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UNITED STATES
FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Date of Report (Date of earliest event reported) July 31, 2006 ITLA CAPITAL CORPORATION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934
Delaware | 0-26960 | 95-4596322 |
(State or other jurisdiction of incorporation) |
(Commission File No.) | (IRS Employer Identification No.) |
888 Prospect Street, Suite 110, La Jolla, California | 92037 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (858) 551-0511
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On July 31, 2006, the Registrant issued the press release attached hereto as Exhibit 99 and incorporated by reference herein announcing its earnings for the quarter ended June 30, 2006.
Exhibit 99 Press release dated July 31, 2006
Item 9.01 Financial Statements and Exhibits
(d) The following exhibit is filed as part of this report.
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 hereunto duly authorized.
ITLA CAPITAL CORPORATION | |||
Date: | August 3, 2006 |
By: | /s/ Timothy M. Doyle Timothy M. Doyle Executive Managing Director and Chief Financial Officer |
Exhibit Number | Description |
99 | Press release dated July 31, 2006 |
EXHIBIT 99
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Contact: |
Timothy M. Doyle Executive Managing Director, CFO 858.551.0511 |
FOR IMMEDIATE RELEASE
ITLA CAPITAL CORPORATION REPORTS
EARNINGS FOR THE QUARTER ENDED
JUNE 30, 2006
La Jolla, California (July 31, 2006) --- ITLA Capital Corporation (NASDAQ-ITLA) today reported net income for the quarter ended June 30, 2006, primarily resulting from the operations of its wholly-owned subsidiary, Imperial Capital Bank (the Bank), of $6.7 million or $1.18 per diluted share compared to $5.8 million or $0.98 per diluted share for the same period last year. President and Chief Executive Officer George W. Haligowski stated: "The strength of our second quarter results was attributable to our ability to sustain loan production and our steadfast commitment to maintaining credit quality. Despite challenging market conditions and the prolonged flattening of the yield curve, we've continued to implement our national expansion strategy, while increasing earnings by over 15% for the quarter."
Net interest income before provision for loan losses increased 8.4 percent to $24.0 million for the quarter ended June 30, 2006, compared to $22.1 million for the same period last year. The increase was primarily caused 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, partially offset by additional interest expense incurred due to the growth in the average balance of interest bearing liabilities, deposits repricing to higher current market interest rates, and the addition of new borrowings at higher current market interest rates.
The provision for loan losses remained unchanged, totaling $1.5 million for the quarters ended June 30, 2006 and 2005. 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 June 30, 2006 and 2005, respectively.
General and administrative expenses increased to $11.8 million during the current quarter, compared to $11.1 million for the same period last year. Our efficiency ratio (defined as general and administrative expenses as percentage of net revenue) was 48.1 percent for the quarter ended June 30, 2006, as compared to 48.9 percent for the same period last year.
Loan originations were $238.7 million for the quarter ended June 30, 2006, compared to $258.8 million for the same period last year. During the current quarter, the Bank originated $168.0 million of commercial real estate loans, $50.4 million of small balance multi-family real estate loans, and $20.3 million of entertainment finance loans. Loan originations for the same period last year consisted of $145.1 million of commercial real estate loans, $80.1 million of small balance multi-family real estate loans, $31.6 million of entertainment finance loans, and $2.0 million of franchise loans. In addition, the Bank's wholesale loan operations acquired $122.9 million and $301.0 million of commercial and multi-family real estate loans during the quarters ended June 30, 2006 and 2005, respectively. Haligowski commented that: "I continue to be encouraged by our loan production team's ability to maintain production through market conditions that include increased competition and economic uncertainty regarding monetary policies. The contribution from our expansion offices continues to improve and, for the first time since the inception of our national expansion, the commercial real estate loan production from these offices exceeded its production of multi-family loans."
www.itlacapital.com
ITLA Capital Corporation reports earnings
For the quarter ended June 30, 2006
Page 2 of 4
Net income for the six months ended June 30, 2006 increased to $13.1 million or $2.28 per diluted share, compared to $11.5 million or $1.90 per diluted share for the same period last year. Net interest income before provision for loan losses increased 6.9 percent to $46.9 million for the six months ended June 30, 2006, compared to $43.9 million for the same period last 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 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 $2.3 million for the six months ended June 30, 2006 and 2005, respectively. 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 June 30, 2006 and 2005, respectively.
General and administrative expenses increased to $23.9 million for the six months ended June 30, 2006, compared to $22.3 million for the same period last year. The Company's efficiency ratio was 49.5 percent for the six months ended June 30, 2006, compared to 50.3 percent for the same period last year.
Loan originations were $436.0 million for the six months ended June 30, 2006, compared to $385.1 million for the same period last year. During the current six month period, the Bank originated $288.6 million of commercial real estate loans, $116.4 million of small balance multi-family real estate loans, and $31.0 million of entertainment finance loans. Loan originations for the same period last year consisted of $186.3 million of commercial real estate loans, $149.4 million of small balance multi-family real estate loans, $47.0 million of entertainment finance loans, and $2.4 million of franchise loans. In addition, the Bank's wholesale loan operations acquired $226.4 million and $493.2 million of commercial and multi-family real estate loans during the six months ended June 30, 2006 and 2005, respectively.
Total assets increased $151.0 million to $3.2 billion at June 30, 2006, compared to $3.1 billion at December 31, 2005. The increase in total assets was primarily due to a $112.1 million increase in our loan portfolio and a $50.4 million increase in cash and cash equivalents, partially offset by a $16.4 million decline in investment securities held-to-maturity and a $2.8 million increase in the allowance for loan losses.
Non-performing assets increased to $29.7 million or 0.93 percent of total assets as of June 30, 2006, as compared to $28.2 million or 0.92 percent as of December 31, 2005, respectively. The allowance for loan loss coverage ratio (defined as the allowance for loan losses divided by non-accrual loans) at June 30, 2006 was 194.7 percent as compared to 180.6 percent at December 31, 2005.
www.itlacapital.com
ITLA Capital Corporation reports earnings
For the quarter ended June 30, 2006
Page 3 of 4
The allowance for loan losses as a percentage of our total loans was 1.7 percent at June 30, 2006, and December 31, 2005. During the quarter ended June 30, 2006, we had net charge-offs of $297,000, compared to net charge-offs of $15,000 for the same period last year.
At June 30, 2006, shareholders' equity totaled $208.9 million or 6.5 percent of total assets. During the current quarter, we repurchased 22,775 shares at an average price of $50.40 per share. For the six months ended June 30, 2006, we repurchased 155,556 shares at an average price of $47.29 per share. Since beginning share repurchases in April 1997, a total of 3.5 million shares have been repurchased, returning approximately $97.2 million of capital to our shareholders at an average price of $28.12 per share. The Company's book value per share of common stock was $39.75 as of June 30, 2006, an increase of 5.0 percent and 10.0 percent, respectively, from $37.85 per share as of December 31, 2005 and $36.14 per share as of June 30, 2005.
The Bank had Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios at June 30, 2006 of 9.1 percent, 11.1 percent and 12.3 percent, respectively, which represents $125.7 million, $127.9 million and $58.8 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 June 30, 2006 of 8.9 percent, 10.9 percent and 12.7 percent, respectively, which represents $120.8 million, $123.0 million and $68.8 million, respectively, of capital in excess of the amount required to be "well capitalized".
Haligowski concluded: "We are encouraged by our second quarter results, and as we enter the second half of our fiscal year, we are cautiously optimistic that as economic conditions fluctuate, we will continue to successfully adapt to these changes to sustain our financial performance. During the quarter, we also delivered shareholder value through the announcement of our second consecutive quarterly cash dividend."
"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 2006 and beyond to differ materially from those expressed in any forward looking statements by, or on behalf of, the Company.
www.itlacapital.com
NEXT PAGEITLA Capital Corporation reports earnings
For the quarter ended June 30, 2006
Page 4 of 4
ITLA Capital Corporation is the largest financial services company headquartered in San Diego, California, and conducts its operations through Imperial Capital Bank and Imperial Capital Real Estate Investment Trust. Imperial Capital Bank has seven retail branch locations and 20 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.
www.itlacapital.com
NEXT PAGEITLA CAPITAL CORPORATION AND SUBSIDIARES
CONSOLIDATED BALANCE SHEETS
June 30, 2006 (unaudited) |
December 31, 2005 | |||||||
(in thousands except share amounts) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ 144,097 | $ 93,747 | ||||||
Investment securities available-for-sale, at fair value | 93,084 | 92,563 | ||||||
Investment securities held-to-maturity, at amortized cost | 217,460 | 233,880 | ||||||
Stock in Federal Home Loan Bank | 47,719 | 43,802 | ||||||
Loans, net (net of allowance for loan losses of $46,655 and | ||||||||
$43,817 as of June 30, 2006 and December 31, 2005, respectively) | 2,632,749 | 2,523,480 | ||||||
Interest receivable | 17,323 | 16,287 | ||||||
Other real estate owned, net | 5,707 | 3,960 | ||||||
Premises and equipment, net | 7,290 | 6,718 | ||||||
Deferred income taxes | 12,828 | 12,717 | ||||||
Goodwill | 3,118 | 3,118 | ||||||
Other assets | 20,775 |
20,924 | ||||||
Total assets | $ 3,202,150 |
$ 3,051,196 | ||||||
Liabilities and Shareholders' Equity | ||||||||
Liabilities: | ||||||||
Deposit accounts | $ 1,811,009 | $ 1,735,428 | ||||||
Federal Home Loan Bank advances and other borrowings | 1,075,891 | 992,557 | ||||||
Accounts payable and other liabilities | 19,727 | 32,130 | ||||||
Junior subordinated debentures | 86,600 | 86,600 | ||||||
Total liabilities | 2,993,227 | 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, 8,987,998 and 8,978,998 issued as of June 30, 2006 | ||||||||
and December 31, 2005, respectively | 78,458 | 78,004 | ||||||
Retained earnings | 231,509 | 220,095 | ||||||
Accumulated other comprehensive loss, net | (434) | (364) | ||||||
309,533 | 297,735 | |||||||
Less treasury stock, at cost - 3,732,251 and 3,576,695 shares | ||||||||
as of June 30, 2006 and December 31, 2005, respectively | (100,610) |
(93,254) | ||||||
Total shareholders' equity | 208,923 |
204,481 | ||||||
Total liabilities and shareholders' equity | $ 3,202,150 |
$ 3,051,196 |
ITLA CAPITAL CORPORATION AND SUBSIDIARES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the Three Months Ended | For the Six Months Ended | |||||||
June 30, |
June 30, | |||||||
2006 |
2005 |
2006 |
2005 | |||||
(in thousands except per share amounts) | ||||||||
Interest income: | ||||||||
Loans, including fees | $ 51,082 | $ 37,210 | $ 98,219 | $ 69,121 | ||||
Cash and investment securities | 4,678 |
4,470 |
8,969 |
9,311 | ||||
Total interest income | 55,760 |
41,680 |
107,188 |
78,432 | ||||
Interest expense: | ||||||||
Deposit accounts | 19,773 | 11,897 | 36,971 | 21,395 | ||||
Federal Home Loan Bank advances and other borrowings | 9,977 | 5,900 | 19,339 | 9,732 | ||||
Junior subordinated debentures | 2,026 |
1,754 |
3,984 |
3,434 | ||||
Total interest expense | 31,776 |
19,551 |
60,294 |
34,561 | ||||
Net interest income before provision for loan losses | 23,984 | 22,129 | 46,894 | 43,871 | ||||
Provision for loan losses | 1,500 |
1,500 |
2,250 |
2,250 | ||||
Net interest income after provision for loan losses | 22,484 |
20,629 |
44,644 |
41,621 | ||||
Non-interest income: | ||||||||
Late and collection fees | 261 | 130 | 484 | 203 | ||||
Other | 346 |
379 |
840 |
286 | ||||
Total non-interest income | 607 |
509 |
1,324 |
489 | ||||
Non-interest expense: | ||||||||
Compensation and benefits | 5,075 | 5,376 | 11,095 | 11,267 | ||||
Occupancy and equipment | 1,876 | 1,750 | 3,682 | 3,401 | ||||
Other | 4,882 |
3,943 |
9,093 |
7,631 | ||||
Total general and administrative | 11,833 |
11,069 |
23,870 |
22,299 | ||||
Real estate owned expense, net | (177) | - | (71) | - | ||||
Gain on sale of other real estate owned, net | - |
- |
- |
(11) | ||||
Total real estate owned expense, net | (177) | - | (71) | (11) | ||||
Total non-interest expense | 11,656 | 11,069 | 23,799 | 22,288 | ||||
Income before provision for income taxes | 11,435 | 10,069 | 22,169 | 19,822 | ||||
Provision for income taxes | 4,689 |
4,230 |
9,091 |
8,332 | ||||
NET INCOME | $ 6,746 |
$ 5,839 |
$ 13,078 |
$ 11,490 | ||||
BASIC EARNINGS PER SHARE | $ 1.22 |
$ 1.01 |
$ 2.34 |
$ 1.99 | ||||
DILUTED EARNINGS PER SHARE | $ 1.18 |
$ 0.98 |
$ 2.28 |
$ 1.90 |