(Adopted by the Board of Directors as of February 27, 2004)

1. Membership

The Nominating Committee (the “Committee”) of the Board of Directors of Wilshire Financial Services Group Inc. (the “Company”) shall comprise all of the then current independent directors of the Board of Directors, each of whom shall be appointed by the Board of Directors for a term of office of one year. The members shall be “independent” in accordance with the rules of the NASDAQ National Market. Re-election is possible. The Board may remove and replace individual members at any time, with or without cause.

The Chairman of the Board shall act as advisor to the Committee.

The Board shall appoint the chairman of the Committee.

Subject to any restrictions set forth in the Company’s certificate of incorporation and bylaws, and applicable law, the Committee should have all power and authority necessary or appropriate to carry out its purposes and responsibilities.

2. Duties

The Committee shall have the following principal duties:



to define principles for the selection and evaluation of candidates for Board membership




to review and propose to the full Board candidates for membership on the Board of Directors to be recommended for election by the shareholders.





to timely assess whether or not Board members, whose term of office is expiring, shall be proposed for re-election by the shareholders.





to establish a policy with regard to the consideration of candidates recommended by shareholders or to determine that the company should not have such a policy.


3. Meetings and Minutes

The Committee shall meet as often as necessary, but at least once a year. Meetings shall normally be called by its chairman, but may also be called by any member of the Committee. The chairman of the Committee shall review the agenda of each meeting with the Chairman of the Board.

The Chairman of the Board may attend the meetings.

The Committee may call upon internal specialists or external advisors if deemed necessary. Appointments of director search firms shall be coordinated and agreed with the Chairman of the Board.

The minutes taken of the meeting shall be distributed to all Board members ahead of the next Board meeting.

4. Reporting

The chairman of the Committee shall update the Board at its next meeting on decisions taken and the considerations which led to such decisions.

5. Abstention

No member of the Committee shall participate in any decision on his membership or specific position.