies for, or
shall be directly responsible for, all direct costs incurred by a Company on
behalf of WFAL, WFAL2, and WFSII for the benefit of WFS.

     2. Direct Costs. Direct costing shall be used when a specific service or
product directly benefits a Company and the costs of the service or product is
readily identifiable and measurable. For example, invoices from third party
suppliers of goods or services, will be treated as direct costs and paid
directly by Benefiting Company as incurred. Where appropriate, Companies shall
enter into separate agreements for such goods and services.

     Pursuant to Recital F, above, Westcorp shall reimburse other Companies for,
or shall be directly responsible for, all direct costs incurred by a Company on
behalf of WII for the benefit of Westcorp.

     Pursuant to Recital G, above, WFS shall reimburse other Companies for, or
shall be directly responsible for, all direct costs incurred by a Company on
behalf of WFAL, WFAL2, and WFSII for the benefit of WFS.

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     3. Space and Office Services. A Company, from time to time and at different
times, may permit another Company to occupy certain space at specific locations
owned or leased by Company. At particular locations, certain office services,
including without limitation, receptionist, telecommunications, and photocopying
services, may be included in the occupancy arrangement. Because locations and
services may be changed or canceled and additional locations and services may be
requested and provided, locations, services and the compensation for them are as
set forth in Exhibit "B", as amended from time to time, attached hereto and
incorporated herein. WFI uses approximately 120 square feet of space in each of
the Bank's retail branches for the sale of non-insured products. Pursuant to
regulations, the space is clearly identified and separate from the retail
operation. The occupancy and use of any particular space or service may be
terminated by either Company with ten (10) day notice to the other Company
without affecting the occupancy or use of any other space or service. There is
no requirement that a Company must occupy any particular space for any
particular period of time.

     Pursuant to Recital F, above, Westcorp shall reimburse other Companies for,
or shall be directly responsible for, all direct costs incurred by a Company on
behalf of WII for the benefit of Westcorp.

     Pursuant to Recital G, above, WFS shall reimburse other Companies for, or
shall be directly responsible for, all direct costs incurred by a Company on
behalf of WFAL, WFAL2, and WFSII for the benefit of WFS.

     4. Director/Officer Costs. An employee of Westcorp ("Executive") devotes
substantially all his time to other Companies and each Benefiting Company
recognizes it should reimburse Westcorp for time spent by Executive on
Benefiting Company's business. The allocation of Executive's compensation to
each Benefiting Company is included in Exhibit "A".

     Certain employees of the Companies serve as directors and officers of other
Companies in addition to their regular job functions or devote a substantial
amount of their time to other Companies' business. Their salaries and benefits
are paid by their employer ("Employer"). Therefore, this Agreement provides for
Benefiting Company to reimburse Employer on a monthly basis for that portion of
the time spent by employees on Benefiting Company's business. This service will
be provided by Employer to Benefiting Company on a flat fee basis for officers
and directors and is intended to cover those instances where specific employees
devote more than an incidental or indivisible segment of time to the affairs of
Company in the capacity of an officer or director. In those instances where
employees spend a substantial amount of time on a Company's business, the
service is provided on a direct cost basis. The flat fee shall be an hourly
rate, which is a blended rate calculated as the average compensation of all
employees except Executive, regardless of their Employer, who serve as officers
and directors of Companies. Because the directors and officers change from time
to time, as will the calculation of the fee, the specific persons and current
fee are shown on Exhibit "C", as amended from time to time, attached hereto and
incorporated herein by reference. Each person shall estimate the number of hours
per month which he/she devotes to a Company as an officer or director thereof
and shall notify the controller of his/her Company annually or upon any material
change in the estimate.

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     Pursuant to Recital F, above, Westcorp shall reimburse other Companies for,
or shall be directly responsible for, all Director/Officer costs incurred by a
Company on behalf of WII for the benefit of Westcorp.

     Pursuant to Recital G, above, WFS shall reimburse other Companies for, or
shall be directly responsible for, all Director/Officer costs incurred by a
Company on behalf of WFAL, WFAL2, and WFSII for the benefit of WFS.

     5. Reconveyance Fees. WRC is trustee on trust deeds loans made by the Bank
and provides reconveyance services to the Bank. WRC also provides reconveyance
services on real estate loans made by THC. The Bank, for itself and for THC,
shall pay a fee to WRC, which shall not exceed the maximum allowable statutory
fee, for each reconveyance processed by WRC. The current fee is set at $65.00
per reconveyance. This fee is payable whether or not the Bank or THC, as
beneficiary under the trust deeds being reconveyed, is paid by the subject
borrowers. In the event any such reconveyance fees are paid directly to WRC or
THC by third parties, such receipts shall be credited to the Bank for fees due
under this Paragraph.

     6. Time and Method of Payment. Reimbursement for allocated costs shall be
payable by each Company to others Companies on a monthly basis by the 20th day
of each month for expenses and costs incurred during the prior month. The
Accounting Department of each Company under the direction of the Controller
shall administer the reimbursement and reflect the reimbursement on the separate
books and records of each Company.

     7. Term.

                7.1 This Agreement shall commence as of the date stated above
and shall continue until terminated by the parties.

                7.2 This Agreement may be terminated immediately for breach of
any covenant, obligation, or duty herein contained or for violation of law,
ordinance, statute, rule or regulation (collectively referred to as "law")
governing the conduct of any party hereto.

                7.3 Termination shall not affect the obligations of the
Companies with respect to any event occurring before termination. Each Company
shall be bound by and responsible for any transaction or expense properly agreed
to or incurred by another Company in connection with services performed
hereunder but not settled, paid or reimbursed prior to the date of any such
termination. Upon termination of this Agreement, the fee referred to above will
be prorated, but the due date thereof shall not be changed.

     8. Representations and Warranties of Company. Each Company on its behalf
alone represents and warrants to and for the benefit of other Companies as
follows:

                8.1 Corporate Existence and Qualifications. Company is a
corporation or association duly organized, validly existing and in good standing
under the laws of the United States or of the States of California or Arizona,
as applicable, with full corporate power to own its properties and to carry on
its business as now owned and operated by Company.

                8.2 Licenses; Compliance with Laws. Company has all licenses,
franchises, permits and authorizations necessary for the lawful conduct by
Company of its business. Company has not violated, and is not in violation of,
any such licenses, franchises, permits or authorizations or any applicable
statutes, laws, ordinances, 

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rules or regulations of any federal, state, or local governmental bodies,
agencies or subdivisions having, asserting or claiming jurisdiction over it or
over any part of its operations.

     9. Covenants Regarding Corporate Existence.

                9.1 Preservation of Corporate Existence and Qualifications. Each
Company shall keep in full effect its existence, rights and franchises as a
corporation or association under the laws of the jurisdiction in which organized
and will obtain and preserve its qualifications to carry on business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary.

                9.2 Observation of Corporate Formalities. Each Company shall at
all times observe the applicable legal requirements for the recognition of
Company as a corporate entity separate and apart from any other Company,
including without limitation the following:

                  (a) Each Company shall maintain corporate records and books of
account separate from those of other Companies;

                  (b) Each Company shall not at any time commingle its funds
with those of other Companies;

                  (c) Each Company shall hold meetings of its Board of Directors
as appropriate to authorize its corporate actions;

                  (d) Each Company shall hold meetings of its shareholder(s) as
appropriate and as required by the Corporations Code of the jurisdiction in
which organized to authorize its corporate actions;

                  (e) Each Company shall file all reports required by the
Secretary of State in all jurisdictions in which Company is licensed or
qualified, including the annual statement by whatever name denominated, in a
timely manner; and

                  (f) Each Company shall ensure that yearly franchise taxes are
paid in a timely manner so as to maintain its corporate existence uninterrupted.

         9.3 Advertising. Each Company will at all times hold itself out to the
public as an entity separate from any other Company and its advertising and
marketing shall reflect such separate corporate existence.

         9.4 OTS Regulations. Each Company shall comply with all applicable OTS
regulations. If required by 12 C.F.R. Section 563.37(b), any instrument
evidencing borrowing by Company shall indicate that no other Company is
responsible for any such debt.

     10. Liability; Consultation with Counsel. No Performing Company shall
assume responsibility or liability with respect to the business or affairs of
another Company except to the extent provided for in this Agreement. Each
Benefiting Company under this Agreement ("Indemnitor") shall indemnify, defend
and hold harmless the Performing Companies against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies (collectively the "Claims), including without
limitation interest penalties and attorney's fees, that such Performing Company
shall incur or suffer, which arise, result from or relate to (i) conduct by
Indemnitor of its business and operations and (ii) breach by Indemnitor of its
obligations pursuant to this Agreement. Notwithstanding anything contained
herein to the contrary, Indemnitor's obligations 

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pursuant to this section shall not be applicable to Claims arising directly from
Performing Company's bad faith, gross negligence or willful misconduct. This
Agreement shall create no right, benefit or privilege in favor of any person not
a party hereto, and no person not a party hereto shall have any recourse against
Performing Company for any advice, service or facility provided or omitted by
Performing Company pursuant to this Agreement. Performing Company may consult
with legal counsel (who may also be counsel to Indemnitor) concerning any
questions that may arise with respect to its duties and obligations hereunder,
and it shall be fully protected in respect of any action taken or omitted by it
hereunder in good faith reliance on any opinion of such counsel with respect to
any such duty or obligation.

     11. General.

         11.1 This Agreement may be modified, amended or superseded in whole or
in part, at any time, by a writing executed by the parties hereto.

         11.2 This Agreement shall be governed by the laws of California, except
to the extent any such laws are superseded by federal law or regulation.

         11.3 This Agreement may be executed in counterparts, all of which,
taken together shall constitute one agreement.

         11.4 No Company shall assign this Agreement without the prior written
consent of the other Companies, which consent shall not unreasonably be
withheld.

         Wherefore, the undersigned have executed this Agreement on the date set
forth below to be effective as of the date first set forth above.

WESTCORP



By: /s/  ERNEST S. RADY                         Date:  March 31, 1997
    -----------------------------
    Ernest S. Rady, President & Chief Executive Officer


WESTCORP INVESTMENTS, INC.



By: /s/  MARK OLSON                             Date:  March 31, 1997
    -----------------------------
    Mark Olson, Vice President


WESTRAN SERVICES CORP.



By: /s/  ALLEN D. GARRETT                       Date:  March 31, 1997
    -----------------------------
    Allen D. Garrett, President


WESTERN FINANCIAL BANK, F.S.B.



By: /s/  DONALD H. KASLE                        Date:  March 31, 1997
    -----------------------------
    Donald H. Kasle, President


WFS FINANCIAL INC



By: /s/  JOY SCHAEFER                           Date:  March 31, 1997
    -----------------------------
    Joy Schaefer, President

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WFS FINANCIAL AUTO LOANS, INC.



By: /s/  JAMES R. DOWLAN                        Date:  March 31, 1997
    -----------------------------
    James R. Dowlan, President


WFS FINANCIAL AUTO LOANS 2, INC



By: /s/  JAMES R. DOWLAN                        Date:  March 31, 1997
    -----------------------------
    James R. Dowlan, President


WFS INVESTMENTS, INC.



By: /s/  MARK OLSON                             Date:  March 31, 1997
    -----------------------------
    Mark Olson, Vice President


THE HAMMOND COMPANY, THE MORTGAGE BANKERS



By: /s/  ARTHUR W. ALVAREZ                      Date:  March 31, 1997
    -----------------------------
    Arthur W. Alvarez, President


WESTERN CONSUMER SERVICES, INC.



By: /s/  THOMAS E. BLEE                         Date:  March 31, 1997
    -----------------------------
    Thomas E. Blee, President


WESTERN RECONVEYANCE COMPANY, INC.



By: /s/  BARBARA J. DARLING                     Date:  March 31, 1997
    -----------------------------
    Barbara J. Darling, President


WESTERN FINANCIAL INSURANCE AGENCY, INC.



By: /s/  KATHERINE M. SALTZMAN                  Date: March 31, 1997
    -----------------------------
    Katherine M. Saltzman, President


WESTERN FINANCIAL INVESTMENTS, INC.



By: /s/  BRETT W. GROSS                         Date:  March 31, 1997
    -----------------------------
    Brett W. Gross, President


WESTHRIFT LIFE INSURANCE COMPANY



By: /s/  JAMES R. DOWLAN                        Date:  March 31, 1997
    -----------------------------
    James R. Dowlan, President