San Diego Business Journal Affiliate of First Commercial Acquires
Dynex Capital Inc.

ITLA Capital Corp., one of San Diego's biggest financial institutions, made 18.2 percent more money in the third quarter than in the same period last year, its chief financial officer said.

The company is best known in Los Angeles and Orange counties for its subsidiary, Imperial Capital Bank, which also has branch offices in San Francisco and Del Mar, said Tim Doyle, ITLA Capital Corp.'s CFO.

ITLA Capital Corp. generated $4.62 million in net income, or 65 cents per share, in the third quarter, compared to $4.12 million, or 55 cents per share, in the third quarter of 1999.

Doyle said the bank doesn't offer a lot of the traditional products other banks do. That's because it specializes in commercial real estate loans and construction financing.

"We don't have the whole cadre of consumer loan products your traditional bank has," Doyle said Nov. 13. "We mainly make loans on income property , multi-family, office and retail."

One local bank stock analyst sees the lender as a successful niche marketer of banking services. Richard S. Levenson, senior vice president of Western Financial Corp. in Downtown, said: "ITLA Capital Corp. is one of those institutions that finds a particular niche that it consistently makes money on. Not all banks can be everything to everyone."

The financial institution's net income for the first nine months of this year was $13.46 million, or $1.86 per diluted share, compared with $12.05 million or $1.63 per diluted share in the same period in 1999, Doyle said. Its total assets increased to $1.3 billion from $1.1 billion as of Dec. 31, 1999.

By comparison, California Bank & Trust had assets of $6.3 billion and San Diego National Bank had $1.2 billion in assets as of mid-year, according to the San Diego Business Journal's list of largest area banks.

While the bank has been setting new earnings records for 20 consecutive quarters, it has no plans to offer its shareholders a dividend, Doyle said. He said that is because ITLA Capital Corp., which is traded on the Nasdaq under the symbol ITLA, wants to reinvest its profits into the bank so that it can grow faster than it would otherwise.

He said the bank is going to start lending soon to fast-food franchise owners on their real estate as part of a new initiative.

The bank holding company moved to La Jolla from Glendale in 1997 and the bank itself was relocated last year, Doyle said.

- - -

Acquisition: California Investment Fund LLC, an affiliate of First Commercial Corp. of San Diego, is acquiring Dynex Capital Inc. of Glen Allen, Va., for $90 million in cash.

Dynex Capital is a financial services company traded under the symbol DX on the New York Stock Exchange that elects to be taxed as a real estate investment trust for federal tax purposes, said Michael Kelly, a spokesman for California Investment Fund. That way, nearly all its earnings can be passed on to shareholders as dividends without being taxed at the corporate level, he said.

The acquisition is expected to close in first quarter 2001.

First Commercial Corp. is a private real estate investment company based in San Diego that acquires loans and loan portfolios secured by commercial real estate, Kelly said.

Bank Notes: Community National Bank of Fallbrook, formerly Fallbrook National Bank, donated $5,000 to the Fallbrook Performing Arts Center in October Neighborhood National Bank has been awarded nearly $1.25 million by the Community Development Financial Institutions Fund of the U.S. Treasury Department In September, Borrego Springs Bank of La Mesa was awarded $73,000 from the same government agency. The grants were a reward for the banks' efforts in underserved communities, their officials said.

Send financial news to Grupe at agrupe@sdbj.com.