WFS Financial Inc on April 24 reported record earnings of $18.8 million, or $0.66 per diluted share for the first quarter of 2001 compared with $14.8 million, or $0.54 per diluted share for the same period a year earlier.

On a comparative basis, net income increased 27 percent and earnings per share rose 22 percent.

WFS Financial continued to experience considerable origination growth with automobile contract purchases totaling $1.2 billion for the first quarter of 2001. This represents a 22 percent increase from the $970 million of automobile contracts purchased during the first quarter of 2000.

As a result of higher contract originations, WFS' portfolio of serviced contracts reached $7.2 billion at March 31, 2001, up from $6.8 billion at Dec. 31, 2000. During the quarter, WFS issued $1 billion of automobile asset-backed securities accounted for as a secured financing.

Annualized credit loss experience for the first quarter improved by 15 basis points to 1.9 percent of average serviced automobile contracts compared with 2 percent a year earlier. Contracts 30 days or more delinquent improved 90 basis points to 2.3 percent at March 31, 2001 compared with 3.2 percent at Dec. 31, 2000.

"Our continued improvement in credit trends demonstrates the success of our credit scoring, underwriting and servicing technology and processes as well as our increased focus on prime lending over the past several years," said Joy Schaefer, CEO and vice chairman of WFS.

Total revenues increased 21 percent to $102 million for the three months ended March 31, 2001 compared with $84.7 million for the same period a year earlier. Net interest income almost doubled while servicing income declined as the company accounts for its newer securitization transaction as secured financings rather than sales. Revenues from securitization transactions treated as sales are reported as servicing income while revenues from securitization transactions treated as secured financings are reported as net interest income.

Major components of revenue include net interest income that increased 75 percent to $65.4 million for the three months ended March 31, 2001 compared with $37.3 million for the period a year earlier. Servicing income totaled $36.8 million for the three months ended March 31, 2001 compared with $39.7 million for the same period a year ago.

The provision for credit losses was $20.1 million for the three months ended March 31, 2001 compared with $11.7 million for the same period a year ago. The increase in provision for credit losses was the result of a higher level of contracts held on the balance sheet resulting from the company accounting for its securitization transactions as secured financings rather than sales. The allowance for credit losses as a percentage of owned contracts outstanding totaled 1.9 percent at March 31, 2001 compared with 2.3 percent at Dec. 31, 2000.

Operating expenses totaled $50.7 million or 2.9 percent of average serviced contracts for the first quarter of 2001 compared with $47.7 million or 3.5 percent for the same period a year ago. Operating costs as a percent of total revenues declined to 50 pecent for the first quarter of 2001 compared with 56 percent for the same period a year earlier.

During the second quarter of 2001, the company expects to sell approximately $1.5 billion of automobile contracts to its ultimate parent, Westcorp. This sale is designed to efficiently utilize capital and allow continued growth at WFS. The company expects to continue to service the contracts it intends to sell.

On a portfolio basis, WFS earned $23.3 million, or $0.81 per diluted share for the first quarter of 2001 compared with $14.9 million, or $0.54 per diluted share for the same period a year earlier.

"Differences between portfolio basis earnings and reported earnings during the year 2000 and 2001 represent the transitional effect of treating our newer securitization transactions as secured financings rather than sales," Schaefer said. "We expect that our reported earnings will ultimately approach our portfolio basis earnings as we continue to treat our future securitization transactions as secured financings."

WFS will host a conference call for analysts and investors at 9 a.m. (PDT) on Wednesday, April 25, 2001. As part of this conference call, WFS management will discuss, at greater length, earnings results for the first quarter as well as management's outlook for the rest of 2001. For a live Internet broadcast of this conference call, go to the company's Web site to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.

About WFS Financial

WFS is one of the nation's largest independent automobile finance companies. WFS specializes in originating, securitizing, and servicing new and used prime and nonprime credit quality automobile contracts through its nationwide relationships with automobile dealers.

Information about WFS can be found at www.wfsfinancial.com.