Edgar Filing: WESTCORP /CA/

As filed pursuant to Rule 424(b)(5)
under the Securities Act of 1933
Registration No. 333-56492

PROSPECTUS

3,756,831 SHARES

[WESTCORP LOGO]

COMMON STOCK
ISSUABLE UPON EXERCISE OF SUBSCRIPTION RIGHTS
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We are distributing to our shareholders of record as of the close of
business on April 30, 2001 transferable subscription rights to purchase shares
of our common stock at a price of $16.25 per share.

- You will receive one (1) right for each share of our common stock that
you own and for each eight and one-half (8.5) rights that you receive you
will be entitled to purchase one (1) share of common stock.

- If you exercise all of your rights, you will also have the right to
oversubscribe on a pro rata basis for additional shares of our common
stock not purchased by other shareholders.

- Our common stock is traded on the New York Stock Exchange under the
symbol "WES" and the last reported sales price of our common stock on the
New York Stock Exchange on April 25, 2001 was $18.90 per share. The
rights will be listed to trade on the New York Stock Exchange under the
symbol "WES Rt".

- The rights are exercisable beginning on the date of this prospectus and
will expire at 5:00 p.m., Eastern Daylight Time, on May 25, 2001, unless
we extend the expiration date. We will not extend the expiration date, in
any event, beyond June 20, 2001.

- Your exercise of rights is irrevocable. If this offering is terminated or
if you oversubscribe for more shares than are available, your funds will
be returned to you promptly, with interest if you subscribed using
immediately available funds.

- IF ALL OF THE SHARES OFFERED ARE PURCHASED, OUR TOTAL OUTSTANDING SHARES
OF COMMON STOCK WILL BE INCREASED BY 12%. IF YOU DO NOT EXERCISE ANY OF
THE RIGHTS DISTRIBUTED TO YOU, YOUR PERCENTAGE INTEREST AS A SHAREHOLDER
WILL BE DILUTED BY APPROXIMATELY 10.5%.

- ERNEST S. RADY, OUR CHAIRMAN, IS THE BENEFICIAL OWNER OF APPROXIMATELY
67% OF OUR COMMON STOCK. MR. RADY HAS INFORMED US THAT HE INTENDS TO
EXERCISE THE RIGHTS DISTRIBUTED TO HIM AND THAT HE EXPECTS TO ALSO
EXERCISE HIS RIGHT TO OVERSUBSCRIBE.

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Per Share Total
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Offering price: $16.25 $61,048,510
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THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 14 TO READ
ABOUT RISKS THAT YOU SHOULD CONSIDER CAREFULLY BEFORE BUYING SHARES OF OUR
COMMON STOCK.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AUTHORITY OR AGENCY.
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THE DATE OF THIS PROSPECTUS IS APRIL 25, 2001.
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TABLE OF CONTENTS

Page

Prospectus Summary.................. 1
Westcorp.......................... 1
Our Company.................... 1
Automobile Lending
Operations................ 1
Bank Operations.............. 2
The History of Westcorp........ 3
Market and Competition......... 4
Our Business Strategy.......... 5
Our Address.................... 7
The Offering...................... 8
The WFS Rights Offering............. 11
Summary Financial Data............ 12
Risk Factors........................ 14
Risks Related to the Offering..... 14
Risks Related to Us............... 15
Risks Related to Us Arising from
Our Consolidated Operations.... 16
Risks Related to Factors Outside
Our Control.................... 19
Use of Proceeds..................... 21
Dividend Policy..................... 21
The Offering........................ 21
The Rights..................... 21
Basic Subscription Right....... 22
Oversubscription Right......... 22
Subscription Price............. 23
Determination of the
Subscription Price........... 23
Expiration Time and Date....... 23

Page

Plan of Distribution........... 23
Principal Stockholders......... 24
Subscription Procedures........ 24
Subscription Payments.......... 25
Interest on Subscription
Funds........................ 26
Notice of Guaranteed
Delivery..................... 26
No Revocation.................. 27
Method of Transferring
Rights....................... 27
Procedures for DTC
Participants................. 28
Subscription Agent............. 28
Foreign Stockholders;
Stockholders with APO or FPO
Addresses.................... 28
Regulatory Limitation.......... 29
Withdrawal of this Offering.... 29
Issuance of the Common Stock... 29
No Board Recommendation........ 29
No Effect on Stock Options or
Bonus Interests.............. 29
Shares of Common Stock Outstanding
After the Offering................ 29
Material Federal Income Tax
Consequences...................... 30
Legal Matters....................... 31
Experts............................. 31
Forward-Looking Statements.......... 31
Where You Can Find More
Information....................... 32
Incorporation by Reference.......... 32
Material Changes.................... 33

PROSPECTUS SUMMARY

This summary highlights certain information found in greater detail
elsewhere in this prospectus. In addition to this summary, we urge you to read
the entire prospectus carefully, especially the risks of investing in our common
stock discussed under "Risk Factors," before deciding to invest in shares of our
common stock.

WESTCORP

OUR COMPANY

We are a diversified financial services holding company whose principal
business activity is automobile lending. Our operations are conducted through
our two principal subsidiaries, Western Financial Bank, or the Bank, and WFS
Financial Inc, or WFS. We own all of the outstanding shares of the Bank, and the
Bank currently owns 82% of WFS. WFS is concurrently engaged in an offering of
additional shares of its common stock to its shareholders as a result of which
the Bank may increase its percentage ownership of WFS.

The Bank is a federally chartered savings association regulated by the
Office of Thrift Supervision and the Federal Deposit Insurance Corporation. The
banking operations conducted by the Bank do not contribute materially to our
consolidated net income, but the Bank does provide significant liquidity for the
operations of WFS. When we describe in this prospectus our banking activities
and the financial results of those activities, we are referring to the business
conducted by the Bank.

WFS is directly engaged in the business of automobile lending. The primary
source of our consolidated net income is from the business activities of WFS.
When we describe in this prospectus our automobile lending activities and the
financial results of those activities, we are referring to the business
conducted by WFS, our second tier subsidiary, a minority interest in which is
owned by other public investors. Upon consolidation, the activities of the Bank
and of WFS are included in our consolidated income after adjusting the
activities of WFS for the 18% minority interest in WFS held by other public
investors.

AUTOMOBILE LENDING OPERATIONS

Through WFS we are one of the nation's largest independent automobile
finance companies with 28 years of experience in the automobile finance
industry. We originate, service and securitize new and used automobile
installment contracts, which are generated through our relationships with over
8,500 franchised and independent automobile dealers in 42 states. We originated
$4.2 billion of automobile contracts during 2000 and serviced a portfolio of
$6.8 billion of automobile contracts at December 31, 2000.

We provide service to dealers through our nationwide network of business
development representatives. Our business development representatives provide
dealers with a single contact to whom they can sell most of their automobile
contracts. Unlike many of our competitors, we offer programs for both prime and
non-prime borrowers. Approximately 70% of our contract originations are with
borrowers who have strong credit histories, otherwise known as prime borrowers,
and approximately 30% or our contracts are with borrowers who have overcome past
credit difficulties, otherwise known as non-prime borrowers. We do not offer
programs for borrowers who are currently experiencing or recently have
experienced credit difficulties, otherwise known as sub-prime borrowers.
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We underwrite contracts through a credit approval process that is supported
and controlled by a centralized, automated front-end system. This system
incorporates proprietary credit scoring models and industry credit scoring
models and tools, which enhance our credit analysts' ability to tailor each
contract's pricing and structure to maximize risk-adjusted returns. Our
underwriters earn incentives based on the profitability rather than the volume
of the contracts that they purchase.

We structure our business to minimize operating costs while providing high
quality service to our dealers. Those aspects of our business that require a
local market presence are performed on a decentralized basis in our 45 offices.
All other operations are centralized.

We fund our purchases of contracts with deposits raised at the Bank which
are insured by the Federal Deposit Insurance Corporation, or the FDIC, and other
borrowings raised by the Bank. We securitize the contracts we have purchased on
a regular basis. Since 1985, we have securitized over $20 billion of automobile
contracts in 51 public offerings of asset-backed securities, making us the
fourth largest issuer of such securities in the nation. We anticipate that we
will continue to securitize contracts in transactions recorded as secured
financings. We believe that the relationship maintained between our
subsidiaries, WFS and the Bank, provides us a competitive advantage relative to
other independent automobile finance companies by providing a significant source
of liquidity at a low cost and by allowing us the ability to enter the
automobile asset-backed securities market on an opportunistic basis.

To improve our long-term profitability, we restructured our automobile
lending operations in 1998. As a result, we incurred a net loss of $14.7 million
in 1998 due to higher credit losses and a $15.0 million charge related to the
restructuring. The higher credit losses were due to purchasing a higher
percentage of non-prime contracts during 1996 and 1997, as well as servicing
disruptions created by our restructuring. As part of this restructuring, we
closed 96 underperforming offices and reduced our number of employees, whom we
refer to as associates, by approximately 20%.

After this restructuring, we have:

- returned to profitability, realizing record net income of $52.6 million
in 1999 and $74.7 million in 2000, a 42% increase;

- increased operating cash flows from automobile lending operations from
$16.5 million in 1998, to $102 million in 1999 and to $140 million in
2000;

- increased automobile contract originations from $2.7 billion in 1998, to
$3.3 billion in 1999 and to $4.2 billion in 2000;

- increased prime contract originations from 68% in 1998, to 69% in 2000;

- improved the percentage of applications funded to applications received
from 13% for the first quarter of 1998 to 22% for the fourth quarter of
2000;

- lowered automobile lending operating expenses as a percentage of average
serviced contracts from 4.1% in 1998, to 3.6% in 1999 and to 3.1% in
2000; and

- reduced automobile net chargeoffs as a percentage of average serviced
contracts from 3.4% in 1998 to 2.1% in 1999 and to 1.9% in 2000.

BANK OPERATIONS

The Bank's primary focus is to generate diverse, low-cost funds to provide
the liquidity needed to fund our acquisition of automobile contracts. We have
the ability to raise significant amounts of
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liquidity by attracting both short-term and long-term deposits from the general
public, commercial enterprises and institutions by offering a variety of
accounts and rates. These funds are generated through our retail and commercial
banking divisions. We may also raise funds by obtaining advances from the
Federal Home Loan Bank, or the FHLB, selling securities under agreements to
repurchase and utilizing other borrowings.

Our retail banking division serves the needs of individuals and small
businesses by offering a broad range of products, such as demand deposit
accounts, money market accounts, certificates of deposits and other investment
services through 25 retail branches located throughout California. At December
31, 2000 and 1999, the total deposits gathered by the retail banking division
were $2.0 billion. Demand deposits and money market accounts totaled $460
million at December 31, 2000 compared with $477 million and $341 million at
December 31, 1999 and 1998, respectively. At December 31, 2000, demand deposits
and money market accounts represented 23% of our total retail deposits compared
with 24% at December 31, 1999.

Our commercial banking division focuses on small and medium-sized
businesses in southern California, offering loans, lines of credit and trade
finance services, as well as account analysis, cash management and other
commercial depository services in order to attract low-cost commercial deposits.
At December 31, 2000, the commercial banking division had generated $444 million
in deposits compared with $216 million and $80 million at December 31, 1999 and
1998, respectively. Commercial loans outstanding totaled $108 million, $66.9
million and $52.9 million at December 31, 2000, 1999 and 1998, respectively.

We also employ the liquidity generated by the retail and commercial banking
divisions by investing in mortgage-backed securities, also known as MBS, to
generate additional net interest margin, manage interest rate risk, provide
another source of liquidity through repurchase agreements, support community
reinvestment and housing finance and meet regulatory requirements. Net interest
income from bank operations totaled $26.3 million, $46.0 million and $55.7
million for the year ended December 31, 2000, 1999 and 1998, respectively. Net
interest income from bank operations represented 24%, 32% and 21% of total net
interest income for us on a consolidated basis for the same respective periods.

THE HISTORY OF WESTCORP

Western Thrift & Loan Association, a California-licensed thrift and loan
association was founded in 1972. In 1973, we were formed as the holding company
for Western Thrift & Loan Association under the name Western Thrift Financial
Corporation. We later changed our name to Westcorp. In 1982, Westcorp acquired
Evergreen Savings and Loan Association, a California-licensed savings and loan
association, which became our wholly owned subsidiary of Westcorp. The
activities of Western Thrift & Loan Association and Evergreen Savings and Loan
Association were merged together in 1982, and Evergreen Savings and Loan
Association's name was changed ultimately to Western Financial Bank.

Western Thrift & Loan Association was involved in automobile finance
activities from its incorporation until its merger with Evergreen Savings and
Loan Association. At such time, the automobile finance activities of Western
Thrift & Loan Association were continued by the Bank. In 1988, Westcorp
Financial Services, Inc. was incorporated as a wholly owned consumer finance
subsidiary of the Bank to provide non-prime automobile finance services, a
market not serviced by the Bank's automobile finance division.

In 1995, the Bank transferred its automobile finance division to Westcorp
Financial Services and changed its name to WFS Financial Inc. In connection with
that acquisition, the Bank transferred to WFS all assets relating to its
automobile finance division, including the contracts held on balance
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sheet and all interests of the Bank in the excess spread payable from
outstanding securitization transactions. The Bank also transferred all of the
outstanding stock of WFS Financial Auto Loans, Inc., or WFAL, and WFS Financial
Auto Loans 2, Inc., or WFAL2, the securitization entities of the Bank, thereby
making these companies subsidiaries of WFS. In 1995, WFS sold approximately 20%
of its shares in a public offering.

The Bank is subject to examination and comprehensive regulation by the
Office of Thrift Supervision, or OTS, and the FDIC. It is further subject to
certain regulations of the Board of Governors of the Federal Reserve System
which governs reserves required to be maintained against deposits and other
matters. The Bank is also a member of the FHLB of San Francisco, one of twelve
regional banks for federally insured savings and loan associations and banks
comprising the FHLB System. The FHLB System is under the supervision of the
Federal Housing Finance Board. WFS and certain other subsidiaries of the Bank
are further regulated in part by various departments or commissions of the
states in which they do business. Federal statutes and regulations primarily
define the types of loans that the Bank and its subsidiary may originate.

MARKET AND COMPETITION

We believe that the automobile finance industry is the second largest
consumer finance industry in the United States with over $700 billion of loan
and lease originations during 2000. The industry is generally segmented
according to the type of car sold (new versus used) and the credit
characteristics of the borrower (prime, non-prime or sub-prime). Based upon
industry data, we believe that during 2000, prime, non-prime and sub-prime loan
originations in the United States were $448 billion, $140 billion and $112
billion, respectively. The U.S. captive automobile finance companies, General
Motors Acceptance Corporation, Ford Motor Credit Company and Chrysler Credit
Corporation account for up to approximately 30% of the automobile finance
market. We believe that the balance of the market is highly fragmented and that
no other market participant has greater than a 2% market share. Other market
participants include the captive automobile finance companies of other
manufacturers, banks, credit unions, independent automobile finance companies
and other financial institutions.

Our dealer servicing and underwriting capabilities enable us to compete
effectively in the automobile finance market. Our ability to compete
successfully depends largely upon our strong personal relationships with dealers
and their willingness to offer to us those contracts that meet our underwriting
criteria. Our relationship is fostered by the promptness with which we process
and fund contracts as well as the flexibility and scope of the programs we
offer. We purchase the full spectrum of prime and non-prime contracts secured by
both new and used vehicles.

The competition for contracts available within the prime and non-prime
credit quality contract spectrum is more intense when the rate of automobile
sales declines. Although we have experienced consistent growth for many years,
we can give no assurance that we will continue to do so. Several of our
competitors have greater financial resources than we have and may have a
significantly lower cost of funds. Many of these competitors also have
longstanding relationships with automobile dealers and may offer dealers or
their customers other forms of financing or services not provided by us. The
finance company that provides floor planning for the dealer's inventory is also
ordinarily one of the dealer's primary sources of financings for automobile
sales. We do not currently provide financing on dealers' inventories. We must
also compete with dealer interest rate subsidy programs offered by the captive
automobile finance companies. However, frequently those programs are limited to
certain models or to certain loan terms which may not be attractive to many new
automobile purchasers. Also, these programs are rarely offered on used vehicles.
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Competition in the retail banking business comes primarily from commercial
banks, credit unions, savings and loan associations, mutual funds, and from the
corporate and government securities markets. Many of the nation's largest
savings and loan associations and other depository institutions are
headquartered or have branches in California. We compete for deposits primarily
on the basis of interest rates paid and the quality of service provided to our
customers. We do not rely on any individual, group or entity for a material
portion of our deposits.

Competition in the commercial banking business comes primarily from other
commercial banks that maintain a presence in southern California. In general,
many commercial banks are more sizable institutions with larger lending
capacities and depository services. We have differentiated ourselves by
providing high quality service, local relationship management, prompt credit
decisions, and competitive rates on both loans and depository products.

OUR BUSINESS STRATEGY

Our business objective is to maximize long-term profitability by
efficiently purchasing and servicing prime and non-prime credit quality
automobile contracts that generate strong and consistent risk-adjusted returns.
We believe we will be able to achieve this objective by employing our business
strategies:

- produce measured growth in automobile contract originations;

- leverage technology to improve our business;

- effectively price automobile contracts relative to risk; and

- utilize the diverse funding sources of the Bank.

PRODUCE MEASURED GROWTH IN AUTOMOBILE CONTRACT ORIGINATIONS

Over the past five years, we have experienced a compounded annual growth
rate in automobile contract purchases of 23%.

We provide a high degree of personalized service to our dealership base by
marketing, underwriting and purchasing contracts on a local level. Our focus is
to provide each dealer superior service by providing a single source of contact
to meet the dealer's prime and non-prime financing needs. We believe that the
level of our service surpasses that of our competitors by making our business
development representatives available any time a dealer is open, making prompt
credit decisions, negotiating credit decisions within available programs by
providing structural alternatives and funding promptly.

Growth of originations will be primarily through increased dealer
penetration. We intend to increase contract purchases from our current dealer
base as well as develop new dealer relationships. Prior to 1995, we originated
contracts in seven, primarily western states. Subsequently, we increased our
geographic penetration to 35 additional states. Although our presence is well
established throughout the country, we believe that we still have opportunities
to build market share, especially in those states which we entered since 1994.
In addition, we have improved our dealer education and delivery systems in order
to increase the ratio of contracts purchased to the amount of applications
received from a dealer, thereby improving the efficiency of our dealer
relationships. We are also seeking to increase contract purchases through new
dealer programs targeting high volume, multiple location dealers. These programs
focus on creating relationships with dealers to achieve higher contract
originations and improving efficiencies. We also originate loans directly from
consumers on a limited basis. Additionally, we continue to explore other
distribution channels including the Internet and are piloting different
dealer-centric approaches to determine the most effective Internet strategies.
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LEVERAGE TECHNOLOGY TO IMPROVE OUR BUSINESS

We are focused on leveraging technology to improve all aspects of our
business. Over the past four years, we have implemented technology and
streamlined operations to improve credit quality, enhance and manage growth, and
improve operating efficiency. We plan to realize additional benefits with
ongoing investments in the future.

Key technological initiatives implemented to date include our:

- new automated front-end origination system which calculates borrower
ratios, maintains lending parameters and approval limits, accepts
electronic applications and directs applications to the appropriate
credit analyst, all of which have reduced the cost of receiving,
underwriting and funding automobile contracts;

- custom designed proprietary scoring models that rank in order the risk of
loss occurring on a particular automobile contract;

- new behavioral collection system platform utilizing new hardware and
software to improve our ability to queue according to the level of risk,
monitor collector performance and track delinquent automobile accounts;

- centralized and upgraded borrower services department, which includes
remittance processing, interactive voice response technology and direct
debit services;

- centralized imaging system that provides for the electronic retention and
retrieval of account records; and

- second generation data warehouse that provides analytical tools necessary
to evaluate performance of our portfolio by multiple dimensions.

We are currently developing a third generation credit score card to improve
loss severity analytics within our application and an online, Internet-based
credit application process to further enhance our growth.

EFFECTIVELY PRICE AUTOMOBILE CONTRACTS RELATIVE TO RISK

Quality underwriting and servicing are essential to effectively assess and
price for risk and to maximize risk-adjusted returns. We rely on a combination
of credit scoring models, system controlled underwriting policies and the
judgment of our trained credit analysts to make risk-based credit decisions. We
use credit scoring to differentiate applicants and to rank order credit risk in
terms of expected default probability. Based upon this statistical assessment of
credit risk, the underwriter is able to appropriately tailor contract pricing
and structure.

To achieve the return anticipated at origination, we have developed a
disciplined, behavioral, servicing process for the early identification and cure
of delinquent contracts and for loss mitigation. In addition, we provide credit
and profitability incentives to our associates to make decisions consistent with
our underwriting policies by offering bonuses based both on individual and
office-wide performance.

UTILIZE THE DIVERSE FUNDING SOURCES OF THE BANK

The Bank provides diverse, low-cost funds through its retail and commercial
banking divisions as well as its ability to obtain advances from the FHLB, sell
securities under agreements to repurchase and to utilize other borrowing
sources. These significant and diverse sources of funds provide liquidity at a
low cost to fund our automobile contract purchases and allow us to
opportunistically enter the automobile asset-backed securities market.
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OUR ADDRESS

Our principal executive office and mailing address is 23 Pasteur, Irvine,
California 92618-3816, and our telephone number is (949) 727-1002. Our Web site
address is http://www.westcorpinc.com. The information contained in our Web site
does not constitute part of this prospectus.
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THE OFFERING

The Offering............... We are offering to sell 3,756,831 shares of our
common stock upon the exercise of subscription
rights. The subscription rights will be distributed
by first class mail on or about May 2, 2001 to our
holders of record as of the April 30, 2001 record
date. If all of the shares offered are purchased,
our total outstanding shares of common stock will
be increased by 12%.

Record Date................ April 30, 2001.

Subscription Price......... $16.25 per share.

Basic Subscription Right... We are granting each person who was a record holder
of our common stock at the close of business on
April 30, 2001 one right for each share of common
stock held on that date. To exercise your rights,
you must deliver 8.5 rights for each share of
common stock for which you subscribe. There is no
minimum amount of shares you must purchase, but you
may not purchase fractional shares. You will
receive a subscription warrant evidencing your
subscription rights.

When determining the number of shares we will
issue, divide the number of subscription rights you
own, whether distributed to you by us or otherwise
acquired by you, by 8.5 and round down to the next
whole number. For example, if you own 100
subscription rights, you may subscribe for 11
shares (100 subscription rights / 8.5 = 11.76,
rounded down to 11 shares, the next whole number).

Oversubscription Right..... If you fully exercise your rights by subscribing
for the maximum number of whole shares you may
purchase based upon the number of rights you own,
and other shareholders do not fully exercise their
rights, you may elect to purchase additional shares
of common stock. We cannot assure you that any
additional shares of common stock will be available
for purchase. Any amounts tendered by you not used
to purchase additional shares will be promptly
refunded to you, with interest if you subscribed
using immediately available funds. See "The
Offering -- Interest on Subscription Funds".

If shares of common stock are available for
purchase pursuant to this oversubscription right,
but the number of shares is not sufficient to
satisfy in full all oversubscriptions received by
us, the number of shares available will be
allocated on a pro rata basis based upon the number
of rights exercised by each person seeking to
oversubscribe as of the final expiration date of
the offering.

Expiration Date............ The rights will expire on May 25, 2001 at 5:00
p.m., Eastern Daylight Time, unless we decide, in
our sole discretion, to extend the expiration date.
We will not extend the expiration date, in any
event, beyond June 20, 2001.
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Termination................ We may cancel this offering at any time, in which
case we will promptly return your subscription
payment to you, with interest if you subscribed
using immediately available funds. See "The
Offering -- Interest on Subscription Funds".

Exercise of Rights by
Ernst S. Rady............ Ernest S. Rady, our chairman, is the beneficial
owner of approximately 67% of our common stock. Mr.
Rady has informed us that he intends to exercise
the rights distributed to him and that he expects
to also exercise his right to oversubscribe.

If you do not exercise
your Rights.............. If all of the shares of common stock which we are
offering are purchased upon the exercise of basic
subscription rights and oversubscription rights,
our total outstanding shares of common stock will
be increased by 12%. If you do not exercise any of
the rights distributed to you, your percentage
interest as a shareholder will be diluted by
approximately 10.5%.

Exercising Your Rights..... Your rights will be evidenced by a subscription
warrant which will be distributed to stockholders
of record at the close of business on the record
date. You may exercise your rights by properly
completing and signing the subscription warrant and
returning it, with full payment for the shares you
are subscribing for, to the subscription agent by
the expiration date. You may elect to exercise your
basic subscription rights in whole or in part, and
if you exercise your basic subscription rights in
full, your oversubscription rights. See "The
Offering--Subscription Payments" for details about
delivery and payment. Rights not exercised by the
expiration date will be null and void after the
expiration date.

You will receive all shares for which you subscribe
pursuant to your basic subscription rights. If your
oversubscription is not completely filled, we will
send you a check for all shares we were unable to
allocate to you. Interest will be paid on returned
subscription funds if you subscribed using
immediately available funds.

YOUR SUBSCRIPTION IS IRREVOCABLE AFTER YOU SUBMIT
THE SUBSCRIPTION DOCUMENTS.

Transferability of
Rights..................... Your subscription rights are transferable and we
expect that they will trade on the New York Stock
Exchange under the symbol "WES Rt" until the close
of business on the last trading day prior to the
expiration date. You may request that the
subscription agent attempt to sell your rights for
you. The subscription agent must receive your
properly completed and executed subscription
warrant by 11:00 a.m., Eastern Daylight time, on
the third trading day before the expiration date if
you are seeking to sell your rights. We can give
you no assurance that the subscription agent will
be able to sell your rights or as to the price at
which they will be sold.
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Subscription Procedures.... You may exercise your basic subscription rights
and, if you elect to do so as well, your
oversubscription rights by properly completing and
signing the subscription warrant which accompanies
this prospectus. You must then return the completed
and signed subscription warrant with full payment
for the total number of shares you are subscribing
for to Mellon Investor Services LLC, our
Subscription Agent. Your payment may be made by
bank certified check, cashier's check or wire
transfer.

Subscription Agent......... Mellon Bank, N.A.
c/o Mellon Investor Services LLC
85 Challenger Road
Ridgefield Park, New Jersey 07660
Attention: Reorganization Department

Information Agent.......... Mellon Investor Services LLC
44 Wall Street
New York, New York 10005

Stock Certificates......... Certificates representing shares of common stock
will be delivered to subscribers with respect to
the exercise of basic subscription rights within
two business days after the expiration date. We
will deliver certificates representing shares of
common stock allocated with respect to the exercise
of oversubscription rights within ten business days
following the expiration date.

Federal Income Tax
Consequences............. Your receipt or exercise of subscription rights
should not be treated as a taxable event for United
States federal income tax purposes. The purchase or
sale of subscription rights may result in a taxable
gain or loss. Please see "Material Federal Income
Tax Consequences."

Questions.................. If you have any questions about the rights
offering, including questions about subscription
procedures and requests for additional copies of
this prospectus or other documents, please contact
the information agent, Mellon Investor Services
LLC, at (866) 825-8874.

Risk Factors............... An investment in shares of our common stock
involves a high degree of risk. Please see "Risk
Factors."

Use of Proceeds............ The net proceeds of this offering will be used by
us for general corporate purposes and in particular
to finance our growth in automobile contracts
purchased.
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THE WFS RIGHTS OFFERING

WFS, our second tier subsidiary, is currently 82% owned by the Bank, our
first tier subsidiary. The balance of the common stock of WFS is owned by public
investors. The common stock of WFS is traded on the Nasdaq Stock Market(R) under
the symbol WFSI. WFS is concurrently engaged in a rights offering and is
distributing rights to its shareholders of record entitling those shareholders
to purchase up to 6,357,805 newly issued shares of WFS common stock. The Bank,
as the principal shareholder of WFS has informed us and WFS that it intends to
exercise in full its right to subscribe and that it expects to also exercise its
right to oversubscribe. As a result, the Bank expects that it will continue to
own not less than 82% of WFS and that its percentage of ownership may increase
if other shareholders elect not to exercise the rights distributed to them in
full. You will not have any right to purchase shares of WFS through this
offering of Westcorp common stock, but if the percentage of WFS owned by the
Bank increases at the conclusion of the WFS rights offering the indirect
interest of our shareholders in WFS will be correspondingly increased.
11
14

SUMMARY FINANCIAL DATA

The following table presents summary financial data for the years ended
December 31, 2000, 1999, 1998, 1997 and 1996. Since the information in this
table is only a summary and does not provide all of the information contained in
our financial statements, including the related notes, you should read our
Consolidated Financial Statements as incorporated herein by reference.

FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CONSOLIDATED SUMMARY OF OPERATIONS
Interest income........................ $ 583,821 $ 297,616 $ 272,166 $ 270,532 $ 242,388
Interest expense....................... 313,654 153,309 162,350 161,748 139,657
----------- ----------- ----------- ----------- -----------
Net interest income................ 270,167 144,307 109,816 108,784 102,731
Provision for credit losses............ 82,133 38,400 18,960 12,851 13,571
----------- ----------- ----------- ----------- -----------
Net interest income after provision
for credit losses............... 188,034 105,907 90,856 95,933 89,160
Noninterest income..................... 177,643 210,006 128,654 220,278 183,587
Noninterest expense(1)................. 221,191 217,437 247,753 243,016 205,506
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes...... 144,486 98,476 (28,243) 73,195 67,241
Income taxes (benefit)................. 58,132 41,460 (11,330) 31,287 28,095
----------- ----------- ----------- ----------- -----------
Income (loss) before minority
interest............................. 86,354 57,016 (16,913) 41,908 39,146
Minority interest in earnings (loss) of
subsidiaries......................... 11,852 6,522 (2,216) 5,120 7,349
----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary
item................................. 74,502 50,494 (14,697) 36,788 31,797
Extraordinary gain from early
extinguishment of debt, net of tax... 241 2,132
----------- ----------- ----------- ----------- -----------
Net income (loss)...................... $ 74,743 $ 52,626 $ (14,697) $ 36,788 $ 31,797
=========== =========== =========== =========== ===========
OTHER SELECTED FINANCIAL DATA
Book value per share(2)................ $ 15.26 $ 13.26 $ 12.43 $ 13.27 $ 12.23
Weighted average number of shares and
common share
equivalents -- diluted............... 29,525,677 26,505,128 26,305,117 26,351,144 26,199,537
Income (loss) before extraordinary
item................................. $ 2.52 $ 1.91 $ (0.56) $ 1.40 $ 1.21
Extraordinary item..................... 0.01 0.08
Net income (loss) per share --
diluted(2)........................... $ 2.53 $ 1.99 $ (0.56) $ 1.40 $ 1.21
=========== =========== =========== =========== ===========
Dividends per share(2)................. $ 0.30 $ 0.20 $ 0.25 $ 0.40 $ 0.39
Dividend payout ratio.................. 11.9% 10.1% N/A 28.6% 32.2%

------------------------------

(1) Includes $18.0 million in restructuring charges in 1998.

(2) Reflects 5% stock dividend in 1996.
12
15

DECEMBER 31,
------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)

CONSOLIDATED SUMMARY OF FINANCIAL CONDITION
Assets:
Cash and other assets...................... $ 611,088 $ 714,357 $ 728,476 $ 699,237 $ 513,290
Loans:
Consumer(1).............................. 4,309,036 1,516,669 933,010 298,550 290,969
Mortgage(2).............................. 507,431 598,302 1,006,933 1,536,954 1,432,769
Commercial............................... 107,586 66,927 52,940 37,314 7,680
Mortgage-backed securities................. 2,230,448 1,431,376 980,044 941,448 849,548
Investments and time deposits.............. 102,321 171,143 131,417 252,540 240,789
---------- ---------- ---------- ---------- ----------
Total Assets.......................... $7,867,910 $4,498,774 $3,832,820 $3,766,043 $3,335,045
========== ========== ========== ========== ==========
Liabilities:
Deposits................................... $2,478,487 $2,212,309 $2,178,735 $2,000,896 $1,873,942
Notes payable on automobile secured
financings............................... 3,473,377 461,104
FHLB advances and other borrowings......... 616,193 498,901 440,924 563,922 569,357
Amounts held on behalf of trustee.......... 494,858 687,274 528,092 488,653 393,449
Subordinated debt.......................... 189,962 199,298 239,856 239,195 104,917
Other liabilities.......................... 71,221 59,140 94,311 95,088 47,058
---------- ---------- ---------- ---------- ----------
Total Liabilities..................... 7,324,098 4,118,026 3,481,918 3,387,754 2,988,723
Minority interest in equity of
subsidiaries............................. 56,644 28,030 21,857 29,538 28,392
Shareholders' equity....................... 487,168 352,718 329,045 348,751 317,930
---------- ---------- ---------- ---------- ----------
Total Liabilities and Shareholders'
Equity.............................. $7,867,910 $4,498,774 $3,832,820 $3,766,043 $3,335,045
========== ========== ========== ========== ==========
OTHER SELECTED FINANCIAL DATA
Average assets............................... $6,242,668 $3,952,360 $3,859,202 $3,682,781 $3,233,713
Return on average assets..................... 1.20% 1.33% (0.38)% 1.00% 0.98%
Average shareholders' equity................. $ 431,486 $ 337,886 $ 333,298 $ 329,250 $ 308,305
Return on average shareholders' equity....... 17.32% 15.58% (4.41)% 11.17% 10.31%
Equity to assets ratio....................... 6.19% 7.84% 8.58% 9.26% 9.53%
Originations:
Consumer loans........................... $4,232,115 $3,355,732 $2,680,341 $2,337,359 $2,157,556
Mortgage loans........................... 33,124 276,936 2,754,398 2,331,506 1,259,716
Commercial loans......................... 266,342 237,316 124,259 71,399 8,632
---------- ---------- ---------- ---------- ----------
Total originations.................... $4,531,581 $3,869,984 $5,558,998 $4,740,264 $3,425,904
========== ========== ========== ========== ==========
Interest rate spread......................... 4.37% 3.59% 2.83% 2.65% 2.86%

------------------------------

(1) Net of unearned discounts.

(2) Net of undisbursed loan proceeds.
13
16

RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this prospectus before
deciding to invest in shares of our common stock. Our business, operating
results and financial condition could be adversely affected by any of the
following risks. The trading price of our common stock could decline due to any
of these risks, and you could lose all or part of your investment. You should
also refer to the other information set forth in this prospectus, including our
consolidated financial statements and the related notes incorporated herein by
reference.

This prospectus also contains forward-looking statements that involve risks
and uncertainties. These statements relate to our future plans, objectives,
expectations and intentions, and the assumptions underlying or relating to any
of these statements. These statements may be identified by the use of words such
as "expects," "anticipates," "intends," and "plans" and similar expressions. Our
actual results could differ materially from those discussed in these statements.
Factors that could contribute to such differences include, but are not limited
to, those discussed below and elsewhere in this prospectus.

RISK RELATED TO THE OFFERING

IF YOU DO NOT EXERCISE YOUR FULL BASIC SUBSCRIPTION RIGHT, YOUR PERCENTAGE
OWNERSHIP AND VOTING RIGHTS OF WESTCORP WILL DECREASE.

If you choose not to exercise your basic subscription right in full, your
relative ownership interest in Westcorp will be diluted to the extent others
exercise their subscription rights. Your voting rights and percentage interest
in any of Westcorp's net earnings will also be diluted if you do not exercise
your rights in full. We are unable to determine the total number of shares that
will be actually sold in the offering, but, if all of the shares of common stock
which we are offering are purchased upon the exercise of basic subscription
rights and oversubscription rights, our total outstanding shares of common stock
will be increased by 12%. If you do not exercise any of the rights distributed
to you, your percentage interest as a shareholder will be diluted by
approximately 10.5%.

THE OFFERING PRICE WAS DETERMINED BY OUR BOARD OF DIRECTORS AND BEARS NO
RELATIONSHIP TO THE VALUE OF OUR ASSETS, FINANCIAL CONDITION OR OTHER
ESTABLISHED CRITERIA FOR VALUE. OUR COMMON STOCK MAY TRADE AT PRICES ABOVE OR
BELOW THIS PRICE.

Our board of directors determined the offering price after considering a
number of factors including:

- current market price of our stock;

- book value of our stock;

- past operations;

- cash flows;

- earnings;

- our overall financial condition; and

- our future prospects, including specifically the prospects of WFS and the
Bank.

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17

The board of directors did not assign weighting to any one factor in
setting the offering price or determine the offering price through the
application of an objective formula. Rather, our board of directors determined
the offering price subjectively after considering these and other factors. After
the date of this prospectus, our common stock may trade at prices above or below
the offering price.

YOU MAY NOT REVOKE YOUR SUBSCRIPTION EXERCISE AND COULD BE COMMITTED TO BUYING
SHARES ABOVE THE PREVAILING MARKET PRICE.

The public trading market price of our common stock may decline before the
subscription rights expire. If you exercise your subscription rights and,
afterwards, the public trading market price of our common stock decreases below
$16.25, you will have committed to buying shares of common stock at a price
above the prevailing market price. Our common stock is traded on the New York
Stock Exchange under the symbol "WES" and the last reported sales price of our
common stock on the New York Stock Exchange on April 25, 2001 was $18.90 per
share. Once you have exercised your subscription rights, you may not revoke your
exercise unless we amend the offering, in which event you will have the right to
cancel your subscription and promptly receive back any funds you have delivered,
without interest, or to reaffirm your exercise of your subscription rights under
the terms of the offering, as so amended. Moreover, you may be unable to sell
your shares of common stock at a price equal to or greater than the offering
price.

BECAUSE WE MAY TERMINATE THE OFFERING AT ANY TIME, YOUR PARTICIPATION IN THE
OFFERING IS NOT ASSURED.

Once you exercise your subscription rights, you may not revoke the exercise
for any reason unless we amend the offering. We may terminate the offering at
any time. If we decide to terminate the offering, we will not have any
obligation with respect to the subscription rights except to return any
subscription payments, with interest if you subscribed using immediately
available funds. See "The Offering -- Interest on Subscription Funds".

WE HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS FROM THIS OFFERING AND MAY
USE THEM IN WAYS WITH WHICH YOU DISAGREE.

We have not allocated specific amounts of the net proceeds to any
particular growth plans. Accordingly, our management will have significant
flexibility in applying the net proceeds of this offering. The failure of
management to use such funds effectively could have a material adverse effect on
our financial position, liquidity and results of operations by reducing or
eliminating our net income from operations.

RISKS RELATED TO US

THE OWNERSHIP OF OUR COMMON STOCK IS CONCENTRATED, WHICH MAY RESULT IN CONFLICTS
OF INTEREST AND ACTIONS THAT ARE NOT IN THE BEST INTERESTS OF OTHER
STOCKHOLDERS.

Ernest S. Rady is the founder, the chairman of the board of directors and
the chief executive officer of Westcorp. Mr. Rady is also the chairman of the
board of directors of the Bank and WFS. Mr. Rady is the beneficial owner of
approximately 67% of the outstanding shares of common stock of Westcorp and will
be able to exercise significant control over our company. In addition, Mr. Rady
has advised us that he intends to exercise the basic subscription rights
controlled by him in full and also expects to oversubscribe. The exact number of
shares he and the entities he controls will be able to purchase pursuant to
oversubscription rights cannot be determined at this time.

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18

Accordingly, the common stock ownership of Mr. Rady will enable him to
elect all of our directors and effectively control the vote on all matters
submitted to a vote of our stockholders, including mergers, sales of all or
substantially all of our assets and "going private" transactions. Because of the
significant block of common stock controlled by Mr. Rady, decisions may be made
that, while in the best interest of Mr. Rady, may not be in the best interest of
other stockholders.

RISKS RELATED TO US ARISING FROM OUR CONSOLIDATED OPERATIONS

As a holding company, the results of our operations and our financial
condition are dependent upon the business activities of our two principal
consolidated subsidiaries, the Bank and WFS. In this section of this prospectus
we provide information about risks with respect to an investment in our common
stock due to the material affect our subsidiaries activities have on our
consolidated operations and financial condition. While a specific risk may
relate to one or both of the Bank or WFS, the effect of that risk is its impact
on our consolidated operations and financial condition. As a result, the
following are risks of investing in our common stock.

THE AVAILABILITY OF OUR FINANCING SOURCES MAY DEPEND ON FACTORS OUTSIDE OF OUR
CONTROL.

We depend on a significant amount of financing to operate our business. We
employ a business strategy to utilize diverse funding sources to fund our
operations. These sources include raising both short-term and long-term deposits
from the general public, commercial enterprise and institution by offering a
variety of accounts and rates through our retail and commercial banking
operations. In addition, we raise funds though the collection of principal and
interest from loans, automobile asset-backed securities, commercial paper,
advances from the FHLB, repurchase agreements, subordinated debentures and other
borrowings. The sources used vary depending on such factors as rates paid,
maturities, and the impact on capital.

The availability of these financing sources may depend on factors outside
of our control, including regulatory issues such as the capital requirements of
the Bank, debt ratings, competition, a market for automobile asset-backed
securities and our ability to receive financings from other financial
institutions. If we were unable to raise the necessary financing to run our
business, we would have to curtail our loan origination activities, which would
have a material adverse effect on our financial position, liquidity and results
of operations by increasing our interest expense, reducing our interest income
and our ability to remain a preferred source of financing for the dealers from
whom we purchase automobile contracts.

WE MAY NOT BE ABLE TO GENERATE SUFFICIENT OPERATING CASH FLOWS TO RUN OUR
BUSINESS.

Our business requires substantial operating cash flows. Operating cash
requirements include amounts paid to dealers for acquisition of automobile
contracts, expenses incurred in connection with the securitization of automobile
contracts, capital expenditures for new technologies and ongoing operating
costs. Our primary source of operating cash comes from the excess cash flows
received from securitization trusts and loans held on the balance sheet. The
timing and amount of excess cash flow from loans varies based on a number of
factors, including but not limited to:

- the rates of loan delinquencies, defaults and net losses;

- how quickly and at what price repossessed vehicles can be resold;

- ages of the loans in the portfolio; and

- levels of voluntary prepayments.

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19

Any adverse change in these factors could reduce or eliminate excess cash flows
to us. Although we currently have positive operating cash flows, we cannot
assure you that we will continue to generate positive cash flows in the future,
which could have a material adverse effect on our financial position, liquidity
and results of operations by reducing or eliminating our net income from
operations.

CHANGES IN OUR SECURITIZATION PROGRAM COULD ADVERSELY AFFECT OUR LIQUIDITY AND
EARNINGS.

Our business depends on our ability to aggregate and sell automobile
contracts in the form of publicly offered asset-backed securities. These sales
generate cash proceeds that allow us to repay amounts borrowed and to purchase
additional contracts. Changes in our asset-backed securities program could
materially adversely affect our earnings or ability to purchase and resell
automobile contracts on a timely basis. Such changes could include a:

- delay in the completion of a planned securitization;

- negative market perception of us; and

- failure of the contracts we intend to sell to conform to insurance
company and rating agency requirements.

If we are unable to use a securitization program, we may have to curtail
our automobile contract purchasing activities, which would have a material
adverse effect on our financial position, liquidity and results of operations as
a material element of our operations depends upon our remaining a preferred
source of financing for the dealers from whom we purchase automobile contracts.
If we are not considered to be a preferred source of financing by a dealer, that
dealer will sell the automobile contracts of the quality we seek to purchase to
our competitors.

WE DEPEND ON OUR CREDIT ENHANCEMENTS TO MAINTAIN FAVORABLE INTEREST RATES AND
CASH REQUIREMENTS FOR OUR AUTOMOBILE ASSET-BACKED SECURITIZATION TRANSACTIONS.

To date, all but one of our automobile asset-backed securitization
transactions have used credit enhancement in the form of financial guaranty
insurance policies issued by Financial Security Assurance Inc., or FSA. These
insurance policies are currently one of the most effective and least capital
intensive forms of credit enhancement. We use this credit enhancement to achieve
"AAA/ Aaa" ratings on our securitizations for those securities sold to the
public, which reduces the overall costs of a transaction relative to alternative
forms of financing available to us. FSA is not required to insure our
securitizations and we cannot assure you that it will continue to do so or that
our future securitizations will be similarly rated. Likewise, we are not
required to use financial guaranty insurance policies issued by FSA or any other
form of credit enhancement in connection with our securitizations. A downgrading
of FSA's credit rating, FSA's withdrawal of credit enhancement or the lack of
availability of reinsurance or other alternative credit enhancements could
result in higher interest costs for our future securitizations and/or larger
initial spread account deposit requirements if we are unable to obtain similar
policies on similar terms. These events could have a material adverse effect on
our financial position, liquidity and results of operations by increasing the
total costs of our securitization activities and thereby reducing our net
income.

IF WE LOSE OUR REINVESTMENT CONTRACT RELATIONSHIP OR IF OUR REINVESTMENT
CONTRACTS ARE NO LONGER DEEMED ELIGIBLE INVESTMENTS, WE MAY NOT BE ABLE TO
OBTAIN COMPARABLE FINANCING.

We have access to the cash flows of the automobile contracts sold to the
securitization trust in each of the outstanding securitization transactions,
including the cash held in each spread account, through a series of agreements
into which, the Bank, WFS, and WFAL2, and other parties have

17
20

entered. We are permitted to use that cash as we determine, including in the
ordinary business activities of originating contracts.

In each securitization transaction, the securitization agreements require
that all cash flows of the relevant trust and the associated spread accounts be
invested in an eligible investment. The Bank and WFAL2 have entered into a
reinvestment contract in connection with each securitization transaction, which
is deemed to be an eligible investment under the relevant securitization
agreements.

A limited portion of the funds invested in reinvestment contracts may be
used by WFAL2 and the balance may be used by the Bank. The Bank makes its
portion of the invested funds available to WFS through a reinvestment contract.
Under the reinvestment contract with WFS and the Bank, WFS receives access to
all of the cash available to the Bank under each trust reinvestment contract.
WFS is obligated to repay to the Bank an amount equal to the cash it used when
needed by the Bank to meet its obligations under the individual trust
reinvestment contracts. With the portion of the cash available to WFAL2 under
the individual trust reinvestment contracts, WFAL2 purchases contracts from WFS
according to the terms of sale and servicing agreements entered into with WFS.
If the reinvestment contracts were no longer deemed an eligible investment,
which determination could be made by either of the securitization rating
agencies or FSA in their sole discretion, we would no longer have the ability to
use this cash in the ordinary course of business and would need to obtain
alternative financing, which may only be available on less attractive terms. If
we were unable to obtain additional financing, we may have to curtail our
contract purchasing activities, which would also have a material adverse effect
on our financial position, liquidity and results of operations by reducing our
interest income and our ability to remain a preferred source of financing for
the dealers from whom we purchase automobile contracts.

A LOSS OF CONTRACTUAL SERVICING RIGHTS COULD HAVE A MATERIAL EFFECT ON OUR
BUSINESS.

As servicer of all our securitized automobile contracts, we are entitled to
receive contractual servicing fees. Contractual servicing fees are earned at
rates ranging from 1.0% to 1.25% per annum on the outstanding balance of
contracts securitized. FSA, as guarantor, can terminate our right to act as
servicer upon the occurrence of events defined in the sale and servicing
agreements for securitized contracts, such as our bankruptcy or material breach
of warranties or covenants. Any loss of such servicing rights could have a
material adverse effect on our financial position, liquidity and results of
operations by reducing our net income upon the elimination of that contractual
servicing income.

WE EXPECT OUR OPERATING RESULTS TO CONTINUE TO FLUCTUATE, WHICH MAY ADVERSELY
IMPACT OUR BUSINESS AND OUR STOCKHOLDERS.

Our results of operations have fluctuated in the past and are expected to
fluctuate in the future. Factors that could affect our quarterly earnings
include but are not limited to:

- variations in the volume of loans originated, which historically tends to
be lower in the first and fourth quarters of the year;

- interest rate spreads;

- the effectiveness of our hedging strategies;

- credit losses, which historically tend to be higher in the first and
fourth quarters of the year; and

- operating costs.

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21

FAILURE TO IMPLEMENT OUR BUSINESS STRATEGY COULD ADVERSELY AFFECT OUR
OPERATIONS.

Our financial position and results of operations depend on our ability to
execute our business strategy, which includes the following key elements:

- producing measured growth in contract originations;

- leveraging technology to improve our business;

- effectively pricing contracts relative to risk; and

- utilizing the diverse funding sources of the Bank.

Our failure or inability to execute any element of our business strategy could
materially adversely affect our financial position, liquidity and results of
operations.

WE HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS FROM THIS OFFERING AND MAY
USE THEM IN WAYS WITH WHICH YOU DISAGREE.

RISKS RELATED TO FACTORS OUTSIDE OUR CONTROL

WE MAY BE UNABLE TO SUCCESSFULLY COMPETE IN OUR INDUSTRY.

The auto finance business is highly competitive. We compete with captive
auto finance companies owned by major automobile manufacturers, banks, credit
unions, savings associations and independent consumer finance companies that
conduct business in the geographic regions in which we operate. Many of these
competitors have greater financial and marketing resources than we have.
Additionally, on occasion the captive finance companies provide financing on
terms significantly more favorable to auto purchasers than we can offer. For
example, the captive finance companies can offer special low interest loan
programs as incentives to purchasers of selected models of automobiles
manufactured by their respective parent manufacturers.

Many of our competitors also have long standing relationships with
automobile dealers and may offer dealers or their customers other forms of
financing, including dealer floor plan financing and leasing, which we do not
provide. Providers of automobile financing have traditionally competed on the
basis of interest rates charged, the quality of credit accepted, the flexibility
of loan terms offered and the quality of service provided to dealers and
customers. In seeking to establish ourself as one of the principal financing
sources of the dealers we serve, we compete predominately on the basis of our
high level of dealer service and strong dealer relationships and by offering
flexible loan terms.

Competition in the retail banking business comes primarily from commercial
banks, credit unions, savings and loan associations, mutual funds, and issuers
of securities. Many of the nation's largest savings and loan associations and
other depository institutions are headquartered or have branches in California.
We compete for deposits primarily on the basis of interest rates paid and the
quality of service provided to our customers. We do not rely on any individual,
group or entity for a material portion of our deposits.

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22

LEGAL AND REGULATORY REQUIREMENTS MAY RESTRICT OUR ABILITY TO DO BUSINESS.

The Bank is subject to inspection and regulation by the OTS, the primary
federal banking agency responsible for the supervision and regulation of the
Bank. The most significant impact of such regulation and supervision is that
absent approval by the OTS, we are precluded from holding consumer loans,
including contracts, on the consolidated balance sheet of the Bank, in an
aggregate principal balance in excess of 30% of the total consolidated assets of
the Bank. The limitation is increased to 35% of the Bank's consolidated assets
if all of the consumer loans in excess of the 30% limit are obtained by the Bank
and its subsidiaries directly from consumers. Our securitization activities,
however, enable us to remove securitized contracts from the Bank's balance sheet
for regulatory purposes. As a result, those securitized contracts are not
included in the calculation of the percentage of the Bank's consolidated assets
subject to either the 30% or 35% limitation on consumer loans.

If we are unable to continue to securitize the automobile contracts we
purchase this regulatory limitation may force us to limit our acquisition of new
automobile contracts, thereby adversely affecting our ability to remain a
preferred source of financing for the dealers from whom we purchase automobile
contracts.

THE ADOPTION OF REGULATIONS PROPOSED BY THE OTS AND THE RECENT PUBLICATION OF
GUIDANCE MAY AFFECT CAPITAL REQUIREMENTS FOR THE BANK.

The OTS, with the other federal banking agencies, has proposed new
regulations relating to the amount of capital that must be held by the Bank with
respect to residual interests arising from the sale or other transfer of
financial assets. These regulations, as proposed, will require institutions that
have these residual interests to hold capital against the full value of the
residual interests and will also require that amounts of these residual
interests in excess of certain specified limits be deducted from capital. As a
result, the regulation as proposed would require that the Bank hold higher
levels of capital as a result of its consolidated ownership of these residual
interests. The OTS has also proposed a new regulation that, if adopted, would
require us to give the OTS notice of certain transactions between the Bank and
us or our non-Bank subsidiaries. If the transaction is one that falls within the
limits of this proposed regulation, the OTS reserves the right to either limit
or preclude the transaction or to permit it only upon conditions, including that
additional capital be held by us as a savings and loan holding company or by the
Bank.

The OTS, along with other federal banking regulatory agencies, has adopted
guidance pertaining to subprime lending programs. Pursuant to the guidance,
lending programs which provide credit to borrowers whose credit histories
reflect specified negative characteristics, such as bankruptcies or payment
delinquencies, are deemed to be subprime lending programs. Pursuant to the
guidance, examiners may require that an institution with a subprime lending
program hold additional capital, typically one and one-half to three times the
normal capital required for similar loans made to borrowers who are not subprime
borrowers, although institutions whose subprime loans are well secured and well
managed may not be required to hold additional capital.

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23

We cannot predict whether the regulations discussed above will be adopted
as proposed, whether any grandfather or phase-in features will be included in
the regulations as adopted or when the regulations, if adopted in any form, will
become effective. We also cannot predict whether we will be required, following
our next examination, to hold additional capital with respect to those contracts
we hold as to which the borrowers are subprime borrowers. To the extent that
either the regulations, if adopted, or the guidance, as implemented, require the
Bank to raise and continue to maintain higher levels of capital, our earnings
may be affected by our inability to invest our assets to a greater extent in
higher income producing assets.

USE OF PROCEEDS

We expect to receive net proceeds from the sale of 3,756,831 shares of
common stock offered by us pursuant to this rights offering of approximately
$61.0 million, assuming that all shares offered are purchased. The purpose of
the offering is to provide us with additional capital for general corporate
purposes and in particular to fund our growth, including increasing the amount
of automobile contracts we can acquire and hold prior to a sale or financing
transaction in the asset-backed securities market.

DIVIDEND POLICY

We paid cash dividends of $0.30, $0.20, and $0.25 per share for the years
ended December 31, 2000, 1999 and 1998, respectively. On December 14, 2000, we
declared a cash dividend of $0.10 per share for shareholders of record as of
February 1, 2001, which dividend was paid on February 15, 2001. We cannot assure
you that our dividend policy will not change in the future.

THE OFFERING

THE RIGHTS

We are offering our shareholders the right to subscribe for and purchase
3,756,831 shares of common stock at $16.25 per share. Only those shareholders of
record who own common stock at the close of business on April 30, 2001 will
receive subscription rights directly from us to purchase stock in the rights
offering. The subscription rights are transferable and any person who acquires
subscription rights before the May 25, 2001 expiration date may exercise these
subscription rights. You are a record holder for this purpose only if your name
is registered as a shareholder with our transfer agent, Mellon Investor Services
LLC, as of the April 30, 2001 record date. We are distributing a subscription
warrant with this prospectus. The subscription warrant will evidence your
subscription rights and will indicate how many rights you are receiving from us.
If you execute a subscription warrant you are agreeing that your exercise of
rights is on the terms and subject to the conditions specified in this
prospectus.

When determining the maximum number of shares which you may purchase,
divide the number of subscription rights you own, whether distributed to you by
us or otherwise acquired by you, by 8.5 and round down to the next whole number.
For example, if you own 100 subscription rights, you may subscribe for 11 shares
(100 subscription rights / 8.5 = 11.76, rounded down to 11 shares, the next
whole number). We will not pay cash for or issue fractional rights. You may not
divide a subscription warrant in such a way as to permit you to receive a
greater number of rights than you are otherwise entitled to receive. However, a
depository, bank, trust company or securities broker or dealer holding shares of
our common stock for more than one beneficial owner, may, upon proper showing to
the

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Subscription Agent, exchange its subscription warrant to obtain several
subscription warrants for the number of rights to which all such beneficial
owners in the aggregate would have been entitled had each beneficial owner been
a holder of record.

BASIC SUBSCRIPTION RIGHT

We are distributing to each record holder one right for each share of
common stock held as of the close of business on the April 30, 2001 record date.
If you hold rights, you may purchase one share of common stock for each 8.5
rights that you hold. You may combine rights you have received from us with
rights that you have purchased from other shareholders. There is no minimum
number of shares you must purchase upon the exercise of your rights, but you may
not purchase fractional shares. This is your Basic Subscription Right. If you
subscribe for shares by tendering immediately available funds, you will receive
interest on your subscription funds as described below under "The
Offering -- Interest on Subscription Funds".

OVERSUBSCRIPTION RIGHT

If you fully exercise your Basic Subscription Right with respect to all the
rights you hold, you may subscribe for additional shares of our common stock.
This Oversubscription Right will be available to the extent that other rights
holders do not exercise their Basic Subscription Right in full. If you wish to
exercise your Oversubscription Right, you must specify the maximum number of
additional shares you want to purchase, and you must submit the full
subscription price for those shares to the Subscription Agent. If you wish to
exercise your Oversubscription Right, you must do so at the same time you fully
exercise your Basic Subscription Right.

If we receive subscriptions, including oversubscriptions, for more than the
3,756,831 shares offered hereby, then we will allocate the available shares as
follows:

- first, subscribing rights holders who exercise their Basic Subscription
Rights, in whole or in part, will receive the shares to which they have
subscribed, and

- second, subscribing rights holders who exercise their Oversubscription
Rights, will receive shares in proportion to the number of shares each
such holder has purchased pursuant to their Basic Subscription Rights,
subject to the elimination of fractional shares. If you are not allocated
the full amount of shares that you subscribed for pursuant to your
Oversubscription Right, you will receive a refund (without interest) of
the subscription price that you delivered for those shares of our common
stock that are not allocated to you. The Subscription Agent will mail
refunds after the expiration of the offering.

For purposes of determining whether you have exercised your Basic
Subscription Right in full, only Basic Subscription Rights held by you in the
same capacity will be considered. For example, if you hold shares of our common
stock as an individual and you exercise your Basic Subscription Right in full
with respect to those shares, you may exercise your Oversubscription Right with
respect to those shares, even if you do not exercise your Basic Subscription
Right with respect to shares held jointly with your spouse or shares in a
retirement account.

In order to exercise the Oversubscription Right, banks, brokers and other
nominee rights holders who exercise the Oversubscription Right on behalf of
beneficial owners must certify to the Subscription Agent and to us with respect
to each beneficial owner:

(1) the number of shares held on the April 30, 2001 record date;

(2) the number of rights exercised pursuant to the Basic Subscription
Right;

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(3) that the holder has exercised its Basic Subscription Right in
full; and

(4) the number of shares subscribed for pursuant to the
Oversubscription Right.

SUBSCRIPTION PRICE

The subscription price is $16.25 per share, payable in cash. If this
offering is terminated or if you oversubscribe for more shares than are
available, your funds will be returned to you promptly, with interest if you
subscribed using immediately available funds.

DETERMINATION OF THE SUBSCRIPTION PRICE

Our board of directors determined the subscription price on April 25, 2001.
The subscription price represents a discount of $2.65 from the closing market
price of a share of the common stock on the date the price was determined. The
last reported sales price of the common stock on the NYSE on April 25, 2001 was
$18.90 per share. In setting the subscription price, the board of directors
considered, among other things, the factors set forth above under "Risks Related
to the Offering--The offering price was determined by our Board of Directors and
bears no relationship to the value of our assets, financial condition, or other
established criteria for value. Our common stock may trade at prices above or
below this price".

EXPIRATION TIME AND DATE

This offering will expire at 5:00 p.m., Eastern Daylight Time, on May 25,
2001, unless we extend the offering. We will not extend the expiration date, in
any event, beyond June 20, 2001. If we extend the expiration date, we will issue
a press release on the first day the New York Stock Exchange is open for trading
after the most recent expiration date. We will also file a copy of the press
release with the SEC under cover of a Form 8-K. The Form 8-K and the press
release as an exhibit to that Form 8-K will be available on the SEC's web site,
www.sec.gov. After the expiration of the offering, all unexercised rights will
be null and void. We will notify you of any extension of the expiration by
issuing a press release. We will not be obligated to honor any purported
exercise of rights which the Subscription Agent received after the expiration of
the offering, regardless of when you sent the documents relating to that
exercise, unless you used the guaranteed delivery procedures described below.

PLAN OF DISTRIBUTION

The rights will be distributed to our holders of record as of the April 30,
2001 record date, by mail, on or about May 2, 2001. It is our expectation that
holders of record which hold shares of our common stock for beneficial owners
will forward a copy of this prospectus and the related subscription information
and forms to those beneficial holders in adequate time to permit beneficial
holders to complete and deliver the Form of Instructions by Beneficial Owners to
Brokers or Other Nominees as to their investment decisions. We have engage
Mellon Investor Services LLC as our Subscription Agent to assist in the
distribution of the rights and of this prospectus and the related subscription
information and forms. Mellon Investor Services LLC, as our Subscription Agent,
will process all subscription warrants from our holders of record and will
distribute certificates for the shares of our common stock purchased by each
holder of record upon the expiration of this offering. See "The
Offering--Issuance of the Common Stock."

We have not engaged an underwriter to conduct a distribution of shares not
purchased upon the exercise of the rights we are distributing, as we anticipate
that our shareholders will purchase all of the shares offered hereby, although
we cannot give you any assurance that will be the case.

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PRINCIPAL STOCKHOLDERS

As of April 5, 2001, Ernest S. Rady, our chairman, beneficially owned
approximately 67% of the outstanding common stock, and will thus receive rights
to subscribe for approximately 2.7 million shares in this offering. Mr. Rady has
informed us that he intends to exercise his Basic Subscription Right and that he
expects to also exercise his Oversubscription Right, although Mr. Rady has not
committed to oversubscribe for all shares not otherwise subscribed for by other
shareholders. Depending upon the number of shares purchased by others, upon the
completion of this offering Mr. Rady will beneficially own not less than 67
percent of our outstanding common stock and that percentage may increase if
other shareholders elect not to exercise as large a percentage of their
Oversubscription Right as Mr. Rady. Neither we nor Mr. Rady have any plans to
market Westcorp or any major assets or subsidiary of Westcorp.

As of April 5, 2001, our Employee Stock Ownership and Salary Savings Plan
was the owner of 1.4 million shares of our common stock. Our board of directors
has determined to make a contribution to the plan of up to $6.5 million to
enable the plan and its participants to exercise their subscription rights.

SUBSCRIPTION PROCEDURES

In order to exercise rights, you must:

(1) complete and sign your subscription warrant (with any signatures
guaranteed if required, as described below); and

(2) deliver the completed and signed subscription warrant, together
with payment in full of the subscription price for each share for which you
subscribe (See "The Offering--Subscription Payments") to the Subscription
Agent before the expiration of the offering, unless delivery of the
subscription warrant is effected pursuant to the guaranteed delivery
procedures described below.

If you do not indicate the number of shares to be subscribed for on your
subscription warrant or guarantee notice (as applicable), or if you indicate a
number of shares that does not agree with the aggregate subscription price
payment you delivered, you will be deemed to have subscribed for the maximum
number of whole shares that may be subscribed for, under both the Basic
Subscription Right and the Oversubscription Right for the aggregate purchase
price you delivered.

If you subscribe for fewer than all of the shares represented by your
subscription warrant you will generally be able to:

(1) direct the Subscription Agent to attempt to sell your remaining
rights; or

(2) receive from the Subscription Agent a new subscription warrant
representing your unused rights. See "The Offering--Method of Transferring
Rights" below.

Your signature on each subscription warrant you deliver must be guaranteed
by a bank, broker, dealer, credit union, national securities exchange,
registered securities association, clearing agency or savings association,
unless:

(1) the shares to be issued are to be issued to the registered holder
of the rights, as indicated on the subscription warrant; or

(2) the subscription warrant is submitted for the account of a member
firm of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc.,

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or a commercial bank or trust company having an office or correspondent in
the United States exercising for your account.

If you hold shares of our common stock for the account of others, you
should contact the respective beneficial owners of those shares as soon as
possible to receive their investment decision and to obtain instructions and
certifications with respect to their rights. If you are so instructed by a
beneficial owner, you should complete the appropriate subscription warrant and,
should the beneficial holder wish to exercise the Oversubscription Right, the
related nominee holder certification, a form of which is included in the
instructions distributed with the subscription warrants. You should submit these
to the Subscription Agent with the proper payment.

If you are a beneficial owner whose shares of our common stock are held for
your account by another, you should give your instructions regarding your
investment decision as to the rights attached to those shares to that holder.

You should carefully read the instructions accompanying the subscription
warrant and follow them closely. You should send your subscription warrant, with
any payment, to the Subscription Agent. Do not send your subscription warrants
to us.

The method of delivery of the subscription warrant and the payment of the
subscription price to the Subscription Agent is at your election and risk. If
you send your subscription warrant and payments by mail, they should be sent by
registered mail, properly insured. You should also allow sufficient time to
ensure delivery to the Subscription Agent and clearance of payment prior to the
expiration time.

We will determine all questions concerning the timeliness, validity, form
and eligibility of any exercise of rights, which determinations will be final
and binding. In our sole discretion, we may waive any defect or irregularity, or
permit a defect or irregularity to be corrected, or reject the purported
exercise of any right because of any defect or irregularity. Neither the
Subscription Agent nor we are under any duty to notify you of any such defect or
irregularity, and will not be held liable for any failure to notify you of any
such defect or irregularity. We also reserve the right to reject any exercise if
it is not in accordance with the terms of this offering, not in proper form or
if it could be deemed unlawful or materially burdensome. See "The
Offering--Regulatory Limitation" below.

You should direct any questions or requests for assistance concerning the
method of exercising rights, or requests for additional copies of this
prospectus supplement and the accompanying prospectus, the instructions or the
notice of guaranteed delivery, to the Subscription Agent, Mellon Investor
Services LLC, 44 Wall Street, 7th Floor, New York, New York 10005 (telephone:
(866) 825-8874).

If you do not exercise your rights prior to 5:00 p.m. Eastern Daylight Time
on the May 25, 2001, expiration date, as that date may be extended, they will
expire and be null and void. See "The Offering -- Expiration Date" above.

SUBSCRIPTION PAYMENTS

You must pay for all shares you subscribe for by:

(1) check or bank draft drawn upon a United States bank, or postal,
telegraphic or express money order, payable to Mellon Investor Services LLC
as Subscription Agent; or

(2) by wire transfer of funds to the account which the Subscription
Agent maintains for this purpose at the Chase Manhattan Bank, New York, NY,
ABA No. 021-000-021, Mellon

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Investor Services, LLC, MISC Reorg. Control A/C 323-885489 WESTCORP, Attn:
Evelyn O'Connor, telephone number (201) 296-4515.

The subscription price will be considered received by the Subscription
Agent only upon:

(1) clearance of an uncertified check;

(2) receipt by the Subscription Agent of a certified or cashier's
check or bank draft drawn upon a United States bank or of a postal,
telegraphic or express money order; or

(3) receipt of funds wired to the Subscription Agent's account
designated above.

Funds paid by uncertified personal check may take several business days to
clear. Accordingly, if you wish to pay the subscription price by uncertified
personal check, you should make payment sufficiently in advance of the
expiration date to ensure its receipt and clearance by that time. To avoid
disappointment caused by a failure of your subscription due to your payment not
clearing prior to the May 25, 2001 expiration date, we urge you to consider
payment by means of certified or cashier's check, money order or wire transfer
of funds. We highly recommend that if you intend on paying the subscription
price by personal check, your subscription payment must be received by the
Subscription Agent no later than seven (7) business days prior to the expiration
date, as extended. If your check does not clear before the expiration date, as
extended, you will not receive any shares, and our only obligation will be to
return your subscription payment, without interest.

INTEREST ON SUBSCRIPTION FUNDS

We have entered into an agreement with the Subscription Agent that will
permit interest to be paid to subscribing holders of the rights, subject to the
limitations described in this section of the prospectus. The Subscription Agent
will pay interest on immediately available funds tendered in connection with the
exercise of Basic Subscription Rights and Oversubscription Rights. Immediately
available funds for this purpose are funds tendered by you in the form of

- certified or cashier's check or bank draft drawn upon a United States
bank,

- United States postal, telegraphic or express money order, or

- wire transfer to the Subscription Agent's account designated above.

Subscription funds tendered by uncertified personal check will not accrue
interest and no interest will be paid on those funds.

Interest will accrue on immediately available funds beginning upon the date
of their receipt by the Subscription Agent, through the day prior to the day on
which funds are delivered to us following the expiration date of this offering,
or the termination date if we terminate the offering. Interest accrued, less a
service fee charged pro rata to all immediately available funds tendered, will
be disbursed by the Subscription Agent promptly after the expiration date. No
assurance can be given as to the effective interest rate which will be earned on
subscription funds which are immediately available funds, as the effective
interest rate will be affected by the amount of the service fee and the service
fee will be the sum of a fixed amount and a percentage of all interest earned.

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NOTICE OF GUARANTEED DELIVERY

If you wish to exercise your rights, but you will not be able to deliver
your subscription warrant to the Subscription Agent prior to the expiration of
the offering, you may nevertheless exercise the rights if:

(1) before the expiration of the offering, the Subscription Agent
receives:

(a) payment for each share you subscribe for pursuant to your Basic
Subscription Right and, if applicable, your Oversubscription Right and

(b) a guarantee notice from a member firm of a registered national
securities exchange or a member of the National Association of
Securities Dealers, Inc. or from a commercial bank or trust company
having an office or correspondent in the United States, guaranteeing the
delivery to the Subscription Agent of the subscription warrant
evidencing the rights to be exercised within three (3) NYSE trading days
following the date of that notice; and

(2) within this three (3) NYSE trading day period, the Subscription
Agent receives the properly completed subscription warrant with any
signatures guaranteed as required.

You may deliver the guarantee notice referred to above to the Subscription
Agent in the same manner as you would deliver the subscription warrant. Eligible
institutions may deliver the notice of guaranteed delivery by telegram or
facsimile transmission (telecopier no. (201) 296-4293). To confirm facsimile
deliveries, please call (201) 496-4860. You should refer to the form titled
"Notice of Guaranteed Delivery," which is provided with the "Instructions as to
Use of Subscription Warrants" distributed with the subscription warrant for the
information and representations required in the guarantee notice.

NO REVOCATION

Once you have exercised your Basic Subscription Right and, if you so elect,
your Oversubscription Right, you may not revoke that exercise unless we elect to
amend the offering. If we elect to amend the offering, you will have the right
to cancel your subscription and promptly receive back any funds you have
delivered, with interest if you subscribed using immediately available funds, or
to reaffirm your exercise of your subscription rights under the terms of the
offering as so amended.

METHOD OF TRANSFERRING RIGHTS

We anticipate that the rights will trade on the NYSE under the symbol "WES
Rt" and may be purchased and sold through usual investment channels until the
close of business on the last trading day prior to the May 25, 2001 expiration
date, as that date may be extended.

You may transfer all of the rights evidenced by a single subscription
warrant by endorsing the subscription warrant for transfer in accordance with
the accompanying instructions. You may transfer a portion of the rights
evidenced by a single subscription warrant, but not fractional rights, by
delivering to the Subscription Agent a subscription warrant properly endorsed
for transfer, with instructions to register that portion of the rights indicated
in the name of the transferee and to issue to it a new subscription warrant
evidencing the transferred rights. In that event, a new subscription warrant
evidencing the balance of the rights will be issued to you or, if you so
instruct, to an additional transferee, or will be sold by the Subscription Agent
in the manner described below upon your instructions.

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You may also sell any of the rights evidenced by a subscription warrant
through the Subscription Agent by delivering to it the subscription warrant
properly executed for sale by the Subscription Agent. If you wish to have the
Subscription Agent sell only a portion of the rights evidenced by a single
subscription warrant, you should instruct the Subscription Agent regarding the
action to be taken with respect to the rights that you do not want to be sold.
The Subscription Agent must receive your order to sell rights at or prior to
11:00 a.m., Eastern Daylight time, on the third trading day before the May 25,
2001 expiration date. Promptly following the expiration date, the Subscription
Agent will send you a check for the net proceeds from the sale of any rights
sold on your behalf. If the Subscription Agent is able to sell any rights, the
sale price will be the weighted average sale price of all rights sold by the
Subscription Agent, less expenses. The Subscription Agent's obligation to
execute orders is subject to its ability to find buyers, and if it cannot fill
all sale orders, sale proceeds will be prorated based on the number of rights
each holder has asked the Subscription Agent to sell. If any of your rights
cannot be sold by the Subscription Agent by 5:00 p.m., Eastern Daylight time, on
the third trading day before the expiration date, they will be returned to you
promptly by mail.

You should take into account that transfers, particularly those requiring
the issuance of a new subscription warrant, can take several business days.
Neither we nor the Subscription Agent will have any liability if a subscription
warrant or any other required document is not received in time for exercise or
sale prior to the expiration date.

You will be issued a new subscription warrant upon the partial exercise or
sale of rights only if the Subscription Agent receives a properly endorsed
subscription warrant before 5:00 p.m., Eastern Daylight time, on the third
trading day before the expiration date. Unless you make other arrangements with
the Subscription Agent, a new Subscription Warrant issued after 5:00 p.m.,
Eastern Daylight time, on the fifth business day before the expiration of the
offering will be held for pick-up at the Subscription Agent's hand delivery
address. You assume all risk associated with the delivery of a newly issued
subscription warrant.

You are responsible for all commissions, fees and other expenses, including
brokerage commissions and transfer taxes, incurred in connection with the
purchase, sale or exercise of rights.

PROCEDURES FOR DTC PARTICIPANTS

We anticipate that the rights will be eligible for transfer, and the
exercise of the Basic Subscription Right and the Oversubscription Right may be
effected through the facilities of The Depository Trust Company, or DTC.

SUBSCRIPTION AGENT

The Subscription Agent is Mellon Bank, NA. The Subscription Agent's
address, to which you must make any required deliveries, is:

If by mail: If by hand: If by overnight courier:
Mellon Investor Services LLC Mellon Investor Services LLC Mellon Investor Services LLC
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road-
South Hackensack, NJ 07606 New York, NY 10271 Mail Drop-Reorg
Attn: Reorganization Attn: Reorganization Ridgefield Park, NJ 07660
Department Department Attn: Reorganization Department

Facsimiles to the Subscription Agent should be sent to (201) 296-4293. If
you send a facsimile to the Subscription Agent, you should confirm that your
facsimile has been received by contacting the Subscription Agent. The telephone
number to confirm receipt of facsimiles is (201) 496-4860.

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We will pay the fees and expense of the Subscription Agent (except for fees
and expenses relating to the sale of rights by the Subscription Agent and the
calculation, allocation and delivery of interest on immediately available
funds), and have agreed to indemnify the Subscription Agent against certain
liabilities that it may incur in connection with this offering.

FOREIGN STOCKHOLDERS; STOCKHOLDERS WITH APO OR FPO ADDRESSES

If you are a holder of record and your address is outside the United
States, or if you have an APO or FPO address, a subscription warrant will not be
mailed to you, but rather will be held by the Subscription Agent for your
account. To exercise the rights, you must notify the Subscription Agent prior to
11:00 a.m., Eastern Daylight time, on the second trading day before the May 25,
2001 expiration date, at which time, if no contrary instructions have been
received, the Subscription Agent will try to sell the rights. If your rights can
be sold, the Subscription Agent will send you a check for the proceeds (based on
the weighted average price of all rights sold by the Subscription Agent and less
expenses) by mail. If the Subscription Agent does not know your address or
cannot contact you, it will hold the proceeds from sale of your rights in a
non-interest bearing account. Any amount remaining unclaimed on the second
anniversary of the date of this prospectus will be turned over to us.

REGULATORY LIMITATION

We will not be required to issue shares pursuant to this offering to anyone
who, in our opinion, would be required to obtain prior clearance or approval
from any state or federal regulatory authorities to own or control such shares
if such clearance or approval has not been obtained at the expiration of this
offering.

WITHDRAWAL OF THIS OFFERING

We reserve the right to withdraw this offering for any reason and at any
time prior to 5:00 p.m. Pacific Daylight Time on the May 25, 2001 expiration
date, in which event we will cause all funds received to be promptly returned,
with interest if you subscribed using immediately available funds.

ISSUANCE OF THE COMMON STOCK

The Subscription Agent will issue to you certificates representing shares
purchased in this offering as soon as practicable after the expiration date. The
Subscription Agent will retain all funds delivered to it in payment of the
subscription price until such certificates are issued. If you are allocated less
than all the shares for which you subscribed, the Subscription Agent will return
excess funds to you, with interest if you subscribed using immediately available
funds, as soon as practicable after the Expiration Date. You will have no rights
as a shareholder with respect to shares subscribed for until the certificates
are issued.

NO BOARD RECOMMENDATION

In making any investment decision to exercise or transfer rights, you must
consider your own best interests. None of the members of the board of directors
makes any recommendation as to whether you should exercise or transfer your
rights.

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NO EFFECT ON STOCK OPTIONS OR BONUS INTERESTS

No adjustments will be made in connection with the rights offering to any
options or bonus interests issued by us under our stock incentive plans or our
senior management bonus plan or to the number of shares reserved for issuance
under any of our stock incentive plans.

SHARES OF COMMON STOCK OUTSTANDING AFTER THE OFFERING

Assuming we issue all of the 3,756,831 shares of common stock being offered
by this prospectus, we will then have approximately 35,689,898 shares of common
stock issued and outstanding. This would represent a 12% increase in the number
of outstanding shares of our common stock. If you are an existing stockholder
and you do not exercise your subscription rights, the percentage of our common
stock outstanding that you hold will be decreased by approximately 10.5% after
the offering.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

This section discusses material federal income tax consequences of the
rights offering to:

- beneficial owners of common stock upon distribution of the rights,

- holders of rights upon the exercise of rights, and

- holders of rights upon the disposition of the rights.

The law firm of Mitchell, Silberberg & Knupp LLP is our tax counsel. The
opinions of that firm expressed in this section have been prepared by that firm
based on the Internal Revenue Code of 1986, as amended, the Treasury regulations
thereunder, judicial authority, and current administrative rulings and practice,
all of which are subject to change. Their opinions are limited to U.S. taxpayers
who hold our common stock and will hold the rights and any shares acquired upon
the exercise of rights as capital assets. Their opinions do not include any tax
consequences under state, local and foreign law. You should consult with your
own tax advisor concerning your own tax situation or special tax considerations
that may apply to you, including without limitation foreign, state and local
laws that may apply. Subject to the limitations set forth in this paragraph,
Mitchell, Silberberg & Knupp LLP is of the opinion that the material federal
income tax consequences to a shareholder of the receipt, exercise or disposition
of the rights distributed with this prospectus are as follows:

No Gain on Receipt of Rights. As an owner of common stock, you will not
recognize taxable income as a result of our distribution of the rights to you.

Exercise of Rights. You will not recognize any gain or loss upon the
exercise of rights. Your basis in the shares you acquire through your exercise
of the rights will be equal to the sum of the subscription price you pay for
such shares and your basis in those rights, if any. The holding period for the
shares you acquire through your exercise of the rights will begin on the day
following the date of acquisition.

Sale of Rights. If you sell the rights you will recognize capital gain or
loss equal to the difference between the sale proceeds and the basis, if any, in
the rights sold. The capital gain or loss you recognize will be long-term or
short-term depending on whether your holding period for the rights is more than
one year.

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Basis and Holding Period of Rights. Your tax basis in the rights
distributed to you by us will be zero, unless (1) you sell or exercise the
rights, and (2) either:

- the fair market value of the rights on the date of distribution is 15% or
more of the fair market value on that date of our common stock your
already own, in which case you will be required to allocate a portion of
your basis in the shares of our common stock you already own to the
rights we are distributing to you, based upon the relative fair market
value of the rights and common stock on the date of distribution, or

- you elect under Section 307 of the Internal Revenue Code of 1986, as
amended, to allocate a portion of your basis in the shares of our common
stock you already own to the rights we are distributing to you, based
upon the relative fair market value of the rights and common stock on the
date of distribution.

Your holding period with respect to the rights we are distributing to you
will include your holding period for the common stock with respect to which the
rights were distributed.

Expiration of Rights. If the rights we are distributing to you as a holder
of our common stock expire unexercised, you will not recognize any gain or loss,
and no adjustment will be made to the basis of the common stock you own.

Purchasers of Rights. If you acquire rights by purchase, your tax basis in
such rights will be equal to the purchase price paid for those rights, and your
holding period for such rights will commence on the day following the date of
their purchase. If you purchased rights and they expire unexercised, you will
recognize a loss equal to your tax basis in the rights. Any loss recognized on
the expiration of the rights acquired by purchase will be a capital loss if the
common stock would be a capital asset in your hands.

Backup Withholding. If you sell rights and receive payments, you may be
subject to backup withholding at the rate of 31% on the payments received,
unless (1) you are a corporation or are otherwise exempt and demonstrate the
basis for the exemption if so required, or (2) provide a correct taxpayer
identification number and certify under penalties of perjury that your taxpayer
identification number is correct and that you are not subject to backup
withholding. Any amount withheld under these rules will be credited against your
federal income tax liability.

LEGAL MATTERS

Certain legal matters with respect to the authorization and issuance of the
common stock offered hereby will be passed upon for us by Mitchell, Silberberg &
Knupp LLP, Los Angeles, California.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 2000 and 1999 and each of the three years
in the period ending December 31, 2000. These statements are included in a Form
8-K, as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our consolidated
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given their authority as experts in accounting and auditing.

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FORWARD-LOOKING STATEMENTS

Included in the Prospectus Summary and elsewhere in this prospectus are
several "forward-looking statements." Forward-looking statements are those which
use words such as "believe," "expect," "anticipate," "intend," "plan," "may,"
"will," "should," "estimate," "continue," or other comparable expressions. These
words indicate future events and trends. Forward-looking statements are our
current views with respect to future events and financial performance. These
forward-looking statements are subject to many risks and uncertainties that
could cause actual results to differ significantly from historical results or
from those anticipated by us. The most significant risks and uncertainties we
face are:

- the level of chargeoffs, as an increase in the level of chargeoffs will
decrease our earnings;

- the ability to originate new loans in a sufficient amount to reach our
needs, as a decrease in the amount of loans we originate will decrease
our earnings;

- a decrease in the difference between the average interest rate we receive
on the loans we originate and the rate of interest we must pay to fund
our cost of originating those loans, as a decrease will reduce our
earnings;

- the continued availability of sources of funding for our operations, as a
reduction in the availability of funding will reduce our ability to
originate loans;

- the level of operating costs, as an increase in those costs will reduce
our net earnings;

- a change in general economic conditions; and

- while we will perform the acts necessary to cause certain events to
occur, final performance is subject to the affirmative acts of
independent third parties over whom we have no control.

There are other risks and uncertainties we face, including the effect of
changes in general economic conditions and the effect of new laws, regulations
and court decisions and those described under the caption "Risk Factors." You
are cautioned not to place undue reliance on our forward-looking statements. You
should carefully review the factors referred to in this prospectus and other
documents we file from time to time with the SEC, including the quarterly
reports on Form 10-Q and any reports on Form 8-K.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933 with respect to the common stock offered hereby. This
prospectus, which constitutes part of the registration statement, does not
contain all of the information set forth in the registration statement and the
exhibits and schedules relating to the registration statement. You may read and
copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room. Our SEC filings are also
available to the public from the SEC's Web site at http://www.sec.gov.

INCORPORATION BY REFERENCE

The following documents, all of which were previously filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, are hereby incorporated by reference in this prospectus:

- our Annual Report on Form 10-K for the year ended December 31, 2000, as
amended on April 25, 2001;

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- our preliminary Proxy Statement for our 2000 annual meeting filed on
March 20, 2001;

- our definitive Proxy Statement for our annual meeting to be held on May
3, 2001; and

- our Report on Form 8-K for March 1, 2001, as amended on April 25, 2001.

All other reports and documents filed by us after the date of this
prospectus pursuant to Sections 13(a), 14 and 15(d) of the Securities Exchange
Act of 1934 prior to the termination of the offering of the common stock covered
by this prospectus are also incorporated by reference in this prospectus and are
considered to be part of this prospectus from the date those documents are
filed.

If any statement contained in a document incorporated by reference herein
conflicts with or is modified by a statement contained in this prospectus or in
any other subsequently filed document that is incorporated by reference into
this prospectus, the statement made at the latest point in time should control.
Any previous statements that have been subsequently altered should therefore not
be considered to be a part of this prospectus. We will provide a copy of any or
all of the documents referred to above that have been or may be incorporated by
reference in this prospectus to any person to whom a copy of this prospectus has
been delivered free of charge upon request. Exhibits to such documents will not
be provided unless the exhibits are specifically incorporated by reference into
the information that the prospectus incorporates. Written requests for copies of
any documents incorporated by reference should be directed to Guy Du Bose, Esq.,
General Counsel, Westcorp, 23 Pasteur, Irvine, California 92618 (telephone
949-727-1002).

MATERIAL CHANGES

There have been no material changes in our affairs which have occurred
since the filing of our year 2000 Form 10-K which have not been fully disclosed
in a subsequently filed Form 10-Q or Form 8-K.

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[Westcorp Logo]

3,756,831 SHARES

COMMON STOCK

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PROSPECTUS
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APRIL 25, 2001

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You may rely on the information contained in this prospectus. Westcorp has not
authorized anyone to provide prospective investors with different or additional
information. This prospectus is not an offer to sell nor is it seeking an offer
to buy these securities in any jurisdiction where the offer or sale is not
permitted. The information contained in this prospectus is correct only as of
the date of this prospectus, regardless of the time of the delivery of this
prospectus or any sale of these securities.
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