<PAGE>   1
                                  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, 1998


                                       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 Incorporation  (IRS Employer Identification No.)
              or Organization)

888 Prospect St., Suite 110, La Jolla, California                   92037
-------------------------------------------------                   -----
    (Address of Principal Executive Offices)                      (Zip Code)

                                 (619) 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: 7,700,484
outstanding as of July 30, 1998.

<PAGE>   2
                    ITLA CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                 JUNE 30,
                                                                                   1998              DECEMBER 31,
                                                                                (UNAUDITED)              1997
                                                                               ------------          ------------
<S>                                                                            <C>                   <C>         
                                                                               (IN THOUSANDS EXCEPT SHARE AMOUNTS)
                               ASSETS

Cash and cash equivalents                                                      $     84,328          $    123,885
Investment securities available for sale, at approximate fair value                  30,795                35,281
Stock in Federal Home Loan Bank                                                      12,270                11,919
Mortgage-backed securities held to maturity, at amortized cost
    (fair value $20,788 and $25,063 in 1998 and 1997, respectively)                  20,764                25,132
Loans held for investment, net (net of allowance for credit losses of
    $15,251 and $12,178 in 1998 and 1997, respectively)                             799,998               750,853
Loans held for sale, at lower of cost or fair market value                           54,486                50,544
Interest receivable                                                                   6,035                 4,916
Other real estate owned, net                                                          3,236                 3,946
Premises and equipment, net                                                           2,864                 3,169
Deferred income taxes                                                                 4,194                 4,190
Other assets                                                                          2,373                 2,074
                                                                               ------------          ------------

              Total assets                                                     $  1,021,343          $  1,015,909
                                                                               ============          ============

                LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Deposit accounts                                                           $    844,895          $    843,813
    Federal Home Loan Bank advances                                                  60,500                61,500
    Accounts payable and other liabilities                                            9,372                11,248
                                                                               ------------          ------------

           Total liabilities                                                        914,767               916,561
                                                                               ------------          ------------

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, 7,854,484 and 7,849,484 issued and
        outstanding in 1998 and 1997, respectively                                   53,225                53,163
    Retained earnings                                                                55,667                48,450
    Unrealized gain on investment securities available for sale, net                     67                    19
                                                                               ------------          ------------

                                                                                    108,959               101,632
    Less treasury stock, at cost - 157,500 shares and 152,500 shares
        in 1998 and 1997, respectively                                               (2,383)               (2,284)
                                                                               ------------          ------------

           Total shareholders' equity                                               106,576                99,348
                                                                               ------------          ------------

              Total liabilities and shareholders' equity                       $  1,021,343          $  1,015,909
                                                                               ============          ============
</TABLE>


   See accompanying notes to the unaudited consolidated financial statements.


                                       2
<PAGE>   3
                    ITLA CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                          FOR THE THREE MONTHS ENDED    FOR THE SIX MONTHS ENDED
                                                                                   JUNE 30,                    JUNE 30,
                                                                          --------------------------    -------------------------
                                                                             1998           1997           1998           1997
                                                                          ----------     ----------     ----------     ----------
<S>                                                                       <C>            <C>            <C>            <C>       
                                                                                   (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                                    
Interest income:                                                                                    
    Loans receivable, including fees                                      $   23,280     $   18,182     $   45,371     $   35,977
    Investment securities                                                      1,965          1,106          4,292          2,610
    Mortgage-backed securities                                                   318            470            710            927
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
       Total interest income                                                  25,563         19,758         50,373         39,514
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
Interest expense:                                                                                   
    Deposit accounts                                                          12,109          9,255         24,252         18,735
    Federal Home Loan Bank advances                                              896            685          1,797          1,274
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
       Total interest expense                                                 13,005          9,940         26,049         20,009
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
          Net interest income before provisions for estimated credit                                
             losses and valuation allowance on loans held for sale            12,558          9,818         24,324         19,505
                                                                                                    
Provision for estimated credit losses                                          1,600            250          3,000            850
Provision for valuation allowance on loans held for sale                          --            350             --            350
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
          Net interest income after provisions for estimated credit                                 
             losses and valuation allowance on loans held for sale            10,958          9,218         21,324         18,305
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
Noninterest income:                                                                                 
    Fee income from mortgage banking activities                                  408            233            990            402
    Other                                                                        238            111            515            290
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
       Total noninterest income                                                  646            344          1,505            692
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
Noninterest expense:                                                                                
    Compensation and benefits                                                  2,553          2,065          5,044          4,145
    Occupancy and equipment                                                      693            541          1,387          1,104
    FDIC assessment                                                               26             21             49            165
    Other                                                                      1,894          1,771          3,884          3,495
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
       Total general and administrative                                        5,166          4,398         10,364          8,909
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
    Real estate operations, net                                                   82             39            162             47
    Provision for estimated losses on other real estate owned                    248             --            248             --
    (Gain) loss on sale of other real estate owned, net                         (176)            24           (176)            31
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
       Total real estate operations, net                                         154             63            234             78
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
          Total noninterest expense                                            5,320          4,461         10,598          8,987
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
Income before provision for income taxes                                       6,284          5,101         12,231         10,010
                                                                                                    
    Provision for income taxes                                                 2,576          2,087          5,014          4,090
                                                                          ----------     ----------     ----------     ----------
                                                                                                    
NET INCOME                                                                $    3,708     $    3,014     $    7,217     $    5,920
                                                                          ==========     ==========     ==========     ==========
                                                                                                    
BASIC EARNINGS PER SHARE                                                  $     0.48     $     0.39     $     0.94     $     0.76
                                                                          ==========     ==========     ==========     ==========
                                                                                                    
DILUTED EARNINGS PER SHARE                                                $     0.46     $     0.38     $     0.90     $     0.74
                                                                          ==========     ==========     ==========     ==========
</TABLE>


   See accompanying notes to the unaudited consolidated financial statements.


                                       3
<PAGE>   4
                   ITLA CAPITAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                              FOR THE SIX MONTHS ENDED
                                                                                       JUNE 30,
                                                                            ----------------------------
                                                                                1998            1997
                                                                            ------------    ------------
                                                                                   (IN THOUSANDS)
<S>                                                                         <C>             <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                $      7,217    $      5,920
  Adjustments to reconcile net income to net cash provided by
   operating activities:
    Depreciation, accretion and amortization, net                                   (496)            478
    Provisions for estimated credit losses, valuation allowance on loans
        held for sale, and estimated losses on other real estate owned             3,248           1,200
    (Gain) loss on sale of other real estate owned                                  (176)             31
    Increase in interest receivable                                               (1,119)           (475)
    Provision for deferred income taxes                                               --            (188)
    (Increase) decrease in other assets                                             (299)            496
    Decrease in accounts payable and other liabilities                            (1,876)         (2,348)
                                                                            ------------    ------------

    Net cash provided by operating activities                                      6,499           5,114
                                                                            ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in loans receivable, net                                              (58,854)        (48,251)
  Purchases of investment securities available for sale                          (20,520)         (8,000)
  Proceeds from the maturity of investment securities available for sale          25,050           6,297
  Increase in stock in Federal Home Loan Bank                                       (351)         (3,233)
  Repayment of principal on mortgage-backed securities                             4,298           3,365
  Proceeds from sale of other real estate owned                                    1,126           2,405
  Proceeds from sale of real estate loans                                          3,411           1,812
  Cash paid for capital expenditures                                                (261)           (686)
  Other, net                                                                          --               9
                                                                            ------------    ------------

     Net cash used in investing activities                                       (46,101)        (46,282)
                                                                            ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Common stock options exercised                                                      62             151
  Purchase of treasury stock                                                         (99)         (1,935)
  Net increase in deposit accounts                                                 1,082          18,685
  (Decrease) increase in Federal Home Loan Bank advances                          (1,000)         18,000
                                                                            ------------    ------------

     Net cash provided by financing activities                                        45          34,901
                                                                            ------------    ------------

         Net decrease in cash and cash equivalents                               (39,557)         (6,267)
         Cash and cash equivalents at beginning of period                        123,885          62,599
                                                                            ------------    ------------

         Cash and cash equivalents at end of period                         $     84,328    $     56,332
                                                                            ============    ============

 Supplemental Cash Flow Information:
   Cash paid during the period for interest                                 $     25,914    $     20,144
   Cash paid during the period for income taxes                             $      6,970    $      4,400
Noncash Investing Transactions:
   Loans transferred to other real estate owned                             $        488    $      1,833
   Loans to facilitate the sale of other real estate owned                  $        549    $        635
</TABLE>


   See accompanying notes to the unaudited consolidated financial statements.


                                       4
<PAGE>   5
                    ITLA CAPITAL CORPORATION AND SUBSIDIARIES

            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998


NOTE 1 - BASIS OF PRESENTATION

         The unaudited consolidated financial statements of ITLA Capital
Corporation ("ITLA Capital" and together with its subsidiaries 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 periods indicated. The unaudited consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries, Imperial
Thrift and Loan Association ("Imperial"), ITLA Funding Corporation ("Funding"),
and ITLA Commercial Investment Corporation ("CIC"), which was formed in May
1998. CIC will invest primarily in mortgages secured by income producing real
estate assets originated by Imperial and Funding. All material intercompany
transactions and balances have been eliminated. Certain reclassifications have
been made to the financial statements for 1997 to conform to the 1998
presentation. Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
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, 1998 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 the Company's annual report on Form 10-K for the year ended December
31, 1997.

NOTE 2 - EARNINGS PER SHARE

         Basic Earnings Per Share ("Basic EPS") is computed by dividing income
available to common stockholders 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 earnings of the Company.


                                       5
<PAGE>   6
                    ITLA CAPITAL CORPORATION AND SUBSIDIARIES

            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)

                FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998


NOTE 2 - EARNINGS PER SHARE (Continued)

         The following is a reconciliation of the numerators and denominators
used in the calculation of Basic and Diluted EPS.

<TABLE>
<CAPTION>
                                            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
                                         ---------   -------------     ---------      ---------   -------------     ---------
                                                             (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                      <C>           <C>             <C>            <C>           <C>             <C>      
1998
   Basic EPS                             $   3,708      7,698,984      $    0.48      $   7,217      7,698,973      $    0.94
   Effect of Dilutive Stock Options             --        297,296           (.02)            --        296,935           (.04)
                                         ---------      ---------      ---------      ---------      ---------      ---------
   Diluted EPS                           $   3,708      7,996,280      $    0.46      $   7,217      7,995,908      $    0.90
                                         =========      =========      =========      =========      =========      =========
   
1997
   Basic EPS                             $   3,014      7,751,239      $    0.39      $   5,920      7,789,312      $    0.76
   Effect of Dilutive Stock Options             --        122,334           (.01)            --        149,000           (.02)
                                         ---------      ---------      ---------      ---------      ---------      ---------
   Diluted EPS                           $   3,014      7,873,573      $    0.38      $   5,920      7,938,312      $    0.74
                                         =========      =========      =========      =========      =========      =========
</TABLE>

NOTE 3 - COMPREHENSIVE INCOME

         Comprehensive income, which encompasses net income and unrealized gains
(losses) on investment securities available for sale, is presented below:

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED JUNE 30,        SIX MONTHS ENDED JUNE 30,
                                                         ---------------------------       ---------------------------
                                                            1998             1997             1998             1997
                                                         ----------       ----------       ----------       ----------
                                                                                (IN THOUSANDS)
<S>                                                      <C>              <C>              <C>              <C>       
Net income                                               $    3,708       $    3,014       $    7,217       $    5,920

Other comprehensive income - unrealized gain
      (loss) on investment securities available
      for sale, net of tax expense (benefit) of
      $35 and $57 for the three months ended
      June 30, 1998 and 1997, respectively, and
      $33 and $(13) for the six months ended
      June 30, 1998 and 1997, respectively                       50               82               48              (18)
                                                         ----------       ----------       ----------       ----------
          Comprehensive income                           $    3,758       $    3,096       $    7,265       $    5,902
                                                         ==========       ==========       ==========       ==========
</TABLE>


                                        6
<PAGE>   7
                    ITLA CAPITAL CORPORATION AND SUBSIDIARIES

            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)

                FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998


NOTE 4 - IMPAIRED LOANS RECEIVABLE

         As of June 30, 1998, the recorded investment in loans receivable that
were considered impaired under Statement of Financial Accounting Standards
("SFAS") No. 114 was $6.6 million. The average recorded investment in impaired
loans during the three and six month periods ended June 30, 1998 was $6.2
million and $7.2 million, respectively. Interest income recognized on impaired
loans was not material during the three and six month periods ended June 30,
1998 and 1997.


                                       7
<PAGE>   8
                    ITLA CAPITAL CORPORATION AND SUBSIDIARIES

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 of the
Company as of and for the three and six month periods ended June 30, 1998.

         When used in this Form 10-Q or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project,"
"believe" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions, changes in domestic or foreign business markets, financial or legal
conditions, changes in levels of market interest rates, credit risks of lending
activities, and competitive and regulatory factors, could affect the Company's
financial performance and could cause the Company's actual results for future
periods to differ materially from those anticipated or projected.

         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.

RESULTS OF OPERATIONS

         THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED
         JUNE 30, 1997

NET INCOME

         Net income totaled $3.7 million for the three months ended June 30,
1998 compared to $3.0 million for the corresponding period in 1997, an increase
of 23.0 percent. The increase in net income was primarily due to increases in
net interest income and noninterest income, partially offset by increases in
general and administrative expenses, the provision for estimated credit losses,
real estate operations, net, and the provision for income taxes. Diluted EPS was
$0.46 for the three months ended June 30, 1998 compared to $0.38 for the
corresponding period in 1997, an increase of 21.1 percent.

NET INTEREST INCOME

         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 (volume) and changes in average
interest rates (rate). The change in interest due to both volume and rate have
been allocated to change due to volume and rate in proportion to the
relationship of absolute dollar amounts of each.


                                       8
<PAGE>   9
<TABLE>
<CAPTION>
                                               FOR THE THREE MONTHS ENDED JUNE 30,
                                                         1998 VS. 1997
                                         -----------------------------------------------
                                          INCREASE (DECREASE) DUE TO:
                                         ----------------------------
                                           VOLUME             RATE              TOTAL
                                         ----------        ----------        ----------
                                                         (IN THOUSANDS)
<S>                                      <C>               <C>               <C>       
Interest and fees earned on:
    Loans receivable, net                $    4,839        $      259        $    5,098
    Investment securities                       863                (4)              859
    Mortgage-backed securities                 (105)              (47)             (152)
                                         ----------        ----------        ----------
        Total increase                        5,597               208             5,805
                                         ----------        ----------        ----------

Interest paid on:
    Deposit accounts                          2,830                24             2,854
    FHLB advances                               182                29               211
                                         ----------        ----------        ----------
        Total increase                        3,012                53             3,065
                                         ----------        ----------        ----------
Increase in net interest income          $    2,585        $      155        $    2,740
                                         ==========        ==========        ==========
</TABLE>

         Total interest income increased by $5.8 million in the 1998 second
quarter compared to the corresponding period in 1997 due primarily to increases
in the average balances of loans receivable(1) and investment securities. The
average balance of loans receivable increased $176.8 million, or 26.2 percent,
due to growth in the Company's real estate loan portfolio. The average balance
of investment securities increased $63.6 million, or 78.4 percent. The
weighted-average yield on loans receivable increased to 10.97 percent for the
1998 second quarter compared to 10.82 percent for the corresponding period in
1997 primarily as a result of income received from prepayments and the
collection of interest on past due loans, some of which were previously
classified as nonaccrual. Excluding this additional income, the yield on loans
receivable would have been 10.83 percent.

         Total interest expense increased by $3.1 million in the 1998 second
quarter compared to the corresponding period in 1997 due primarily to an
increase in the average balance of deposit accounts and Federal Home Loan Bank
of San Francisco ("FHLB") advances. The average balance of deposit accounts
increased $196.4 million during the second quarter of 1998 as compared to the
1997 second quarter. The average rate paid on these accounts increased slightly
to 5.77 percent in the 1998 second quarter from 5.76 percent during the
corresponding period in 1997.

PROVISION FOR ESTIMATED CREDIT LOSSES

         Management periodically assesses the adequacy of the allowance for
credit 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, potential credit and geographic concentrations, nonaccrual
loan levels, historical loss experience and risks associated with changes in
economic, social and business conditions. Accordingly, the calculation of the
adequacy of the allowance for credit losses is not based solely on the level of
nonperforming 


--------
(1) Loans receivable consist of loans held for investment and loans held for
    sale.


                                       9
<PAGE>   10
assets. Management believes that the Company's allowance for credit losses as of
June 30, 1998 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 the Company's
financial condition and results of operations. In addition, the determination of
the amount of the allowance for credit losses is subject to review by Imperial'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 estimated credit losses increased to $1.6 million in
the 1998 second quarter from $0.3 million in the corresponding period in 1997,
primarily due to the establishment of reserves relating to growth in loans held
for investment. Nonperforming assets to total assets declined to 0.92 percent as
of June 30, 1998, compared to 1.21 percent at December 31, 1997. The aggregate
amount of nonperforming assets decreased to $9.4 million as of June 30, 1998
from $12.3 million at December 31, 1997. At June 30, 1998, the total allowance
for credit losses was $15.3 million or 1.9 percent of total loans held for
investment. See also "Financial Condition - Nonperforming Assets and Allowance
for Credit Losses."

NONINTEREST INCOME

         Noninterest income totaled $0.6 million for the three months ended June
30, 1998 compared to $0.3 million for the corresponding period in 1997. The
increase in noninterest income was due primarily to the increased fee income
from mortgage banking activities recognized by Funding, which commenced
operations during the first quarter of 1997. For the three month period ended
June 30, 1998, Funding originated $39.5 million of commercial real estate loans
for third-party investors and recognized $0.4 million of fee income, compared to
$25.3 million of loans originated and $0.2 million of fee income recognized
during the corresponding period in the prior year.

NONINTEREST EXPENSE

         Noninterest expense totaled $5.3 million for the three months ended
June 30, 1998 compared to $4.5 million for the corresponding period in 1997. The
increase in noninterest expense was due primarily to increases in compensation
and benefits and occupancy and equipment expenses incurred by Funding.
Compensation and benefits expense increased due to an increase in the number of
full-time equivalent employees, which averaged 168 during the second quarter of
1998 compared to 150 during the corresponding period of the previous year. The
increase in occupancy and equipment expense was due primarily to increases from
the expansion of Funding's national network of loan production offices.

         For the three months ended June 30, 1998 and 1997, the Company's ratio
of consolidated general and administrative expense to average assets, on an
annualized basis, was 2.0 percent and 2.2 percent, respectively. The ratio
excluding the costs of Funding was 1.5 percent and 2.0 percent, respectively.
The Company's efficiency ratio (the ratio of noninterest expense to the sum of
net interest income and noninterest income) was 40.3 percent for the quarter
ended June 30, 1998 compared to 43.9 percent during the corresponding period in
the prior year.


                                       10
<PAGE>   11
         SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED
         JUNE 30, 1997

NET INCOME

         Net income totaled $7.2 million for the six months ended June 30, 1998
compared to $5.9 million for the corresponding period in 1997, an increase of
21.9 percent. The increase in net income was primarily due to increases in net
interest income and noninterest income, partially offset by increases in general
and administrative expenses, the provision for estimated credit losses, real
estate operations, net, and the provision for income taxes. Diluted EPS was
$0.90 for the six months ended June 30, 1998 compared to $0.74 for the
corresponding period in 1997, an increase of 21.6 percent.

NET INTEREST INCOME

         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 (volume) and changes in average
interest rates (rate). The change in interest due to both volume and rate have
been allocated to change due to volume and rate in proportion to the
relationship of absolute dollar amounts of each.

<TABLE>
<CAPTION>
                                        FOR THE SIX MONTHS ENDED JUNE 30,
                                                  1998 VS. 1997
                                  ----------------------------------------------
                                    INCREASE (DECREASE) DUE TO:
                                  ----------------------------
                                     VOLUME           RATE            TOTAL
                                  ------------    ------------     ------------
                                                 (IN THOUSANDS)
<S>                               <C>             <C>              <C>         
Interest and fees earned on:
    Loans receivable, net         $      8,965    $        429     $      9,394
    Investment securities                1,644              38            1,682
    Mortgage-backed securities            (210)             (7)            (217)
                                  ------------    ------------     ------------
        Total increase                  10,399             460           10,859
                                  ------------    ------------     ------------
Interest paid on:
    Deposit accounts                     5,255             262            5,517
    FHLB advances                          442              81              523
                                  ------------    ------------     ------------
        Total increase                   5,697             343            6,040
                                  ------------    ------------     ------------
Increase in net interest income   $      4,702    $        117     $      4,819
                                  ============    ============     ============
</TABLE>

         Total interest income increased by $10.9 million for the six month
period ended June 30, 1998 compared to the corresponding period in 1997 due
primarily to increases in the average balances of loans receivable and
investment securities. The average balance of loans receivable increased $165.3
million, or 24.7 percent, due to growth in the Company's real estate loan
portfolio. The average balance of investment securities increased $60.2 million,
or 62.0 percent. The weighted-average yield on loans receivable increased to
10.96 percent for the six months ended June 30, 1998 compared to 10.83 percent
for the corresponding period in 1997 primarily as a result of income received
from prepayments and the collection of interest on past due loans, some of which
were previously classified as nonaccrual. Excluding this additional income, the
yield on loans receivable would have been 10.88 percent.


                                       11
<PAGE>   12
         Total interest expense increased by $6.0 million for the six month
period ended June 30, 1998 compared to the corresponding period in 1997 due
primarily to an increase in the average balance of deposit accounts and FHLB
advances. The average balance of deposit accounts increased $182.7 million
during the six month period ended June 30, 1998 compared to the corresponding
period in the prior year. The average rate paid on these accounts increased to
5.81 percent for the six month period ended June 30, 1998 from 5.73 percent
during the corresponding period in the prior year. The increase in deposit rates
was due to an increase in market demand for funds during the fourth quarter of
1997 and the first quarter of 1998, which resulted in deposit contracts entered
into during those periods to be priced above the rate of the then existing
deposit portfolio.

PROVISIONS FOR ESTIMATED CREDIT LOSSES AND VALUATION ALLOWANCE ON LOANS HELD FOR
SALE

         The provision for estimated credit losses increased to $3.0 million for
the six month period ended June 30, 1998 compared to $0.9 million for the
corresponding period in 1997, primarily due to the establishment of reserves
relating to growth in loans held for investment. See also "Financial Condition -
Nonperforming Assets and Allowance for Credit Losses." The provision for
valuation allowance on loans held for sale declined to zero during the six month
period ended June 30, 1998 from $0.4 million for the corresponding period in the
prior year, as the portfolio of automobile finance contracts held for sale that
was subject to market valuation adjustments had a net carrying value of zero
during the current period.

NONINTEREST INCOME

         Noninterest income totaled $1.5 million for the six months ended June
30, 1998 compared to $0.7 million for the corresponding period in 1997. The
increase in noninterest income was due primarily to the increased fee income
from mortgage banking activities recognized by Funding, which commenced
operations during the first quarter of 1997. For the six month period ended June
30, 1998, Funding originated $89.6 million of commercial real estate loans for
third-party investors and recognized $1.0 million of fee income, compared to
$37.8 million of loans originated and $0.4 million of fee income recognized
during the corresponding period in the prior year.

NONINTEREST EXPENSE

         Noninterest expense totaled $10.6 million for the six months ended June
30, 1998 compared to $9.0 million for the corresponding period in 1997. The
increase in noninterest expense was due primarily to increases in compensation
and benefits and occupancy and equipment expenses incurred by Funding.
Compensation and benefits expense increased due to an increase in the number of
full-time equivalent employees, which averaged 168 during the six month period
ended June 30, 1998 compared to 148 during the corresponding period of the
previous year. The increase in occupancy and equipment expense was due primarily
to increases from the expansion of Funding's national network of loan production
offices.

         For the six months ended June 30, 1998 and 1997, the Company's ratio of
consolidated general and administrative expense to average assets, on an
annualized basis, was 2.0 percent and 2.2 percent, respectively. The ratio
excluding the costs of Funding was 1.6 percent and 1.9 percent, respectively.
The Company's efficiency ratio (the ratio of noninterest expense to the 


                                       12
<PAGE>   13
sum of net interest income and noninterest income) was 41.0 percent for the six
months ended June 30, 1998 compared to 44.5 percent during the corresponding
period in the prior year.

YEAR 2000

         The Company is currently in the process of conducting a comprehensive
review of its computer systems to identify the systems that could be affected by
the "Year 2000" potential issue. The Year 2000 potential issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. Any of the Company's programs that have time sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failure or miscalculations. Management anticipates that
the enhancements necessary to prepare its systems for the year 2000 will be
completed in a timely manner.

         The Company is also aware of the risks to third parties, including
vendors (and to the extent appropriate, depositors and borrowers), and the
potential adverse impact on the Company resulting from failures by these parties
to adequately address these risks. The Company has been communicating with its
outside data processing service bureau, as well as other third-party service
providers (and to the extent appropriate, depositors and borrowers), to assess
their progress in evaluating their systems and implementing any corrective
measures required by them to be prepared for the year 2000. To date, the Company
has not been advised by any of its primary vendors that there are any
unmitigated risks regarding potential issues related to the year 2000. However,
no assurance can be given as to the adequacy of any plans or to the timeliness
of their implementation.

         The Company anticipates that it may incur internal staff costs as well
as consulting and other expenses related to the enhancements necessary to
prepare the systems for the year 2000. Based on the Company's current knowledge
and investigations, any expense relating to the Year 2000 potential issue is not
expected to have a material impact on the Company's financial position or
results of operations.


                                       13
<PAGE>   14
FINANCIAL CONDITION

NONPERFORMING ASSETS AND ALLOWANCE FOR CREDIT LOSSES

         The following table sets forth the Company's nonperforming assets by
category as of the dates indicated.

<TABLE>
<CAPTION>
                                                         JUNE 30,        DECEMBER 31,
                                                           1998             1997
                                                       ------------      ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                                                    <C>               <C>         

Nonaccrual loans                                       $      6,126      $      8,332
Other real estate owned, net                                  3,236             3,946
                                                       ------------      ------------
        Total nonperforming assets                     $      9,362      $     12,278
                                                       ============      ============

Troubled debt restructurings                           $      1,575      $      1,574

Nonaccrual loans held for investment to total
   gross loans held for investment                             0.75%             1.09%

Nonperforming assets to total assets                           0.92%             1.21%
</TABLE>

         The following table provides certain information regarding the
Company's allowance for credit losses.

<TABLE>
<CAPTION>
                                                           SIX MONTHS
                                                              ENDED           YEAR ENDED    
                                                            JUNE 30,         DECEMBER 31,      
                                                              1998               1997          
                                                           ------------      ------------
                                                                  (IN THOUSANDS)
<S>                                                        <C>               <C>         
Balance at beginning of period                             $     12,178      $     10,885
Provision for estimated credit losses                             3,000             3,300
Net recoveries (charge-offs) on real estate loans                    73            (2,007)
                                                           ------------      ------------
        Balance at end of period                           $     15,251      $     12,178
                                                           ============      ============
</TABLE>

LIQUIDITY AND DEPOSIT ACCOUNTS

         Liquidity refers to the Company's 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 loans receivable. The Company maintains a cash and investment
securities portfolio designed to satisfy operating and regulatory liquidity
requirements while preserving capital and maximizing yield. As of June 30, 1998,
the Company held approximately $84.3 million of cash and cash equivalents
(consisting primarily of short-term investments with original maturities of 90
days or less) and $30.8 million of investment securities classified as available
for sale. Short-term investments classified as cash equivalents consisted of
government money market funds, repurchase agreements and short-term government
agency securities, while investment securities available for sale consisted of
fixed income instruments which were rated "AAA" or equivalent by nationally
recognized rating agencies. As of June 30, 1998 and December 31, 1997,
Imperial's liquidity ratios were 13.0 


                                       14
<PAGE>   15
percent and 14.0 percent, respectively, exceeding the regulatory requirement of
1.5 percent. In addition, the Company's liquidity position is supported by a
credit facility with the FHLB with an available borrowing capacity of $42.4
million, and by federal funds lines of credit with two major banks with an
available borrowing capacity of $30.0 million.

         Total deposit accounts increased to $844.9 million at June 30, 1998
from $843.8 million at December 31, 1997. The Company retained a significant
amount of the funds which matured through rollover of maturing deposit accounts
in the three months ended June 30, 1998 and 1997. Although the Company competes
for deposits primarily on the basis of rates, based on its historical experience
regarding retention of deposits, management believes that a significant portion
of deposits will remain with the Company upon maturity on an ongoing basis.

CAPITAL RESOURCES

         As of June 30, 1998, Imperial's Leverage (Core), Tier I and Total
Risk-Based capital ratios were 8.4 percent, 9.2 percent and 10.4 percent,
respectively. These ratios were 9.6 percent, 11.4 percent and 12.7 percent,
respectively, as of December 31, 1997. The minimum regulatory requirement for
Leverage (Core), Tier I and Risk-Based capital are 4.0 percent, 4.0 percent and
8.0 percent, respectively. As of June 30, 1998, Imperial's capital position was
designated as "well capitalized" for regulatory purposes. During the three
months ended June 30, 1998, Imperial provided a $23.0 million dividend to the
parent company.

         The Company's shareholders' equity increased $7.2 million from December
31, 1997 to June 30, 1998 due primarily to the accumulation of $7.2 million in
net income. There were no dividends declared or paid by the Company during the
first six months of 1998.

MARKET RISK

         The Company's 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 the Company's annual report on Form 10-K for the year ended
December 31, 1997.


                                       15
<PAGE>   16
PART II - OTHER INFORMATION

ITEM 1         LEGAL PROCEEDINGS

               The Company is party to certain legal proceedings incidental
               to its business. Management believes that the outcome of such
               proceedings, in the aggregate, will not have a material effect
               on the Company's 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

               In order to be eligible for inclusion in the Company's proxy
               materials for next year's Annual Meeting of Shareholders, any
               shareholder proposal to take action at such meeting must be
               received at the Company's executive office, 888 Prospect Street,
               suite 110, La Jolla, California 92037, no later than March 2,
               1999. Any such proposal shall be subject to the requirements of
               the proxy rules adopted under the Securities Exchange Act of
               1934, as amended. Otherwise, any shareholder proposal to take
               action at such meeting must be received at the Company's
               executive office, 888 Prospect Street, suite 110, La Jolla,
               California 92037 by May 31, 1999; provided, however, that in the
               event that the date of the annual meeting is held before July 11,
               1999 or after September 28, 1999, the shareholder proposal must
               be received no later than the close of business on the later of
               the 60th day prior to such annual meeting or the tenth day
               following the day on which notice of the date of the annual
               meeting was mailed or public announcement of the date of such
               meeting was first made. All shareholder proposals must also
               comply with the Company's bylaws and Delaware law.


ITEM 6         EXHIBITS AND REPORTS ON FORM 8-K

               Not applicable.


                                       16
<PAGE>   17
                                   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 11, 1998                /s/ George W. Haligowski
       ---------------                ------------------------------------------
                                           George W. Haligowski
                                           Chairman of the Board, President and
                                           Chief Executive Officer



Date:  August 11, 1998                /s/ Michael A. Sicuro
       ---------------                ------------------------------------------
                                           Michael A. Sicuro
                                           Managing Director and Chief
                                           Financial Officer


                                       17