<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File Number 0-26960
ITLA CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4596322
- --------------------------------------------- -------------------
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
888 Prospect St., Suite 110, La Jolla, California 92037
- ------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(619) 551-0511
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of common stock of the registrant: 7,699,984 outstanding
as of May 4, 1998.
<PAGE> 2
ITLA CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31,
1998 DECEMBER 31,
(UNAUDITED) 1997
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 111,960 $ 123,885
Investment securities available for sale, at approximate fair value 20,229 35,281
Stock in Federal Home Loan Bank 12,095 11,919
Mortgage-backed securities held to maturity, at amortized cost
(fair value $23,412 and $25,063 for 1998 and 1997, respectively) 23,430 25,132
Loans held for investment, net (net of allowance for credit losses of
$13,673 and $12,178 in 1998 and 1997, respectively) 769,731 750,853
Loans held for sale, at lower of cost or fair market value 55,494 50,544
Interest receivable 5,070 4,916
Other real estate owned, net 4,254 3,946
Premises and equipment, net 3,041 3,169
Deferred income taxes 4,191 4,190
Other assets 1,492 2,074
----------- -----------
Total assets $ 1,010,987 $ 1,015,909
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposit accounts $ 836,957 $ 843,813
Federal Home Loan Bank advances 60,500 61,500
Accounts payable and other liabilities 10,641 11,248
----------- -----------
Total liabilities 908,098 916,561
----------- -----------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized, none issued -- --
Contributed capital - common stock, $.01 par value; 20,000,000
shares authorized, 7,852,484 and 7,849,484 issued and
outstanding in 1998 and 1997, respectively 53,197 53,163
Retained earnings 51,959 48,450
Unrealized gain on investment securities available for sale, net 17 19
----------- -----------
105,173 101,632
Less 152,500 shares of treasury stock, at cost (2,284) (2,284)
----------- -----------
Total shareholders' equity 102,889 99,348
----------- -----------
Total liabilities and shareholders' equity $ 1,010,987 $ 1,015,909
=========== ===========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
2
<PAGE> 3
ITLA CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
-------------------
1998 1997
------- -------
<S> <C> <C>
Interest income:
Loans receivable, including fees $22,091 $17,795
Investment securities 2,327 1,504
Mortgage-backed securities 392 457
------- -------
Total interest income 24,810 19,756
------- -------
Interest expense:
Deposit accounts 12,143 9,480
Federal Home Loan Bank advances 901 589
------- -------
Total interest expense 13,044 10,069
------- -------
Net interest income before provision for estimated credit losses 11,766 9,687
Provision for estimated credit losses 1,400 600
------- -------
Net interest income after provision for estimated credit losses 10,366 9,087
------- -------
Noninterest income:
Fee income from mortgage banking activities 582 169
Other 277 179
------- -------
Total noninterest income 859 348
------- -------
Noninterest expense:
Compensation and benefits 2,491 2,080
Occupancy and equipment 694 563
FDIC assessment 23 144
Other 1,990 1,724
------- -------
Total general and administrative 5,198 4,511
------- -------
Real estate operations, net 80 8
Loss on sale of other real estate owned, net -- 7
------- -------
Total real estate operations, net 80 15
------- -------
Total noninterest expense 5,278 4,526
------- -------
Income before provision for income taxes 5,947 4,909
Provision for income taxes 2,438 2,003
------- -------
NET INCOME $ 3,509 $ 2,906
======= =======
BASIC EARNINGS PER SHARE $ 0.46 $ 0.37
======= =======
DILUTED EARNINGS PER SHARE $ 0.44 $ 0.36
======= =======
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
3
<PAGE> 4
ITLA CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
-----------------------
1998 1997
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,509 $ 2,906
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, accretion and amortization, net (286) (529)
Provision for estimated credit losses 1,400 600
Increase in interest receivable (154) (423)
Provision for deferred income taxes -- (188)
Decrease in other assets 582 1,788
(Decrease) increase in accounts payable and other liabilities (607) 1,946
--------- --------
Net cash provided by operating activities 4,444 6,100
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in loans receivable, net (27,359) (3,589)
Purchases of investment securities available for sale (5,000) (8,000)
Proceeds from the maturity of investment securities available for sale 20,050 6,202
Increase in stock in Federal Home Loan Bank (176) (134)
Repayment of principal on mortgage-backed securities 1,679 1,965
Proceeds from sale of other real estate owned -- 1,753
Proceeds from sale of real estate loans 2,415 660
Cash paid for capital expenditures (155) (376)
Other, net (1) 16
--------- --------
Net cash used in investing activities (8,547) (1,503)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock options exercised 34 53
Decrease in deposit accounts (6,856) (754)
Decrease in Federal Home Loan Bank advances (1,000) (4,000)
--------- --------
Net cash used in financing activities (7,822) (4,701)
--------- --------
Net decrease in cash and cash equivalents (11,925) (104)
Cash and cash equivalents at beginning of period 123,885 62,599
--------- --------
Cash and cash equivalents at end of period $ 111,960 $ 62,495
========= ========
Supplemental Cash Flow Information:
Cash paid during the period for interest $ 13,052 $ 9,672
Cash paid during the period for income taxes $ 1,250 $ 900
Noncash Investing Transactions:
Loans transferred to other real estate owned $ 308 $ 140
Loans to facilitate the sale of other real estate owned $ -- $ 435
</TABLE>
4
<PAGE> 5
ITLA CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of ITLA Capital
Corporation ("ITLA Capital" and together with its subsidiaries the "Company")
included herein reflect all normal recurring adjustments which are, in the
opinion of management, necessary to present a fair statement of the results for
the interim periods indicated. The unaudited consolidated financial statements
include the accounts of the Company and its two wholly-owned subsidiaries,
Imperial Thrift and Loan Association ("Imperial") and ITLA Funding Corporation
("Funding"). All material intercompany transactions and balances have been
eliminated. Certain reclassifications have been made to the financial statements
for 1997 to conform to the 1998 presentation. Certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission. The results of operations for the three months ended March 31, 1998
are not necessarily indicative of the results of operations for the remainder of
the year.
These unaudited consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1997.
NOTE 2 - EARNINGS PER SHARE
Basic Earnings Per Share ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock which shared in the earnings of the Company.
The following is a reconciliation of the numerators and denominators
used in the calculation of Basic and Diluted EPS.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31
-----------------------------------------
WEIGHTED-
AVERAGE PER
NET SHARES SHARE
INCOME OUTSTANDING AMOUNT
------ ----------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
1998
Basic EPS $3,509 7,697,654 $ 0.46
Effect of Dilutive Stock Options -- 249,228 --
------ --------- --------
Diluted EPS $3,509 7,946,882 $ 0.44
====== ========= ========
1997
Basic EPS $2,906 7,827,807 $ 0.37
Effect of Dilutive Stock Options -- 147,635 --
------ --------- --------
Diluted EPS $2,906 7,975,442 $ 0.36
====== ========= ========
</TABLE>
5
<PAGE> 6
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENT
In 1998, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income", which requires companies to
report all changes in equity during a period, except those resulting from
investment by owners and distribution to owners, in a financial statement for
the period in which they are recognized. Comprehensive income, which encompasses
net income and unrealized gains (losses) on available for sale securities, is
presented below:
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED
MARCH 31
------------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net income $ 3,509 $ 2,906
Other comprehensive income - unrealized loss on investment
securities available for sale, net of tax benefit of $1 and $70
for the three months ended March 31, 1998 and 1997,
respectively (2) (100)
------- -------
Comprehensive income $ 3,507 $ 2,806
======= =======
</TABLE>
NOTE 4 - IMPAIRED LOANS RECEIVABLE
As of March 31, 1998, the recorded investment in loans receivable that
were considered impaired under SFAS No. 114 was $7.4 million. The average
recorded investment in impaired loans during the three month period ended March
31, 1998 was $8.2 million. Interest income recognized on impaired loans was not
material during the three month periods ended March 31, 1998 and 1997.
NOTE 5 - SUBSEQUENT EVENT
Subsequent to March 31, 1998, Imperial made a distribution to ITLA
Capital totaling $23.0 million. This dividend did not impact Imperial's "well
capitalized" designation for regulatory purposes.
On May 1, 1998, the Company completed the formation of its third
operating subsidiary, ITLA Commercial Investment Corporation ("CIC"). CIC will
invest primarily in mortgages secured by income producing real estate assets
originated by the Company's other operating subsidiaries. The initial
capitalization for CIC was approximately $20 million, which was used to acquire
assets from Imperial. The Company intends to expand CIC's portfolio of assets
to approximately $200 million, utilizing funding provided by external credit
facilities.
6
<PAGE> 7
ITLA CAPITAL CORPORATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis is intended to identify the major
components that influenced the financial condition and results of operations of
the Company as of and for the three month period ended March 31, 1998.
When used in this Form 10-Q or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project,"
"believe" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions, changes in domestic or foreign business markets, financial or legal
conditions, changes in levels of market interest rates, credit risks of lending
activities, and competitive and regulatory factors, could affect the Company's
financial performance and could cause the Company's actual results for future
periods to differ materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any
obligation, to revise any forward-looking statements to reflect the occurrence
of anticipated or unanticipated events or circumstances after the date of such
statements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH
31, 1997
NET INCOME
Net income totaled $3.5 million for the three months ended March 31,
1998 compared to $2.9 million for the same period in 1997, an increase of 20.8
percent. The increase in net income was primarily due to increases in net
interest income and noninterest income, offset by increases in general and
administrative expenses, the provision for estimated credit losses, real estate
operations, net, and the provision for income taxes. Diluted Earnings Per Share
was $.44 for the three months ended March 31, 1998 compared to $.36 for the same
period in 1997.
NET INTEREST INCOME
The following table sets forth a summary of the changes in interest
income and interest expense resulting from changes in average interest-earning
asset and interest-bearing liability balances (volume) and changes in average
interest rates (rate). The change in interest due to
7
<PAGE> 8
both volume and rate have been allocated to change due to volume and rate in
proportion to the relationship of absolute dollar amounts in each.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
1998 VERSUS 1997
------------------------------------
VOLUME RATE TOTAL
------- ----- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest and fees earned on:
Loans receivable, net $ 4,150 $ 146 $ 4,296
Investment securities 776 47 823
Mortgage-backed securities (108) 43 (65)
------- ----- -------
Total increase 4,818 236 5,054
------- ----- -------
Interest paid on:
Deposit accounts 2,430 233 2,663
FHLB advances 258 54 312
------- ----- -------
Total increase 2,688 287 2,975
------- ----- -------
Increase (decrease) in net
interest income $ 2,130 $ (51) $ 2,079
======= ===== =======
</TABLE>
Total interest income increased by $5.1 million in the 1998 first
quarter compared to the same period in 1997 due primarily to increases in both
the average balances of loans and investment securities as compared to the first
quarter of 1997. The average balance of loans receivable increased $154.0
million, or 23.1 percent, due to growth in the Company's real estate loan
portfolio. The weighted-average yield on loans receivable increased to 10.93
percent for the 1998 first quarter compared to 10.85 percent for the same period
in 1997 primarily as a result of additional income received from prepayments and
the collection of interest on past due loans, some of which were previously
classified as nonaccrual. Excluding this additional income, the yield on loans
receivable would have declined to 10.55 percent due to the pricing of real
estate loans in response to competitive factors and the Company's emphasis on
attempting to manage credit risk.
Total interest expense increased by $3.0 million in the 1998 first
quarter compared to the same period in 1997 due primarily to an increase in the
average balance of deposit accounts and FHLB advances and, to a lesser extent,
to an increase in the cost of funds. The average balance of deposit accounts
increased $168.9 million during the first quarter of 1998 as compared to the
1997 first quarter. The average rate paid on these accounts increased to 5.84
percent in the 1998 first quarter from 5.71 percent during the same period in
1997. The increase in deposit rates was consistent with market conditions.
PROVISION FOR ESTIMATED CREDIT LOSSES
Management periodically assesses the adequacy of the allowance for
credit losses by reference to many factors which may be weighted differently at
various times depending on prevailing conditions. These factors include, among
other elements, general portfolio trends relative to asset and portfolio size,
asset categories, potential credit and geographic concentrations, nonaccrual
loan levels, historical loss experience and risks associated with changes in
economic, social and business conditions. Accordingly, the calculation of the
adequacy of the allowance for credit losses is not based solely on the level of
nonperforming
8
<PAGE> 9
assets. Management believes that the Company's allowance for credit losses as of
March 31, 1998 was adequate to absorb the known and inherent risks of loss in
the loan portfolio at that date. While management believes the estimates and
assumptions used in its determination of the adequacy of the allowance are
reasonable, there can be no assurance that such estimates and assumptions will
not be proven incorrect in the future, or that the actual amount of future
provisions will not exceed the amount of past provisions or that any increased
provisions that may be required will not adversely impact the Company's
financial condition and results of operations. In addition, the determination of
the amount of the allowance for credit losses is subject to review by Imperial's
regulators, as part of the routine examination process, which may result in the
establishment of additional reserves based upon their judgment of information
available to them at the time of their examination.
The provision for estimated credit losses increased to $1.4 million in
the 1998 first quarter from $0.6 million in the same period in 1997, primarily
due to the establishment of reserves relating to growth in the loan portfolio.
Nonperforming assets to total assets declined to 1.15 percent as of March 31,
1998, compared to 1.21 percent at December 31, 1997. The aggregate amount of
nonperforming assets decreased to $11.7 million as of March 31, 1998 from $12.3
million at December 31, 1997. At March 31, 1998, the total allowance for credit
losses was $13.7 million or 1.7 percent of total loans receivable held for
investment. See also "Financial Condition - Nonperforming Assets and Allowance
for Credit Losses."
NONINTEREST INCOME
Noninterest income totaled $0.9 million during the three months ended
March 31, 1998 compared to $0.3 million for the same period in 1997. The
increase in noninterest income was due primarily to the increased fee income
from mortgage banking activities recognized by Funding, which commenced
operations during the first quarter of 1997. In the current period, Funding
originated $86.4 million of commercial real estate loans for third-party
investors and recognized $0.6 million of fee income, compared to $12.5 million
of loans originated and $0.2 million of fee income recognized during the same
period in the prior year.
NONINTEREST EXPENSE
Noninterest expense totaled $5.2 million for the three months ended
March 31, 1998 compared to $4.5 million for the same period in 1997. The
increase in noninterest expense was due primarily to increases in compensation
and benefits and occupancy and equipment expenses incurred by Funding.
Compensation and benefits expense increased due to an increase in the number of
full-time equivalent employees to 163 at March 31, 1998 compared to 151 at March
31, 1997 and 165 at December 31, 1997. The increase in occupancy and equipment
expense was due primarily to increases from the expansion of Funding's national
network of loan production offices.
For the three months ended March 31, 1998 and 1997, the Company's
consolidated ratio of general and administrative expense to average assets, on
an annualized basis, was 2.0 percent. The ratio excluding the costs of Funding
was 1.7 percent and 1.8 percent, respectively, for the quarters ended March 31,
1998 and 1997. The Company's efficiency ratio (the ratio of noninterest expense
to the sum of net interest income and noninterest income) was 41.8 percent for
the quarter ended March 31, 1998, unchanged from the same period in the prior
year.
9
<PAGE> 10
YEAR 2000
The Company is currently in the process of conducting a comprehensive
review of its computer systems to identify the systems that could be affected by
the "Year 2000" potential issue. The Year 2000 potential issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. Any of the Company's programs that have time sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failure or miscalculations. Management anticipates that
the enhancements necessary to prepare its systems for the year 2000 will be
completed in a timely manner.
The Company is also aware of the risks to third parties, including
vendors (and to the extent appropriate, depositors and borrowers), and the
potential adverse impact on the Company resulting from failures by these parties
to adequately address these risks. The Company has been communicating with its
outside data processing service bureau, as well as other third-party service
providers (and to the extent appropriate, depositors and borrowers), to assess
their progress in evaluating their systems and implementing any corrective
measures required by them to be prepared for the year 2000. To date, the Company
has not been advised by any of its primary vendors that there are any
unmitigated risks regarding potential issues related to the Year 2000. However,
no assurance can be given as to the adequacy of any plans or to the timeliness
of their implementation.
The Company anticipates that it may incur internal staff costs as well
as consulting and other expenses related to the enhancements necessary to
prepare the systems for the Year 2000. Based on the Company's current knowledge
and investigations, any expense relating to the Year 2000 potential issue is not
expected to have a material impact on the Company's financial position or
results of operations.
FINANCIAL CONDITION
NONPERFORMING ASSETS AND ALLOWANCE FOR CREDIT LOSSES
The following table sets forth the Company's nonperforming assets by
category at the dates indicated.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $ 7,398 $ 8,332
Other real estate owned, net 4,254 3,946
------- -------
Total nonperforming assets $11,652 $12,278
======= =======
Troubled debt restructurings $ 1,629 $ 1,574
Nonaccrual loans held for investment to
total gross loans held for investment 0.95% 1.09%
Nonperforming assets to total assets 1.15% 1.21%
</TABLE>
10
<PAGE> 11
The following table provides certain information regarding the Company's
allowance for credit losses.
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1998 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
Balance, beginning of period $12,178 $ 10,885
Provision for estimated credit losses 1,400 3,300
Net recoveries (charge-offs) on real estate loans 95 (2,007)
------- --------
Balance, end of period $13,673 $ 12,178
======= ========
</TABLE>
LIQUIDITY AND DEPOSIT ACCOUNTS
Liquidity refers to the Company's ability to maintain cash flow adequate
to fund operations and meet obligations and other commitments on a timely basis,
including the payment of maturing deposits and the origination or purchase of
new loans receivable. The Company maintains a cash and investment securities
portfolio designed to satisfy operating and regulatory liquidity requirements
while preserving capital and maximizing yield. As of March 31, 1998, the Company
held approximately $112.0 million cash and cash equivalents (consisting
primarily of short term investments with original maturities of 90 days or less)
and $20.2 million of investment securities classified as available for sale.
Short term investments classified as cash equivalents consisted of government
money market funds, repurchase agreements and short term government agency
securities, while investment securities available for sale consisted of fixed
income instruments which were rated "AAA" or better by nationally recognized
rating agencies. As of March 31, 1998 and December 31, 1997, Imperial's
liquidity ratios were 12.6 percent and 14.0 percent, respectively, exceeding the
regulatory requirement of 1.5 percent. In addition, the Company's liquidity
position is supported by a credit facility with the FHLB of San Francisco with
an available borrowing capacity of $38.7 million, and by federal funds lines of
credit with two major banks with an available borrowing capacity of $30.0
million.
Total deposit accounts decreased to $837.0 million at March 31, 1998
from $843.8 million at December 31, 1997. The Company retained a significant
amount of the funds which matured through rollover of the certificates in the
three months ended March 31, 1998 and 1997, respectively. Although the Company
competes for deposits primarily on the basis of rates, based on its historical
experience regarding retention of deposits, management believes that a
significant portion of deposits will remain with the Company upon maturity on an
ongoing basis.
CAPITAL RESOURCES
At March 31, 1998, Imperial's Leverage (Core), Tier I and Total
Risk-Based capital ratios were 10.1 percent, 11.6 percent and 12.8 percent,
respectively. At December 31, 1997, Leverage (Core), Tier I and Total Risk-Based
capital ratios were 9.6 percent, 11.4 percent and 12.7 percent, respectively.
The minimum regulatory requirement for Leverage (Core), Tier I and Risk-Based
capital are 4.0 percent, 4.0 percent and 8.0 percent, respectively. As of March
31, 1998, Imperial's capital position was designated as "well capitalized" for
regulatory purposes. Subsequent to March 31, 1998, Imperial provided a $23.0
million dividend to ITLA Capital.
11
<PAGE> 12
Assuming this dividend occurred at March 31, 1998, Imperial's Leverage (Core),
Tier 1 and Total Risk-Based capital ratios would have been 8.0 percent, 9.2
percent and 10.5 percent, respectively. This dividend payment did not impact
Imperial's "well capitalized" designation.
The Company's shareholders' equity increased $3.5 million from December
31, 1997 to March 31, 1998 due primarily to the accumulation of $3.5 million in
net income. There were no dividends declared or paid by the Company during the
first three months of 1998.
MARKET RISK
The Company's estimated sensitivity to interest rate risk, as measured
by the estimated interest earnings sensitivity profile and the interest
sensitivity gap analysis, has not materially changed from the information
disclosed in the Company's Form 10-K for the period ended December 31, 1997.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company is party to certain legal proceedings
incidental to its business. Management believes that the
outcome of such proceedings, in the aggregate, will not
have a material effect on the Company's financial condition
and results of operations.
ITEM 2 CHANGES IN SECURITIES
Not applicable.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Not applicable.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ITLA CAPITAL CORPORATION
Date: May 14, 1998 /s/ George W. Haligowski
------------ ----------------------------
George W. Haligowski
Chairman of the Board, President and
Chief Executive Officer
Date: May 14, 1998 /s/ Michael A. Sicuro
------------ -------------------------
Michael A. Sicuro
Managing Director and Chief
Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 10,248
<INT-BEARING-DEPOSITS> 101,712
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,229
<INVESTMENTS-CARRYING> 23,430
<INVESTMENTS-MARKET> 23,412
<LOANS> 838,898
<ALLOWANCE> 13,673
<TOTAL-ASSETS> 1,010,987
<DEPOSITS> 836,957
<SHORT-TERM> 60,500
<LIABILITIES-OTHER> 10,641
<LONG-TERM> 0
0
0
<COMMON> 53,197
<OTHER-SE> 49,692
<TOTAL-LIABILITIES-AND-EQUITY> 1,010,987
<INTEREST-LOAN> 22,091
<INTEREST-INVEST> 2,719
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 24,810
<INTEREST-DEPOSIT> 12,143
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<INCOME-PRETAX> 5,947
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<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.44
<YIELD-ACTUAL> 4.71
<LOANS-NON> 7,398
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<ALLOWANCE-CLOSE> 13,673
<ALLOWANCE-DOMESTIC> 13,673
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
