LA JOLLA, Calif., Feb. 6 /PRNewswire-FirstCall/ -- Imperial Capital
Bancorp, Inc. (NYSE:IMP) today reported net income for the quarter
ended December 31, 2007, primarily resulting from the operations of
its wholly-owned subsidiary, Imperial Capital Bank (the Bank), of
$1.1 million or $0.21 per diluted share compared to $7.0 million or
$1.22 per diluted share for the same period last year. President
and Chief Executive Officer George W. Haligowski stated: "Our
results for the quarter reflect the deteriorating economic
conditions currently being experienced in the real estate and
credit markets. Although we have consequently recorded substantial
provisions for loan losses and raised our allowance for loan loss
reserve ratio, we have maintained our profitability and increased
our book value during the quarter." Net interest income before
provision for loan losses decreased 13.1% to $20.2 million for the
quarter ended December 31, 2007, compared to $23.2 million for the
same period last year. This decrease was primarily due to the
decline in the yield earned on our loan portfolio, as higher
yielding loans have paid-off and were replaced by loan production
that was originated at lower spreads over our cost of funds due to
competitive pricing pressures. Net interest income was further
negatively impacted by the increase in our cost of funds as
deposits and all other interest bearing liabilities repriced to
higher market interest rates, partially offset by the growth in the
average balance of our loan portfolio. Haligowski commented: "We
continue our effort started in the third quarter of this year to
improve our net interest margins with an additional 25 basis points
in lending rate increases and have instituted floor rates at
appropriate margins over our cost of funds. With the recent 125
basis points in rate cuts instituted by the Federal Reserve, we
expect some relief in cost of funds despite competitive deposit
pricing pressures in the markets we serve." The provision for loan
losses was $4.6 million and $1.3 million, respectively, for the
quarters ended December 31, 2007 and 2006. The increase in
provision for loan losses during the quarter was primarily due to
the increase in our non-performing loans. Non-performing loans as
of December 31, 2007 were $38.0 million, compared to $26.3 million
at December 31, 2006. As a percentage of our total loan portfolio,
the amount of non-performing loans was 1.20% and 0.88% at December
31, 2007 and 2006, respectively. The increase in non-performing
loans was primarily related to five lending relationships that in
the aggregate represented approximately $15.5 million of the total
of $22.5 million of loans transferred to non-performing status
during the quarter. With the housing and secondary mortgage markets
continuing to deteriorate and showing no signs of stabilizing in
the near future, we continue to aggressively monitor our real
estate loan portfolio, including our commercial and residential
construction loan portfolio. Our construction loan portfolio at
December 31, 2007 totaled $421.1 million, of which $209.6 million
were residential construction loans, representing only 6.6% of our
total loan portfolio. At December 31, 2007, we had $8.8 million of
non-performing lending relationships within our construction loan
portfolio, consisting of two residential construction projects
located in Corona, California and Portland, Oregon. General and
administrative expenses were $13.8 million for the quarter ended
December 31, 2007, compared to $11.1 million for the same period
last year. The Company's efficiency ratio (defined as general and
administrative expenses as percentage of net revenue) was 66.2% for
the quarter ended December 31, 2007, as compared to 46.0% for the
same period last year. The increase in our efficiency ratio was
primarily caused by the $2.7 million increase in general and
administrative expenses, as well as the $3.0 million decrease in
net interest income, which, as discussed above, was caused by the
decrease in our net interest spread. Loan originations were $150.6
million for the quarter ended December 31, 2007, compared to $388.3
million for the same period last year. During the current quarter,
the Bank originated $77.5 million of commercial real estate loans,
$50.7 million of small balance multi-family real estate loans, and
$22.4 million of entertainment finance loans. Loan originations for
the same period last year consisted of $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. In addition, the Bank's wholesale loan operations acquired
$150.5 million of commercial and multi-family real estate loans
during the quarter ended December 31, 2006. The Bank did not have
any wholesale loan purchases during the current quarter. Haligowski
commented that: "The pace of commercial real estate investment
during the first half of the year drove our loan production to
record levels, however investor demand has declined precipitously
due to the uncertainty of current economic and market conditions.
As we have increased our lending rates and tightened credit in
response to current market conditions our fourth quarter loan
production declined by over 60% as compared to the same period last
year. We anticipate that loan demand will remain soft in the near
term, but will ultimately normalize as the current macroeconomic
credit and liquidity conditions improve and markets stabilize." Net
income for the year ended December 31, 2007 was $15.6 million, or
$2.81 per diluted share, compared to $26.9 million, or $4.71 per
diluted share, for the same period last year. Net interest income
before provision for loan losses decreased 8.2% to $86.7 million
for the year ended December 31, 2007, compared to $94.4 million for
the prior year. This decrease was primarily due to the decline in
the yield earned on our loan portfolio, as higher yielding loans
have continued to paid-off and were replaced by loan production
that was originated at lower spreads over our cost of funds due to
competitive pricing pressures. Net interest income was further
negatively impacted by the increase in our cost of funds as
deposits and all other interest bearing liabilities repriced to
higher market interest rates, partially offset by the growth in the
average balance of our loan portfolio. The provision for loan
losses was $11.1 million and $5.0 million, respectively, for the
years ended December 31, 2007 and 2006. Refer to the discussion
above for additional information regarding the provision for loan
losses and non-performing loans. General and administrative
expenses were $51.4 million for the year ended December 31, 2007,
compared to $46.4 million for the prior year. The Company's
efficiency ratio was 57.2% for the year ended December 31, 2007, as
compared to 47.8% for the prior year. The fluctuation in our
efficiency ratio during the year was primarily due to a decline in
net interest income earned, which, as discussed above, was caused
by a decrease in our net interest rate spread. Loan originations
were $1.2 billion for the year ended December 31, 2007, compared to
$1.1 billion for the prior year. During the current year, the Bank
originated $721.5 million of commercial real estate loans, $331.9
million of small balance multi-family real estate loans, and $114.4
million of entertainment finance loans. Loan originations for the
prior year consisted of $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. In
addition, the Bank's wholesale loan operations acquired $47.3
million and $497.8 million of multi-family real estate loans during
the years ended December 31, 2007 and 2006, respectively. The
decline in wholesale loan acquisitions during the current year
primarily related to a reduction in loan pools being offered in the
secondary market that met our pricing and credit requirements.
Total assets increased $135.7 million to $3.6 billion at December
31, 2007, compared to $3.4 billion at December 31, 2006. The
increase in total assets was primarily due to a $153.4 million
increase in our loan portfolio, an $18.4 million increase in
investment securities available-for-sale and a $12.7 million
increase in other real estate and other assets owned, partially
offset by a $34.5 million decline in investment securities
held-to-maturity and a $21.5 million decrease in cash and cash
equivalents. Non-performing assets were $57.4 million and $33.0
million, representing 1.62% and 0.97% of total assets as of
December 31, 2007 and December 31, 2006, respectively. The increase
in non-performing assets during the year ended December 31, 2007
consisted of the addition of $85.3 million of non-performing loans,
partially offset by paydowns received of $27.0 million, charge-offs
of $10.9 million and loan upgrades of $17.8 million from
non-performing to performing status. As of December 31, 2007 as
compared to December 31, 2006, the net increase in non-performing
loans primarily consisted of $8.8 million of residential
construction real estate loans and $15.0 million of commercial and
multifamily loans, partially offset by decreases of $4.5 million of
franchise loans and $7.6 million of entertainment finance loans. In
addition, our other real estate and other assets owned increased by
$12.7 million during the current year to $19.4 million. At December
31, 2007, we owned 19 properties, consisting of $2.8 million of
commercial real estate, $9.5 million of multi-family real estate,
$2.0 million of residential construction and $5.1 million of
entertainment finance assets. The allowance for loan loss coverage
ratio (defined as the allowance for loan losses divided by
non-accrual loans) was 125.9% at December 31, 2007 as compared to
175.4% at December 31, 2006. The allowance for loan losses as a
percentage of our total loans was 1.5% at December 31, 2007 and
2006, respectively. We believe that these reserves levels were
adequate to support known and inherent losses in our loan portfolio
and for specific reserves as of December 31, 2007 and December 31,
2006, respectively. The allowance for loan losses is impacted by
inherent risk in the loan portfolio, including the level of our
non-performing loans and other loans of concern, as well as
specific reserves and charge-off activity. During the year, the
level of other loans of concern declined by 59.1%, from $67.0
million at December 31, 2006 to $27.4 million at December 31, 2007.
Other loans of concern consist of performing loans which have known
information that has caused management to be concerned about the
borrowers ability to comply with present loan repayment terms. In
addition, this ratio was further impacted by the higher
concentration of small balance multi-family loans in our portfolio,
which has improved our geographic diversity and lowered our average
loan size due to the national expansion of our lending platform, as
well as the Bank's aggressive recognition of charge-offs and the
identification of problem credits in a timely manner. During the
years ended December 31, 2007 and 2006, we had net charge-offs of
$9.3 million and $2.8 million, respectively. At December 31, 2007,
shareholders' equity totaled $227.6 million or 6.4% of total
assets. During the current quarter, we did not repurchase any
shares under the Company's share repurchase program. For the year
ended December 31, 2007, we repurchased 187,475 shares at an
average price of $47.42 per share. Since beginning share
repurchases in April 1997, a total of 3.7 million shares have been
repurchased under our stock repurchase program, returning
approximately $110.0 million of capital to our shareholders at an
average price of $29.59 per share. The Company's book value per
share of common stock was $44.22 as of December 31, 2007, an
increase of 5.1%, from $42.07 per share as of December 31, 2006.
The Bank had Tier 1 leverage, Tier 1 risk-based and total
risk-based capital ratios at December 31, 2007 of 8.31%, 9.60% and
10.85%, respectively, which represents $116.7 million, $109.8
million and $26.0 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, 2007 of 8.44%, 9.73% and 11.29%,
respectively, which represents $121.8 million, $114.7 million and
$39.6 million, respectively, of capital in excess of the amount
required to be "well capitalized". Haligowski concluded: "2007 has
turned out to be a year of extremes for our company with record
profitability during the first half of the year and then being
faced with the current credit and liquidity crisis commencing
during the second half of the year. Through all these challenges we
have maintained our profitability and have grown book value while
some of our competitors and peers have experienced staggering
losses. Although the banking industry and our commercial real
markets certainly face challenges in the short term, we plan to
diligently manage our portfolio, and focus on continuing to
strengthen our balance sheet, while we position the company to take
advantage of opportunities that will become available in the
future." "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 2008 and beyond to differ materially from those expressed in
any forward looking statements by, or on behalf of, the Company.
Imperial Capital Bancorp, Inc. (formerly 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 eight retail
branch locations and 25 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.
IMPERIAL CAPITAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS December 31, 2007 December 31, (unaudited) 2006 (in
thousands, except share amounts) Assets Cash and cash equivalents
$8,944 $30,448 Investment securities available-for- sale, at fair
value 117,924 99,527 Investment securities held-to- maturity, at
amortized cost 159,023 193,512 Stock in Federal Home Loan Bank
53,497 48,984 Loans, net (net of allowance for loan losses of
$47,783 and $46,049 as of December 31, 2007 and 2006, respectively)
3,125,072 2,973,368 Interest receivable 20,841 20,753 Other real
estate and other assets owned, net 19,396 6,729 Other assets 46,522
42,189 Total assets $3,551,219 $3,415,510 Liabilities and
Shareholders' Equity Liabilities: Deposit accounts $2,181,858
$2,059,405 Federal Home Loan Bank advances and other borrowings
1,021,235 1,010,000 Accounts payable and other liabilities 33,959
38,168 Junior subordinated debentures 86,600 86,600 Total
liabilities 3,323,652 3,194,173 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, 9,142,256 and 9,065,672 issued as of
December 31, 2007 and 2006, respectively 85,009 82,073 Retained
earnings 255,947 243,823 Accumulated other comprehensive income,
net 267 35 341,223 325,931 Less treasury stock, at cost - 3,995,634
and 3,803,969 shares as of December 31, 2007 and 2006, respectively
(113,656) (104,594) Total shareholders' equity 227,567 221,337
Total liabilities and shareholders' equity $3,551,219 $3,415,510
IMPERIAL CAPITAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED) For the Three Months Ended For the
Year Ended December 31, December 31, 2007 2006 2007 2006 (in
thousands, except per share amounts) Interest income: Loans
receivable, including fees $58,072 $55,496 $233,749 $207,320 Cash
and investment securities 4,185 4,687 17,522 19,181 Total interest
income 62,257 60,183 251,271 226,501 Interest expense: Deposit
accounts 27,559 25,097 110,111 85,156 Federal Home Loan Bank
advances and other borrowings 12,424 9,735 46,134 38,722 Junior
subordinated debentures 2,070 2,109 8,338 8,197 Total interest
expense 42,053 36,941 164,583 132,075 Net interest income before
provision for loan losses 20,204 23,242 86,688 94,426 Provision for
loan losses 4,561 1,250 11,077 5,000 Net interest income after
provision for loan losses 15,643 21,992 75,611 89,426 Non-interest
income: Late and collection fees 271 278 1,119 970 Other 354 592
2,014 1,802 Total non-interest income 625 870 3,133 2,772
Non-interest expense: Compensation and benefits 6,694 4,735 23,899
21,265 Occupancy and equipment 1,904 1,871 7,832 7,439 Other 5,187
4,497 19,633 17,743 Total general and administrative 13,785 11,103
51,364 46,447 Real estate and other assets owned expense, net 154
118 780 334 Provision for losses on other real estate owned 300 -
300 - Loss on sale of other real estate owned, net 114 35 45 35
Total real estate owned expense, net 568 153 1,125 369 Total
non-interest expense 14,353 11,256 52,489 46,816 Income before
provision for income taxes 1,915 11,606 26,255 45,382 Provision for
income taxes 784 4,643 10,635 18,493 NET INCOME $1,131 $6,963
$15,620 $26,889 BASIC EARNINGS PER SHARE $0.21 $1.26 $2.85 $4.83
DILUTED EARNINGS PER SHARE $0.21 $1.22 $2.81 $4.71 DATASOURCE:
Imperial Capital Bancorp, Inc. CONTACT: Timothy M. Doyle, Executive
Managing Director and Chief Financial Officer of Imperial Capital
Bancorp, Inc., +1-858-551-0511 Web site:
http://www.itlacapital.com/
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