SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
|X|  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 2002
                                    OR

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

For the transition period from......................to.........................

Commission file number 1-3521

                      WASHINGTON MUTUAL FINANCE CORPORATION
             (Exact name of registrant as specified in its charter)

                 DELAWARE                            95-4128205
      (State or other jurisdiction of             (I.R.S. Employer
      incorporation or organization)           Identification Number)
     8900 Grand Oak Circle, Tampa, FL                33637-1050
 (Address of principal executive offices)            (Zip Code)

                                 (813) 632-4500
              (Registrant's telephone number, including area code)


          Securities registered pursuant to Section 12 (b)of the Act:

                                                   Name of each exchange
              Title of each class                  on which registered
              -------------------                  -------------------
     6 7/8 % Senior Notes due May 15, 2011       New York Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act:     None

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 [ ].


Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K:

                                 Not applicable

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X].

The aggregate market value of Common Stock held by non-affiliates: None
As of February 28, 2003, there were 1,000 shares of Common Stock outstanding.

Documents incorporated by reference:    None

Registrant meets the conditions set forth in General  Instruction  (I)(1)(a) and
(b) of Form 10-K and is therefore  filing this Form with the reduced  disclosure
format.

<PAGE>



                      WASHINGTON MUTUAL FINANCE CORPORATION

                           ANNUAL REPORT ON FORM 10-K

                                Table of Contents


                                                                            Page
                                     PART I

Item 1.     Business...........................................................3
Item 2.     Properties........................................................10
Item 3.     Legal Proceedings.................................................10
Item 4.     Submission of Matters to a Vote of Security Holders................*

                               PART II

Item 5.     Market for the Registrant's Common Equity
               and Related Stockholder Matters................................12
Item 6.     Five-Year Summary of Selected Financial Data......................12
Item 7.     Management's Discussion and Analysis of Financial Condition
               and Results of Operations......................................12
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk........24
Item 8.     Financial Statements and Supplementary Data.......................26
Item 9.     Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure............................48

                              PART III

Item 10.    Directors and Executive Officers of the Registrant.................*
Item 11.    Executive Compensation.............................................*
Item 12.    Security Ownership of Certain Beneficial Owners and
               Management and Related Stockholder Matters......................*
Item 13.    Certain Relationships and Related Transactions.....................*
Item 14.    Controls and Procedures...........................................13

                               PART IV

Item 15.    Exhibits, Financial Statement Schedules and
               Reports on Form 8-K............................................49


       *    Items 4, 10, 11, 12 and 13 are not included as per conditions met by
            Registrant set forth  in  General Instruction I(1(a) and (b) of Form
            10-K.


<PAGE>


                                     PART I

Item 1.  Business

General

Washington Mutual Finance Corporation ("WMF"), incorporated in Delaware in 1986,
as Aristar,  Inc., is a holding company  headquartered  in Tampa,  Florida whose
subsidiaries are engaged in the consumer financial services business. Washington
Mutual Finance Corporation is an indirect, wholly-owned subsidiary of Washington
Mutual, Inc. ("Washington  Mutual").  When we refer to "we", "our", "us", or the
"Company" in this Form 10-K, we mean Washington  Mutual Finance  Corporation and
its subsidiaries, all of which are wholly-owned.

Our Company's operations consists principally of a network of 432 branch offices
located in 26 states,  primarily  in the  southeast,  southwest  and  California
("Consumer  Finance").  These offices operate under the name  Washington  Mutual
Finance.  Our branch  offices are  typically  located in small- to  medium-sized
communities  in  suburban  or rural  areas and are  managed by  individuals  who
generally have  considerable  consumer lending  experience.  We make secured and
unsecured consumer  installment loans, and purchase  installment  contracts from
local retail establishments.  The consumer credit transactions are primarily for
personal,  family,  or  household  purposes.  From  time to time,  we  purchase,
servicing  released,  real estate secured consumer loans from national  mortgage
companies and banking operations through our wholly owned subsidiary, Washington
Mutual Finance, Inc., a California  corporation,  which does business as Aristar
Mortgage Company ("Aristar Mortgage").

Until  October 1, 2002,  we also owned a consumer  financial  services  business
("Consumer  Banking"),  which provided  services through our industrial  banking
subsidiary,  First Community  Industrial Bank ("FCIB").  FCIB had 10 branches in
Colorado  and Utah.  FCIB made  consumer  loans,  purchased  retail  installment
contracts  and  accepted  deposits  insured  by the  Federal  Deposit  Insurance
Corporation.  This  business  was sold on  October  1,  2002  and,  accordingly,
Consumer  Banking  has been  accounted  for,  and is reported  as,  discontinued
operations.

Discontinued Operations

On October 1, 2002,  we  completed  the sale of FCIB through a merger with First
State Bank,  NM,  formerly  First State Bank of Taos,  a New Mexico bank ("First
State"),  wholly-owned by First State Bancorporation,  a New Mexico corporation,
with First State being the surviving entity.  Accordingly,  Consumer Banking has
been accounted for as discontinued operations and the accompanying  Consolidated
Financial  Statements  presented herein have been restated to report  separately
the net  assets  and  liabilities  and  operating  results  of the  discontinued
operation.



<PAGE>


Portfolio Composition

The  following  table  provides  an  analysis  by type of our  consumer  finance
receivables  (excluding  unearned  finance  charges and deferred loan fees) from
continuing operations at the dates shown:
<TABLE>

(Dollars in thousands)                                              December 31,
                                           --------------------------------------------
                                                2002            2001             2000
Notes and contracts receivable:            -----------      -----------     -----------
Type:
<S>                                        <C>              <C>             <C>
   Real estate secured loans               $ 1,929,797      $ 1,738,967     $ 1,628,628
   Other installment loans                   1,464,234        1,410,529       1,390,697
   Retail installment contracts                264,366          330,404         319,637
                                           -----------      -----------     -----------
     Total                                 $ 3,658,397      $ 3,479,900     $ 3,338,962
                                           ===========      ===========     ===========
     Number of accounts                        886,585          984,775         997,850
Type as a percent of total receivables:
   Real estate secured loans                      52.8%            50.0%           48.8%
   Other installment loans                        40.0             40.5            41.6
   Retail installment contracts                    7.2              9.5             9.6
                                           -----------      -----------     -----------
                                                 100.0%           100.0%          100.0%
                                           ===========      ===========     ===========
</TABLE>

For the year ended  December 31, 2002,  real estate  secured  loans  outstanding
(excluding  unearned  finance charges and deferred loan fees)  increased  $190.8
million,  or 11.0% from 2001 as compared with an increase of $110.3 million,  or
6.8%, from 2000 to 2001. Aristar Mortgage  contributed $174.8 million toward the
real estate  secured  loan growth in 2002  through  its bulk  purchases  of real
estate  secured  consumer  loans from  national  mortgage  companies and banking
operations.  Real estate secured loans are typically  secured by first or second
mortgages,  and those  originated by us are  primarily  used by the customer for
purchases of consumer goods or debt consolidation. We have focused on increasing
our percentage of real estate loans due to the better credit quality inherent in
the customer base. The underlying  security in real estate secured loans reduces
our risk of loss. In addition,  the larger average  balance makes this loan type
more cost  effective to purchase or originate and service.  At December 31, 2002
and 2001, the average  balance of a real estate  secured loan was  approximately
$28,700 and $27,600.

Over the past two years, other installment loans outstanding (excluding unearned
finance charges and deferred loan fees) has remained relatively flat, increasing
$53.7 million,  or 3.8% in 2002 over 2001, and increasing  $19.8 million or 1.4%
from 2000 to 2001.  These  results are due primarily to our focus on growing the
real estate  portfolio.  Other  installment loans are either secured by consumer
goods or  unsecured  and are  primarily  used by the  customer to make  specific
purchases  of  consumer  goods or  undertake  personal  debt  consolidation.  At
December 31, 2002 and 2001, the average balance of an other installment loan was
approximately $2,800 and $2,500.

During  2002,  retail  installment  contracts  outstanding  (excluding  unearned
finance charges and deferred loan fees)  decreased  $66.0 million,  or 20.0%, as
compared  to an  increase  of $10.8  million,  or 3.4% from  2000 to 2001.  This
decline is due primarily to the change in consumer  purchasing  habits caused by
the slow  economy.  This  loan  type is  generally  utilized  as a source of new
customers, and it has been determined that maintaining this portfolio as a small
percentage of the mix is appropriate for generating cross-selling opportunities,
while  minimizing  the  impact  on  yields.  Retail  installment  contracts  are
generally acquired without recourse to the originating  merchant and establish a
customer  relationship  for  developing  future loan business.  These  contracts
result  from the sale of  consumer  goods and  payment is secured by such goods.

<PAGE>

Retail  installment  contracts are generally  acquired  through the  originating
merchant.  We had such arrangements with approximately  3,000 merchants in 2002.
At December  31,  2002 and 2001,  the  average  balance of a retail  installment
contract was approximately $900 and $930.

Consumer  loans  are  typically   fixed-rate  and  are  originated  by  customer
application or acquired  through  periodic  purchases of receivable  portfolios.
Loan  originations are a result of business  development  efforts  consisting of
direct mail,  telemarketing  and branch office sales  personnel.  Consumer loans
written in 2002 had original terms  generally  ranging from 12 to 240 months and
averaged 64 months. Of the loans originated in 2002,  approximately 74.9% of the
dollar value were unsecured or secured by consumer  goods,  automobiles or other
personal  property,  and  approximately  25.1% were secured by real  estate.  In
addition,  the  Company  purchases  loan  portfolios  from its  competitors  and
secondary  markets.  In 2002, $357.4 million of loans were purchased,  primarily
through Aristar Mortgage. Of these, approximately 2.3% were unsecured or secured
by consumer goods,  automobiles or other personal  property,  and  approximately
97.7% were secured by real estate.

As part of our  consumer  finance line of business,  we make  available,  at the
option of our customers,  various credit insurance and ancillary products. These
products  include credit life insurance,  credit accident and health  insurance,
credit property and casualty  insurance,  term life  protector,  and involuntary
unemployment  insurance.  We do not sell insurance to non-customers.  The credit
insurance  we  sell is  written  by  unaffiliated  insurance  companies,  and we
substantially  reinsure all of these  policies,  and earn a reinsurance  premium
thereon, except for the involuntary  unemployment insurance, for which we earn a
direct commission.

Yield Written

For the years ended December 31, 2002, 2001 and 2000 the average portfolio yield
written during the year, by loan type, was as follows:


<TABLE>

                                               2002       2001       2000
                                              -----      -----      -----
<S>                                           <C>        <C>        <C>
         Real estate secured loans            13.33%     13.74%     14.12%
         Other installment loans              24.20      24.59      25.11
         Retail installment contracts         19.84      19.95      19.86


</TABLE>

The yield written  includes the stated coupon rate of interest plus initial fees
charged at the time of loan  origination.  These  initial  finance  charges  are
recognized on an accrual basis, using the interest method.



<PAGE>


Geographic Distribution

Geographic   diversification  of  consumer  finance   receivables   reduces  the
concentration of credit risk associated with a recession in any one region.  The
concentration  of  consumer  finance  receivables  (excluding  unearned  finance
charges and deferred loan fees) by state was as follows (note that these results
are based on the state where the customer resides):

<TABLE>


                                                      December 31,
                        -----------------------------------------------------------------------
                                   2002                     2001                     2000
                        ---------------------     --------------------    ---------------------
(Dollars in thousands)  Amount        Percent        Amount    Percent       Amount     Percent
                        -----------   -------     -----------  -------    -----------   -------
<S>                     <C>              <C>      <C>             <C>     <C>             <C>
California              $   601,936      16%      $   474,181     14%     $   388,825     12%
Texas                       491,366      13           422,184     12          363,407     11
Tennessee                   363,042      10           345,587     10          339,852     10
North Carolina              281,545       8           291,929      8          292,893      9
Florida                     248,674       7           222,324      6          222,010      7
South Carolina              178,067       5           179,379      5          182,669      5
Virginia                    160,967       4           157,217      5          161,247      5
Louisiana                   143,326       4           145,127      4          146,146      4
Alabama                     128,195       4           118,487      4          118,785      4
Oklahoma                    113,928       3           107,086      3          102,036      3
Other                       947,351      26         1,016,399     29        1,021,092     30
                        -----------   -------     -----------  -------    -----------   -------
Total Continuing
   Operations           $ 3,658,397     100%      $ 3,479,900    100%     $ 3,338,962    100%
                        ===========   =======     ===========  =======    ===========   =======


</TABLE>

Credit Loss Experience

We closely monitor portfolio delinquency and loss rates in measuring the quality
of the portfolio and the potential  for ultimate  credit  losses.  An account is
considered  delinquent  when a payment is 60 days or more past due, based on the
original  terms of the  contract.  Under our  policy,  non-real  estate  secured
delinquent  accounts  generally are charged off (i.e.  fully reserved) when they
become  180  days  contractually  delinquent.  Real  estate  secured  delinquent
accounts  are handled on a  case-by-case  basis,  with  foreclosure  proceedings
typically  beginning when the accounts are between 60 and 90 days  contractually
delinquent.  Within legal  limitations  such as  bankruptcy  discharges of debt,
collection  efforts  continue  after an account has been charged off until it is
determined that the cost of collection efforts outweighs the benefits received.

We attempt to control customer  delinquency  through careful  evaluation of each
borrower's  application and credit history at the time the loan is originated or
purchased,  and through appropriate  collection activity. We also seek to reduce
our risk by  focusing on consumer  lending,  making a greater  number of smaller
loans than would be practical in commercial markets, and maintaining disciplined
control over the underwriting process.

We maintain an allowance for loan losses inherent in the receivables  portfolio.
The allowance is based on an ongoing assessment of the probable estimated losses
inherent in the portfolio.  This analysis provides a mechanism for ensuring that
estimated losses reasonably  approximate  actual observed losses. See discussion
in "Allowance for loan losses" in Item 7.



<PAGE>


Funding Composition

A  relatively  high ratio of  borrowings  to invested  capital is  customary  in
consumer  finance  activities due to the quality and term of the assets employed
by the  business.  As a result,  the spread  between the revenues  received from
loans and  interest  expense  is a  significant  factor in  determining  our net
income.

We fund our  operations  principally  through  net  cash  flows  from  operating
activities,  short-term  borrowings in the commercial paper market and issuances
of senior debt.

The Company has a commercial  paper program with several  investment banks which
provides $500 million in borrowing capacity.  At December 31, 2002,  twenty-nine
different  commercial paper borrowings totaling $439.5 million were outstanding,
with an average coupon of 1.81%.  We also share with  Washington  Mutual an $800
million  three-year  revolving credit  facility,  which provides back-up for our
commercial  paper programs.  The borrowing  capacity is limited to the amount of
the credit facility, net of the amount of combined commercial paper outstanding.
At December 31, 2002,  there was $360.5  million  available  under the facility.
There were no direct  borrowings  under the facility at any point during 2002 or
2001.

On July 31,  2002,  we entered into an agreement  with  Westdeutsche  Landesbank
Girozentrale ("WestLB") to participate in a $300 million asset-backed commercial
paper conduit program.  Under this program,  administered by WestLB,  up to $300
million of funding will be made available through the assignment of an undivided
interest in a specified  group of unsecured  receivables  to a special  purpose,
wholly-owned  consolidated  subsidiary  of the  Company.  Under the terms of the
agreement,  which has a  364-day  term,  with an option to extend  for up to two
additional 364-day periods,  WestLB issues commercial paper (indirectly  secured
by the receivables), on behalf of the Company. Under this agreement, we had $300
million outstanding, with an average coupon of 1.42% at December 31, 2002.

Effective January 16, 2003, we entered into a 364-day unsecured revolving credit
agreement  with  Washington  Mutual,  Inc.,  which  provides  $250.0  million in
borrowing  capacity at an interest rate of LIBOR plus 0.45% and is automatically
renewable for an additional 364 days.  Under the agreement,  we borrowed  $150.0
million on January 17, 2003. See "Subsequent Event".

Senior notes  outstanding  totaled  $2.39  billion at December 31, 2002,  with a
weighted average coupon of 7.00%.

Available Information

We make our annual report on Form 10-K,  quarterly reports on Form 10-Q, current
reports on Form 8-K,  and all  amendments  to such  reports  filed  pursuant  to
Section  13(a) or 15(d) of the  Exchange  Act,  available  free of  charge on or
through our website located at  www.wamufinance.com or through the United States
Securities and Exchange Commission's website at www.sec.gov.

Employee Relations

Our  number  of  full-time   equivalent  employees  at  December  31,  2002  was
approximately  2,300,  a 13.2%  decrease from December 31, 2001 due primarily to
the  sale of FCIB  in  October,  as well  as  efficiencies  gained  through  the
centralization  of  certain  branch  functions.  We  believe  that we have  been
successful in attracting and retaining  quality  employees and that our employee
relations are good.

<PAGE>

Factors That May Affect Future Results

From time to time, we have made and will make  forward-looking  statements.  Our
Form 10-K and other  documents  that we file with the  Securities  and  Exchange
Commission have forward-looking  statements.  In addition, our senior management
may make forward-looking statements orally to analysts, investors, the media and
others.  Forward-looking  statements  can be identified by the fact that they do
not relate  strictly to  historical or current  facts.  They often include words
such as "expects,"  "anticipates,"  "intends," "plans," "believes," "estimates,"
or words of  similar  meaning,  or future or  conditional  verbs such as "will,"
"would," "should," "could," or "may."

Forward-looking  statements  provide our  expectations  or predictions of future
conditions, events or results. They are not guarantees of future performance. By
their nature, forward-looking statements are subject to risks and uncertainties.
These statements speak only as of the date they are made. We do not undertake to
update  forward-looking  statements  to reflect the impact of  circumstances  or
events that arise after the date the forward-looking statements were made. There
are a number of factors,  many of which are beyond our control, that could cause
actual  conditions,  events  or  results  to  differ  significantly  from  those
described in the forward-looking statements.

Some of these factors are described below.

A decline of collateral value may adversely affect the credit quality of our
portfolio

Approximately 53% of our consumer finance  receivables  outstanding were secured
by real estate at December 31, 2002. Any material  decline in real estate values
reduces the ability of  borrowers to use home equity to support  borrowings  and
increases  the  loan-to-value  ratios of loans  previously  made by us,  thereby
weakening  collateral  coverage and increasing the  possibility of a loss in the
event of a borrower  default.  Further,  delinquencies,  foreclosures and losses
generally increase during economic slowdowns or recessions. Any sustained period
of such increased delinquencies,  foreclosures and losses could adversely affect
our results of operations and financial condition.

An  increase  in our  delinquency  rate could  adversely  affect our  results of
operations

Our  underwriting  criteria  or  collection  methods  may  not  afford  adequate
protection against the risks inherent in the loans we make to our customers.  In
the event our  portfolio  of consumer  finance  receivables  experiences  higher
delinquencies,   foreclosures  or  losses  than  anticipated,   our  results  of
operations or financial condition could be adversely affected.

Changes in  legislation  or  regulation  could  adversely  affect  our  business
operations

Our lending  activities are subject to federal consumer  protection laws such as
the  Amended  Truth-in-Lending  Act  (including  the Home  Ownership  and Equity
Protection  Act of 1994,  "HOEPA"),  the Fair  Housing  Act,  the  Equal  Credit
Opportunity  Act,  the Fair Credit  Reporting  Act,  the Real Estate  Settlement
Procedures  Act, the Home Mortgage  Disclosure Act and the Fair Debt  Collection
Practices Act and regulations promulgated thereunder. Amendments to Regulation C
implementing the Home Mortgage Disclosure Act ("HMDA") have been adopted.  Prior
to the amendments,  we were generally exempt from HMDA reporting. The amendments

<PAGE>

will  require  us to report  certain  mortgage  loans and will  require  certain
additional data that was not previously  required,  such as designation of HOEPA
applicability  to the mortgage loan. In  anticipation of the HMDA effective date
for the amendments,  we instituted an implementation plan and have already begun
a pilot  test of the new  programming  required  to  comply  with the  reporting
requirements and to insure that we are in compliance with the regulations by the
mandatory  compliance  date.  The HMDA  amendments  are not  expected  to have a
material adverse impact on the business.

We are  also  under  the  federal  regulatory  oversight  of the  Federal  Trade
Commission  ("FTC") which, from time to time,  promulgates rules that affect our
operations.  Our operating subsidiaries are subject to state laws and regulatory
oversight which laws and regulations:  (i) impose  licensing  obligations on us,
(ii)  establish   eligibility   criteria  for  mortgage  loans,  (iii)  prohibit
discrimination,  (iv) provide for inspections and appraisals of properties,  (v)
require credit reports on loan applicants, (vi) regulate assessment, collection,
foreclosure and claims handling,  (vii) mandate certain  disclosures and notices
to borrowers,  (viii) in some cases,  fix maximum  interest  rates,  fees,  loan
amounts,  prepayment penalties and refinancing  frequencies and (ix) regulate or
prohibit the sale of credit insurance products. Failure to comply with the state
and federal requirements can lead to termination or suspension of our ability to
make and  collect  loans,  certain  rights of  rescission  for  mortgage  loans,
individual civil liability, class action lawsuits and administrative enforcement
actions.

Although consumer finance laws have been in effect for many years,  amending and
new  legislation  is  frequently  proposed.  Currently  there are a  handful  of
subprime lending bills pending in various states, cities and counties, including
Tennessee, West Virginia, Oakland, CA, Los Angeles, CA, Detroit, MI, and Toledo,
OH.  In  general  the  bills are aimed at  lending  practices  considered  to be
"predatory"  as they have an adverse  effect on borrowers  with weakened  credit
histories  and lower  prepayment  abilities.  If passed,  generally the bills or
ordinances  may  impose  additional  loan  disclosure   requirements,   restrict
prepayment penalties, prohibit frequent loan refinancings without benefit to the
borrower and increase enforcement abilities and penalties for violations. Due to
self-imposed  lending  guidelines,  we believe that the pending  state bills and
ordinances  would have minimal impact on our operations if passed.  There can be
no assurance  that more  restrictive  laws,  rules and  regulations  will not be
proposed and adopted in the future,  or that existing laws and regulations  will
not be interpreted in a more restrictive  manner.  Such  occurrences  could make
compliance more difficult or expensive.

Our lending practices have in the past been, and currently are, under regulatory
review by various state  authorities  in the normal course of their  examination
functions. Additionally, the laws and regulations described above are subject to
administrative and judicial interpretation. Where the law or regulation has been
infrequently   interpreted   (or   there   are  an   insignificant   number   of
interpretations  of recently  enacted  regulations)  ambiguity  with  respect to
permitted  conduct under these laws and  regulations  can result.  Any ambiguity
under  the   regulations  to  which  we  are  subject  may  lead  to  regulatory
investigations  or  enforcement  actions and private  causes of action,  such as
class action  lawsuits,  with respect to our compliance with the applicable laws
and regulations.

We may be  subject to  litigation  that could  adversely  affect our  results of
operations or financial condition

In the ordinary course of our business, we are subject to claims made against us
by borrowers  arising from, among other things,  losses that are claimed to have
been incurred as a result of alleged  failures by us to comply with various laws
and regulations applicable to our business. See Item 3 - "Legal Proceedings" for
more details.  We believe that liability with respect to any currently  asserted


<PAGE>

claims or legal actions is not likely to be material to our consolidated results
of operations or financial condition. However, any claims asserted in the future
may result in legal expenses or liabilities  that could have a material  adverse
effect on our results of operations and financial condition.

Fluctuations in interest rates may adversely affect our profitability

Our profitability  may be adversely  affected during any period of rapid changes
in interest rates, as substantially  all consumer loans  outstanding are written
at a fixed rate. A substantial  and sustained  increase in interest  rates could
adversely  affect the spread between the rate of interest  received by us on our
loans and the interest  rates payable under our debt  agreements.  Such interest
rate increases  could also affect our ability to originate  loans. A significant
decline in interest  rates could  decrease the balance of the  consumer  finance
receivables portfolio by increasing the level of loan prepayments.  See Item 7 -
"Asset/Liability Management" for sensitivity analysis.

Competition could adversely affect our results of operations

Competition  in the consumer  finance  business is high.  The  consumer  lending
market is highly  fragmented and has been serviced by commercial  banks,  credit
unions and savings institutions, as well as by other consumer finance companies.
Many of  these  competitors  have  greater  financial  resources  and  may  have
significantly lower costs of funds than we do. Even after we have made a loan to
a borrower,  our  competitors  may seek to refinance  the loan in order to offer
additional loan amounts or reduce payments.  In addition,  if we expand into new
geographic  markets,  we will face  competition  from lenders  with  established
positions in these locations.  There can be no assurance that we will be able to
continue to compete successfully in these markets.

Item 2.    Properties

The Company's corporate  headquarters building is located in Tampa, Florida. The
current lease expires in May 2006, with an additional five-year option to renew.

Our branch  offices are leased  typically  for terms of three to five years with
options to renew.  Typical locations include shopping centers,  office buildings
and  storefronts,  and are  generally of  relatively  small size  sufficient  to
accommodate a staff of three to eight employees.

We lease 50,000  square feet of space in Pensacola,  Florida,  which is used for
centralized underwriting, servicing and collections activities.

See  "Notes  to  Consolidated  Financial  Statements  -  Note  12:  Leases"  for
additional information on rental expense and lease commitments.

Item 3.    Legal Proceedings

The  Company  and  several  of its  subsidiaries  and their  current  and former
employees  are  defendants  in  approximately  35 suits pending in the state and
federal courts of Mississippi.  The lawsuits generally allege unfair lending and
insurance related  practices.  Similar suits are pending against other financial
services  companies in Mississippi.  All but three of the suits are currently in
various  stages of discovery or stayed pending the outcome of motions for remand
and no immediate developments are expected in those cases.

<PAGE>

In one of the pending cases,  Carolyn Baker, et al. v. Washington Mutual Finance
Group,  LLC f/k/a City  Finance  Company,  a jury  awarded just over $71 million
against one of the Company's subsidiaries, Washington Mutual Finance Group, LLC,
a Delaware limited liability  company ("WMF Group").  Pursuant to a motion filed
by WMF Group, the trial court reduced the verdict to just over $53 million.  WMF
Group is in the process of  appealing  the verdict and has posted a bond to stay
execution on the judgment  pending the  appellate  court's  ruling.  WMF Group's
appellate  brief and three amicus briefs were filed in November and all briefing
is expected to be  completed  by the end of first  quarter  2003.  The appeal is
based on numerous  grounds,  including  the gross  inequity  between the alleged
economic losses of only $12,000 and the actual jury award.

In the case of Philisia  Banks,  et. al. v. City Finance Co., et. al., which was
originally  scheduled  for trial  beginning  December 16, 2002,  the  plaintiffs
requested  further  mediation.  No new trial date has been set. This case is now
expected to go to trial  sometime in the first or second quarter of 2003. In the
case of William Agnew, et. al. v. City Finance Company of Mississippi, Inc., et.
al., a trial is currently set for May of 2003 and a motion for summary  judgment
is currently pending. Adverse verdicts could result in either case by the end of
second  quarter  2003.  Because  of  the  unusual   litigation   environment  in
Mississippi,  it is difficult to predict potential outcomes and losses. However,
based upon  information  presently  available,  we believe that the total amount
that will ultimately be paid, if any, after reductions and appeals, arising from
these  Mississippi  lawsuits and  proceedings  will not have a material  adverse
effect on our consolidated results of operations and financial position.

We are currently  evaluating the business and legal  environment in Mississippi.
During  the  evaluation  process,  we have  suspended  all new loan  origination
activities and revolving loan advances to Mississippi residents.  The moratorium
on new advances and  originations  went into effect September 30, 2002. Based on
the  information  available,  we  believe  that the  moratorium  will not have a
material adverse effect on our  consolidated  results of operation and financial
position.



<PAGE>


                                     PART II

Item 5.    Market for the Registrant's Common Equity and Related Stockholder
           Matters

The Company is an indirect wholly-owned  subsidiary of Washington Mutual and the
Company's  common stock is not traded on any  national  exchange or in any other
established market.

Payment  of  dividends  is  within  the  discretion  of the  Company's  Board of
Directors.  Provisions of certain of our debt agreements restrict the payment of
dividends to a maximum prescribed portion of cumulative earnings and contributed
capital and otherwise  provide for the  maintenance  of minimum levels of equity
and maximum  leverage  ratios.  Dividends will be paid when capital  exceeds the
amount of debt to  tangible  capital  (leverage  ratio)  deemed  appropriate  by
management.   This  leverage  ratio  will  be  managed  with  the  intention  of
maintaining  the existing  credit  ratings on our  outstanding  obligations.  We
declared  dividends totaling $123.0 million during 2002 and $43.5 million during
2001.


Item 6.  Five-Year Summary of Selected Financial Data

The selected financial data is included in Item 7 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations". Please refer to Item
7, as the  selected  financial  data  should  be read in  conjunction  with  the
accompanying  consolidated  financial statements and related notes in Item 8 and
other financial  information  included in this Form 10-K. On October 1, 2002, we
sold our Consumer Banking subsidiary.  Accordingly, it has been accounted for as
discontinued  operations and the accompanying  selected  financial data has been
restated  to report  separately  the net  assets and  operating  results of this
discontinued operation.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Cautionary Statements

This section contains forward-looking statements, which are not historical facts
and pertain to our future operating results.  These  forward-looking  statements
are within the meaning of the Private Securities  Litigation Reform Act of 1995.
These  forward-looking  statements  include,  but are not limited to, statements
about our plans,  objectives,  expectations  and intentions and other statements
contained  in this  report  that are not  historical  facts.  When  used in this
report,  the words "expects,"  "anticipates,"  "intends,"  "plans,"  "believes,"
"seeks,"  "estimates,"  or words of similar  meaning,  or future or  conditional
verbs,  such as  "will,"  "would,"  "should,"  "could,"  or "may" are  generally
intended  to  identify   forward-looking   statements.   These   forward-looking
statements  are  inherently  subject  to  significant  business,   economic  and
competitive  uncertainties  and  contingencies,  many of which  are  beyond  our
control.  In  addition,   these   forward-looking   statements  are  subject  to
assumptions  with respect to future  business  strategies and decisions that are
subject  to  change.  Actual  results  may differ  materially  from the  results
discussed in these forward-looking statements. Refer to "Business - Factors that
May  Affect  Future  Results"  for  additional  information  on  forward-looking
statements.



<PAGE>


Controls and Procedures

An evaluation was performed under the supervision and with the  participation of
the Company's management,  including the Chief Executive Officer ("CEO") and the
Chief  Financial  Officer  ("CFO"),  of  the  effectiveness  of the  design  and
operation of the Company's  disclosure  controls and  procedures  within 90 days
before the filing  date of this annual  report.  Based on that  evaluation,  the
Company's  management,  including the CEO and CFO,  concluded that the Company's
disclosure   controls  and  procedures  were  effective.   There  have  been  no
significant  changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to their evaluation.

We intend to review and evaluate the design and  effectiveness of our disclosure
controls  and  procedures  on an ongoing  basis and to improve our  controls and
procedures over time and to correct any deficiencies that we may discover in the
future.  Our goal is to ensure that our senior  management  has timely access to
all material  financial and non-financial  information  concerning our business.
While we believe the present design of our disclosure controls and procedures is
effective to achieve our goal, future events affecting our business may cause us
to modify our disclosure controls and procedures.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make a
number of judgments,  estimates and assumptions  that affect the reported amount
of  assets,  liabilities,  income and  expenses  in our  Consolidated  Financial
Statements and accompanying notes. We believe that the judgments,  estimates and
assumptions used in the preparation of our Consolidated Financial Statements are
appropriate  given the factual  circumstances  at the time.  However,  given the
sensitivity  of  our  Consolidated   Financial   Statements  to  these  critical
accounting policies, the use of other judgments, estimates and assumptions could
result in  material  differences  in our  results  of  operations  or  financial
condition.

Critical Accounting Estimates

Various  elements of our accounting  policies,  by their nature,  are inherently
subject to estimation  techniques,  valuation  assumptions and other  subjective
assessments.  In  particular,  we have  identified  one policy that,  due to the
judgments,  estimates and assumptions inherent in this policy, is critical to an
understanding of our Consolidated  financial statements.  This policy relates to
the methodology  for the  determination  of our allowance for loan losses.  This
policy and judgments,  estimates and assumptions are described in greater detail
in subsequent  sections of  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations".

Initial Adoption of Accounting Policies

The  Company  did not adopt any new  accounting  policies  during the year ended
December 31, 2002 that were not the result of new accounting  literature  issued
by a recognized accounting standard setter and that had a material impact on the
Company's financial presentation.



<PAGE>


Five-Year Summary of Selected Financial Data

The following selected  financial data is taken from our consolidated  financial
statements.  Accordingly,  all  amounts  shown are from  continuing  operations,
unless otherwise noted. Per share information is not included because all of our
stock is owned by Washington Mutual.


<TABLE>


                                             As of, or For the Years Ended December 31,
                               -------------------------------------------------------------------
(Dollars in thousands)             2002           2001          2000          1999          1998
                               ----------     ----------    ----------    ----------    ----------
<S>                            <C>            <C>           <C>           <C>           <C>
Net interest income            $  200,928     $  219,127    $  231,283    $  205,902    $  186,416

Noninterest income                 27,624         29,212        30,914        30,094        27,817

Noninterest expense               158,438        164,011       148,164       128,941       137,323

Income from continuing
   operations                      44,842         53,760        71,240        65,794        46,294

Income from operations of
   discontinued division (less
   applicable income taxes)         4,417          7,365         7,649         7,198         6,593

Gain on disposition of discontinued
   operations (less applicable
   income taxes)                   22,523            -             -              -            -

Net income                         71,782         61,125        78,889        72,992        52,887

Consumer finance
   receivables                  3,507,971      3,357,050     3,237,547     2,590,591     2,203,842

Total assets                    3,847,308      3,719,740     3,574,086     2,915,364     2,477,976

Total debt                      3,129,144      3,018,322     2,880,099     2,238,058     1,914,090

Total equity                      517,030        559,657       539,088       475,158       419,330



</TABLE>

Overview

On October 1, 2002, we sold FCIB, our Consumer Banking subsidiary.  Accordingly,
it has  been  accounted  for as  discontinued  operations  and the  accompanying
selected  financial  data has been restated to report  separately the net assets
and operating  results of this discontinued  operation.  We had net income after
discontinued  operations  of $71.8  million  in  2002,  which  represents  a 17%
increase  from the $61.1  million  reported in 2001 and a 9%  decrease  from the
$78.9 million reported in 2000.

The following are key highlights of our performance from continuing operations:

o    Consumer  finance  receivables,  net  of  unearned  income  and  allowance,
     increased 4.5% in 2002,  from 2001.  This reflects our ongoing  strategy to
     target portfolio growth, while continuing to take into account the economic
     state in markets we currently serve or into which we anticipate expanding.

<PAGE>

o    Yields earned on consumer  finance  receivables  declined to 15.61% in 2002
     from  16.05% in 2001.  This was due  primarily  to a shift in  product  mix
     towards  lower-yielding real estate secured loans and stricter underwriting
     of other  installment  loans,  which  resulted in lending larger amounts at
     lower allowable coupon rates.

o    Net interest  spread  increased to 9.48% in 2002,  from 9.18% in 2001.  Net
     interest margin increased to 10.51% in 2002, from 10.23% in 2001. Both were
     due  primarily  to  a  lower  average  cost  incurred  on  interest-bearing
     liabilities.  Net interest  spread  represents the  difference  between the
     yield on interest-earning  assets and the interest rate paid on borrowings.
     Net interest margin  represents the ratio of net interest income to average
     earning assets. Interest income remained relatively flat; however, interest
     expense   decreased   significantly  due  to  the  lower  average  cost  of
     interest-bearing liabilities.

o    Operating efficiency represents the ratio of noninterest expense (excluding
     the  amortization of goodwill) to total revenue,  which is comprised of net
     interest income before provision for loan losses and noninterest income. In
     2002, our operating  efficiency ratio improved to 37.9% from 40.4% in 2001.
     The improvement is due to higher net interest margin,  coupled with reduced
     noninterest expenses. See discussion in "Consolidated Results of Operations
     - Noninterest Expense."

o    Delinquencies  (accounts  contractually past-due greater than 60 days) as a
     percentage  of gross  consumer  finance  receivables  decreased to 3.40% at
     December 31, 2002 from 3.69% in 2001. This  improvement of delinquencies is
     caused primarily by the following two factors:  we focused  specifically on
     reducing  delinquencies  in 2002;  and a portfolio that we had purchased in
     2000, which experienced higher than expected  delinquency rates in 2000 and
     2001, was sold in February 2002.

o    Net credit  losses  totaled  $161.7  million in 2002, as compared to $125.4
     million  in 2001  and  $101.8  million  in 2000.  Net  credit  losses  as a
     percentage of average  consumer  finance  receivables  (excluding  unearned
     finance  charges and deferred loan fees) were 4.6%,  3.7% and 3.3% in 2002,
     2001 and 2000.

Consolidated Results of Operations

Net Interest Income before Provision for Credit Losses

Net  interest  income  before  provision  for  credit  losses for the year ended
December 31, 2002 increased 6.7% to $390.2  million,  compared to $365.8 million
in 2001 and $339.2  million in 2000.  Net  interest  margin for 2002 was 10.51%,
compared to 10.23% in 2001 and 10.55% in 2000.

The increase in net interest  income before  provision for credit losses in 2002
reflects  growth in average net consumer  finance  receivables to $3.54 billion,
which was $133.6  million,  or 3.9%,  greater than the average balance for 2001.
Portfolio  yield  decreased  by 44  basis  points  compared  to 2001  due to the
remixing of the portfolio to a larger percentage of  lower-yielding  real estate
secured loans and larger balance,  lower yielding unsecured loans. However, as a
result of an 83 basis point decrease in our average cost of borrowings,  our net
interest spread  increased from 9.18% in 2001 to 9.48% in 2002. Our average debt
outstanding  increased by $44.9  million,  or 1.5%, to $3.03 billion for 2002 to



<PAGE>

support the growth in assets.  Our average  costs of  borrowings  decreased as a
result of lower rates on new senior  debt  issuances,  coupled  with lower rates
associated with our interest rate swap activities.  In addition,  we shifted our
strategy to meet our funding  needs with  commercial  paper  borrowings in 2002,
where our average rate paid was 283 basis points lower than 2001.

The  following  table  reflects  the average  outstanding  balances  and related
effective yields and costs in 2002, 2001 and 2000, as described above:

<TABLE>

(Dollars in thousands)                                   Year Ended December 31,
                                 ---------------------------------------------------------------------
                                          2002                    2001                    2000
                                 --------------------     -------------------      -------------------
                                    Average                 Average                 Average
                                    Balance      Rate       Balance      Rate       Balance      Rate
Interest-earning assets:         -----------   ------     -----------   ------     -----------  ------
 Consumer finance receivables:
  Real estate secured
<S>                              <C>            <C>       <C>            <C>       <C>           <C>
   loans                         $ 1,834,680    12.54%    $ 1,695,396    13.35%    $ 1,425,326   13.25%
  Other installment loans          1,418,219    20.71       1,390,992    20.87       1,353,295   21.48
  Retail installment contracts       286,940    10.05         319,881     9.44         291,831   10.59
 Total consumer                  -----------              -----------              -----------
  finance receivables              3,539,839    15.61       3,406,269    16.05       3,070,452   16.63
 Cash, cash equivalents and
  investment securities              174,561     3.59         168,951     6.02         144,097    6.86
                                 -----------              -----------              -----------
Total interest-earning assets    $ 3,714,400    15.05%    $ 3,575,220    15.58%    $ 3,214,549   16.19%
                                 ===========              ===========              ===========
Interest-bearing liabilities:
 Senior debt                     $ 2,547,009     6.23%    $ 2,575,255     6.64%    $ 2,180,747    7.02%
 Commercial paper                    484,405     2.10         411,271     4.93         420,215    6.63
                                 -----------              -----------              -----------
Total interest-bearing
 liabilities                     $ 3,031,414     5.57%    $ 2,986,526     6.40%    $ 2,600,962    6.96%
                                 ===========              ===========              ===========
Net interest spread                              9.48%                    9.18%                   9.23%

Net interest margin                             10.51%                   10.23%                  10.55%

</TABLE>

The dollar amounts of interest income and interest expense  fluctuate  depending
upon  changes in amounts  (volume)  and upon  changes in  interest  rates of our
interest-earning assets and interest-bearing liabilities.

Changes  attributable to (i) changes in volume  (changes in average  outstanding
balances  multiplied by the prior period's rate),  (ii) changes in rate (changes
in average  interest rate  multiplied by the prior period's  volume),  and (iii)
changes in  rate/volume  (changes  in rate times the change in volume  that were
allocated proportionately to the changes in volume and the changes in rate) were
as follows:

<TABLE>

(Dollars in thousands)
                               Year Ended December 31,                 Year Ended December 31,
                                   2002 vs. 2001                           2001 vs. 2000
                         ---------------------------------       -------------------------------------
                             Increase/(Decrease) Due to              Increase/(Decrease) Due to
                         ---------------------------------       -------------------------------------
                           Volume      Rate   Total Change         Volume        Rate     Total Change
Interest income:         --------  ---------  ------------       ---------   ---------    ------------
  Consumer finance
<S>                      <C>       <C>        <C>                <C>         <C>          <C>
   receivables           $ 20,855  $ (14,935) $      5,920       $  53,906   $ (17,531)   $     36,375
  Investment securities       202     (4,096)       (3,894)          1,495      (1,212)            283
                         --------  ---------  ------------       ---------   ---------    ------------
    Total interest income  21,057    (19,031)        2,026          55,401     (18,743)         36,658

Interest expense:
  Interest-bearing
   liabilities              2,499    (24,831)      (22,332)         24,674     (14,599)         10,075
                         --------  ---------  ------------       ---------   ---------    ------------
    Net interest income  $ 18,558  $   5,800  $     24,358       $  30,727   $  (4,144)   $     26,583
                         ========  =========  ============       =========   =========    ============
</TABLE>


<PAGE>


Provision for Loan Losses

The provision for loan losses during 2002 was $189.3 million, compared to $146.7
million in 2001 and $108.0  million in 2000.  In 2002,  the  provision  for loan
losses was 5.35% of average consumer  finance  receivables  (excluding  unearned
finance charges and deferred loan fees), compared to 4.31% for 2001 and 3.52% in
2000. See further discussion in "Allowance for loan losses."

Noninterest Income

Noninterest income decreased to $27.6 million in 2002, compared to $29.2 million
in 2001 and $30.9 million in 2000.  Noninterest income is typically comprised of
revenue earned from the sale of various credit insurance and ancillary  products
to  borrowers  at the branch  locations.  These  products  include  credit  life
insurance,   accident  and  health  insurance,   credit  property  and  casualty
insurance,  term life protector,  and involuntary  unemployment  insurance.  The
decreases  in income from credit  insurance  products  is  primarily  due to the
decision to discontinue the sale of insurance products in Mississippi as of June
2001, and to discontinue the sale of single premium credit life and accident and
health  insurance on closed-end  real estate loans in all other branch states as
of July 2001,  in response to growing  concern that the products  were not fully
meeting the needs of  consumers.  An  alternative  product,  intended to be more
responsive  to  customer  needs and  desires,  has been  developed  and is being
introduced  on a graduated  basis in almost  every  branch  state.  The product,
monthly outstanding  balance credit life insurance,  provides for premiums to be
billed monthly instead of financed at the beginning of the loan.

Noninterest Expense

Noninterest expense decreased by 3.4% or $5.6 million to $158.4 million in 2002,
compared with 2001 and increased 6.9% or $10.3  million,  as compared with 2000.
The  decrease  in  noninterest  expense  from 2001 is  attributed  to  continued
cost-containment  efforts,  begun in the second half of 2001. There were several
factors  contributing  to the expense  improvements  over prior year.  Personnel
expense decreased 2.1%, due primarily to the sale of FCIB in October, as well as
efficiencies gained through the centralization of certain branch functions. Also
due  to  our  heightened  focus  on   cost-containment,   taxes,   licenses  and
professional  fees were  approximately  30.4%  below 2001.  These were  somewhat
offset by an  increase  in expenses  associated  with our direct mail  marketing
strategy.

Operating efficiency is defined as the ratio of noninterest  expense,  excluding
the  amortization  of  goodwill,  to total  revenue,  which is  comprised of net
interest income before  provision for credit losses and noninterest  income.  In
2002, our operating  efficiency ratio improved to 37.9% from 40.4% in 2001. This
improvement is due to higher  interest margin and  noninterest  income,  coupled
with reduced noninterest expenses.

Provision for Federal and State Income Taxes

The  provision  for income taxes from  continuing  operations  in 2002 was $25.3
million,  which  represents an effective rate of 36.04%.  This compares to $30.6
million, or 36.25% in 2001 and $42.8 million, or 37.53% in 2000. We are actively
managing our effective tax rate by monitoring  and, where  necessary,  adjusting
our organizational structure.



<PAGE>


Financial Condition

Allowance for loan losses

Activity in the Company's allowance for loan losses is as follows:

<TABLE>

                                                          Year Ended December 31,
                                               ---------------------------------------------
(Dollars in thousands)                              2002             2001            2000
                                               ------------      -----------    ------------
<S>              <C>                           <C>               <C>            <C>
Balance, January 1                             $    122,850      $   101,415    $     95,260
Provision for loan losses                           189,256          146,699         107,960
Amounts charged off:
   Real estate secured loans                        (11,389)          (7,217)         (2,463)
   Other installment loans                         (153,772)        (123,723)       (103,576)
   Retail installment contracts                     (15,757)         (13,064)        (12,696)
                                               ------------      -----------    ------------
                                                   (180,918)        (144,004)       (118,735)
Recoveries:
   Real estate secured loans                            472              289             206
   Other installment loans                           16,340           15,917          14,131
   Retail installment contracts                       2,426            2,384           2,593
                                               ------------      -----------    ------------
                                                     19,238           18,590          16,930
                                               ------------      -----------    ------------
Net charge offs                                    (161,680)        (125,414)       (101,805)

Allowances on notes purchased                          -                 150            -
                                               ------------      -----------    ------------
Balance, December 31                           $    150,426      $   122,850    $    101,415
                                               ============      ===========    ============
Allowance for loan losses as a percentage
  of December 31 consumer finance receivables
  (excluding unearned finance charges and
  deferred loan fees)                                  4.11%            3.53%           3.04%

Net charge offs as a percentage of average
  consumer finance receivables (excluding unearned
  finance charges and deferred loan fees)              4.57%            3.68%           3.32%

Provision for loan losses as a percentage of
  average consumer finance receivables (excluding
  unearned finance charges and deferred loan fees)     5.35%            4.31%           3.52%


</TABLE>

In order to  establish  our  allowance  for loan losses,  the  consumer  finance
receivables portfolio is segmented into two categories:  real estate secured and
non-real  estate  secured  (other   installment  loans  and  retail  installment
contracts). The determination of the level of the allowance for loan losses and,
correspondingly,  the  provision for credit  losses for these  homogeneous  loan
pools rests upon various  judgments and  assumptions  used to determine the risk
characteristics  of each  portfolio.  These  judgments are supported by analyses
that fall into three general categories:  (i) economic conditions as they relate
to our current  customer  base and  geographic  distribution;  (ii) a predictive
analysis of the outcome of the current  portfolio  (a migration  analysis);  and
(iii) prior loan loss experience.  Additionally,  every real estate secured loan
that  reaches 60 days  delinquency  is  reviewed  by our  credit  administration
management to assess  collectibility and determine a future course of action, at
times resulting in the need to foreclose on the property.

<PAGE>

Management  establishes the allowance for loan losses based on estimated  losses
inherent in the portfolio. There are several underlying factors in our portfolio
that  support our current  level of allowance  for loan  losses.  We analyze our
reserves based on both trailing coverage and forward looking coverage.  Trailing
coverage  represents  the  percentage  of  coverage  we  currently  have  in the
allowance,  based on the previous 12 months of losses.  Forward looking coverage
represents  the  percentage  of  coverage  we have in the  allowance,  based  on
estimated losses inherent in the portfolio over the next 12 months. Our trailing
coverage is slightly lower  compared to the end of 2001 and our forward  looking
coverage has improved over the same period of time.

Net charge offs in 2002 increased  significantly over the prior year,  primarily
due to the seasoning of the  portfolio  which had grown  significantly  in prior
years,  coupled with economic pressures resulting from the prolonged  recession.
However,  as  reflected  below,  the  delinquency  trends in our  portfolio  are
favorable. This is a result of both strengthened underwriting capabilities and a
heightened  focus on collection  efforts in the branch offices and the Pensacola
facility. In the fourth quarter of 2002, these factors resulted in a decrease in
other  installment  loans  contractually  delinquent  60  days  or  more of $7.4
million,  or 7.8%.  Because other  installment  loans more than 60 days past due
typically  result in a charge off,  this  significant  reduction  is expected to
result in lower credit losses in the first half of 2003.

From an underwriting perspective,  we have focused our unsecured lending efforts
on  identifying   opportunities  in  markets  with  stronger  economies,   while
minimizing  exposure  in markets  deemed to be in  recession  or  unstable.  For
secured  lending,  we have focused on reducing the loan to value  ("LTV") on new
origination.  LTV  represents the dollars loaned as a percentage of the value of
the collateral of our real estate  secured loans;  lower LTV means less inherent
risk.

Based on industry-defined economic status, we have identified states that are in
or  near  recession,  and  have  focused  our  unsecured  lending  efforts  into
non-recessionary  states,  by targeting those markets for direct mail campaigns,
as well as  limiting  the  amount of new money  lent to  existing  borrowers  in
depressed markets. As a result of our stricter underwriting  standards,  we have
slowed the growth of  unsecured  loans and  continued  to remix  toward a higher
percentage of real estate  secured  loans.  The increased  proportion of secured
loans in the portfolio,  combined with the stronger collateral position, as well
as improved unsecured  guidelines,  is expected to result in a relative decrease
in credit losses as the portfolio begins to season in 2003 and beyond.

When a borrower  is  delinquent  in making a  payment,  the amount of effort put
forth in  contacting  the borrower  has a direct,  inverse  relationship  to the
likelihood  that the  account  will  eventually  charge  off.  In light of this,
management  has placed an increased  emphasis on the level of  resources  placed
toward our collection  activity.  As a result of the focused,  targeted  contact
strategies  put in place and executed  upon,  the  delinquency  levels have been
favorably impacted.



<PAGE>


The  following  table  sets  forth,  by loan  type,  the  amount of  receivables
delinquent  for 60 days or more, on a contractual  basis,  and the ratio of that
amount to the gross consumer finance receivables outstanding in each category:


<TABLE>

                                                        December 31,
                              ------------------------------------------------------------------
(Dollars in thousands)                2002                    2001                     2000
                              -------------------     -------------------     ------------------
<S>                           <C>            <C>      <C>            <C>      <C>           <C>
Real estate secured loans     $   44,409     2.04%    $   43,236     2.17%    $   29,677    1.57%
Other installment loans           87,179     5.28         93,849     5.77         74,628    4.58
Retail installment contracts       8,874     2.92         10,668     2.82          9,302    2.55
                              ----------              ----------              ----------
Total                         $  140,462     3.40%    $  147,753     3.69%    $  113,607    2.92%
                              ==========              ==========              ==========

</TABLE>

At  December  31,  2002 and 2001,  the  Company  held  foreclosed  single-family
dwellings with a carrying value of approximately $8.4 million and $10.5 million.
These balances total 0.4% and 0.6% of the real estate secured loans  outstanding
(net of unearned finance charges and deferred loan fees) as of December 31, 2002
and 2001.

Off-Balance Sheet Arrangements

Off  balance  sheet  arrangements  include  financial   guarantees,   contingent
interests, derivative instruments and interests in unconsolidated entities where
portions of those entities' losses may be absorbed by the holder.

At December 31, 2002, we had three  outstanding  interest  rate sway  agreements
with a  combined  notional  amount of $450.0  million  and a total fair value of
$34.3  million.  This amount is reflected as an adjustment to senior debt on the
Consolidated Statement of Financial Condition.

Other than the interest  rate sway, we did not hold any such  off-balance  sheet
arrangements at December 31, 2002 and 2001.

Aggregate Contractual Obligations

Contractual  obligations for payments under long-term debt and lease obligations
are shown as follows:

<TABLE>

                                                 Contractual Obligations
                       ----------------------------------------------------------------------------
                                          Within           1 - 3           3 - 5            > 5
(Dollars in thousands)    Total           1 year           Years           Years           Years
                       -----------     ------------     -----------     -----------     -----------
<S>                    <C>             <C>              <C>             <C>             <C>
Senior debt            $ 2,389,677     $    149,921     $   994,324     $   747,923     $   497,509
Operating leases            27,778            9,985          14,290           3,464              39
                       -----------     ------------     -----------     -----------     -----------
Total                  $ 2,417,455     $    159,906     $ 1,008,614     $   751,387     $   497,548
                       ===========     ============     ===========     ===========     ===========

</TABLE>

Asset / Liability Management

Our  long-range  profitability  depends not only on the success of the  services
offered to our customers and the credit  quality of our  portfolio,  but also on
the extent to which earnings are not negatively  affected by changes in interest
rates.  Accordingly,  our philosophy is to maintain an approximate  match of the
interest rate sensitivity between our  interest-bearing  assets and liabilities.
Our consumer finance receivables are primarily fixed rate and have initial terms
generally ranging from 12 to 240 months.  However,  loans are generally paid off
or refinanced prior to their stated  maturity.  Therefore,  our  asset/liability
management  requires  a high  degree of  analysis  and  estimation.  We fund our
interest-bearing  assets through both internally  generated  equity and external
debt financing.


<PAGE>


Liquidity

We fund our operations  through a variety of corporate  borrowings.  The primary
source of these  borrowings is corporate debt securities  issued by the Company.
At December 31, 2002,  seven  different  fixed-rate  senior debt issues totaling
$2.35 billion were outstanding, with a weighted-average coupon of 7.00%. To meet
our  short-term  funding needs,  we issue  commercial  paper.  The Company has a
commercial  paper  program with several  investment  banks which  provides  $500
million in  borrowing  capacity.  At December 31,  2002,  twenty-nine  different
commercial paper  borrowings  totaling $439.5 million were  outstanding,  with a
weighted-average coupon of 1.81%.

We also share,  with Washington  Mutual, an $800 million 3-year revolving credit
facility which provides back up for our commercial  paper programs.  Previously,
we shared two revolving credit  facilities,  which provided  combined back-up of
$1.2 billion.  Effective August 12, 2002 the facilities were  restructured  into
the existing $800 million  3-year  credit  facility.  The borrowing  capacity is
limited  to the  total  amount  of the  credit  facility,  net of the  amount of
combined  commercial paper  outstanding.  At December 31, 2002, there was $360.5
million available under these facilities.  There were no direct borrowings under
these facilities at any point during 2002 or 2001.

This revolving credit agreement,  shared with Washington Mutual, has restrictive
covenants  which  include:  a minimum  consolidated  net worth test;  a limit on
senior debt to the borrowing base (up to 10:1);  subsidiary debt (excluding bank
deposits and  intercompany  debt) not to exceed 30% of total debt;  and a 60-day
delinquency  ratio not to  exceed  6% of  consumer  finance  receivables.  As of
December 31, 2002, we were in compliance with all restrictive covenants.

The following table shows selected sources (uses) of cash:

<TABLE>

                                                 Year Ended December 31,
                                      -------------------------------------------
(Dollars in thousands)                     2002            2001             2000
                                      -----------     -----------     -----------
<S>                                   <C>             <C>             <C>
Operations                            $   211,383     $   205,363     $   174,112
Net issuances and repayments of debt      112,510         139,086         640,831
Net originations and purchases
   of consumer finance receivables       (344,164)       (275,818)       (763,479)
Dividends paid                            (45,000)        (43,500)        (25,000)


</TABLE>


Subsequent Event

Effective January 16, 2003, we entered into a 364-day unsecured revolving credit
agreement  with  Washington  Mutual,  Inc.,  which  provides  $250.0  million in
borrowing  capacity at an interest rate of LIBOR plus 0.45% and is automatically
renewable for an additional 364 days.  Under the agreement,  we borrowed  $150.0
million on January 17, 2003.

Capital Management

We establish  equity  leverage  targets based upon the ratio of debt to tangible
equity.  The debt to tangible  equity  ratio after  discontinued  operations  at
December 31, 2002 was 6.57:1.  The  determination  of our dividend  payments and
resulting  capital leverage is managed in a manner consistent with our desire to
maintain strong and improved credit ratings. In addition,  provisions of certain

<PAGE>

proportion of cumulative earnings and contributed capital. At December 31, 2002,
approximately  $73.9 million was available under the debt agreement  restriction
for future dividends.

Recently Issued Accounting Standards

In June 2001,  the FASB  issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations.  SFAS No. 143  addresses  financial  accounting  and  reporting for
obligations  associated with the retirement of tangible,  long-lived  assets and
the associated retirement costs. This Statement is effective January 1, 2003 and
is not expected to have a material  impact on our results of  operations  or the
financial condition of the Company.

In August 2001,  the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal  of  Long-Lived  Assets.  This  Statement   supercedes  SFAS  No.  121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
be Disposed  Of, but  retains  the  requirements  relating  to  recognition  and
measurement of an impairment  loss and resolves  certain  implementation  issues
resulting from SFAS No. 121. This Statement became effective January 1, 2002 and
did not have a material  impact on our results of  operations  or the  financial
condition of the Company.

In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  146,  Accounting  for Costs
Associated  with Exit or Disposal  Activities.  This  Statement  requires that a
liability for costs associated with exit or disposition activities be recognized
when the  liability  is incurred  and be measured at fair value and adjusted for
changes  in  estimated  cash  flows.   Existing  generally  accepted  accounting
principles provide for the recognition of such costs at the date of management's
commitment to an exit plan.  Under SFAS No. 146,  management's  commitment to an
exit plan would not be  sufficient,  by itself,  to recognize a  liability.  The
Statement is effective for exit or disposal activities  initiated after December
31,  2002 and will not have a material  impact on the results of  operations  or
financial condition of the Company.

In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial
Institutions.  This  Statement  amends  Statements  No.  72  and  144  and  FASB
Interpretation  No. 9. Among  other  topics,  this  Statement  requires  that an
unidentifiable  intangible  asset  that is  recognized  in an  acquisition  of a
financial institution,  in which the liabilities assumed exceed the identifiable
assets acquired, to be recorded as goodwill.  Consequently,  this unidentifiable
intangible asset will be subject to the goodwill accounting  standards set forth
in SFAS No. 142, Goodwill and Other Intangible Assets, and will be evaluated for
impairment  on an  annual  basis  instead  of  being  amortized.  We do not  own
intangible  assets of this  nature.  Therefore,  this  Statement  did not have a
material  impact on the results of  operations  or  financial  condition  of the
Company.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),  Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others,  which expands on the accounting  guidance
of SFAS No. 5, 57 and 107 and incorporates without change the provisions of FASB
Interpretation No. 34, which is being superseded. This Interpretation requires a
guarantor to  recognize,  at the  inception of a guarantee,  a liability for the
fair value of the obligation  undertaken in issuing the guarantee.  In addition,
guarantors  will be required to make  significant new  disclosures,  even if the
likelihood of the guarantor  making payments under the guarantee is remote.  The
Interpretation's  disclosure  requirements  are  effective for the Company as of
December  31, 2002.  The  recognition  requirements  of FIN 45 are to be applied
prospectively  to guarantees  issued or modified after December 31, 2002.  There
have been no previous significant  guarantees that have been entered into by the
Company.

<PAGE>

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation  -  Transition  and  Disclosure,  which  amends SFAS No. 123.  This
Statement provides alternative methods of transition for a voluntary change from
the  intrinsic   value-based  method  of  accounting  prescribed  by  Accounting
Principles  Board  ("APB")  Opinion  No.  25,  Accounting  for  Stock  Issued to
Employees to the fair value-based method of accounting for stock-based  employee
compensation. This Statement is effective for fiscal years ending after December
15, 2002 for transition  guidance and annual  disclosure  provisions and did not
have a material  effect on the results of its operations or financial  condition
of the Company.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), Consolidation
of Variable  Interest  Entities.  The  objective  of this  interpretation  is to
provide  guidance on how to identify a variable  interest  entity and  determine
when assets, liabilities, noncontrolling interests, and results of operations of
a variable  interest  entity need to be  included  in a  company's  consolidated
financial statements.  A company that holds variable interests in an entity will
need to  consolidate  the  entity  if the  company's  interest  in the  variable
interest  entity is such that the company will absorb a majority of the variable
interest  entity's  expected  losses  and/or  receive a majority of the entity's
expected residual returns,  if they occur. The provisions of this interpretation
became  effective upon issuance.  We have no  unconsolidated  investments in any
variable interest entities.

Transactions with Related Parties

Significant   transactions  with  Washington  Mutual  or  its  subsidiaries  are
identified as follows:

o    Certain  administrative  services,   including  human  resources  and  cash
     management were provided, for which we paid management fees of $4.6 million
     in 2002,  $5.3  million in 2001 and $2.4  million  in 2000.  These fees are
     allocated  by  Washington  Mutual  to its  subsidiaries  based  on  various
     business factors,  including the number of employees and total assets,  and
     include a reasonable market value adjustment.

o    We made payments to Washington  Mutual,  which in turn made payments on our
     behalf,  pursuant to a tax  allocation  policy and in  connection  with the
     retirement & savings plans.  The tax payments totaled  approximately  $35.0
     million, and retirement & savings plan payments totaled  approximately $5.0
     million.

o    Included in accounts  payable and other  liabilities are net amounts due to
     Washington  Mutual  for  dividends  and  for  operating  expenses  and  tax
     remittances  paid on our  behalf.  At  December  31,  2002 and 2001,  these
     amounts totaled $83.9 million and $14.3 million.

o    On February 1, 2002,  the Company  sold,  at book value,  $46.3  million of
     single family residence loans and $3.4 million of foreclosed  single-family
     dwellings to Ahmanson  Obligation  Company,  a wholly owned  subsidiary  of
     Washington  Mutual.  The loans had been  acquired  in 2000 from Long  Beach
     Mortgage Company, a wholly owned subsidiary of Washington Mutual. The loans
     were reported as consumer  finance  receivables  and the foreclosed  assets
     were included in other assets on the  Consolidated  Statements of Financial
     Condition.

<PAGE>

o    Included  in other  assets are  amounts  prepaid to  Washington  Mutual for
     pension  expenses which are to be paid on our behalf.  The  pension-related
     payments in 2002 totaled  approximately  $23.4  million,  leaving a prepaid
     balance at December 31, 2002 of $19.6 million.

o    Effective January 16, 2003, we entered into a 364-day  unsecured  revolving
     credit  agreement with  Washington  Mutual,  Inc.,  which  provides  $250.0
     million in borrowing  capacity at an interest  rate of LIBOR plus 0.45% and
     is automatically renewable for an additional 364 days. Under the agreement,
     we borrowed $150.0 million on January 17, 2003. See "Subsequent Event"


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

Certain of the statements  contained within this section that are not historical
facts  are  forward-looking   statements  within  the  meaning  of  the  Private
Securities  Litigation  Reform Act of 1995.  These  statements  are  intended to
assist in the  understanding of how our financial  performance would be affected
by the  circumstances  described  in this  section.  However,  such  performance
involves  risks  and  uncertainties  that may  cause  actual  results  to differ
materially from those expressed in the forward-looking  statements. See Item 7 -
"Cautionary Statements."

Market  risk is defined as the  sensitivity  of income and capital to changes in
interest rates,  foreign  currency  exchange rates,  commodity  prices and other
relevant market rates or prices. The primary market risk to which we are exposed
is  interest  rate risk.  Our risk  management  policy  provides  for the use of
certain  derivatives and financial  instruments in managing certain risks. We do
not enter  into  derivatives  or other  financial  instruments  for  trading  or
speculative purposes.

Increases  or  decreases  in  interest  rates can cause  changes in net  income,
fluctuations  in the fair  value of  assets  and  liabilities,  and  changes  in
noninterest  income and  noninterest  expense.  Our  interest  rate risk  arises
because assets and liabilities  reprice,  mature or prepay at different times or
frequencies as market interest rates change. Our loan volume and mix also varies
as interest rates change.

Management of Interest Rate Risk

Interest  rate risk is  managed  within an  overall  asset/liability  management
framework.  The principal  objective of asset/liability  management is to manage
the sensitivity of net income to changing interest rates.

Managed  risk  includes the risk  associated  with changes in fair value of long
term fixed rate debt. In accordance with our risk management  policy,  such risk
is hedged by entering into pay floating interest rate exchange  agreements.  The
instruments  designated in these fair value hedges  include  interest rate swaps
that qualify for the "short cut" method of accounting  under SFAS No. 133. Under
the "short cut" method, we assume no ineffectiveness in a hedging  relationship.
Since the terms of the interest rate swap qualify for the use of the "short cut"
method,  it is not necessary to measure  effectiveness and there is no charge to
earnings  for changes in fair value.  All changes in fair value are  recorded as
adjustments to the basis of the hedged  borrowings  based on changes in the fair
value of the derivative  instrument.  When derivative instruments are terminated
prior to their maturity, or the maturity of the hedged liability,  any resulting
gains or losses are included as part of the basis  adjustment of the hedged item



<PAGE>

and amortized over the remaining  term of the  liability.  At December 31, 2002,
the unamortized  deferred gain on terminated hedging  transactions totaled $10.8
million. This amount is included in senior debt on the Consolidated Statement of
Financial Condition.

At December 31, 2002, we had three  outstanding  interest  rate swap  agreements
with a  combined  notional  amount of $450.0  million  and a total fair value of
$34.3  million.  This amount is reflected as an adjustment to senior debt on the
Consolidated Statement of Financial Condition.

The table below  indicates the sensitivity of net interest income and net income
before taxes to interest rate movements.  The comparative  scenarios assume that
interest  rates rise or fall in even  monthly  increments  over the next  twelve
months for a total increase of 200 or decrease of 100 basis points. The interest
rate scenarios are used for analytical purposes and do not necessarily represent
management's view of future market movements.

Our net interest income and net income before taxes from  continuing  operations
sensitivity profiles as of year-end 2002 and 2001 are stated below:

<TABLE>

                                                                     Gradual Change in Rates
                                                                   ---------------------------
Net interest income change for the one-year period beginning:       -100bp          +200bp
                                                                   ---------------------------
<S>        <C>                                                       <C>            <C>
   January 1, 2003                                                   .77%           (1.48)%
   January 1, 2002                                                   .18%            (.30)%

Net income before taxes change for the one-year period beginning:   -100bp          +200bp
                                                                   ---------------------------
   January 1, 2003                                                 (.50)%             1.08%
   January 1, 2002                                                   .11%            (.19)%

</TABLE>

Our net  interest  income and net income  before  taxes "at risk"  position  has
increased since December 31, 2001. The change reflects increased  sensitivity to
interest rate movement,  primarily  associated with the resumption of short-term
financing needs. At December 31, 2002, the commercial paper balance  outstanding
was $739.5 million (23.6% of total  outstanding  debt), and at December 31, 2001
the  commercial  paper balance  outstanding  was $351.1  million (11.6% of total
outstanding debt). In general, changes in rates do not have a significant impact
on our  interest  income,  as our  customers  are less  rate  sensitive  and the
majority of our borrowings are fixed rate.  Assumptions are made in modeling the
sensitivity of net interest  income and net income before taxes.  The simulation
model  captures  expected  prepayment  behavior  under  changing  interest  rate
environments.  Sensitivity of new loan volume to market  interest rate levels is
included as well.



<PAGE>


Item 8.    Financial Statements and Supplementary Data

Independent Auditors' Report

To the Board of Directors and Stockholder of
  Washington Mutual Finance Corporation
   Tampa, Florida

We have audited the accompanying  consolidated statements of financial condition
of Washington Mutual Finance  Corporation and subsidiaries (the "Company") as of
December  31,  2002  and  2001,  and  the  related  consolidated  statements  of
operations,  comprehensive income and retained earnings, and cash flows for each
of the three  years in the period  ended  December  31,  2002.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,   the  financial  condition  of  Washington  Mutual  Finance
Corporation  and  subsidiaries as of December 31, 2002 and 2001, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period  ended  December 31,  2002,  in  conformity  with  accounting  principles
generally accepted in the United States of America.




DELOITTE & TOUCHE LLP
Tampa, Florida
February 28, 2003


<PAGE>


WASHINGTON MUTUAL FINANCE CORPORATION and Subsidiaries
Consolidated Statements of Financial Condition

<TABLE>

(Dollars in thousands, except par value)                     December 31,
                                                    --------------------------------
                                                       2002                 2001
ASSETS                                              -----------          -----------

<S>                                                 <C>                  <C>
Consumer finance receivables, net                   $ 3,507,971          $ 3,357,050
Investment securities available for sale                 67,366               90,442
Cash and cash equivalents                               124,506               94,326
Property, equipment and leasehold improvements, net      21,375               26,305
Goodwill, net                                            40,821               42,214
Other assets                                             85,269               45,658
Net assets of discontinued operations                      -                  63,745
                                                    -----------          -----------
    TOTAL ASSETS                                    $ 3,847,308          $ 3,719,740
                                                    ===========          ===========
LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities
Commercial paper borrowings                         $   739,467          $   351,141
Senior debt                                           2,389,677            2,667,181
                                                    -----------          -----------
    Total debt                                        3,129,144            3,018,322
Accounts payable and other liabilities                  201,134              141,761
                                                    -----------          -----------
    Total liabilities                                 3,330,278            3,160,083
                                                    -----------          -----------

Commitments and contingencies
  (Notes 12, 13 and 14)

Stockholder's equity
Common stock: $1.00 par value;
  10,000 shares authorized; 1,000
  shares issued and outstanding                               1                    1
Paid-in capital                                          67,210               57,710
Retained earnings                                       447,931              499,149
Accumulated other comprehensive income                    1,888                2,797
                                                    -----------          -----------
      Total stockholder's equity                        517,030              559,657
                                                    -----------          -----------

    TOTAL LIABILITIES AND
      STOCKHOLDER'S EQUITY                          $ 3,847,308          $ 3,719,740
                                                    ===========          ===========

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>


WASHINGTON MUTUAL FINANCE CORPORATION and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income

<TABLE>

(Dollars in thousands)                                              Year Ended December 31,
                                                       --------------------------------------------
                                                           2002             2001             2000
Interest income:                                       ----------       ----------       ----------
<S>                                                    <C>              <C>              <C>
 Loan interest and fee income                          $  552,706       $  546,786       $  510,411
 Investment securities income                               6,271           10,165            9,882
                                                       ----------       ----------       ----------
  Total interest income                                   558,977          556,951          520,293

Interest and debt expense                                 168,793          191,125          181,050
                                                       ----------       ----------       ----------

  Net interest income before
   provision for loan losses                              390,184          365,826          339,243

Provision for loan losses                                 189,256          146,699          107,960
                                                       ----------       ----------       ----------

   Net interest income after
    provision for loan losses                             200,928          219,127          231,283
                                                       ----------       ----------       ----------

Noninterest income                                         27,624           29,212           30,914

Noninterest expense:
 Personnel                                                 88,674           90,539           87,918
 Data processing and telecommunication                     16,973           16,190           13,535
 Occupancy                                                 14,456           14,364           13,474
 Advertising                                               11,743            8,358            5,309
 Taxes, licenses and professional fees                     10,373           14,897           12,276
 Goodwill amortization                                       -               4,563            4,563
 Other                                                     16,219           15,100           11,089
                                                       ----------       ----------       ----------
  Total noninterest expense                               158,438          164,011          148,164
                                                       ----------       ----------       ----------

Income from continuing operations
   before income taxes                                     70,114           84,328          114,033

Income taxes                                               25,272           30,568           42,793
                                                       ----------       ----------       ----------

Income from continuing operations                          44,842           53,760           71,240

Discontinued operations (Note 6)
   Income from operations of discontinued division
     (less applicable income taxes of $3,042, $4,562,
     and $4,737)                                            4,417            7,365            7,649

   Gain on disposition of discontinued operations
     (less applicable income taxes of $12,946)             22,523              -                -
                                                       ----------       ----------       ----------

Net income                                                 71,782           61,125           78,889

Net unrealized holding (losses) gains on
   securities arising during period, net of tax              (909)           2,944            1,291
                                                       ----------       ----------       ----------

Comprehensive income                                   $   70,873       $   64,069       $   80,180
                                                       ==========       ==========       ==========

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>


WASHINGTON MUTUAL FINANCE CORPORATION and Subsidiaries
Consolidated Statements of Retained Earnings

<TABLE>

(Dollars in thousands)                   Year Ended December 31,
                           ----------------------------------------------
                               2002              2001              2000
Retained earnings          ----------       -----------       -----------
<S>                        <C>              <C>               <C>
   Beginning of period     $  499,149       $   481,524       $   427,635
   Net income                  71,782            61,125            78,889
   Dividends                 (123,000)          (43,500)          (25,000)
                           ----------       -----------       -----------
   End of period           $  447,931       $   499,149       $   481,524
                           ==========       ===========       ===========

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>


WASHINGTON MUTUAL FINANCE CORPORATION and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>

                                                                     Year Ended December 31,
                                                       ----------------------------------------------
(Dollars in thousands)                                      2002              2001             2000
                                                       -----------       -----------       ----------
Operating activities
<S>                                                    <C>               <C>               <C>
   Income from continuing operations                   $    44,842       $    53,760       $   71,240
   Income from discontinued operations                       4,417             7,365            7,649
   Gain on disposition of discontinued operations           22,523               -                -
                                                       -----------       -----------       ----------

   Net income                                               71,782            61,125           78,889
   Adjustments to reconcile net income to net
       cash provided by operating activities:
      Provision for credit losses                          189,256           146,699          107,960
      Depreciation and amortization                          8,925            18,368           19,321
      Decrease (increase) in net assets of
         discontinued operations                               -               6,192           (5,763)
      Increase (decrease) in accounts payable
         and other liabilities                              59,029           (13,954)         (47,470)
      Dividends declared, but not paid                     (78,000)              -                -
         (Increase) decrease in other assets               (39,611)          (13,067)          21,175
                                                       -----------       -----------       ----------

   Net cash provided by operating activities               211,381           205,363          174,112
                                                       -----------       -----------       ----------

Investing activities
   Disposal of operating segment                            63,728               -                -
   Investment securities matured or sold                    24,902            65,258           26,301
   Investment securities purchased                            (232)           (1,671)         (77,197)
   Net additions to property, equipment and leasehold
      improvements                                          (2,445)           (6,868)          (8,442)
   Increase in consumer finance receivables               (344,164)         (275,818)        (763,479)
                                                       -----------       -----------       ----------

   Net cash used in investing activities                  (258,211)         (219,099)        (822,817)
                                                       -----------       -----------       ----------

Financing activities
   Net increase (decrease) in commercial
    paper borrowings                                       388,326          (332,513)         441,484
   Increase in senior debt from hedging activity            24,184            26,534             -
   Capital contributed by parent                             9,500               -              8,750
   Proceeds from issuance of senior debt                       -             995,065          449,347
   Dividends paid                                          (45,000)          (43,500)         (25,000)
   Repayments of senior debt                              (300,000)         (550,000)        (250,000)
                                                       -----------       -----------       ----------

   Net cash provided by financing activities                77,010            95,586          624,581
                                                       -----------       -----------       ----------

Net increase (decrease) in cash and cash equivalents        30,180            81,850          (24,124)
                                                       -----------       -----------       ----------

Cash and cash equivalents
   Beginning of period                                      94,326            12,476           36,600
                                                       -----------       -----------       ----------

   End of period                                       $   124,506       $    94,326       $   12,476
                                                       ===========       ===========       ==========

Supplemental disclosures of cash flow information
   Interest paid                                       $   169,136       $   188,365       $  178,872
   Federal and state income taxes paid
      (net of refunds)                                 $    35,015       $    37,559       $   66,077

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>


WASHINGTON MUTUAL FINANCE CORPORATION and Subsidiaries
Notes to Consolidated Financial Statements

Note 1            Ownership and Operations

Washington Mutual Finance Corporation ("WMF"), incorporated in Delaware in 1986,
as Aristar,  Inc., is a holding company  headquartered  in Tampa,  Florida whose
subsidiaries are engaged in the consumer financial services business. Washington
Mutual Finance Corporation is an indirect, wholly-owned subsidiary of Washington
Mutual, Inc. ("Washington  Mutual").  When we refer to "we", "our", "us", or the
"Company" in this Form 10-K, we mean Washington  Mutual Finance  Corporation and
its subsidiaries, all of which are wholly-owned.

Our Company's  operations consist principally of a network of 432 branch offices
located in 26 states,  primarily  in the  southeast,  southwest  and  California
("Consumer  Finance").  These offices operate under the name  Washington  Mutual
Finance.  Our branch  offices are  typically  located in small- to  medium-sized
communities  in  suburban  or rural  areas and are  managed by  individuals  who
generally have  considerable  consumer lending  experience.  We make secured and
unsecured consumer  installment loans, and purchase  installment  contracts from
local retail establishments.  The consumer credit transactions are primarily for
personal,  family,  or  household  purposes.  From  time to time,  we  purchase,
servicing  released,  real estate secured consumer loans from national  mortgage
companies and banking operations through our wholly owned subsidiary  Washington
Mutual Finance, Inc., a California  corporation,  which does business as Aristar
Mortgage Company ("Aristar Mortgage").

We also provided  consumer  financial  services  through our industrial  banking
subsidiary,  First Community Industrial Bank ("FCIB"),  which had 10 branches in
Colorado and Utah  ("Consumer  Banking").  FCIB made consumer  loans,  purchased
retail  installment  contracts  and  accepted  deposits  insured by the  Federal
Deposit Insurance Corporation. On October 1, 2002, we completed the sale of this
subsidiary through a merger with First State Bank, NM, formerly First State Bank
of Taos,  a New  Mexico  bank  ("First  State"),  wholly-owned  by  First  State
Bancorporation,  a New Mexico corporation,  with First State being the surviving
entity.

Note 2            Summary of Significant Accounting Policies

Principles of Consolidation.  The consolidated  financial statements include the
accounts of Washington Mutual Finance  Corporation and its subsidiaries,  all of
which are  wholly-owned,  after  elimination  of all  intercompany  balances and
transactions.  Certain amounts in prior years have been  reclassified to conform
to the current year's presentation.

Estimates.  The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Income  Recognition  from Finance  Operations.  Unearned  finance charges on all
types of consumer finance  receivables are recognized on an accrual basis, using
the interest  method.  Accrual of interest  generally is suspended when payments
are more than three months contractually overdue. When the finance receivable is
secured  by real  estate  and is  well-collateralized,  we  continue  to  accrue
interest past this timeframe,  until foreclosure  proceedings are initiated,  at
which time all interest  accrued but not  collected is reversed.  In those cases


<PAGE>

where  the  loan is not  well-collateralized  and  collectibility  is in  doubt,
accrual  of  interest  is  suspended  prior  to the  initiation  of  foreclosure
proceedings.  Loan fees and  directly  related  lending  costs are  deferred and
amortized  using the interest  method over the  contractual  life of the related
receivables.

Consumer  Finance  Receivables.  Loans held in  portfolio  are  recorded  at the
principal  amount  outstanding,  net of  deferred  loan  costs  or fees  and any
discounts or premiums on purchased loans.  Deferred costs or fees, discounts and
premiums are amortized using the interest  method over the  contractual  term of
the loan adjusted for actual prepayments.

Derivatives.  Managed  risk  includes the risk  associated  with changes in fair
value of long term fixed  rate  debt.  In  accordance  with our risk  management
policy,  such risk is hedged by entering  into pay floating  interest  rate swap
agreements.  The  instruments  designated  in these  fair value  hedges  include
interest rate swaps that qualify for the "short cut" method of accounting  under
SFAS No. 133. Under the "short cut" method,  we assume no  ineffectiveness  in a
hedging relationship.  Since the terms of the interest rate swap qualify for the
use of the "short cut" method, it is not necessary to measure  effectiveness and
there is no charge to earnings  for  changes in fair value.  All changes in fair
value are recorded as adjustments to the basis of the hedged borrowings based on
changes  in  the  fair  value  of the  derivative  instrument.  When  derivative
instruments  are  terminated  prior to their  maturity,  or the  maturity of the
hedged  liability,  any  resulting  gains or losses are  included as part of the
basis adjustment of the hedged item and amortized over the remaining term of the
liability.

Provision  and  Allowance  for loan  losses.  The  allowance  for loan losses is
maintained at a level sufficient to provide for estimated credit losses based on
evaluating  known  and  inherent  risks  in  the  consumer  finance  receivables
portfolio.  We provide,  through charges to income, an allowance for loan losses
which,  based  upon  management's  evaluation  of  numerous  factors,  including
economic  conditions,  a  predictive  analysis  of the  outcome  of the  current
portfolio  and  prior  credit  loss  experience,  is  deemed  adequate  to cover
reasonably  expected  losses inherent in outstanding  receivables.  Our consumer
finance receivables are a large group of small-balance homogenous loans that are
collectively evaluated for impairment.  Additionally,  every real estate secured
loan  that  is 60 days  delinquent  is  reviewed  by our  credit  administration
management to assess collectibility and future course of action.

Losses on  receivables  are charged to the  allowance for loan losses based upon
the number of days delinquent,  or when collectibility  becomes doubtful and the
underlying  collateral,  if any, is  considered  insufficient  to liquidate  the
receivable  balance.   Non-real  estate  secured,   delinquent  receivables  are
generally  charged  off  when  they are 180 days  contractually  delinquent.  We
typically  begin  foreclosure  procedures  on real  estate  secured,  delinquent
receivables  when  they  reach  60 to 90 days  past  due.  When  foreclosure  is
completed  and we have  obtained  title to the  property,  we establish the real
estate as an asset  valued at fair  value,  and  charge  off any loan  amount in
excess of that value.  Recoveries  on  previously  written-off  receivables  are
credited to the allowance.

Investment  Securities.  Debt and equity  securities are classified as available
for sale and are  reported  at fair  value,  with  unrealized  gains and  losses
excluded from earnings and reported,  net of taxes,  as a separate  component of
stockholder's  equity and comprehensive  income.  Gains and losses on investment
securities are recorded when realized on a specific identity basis.



<PAGE>


Property,   Equipment  and  Leasehold  Improvements.   Property,  equipment  and
leasehold  improvements  are stated at cost,  net of  accumulated  depreciation.
Depreciation is provided for, principally,  on the straight-line method over the
estimated useful life, ranging from three to ten years, or, if less, the term of
the  lease.  At  December  31,  2002  and  2001,  accumulated  depreciation  and
amortization totaled $34.4 million and $31.8 million.

Goodwill.  Goodwill  represents the excess of purchase price over the fair value
of net assets acquired by the Company.  We review our goodwill  periodically for
other-than-temporary  impairment.  Impairment loss is recognized if the carrying
amount of the  goodwill is not  recoverable  and  exceeds its fair value.  As of
January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets. Under the statement,  goodwill is no longer amortized but must be tested
for  impairment  as of the beginning of the fiscal year in which SFAS No. 142 is
adopted  and at least  annually  thereafter.  See further  discussion  under the
heading "Recently Issued Accounting Standards".

Real Estate  Owned.  Real estate  owned is valued at lower of cost or fair value
less estimated  costs to sell and is included in other assets.  These values are
periodically  reviewed and reduced, if necessary.  Costs of holding real estate,
and  related  gains and  losses on  disposition,  are  credited  or  charged  to
noninterest expense as incurred.

Income  Taxes.  We are included in the  consolidated  Federal  income tax return
filed by Washington Mutual.  Federal income taxes are paid to Washington Mutual.
Federal  income  taxes  are  allocated   between   Washington   Mutual  and  its
subsidiaries in proportion to the respective contribution to consolidated income
or loss. State income tax expense  represents the amount of taxes either owed by
us or that we would have paid on a separate  entity basis,  when we are included
in Washington  Mutual's  consolidated state income tax returns.  Deferred income
taxes are  provided  on  elements of income or expense  that are  recognized  in
different periods for financial and tax reporting purposes.

Taxes on income are  determined  by using the asset and liability  method.  This
approach requires the recognition of deferred tax assets and liabilities for the
expected  future tax  consequences  of events that have been  recognized  in the
Company's  financial  statements  or  tax  returns.  In  estimating  future  tax
consequences,  we consider  expected  future  events  other than  enactments  of
changes in the tax law or rates.

The Company has recorded a net deferred tax asset of approximately $42.0 million
at December  31,  2002.  Realization  of the asset is  dependent  on  generating
sufficient taxable income prior to expiration of loss carryforwards available to
the Company. Although realization is not assured, management believes it is more
likely  than  not that all of the  remaining  net  deferred  tax  asset  will be
realized.  The  amount  of the net  deferred  tax asset  considered  realizable,
however, could be reduced in the near term if estimates of future taxable income
during the carryforward period are reduced.

Statements of Cash Flows.  For purposes of reporting cash flows, we consider all
highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents.

Fair Value  Disclosures.  Quoted market  prices are used,  where  available,  to
estimate  the fair  value of the  Company's  financial  instruments.  Because no
quoted market prices exist for a significant  portion of the Company's financial
instruments,  fair value is estimated using comparable market prices for similar
instruments or using  management's  estimates of appropriate  discount rates and


<PAGE>

cash  flows for the  underlying  asset or  liability.  A change in  management's
assumptions  could  significantly  affect  these  estimates.   Accordingly,  the
Company's fair value estimates are not necessarily indicative of the value which
would be realized upon disposition of the financial instruments.

Recently  Issued  Accounting  Standards.  In June 2001, the FASB issued SFAS No.
143,  Accounting  for  Asset  Retirement  Obligations.  SFAS No.  143  addresses
financial   accounting  and  reporting  for  obligations   associated  with  the
retirement of tangible,  long-lived assets and the associated  retirement costs.
This  Statement  is  effective  January  1, 2003 and is not  expected  to have a
material  impact on our results of operations or the financial  condition of the
Company.

In August 2001,  the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal  of  Long-Lived  Assets.  This  Statement   supercedes  SFAS  No.  121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
be Disposed  Of, but  retains  the  requirements  relating  to  recognition  and
measurement of an impairment  loss and resolves  certain  implementation  issues
resulting from SFAS No. 121. This Statement became effective January 1, 2002 and
did not have a material  impact on our results of  operations  or the  financial
condition of the Company.

In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  146,  Accounting  for Costs
Associated  with Exit or Disposal  Activities.  This  Statement  requires that a
liability for costs associated with exit or disposition activities be recognized
when the  liability  is incurred  and be measured at fair value and adjusted for
changes  in  estimated  cash  flows.   Existing  generally  accepted  accounting
principles provide for the recognition of such costs at the date of management's
commitment to an exit plan.  Under SFAS No. 146,  management's  commitment to an
exit plan would not be  sufficient,  by itself,  to recognize a  liability.  The
Statement is effective for exit or disposal activities  initiated after December
31,  2002 and will not have a material  impact on the results of  operations  or
financial condition of the Company.

In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial
Institutions.  This  Statement  amends  Statements  No.  72  and  144  and  FASB
Interpretation  No. 9. Among  other  topics,  this  Statement  requires  that an
unidentifiable  intangible  asset  that is  recognized  in an  acquisition  of a
financial institution,  in which the liabilities assumed exceed the identifiable
assets acquired, to be recorded as goodwill.  Consequently,  this unidentifiable
intangible asset will be subject to the goodwill accounting  standards set forth
in SFAS No. 142, Goodwill and Other Intangible Assets, and will be evaluated for
impairment  on an  annual  basis  instead  of  being  amortized.  We do not  own
intangible  assets of this  nature.  Therefore,  this  Statement  did not have a
material  impact on the results of  operations  or  financial  condition  of the
Company.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),  Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others,  which expands on the accounting  guidance
of SFAS No. 5, 57 and 107 and incorporates without change the provisions of FASB
Interpretation No. 34, which is being superseded. This Interpretation requires a
guarantor to  recognize,  at the  inception of a guarantee,  a liability for the
fair value of the obligation  undertaken in issuing the guarantee.  In addition,
guarantors  will be required to make  significant new  disclosures,  even if the
likelihood of the guarantor  making payments under the guarantee is remote.  The
Interpretation's  disclosure  requirements  are  effective for the Company as of
December  31, 2002.  The  recognition  requirements  of FIN 45 are to be applied
prospectively  to guarantees  issued or modified after December 31, 2002.  There
have been no previous significant  guarantees that have been entered into by the
Company.

<PAGE>

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation  -  Transition  and  Disclosure,  which  amends SFAS No. 123.  This
Statement provides alternative methods of transition for a voluntary change from
the  intrinsic   value-based  method  of  accounting  prescribed  by  Accounting
Principles  Board  ("APB")  Opinion  No.  25,  Accounting  for  Stock  Issued to
Employees to the fair value-based method of accounting for stock-based  employee
compensation. This Statement is effective for fiscal years ending after December
15, 2002 for transition  guidance and annual  disclosure  provisions and did not
have a material  effect on the results of its operations or financial  condition
of the Company.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), Consolidation
of Variable  Interest  Entities.  The  objective  of this  interpretation  is to
provide  guidance on how to identify a variable  interest  entity and  determine
when assets, liabilities, noncontrolling interests, and results of operations of
a variable  interest  entity need to be  included  in a  company's  consolidated
financial statements.  A company that holds variable interests in an entity will
need to  consolidate  the  entity  if the  company's  interest  in the  variable
interest  entity is such that the company will absorb a majority of the variable
interest  entity's  expected  losses  and/or  receive a majority of the entity's
expected residual returns,  if they occur. The provisions of this interpretation
became  effective upon issuance.  We have no  unconsolidated  investments in any
variable interest entities.

Note 3            Consumer Finance Receivables

Consumer finance receivables from continuing operations at December 31, 2002 and
2001 are summarized as follows:

<TABLE>

(Dollars in thousands)                       2002                2001
                                        -----------        -----------
Consumer finance receivables:
<S>                                     <C>                <C>
  Real estate secured loans             $ 2,174,108        $ 1,995,953
  Other installment loans                 1,651,120          1,625,388
  Retail installment contracts              304,289            378,650
                                        -----------        -----------
    Gross consumer finance receivables    4,129,517          3,999,991
Less:    Unearned finance charges and
          deferred loan fees               (471,120)          (520,091)
         Allowance for loan losses         (150,426)          (122,850)
                                        -----------        -----------
Consumer finance receivables, net       $ 3,507,971        $ 3,357,050
                                        ===========        ===========

</TABLE>

The amount of gross nonaccruing  consumer finance  receivables was approximately
$105.7  million and $109.6  million at December 31, 2002 and 2001. The amount of
interest that would have been accrued on these consumer finance receivables from
continuing  operations was approximately $16.8 million in 2002 and $15.6 million
in 2001.



<PAGE>


Activity in the Company's allowance for loan losses is as follows:

<TABLE>

                                               Year Ended December 31,
                                 -----------------------------------------------
(Dollars in thousands)                2002              2001              2000
                                 -----------       -----------       -----------
<S>              <C>             <C>               <C>               <C>
Balance, January 1               $   122,850       $   101,415       $    95,260
Provision for loan losses            189,256           146,699           107,960
Amounts charged off:
   Real estate secured loans         (11,389)           (7,217)           (2,463)
   Other installment loans          (153,772)         (123,723)         (103,576)
   Retail installment contracts      (15,757)          (13,064)          (12,696)
                                 -----------       -----------       -----------
                                    (180,918)         (144,004)         (118,735)
Recoveries:
   Real estate secured loans             472               289               206
   Other installment loans            16,340            15,917            14,131
   Retail installment contracts        2,426             2,384             2,593
                                 -----------       -----------       -----------
                                      19,238            18,590            16,930
                                 -----------       -----------       -----------
Net charge offs                     (161,680)         (125,414)         (101,805)

Allowances on notes purchased           -                  150              -
                                 -----------       -----------       -----------
Balance, December 31             $   150,426       $   122,850       $   101,415
                                 ===========       ===========       ===========

</TABLE>


Contractual  maturities,  excluding  unearned  finance charges and deferred loan
fees, at December 31, 2002 are as follows:

<TABLE>

                                           Over 1 But
                                Within         Within         Over
(Dollars in thousands)          1 year        5 years        5 years        Total
                              ---------    -----------    -----------    -----------
<S>                           <C>          <C>            <C>            <C>
Real estate secured loans     $   3,182    $   251,429    $ 1,675,186    $ 1,929,797
Other installment loans          56,411      1,394,272         13,551      1,464,234
Retail installment contracts     23,553        238,592          2,221        264,366
                              ---------    -----------    -----------    -----------
                              $  83,146    $ 1,884,293    $ 1,690,958    $ 3,658,397
                              =========    ===========    ===========    ===========
</TABLE>


The weighted average  contractual term of all consumer finance  receivables from
continuing  operations written during the years ended December 31, 2002 and 2001
was 64 months and 55 months  with the  majority of loans  providing  for a fixed
rate of interest over the  contractual  life of the loan.  Experience  has shown
that a substantial portion of consumer finance receivables will be refinanced to
lower a rate or payment  or to  provide  additional  money to the  customer,  or
repaid prior to contractual maturity. Therefore, the preceding information as to
contractual  maturities  should not be  regarded  as a forecast  of future  cash
collections.

Because we primarily  lend to consumers,  we did not have  receivables  from any
industry  group that  comprised  10 percent  or more of total  consumer  finance
receivables at December 31, 2002. Geographic diversification of consumer finance
receivables reduces the concentration of credit risk associated with a recession
in any one region.



<PAGE>


The largest concentrations of consumer finance receivables (excluding unearned
finance charges and deferred loan fees), by state were as follows:

<TABLE>


                                        December 31,
                       ----------------------------------------------
                                 2002                     2001
                       ---------------------     --------------------
(Dollars in thousands)     Amount    Percent         Amount   Percent
                       -----------   -------     -----------  -------
<S>                    <C>              <C>      <C>             <C>
California             $   601,936        16%    $   474,181       14%
Texas                      491,366        13         422,184       12
Tennessee                  363,042        10         345,587       10
North Carolina             281,545         8         291,929        8
Florida                    248,674         7         222,324        6
South Carolina             178,067         5         179,379        5
Virginia                   160,967         4         157,217        5
Louisiana                  143,326         4         145,127        4
Alabama                    128,195         4         118,487        4
Oklahoma                   113,928         3         107,086        3
Other                      947,351        26       1,016,399       29
Total Continuing       -----------   -------     -----------  -------
   Operations          $ 3,658,397       100%    $ 3,479,900      100%
                       ===========   =======     ===========  =======


</TABLE>



Note 4            Investment Securities

At December 31, 2002 and 2001,  all  investment  securities  were  classified as
available-for-sale  and  reported at fair  value.  Investment  securities  as of
December 31, 2002 and 2001 are as follows:

<TABLE>

                                                 December 31, 2002
                          ---------------------------------------------------------------
                                                                              Approximate
                           Original     Amortized        Gross Unrealized        Fair
(Dollars in thousands)       Cost          Cost          Gains      Losses       Value
                          ---------     ---------     ---------     ------     ----------
<S>                       <C>           <C>           <C>           <C>        <C>
Government obligations    $  14,158     $  14,290     $   1,144     $    -     $   15,434
Corporate obligations        37,035        37,078         1,164        (15)        38,227
Certificates of deposit
 and other                   13,208        13,218           512        (25)        13,705
                          ---------     ---------     ---------     ------     ----------

                          $  64,401     $  64,586     $   2,820     $  (40)    $   67,366
                          =========     =========     =========     ======     ==========


                                                 December 31, 2001
                          ---------------------------------------------------------------
                                                                              Approximate
                           Original     Amortized        Gross Unrealized        Fair
(Dollars in thousands)       Cost          Cost          Gains      Losses       Value
                          ---------     ---------     ---------     ------     ----------
Government obligations    $  25,700     $  25,920     $   1,232     $   (1)    $   27,151
Corporate obligations        45,526        46,006         1,745        (40)        47,711
Certificates of deposit
 and other                   15,269        15,136           454        (10)        15,580
                          ---------     ---------     ---------     ------     ----------

                          $  86,495     $  87,062     $   3,431     $  (51)    $   90,442
                          =========     =========     =========     ======     ==========

</TABLE>

There were no significant realized gains or losses during 2002, 2001 or 2000.



<PAGE>


The  following  table  presents the  maturity of the  investment  securities  at
December 31, 2002:

<TABLE>

                                                               Approximate
                                           Amortized              Fair
(Dollars in thousands)                       Cost                 Value
                                         ------------        -------------
<S>                                      <C>                 <C>
Due in one year or less                  $     27,002        $      27,341
Due after one year through five years          32,690               34,794
Due after five years through ten years          3,135                3,378
Due after ten years                             1,759                1,853
                                         ------------        -------------
                                         $     64,586        $      67,366
                                         ============        =============

</TABLE>

Note 5        Goodwill

The results for the year ended December 31, 2002, include the effect of adopting
SFAS No. 142, Goodwill and Other Intangible  Assets.  SFAS No. 142 provides that
goodwill  is no longer  amortized  and the value of an  identifiable  intangible
asset must be amortized over its useful life,  unless the asset is determined to
have an indefinite useful life. Goodwill must be tested for impairment as of the
beginning  of the fiscal  year in which SFAS No.  142 is  adopted,  and at least
annually  thereafter.  Goodwill has been tested for  impairment  and it has been
determined that there are no impairment losses to be recognized in the period as
a result of the  impairment  analysis  performed  as of  January  1,  2002.  The
adoption  of SFAS No. 142  resulted  in a pretax  reduction  in expenses of $4.6
million year to date.

On October 1, 2002, we completed the sale of our wholly-owned subsidiary,  First
Community Industrial Bank ("FCIB"),  through a merger with First State Bank, NM.
See "Note 6 - Discontinued Operations". There was goodwill in the amount of $1.4
million,  associated with the discontinued operation,  that was written down, at
the time of the sale.

Had the Company  been  accounting  for its  goodwill  under SFAS No. 142 for all
periods presented, the Company's net income would have been as follows:


<TABLE>
                                                               Year Ended December 31,
                                                     ----------------------------------------
(Dollars in thousands)                                  2002            2001           2000
                                                     ---------      ----------      ---------
Net income from continuing operations:
<S>                                                  <C>            <C>             <C>
  Reported net income from continuing operations     $  44,842      $   53,760      $  71,240
   Add back:  Goodwill previously amortized                -             4,563          4,563
                                                     ---------      ----------      ---------
   Income from continuing operations before income
     taxes, excluding amortization of goodwill          44,842          58,323         75,803
   Income tax expense                                      -            (1,665)        (1,665)
                                                     ---------      ----------      ---------
   Adjusted net income from continuing operations    $  44,842      $   56,658      $  74,138
                                                     =========      ==========      =========

</TABLE>



<PAGE>


Note 6        Discontinued Operations

On  October  1, 2002,  our  subsidiary,  Blazer  Financial  Corporation  ("BFC")
completed the sale of its  wholly-owned  industrial  banking  subsidiary,  First
Community Industrial Bank ("FCIB"),  through a merger with First State Bank, NM,
formerly  First  State  Bank  of  Taos,  a  New  Mexico  bank  ("First  State"),
wholly-owned by First State Bancorporation, a New Mexico corporation, with First
State being the surviving entity. FCIB was a wholly-owned  subsidiary of BFC and
was included in the Consumer Banking segment.  BFC is a wholly-owned  subsidiary
of Washington Mutual Finance  Corporation.  Prior to the sale, FCIB declared and
paid a dividend to BFC, in the amount of $37.5 million.  The consideration  paid
by First State for the merger was equal to $67.0 million in cash.

Net assets of the  discontinued  operations  for the  December  31, 2001 balance
sheet are as follows:

<TABLE>

(Dollars in thousands)                       December 31,
                                                  2001
ASSETS                                       ------------
<S>                                          <C>
Consumer finance receivables, net            $    372,274
Investment securities available for sale           33,772
Cash and cash equivalents                          11,821
Property, equipment and leasehold
   improvements, net                                  205
Other assets                                           99
                                             ------------
   TOTAL ASSETS                              $    418,171
                                             ============
LIABILITIES
Federal Home Loan Bank borrowings            $    110,000
Customer deposits                                 237,220
Accounts payable and other liabilities              7,206
                                             ------------
   TOTAL LIABILITIES                              354,426
                                             ------------
NET ASSETS OF DISCONTINUED
   OPERATIONS                                $     63,745
                                             ============
</TABLE>


<PAGE>


The operating results of discontinued operations are as follows:

<TABLE>

                                          Nine
                                         Months
                                          Ended                Year Ended
                                       September 30,           December 31,
                                       -------------     -----------------------
(Dollars in thousands)                     2002             2001          2000
Interest income:                       -------------     ---------     ---------
<S>                                    <C>               <C>           <C>
  Loan interest and fee income         $      23,894     $  37,753     $  38,641
  Investment securities income                 1,677         2,538         2,472
                                       -------------     ---------     ---------
   Total interest income                      25,571        40,291        41,113
Interest and debt expense                     11,084        19,396        21,113
                                       -------------     ---------     ---------
   Net interest income before
    provision for credit losses               14,487        20,895        20,000

Provision for credit losses                    1,770         1,124          (717)
                                       -------------     ---------     ---------
   Net interest income                        12,717        19,771        20,717
                                       -------------     ---------     ---------
Noninterest income                                33            92           163

Noninterest expense:
  Personnel                                    3,164         4,508         4,901
  Data processing and telecommunication          615         1,021           872
  Occupancy                                      584           778           768
  Advertising                                      8            13            59
  Taxes, licenses and professional fees           37            67           148
  Goodwill amortization                            0             0             0
  Other                                          883         1,549         1,746
                                       -------------     ---------     ---------
   Total noninterest expense                   5,291         7,936         8,494
                                       -------------     ---------     ---------
Income before income taxes                     7,459        11,927        12,386

Provision for income taxes                     3,042         4,562         4,737
                                       -------------     ---------     ---------
Net income                             $       4,417     $   7,365     $   7,649
                                       =============     =========     =========

</TABLE>



Note 7            Commercial Paper Borrowings

The Company has a commercial  paper program with several  investment banks which
provides  $500 million in borrowing  capacity.  Commercial  paper  borrowings at
December 31, 2002 and 2001 totaled $439.5 million and $351.1  million.  Interest
expense in 2002,  2001 and 2000 related to  commercial  paper was $9.3  million,
$19.0 million and $26.2 million.

On July 31,  2002,  we entered into an agreement  with  Westdeutsche  Landesbank
Girozentrale ("WestLB") to participate in a $300 million asset-backed commercial
paper conduit program.  Under this program,  administered by WestLB,  up to $300
million of funding will be made available through the assignment of an undivided
interest in a specified  group of unsecured  receivables  to a special  purpose,
wholly-owned  consolidated  subsidiary  of the  Company.  Under the terms of the


<PAGE>

agreement,  which has a  364-day  term,  with an option to extend  for up to two
additional 364-day periods,  WestLB issues commercial paper (indirectly  secured
by the receivables), on behalf of the Company. Under this agreement, we had $300
million outstanding,  with an average coupon of 1.42% at December 31, 2002. This
program has restrictive  covenants which include various financial reporting and
management   requirements,   as  well  as  a  $9.0  million  minimum  net  worth
requirement. As of December 31, 2002, we were in compliance with all restrictive
covenants.

We also share with Washington  Mutual,  an $800 million 3-year  revolving credit
facility, which provides back-up for our commercial paper programs.  Previously,
we shared two revolving credit  facilities,  which provided  combined back-up of
$1.2 billion.  Effective August 12, 2002 the facilities were  restructured  into
the existing $800 million  3-year  credit  facility.  The borrowing  capacity is
limited  to the  amount of the credit  facility,  net of the amount of  combined
commercial  paper  outstanding.  At December 31, 2002,  there was $360.5 million
available  under the  facility.  There  were no direct  borrowings  under  these
facilities at any point during 2002 or 2001.

This revolving credit agreement,  shared with Washington Mutual, has restrictive
covenants  which  include:  a minimum  consolidated  net worth test;  a limit on
senior debt to the borrowing base (up to 10:1);  subsidiary debt (excluding bank
deposits and  intercompany  debt) not to exceed 30% of total debt;  and a 60-day
delinquency  ratio not to  exceed  6% of  consumer  finance  receivables.  As of
December 31, 2002, we were in compliance with all restrictive covenants.

Effective January 16, 2003, we entered into a 364-day unsecured revolving credit
agreement  with  Washington  Mutual,  Inc.,  which  provides  $250.0  million in
borrowing  capacity at an interest rate of LIBOR plus 0.45% and is automatically
renewable for an additional 364 days.  Under the agreement,  we borrowed  $150.0
million on January 17, 2003. See "Note 15 - Subsequent Event".

Additional information  concerning total commercial paper borrowings,  including
the commercial paper conduit, is as follows:

<TABLE>


                                                  Year Ended December 31,
                                      -------------------------------------------
(Dollars in thousands)                    2002            2001            2000
                                      -----------     -----------     -----------
Outstanding during the year
<S>                                   <C>             <C>             <C>
   Maximum amount at any month end    $   739,467     $   703,912     $   683,654
   Average amount                         484,405         411,271         420,215
   Average yield                             2.10%           4.93%           6.63%

</TABLE>


Average interest rates include the effect of commitment fees.



<PAGE>


Note 8            Senior Debt

Senior debt at December 31, 2002 and 2001 was comprised of the following  senior
notes and debentures (unsecured):


<TABLE>

(Dollars in thousands)                       2002               2001
                                        ------------       ------------
<S>              <C> <C>                <C>                <C>
   6.0%, due May 15, 2002               $       -          $    149,960
   6.30%, due October 1, 2002                   -               149,927
   6.50%, due November 15, 2003              149,921            149,771
   5.85%, due January 27, 2004               199,940            199,875
   7.375%, due September 1, 2004             299,620            299,392
   8.25%, due June 15, 2005                  494,764            473,734
   7.25%, due June 15, 2006                  249,253            249,036
   6.25%, due June 15, 2006                  498,670            498,275
   6.875%, due June 15, 2011                 497,509            497,211
                                        ------------       ------------

     Total senior debt                  $  2,389,677       $  2,667,181
                                        ============       ============

</TABLE>

Aggregate maturities of senior debt at December 31, 2002 are as follows:  $149.9
million in 2003;  $499.6 million in 2004; $494.8 million in 2005; $747.9 million
in 2006; $497.5 million in 2007 and thereafter.

Interest  expense related to senior debt  outstanding in 2002, 2001 and 2000 was
$158.5 million, $170.8 million, and $154.3 million.

The increase in senior debt related to hedging  activities in 2002 totaled $20.9
million.  This was  comprised of $24.2  million  total fair value offset by $3.3
million  amortization of deferred gain on terminated hedging  transactions.  See
"Note 9 - Hedging Activities".

Note 9            Hedging Activities

SFAS No. 133  establishes  accounting  and reporting  standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging  activities.  We did not enter into any  agreements,
which met the definition of a derivative instrument at any time during 2002.

Our risk  management  policy  provides  for the use of certain  derivatives  and
financial   instruments  in  managing  certain  risks.  We  do  not  enter  into
derivatives or other financial instruments for trading or speculative purposes.

Managed  risk  includes  the  risk  associated  with  changes  in fair  value of
long-term fixed rate debt. In accordance with our risk management  policy,  such
risk is hedged by entering into pay floating interest rate exchange  agreements.
The  instruments  designated  in these fair value hedges  include  interest rate
swaps that qualify for the "short cut" method of accounting  under SFAS No. 133.
Under  the  "short  cut"  method,  we  assume  no  ineffectiveness  in a hedging
relationship.  Since the terms of the interest  rate swap qualify for the use of
the "short cut" method,  it is not necessary to measure  effectiveness and there
is no charge to earnings  for  changes in fair value.  All changes in fair value
are  recorded  as  adjustments  to the basis of the hedged  borrowings  based on


<PAGE>

changes  in  the  fair  value  of the  derivative  instrument.  When  derivative
instruments  are  terminated  prior to their  maturity,  or the  maturity of the
hedged  liability,  any  resulting  gains or losses are  included as part of the
basis adjustment of the hedged item and amortized over the remaining term of the
liability.  At December 31, 2002,  the  unamortized  deferred gain on terminated
hedging  transactions  totaled $10.8 million.  This amount is included in senior
debt on the Consolidated Statement of Financial Condition.

At December 31, 2002, we had three  outstanding  interest  rate swap  agreements
with a  combined  notional  amount of $450.0  million  and a total fair value of
$34.3  million.  This amount is reflected as an adjustment to senior debt on the
Consolidated Statement of Financial Condition.

Note 10  Income Taxes

The components of income tax expense (benefit) are as follows:


<TABLE>

                                      Year Ended December 31,
                          ------------------------------------------
(Dollars in thousands)         2002           2001           2000
                          ----------      ----------      ----------
Current
<S>                       <C>             <C>             <C>
   Federal                $   31,673      $   37,689      $   39,775
   State                       1,560             (71)         (1,588)
Deferred                      (7,961)         (7,050)          4,606
                          ----------      ----------      ----------
                          $   25,272      $   30,568      $   42,793
                          ==========      ==========      ==========

</TABLE>

The  provisions  for  income  taxes  differ  from  the  amounts   determined  by
multiplying  pre-tax income by the statutory  federal income tax rate of 35% for
2002, 2001 and 2000. A reconciliation between these amounts is as follows:

<TABLE>

                                                                Year Ended December 31,
                                      --------------------------------------------------------------------------
(Dollars in thousands)                         2002                     2001                      2000
                                      ----------------------   ----------------------    -----------------------
                                                     % of                     % of                       % of
                                                    Pretax                   Pretax                     Pretax
                                                    Income                   Income                     Income
                                                     from                     from                       from
                                                  Continuing               Continuing                 Continuing
                                        Amount    Operations     Amount    Operations     Amount      Operations
                                      ---------   ----------   ---------   ----------    --------     ----------
<S>                                   <C>              <C>     <C>              <C>      <C>               <C>
Income taxes at statutory rates       $  24,540        35.00%  $  29,515        35.00%   $ 39,911          35.00%
Increase (reduction) in taxes
   resulting from:
    State income taxes, net of
     Federal benefit                        964         1.37       1,008         1.20       2,877          2.52
    Other                                  (232)        (.33)         45          .05           5            .01
                                      ---------   ----------   ---------   ----------    --------     ----------
                                      $  25,272        36.04%  $  30,568        36.25%   $ 42,793          37.53%
                                      =========   ==========   =========   ==========    ========     ==========

</TABLE>


<PAGE>


Deferred taxes result from temporary  differences in the  recognition of certain
items for tax and financial  reporting purposes.  The significant  components of
the Company's net deferred tax asset (liability) were as follows:

<TABLE>

                                                               December 31,
                                                  ---------------------------------
(Dollars in thousands)                                 2002                  2001
                                                  -----------          ------------
Deferred tax assets:
<S>                                               <C>                  <C>
   Credit loss reserves                           $    50,952          $     35,671
   Unearned insurance commissions                       5,435                 7,090
   State taxes                                          1,515                 1,145
   Employee benefits accruals                           1,269                 2,943
   Other                                                  883                   899
                                                  -----------          ------------
     Total deferred tax assets                         60,054                47,748
                                                  -----------          ------------

Deferred tax liabilities:
   Amortization of intangibles                        (10,809)              (10,314)
   Loan interest and fee income                        (4,565)                 (930)
   Basis differences on premises and equipment         (1,402)               (1,187)
   Other                                               (1,232)               (1,066)
                                                  -----------          ------------
     Total deferred tax liabilities                   (18,008)              (13,497)
                                                  -----------          ------------

Net deferred tax asset                            $    42,046          $     34,251
                                                  ===========          ============


</TABLE>


Note 11           Retirement and Savings Plans

Substantially  all of our employees  participate  in a  noncontributory  defined
contribution   pension  plan  maintained  by  Washington  Mutual  ("the  Plan").
Accumulated plan benefits and annual pension cost are derived from an allocation
formula based on our total participants and the Plan's total participants.

Pension cost for our  participants  for the years ended December 31, 2002, 2001,
and 2000 was approximately  $3.8 million,  $2.2 million,  and $1.0 million.  The
significant increase in 2002 was due to actuarial  adjustments to funding of the
pension plan. Due to our participation in a multi-employer defined benefit plan,
information as to separate Company participant assets and vested benefits is not
presented.

Our  employees  also  participate  in an employee  savings  plan  maintained  by
Washington  Mutual,  which  allows  employees  to defer  part of  their  pre-tax
compensation  until  retirement.   Company   contributions  equal  100%  of  the
contributions  made by  employees  up to 3% of salary plus annual  discretionary
amounts,  if any, as determined by  management.  Our cost is based on the actual
contribution  related  to  our  participating   employees.   Total  expense  was
approximately  $3.4  million,  $3.6 million and $3.4 million for the years ended
December 31, 2002, 2001 and 2000.

The Company's  employees who retired prior to July 1, 1997 also  participate  in
Washington  Mutual's  defined benefit  postretirement  plan ("the Benefit Plan")
which  covers a portion of the costs of medical and life  insurance  coverage to
eligible employees and dependents based on age and length of service.

Medical  coverage  options are the same as  available to active  employees.  The
accumulated  postretirement  benefit  obligation and related expense are derived
from an  allocation  formula  based on our total  participants  and the  Benefit
Plan's total participants.

<PAGE>

The net  postretirement  medical and life insurance  expense allocated to us for
the years ended  December 31, 2002,  2001 and 2000 was  approximately  $141,000,
$194,000 and $184,000.

Note 12           Leases

The Company leases office space,  computers,  office  equipment and automobiles,
generally for terms of five or fewer years.

Under operating leases that have initial or remaining  noncancelable lease terms
in excess of one year,  approximate  aggregate  annual minimum  rentals are $9.2
million in 2003;  $7.4 million in 2004;  $5.2  million in 2005;  $2.3 million in
2006;  and $0.8 million in 2007 and  thereafter.  Rent  expense from  continuing
operations  for the  years  ended  December  31,  2002,  2001 and 2000 was $11.5
million, $11.7 million and $11.6 million.

Our corporate  headquarters  building is located in Tampa, Florida. We currently
lease our headquarters  office facilities at a monthly base rent of $66 thousand
per month, with annual increases  approximating 3.5% per year. The current lease
expires in May 2006, with an additional five-year option to renew.

Note 13           Contingencies

The  Company  and  several  of its  subsidiaries  and their  current  and former
employees  are  defendants  in  approximately  35 suits pending in the state and
federal courts of Mississippi.  The lawsuits generally allege unfair lending and
insurance related  practices.  Similar suits are pending against other financial
services  companies in Mississippi.  All but three of the suits are currently in
various  stages of discovery or stayed pending the outcome of motions for remand
and no immediate developments are expected in those cases.

In one of the pending cases,  Carolyn Baker, et al. v. Washington Mutual Finance
Group,  LLC f/k/a City  Finance  Company,  a jury  awarded just over $71 million
against one of the Company's subsidiaries, Washington Mutual Finance Group, LLC,
a Delaware limited liability  company ("WMF Group").  Pursuant to a motion filed
by WMF Group, the trial court reduced the verdict to just over $53 million.  WMF
Group is in the process of  appealing  the verdict and has posted a bond to stay
execution on the judgment  pending the  appellate  court's  ruling.  WMF Group's
appellate  brief and three amicus briefs were filed in November and all briefing
is expected to be  completed  by the end of first  quarter  2003.  The appeal is
based on numerous  grounds,  including  the gross  inequity  between the alleged
economic losses of only $12,000 and the actual jury award.

In the case of Philisia  Banks,  et. al. v. City Finance Co., et. al., which was
originally  scheduled  for trial  beginning  December 16, 2002,  the  plaintiffs
requested  further  mediation.  No new trial date has been set. This case is now
expected to go to trial  sometime in the first or second quarter of 2003. In the
case of William Agnew, et. al. v. City Finance Company of Mississippi, Inc., et.
al., a trial is currently set for May of 2003 and a motion for summary  judgment
is currently pending. Adverse verdicts could result in either case by the end of
second  quarter  2003.  Because  of  the  unusual   litigation   environment  in


<PAGE>

Mississippi it is difficult to predict potential  outcomes and losses.  However,
based upon  information  presently  available,  we believe that the total amount
that will ultimately be paid, if any, after reductions and appeals, arising from
these  Mississippi  lawsuits and  proceedings  will not have a material  adverse
effect on our consolidated results of operations and financial position.

We are currently  evaluating the business and legal  environment in Mississippi.
During  the  evaluation  process,  we have  suspended  all new loan  origination
activities and revolving loan advances to Mississippi residents.  The moratorium
on new advances and  originations  went into effect September 30, 2002. Based on
the  information  available,  we  believe  that the  moratorium  will not have a
material adverse effect on our  consolidated  results of operation and financial
position.

Note 14           Transactions with Related Parties

Significant   transactions  with  Washington  Mutual  or  its  subsidiaries  are
identified as follows:

o    Certain  administrative  services,   including  human  resources  and  cash
     management were provided, for which we paid management fees of $4.6 million
     in 2002,  $5.3  million in 2001 and $2.4  million  in 2000.  These fees are
     allocated  by  Washington  Mutual  to its  subsidiaries  based  on  various
     business factors,  including the number of employees and total assets,  and
     include a reasonable market value adjustment.

o    We made payments to Washington  Mutual,  which in turn made payments on our
     behalf,  pursuant to a tax  allocation  policy and in  connection  with the
     retirement & savings plans.  The tax payments totaled  approximately  $35.0
     million, and retirement & savings plan payments totaled  approximately $5.0
     million.

o    Included in accounts  payable and other  liabilities are net amounts due to
     Washington  Mutual for operating  expenses and tax remittances  paid on our
     behalf.  At December 31, 2002 and 2001, these amounts totaled $83.9 million
     and $14.3 million.

o    On February 1, 2002,  the Company  sold,  at book value,  $46.3  million of
     single family residence loans and $3.4 million of foreclosed  single-family
     dwellings to Ahmanson  Obligation  Company,  a wholly owned  subsidiary  of
     Washington  Mutual.  The loans had been  acquired  in 2000 from Long  Beach
     Mortgage Company, a wholly owned subsidiary of Washington Mutual. The loans
     were reported as consumer  finance  receivables  and the foreclosed  assets
     were included in other assets on the  Consolidated  Statements of Financial
     Condition.

o    Included  in other  assets are  amounts  prepaid to  Washington  Mutual for
     pension  expenses which are to be paid on our behalf.  The  pension-related
     payments in 2002 totaled  approximately  $23.4  million,  leaving a prepaid
     balance at December 31, 2002 of $19.6 million.

o    Effective January 16, 2003, we entered into a 364-day  unsecured  revolving
     credit  agreement with  Washington  Mutual,  Inc.,  which  provides  $250.0
     million in borrowing  capacity at an interest  rate of LIBOR plus 0.45% and
     is automatically renewable for an additional 364 days. Under the agreement,
     we borrowed  $150.0  million on January 17, 2003. See "Note 15 - Subsequent
     Event".

<PAGE>

Note 15  Subsequent Event

Effective January 16, 2003, we entered into a 364-day unsecured revolving credit
agreement  with  Washington  Mutual,  Inc.,  which  provides  $250.0  million in
borrowing  capacity at an interest rate of LIBOR plus 0.45% and is automatically
renewable for an additional 364 days.  Under the agreement,  we borrowed  $150.0
million on January 17, 2003.

Note 16  Approximate Fair Values of Financial Instruments

A summary  of the  approximate  fair  values of our  financial  instruments,  as
compared to their carrying values, is set forth in the following table:


<TABLE>
                                      December 31, 2002               December 31, 2001
                                ---------------------------     ---------------------------
(Dollars in thousands)            Carrying      Approximate       Carrying      Approximate
                                   Value         Fair Value        Value         Fair Value
                                -----------     -----------     -----------     -----------
<S>                             <C>             <C>             <C>             <C>
Consumer finance receivables    $ 3,658,397     $ 3,671,001     $ 3,479,900     $ 3,471,743
Investment securities                67,366          67,366          90,442          90,442
Commercial paper borrowings         739,467         740,162         351,141         351,247
Senior Debt                       2,389,677       2,601,835       2,667,181       2,785,907

</TABLE>

In estimating the fair value disclosures for financial instruments,  we used the
following methods and assumptions:

         Consumer  finance receivables. The approximate fair  value  of consumer
         finance receivables was estimated by discounting the future cash  flows
         using current  rates at which  similar loans would be made with similar
         maturities to borrowers with similar credit ratings. The fair value was
         not adjusted for  the  value of  potential loan  renewals from existing
         borrowers.

         Investment securities.  Fair values for investment securities are based
         on quoted market prices.  If  quoted  market prices were not available,
         fair values  were estimated based on quoted market prices of comparable
         instruments.

         Cash  and  cash  equivalents.  The  carrying  amount  reported  in  the
         statement  of  financial  condition  for  cash  and  cash   equivalents
         approximates its fair value given its highly liquid nature.

         Debt.  The  carrying  amount  reported  in  the  statement of financial
         condition  for commercial paper borrowings  approximates its fair value
         given its brief  maximum term.  The approximate  fair value  for senior
         debt  was  estimated  using  rates currently  available  for  debt with
         similar terms and remaining maturities.

         Accounts  payable and  other liabilities. The carrying amounts reported
         in the statement of financial  condition for accounts payable and other
         liabilities  approximate  their  fair value,  given  the  settlement on
         demand nature of these items.



<PAGE>


Note 17           Selected Quarterly Financial Data (Unaudited)

A summary of the quarterly  results of operations  for the years ended  December
31, 2002 and 2001 is set forth below.  On October 1, 2002,  we sold our Consumer
Banking  subsidiary.  Accordingly,  it has been  accounted  for as  discontinued
operations  and the  accompanying  selected  quarterly  financial  data has been
restated to report separately the net consumer finance receivables and operating
results of this discontinued operation.

<TABLE>

                                                              As of and for the Quarter Ended
                               ----------------------------------------------------------------------------------------------
                                      March 31,              June 30,              September 30,            December 31,
                               ----------------------  ----------------------  ----------------------  ----------------------
(Dollars in thousands)            2002        2001       2002        2001        2002        2001         2002        2001
                               ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net interest income before
<S>                            <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
 provision for credit losses   $   92,266  $   87,400  $   94,653  $   90,841  $   99,710  $   92,437  $  103,555  $   95,148
                               ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------

Provision for credit losses        39,599      31,332      43,194      32,169      48,368      35,625      58,095      47,573
Other operating income              5,790       7,750       7,589       7,747       6,994       6,369       7,251       7,346
Other operating expenses           39,526      42,605      38,262      39,648      39,566      39,506      41,084      37,689
Goodwill amortization
 expense                           -            1,141      -            1,140      -            1,141      -            1,141
                               ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------

Income from continuing operations
 before income taxes               18,931      20,072      20,786      25,631      18,770      22,534      11,627      16,091

Income taxes                        6,867       7,274       7,499       9,299       6,662       8,173       4,244       5,822
                               ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------

Income from continuing
 operations                        12,064      12,798      13,287      16,332      12,108      14,361       7,383      10,269

Income from operations of discontinued
 division (less applicable
 income taxes)                      1,572       1,799       1,766       1,858       1,079       1,856      -            1,852

Gain on disposition of discontinued
 operations (less applicable
 income taxes)                     -           -           -           -           -           -           22,523       -
                               ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------



Net income                     $   13,636  $   14,597  $   15,053  $   18,190  $   13,187  $   16,217  $   29,906  $   12,121
                               ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========

Consumer finance
 receivables, net (from
 continuing operations)        $3,309,770  $3,262,062  $3,444,445  $3,293,989  $3,479,042  $3,335,783  $3,507,971  $3,357,050
                               ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========

Consumer finance
 receivables, net (from
 discontinued operations)      $  362,065  $  378,850  $  360,878  $  376,164  $  347,781  $  375,779  $   -       $  372,274
                               ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========

</TABLE>

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

None.




<PAGE>


                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a) Index of Documents filed as a part of this Report:

       1.    Financial Statements

             Included in Part II of this Report:
                                                                            PAGE

             Report of Independent Certified Public Accountants...............26

             Washington Mutual Finance Corporation and Subsidiaries:
               Consolidated Statements of Financial Condition
                at December 31, 2002 and 2001.................................27
               Consolidated Statements of Operations and Comprehensive Income
                for the Years Ended December 31, 2002, 2001 and 2000..........28
               Consolidated Statements of Retained Earnings
                for the Years Ended December 31, 2002, 2001 and 2000..........29
               Consolidated Statements of Cash Flows
                for the Years Ended December 31, 2002, 2001 and 2000..........30
               Notes to Consolidated Financial Statements.....................31

       2.    Financial Statement Schedules

             All  schedules are omitted because of the absence of the conditions
             under which they  are  required or because the required information
             is set forth in the financial statements or related notes.

       3.    Exhibits

             Included in Part IV of this Report:

        Exhibit
        Number
        (3)  (a)   Certificate of  Incorporation  of  Washington Mutual  Finance
                   Corporation. as presently in effect. (i)
             (b)   By-Laws of Washington Mutual Finance Corporation as presently
                   in effect. (ii)
        (4)  (a)   Indenture dated as of October 1, 1997 between  Aristar,  Inc.
                   and First Union National Bank, as trustee. (iii)
             (b)   Indenture dated as of November 15, 1997 between Aristar, Inc.
                   and First Union National Bank, as trustee. (iv)
             (c)   Indenture dated as of June 23, 1999 between Aristar, Inc. and
                   Harris Trust and Savings Bank, as trustee. (iv)
             (d)   The registrant  hereby agrees  to furnish  the Securities and
                   Exchange   Commission   upon   request   with  copies  of all
                   instruments defining  rights of holders  of long-term debt of
                   Washington  Mutual Finance Corporation and its consolidated
                   subsidiaries.

<PAGE>

        (10) (a)   Income  Tax  Allocation  Agreement  between Aristar, Inc. and
                   Washington  Mutual, as  successor to Great  Western Financial
                   Corporation (as amended effective August 31, 1999). (iv)
             (b)   Three-Year  Credit Agreement  by and  among Washington Mutual
                   and Washington Mutual  Finance Corporation and JPMorgan Chase
                   Bank, as Administrative Agent. (iv)

        (12)  Statement Re: Computation of Ratios
        (23)  Independent Auditors' Consent.


             (i)   Incorporated by  reference to  Registrant's  Annual Report on
                   Form 10-K  for the  year  ended December 31, 1987, Commission
                   file number 1-3521.
             (ii)  Incorporated by reference to Registrant's  Current  Report on
                   Form 8-K  dated  October  6, 1997,  Commission  file   number
                   1-3521.
            (iii)  Incorporated  by  reference  to  Registrant's  Report on Form
                   424B2 dated November 6, 1997, Commission file number 1-3521.
             (iv)  Incorporated by reference to Washington Mutual, Inc.'s Annual
                   Report  on  Form  10-K for the  year ended December 31, 2002,
                   Commission File No. 1-14667.

             (b)   Reports on Form 8-K

                   No  reports on Form 8-K were filed during the  period covered
                   by this Report.



<PAGE>


                                   Signatures

Pursuant to the requirements of the Section 13 of the Securities Exchange Act of
1934,  the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                           WASHINGTON MUTUAL FINANCE CORPORATION

                                           /s/   Craig J. Chapman
                                           -------------------------------------
                                           Craig J. Chapman
                                           Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of the Company and in
the capacities indicated on March 27, 2003.



/s/   Craig J. Chapman                 /s/   Edward S. Robertson
------------------------------------   -----------------------------------------
Craig J. Chapman                       Edward S. Robertson
Chief Executive Officer and Director   Senior Vice President and Chief Financial
(Principal Executive Officer)          Officer (Principal Financial Officer)

                                       /s/   Craig A. Stein
                                       -----------------------------------------
                                       Craig A. Stein
                                       Vice President and Controller
                                       (Principal Accounting Officer)

/s/   Craig E. Tall                    /s/   Fay L. Chapman
------------------------------------   -----------------------------------------
Craig E. Tall                          Fay L. Chapman
Director                               Director

                                       /s/   William A. Longbrake
                                       -----------------------------------------
                                       William A. Longbrake
                                       Director



<PAGE>


                                 CERTIFICATIONS


I, Craig J. Chapman, certify that:

1)   I have  reviewed  this  annual  report  on Form 10-K of  Washington  Mutual
     Finance Corporation;
2)   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;
3)   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;
4)   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
     a)   designed  such   disclosure  controls  and  procedures  to ensure that
          material  information   relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities, particularly during the period in  which  this annual report
          is being prepared;
     b)   evaluated  the effectiveness of  the registrant's disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
     c)   presented   in  this   annual  report  our  conclusions   about    the
          effectiveness of  the disclosure controls and procedures  based on our
          evaluation as of the Evaluation Date;
5)   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):
     a)   all significant deficiencies  in the  design or  operation of internal
          controls  which  could adversely  affect  the  registrant's ability to
          record,  process,  summarize  and  report  financial  data  and   have
          identified  for  the registrant's auditors any  material weaknesses in
          internal controls; and
     b)   any fraud, whether or not  material, that involves management or other
          employee who have  a significant  role  in  the  registrant's internal
          controls; and
6)   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  action with regard to  significant  deficiencies  and  material
     weaknesses.

Date:    March 27, 2003
                                       By:           /s/   Craig J. Chapman
                                       -----------------------------------------
                                       Craig J. Chapman
                                       Chief Executive Officer of
                                       Washington Mutual Finance Corporation




<PAGE>


I, Edward S. Robertson, certify that:

1)   I have  reviewed  this  annual  report  on Form 10-K of  Washington  Mutual
     Finance Corporation;
2)   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;
3)   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;
4)   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
     a)   designed  such   disclosure  controls  and  procedures  to ensure that
          material  information   relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities, particularly during the period in  which  this annual report
          is being prepared;
     b)   evaluated  the effectiveness of  the registrant's disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
     c)   presented   in  this   annual  report  our  conclusions   about    the
          effectiveness of  the disclosure controls and procedures  based on our
          evaluation as of the Evaluation Date;
5)   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):
     a)   all significant deficiencies  in the  design or  operation of internal
          controls  which  could adversely  affect  the  registrant's ability to
          record,  process,  summarize  and  report  financial  data  and   have
          identified  for  the registrant's auditors any  material weaknesses in
          internal controls; and
     b)   any fraud, whether or not  material, that involves management or other
          employee who have  a significant  role  in  the  registrant's internal
          controls; and
6)   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  action with regard to  significant  deficiencies  and  material
     weaknesses.


Date:    March 27, 2003
                                       By:           /s/   Edward S. Robertson
                                       -----------------------------------------
                                       Edward S. Robertson
                                       Chief Financial Officer of Washington
                                       Mutual Finance Corporation