WFS Financial Inc. has reported record earnings of $17.3 million, or $0.61 per diluted share for the third quarter of 2000 compared with $12.7 million, or $0.49 per diluted share for the same period a year earlier.

On a comparative basis, net income increased 36 percent and earnings per share rose 24 percent. For the nine months ended Sept. 30, 2000, the company recorded net income of $48.2 million, or $1.71 per diluted share compared with $36.4 million, or $1.41 per diluted share for the same period a year ago.

WFS Financial continued to experience considerable origination growth with automobile contract purchases totaling $1.2 billion for the third quarter of 2000. This represents a 29 percent increase from the $906 million of automobile contracts purchased during the third quarter of 1999.

For the year, automobile contract purchases increased $694 million or 27 percent to $3.2 billion compared with $2.5 billion for the same period a year earlier. As a result of higher contract originations, WFS' portfolio of serviced contracts reached $6.5 billion at Sept. 30, 2000, up from $5.4 billion at Dec. 31, 1999.

During the third quarter, WFS sold $1.4 billion of automobile contracts on a whole loan basis to an affiliate of WFS' ultimate parent, Westcorp. As a result of this transaction, WFS recorded a one-time cash gain on sale of $6.0 million. WFS will continue to service these contracts for this affiliate.

"This transaction enhances the regulatory capital levels of our parent, Western Financial Bank, by efficiently utilizing additional capital raised by Westcorp through its rights offering completed last quarter. In turn, we will continue to have the regulatory capital and liquidity support needed for continued origination growth," said Joy Schaefer, CEO.

"We expect that our securitization transactions in the foreseeable future will be structured and accounted for as secured financings."

Annualized credit loss experience for the third quarter increased 11 basis points to 1.93 percent of average serviced automobile contracts compared with 1.82 percent a year earlier. For the nine months ended Sept. 30, 2000, credit loss experience improved 25 basis points to 1.76 percent compared with 2.01 percent a year earlier.

The percentage of outstanding contracts 30 days or more delinquent also improved to 2.4 percent at Sept. 30, 2000 compared with 2.8 percent at Dec. 31, 1999. Total revenues grew 19 percent and 21 percent, respectively for the three months and nine months ended Sept. 30, 2000 to $98.0 million and $272 million compared with $82.7 million and $225 million for the same periods a year earlier. Major components of revenue include:

Net interest income increased to $46.5 million and $129 million for the three and nine months ended Sept. 30, 2000 compared with $25.5 and $70.5 million for the same periods a year earlier. Net interest income has almost doubled as more contracts were held on the balance sheet as the company utilized the liquidity sources provided by its parent and completed $1.5 billion of secured financings.

Servicing income totaled $45.5 million and $129 million for the three and nine months ended Sept. 30, 2000 compared with $37.0 million and $106 million for the same respective periods a year earlier. Servicing income increased as a result of a higher level of contracts serviced.

WFS recorded a cash gain of $6.0 million during the third quarter resulting from a $1.4 billion whole loan sale of automobile contracts. This compares with a $20.3 million non-cash gain on sale of contracts recorded during the same period a year earlier.

For the nine months ended Sept. 30, 2000, cash and non-cash gains totaled $13.7 million compared with $48.5 million of non-cash gains during the same period a year earlier. Total gain on sale of contracts represented only 5 percent of total revenues for the nine months ended Sept. 30, 2000 compared with 22% a year earlier.

The provision for credit losses was $21.4 million and $47.9 million for the three months and nine months ended Sept. 30, 2000 compared with $15.3 million and $31.3 million for the same periods a year ago. The increase in provision for credit losses is the result of a higher level of contracts held on the balance sheet. The allowance for credit losses as a percentage of owned contracts outstanding totaled 2.8 percent and 2.5 percent at Sept. 30, 2000 and Dec. 31, 1999, respectively.

Operating expenses totaled $47.2 million or 3.0 percent of average serviced contracts for the third quarter of 2000 compared with $45.4 million or 3.6 percent for the same period a year ago. For the nine months ended Sept. 30, 2000, operating expenses totaled $142 million or 3.2 percent of average serviced contracts compared with $130 million or 3.7 percent for the same period a year earlier.

On a portfolio basis, WFS earned $20.4 million, or $0.72 per diluted share for the third quarter of 2000 compared with $15.7 million, or $0.61 per diluted share for the same period a year earlier. For the nine months ended Sept. 30, 2000, WFS earned $59.0 million on a portfolio basis, or $2.09 per diluted share, compared with $36.5 million, or $1.41 per diluted share for the same period a year ago.

"Differences between portfolio basis earnings and reported earnings during the year 2000 represent the transitional effect of treating our newer securitization transactions as secured financings rather than sales," said Schaefer.

"We expect that our portfolio basis earnings and reported earnings will ultimately converge up to portfolio basis earnings as we continue to treat our future securitization transactions as secured financings."

WFS is one of the nation's largest independent automobile finance companies. WFS specializes in originating, securitizing, and servicing new and used prime and non-prime credit quality automobile contracts through its nationwide relationships with automobile dealers. Information about WFS can be found at its Website at http://www.wfsfinancial.com.