News Release

(1) Published by Origination News - October 1999

(2) Estimates based on statements made by housing and mortgage economists.

IFC continued to reduce its exposure to prepayments by introducing programs with prepayment penalties and limiting our premiums paid on loans without prepayment penalties. Approximately 40% of IFC's new loan production during the first nine months of 1999 include prepayment penalties as compared to approximately 14% during the first nine months of 1998. Absent any external market conditions, which may affect overall levels of loan production, IFC’s increased number of customers, increased levels of prepayment penalties and lower loan acquisition costs should contribute to stability of earnings.

Impac Direct Access System for Lending ("IDASL")

During the fourth quarter of 1999, the Company anticipates launching its web-based interactive and automated loan approval system called Impac Direct Access System for Lending ("IDASL"). IDASL is a risk-based pricing model as well as an automated underwriting system. With the expected roll out in the fourth quarter, IDASL will provide substantial benefits to IFC's business-to-business customers with plans to expand IDASL to provide the same benefits to IFC's retail customers in 2000. IDASL will provide IFC's customers the benefits of direct download from in-house origination systems, prequalification and full underwriting approval, risk-based pricing and automated exception underwriting. The benefits provided to IFC's customers will directly pass-through to IFC in the form of consistent and reliable underwriting decisions, automated loan pricing, higher loan pull-through rates and reduced operating costs.

Efficiencies

Future releases of the IDASL system will include fraud detection measures and automated appraisals which will continue to increase operational efficiencies and quality of the Company’s loan products.

Loan Sales and Securitizations

Total loan sales by IFC were $518.4 million during the third quarter of 1999 as compared to $276.7 million during the second quarter of 1999. Gain on sale of loans during the third quarter of 1999 were $8.3 million as compared to $5.4 million during the second quarter of 1999, which excludes reversal of mark-to-market allowances of $4.1 million. Of the $518.4 million of loan sales during the third quarter of 1999, $381.1 million were whole loan sales and $137.3 million were securitized as a Real Estate Mortgage Investment Conduit ("REMIC") transaction.

Loan Servicing

IFC's servicing portfolio decreased 41% to $2.2 billion at September 30, 1999 as compared to $3.7 billion at December 31, 1998. The decrease was attributable to IFC selling $944.9 million of servicing during the latter half of 1998 which subsequently transferred in 1999 and an additional $538.9 million of mortgage loans sold on a servicing released basis during the first nine months of 1999. The sale of servicing and loans servicing released increased liquidity and reduced exposure to additional prepayment risk. The servicing portfolio had a weighted average coupon of 9.57% at September 30, 1999 as compared to a weighted average coupon of 9.47% at December 31, 1998. The weighted average coupon of the servicing portfolio at September 30, 1999 and December 31, 1998 includes a high concentration of second trust deed mortgage loans. The loan delinquency rate of mortgages in IFC's servicing portfolio which were 60 or more days past due, inclusive of foreclosures and delinquent bankruptcies, was 5.28% at September 30, 1999 as compared to 4.81% at December 31, 1998. The number of delinquent mortgages in IFC's servicing portfolio which were 60 or more days past due, inclusive of foreclosures and delinquent bankruptcies, decreased to 5.97% at September 30, 1999 as compared to 6.36% at December 31, 1998

Liquidity and Leverage

As previously disclosed, the Company continued to maintain reduced leverage and strong liquidity levels during the third quarter of 1999 as well as during the first nine months of 1999. The Company's debt-to-equity ratio decreased to 4.85:1 at September 30, 1999 as compared to 5.55:1 at December 31, 1998. The Company's liquidity position at September 30, 1999 totaled $26.9 million of cash and cash equivalents as compared to $34.3 million at December 31, 1998.

The Company continues to reduce its reliance on reverse repurchase agreements to finance its investment securities available for sale portfolio, which were $11.4 million at September 30, 1999 as compared to $24.1 million at December 31, 1998. The Company completed a re-securitization of its investment securities available-for-sale on October 21, 1999, which raised additional cash liquidity for the Company of approximately $23.3 million after repaying reverse repurchase agreements collateralized by the investment securities available-for-sale. The cash proceeds can be used to grow the Company's balance sheet, repurchase common stock or for business expansion. The following table summarizes the Company's liquidity position for the periods presented:

1. Calculated as cash and marketable securities rated AAA through BBB.
2. Calculated as warehouse borrowings, reverse repurchase agreements, dividends payable, and other short-term liabilities.

Common Stock Repurchases and Book Value

During the quarter ended September, 1999, the Company repurchased 640,100 shares of common stock for $2.9 million at an average price of $4.50 per share. The Company’s total stock repurchases for the year are 1.3 million shares for $6.8 million at an average price of $5.10 per share.

The Company's book value per common share increased to $9.49 (calculated assuming liquidation value of the Company's Series B Cumulative Convertible Preferred Stock ("preferred stock")) at September 30, 1999 as compared to book value per common share of $9.02 at December 31, 1998. The increase in book value was attributable to the retention of earnings, the exchange offer completed in the second quarter and the repurchase of the Company’s stock in the open market.

Acquisition of California Industrial Thrift and Loan

During the first quarter of 1999, the Company completed a definitive agreement to acquire a bank. As provided for in the agreement, the Company submitted its application in the second quarter of 1999 for a change of control to the state and federal regulatory agencies for their approval. During the process of reviewing the application, particularly the federal regulator raised certain issues. We were not able to give the federal agency sufficient comfort with respect to those issues without modifying our proposal. Also, the state regulatory department requested significant additional information which had the effect of delaying the approval process. At this time, the Company has decided to withdraw its state and federal applications for change of control and intends on resubmitting a new application at a later date that addresses the business concerns expressed by the regulators. However, there are no assurances that new applications for change of control will be received favorably by either of the state and federal regulators. Therefore, the Company is continuing to expand its wholesale and retail operations, which was intended to be contributed to the bank, within IFC. In the event that the Company is unsuccessful in its efforts to obtain the bank charter, Management believes that it will have no effect on the future profitability of the Company.

IMH Results of Operations

Third Quarter of 1999 compared to Third Quarter of 1998

Net Interest Income. Net interest income was $5.9 million during the third quarter of 1999 as compared to $11.7 million during the third quarter of 1998. Gross interest income earned on Mortgage Assets, or core earnings, decreased during the third quarter of 1999 to $26.7 million as compared to $45.3 million during the third quarter of 1998. Mortgage Assets are comprised of mortgage loans held-for-investment, Collateralized Mortgage Obligation ("CMO") collateral, finance receivables and investment securities available-for-sale. During the third quarter of 1999 core earnings decreased as average Mortgage Assets decreased to $1.5 billion as compared to $2.2 billion during the third quarter of 1998. The decrease in average Mortgage Assets was primarily the result of a decrease in average finance receivables. Average finance receivables decreased to $261.6 million during the third quarter of 1999 as compared to $704.0 million during the third quarter of 1998 primarily due to a decrease in average finance receivables to IFC as IFC continues to sell loans primarily in monthly whole loan transactions. The yield on average Mortgage Assets during the third quarter of 1999 was 7.17% as compared to 8.06% during the third quarter of 1998. The net interest spread on Mortgage Assets was 0.71% for the third quarter of 1999 as compared to 1.46% during the third quarter of 1998. Net interest margin was 1.52% during the third quarter of 1999 as compared to 2.09% during the third quarter of 1998. The decrease in mortgage yields was attributable to increased amortization of premiums as a result of higher prepayment experience and prepayment of higher yielding mortgage assets during 1999.

Non-Interest Income. Non-interest income includes equity in net earnings of IFC and other non-interest income, including primarily loan servicing fees and fees associated with the Company's Warehouse Lending Operations. During the third quarter of 1999, non-interest income increased to $3.8 million as compared to $(9.5) million during the third quarter of 1998. This increase was primarily due to an increase of $10.9 million in equity in net earnings (loss) of IFC to $3.0 million during the third quarter of 1999 as compared to a loss of $(7.9) million during the third quarter of 1998. The loss for the third quarter of 1998 was primarily due to non-cash charges that required the Company and its subsidiaries to make certain write-downs of its mortgage loans, equity investments and investment securities available-for-sale portfolios.

Non-Interest Expense. During the third quarter of 1999, non-interest expense decreased to $2.1 million as compared to $23.1 million during the third quarter of 1998. This decrease was primarily due to a decrease in write-down of investment securities to $358,000 during the third quarter of 1999 as compared to $11.6 million during the third quarter of 1998. The write-down of investment securities during the third quarter of 1998 was primarily due to the deterioration of the mortgage-backed securitization market during the latter half of 1998 and the $9.1 million loss on the sale of Impac Commercial Holdings, Inc. ("ICH") common stock. Excluding the write-down of investment securities and loss on sale of ICH common stock, non-interest expense during the third quarter of 1999 decreased 29% to $1.7 million as compared to $2.4 million during the third quarter of 1998.

IFC Results of Operations

Third Quarter of 1999 compared to Third Quarter of 1998

Net earnings during the third quarter of 1999 increased to $3.0 million as compared to a net loss of $(7.9) million during the third quarter of 1998. Net earnings during the third quarter of 1999 increased primarily as a result of a mark-to-market loss of $21.0 million recorded during the third quarter of 1998. The non-cash charge reflected market bid prices that IFC received for the sale of mortgage loans in the fourth quarter of 1998 on a whole loan basis as a result of the deterioration of the mortgage-backed securitization market.

Total assets at September 30, 1999 decreased to $145.0 million as compared to $313.9 million at December 31, 1998, while shareholders' equity increased 47% to $19.0 million as compared to $12.9 million, respectively. In addition, liquidity improved as cash balances increased to $10.5 million at September 30, 1999 as compared to $422,000 at December 31, 1998. The increase in liquidity was primarily due to a cash infusion of $14.5 million from IMH in exchange for a promissory note. Liquidity also improved as of September 30, 1999 as a result of whole loan sales for cash during the first nine months of 1999.

The Company has announced a conference call on Monday, October 25, 1999 at 1:30 p.m. pacific standard time to discuss the results of the Company’s third quarter earnings. The conference call will be limited for discussion to certain buyside and sellside analysts and open for "listen only" to all those other parties interested. To participate please call (888) 303-1413. In addition, a replay of the conference call will be available for 48 hours following the call. To listen to the replay please dial (800) 633 - 8284, reservation number: 13386989.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology such as "may", "will", "intend", "expect", "anticipate", "estimate" or "continue" or the negatives thereof or other comparable terminology. The Company’s actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including but not limited to, changes in the origination and resale pricing of mortgage loans, changes in management’s estimates and expectations, general financial markets and economic conditions and other factors described in this press release. The financial information presented in this release pertaining to actual results should not be taken to predict future earnings, as the Company may not experience similar earnings in future periods.

or email:  tjernigan@impaccompanies.com