PROPOSAL 1

Director Nominees

      Judith M. Bardwick, Ph.D. has been a director of Westcorp and its first-tier subsidiary, Western Financial Bank, since 1994. She has been a director of Westcorp’s second-tier subsidiary, WFS Financial Inc, also known as WFS, since 2001. Dr. Bardwick is President and founder of Bardwick and Associates, a management consulting firm. In addition to her many academic achievements, Dr. Bardwick has been an active business consultant for more than two decades. Dr. Bardwick earned a B.S. degree from Purdue University and an M.S. from Cornell. She received her Ph.D. from the University of Michigan and subsequently became a Full Professor and Associate Dean of the College of Literature, Science and the Arts at that university. Dr. Bardwick has devoted herself to consulting and business-related research and writing, concentrating on issues relating to improving organizational efficiency and management skills. She has been a clinical Professor of Psychiatry at the University of California at San Diego since 1984 and has worked as a psychological therapist. Her most recent business book, Toward the Eye of the Storm, was published in 2002. She is the author of seven other books. In addition, she has published more than 85 articles on a wide range of topics during her distinguished career.

      Robert T. Barnum has been a director of Westcorp and of Western Financial Bank since 1998. He is a private investor and advisor to several private equity funds. He is currently the Chairman of the Board of Korea First Bank, a $40 billion asset Korean Bank owned jointly by Texas Pacific Group, Blum Capital and the Government of Korea. Mr. Barnum was the Chief Financial Officer and then President and Chief Operating Officer of American Savings from its acquisition in 1989 until its sale to Washington Mutual in 1998. American Savings was a $20 billion California thrift that was owned by the Robert M. Bass group. Mr. Barnum was a director of National RE until its sale to General RE in 1996 and of Harborside Healthcare until its recapitalization in 1997, and of Center Trust Properties until its sale to Pan Pacific in 2003.

Mr. Barnum is currently on the Board of Directors and Chairman of the Audit Committee of American Residential Investment Trust and Ameriquest Capital Corporation. He also is on the Board of Berkshire Mortgage. Mr. Barnum holds a B.S. in Mathematics from the University of Illinois and an M.B.A. in Finance from Indiana University.

      James R. Dowlan has been a director of Westcorp since 2001 and a director of WFS since 1995. He served as Senior Executive Vice President of WFS from 1995 through January 1999. He started as Senior Vice President of Western Financial Bank in 1984 and then acted as Executive Vice President of the Bank from 1989 until the Auto Finance Division of Western Financial Bank was combined with WFS in 1995. He also served as Chairman of the Board of Western Financial Insurance Agency, Inc., Chairman of Westhrift Life Insurance Company, subsidiaries of the Bank, and President and Chief Executive Officer of WFS Financial Auto Loans, Inc. and WFS Financial Auto Loans 2, Inc., subsidiaries of WFS. Prior to his association with Western Financial Bank, Mr. Dowlan was Vice President of Loan Administration for Union Bank, where he held several positions since 1973. He served for several years on the National Advisory Board Installment Lending, the American Bankers Association and the Consumer Lending Committee of the California Bankers Association. He is a graduate of the Pacific Coast Banking School, University of Washington.

      Duane A. Nelles has been a director of Westcorp and Western Financial Bank since February 2003 and of WFS since 1995. Since 1988, he also has served on the Board of Directors of QUALCOMM, Inc., a world leader in digital wireless communications. Mr. Nelles was a partner in an international accounting firm, now known as PricewaterhouseCoopers, from 1968 to 1987. From 1987 to 2000, he headed a private personal investment business. Mr. Nelles received his M.B.A. degree from the University of Michigan.

      Ernest S. Rady has served as Chairman of the Board and Chief Executive Officer of Westcorp since 1973 and as President from 1982 to 1996 and from 1998 to 1999. He has served as Chairman of the Board of Western Financial Bank since 1982 and Chief Executive Officer of the Bank from 1994 to 1996 and from 1998 to present. He has been Chairman of the Board of WFS since 1995 and a director since 1988. Mr. Rady is a principal shareholder, manager, and consultant to a group of companies engaged in real estate management and development, property and casualty insurance and investment management through American Assets, Inc., a financial, investment management, and real estate conglomerate, and Insurance Company of the West, a property casualty insurance company. Mr. Rady is the father of Director Harry Rady.

      Harry M. Rady has been a director of Westcorp and Western Financial Bank since 2003. Mr. Rady served as the Chief Investment Officer and Director of American Assets, Inc. from 1996 through November 2004. He also has served as Chief Investment Officer through November 2004 and continues to be a Director of Insurance Company of the West. Mr. Rady received his M.B.A. from the University of Southern California. Harry Rady is the son of Director Ernest Rady.

      Charles E. Scribner has been a director of Westcorp and Western Financial Bank since 1998. Mr. Scribner was with Bank of America for 34 years, retiring in May 1994. From 1979 to 1983, he was Regional Senior Vice President in charge of the Orange County/ Los Angeles coastal region, responsible for loan deposits and general operations of 150 branches in the region. From 1984 to 1986, he was Senior Vice President and General Manager of the northern Asian operation for Bank of America headquartered in Tokyo. Mr. Scribner later became Area Manager of southern Asia for Bank of America from 1986 through 1989. He was in charge of all banking activities in eight countries and was headquartered in Singapore. From 1990 to 1994, he served as Bank of America’s Executive Vice President and General Manager of the southern California Commercial Banking wholesale activities. Mr. Scribner currently serves on the Board of Insurance Company of the West, Whittier Institute, Western Financial Bank, and Westcorp.

      Thomas A. Wolfe has been a director of Westcorp and WFS since February 2002. He has served as President of Westcorp since February 2002, having previously served as Senior Vice President since March 1999. Mr. Wolfe has served as President of Western Financial Bank since May 2002 and as Vice Chairman and Director since March 2002. In February 2002, Mr. Wolfe was elected Chief Executive Officer of WFS, having previously served as President and Chief Operating Officer since March 1999. Mr. Wolfe began his career with WFS as Executive Vice President and National Production Manager in April 1998. Prior to

joining WFS, he held the position of National Production Manager at Key Auto Finance, where he oversaw the production of the indirect auto finance business, which included prime, sub-prime, leasing, and commercial lending. Mr. Wolfe has been in the auto finance and consumer credit industry since 1982. He previously held positions with Citibank and General Motors Acceptance Corporation. Mr. Wolfe is also a Director of DealerTrack Holdings, Inc. He graduated from Oregon State University in 1981 with a degree in finance.

The Board recommends a vote FOR the election to the Board

of each of the nominees named above.

      The person named as proxy and his alternate in the accompanying proxy have advised us of their intention to vote shares covered by proxies received in favor of the election of the nominees named above, each of whom have consented to be named and have indicated their intent to serve if elected. If any nominee becomes unavailable for any reason, the proxy or his alternate in his discretion will vote for substitute nominees of the Board of Directors, unless otherwise instructed.

Independent Directors

      A majority of our directors are independent. Our independent directors are Judith M. Bardwick, Robert T. Barnum, James R. Dowlan, Duane A. Nelles and Charles E. Scribner. The full Board of Directors has confirmed with Westcorp’s general and outside counsel that all relationships that exist between Westcorp and its independent directors are within the standards prescribed by the New York Stock Exchange and the Securities and Exchange Commission such that each of our independent directors meet these standards and are therefore independent. The independent directors meet at regularly scheduled executive sessions without management. Director Nelles has been selected by the independent directors to preside over these meetings.

Audit Committee and Qualified Legal Compliance Committee

      Westcorp has a standing Audit Committee of the Board of Directors composed of Directors Robert T. Barnum, Duane A. Nelles, and Charles E. Scribner. Mr. Barnum is Chairman of the Audit Committee. The Audit Committee met seven times in 2004. Information regarding the functions performed by the Audit Committee is set forth in this Proxy Statement in the Report of the Audit Committee and in the Audit Committee Charter. A copy of the Audit Committee Charter, adopted by our Board of Directors and pursuant to which the Audit Committee conducts its functions, is attached to this Proxy Statement as Appendix A and is available on our website at www.westcorpinc.com. The full Board of Directors has determined that each member of the Audit Committee, Mr. Barnum, Mr. Nelles, and Mr. Scribner, qualifies as (i) independent under the standards prescribed by the Securities and Exchange Commission and the New York Stock Exchange and (ii) an audit committee financial expert under the definition adopted by the Securities and Exchange Commission. The members of the Audit Committee serve as the members of our Qualified Legal Compliance Committee in accordance with Securities and Exchange Commission regulations. The Qualified Legal Compliance Committee Charter is available on our website at www.westcorpinc.com.

Corporate Governance and Nominating Committee

      Westcorp established a standing Corporate Governance and Nominating Committee on February 25, 2004, consisting of Directors Robert T. Barnum, Duane A. Nelles, and Charles E. Scribner. Mr. Nelles is Chairman of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee met five times in 2004.

      The Corporate Governance and Nominating Committee will consider director candidates to the Board of Directors recommended by shareholders. Shareholders may propose director nominees for consideration by the Corporate Governance and Nominating Committee for the next annual meeting by submitting the names and supporting information to Secretary, Westcorp, 23 Pasteur, Irvine, California 92618, by 120 days before April 1, 2006.

      The Corporate Governance and Nominating Committee shall select individuals as director nominees who shall have the highest personal and professional integrity, demonstrated exceptional ability and judgment, and be most effective, in conjunction with the other nominees to the Board of Directors, in collectively serving the long-term interests of the shareholders of Westcorp as a whole, rather than special interest groups. The Corporate Governance and Nominating Committee identifies and evaluates director nominees by (i) reviewing the present needs of the Board of Directors and establishing specific criteria, (ii) reviewing the performance of the incumbent directors, (iii) proposing to the Board of Directors criteria for board composition before each search is undertaken, (iv) determining whether a search firm should be hired, (v) providing parameters to a search firm, if one is hired, and (vi) reviewing the qualifications of any proposed new directors. The Corporate Governance and Nominating Committee Charter is available on our website at www.westcorpinc.com.

Compensation Committee Interlocks and Insider Participation

      Westcorp has a standing Compensation Committee of the Board of Directors, whose current members are Directors Robert T. Barnum, James R. Dowlan, and Charles E. Scribner. Mr. Scribner is Chairman of the Compensation Committee. Mr. Dowlan was an officer of Westcorp’s subsidiaries WFS and Western Financial Bank through 1999 and 1995, respectively. The Compensation Committee reviews and approves recommendations for annual salaries of employees, otherwise known as associates, reviews and sets the levels of compensation of senior management, and establishes policies applicable to, performance related to, and the basis for compensation. The Compensation Committee held two meetings during 2004. The Compensation Committee Charter is available on our website at www.westcorpinc.com.

Meetings of the Board

      The Westcorp Board of Directors met eight times in 2004. All directors have attended at least 75% of all board and applicable committee meetings. Westcorp’s policy is that all directors should attend the annual meeting of the Board of Directors. Last year, all directors attended the annual meeting.

Director Compensation

      Each director who also is not an associate of Westcorp or its subsidiaries received $5,000 for each quarterly board meeting attended, $2,250 for each non-quarterly board meeting attended, and $1,500 for each committee meeting attended that is not held in conjunction with a board meeting. Directors who are associates of Westcorp or its subsidiaries do not receive additional compensation for their services as directors. Directors who attend a Westcorp and WFS board meeting on the same day are compensated for only one of the two meetings. In addition, the directors are eligible to receive stock options on a discretionary basis and, if Proposal 3 is approved, restricted stock awards. Directors Judith Bardwick and James Dowlan received $13,494 and $8,696, respectively, pursuant to the company’s policy to compensate the holders of non-qualified stock options to the extent of the tax benefit obtained by the company upon the exercise of such non-qualified stock options.