WFS Financial Inc. on Jan. 21 reported that net income increased 59 percent to $28.6 million or $0.70 per diluted share for the three months ended Dec. 31, 2003, compared with $18.0 million or $0.44 per diluted share for the same period a year ago. For all of 2003, net income increased to a record $162 million or $3.95 per diluted share compared with $82.1 million or $2.05 per diluted share for 2002.

"We achieved outstanding performance in 2003 by focusing on originating prime credit quality contracts and other initiatives to improve earnings," said Tom Wolfe, CEO of WFS Financial. "The success of this strategy is reflected in our improving credit quality which accelerated our earnings performance in the second half of the year. Our earnings guidance for 2004 is net income of approximately $152 million or $3.70 per diluted share. This guidance assumes that we sell approximately $1.5 billion of automobile contracts."

Automobile contract purchases totaled $1.4 billion for the fourth quarter of 2003, a 12 percent increase from the same period a year earlier. For all of 2003, automobile contract purchases rose 10 percent to $6.0 billion compared with $5.4 billion for 2002. As a result of higher contract originations, the company's portfolio of managed automobile contracts reached $10.6 billion at Dec. 31, 2003, up from $9.4 billion a year earlier.

Annualized credit loss experience in the fourth quarter improved 70 basis points to 2.64 percent, compared with 3.34 percent for the same period a year earlier. For the year, credit loss experience improved 17 basis points to 2.60 percent of average managed automobile contracts compared with 2.77 percent for 2002. The percentage of outstanding automobile contracts 30 days or more delinquent improved 60 basis points to 2.90 percent at Dec. 31, 2003 compared with 3.50 percent a year ago.

Net interest income grew 11 percent to $148 million for the fourth quarter compared with $133 million for the same period a year earlier. Net interest margin was 5.82 percent for the fourth quarter compared with 5.85 percent for the same period a year ago.

For the year, net interest income increased 28 percent to $602 million compared with $471 million for 2002. Net interest margin was 5.97 percent for all of 2003 compared with 6.27 percent for 2002. Net interest income increased as automobile contracts increased offset by narrower net interest margins as the Company continued to shift its portfolio to a higher percentage of prime credit quality automobile contracts.

Provision for credit losses totaled $69.6 million for the three months ended Dec. 31, 2003 compared with $85.6 million for the same period a year earlier. For 2003, provision for credit losses totaled $234 million compared with $249 million for the same period a year ago. The decline in provision for credit losses is the result of lower chargeoff experience and the shift in the portfolio to more prime credit quality contracts. The allowance for credit losses as a percentage of owned automobile contracts outstanding was 2.8 percent at Dec. 31, 2003, compared with 2.9 percent a year earlier.

Noninterest income increased 12 percent to $31.8 million for the three months ended Dec. 31, 2003 compared with $28.3 million for the same period a year earlier. For 2003, total noninterest income, which includes cash gain on sale of contracts and other automobile servicing related fee income, increased 19 percent to $142 million compared with $119 million for 2002. The increase was primarily the result of an increase in the level of automobile contracts managed and WFS Financial selling $1.7 billion of automobile contracts to its parent for a cash gain. The company expects to sell approximately $1.5 billion of automobile contracts again in the first quarter of 2004.

Noninterest expense was $62.7 million or 2.4 percent of average managed contracts for the three months ended Dec. 31, 2003 compared with $52.3 million or 2.2 percent for the same period a year earlier. The increase in noninterest expense for the fourth quarter is primarily the result of higher salary related expenses. For 2003, noninterest expense totaled $241 million or 2.4 percent of average managed contracts compared with $213 million or 2.4 percent for 2002.

Earnings Conference Call Held

WFS Financial, along with its parent company, Westcorp, hosted a conference call for analysts and investors on Jan. 22. As part of this conference call, the company's management discussed further the earnings results for the quarter.

For those who could not listen to the live broadcast, a replay is available at www.wfsfinancial.com.

About Westcorp

Westcorp is a financial services holding company whose principal subsidiaries are WFS Financial Inc and Western Financial Bank. Westcorp is a publicly owned company whose common stock is traded on the New York Stock Exchange under the symbol WES.

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

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

Westcorp, through its subsidiary, Western Financial Bank, operates 19 retail bank branches and provides commercial banking services in Southern California. Information on the products and services offered by the bank can be found at www.wfb.com.