Capital Alliance Income Trust Ltd. Announces Increased Revenues and Improved Earnings for First Quarter.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--May 15, 2002

Capital Alliance Income Trust Ltd. ("CAIT") (AMEX:CAA) - a non-conforming specialty residential finance company, organized as a Real Estate Investment Trust ("REIT"), announced that its revenues increased to $741,478 in the first quarter of 2002, up from $625,102 in the first quarter of 2001 - a 19% increase - and that its earnings increased 16% to $306,979 for the first quarter of 2002 as compared to $264,491 in the first quarter of 2001. First quarter 2002 earnings produced basic and fully diluted earnings per share of $0.53 and $0.42 versus split adjusted first quarter 2001 basic and fully diluted earnings per share of $0.26 and $0.25. Based on the closing stock price of CAIT's common shares on May 14, 2002, the annualized dividend yield is 9.47%.

Thomas B. Swartz, Chairman and CEO of CAIT, stated that "It is particularly satisfying to see the improvement in CAIT's earnings and revenues over the last year since it has enabled our Board to raise CAIT's common share dividend four times over the last five quarters - from an annual rate of $1.02 per share to $1.60 per share. While interest rates are expected to rise during 2002, we nevertheless expect CAIT's profitability to be maintained by its loan portfolio growth and increased loan origination activity. We are currently negotiating with several financial institutions to increase the liquidity of our company in this very favorable interest environment to take advantage of the favorable spread between the cost of debt financing and the returns on our investment opportunities." Mr. Swartz also noted that "the increases in earnings and dividends have also precipitated an increase in the price of CAIT's shares on the American Exchange from a low of $6.73 in the first quarter of 2001 to a high of $17.40 during last week's trading.

Richard J. Wrensen, CAIT's Executive Vice-President and Chief Financial Officer, observed that "we are seeking to further expand our borrowings while maintaining a conservative balance sheet. Current borrowings are less than the CAIT's shareholder equity while mortgage REITs typically borrow five to nine times their equity capital. Additional liquidity will enable CAIT to internally grow its business and further enhance shareholder value." He also noted that next month, CAIT's Board of Directors is scheduled to meet and declare CAIT's common share dividend for payment in July and that CAIT must annually distribute at least 90% of its taxable income to maintain its REIT status under the Internal Revenue Code.

CAIT is a specialty residential lender which originates and invests as a portfolio lender in high-yielding non-conforming residential mortgage loans on one-to-four unit residential properties located primarily in California and other western states. It also originates conforming and non-conforming loans on residential properties for sale to investors in the secondary market on a whole loan basis for cash through its mortgage banking subsidiary, Capital Alliance Funding Corporation. CAIT's investment guidelines limit its portfolio mortgage to 75% or less of the collateral's appraised value.

This document contains "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) that inherently involve risks and uncertainty. CAIT's actual results and liquidity can differ materially from those anticipated in these forward-looking statements because of changes in the level and composition of CAIT's investments and unforeseen factors. As discussed in CAIT's filings with the Securities and Exchange Commission, these factors may include, but are not limited to, changes in general economic conditions, the availability of suitable investments, fluctuations in and market expectations for fluctuations in interest rates and levels of mortgage prepayments, deterioration in credit quality and ratings, the effectiveness of risk management strategies, the impact of leverage, the liquidity of the secondary markets and credit markets, increases in cost and other general competitive factors.