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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 June 30, 2001
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 (IRS Employer
Incorporation or Organization) Identification No.)
888 Prospect St., Suite 110, La Jolla, California 92037
------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(858) 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: 6,143,413 outstanding
as of August 7, 2001.
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ITLA CAPITAL CORPORATION
FORM 10-Q
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
----
Consolidated Balance Sheets - June 30, 2001 and December 31, 2000.......................... 3
Consolidated Statements of Income - Three and Six Months
Ended June 30, 2001 and 2000........................................................... 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2001 and 2000................................................ 5
Notes to Unaudited Consolidated Financial Statements....................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...................................................................... 8
ITEM 3. MARKET RISK................................................................................... 20
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings.......................................................................... 21
ITEM 2. Changes in Securities...................................................................... 21
ITEM 3. Defaults Upon Senior Securities............................................................ 21
ITEM 4. Submission of Matters to a Vote of Security Holders........................................ 21
ITEM 5. Other Information.......................................................................... 21
ITEM 6. Exhibits and Reports on Form 8-K........................................................... 21
Signatures................................................................................. 22
FORWARD LOOKING STATEMENTS
"Safe Harbor" statement under the Private Securities Litigation Reform Act
of 1995: This Form 10-Q contains forward-looking statements that are subject to
risks and uncertainties, including, but not limited to, changes in economic
conditions in our market areas, changes in policies by regulatory agencies, the
impact of competitive loan products, loan demand risks, fluctuations in interest
rates and operating results and other risks detailed from time to time in our
filings with the Securities and Exchange Commission. We caution readers not to
place undue reliance on forward-looking statements. We do not undertake and
specifically disclaim 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 our actual results
for 2001 and beyond to differ materially from those expressed in any
forward-looking statements by, or on behalf of, us.
As used throughout this report, the terms "we", "our" or "Company" refer
to ITLA Capital Corporation and its consolidated subsidiaries.
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ITLA CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30,
2001 DECEMBER 31,
(UNAUDITED) 2000
---------------- ----------------
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
ASSETS
Cash and cash equivalents $ 98,301 $ 70,950
Investment securities available for sale, at fair value 14,474 46,325
Stock in Federal Home Loan Bank 9,307 3,963
Real estate loans, net (net of allowance for loan losses of $22,661 and
$22,608 in 2001 and 2000, respectively) 1,080,332 1,045,927
Real estate loans, held in trust (net of allowance for loan losses of
$4,578 in 2001 and 2000) 184,784 211,722
Interest receivable 10,933 11,821
Other real estate owned, net 2,124 2,250
Premises and equipment, net 2,103 2,690
Deferred income taxes 11,137 11,302
Other assets 8,025 8,193
----------- -----------
Total assets $ 1,421,520 $ 1,415,143
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposit accounts $ 926,912 $ 1,015,699
Collateralized mortgage obligations 135,154 161,852
Federal Home Loan Bank advances 186,135 79,250
Accounts payable and other liabilities 11,453 11,269
----------- -----------
Total liabilities 1,259,654 1,268,070
----------- -----------
Commitments and contingencies
Guaranteed preferred beneficial interests in the Company's junior
subordinated deferrable interest debentures, net 28,069 13,519
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized, none issued -- --
Contributed capital-common stock, $.01 par value; 20,000,000 shares
authorized, 8,210,749 and 8,206,749 issued and outstanding in 2001
and 2000, respectively 57,168 57,120
Retained earnings 107,049 97,617
Accumulated other comprehensive income 21 91
----------- -----------
164,238 154,828
Less treasury stock, at cost - 2,058,336 and 1,546,336 shares in
2001 and 2000, respectively (30,441) (21,274)
----------- -----------
Total shareholders' equity 133,797 133,554
----------- -----------
Total liabilities and shareholders' equity $ 1,421,520 $ 1,415,143
=========== ===========
See accompanying notes to the unaudited consolidated financial statements.
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ITLA CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- -----------------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
2001 2000 2001 2000
-------- -------- -------- --------
Interest income:
Real estate loans, including fees $ 26,635 $ 24,778 $ 53,418 $ 49,379
Real estate loans held in trust 4,006 5,672 8,328 5,918
Cash and investment securities 787 1,093 1,948 2,765
-------- -------- -------- --------
Total interest income 31,428 31,543 63,694 58,062
-------- -------- -------- --------
Interest expense:
Deposit accounts 14,097 13,389 29,911 26,390
Collateralized mortgage obligations 1,689 3,830 3,982 3,981
Federal Home Loan Bank advances 1,127 444 1,658 894
-------- -------- -------- --------
Total interest expense 16,913 17,663 35,551 31,265
-------- -------- -------- --------
Net interest income before provision
for loan losses 14,515 13,880 28,143 26,797
Provision for loan losses 500 1,200 950 1,800
-------- -------- -------- --------
Net interest income after provision
for loan losses 14,015 12,680 27,193 24,997
-------- -------- -------- --------
Noninterest income:
Fee income from mortgage banking activities -- 33 60 33
Gain on sale of investment securities available
for sale -- -- -- 1,412
Other 239 111 493 273
-------- -------- -------- --------
Total noninterest income 239 144 553 1,718
-------- -------- -------- --------
Noninterest expense:
Compensation and benefits 3,097 2,439 5,853 4,879
Occupancy and equipment 750 696 1,443 1,395
FDIC assessment 48 47 93 95
Other 1,886 1,919 3,523 3,997
-------- -------- -------- --------
Total recurring general and administrative 5,781 5,101 10,912 10,366
Nonrecurring expense -- -- -- 1,400
-------- -------- -------- --------
Total general and administrative 5,781 5,101 10,912 11,766
-------- -------- -------- --------
Real estate owned expense (income), net 35 6 50 (48)
Provision for losses on other real estate owned 81 -- 203 144
(Gain) loss on sale of other real estate owned, net (69) (60) (37) 9
-------- -------- -------- --------
Total real estate owned expense, net 47 (54) 216 105
-------- -------- -------- --------
Total noninterest expense 5,828 5,047 11,128 11,871
-------- -------- -------- --------
Income before provision for income taxes and
minority interest in income of subsidiary 8,426 7,777 16,618 14,844
Minority interest in income of subsidiary 796 -- 1,370 --
-------- -------- -------- --------
Income before provision for income taxes 7,630 7,777 15,248 14,844
Provision for income taxes 2,911 3,184 5,816 6,007
-------- -------- -------- --------
NET INCOME $ 4,719 $ 4,593 $ 9,432 $ 8,837
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.71 $ 0.64 $ 1.41 $ 1.23
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.69 $ 0.63 $ 1.36 $ 1.21
======== ======== ======== ========
See accompanying notes to the unaudited consolidated financial statements.
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ITLA CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------
2001 2000
--------- ---------
(IN THOUSANDS)
Cash Flows From Operating Activities:
Net Income $ 9,432 $ 8,837
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of premises and equipment 405 415
Amortization of premium on purchased loans 1,615 949
Accretion of deferred loan origination fees, net of costs (915) (780)
Amortization of original issue discount and deferred debt
issuance costs on collateralized mortgage obligations 166 392
Provision for loan losses 950 1,800
Provision for losses on other real estate owned 203 144
Gain on sale of investment securities available for sale -- (1,412)
(Gain) loss in the sale of other real estate owned (37) 9
Decrease (increase) in interest receivable 888 (107)
Decrease (increase) in other assets 244 (7,522)
Increase in accounts payable and other liabilities 185 4,049
--------- ---------
Net cash provided by operating activities 13,136 6,774
--------- ---------
Cash Flows From Investing Activities:
Purchases of investment securities available for sale (11,000) (15,000)
Proceeds from maturity of investment securities available for sale 43,260 10,000
Proceeds from the sale of investment securities available for sale -- 16,176
(Increase) decrease in stock in Federal Home Loan Bank (5,344) 5,661
Purchases of real estate loans (119,852) (53,539)
Decrease in real estate loans, net 82,488 60,075
Cash paid to acquire ICCMAC Multifamily and Commercial Trust 1999-1 -- (51,069)
Repayment of real estate loans held in trust 26,118 9,559
Proceeds from sale of real estate loans 356 12,720
Proceeds from the sale of other real estate owned 1,723 1,018
Other, net (198) (498)
--------- ---------
Net cash provided by (used in) investing activities 17,551 (4,897)
--------- ---------
Cash Flows From Financing Activities:
Net (decrease) increase in deposit accounts (88,787) 10,973
Principal repayments on collateralized mortgage obligations (26,864) (10,528)
Proceeds from borrowings from the Federal Home Loan Bank 106,885 --
Repayment of borrowings from the Federal Home Loan Bank -- (28,000)
Proceeds from the issuance of trust preferred securities 14,549 --
Proceeds from exercise of employee stock options 48 30
Cash paid to acquire treasury stock (9,167) (2,780)
--------- ---------
Net cash used in financing activities (3,336) (30,305)
--------- ---------
Net increase (decrease) in cash and cash equivalents 27,351 (28,428)
Cash and cash equivalents at beginning of the period 70,950 72,242
--------- ---------
Cash and cash equivalents at end of period $ 98,301 $ 43,814
========= =========
Supplemental Cash Flow Information:
Cash paid during the period for interest $ 35,729 $ 31,746
Cash paid during the period for income taxes $ 5,800 $ 7,850
Noncash Investing Transactions:
Loans transferred to other real estate owned $ 1,773 $ 1,290
See accompanying notes to the unaudited consolidated financial statements
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ITLA CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of ITLA Capital
Corporation ("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 period indicated. The unaudited
consolidated financial statements include the accounts of ITLA Capital and its
subsidiaries, Imperial Capital Bank (the "Bank") and Imperial Capital Real
Estate Investment Trust ("Imperial Capital REIT"), ITLA Capital Statutory Trust
I ("Trust I") and ITLA Capital Statutory Trust II ("Trust II"). All intercompany
transactions and balances have been eliminated. Certain information and
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States 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 and
six months ended June 30, 2001 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 consolidated financial statements and notes thereto
included in our annual report on Form 10-K for the year ended December 31, 2000.
NOTE 2 - EARNINGS PER SHARE
Basic Earnings Per Share ("Basic EPS") is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted Earnings Per Share ("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 Company's earnings.
The following is a reconciliation of the calculation of Basic EPS and
Diluted EPS.
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30,
-------------------------------------- --------------------------------------
WEIGHTED- WEIGHTED-
AVERAGE PER AVERAGE PER
NET SHARES SHARE NET SHARES SHARE
INCOME OUTSTANDING AMOUNT INCOME OUTSTANDING AMOUNT
------ ----------- -------- ------ ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2001
------------------
Basic EPS $4,719 6,633 $ 0.71 $9,432 6,676 $ 1.41
Effect of dilutive
stock options -- 221 (0.02) -- 236 (0.05)
------ ------ -------- ------ ------ --------
Diluted EPS $4,719 6,854 $ 0.69 $9,432 6,912 $ 1.36
====== ====== ======== ====== ====== ========
2000
------------------
Basic EPS $4,593 7,190 $ 0.64 $8,837 7,206 $ 1.23
Effect of dilutive
stock options -- 114 (0.01) -- 112 (0.02)
------ ------ -------- ------ ------ --------
Diluted EPS $4,593 7,304 $ 0.63 $8,837 7,318 $ 1.21
====== ====== ======== ====== ====== ========
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NOTE 3 - COMPREHENSIVE INCOME
Comprehensive income, which encompasses net income and the net change in
unrealized gains (losses) on investment securities available for sale, is
presented below:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- ------------------------
2001 2000 2001 2000
------- ------- ------- -------
(IN THOUSANDS)
Net Income $ 4,719 $ 4,593 $ 9,432 $ 8,837
Other comprehensive income (loss)- Unrealized
gain (loss) on investment securities available
for sale, net of tax expense of $20 and $28 for
the three months ended June 30, 2001 and 2000,
and net of tax benefit of $47 and $1 for the
six months ended June 30, 2001 and 2000,
respectively. 30 70 (70) (1)
Less: reclassification adjustment for gains
included in net income, net of tax benefit of
$578 in 2000 -- -- -- (834)
------- ------- ------- -------
Comprehensive income $ 4,749 $ 4,663 $ 9,362 $ 8,002
======= ======= ======= =======
NOTE 4 - IMPAIRED LOANS RECEIVABLE
As of June 30, 2001 and December 31, 2000, the recorded investment in
impaired real estate loans and impaired real estate loans held in trust was
$28.3 million and $18.9 million, respectively. The average recorded investment
in impaired loans was $28.5 million for the three months ended June 30, 2001 and
$13.3 million for the same period last year. The average recorded investment in
impaired loans was $25.2 million for the six months ended June 30, 2001 and
$16.0 million for the same period last year. Interest income recognized on
impaired loans totaled $12,000 for the three and six months ended June 30, 2001
as compared to none and $300,000 for the same periods last year.
NOTE 5 - GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
The Company has two wholly-owned trust subsidiaries, Trust I and Trust II
which issued $14.0 million of 10.60% cumulative trust preferred securities and
$15.0 million of 10.20% cumulative trust preferred securities, respectively,
referred to collectively as the Trust Preferred securities. ITLA Capital has
fully and unconditionally guaranteed the Trust Preferred securities along with
all obligations of each trust under their respective trust agreements. Each
trust was formed for the exclusive purpose of issuing their respective Trust
Preferred securities and common securities and using the proceeds to acquire
ITLA Capital's junior subordinated deferrable interest debentures. Trust I
acquired an aggregate principal amount of $14.4 million of ITLA Capital's 10.60%
junior subordinated deferrable interest debentures due September 7, 2030 and
Trust II acquired an aggregate principal amount of $15.5 million of ITLA
Capital's 10.20% junior subordinated deferrable interest debentures due February
22, 2031. The sole assets of each trust are the debentures it holds. Each of the
debentures is redeemable, in whole or in part, at ITLA Capital's option on or
after ten years after issuance, at declining premiums to maturity. The Company
used the proceeds from the debentures for general corporate purposes, including
an aggregate of $28.0 million in capital contributions to the Bank to support
future growth. The costs associated with the Trust Preferred securities issuance
have
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been capitalized and are being amortized using a method that approximates the
interest method over a period of ten years. The distributions payable on the
Trust Preferred securities are reflected as "Minority interest in income of
subsidiary" in the Consolidated Statements of Income. The Trust preferred
securities are reflected on the Consolidated Statement of Financial Condition as
"Guaranteed Preferred Beneficial Interests in the Company's Junior Subordinated
Deferrable Interest Debentures."
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board ("FASB") has finalized new
accounting standards covering business combinations, goodwill and intangible
assets. These new rules published in July 2001, consist of Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets". In conjunction with these
new accounting standards the FASB has issued "Transition Provisions for New
Business Combination Accounting Rules" ("Provisions") that require the Company
to cease amortization of goodwill and adopt the new impairment approach as of
January 1, 2002. Management does not expect SFAS No.'s 141 and 142 to have a
material effect on the Company's financial condition or results of operations.
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
factors that influenced the financial condition and results of operations for
the three months and six months ended June 30, 2001.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000
GENERAL
Consolidated net income totaled $4.7 million for the three months ended
June 30, 2001 compared to $4.6 million for the same period last year, an
increase of 2.2%. The increase in net income was primarily due to the increase
in net interest income and the decrease in the provision for loan losses,
partially offset by increases in noninterest expense and the expense associated
with the Trust Preferred securities. Diluted EPS was $0.69 for the three months
ended June 30, 2001 compared to $0.63 for the same period last year, an increase
of 9.5%.
The return on average assets was 1.37% for the three months ended June 30,
2001 compared to 1.45% for the same period last year. The return on average
shareholders' equity was 13.69% for the three months ended June 30, 2001,
compared to 14.50% for the same period last year.
Total loan production was $118.1 million for the three months ended June
30, 2001, consisting of the origination and/or purchase of $99.4 million of
commercial real estate loans, $2.5 million of residential real estate loans and
$16.2 million of franchise loans. Loan production during the same period last
year totaled $74.6 million, consisting of the origination of $37.1 million of
commercial real estate loans and the purchase of $37.5 million of residential
real estate loans.
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NET INTEREST INCOME AND MARGIN
The following table presents, for the three months ended June 30, 2001 and
2000, our condensed average balance sheet information, together with interest
income and yields earned on average interest-earning assets and interest expense
and rates paid on average interest-bearing liabilities. Average balances are
computed using daily average balances. Nonaccrual loans are included in loans
receivable.
FOR THE THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------------
2001 2000
--------------------------------------- ------------------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- ----------- ------ ----------- ----------- ------
(DOLLARS IN THOUSANDS)
ASSETS
Cash and investments $ 63,279 $ 787 4.99% $ 66,714 $ 1,093 6.59%
Loans receivable:
Real estate loans 1,114,223 26,635 9.59% 947,193 24,778 10.52%
Real estate loans
held in trust 195,059 4,006 8.24% 255,339 5,672 8.93%
----------- ----------- ---- ----------- ----------- -----
Total loans receivable 1,309,282 30,641 9.39% 1,202,532 30,450 10.18%
----------- ----------- ---- ----------- ----------- -----
Total interest-earning assets 1,372,561 $ 31,428 9.18% 1,269,246 $ 31,543 10.00%
=========== ==== =========== =====
Noninterest-earning assets 32,345 27,254
Allowance for loan losses (27,401) (24,780)
----------- -----------
Total assets $ 1,377,505 $ 1,271,720
=========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposit accounts:
Money market and
passbook accounts $ 105,619 $ 1,139 4.33% $ 115,418 $ 1,598 5.57%
Time certificates 860,915 12,958 6.04% 781,635 11,791 6.07%
----------- ----------- ---- ----------- ----------- -----
Total deposit accounts 966,534 14,097 5.85% 897,053 13,389 6.00%
Collateralized mortgage
obligations 140,575 1,689 4.82% 201,758 3,830 7.63%
FHLB advances 89,164 1,127 5.07% 31,931 444 5.59%
----------- ----------- ---- ----------- ----------- -----
Total interest-bearing
liabilities 1,196,273 $ 16,913 5.67% 1,130,742 $ 17,663 6.28%
=========== ==== =========== =====
Noninterest-bearing liabilities 14,934 13,542
Trust preferred securities 28,063 --
Shareholders' equity 138,235 127,436
----------- -----------
Total liabilities
and shareholders' equity $ 1,377,505 $ 1,271,720
=========== ===========
Net interest spread 3.51% 3.72%
==== =====
Net interest income
Before provision for
loan losses $ 14,515 $ 13,880
=========== ===========
Net interest margin 4.24% 4.40%
==== =====
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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 and changes in average interest rates.
The change in interest due to both volume and rate has been allocated to change
due to volume and rate in proportion to the relationship of absolute dollar
amounts of each.
FOR THE THREE MONTHS ENDED
JUNE 30, 2001 AND 2000
INCREASE (DECREASE) DUE TO:
---------------------------------
VOLUME RATE TOTAL
------- ------- -------
(IN THOUSANDS)
Interest and fees earned from:
Real estate loans $ 4,032 $(2,175) $ 1,857
Real estate loans held in trust (1,230) (436) (1,666)
Cash and investment securities (42) (264) (306)
------- ------- -------
Total increase (decrease) in
interest income $ 2,760 (2,875) (115)
------- ------- -------
Interest paid on:
Deposit accounts 1,036 (328) 708
Collateralized mortgage obligations (733) (1,408) (2,141)
FHLB advances 724 (41) 683
------- ------- -------
Total increase (decrease) in
interest expense 1,027 (1,777) (750)
------- ------- -------
Increase (decrease) in net interest income $ 1,733 $(1,098) $ 635
======= ======= =======
Total interest income decreased $115,000 to $31.4 million in the second
quarter of 2001 compared to $31.5 million for the same period last year. The
decrease in interest income was due primarily to lower yields on interest
earning assets partially offset by an increase in interest income due to a
higher average outstanding balance of interest earning assets.
The average balance of real estate loans was $1.1 billion for the three
months ended June 30, 2001 as compared to $947.2 million for the same period
last year. This increase was primarily due to increases in real estate loans
secured by income producing properties, construction loans and purchased single
family residential mortgages. Loans secured by income producing properties and
construction loans had an average balance of $977.7 million during the quarter
ended June 30, 2001 compared to $839.4 million during the same period last year.
The average balance of purchased single family residential mortgages was $136.5
million during the quarter ended June 30, 2001, compared to $107.8 million in
the same period in the prior year. Purchased single family residential mortgages
are not presently expected to materially increase as a percentage of our current
total assets. The average balance of real estate loans held in trust was $195.1
million for the three months ended June 30, 2001 as compared to $255.3 million
for the same period last year. This decrease was primarily due to loan
prepayments and principal amortization.
The average yield earned on real estate loans decreased 93 basis points to
9.59% in the quarter ended June 30, 2001 as compared to 10.52% in the same
period last year. The decrease in the yield on real estate loans was primarily
due to the repricing of variable rate loans at lower interest rates resulting
from the general decline in market interest rates. Our commercial real estate
loan portfolio is primarily comprised of adjustable rate mortgages indexed to
the six month LIBOR.
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Approximately 90.2% of our real estate loan portfolio (including real
estate loans held in trust) are adjustable rate mortgages at June 30 2001. These
adjustable rate mortgages generally reprice on a quarterly basis and
approximately $1.1 billion or 95.1% of our real estate loan portfolio contain
interest rate floors, below which the loans' contractual interest rate may not
adjust. At June 30, 2001, the weighted average floor interest rate of these
loans was 9.1%. At that date, approximately $801.6 million or 73.2% of those
loans were at the floor interest rate, approximately $70.3 million or 6.4% were
within 50 basis points of their floor interest rate, and approximately $58.6
million or 5.3% were greater than 50 but less than 100 basis points from their
floor interest rate. As market interest rates decline and the loans reprice,
more of our portfolio will reach the floor interest rate and no longer reprice
downward. Accordingly, we expect that the rate of decline in the yield on our
adjustable rate loans due to falling interest rates may be less significant
during the remainder of 2001, as compared to the six months ended June 30, 2001.
Total interest expense decreased by $750,000 to $16.9 million in the
second quarter of 2001, compared to $17.7 million for the same period last year.
This decrease was primarily attributable to lower interest rates paid on all
interest bearing liabilities and a lower average balance on the Collateralized
Mortgage Obligations ("CMO's") partially offset by higher average balances on
deposit accounts and Federal Home Loan Bank ("FHLB") advances.
The average balance of deposit accounts increased $69.4 million to $966.5
million for the three months ended June 30, 2001 compared to $897.1 million for
the same period last year. Our cost of funds decreased to 5.67% during the three
month period ended June 30, 2001, compared to 6.28% for the same period last
year. This decrease in funding costs was due primarily to lower rates being paid
on the CMO's and deposit accounts as compared to the same period last year due
to the general decline in market interest rates. We expect the cost of funds of
our deposit accounts to decline during the remainder of 2001, as the
certificates issued at higher market interest rates mature and are replaced with
certificates that bear interest at current market rates. Approximately $481.5
million, or 51.9% of our deposit accounts are certificates that will mature
within the next six months. The average balance of the CMO's was $140.6 million
during the second quarter of 2001, compared to $201.8 million for the same
period last year. The average rate paid on the CMO's was 4.82% during the three
months ended June 30, 2001 compared to 7.63% for the same period last year. FHLB
advances averaged $89.2 million in the current quarter, compared to $31.9
million for the same period last year.
Net interest margin decreased to 4.24% for the three months ended June 30,
2001 as compared to 4.40% for the same period last year primarily due to the 82
basis point decrease in the yield on total average interest earning assets
partially offset by the 61 basis point decrease in cost of funds.
PROVISION FOR LOAN LOSSES
Management periodically assesses the adequacy of the allowance for loan
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;
- credit and geographic concentrations;
- delinquency trends and nonaccrual loan levels;
- historical loss experience and risks associated with changes in economic,
social and business conditions.
11
12
Accordingly, the calculation of the adequacy of the allowance for loan
losses is not based solely on the level of nonperforming assets. Management
believes that the allowance for loan losses as of June 30, 2001 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 our financial condition and results of operations. In
addition, the determination of the amount of the Bank's allowance for loan
losses is subject to review by the Bank'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 loan losses totaled $500,000 in the second quarter of
2001, compared to $1.2 million for the same period in the prior year. The
provision for loan losses is recorded to provide for reserves based on the
aggregate amount of nonperforming loans and other loans of concern, which has
declined in total since December 31, 2000. The allowance for loan losses was
2.11% of total real estate loans and real estate loans held in trust at June 30,
2001 as compared to 2.12% at December 31, 2000. See also-"Financial
Condition-Credit Risk."
NONINTEREST EXPENSE
Noninterest expense totaled $5.8 million for the three months ended June
30, 2001, compared to $5.0 million for the same period last year. Compensation
and benefits expense totaled $3.1 million during the three months ended June 30,
2001, compared to $2.4 million for the same period last year. The increase in
compensation and benefits expense was primarily due to additions made to retail
and wholesale loan origination sales staff.
For the three months ended June 30, 2001, our ratio of consolidated
general and administrative expense to average assets, on an annualized basis,
increased to 1.68% compared to 1.60% for the same period last year. Our
efficiency ratio, (excluding real estate operations), which is defined as
general and administrative expenses as a percentage of net interest income and
noninterest income was 39.18% for the quarter ended June 30, 2001 compared to
36.37% for the same period last year.
MINORITY INTEREST IN INCOME OF SUBSIDIARY
Minority interest in income of subsidiary was $796,000 during the three
month period ended June 30, 2001 consisting of accrued distributions payable on
our Trust Preferred securities. See Note 5 to the unaudited Consolidated
Financial Statements for further information.
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000
GENERAL
Consolidated net income totaled $9.4 million for the six months ended June
30, 2001 compared to $8.8 million for the same period last year, an increase of
6.8%. The increase in net income was primarily due to an increase in net
interest income and decreases in noninterest expense and provision for loan
losses. These items were partially offset by a decrease in noninterest income
and an increase in minority interest in income of subsidiary. Diluted EPS was
$1.36 for the six months ended June 30, 2001 compared to $1.21 for the same
period last year, an increase of 12.4%.
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13
The return on average assets was 1.38% for the six months ended June 30,
2001 compared to 1.51% for the same period last year. The return on average
shareholders equity was 13.87% for the six months ended June 30, 2001, compared
to 13.97% for the same period last year.
Total loan production was $247.4 million for the six months ended June 30,
2001, consisting of the origination and/or purchase of $200.1 million of
commercial real estate loans, $17.8 million of residential real estate loans and
$29.5 million of franchise loans. Loan production during the same period last
year totaled $104.5 million, consisting of the origination of $51.8 million of
commercial real estate loans and the purchase of $52.7 million of residential
real estate loans. Additionally, during the same period last year, we acquired
$250.5 million of commercial real estate loans when we purchased the ICCMAC
Multifamily and Commercial Trust 1999-1 ("ICCMAC Trust").
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NET INTEREST INCOME AND MARGIN
The following table presents, for the six months ended June 30, 2001 and
2000, our condensed average balance sheet information, together with interest
income and yields earned on average interest-earning assets and interest expense
and rates paid on average interest-bearing liabilities. Average balances are
computed using daily average balances. Nonaccrual loans are included in loans
receivable.
FOR THE SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------------
2001 2000
--------------------------------------- ------------------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- ----------- ------ ----------- ----------- ------
(DOLLARS IN THOUSANDS)
ASSETS
Cash and investments $ 71,581 $ 1,948 5.49% $ 93,903 $ 2,765 5.92%
Loans receivable:
Real estate loans 1,094,841 53,418 9.84% 949,008 49,379 10.46%
Real estate loans
held in trust 202,218 8,328 8.30% 133,361 5,918 8.92%
----------- ----------- ---- ----------- ----------- -----
Total loans receivable 1,297,059 61,746 9.60% 1,082,369 55,297 10.27%
----------- ----------- ---- ----------- ----------- -----
Total interest-earning assets 1,368,640 $ 63,694 9.38% 1,176,272 $ 58,062 9.93%
=========== ==== =========== =====
Noninterest-earning assets 32,854 23,680
Allowance for loan losses (27,451) (22,443)
----------- -----------
Total assets $ 1,374,043 $ 1,177,509
=========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposit accounts:
Money market and
passbook accounts $ 105,319 $ 2,491 4.77% $ 120,573 $ 3,258 5.43%
Time certificates 882,750 27,420 6.26% 781,335 23,132 5.95%
----------- ----------- ---- ----------- ----------- -----
Total deposit accounts 988,069 29,911 6.10% 901,908 26,390 5.88%
Collateralized mortgage
obligations 147,731 3,982 5.44% 108,574 3,981 7.37%
FHLB advances 62,300 1,658 5.37% 32,635 894 5.51%
----------- ----------- ---- ----------- ----------- -----
Total interest-bearing
liabilities 1,198,100 $ 35,551 5.98% 1,043,117 $ 31,265 6.03%
=========== ==== =========== =====
Noninterest-bearing liabilities 14,909 7,141
Trust preferred securities 23,887 --
Shareholders' equity 137,147 127,251
----------- -----------
Total liabilities
and shareholders' equity $ 1,374,043 $ 1,177,509
=========== ===========
Net interest spread 3.40% 3.90%
==== =====
Net interest income
before provision for
loan losses $ 28,143 $ 26,797
=========== ===========
Net interest margin 4.15% 4.58%
==== =====
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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 and changes in average interest rates.
The change in interest due to both volume and rate has been allocated to change
due to volume and rate in proportion to the relationship of absolute dollar
amounts of each.
FOR THE SIX MONTHS ENDED
JUNE 30, 2001 AND 2000
-----------------------------------------
INCREASE (DECREASE) DUE TO:
-----------------------------------------
VOLUME RATE TOTAL
------- ------- -------
(IN THOUSANDS)
Interest and fees earned from:
Real estate loans $ 7,003 $(2,964) $ 4,039
Real estate loans held in trust 2,822 (412) 2,410
Cash and investments (615) (202) (817)
------- ------- -------
Total increase (decrease) in interest income $ 9,210 (3,578) $ 5,632
------- ------- -------
Interest paid on:
Deposit accounts 2,556 965 3,521
Collateralized mortgage obligations 1,048 (1,047) 1
FHLB advances 787 (23) 764
------- ------- -------
Total increase (decrease) in interest expense 4,391 (105) 4,286
------- ------- -------
Increase (decrease) in net interest income $ 4,819 $(3,473) $ 1,346
======= ======= =======
Total interest income increased $5.6 million to $63.7 million in the six
months ended June 30, 2001 compared to $58.1 million for the same period last
year due to increases in the average balance of the Bank's real estate loans and
real estate loans held in trust. These increases in interest income were
primarily offset by decreases resulting from lower yields on all earning assets
and to a lesser extent, the decline in the average balance of cash and
investment securities.
The average balance of real estate loans increased to $1.1 billion during
the six months ended June 30, 2001 as compared to $949.0 million for the same
period last year. This increase was primarily due to growth in real estate loans
secured by income producing properties, construction loans and purchased single
family residential mortgages. Loans secured by income producing properties and
construction loans had an average balance of $959.6 million during the six
months ended June 30, 2001 compared to $851.1 million during the same period
last year. The average balance of purchased single family residential mortgages
was $135.3 million during the six months ended June 30, 2001, compared to $98.0
million during the same period in the prior year. Purchased single family
residential mortgages are not presently expected to materially increase as a
percentage of our current total assets.
The average balance of real estate loans held in trust was $202.2 million
for the six months ended June 30, 2001 as compared to $133.4 million for the
same period last year. This increase was primarily due to the timing of the
acquisition of the ICCMAC Trust which occurred during the last week of the prior
years' first quarter.
The average yield earned on real estate loans decreased 62 basis points to
9.84% for the six months ended June 30, 2001 as compared to 10.46% in the same
period in the prior year. The decrease in the yield on real estate loans was
primarily due to the repricing of variable rate loans at lower interest rates
and the reduced yield earned on current period loan production, both resulting
from the general decline in market interest rates. Our commercial real estate
loan portfolio and
15
16
current loan production is primarily comprised of adjustable rate mortgages
indexed to the six month LIBOR.
Total interest expense increased by $4.3 million to $35.6 million in the
six months ended June 30, 2001, compared to $31.3 million for the same period
last year. This increase was primarily attributable to the increase in the net
average balance of deposit accounts, CMO's and FHLB advances.
The average balance of deposit accounts increased $86.2 million to $988.1
million for the six months ended June 30, 2001 compared to $901.9 million for
the same period last year. Our cost of funds decreased to 5.98% for the six
month period ended June 30, 2001, compared to 6.03% for the same period last
year. This decrease in funding costs was due primarily to lower rates paid on
the CMO's and FHLB advances, partially offset by higher rates paid on deposit
accounts. FHLB advances averaged $62.3 million for the six months ended June 30,
2001, compared to $32.6 million for the same period last year. The average rate
paid on FHLB advances was 5.37% for the six months ended June 30, 2001, compared
to 5.51% for the same period last year. The average balance of the CMO's was
$147.7 million during the six months ended June 30, 2001, compared to $108.6
million for the same period last year. The average rate paid on the CMO's was
5.44% during the six months ended June 30, 2001 compared to 7.37% for the same
period last year.
Net interest margin decreased to 4.15% for the six months ended June 30,
2001 as compared to 4.58% for the same period last year primarily due to the 55
basis point decrease in the yield on total average interest earning assets and
5 basis point decrease in cost of funds.
PROVISION FOR LOAN LOSSES
The provision for loan losses totaled $950,000 in the six months ended
June 30, of 2001, compared to $1.8 million for the same period in the prior
year. The provision for loan losses is recorded to provide for reserves based on
the aggregate amount of nonperforming loans and other loans of concern, which
has declined in total since December 31, 2000.
NONINTEREST INCOME
Noninterest income totaled $553,000 for the six months ended June 30,
2001, compared to $1.7 million for the same period last year. The previous
year's noninterest income included a $1.4 million gain on sale of investment
securities available for sale.
NONINTEREST EXPENSE
Noninterest expense totaled $11.1 million for the six months ended June
30, 2001, compared to $11.9 million for the same period last year. The previous
year's noninterest expense included a $1.4 million nonrecurring charge relating
to the consolidation of the Bank's headquarters with ITLA Capital's headquarters
in La Jolla, California. Compensation and benefits expense totaled $5.9 million
during the six months ended June 30, 2001, compared to $4.9 million for the same
period last year. The increase in compensation and benefits expense was
primarily due to additions made to the retail and wholesale loan originations
sales staff. In addition, full time equivalent associates totaled 130 for the
six months ended June 30, 2001, compared to 115 for the same period last year.
For the six months ended June 30, 2001, our ratio of consolidated general
and administrative expense to average assets, on an annualized basis, decreased
to 1.59% compared to 1.76% for the same period last year. Our efficiency ratio
(excluding real estate operations) which is defined as general
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17
and administrative expenses as a percentage of net interest income and
noninterest income was 38.03% for the six months ended June 30, 2001 compared to
36.35% for the same period last year.
MINORITY INTEREST IN INCOME OF SUBSIDIARY
Minority interest in income of subsidiary was $1.4 million during the six
month period ended June 30, 2001 consisting of accrued distributions payable on
our Trust Preferred securities. See Note 5 to the unaudited Consolidated
Financial Statements for further information.
FINANCIAL CONDITION
Total assets remained relatively constant at $1.42 billion at June 30,
2001 and December 31, 2000, respectively. During the six months ended June 30,
2001, the Bank's loan portfolio increased $34.4 million and, cash and cash
equivalents increased by $27.4 million. These increases were partially offset by
a $31.9 million decrease in investment securities available for sale and a $26.9
million decrease in real estate loans held in trust. Total deposit accounts,
which are concentrated in time certificates, decreased to $926.9 million at June
30, 2001 as compared to $1.02 billion at December 31, 2000. We retained a
majority of the funds which matured through rollover of maturing deposit
accounts during the six months ended June 30, 2001 during a sharply declining
interest rate environment. Although we compete for deposits primarily on the
basis of rates, management believes that a significant portion of deposits will
remain with us upon maturity based on our historical experience regarding
retention of deposits. CMO's decreased $26.7 million to $135.2 million at June
30, 2001 compared to $161.9 million at December 31, 2000. FHLB advances
increased $106.8 million to $186.1 million at June 30, 2001, compared to $79.3
million at December 31, 2000, as we replaced higher costing deposits with lower
cost FHLB advances.
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CREDIT RISK
NONPERFORMING ASSETS, OTHER LOANS OF CONCERN AND ALLOWANCE FOR LOAN LOSSES
The following table sets forth our nonperforming assets by category,
accruing loans past due 90 days or more and troubled debt restructurings as of
the dates indicated.
JUNE 30, DECEMBER 31,
2001 2000
-------- ------------
(DOLLARS IN THOUSANDS)
Nonaccrual loans:
Real estate(1) $13,294 $ 9,430
Construction 13,725 8,712
------- -------
Total nonaccrual loans 27,019 18,142
Other real estate owned, net 2,124 2,250
------- -------
Total nonperforming assets 29,143 20,392
Accruing loans past due 90 days or more
with respect to principal or interest 269 9,765
Performing troubled debt restructuring 3,607 3,002
------- -------
$33,019 $33,159
======= =======
Nonaccrual loans to total real estate loans
and real estate loans held in trust 2.11% 1.42%
Allowance for loan losses to nonaccrual loans 100.80% 149.85%
Nonperforming assets to total assets 2.05% 1.44%
(1) Includes one loan with a net book balance of $225,000 at June 30, 2001 and
one loan with a net book of $1.4 million at December 31, 2000 that are
nonperforming troubled debt restructurings.
At June 30, 2001, other real estate owned consisted of three income
producing properties totaling $1.7 million and seven single family residential
properties totaling $391,000.
As of June 30, 2001 and December 31, 2000, other loans of concern totaled
$33.9 million and $70.9 million, respectively. Other loans of concern consist of
loans with respect to which known information concerning possible credit
problems with the borrowers or the cash flows of the properties securing the
respective loans has caused management to be concerned about the ability of the
borrowers to comply with present loan repayment terms, which may result in the
future inclusion of such loans in the nonaccrual category. The decrease in other
loans of concern for the six months ended June 30, 2001 was primarily due to
$15.4 million of loans being paid-off, $16.9 million of loans being upgraded due
to improving conditions and $10.0 million of loans migrating to nonaccrual
status, partially offset by $5.3 million of new other loans of concern.
Our loan delinquencies (delinquent loans greater than 30 days) increased
slightly to $46.0 million or 3.57% of gross loan portfolio at June 30, 2001 as
compared to $44.1 million or 3.46% of gross loan portfolio at December 31, 2000.
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The following table provides certain information with respect to our
allowance for loan losses, including charge-offs, recoveries and selected ratios
for the periods indicated.
FOR SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
(DOLLARS IN THOUSANDS)
Balance at beginning of period $ 27,186 $ 19,895
Provision for loan losses 950 4,775
Addition due to purchase of the ICCMAC
Trust -- 4,614
Charge-offs:
Real estate loans (918) (1,489)
Construction loans -- (1,000)
-------- --------
Total charge-offs (918) (2,489)
-------- --------
Recoveries:
Real estate loans 21 391
-------- --------
Total recoveries 21 391
-------- --------
Net charge-offs (897) (2,098)
-------- --------
Balance at end of period $ 27,239 $ 27,186
======== ========
Allowance for loan losses as a percentage
of real estate loans and loans held in
trust, net 2.11% 2.12%
LIQUIDITY
Liquidity refers to our 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 real estate loans. We maintain a cash and investment securities portfolio
designed to satisfy operating liquidity requirements while preserving capital
and maximizing yield. As of June 30, 2001, we held approximately $98.3 million
of cash and cash equivalents (consisting primarily of short-term investments
with original maturities of 90 days or less) and $14.5 million of investment
securities classified as available for sale. Short-term fixed income investments
classified as cash equivalents consisted of interest-bearing deposits at
financial institutions, government money market funds and short-term government
agency securities, while investment securities available for sale consisted
primarily of fixed income instruments which were rated "AAA" or equivalent by
nationally recognized rating agencies. As of June 30, 2001 and December 31,
2000, the Bank's liquidity ratios were 12.1% and 11.7%, respectively. In
addition, our liquidity position is supported by a credit facility with the
Federal Home Loan Bank of San Francisco. As of June 30, 2001, we had remaining
available borrowing capacity under this credit facility of $36.0 million, net of
the $1.9 million of additional Federal Home Loan Bank Stock that we would be
required to purchase to support those additional borrowings, and $30.0 million
of unused federal funds credit facilities under established lines of credit with
two banks.
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CAPITAL RESOURCES
As of June 30, 2001, the Bank's Leverage (Core), Tier I and Total
Risk-Based capital ratios were 10.5%, 11.3% and 12.6%, respectively. These
ratios were 9.1%, 10.4% and 11.6%, respectively, as of December 31, 2000. The
increase in capital ratios from December 31, 2000 to June 30, 2001 was due
primarily to the $14.5 million capital contribution to the Bank from ITLA
Capital and the Bank's net income of $8.4 million, which was partially offset by
the payment of $9.6 million of dividends to ITLA Capital from the Bank. The
minimum regulatory requirement for Leverage (Core), Tier I and Total Risk-Based
capital are 4.0%, 4.0% and 8.0%, respectively. As of June 30, 2001, the Bank's
capital position was designated as "well capitalized" for regulatory purposes.
At June 30, 2001, shareholders equity totaled $133.8 million or 9.4
percent of total assets. The Company continued to repurchase shares of its
common stock in the open market during the second quarter of 2001 completing its
fifth stock repurchase program. During the second quarter of 2001, the Company
repurchased 422,000 shares of common stock at an average price of $17.51 per
share. For the six months ending June 30, 2001, the Company repurchased 512,000
shares of common stock at an average price of $17.90 per share. Since beginning
share repurchases in April of 1997, the Company has repurchased a total of
1,775,519 shares or approximately 22 percent of the outstanding shares of common
stock, returning approximately $27.9 million of capital to its shareholders at
an average price of $15.71 per share. Through our fifth stock repurchase
program, 100 percent of the Company's secondary public offering, which raised
$22.6 million in April of 1996 has been retired. The Company's book value per
share of common stock was $21.74 per share as of June 30, 2001, as compared to
$20.05 per share as of December 31, 2000 and $18.45 per share as of June 30,
2000.
ITEM 3: MARKET RISK
Our 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 our
annual report on Form 10-K for the year ended December 31, 2000.
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PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
We are party to certain legal proceedings incidental to our business.
Management believes that the outcome of such proceedings, in the
aggregate, will not have a material effect on our financial condition
or 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
None
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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: August 14, 2001 /s/ George W. Haligowski
--------------------------------------
George W. Haligowski
Chairman of the Board, President and
Chief Executive Officer
Date: August 14, 2001 /s/ Timothy M. Doyle
--------------------------------------
Timothy M. Doyle
Managing Director and Chief
Financial Officer
22