CHAIRMAN'S MESSAGE

Dear Fellow Shareholders,

In addition to recording the 11th consecutive year of record core profitability, 2006 truly marked the year that we successfully transformed ourselves from a regional bank to a national commercial real estate lender. We now have a production team that's capable of servicing customers throughout the continental United States.

Last year, for the first time, more than one half of Imperial Capital Bancorp's commercial and multifamily loan originations came from lending regions outside of our traditional West Coast market. Imperial Capital Bancorp's bank subsidiary, Imperial Capital Bank (ICB), generated record internal loan production volume in 2006. Total loan originations exceeded $1.0 billion for the first time ever, fueled primarily by our commercial real estate lending division. ICB's market share of the small balance commercial real estate market placed it among the top originators of this asset class in 2006. The Company also continued to supplement its internal loan production with opportunistic purchases of loan pools in the secondary market. In 2006, ICB acquired approximately $500 million of assets through loan pool purchases, helping drive balance sheet growth.

In 2006, Imperial Capital Bancorp reported net income and earnings per share of $26.9 million and $4.71, respectively, an increase of 12% and 17%, respectively, over the earnings for the previous year. Since becoming a public company in 1996, Imperial Capital Bancorp's core profitability has increased at a compounded annual rate of 10%, demonstrating the fundamental strength and stability of our business model. We improved the return on equity to 12.75% in 2006, overcoming a very competitive lending marketplace and a challenging interest rate environment.

Imperial Capital Bancorp effectively managed its capital resources, balancing the needs of our shareholders for a return on their investment and the needs of our business to retain capital for future growth. During 2006, Imperial Capital Bancorp initiated a dividend on its common stock, and declared $3.4 million of dividends to its shareholders through a quarterly dividend payout of $0.15 per share. The highly successful stock repurchase program continued this year as well, with Imperial Capital Bancorp buying back approximately 229,000 shares and returning $11.3 million of capital to shareholders. During the year, Imperial Capital Bancorp's share price increased 19% to a closing price of $57.91.

Over the last several years, ICB has invested heavily in its deposit business to ensure that our depositors have access to state-of-the-art products and services. ICB offers its customers a wide array of deposit products, including certificates of deposit, savings and money market, and checking accounts, all with very competitive rates. These accounts are fully accessible through our interactive ebanking website, our retail branch locations, our ATM's or through strategic relationships. In 2006, ICB's deposit accounts exceeded $2.0 billion for the first time, and in the second quarter of 2007 ICB will be opening a new retail branch in Baltimore, Maryland, providing our east coast customers with a regional banking center.

And finally, on December 29, 2006, Imperial Capital Bancorp stock began trading on the New York Stock Exchange under a new ticker symbol, "IMP". We look forward to being associated with the NYSE, which we believe will increase the visibility of our company and is a logical next step as we continue to expand our operations nationally.

None of these achievements would be possible without the continued dedication and hard work of our associates, who are among the most productive work force in the banking industry, and the backing of Imperial Capital Bancorp shareholders who have provided unwavering support of Imperial Capital Bancorp's business initiatives since our 1995 IPO. Thank you all for your continued support of Imperial Capital Bancorp.

George W. Haligowski
Chairman of the Board, President & CEO

To learn more about Mr. Haligowski, please click here.

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