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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 September 30, 2002

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

(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]  X No [   ]

     Number of shares of common stock of the registrant: 5,778,758 outstanding as of November 8, 2002.

Table of Contents

ITLA CAPITAL CORPORATION
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002
TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

							Page
Item 1.	Financial Statements
		Consolidated Balance Sheets — September 30, 2002 and December 31, 2001						3
		Consolidated Statements of Income — Three and Nine Months Ended September 30, 2002 and 2001						4
		Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2002 and 2001						5
		Notes to Unaudited Consolidated Financial Statements						6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations							9
Item 3.	Market Risk							20
Item 4.	Controls and Procedures							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
		Certifications						23

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; the economic impact of the terrorist attacks on September 11, 2001 and the U.S. response to these attacks, changes in economic conditions in our 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, including levels of nonperforming assets, fluctuations in interest rates, and changes in the relative differences between short and long term 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 2002 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

					September 30,
					2002				December 31,
					(unaudited)				2001
					(in thousands except share amounts)
Assets
Cash and cash equivalents					$	92,834			$	134,241
Investment securities available for sale, at fair value						53,616				29,411
Stock in Federal Home Loan Bank						16,454				13,464
Real estate loans, net (net of allowance for loan losses of $29,309 and $24,722 in 2002 and 2001, respectively)						1,142,897				1,122,370
Real estate loans held in trust (net of allowance for loan losses of $1,928 in 2002 and 2001, respectively)						132,389				162,158
Interest receivable						9,017				11,144
Other real estate owned, net						14,092				13,741
Premises and equipment, net						3,787				2,177
Deferred income taxes						11,626				11,869
Other assets						11,633				7,733
			Total assets		$	1,488,345			$	1,508,308
Liabilities and Shareholders’ Equity
Liabilities:
	Deposit accounts				$	893,485			$	953,654
	Federal Home Loan Bank advances					329,085				269,285
	Collateralized mortgage obligations					79,400				109,648
	Accounts payable and other liabilities					7,144				9,674
			Total liabilities			1,309,114				1,342,261
Commitments and contingencies
	Guaranteed preferred beneficial interests in the Company’s junior subordinated deferrable interest debentures, net					28,190				28,118
Shareholders’ equity:
	Preferred stock, 5,000,000 shares authorized, none issued					—				—
	Contributed capital-common stock, $.01 par value; 20,000,000 shares authorized, 8,226,414 and 8,212,749 issued and outstanding in 2002 and 2001, respectively					58,514				58,183
	Retained earnings					130,447				115,768
	Accumulated other comprehensive income (loss)					438				(7	)
						189,399				173,944
	Less treasury stock, at cost — 2,447,656 and 2,354,056 shares in 2002 and 2001, respectively					(38,358	)			(36,015	)
		Total shareholders’ equity				151,041				137,929
			Total liabilities and shareholders’ equity		$	1,488,345			$	1,508,308

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 Ended								For the Nine Months Ended
					September 30,								September 30,
					2002				2001				2002				2001
					(in thousands except per share amounts)
Interest income:
	Real estate loans, including fees				$	24,020			$	25,445			$	70,598			$	78,863
	Real estate loans held in trust					2,458				3,532				7,960				11,860
	Cash and investment securities					902				656				2,427				2,604
		Total interest income				27,380				29,633				80,985				93,327
Interest expense:
	Deposit accounts					6,815				12,250				22,203				42,161
	Federal Home Loan Bank advances					1,422				1,561				4,310				3,219
	Collateralized mortgage obligations					563				1,412				1,852				5,394
		Total interest expense				8,800				15,223				28,365				50,774
			Net interest income before provision for loan losses			18,580				14,410				52,620				42,553
Provision for loan losses						2,700				1,500				6,125				2,450
			Net interest income after provision for loan losses			15,880				12,910				46,495				40,103
Non-interest income:
	Fee income from mortgage banking activities					—				15				—				75
	Gain on sale of loans, net					—				—				32				—
	Other					(54	)			236				141				729
		Total non-interest income				(54	)			251				173				804
Non-interest expense:
	Compensation and benefits					3,303				3,018				9,781				8,871
	Occupancy and equipment					777				753				2,232				2,196
	FDIC assessment					36				46				120				139
	Other					2,343				1,855				6,956				5,378
		Total general and administrative				6,459				5,672				19,089				16,584
	Real estate owned expense, net					71				47				325				97
	Provision for losses on other real estate owned					—				34				796				237
	Gain on sale of other real estate owned, net					—				(13	)			(75	)			(50	)
		Total real estate owned expense, net				71				68				1,046				284
			Total non-interest expense			6,530				5,740				20,135				16,868
Income before provision for income taxes and minority interest in income of subsidiary						9,296				7,421				26,533				24,039
Minority interest in income of subsidiary						815				799				2,411				2,169
Income before provision for income taxes						8,481				6,622				24,122				21,870
Provision for income taxes						3,326				2,583				9,443				8,399
	NET INCOME				$	5,155			$	4,039			$	14,679			$	13,471
	BASIC EARNINGS PER SHARE				$	0.86			$	0.64			$	2.45			$	2.06
	DILUTED EARNINGS PER SHARE				$	0.80			$	0.62			$	2.29			$	1.99

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 Nine Months Ended
						September 30,
						2002				2001
						(in thousands)
Cash Flows From Operating Activities:
	Net Income					$	14,679			$	13,471
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization of premises and equipment					674				616
		Amortization of premium on purchased loans					1,532				2,373
		Amortization of original issue discount and deferred debt issuance costs on CMOs					136				234
		Accretion of deferred loan origination fees, net of costs					(868	)			(1,219	)
		Provision for loan losses					6,125				2,450
		Provision for losses on other real estate owned					796				237
		Gain on sale of real estate loans, net					(32	)			—
		Gain on the sale of other real estate owned					(75	)			(50	)
		Decrease in interest receivable					2,127				820
		(Increase) decrease in other assets					(912	)			977
		Decrease in accounts payable and other liabilities					(2,899	)			(1,143	)
			Net cash provided by operating activities				21,283				18,766
Cash Flows From Investing Activities:
		Proceeds from securitization and sale of real estate loans					98,155				448
		(Increase) decrease in real estate loans, net					(63,527	)			94,338
		Net cash paid to acquire Asahi Bank of California					(14,872	)			—
		Repayment of real estate loans held in trust					28,774				34,829
		Purchases of real estate loans					(30,084	)			(170,576	)
		Purchases of investment securities available for sale					(77,670	)			(16,000	)
		Proceeds from maturity of investment securities available for sale					55,000				59,260
		Increase in stock in Federal Home Loan Bank					(2,990	)			(6,066	)
		Proceeds from the sale of other real estate owned					2,720				1,889
		Other, net					(1,822	)			(472	)
			Net cash used in investing activities				(6,316	)			(2,350	)
Cash Flows From Financing Activities:
		Decrease in deposit accounts					(68,938	)			(83,540	)
		Net proceeds from borrowings from the Federal Home Loan Bank					59,800				125,635
		Repayment of Asahi repurchase agreement, net					(14,693	)