LA JOLLA, Calif., Feb. 5 /PRNewswire-FirstCall/ -- ITLA Capital
Corporation (NYSE:IMP) today reported net income for the year ended
December 31, 2006, primarily resulting from the operations of its
wholly-owned subsidiary, Imperial Capital Bank (the Bank), of $26.9
million or $4.71 per diluted share compared to $24.1 million or
$4.04 per diluted share for the prior year. President and Chief
Executive Officer George W. Haligowski stated: "I'm pleased to
report our 11th consecutive year of record core profitability. 2006
truly marked the year that we successfully transformed ourselves
from a regional bank to a national commercial real estate lender
with a production team that's capable of servicing customers
throughout the continental United States. After initiating our
national expansion effort over three years ago, our expansion
offices are now providing significant contributions to our
financial performance and to the record loan production achieved
during the year." Net income for the year ended December 31, 2006
increased to $26.9 million or $4.71 per diluted share, compared to
$24.1 million or $4.04 per diluted share for the prior year. Net
interest income before provision for loan losses increased 3.0
percent to $94.4 million for the year ended December 31, 2006,
compared to $91.7 million for the prior year. This increase was
primarily due to the growth in the average balance of our loan
portfolio, and variable rate loans repricing to higher current
market interest rates, partially offset by additional interest
expense incurred due to the growth in the average balance of
interest bearing liabilities, deposits and other interest bearing
liabilities repricing to higher current market interest rates, and
the addition of new borrowings at higher current market interest
rates. The provision for loan losses was $5.0 million for the year
ended December 31, 2006, compared to $10.3 million for the prior
year. These provisions for loan losses were recorded to provide
reserves adequate to support known and inherent losses in our loan
portfolio and for specific reserves as of December 31, 2006 and
2005, respectively. The provision recorded during 2005 reflects a
$29.3 million increase in the Bank's other loans of concern and a
$9.6 million increase in non-performing loans during the year.
Despite the increase in our overall loan portfolio during 2006, the
level of other loans of concern and non-performing loans stabilized
in 2006 compared to the prior year. Other loans of concern were
$67.0 million and $66.4 million, respectively, at December 31, 2006
and 2005. Other loans of concern consist of performing loans which
have known information that have caused management to be concerned
about the borrowers ability to comply with present loan repayment
terms. Non-performing loans totaled $26.3 million and $24.3
million, respectively, at December 31, 2006 and 2005. As a
percentage of our total loan portfolio, the amount of other loans
of concern and non-performing loans decreased to 2.22% and 0.88%,
respectively, at December 31, 2006, compared to 2.32% and 0.95%,
respectively, at December 31, 2005. Non-interest income was $2.8
million for the year ended December 31, 2006, compared to $6.6
million for the prior year. This decrease primarily related to a
$4.9 million gain recorded during 2005 in connection with the sale
of substantially all of the Bank's franchise loan portfolio.
General and administrative expenses were $46.4 million for the year
ended December 31, 2006, compared to $46.3 million for the prior
year. The Company's efficiency ratio was 47.8 percent for the year
ended December 31, 2006, as compared to 47.1 percent for the prior
year. Loan originations were $1.1 billion for the year ended
December 31, 2006, compared to $919.6 million for the prior year.
During the current year, the Bank originated $693.1 million of
commercial real estate loans, $293.7 million of small balance
multi-family real estate loans, and $102.7 million of entertainment
finance loans. Loan originations for the prior year consisted of
$525.8 million of commercial real estate loans, $322.8 million of
small balance multi-family real estate loans, $68.7 million of
entertainment finance loans, and $2.4 million of franchise loans.
In addition, the Bank's wholesale loan operations acquired $497.8
million and $595.3 million of commercial and multi-family real
estate loans during the years ended December 31, 2006 and 2005,
respectively. The Bank's wholesale loan operations also acquired a
$128.5 million single-family residential loan portfolio during the
year ended December 31, 2005. Haligowski commented that: "Our
annual internal production exceeded $1.0 billion for the first time
in the Company's 32 year history. This achievement was a team
effort with contributions coming from all areas of our operations.
Approximately 50% of our real estate loan originations were
produced by our expansion offices, while over 70% of our overall
real estate production consisted of higher yielding commercial real
estate loans." Net income for the quarter ended December 31, 2006
increased to $7.0 million or $1.22 per diluted share, compared to
$6.3 million or $1.08 per diluted share for the same period last
year. Net interest income before provision for loan losses
decreased 3.0 percent to $23.2 million for the quarter ended
December 31, 2006, compared to $24.0 million for the same period
last year. The decrease was primarily caused by additional interest
expense incurred due to the growth in the average balance of
interest bearing liabilities, deposits and other interest bearing
liabilities repricing to higher current market interest rates, and
the addition of new borrowings at higher current market interest
rates, partially offset by additional interest income earned due to
the growth in the average balance of our loan portfolio and
variable rate loans repricing to higher current market interest
rates. The provision for loan losses was $1.3 million for the
quarter ended December 31, 2006, compared to $6.5 million for the
same period last year. These provisions for loan losses were
recorded to provide reserves adequate to support the known and
inherent risk of loss in our loan portfolio and for specific
reserves as of December 31, 2006 and 2005, respectively. The
decrease in the provision for loan losses related primarily to an
increase in the provision recorded during the quarter ended
December 31, 2005, as a result of a $14.3 million increase in the
Bank's other loans of concern during that period. Non-interest
income was $870,000 for the quarter ended December 31, 2006,
compared to $5.6 million for the same period last year. As
discussed above, this decrease primarily related to the gain
recorded during 2005, in connection with the sale of the Bank's
franchise loan portfolio. General and administrative expenses
decreased to $11.1 million during the current quarter, compared to
$12.0 million for the same period last year. Our efficiency ratio
(defined as general and administrative expenses as percentage of
net revenue) was 46.0 percent for the quarter ended December 31,
2006, as compared to 40.5 percent for the same period last year.
The efficiency ratio was lower in 2005 compared to 2006, due to the
$4.9 million gain recognized during 2005 in connection with the
sale of the franchise loan portfolio. Loan originations were $388.3
million for the quarter ended December 31, 2006, compared to $280.6
million for the same period last year. During the current quarter,
the Bank originated $203.4 million of commercial real estate loans,
$122.9 million of small balance multi-family real estate loans, and
$62.0 million of entertainment finance loans. Loan originations for
the same period last year consisted of $186.0 million of commercial
real estate loans, $90.3 million of small balance multi-family real
estate loans, and $4.3 million of entertainment finance loans. In
addition, the Bank's wholesale loan operations acquired $150.5
million and $102.2 million of multi-family real estate loans during
the quarters ended December 31, 2006 and 2005, respectively.
Haligowski commented that: "For the first time since commencing the
national expansion, our expansion offices out produced the lending
offices in California on a quarterly basis, and assisted in
achieving the highest level of quarterly internal production in our
Company's history. During the quarter, over 45% of the commercial
real estate loan originations were produced by our expansion
offices, representing a 67% increase in their commercial real
estate loan production compared to the same period last year."
Total assets increased $364.3 million to $3.4 billion at December
31, 2006, compared to $3.1 billion at December 31, 2005. The
increase in total assets was primarily due to a $449.9 million
increase in our loan portfolio, partially offset by a $63.3 million
decrease in cash and cash equivalents and a $40.4 million decline
in investment securities held-to-maturity. Non-performing assets
were $33.0 million or 0.97 percent of total assets as of December
31, 2006, as compared to $28.2 million or 0.92 percent of total
assets as of December 31, 2005. The allowance for loan loss
coverage ratio (defined as the allowance for loan losses divided by
non-accrual loans) at December 31, 2006 was 175.4 percent as
compared to 180.6 percent at December 31, 2005. The allowance for
loan losses as a percentage of our total loans was 1.5% at December
31, 2006, as compared to 1.7% at December 31, 2005. The decrease in
this percentage primarily reflects the growth in our total loan
portfolio during the year, which increased by 17.6% compared to the
prior year, as well as the continuing decline in our overall risk
profile due to a broader geographic diversification of our real
estate loan portfolio resulting from a higher concentration of
non-California multi-family and commercial real estate loans as a
percentage of our total loan portfolio. As of December 31, 2006,
over 46% of our real estate loans were secured by properties
outside of California compared to 41% in 2005. During the years
ended December 31, 2006 and 2005, we had net charge-offs of $2.8
million and $1.9 million, respectively. At December 31, 2006,
shareholders' equity totaled $221.3 million or 6.5 percent of total
assets. During the current quarter, we repurchased 39,050 shares at
an average price of $54.97 per share. For the year ended December
31, 2006, we repurchased 228,781 shares at an average price of
$49.19 per share. Since beginning share repurchases in April 1997,
a total of 3.5 million shares have been repurchased, returning
approximately $101.1 million of capital to our shareholders at an
average price of $28.64 per share. The Company's book value per
share of common stock was $42.07 as of December 31, 2006, an
increase of 11.1 percent, from $37.85 per share as of December 31,
2005. The Bank had Tier 1 leverage, Tier 1 risk-based and total
risk-based capital ratios at December 31, 2006 of 9.1 percent, 10.3
percent and 11.5 percent, respectively, which represents $130.0
million, $120.3 million and $42.6 million, respectively, of capital
in excess of the amount required to be "well capitalized" for
regulatory purposes. In addition, the Company, the Bank's holding
company, had Tier 1 leverage, Tier 1 risk-based and total
risk-based capital ratios at December 31, 2006 of 9.0 percent, 10.2
percent and 11.9 percent, respectively, which represents $130.0
million, $120.3 million and $53.5 million, respectively, of capital
in excess of the amount required to be "well capitalized".
Haligowski concluded: "2006 culminated with the Company's listing
on the New York Stock Exchange, which I believe will increase our
visibility in the capital markets. This achievement is a tribute to
our success and the hard work and dedication of our associates, and
further marks the evolution of the Company from our modest
beginnings at the time of our IPO in 1995 to a national commercial
real estate lender. Our share price ended the year at $57.91, a 19%
increase over last year's closing price of $48.85, while our total
assets exceeded $3.4 billion, with record loan footings of $3.0
billion. In an effort to provide further value to our shareholders,
we announced our first regular quarterly dividend of $0.15 per
share during the first quarter of 2006, and we declared total
dividends of approximately $3.2 million throughout the year." "Safe
Harbor" statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward looking statements that
are subject to risks and uncertainties, including, but not limited
to, changes in economic conditions in the Company's market areas,
changes in policies by regulatory agencies, the impact of
competitive loan products, loan demand risks, the quality or
composition of the loan or investment portfolios, increased costs
from pursuing the national expansion of our lending platform and
operational challenges inherent in implementing this expansion
strategy, fluctuations in interest rates, and changes in the
relative differences between short- and long-term interest rates,
levels of non-performing assets and other loans of concern, and
operating results, the economic impact of terrorist actions and
other risks detailed from time to time in the Company's filings
with the Securities and Exchange Commission. The Company cautions
readers not to place undue reliance on any forward-looking
statements. 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. These risks could
cause the Company's actual results for 2007 and beyond to differ
materially from those expressed in any forward looking statements
by, or on behalf of, the Company. ITLA Capital Corporation is a
publicly traded diversified bank holding company specializing in
commercial real estate lending on a national basis and is
headquartered in San Diego, California. The Company conducts its
operations through Imperial Capital Bank and Imperial Capital Real
Estate Investment Trust. Imperial Capital Bank has seven retail
branch locations and 23 loan origination offices serving the
Western United States, the Southeast, the Mid-Atlantic states, the
Ohio Valley, the Metro New York area and New England. For
additional information, contact Timothy M. Doyle, Executive
Managing Director and Chief Financial Officer, at (858) 551-0511.
http://www.itlacapital.com/ ITLA CAPITAL CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2006 December
31, (unaudited) 2005 (in thousands except share amounts) Assets
Cash and cash equivalents $30,448 $93,747 Investment securities
available-for-sale, at fair value 99,527 92,563 Investment
securities held-to-maturity, at amortized cost 193,512 233,880
Stock in Federal Home Loan Bank 48,984 43,802 Loans, net (net of
allowance for loan losses of $46,049 and $43,817 in 2006 and 2005,
respectively) 2,973,368 2,523,480 Interest receivable 20,753 16,287
Other real estate owned, net 6,729 3,960 Premises and equipment,
net 7,851 6,718 Deferred income taxes 11,513 12,717 Goodwill 3,118
3,118 Other assets 19,707 20,924 Total assets $3,415,510 $3,051,196
Liabilities and Shareholders' Equity Liabilities: Deposit accounts
$2,059,405 $1,735,428 Federal Home Loan Bank advances and other
borrowings 1,010,000 992,557 Accounts payable and other liabilities
38,168 32,130 Junior subordinated debentures 86,600 86,600 Total
liabilities 3,194,173 2,846,715 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, 9,065,672 and 8,978,998 issued
in 2006 and 2005, respectively 82,073 78,004 Retained earnings
243,823 220,095 Accumulated other comprehensive income (loss), net
35 (364) 325,931 297,735 Less treasury stock, at cost - 3,803,969
and 3,576,695 shares in 2006 and 2005, respectively (104,594)
(93,254) Total shareholders' equity 221,337 204,481 Total
liabilities and shareholders' equity $3,415,510 $3,051,196 ITLA
CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED) For the Three Months Ended For the Years Ended
December 31, December 31, 2006 2005 2006 2005 (in thousands except
per share amounts) Interest income: Loans receivable, including
fees $55,496 $46,321 $207,320 $159,720 Cash, cash equivalents and
investment securities 4,687 4,575 19,181 18,438 Total interest
income 60,183 50,896 226,501 178,158 Interest expense: Deposit
accounts 25,097 16,885 85,156 53,807 Federal Home Loan Bank
advances and other borrowings 9,735 8,142 38,722 25,508 Junior
subordinated debentures 2,109 1,907 8,197 7,171 Total interest
expense 36,941 26,934 132,075 86,486 Net interest income before
provision for loan losses 23,242 23,962 94,426 91,672 Provision for
loan losses 1,250 6,500 5,000 10,250 Net interest income after
provision for loan losses 21,992 17,462 89,426 81,422 Non-interest
income: Gain on sale of loans, net -- 4,911 -- 4,911 Late and
collection fees 278 152 970 536 Other 592 537 1,802 1,127 Total
non-interest income 870 5,600 2,772 6,574 Non-interest expense:
Compensation and benefits 4,735 5,422 21,265 21,737 Occupancy and
equipment 1,871 1,796 7,439 7,177 Other 4,497 4,768 17,743 17,344
Total general and administrative 11,103 11,986 46,447 46,258 Real
estate owned expense, net 118 204 334 204 Loss (gain) on sale of
other real estate owned, net 35 -- 35 (11) Total real estate owned
expense, net 153 204 369 193 Total non-interest expense 11,256
12,190 46,816 46,451 Income before provision for income taxes
11,606 10,872 45,382 41,545 Provision for income taxes 4,643 4,567
18,493 17,482 NET INCOME $6,963 $6,305 $26,889 $24,063 BASIC
EARNINGS PER SHARE $1.26 $1.11 $4.83 $4.19 DILUTED EARNINGS PER
SHARE $1.22 $1.08 $4.71 $4.04 DATASOURCE: ITLA Capital Corporation
CONTACT: Timothy M. Doyle, Executive Managing Director and Chief
Financial Officer of ITLA Capital Corporation, +1-858-551-0511 Web
site: http://www.itlacapital.com/
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