IFC Irwin Financial Corp

Irwin Financial Corporation Announces First Quarter 2005 Earnings * First Quarter Net Income of $0.13 per Diluted Share; COLUMBUS, Ind., April 29 /PRNewswire-FirstCall/ -- Irwin Financial Corporation (NYSE:IFC), a bank holding company focusing on mortgage banking, small business and home equity lending, today announced net income for the first quarter of 2005 of $3.6 million or $0.13 per diluted share. This compares with net income of $14.4 million or $0.48 per diluted share in the fourth quarter of 2004. The decline is largely attributable to a reduction in net income from mortgage banking operations. Return on average equity totaled 2.9 percent compared to 11.7 percent a year earlier. In a previous press release, the company had stated that it expected a small loss in the quarter. The change to a profit resulted from updated estimates of the value of incentive servicing fee agreements at the home equity line of business made during the closing process. "We are obviously disappointed with our performance in mortgage banking," noted Irwin Financial Chairman Will Miller. "Like many in the industry, we have found it difficult to reduce the size of operations after the refinance boom of 2001-2003 in a rapid enough fashion to align with the reduced margins of the past several quarters. In addition, the direction of interest rates started the quarter by declining rapidly, leading us to reposition our hedges. Rates then rose approximately three quarters of a percent over the last half of the quarter, driving our servicing values over the 'lower of cost or market' cap in GAAP that caused us to book hedge losses greater than the amount by which we could have otherwise recognized increases in servicing values. The economic value of our servicing rights continued to rise and would have offset the hedge losses had we been allowed to book the increase in value under GAAP. We have implemented a number of difficult and painful actions in our mortgage banking business that should bring it back to profitability. These steps include a strategic paring of our production operation to focus on our traditional strengths in first-time and emerging market homebuyers and selective servicing sales." "At the same time, we are pleased with the first quarter performance in our other three segments. We had strong origination volumes in the home equity sector and steady growth in the commercial portfolios, coupled with satisfactory overall credit quality." Miller continued, "In our home equity segment, we sell a portion of our current production on a credit-risk sold basis to manage the balance sheet, but have retained servicing rights to leverage the strength of our servicing operations. Certain buyers of these whole loans have granted us incentive servicing rights in order to align interests by encouraging servicing practices to produce better-than-industry-norm credit performance. SFAS 133 requires we mark certain derivatives associated with these incentive servicing rights to market on a quarterly basis. While we would prefer to limit our mark-to-market activities, we would have to forgo substantial potential economic value by dropping the incentive servicing agreements to do so. We believe the value created in the long-term from these fees will outweigh the negatives of the mark-to-market requirement. Our improved consolidated results for the quarter compared to the expectation we announced in early April resulted from updated forecasts of the value of these incentive servicing agreements. To limit volatility in our capital accounts, we hold dollar-for- dollar capital against these derivatives." Financial highlights for the period include: Consolidated Results 1Q 1Q Percent 4Q Percent $ in millions, except EPS Change Change 2005 2004 2004 Net Interest Income After Provision for Losses $57 $51 11% $61 (6)% Non-Interest Income 46 83 (44) 61 (24) Total Consolidated Net 103 134 (23) 121 (15) Revenues Non-Interest Expense 98 100 (2) 97 2 Net Income 4 20 (82) 14 (75) Earning per Share (diluted) 0.13 0.67 (81) 0.48 (73) Loans and Leases 3,488 3,222 8 3,450 1 Mortgage Loans Held for Sale 1,054 996 6 891 18 Deposits 3,770 3,309 14 3,395 11 Shareholders' Equity 504 453 11 503 NM Total Risk-Based 15.0% 15.3% 15.9% Capital Ratio Return on Average Equity 2.9 18.4 11.7 Consolidated net revenues declined on both a sequential quarter basis and compared with the year earlier quarter. The majority of the declines in each period occurred in our first mortgage segment reflecting a combination of lower loan production, reduced gains on secondary market activities, and reduced net recovery of mortgage servicing impairment. Our total loan and lease portfolio of $3.5 billion as of March 31, 2005, increased $37 million or 1 percent from the end of the fourth quarter. Our two commercial portfolios increased $75 million or 11 percent on an annualized basis during the quarter, whereas our second mortgage loan portfolio declined $37 million, due to run-off and whole loan sales. However, our loans held for sale in the first and second mortgage segments increased $163 million during the quarter and totaled $1.1 billion at quarter end, up 18 percent from December 31. Deposits totaled $3.8 billion at March 31, up $375 million or 11 percent from December 31. Average core deposits of $2.2 billion rose at a modest annualized rate of 5 percent during the first quarter, but have increased $458 million or 26 percent during the past year as we continue to shift our funding focus to core deposits from wholesale sources. We had $504 million or $17.67 per share in common shareholders' equity as of March 31, 2005. At quarter end, our Tier 1 Leverage Ratio and Total Risk- based Capital Ratio were 12.0 percent and 15.0 percent, respectively, compared to 11.6 percent and 15.9 percent as of December 31, 2004. The Risk-based Capital Ratio declined principally as a result of loan growth in excess of capital growth. Nonperforming assets (including other real estate owned of $13 million) were $41 million or 0.75 percent of total assets as of March 31, 2005, down from $45 million or 0.86 percent of total assets at the end of December. Our on-balance sheet allowance for loan and lease losses totaled $45 million as of March 31, up $1 million from the end of the year. The ratio of on-balance sheet allowance for loan and lease losses to nonperforming loans and leases increased to 163 percent at March 31, compared to 132 percent at December 31 principally as the result of one commercial banking credit which moved from non-performing to real estate owned. Our consolidated loan and lease loss provision totaled $3 million, up $1 million from the fourth quarter of 2004 and compared favorably to net charge- offs, which totaled $2 million, down $4 million from the fourth quarter. The amount of 30-day and greater delinquencies, the ratio of charge-offs to average loans and leases, and the allowance for loan and lease losses to total loans and leases for our principal credit-related portfolios are shown below. In general, despite the rising delinquencies in our commercial portfolios, which we believe are manageable, we are pleased with the recent credit performance of the portfolios and anticipate similar credit results in the near future. Home Equity Home Equity Commercial Lending On- Lending Off- Commercial Banking Balance Balance Finance Sheet(1) Sheet(2) 30-Day and Greater Delinquencies March 31, 2005 0.66% 1.82% 9.38% 1.10% December 31, 2004 0.11 1.93 11.71 0.70 September 30, 2004 0.24 1.87 10.78 0.95 June 30, 2004 0.19 1.45 9.92 0.88 March 31, 2004 0.29 2.46 8.65 0.86 Annualized Charge-offs 1Q05 0.07% 0.15% 2.98% 0.88% 4Q04 0.10 0.79 4.48 2.67 3Q04 0.11 0.68 3.19 1.47 2Q04 0.15 1.08 4.25 0.87 1Q04 0.24 2.61 6.28 1.12 Allowance to Loans and Leases March 31, 2005 1.00% 2.05% 2.54% 1.58% December 31, 2004 1.00 1.92 3.40 1.54 September 30, 2004 1.02 1.97 5.97 2.05 June 30, 2004 1.06 3.16 8.12 2.30 March 31, 2004 1.10 4.08 10.25 2.29 1. Home Equity on -balance sheet Allowance to Loans and Leases relates to Loans Held for Investment portfolio only. 2. Off-balance sheet loans underlie our residual interests. These loans have been treated as sold under SFAS 140 and have a reserve methodology that reflects life-of-account loss expectations, whereas our policy for on-balance sheet loans requires that we hold loss reserve coverage sufficient for potential losses inherent in the portfolio at the balance sheet date. The figures for reserves in the column labeled "Home Equity Lending Off-Balance Sheet," therefore, are not balance sheet accounts of "allowance for loan and lease losses," but instead represent the percentage of undiscounted losses assumed in our residual valuation relative to the underlying loan balances supporting the residual interests. Segment Results Net income by line of business is shown below, with additional detail available in the segment summary tables at the end of this release and in our Form 10-Q. Net Income ($ in millions) 1Q 1Q Percent 4Q Percent Change Change 2005 2004 2004 Mortgage Banking $(9.6) $9.7 NM $1.0 NM Commercial Banking 5.5 5.4 1 6.7 (19) Home Equity 6.9 6.6 4 6.4 8 Commercial Finance 0.7 (0.3) NM 1.1 (36) Other Segments, 0.1 (1.1) NM (0.8) NM Including Parent Consolidated Net Income 3.6 20.3 (82) 14.4 (75) Mortgage banking recorded a net loss of $9.6 million, compared to earnings of $9.7 million a year earlier. These results reflect servicing hedge costs in excess of servicing impairment recovery of $15 million, compared with a net recovery of $10 million in the year earlier as well as significantly reduced secondary market loan margins. The majority of the hedge losses occurred as interest rates rose rapidly toward the end of the quarter. This increase in rates resulted in hedge losses that exceeded our servicing asset impairment reversal, which is capped under GAAP at the lower-of-cost-or-market (LOCOM). By the end of the quarter, the market value of our first mortgage servicing asset had increased in value to $26 million more than the LOCOM-capped carrying value. Therefore, absent this LOCOM cap, our economic, non-GAAP impairment reversal, net of hedge costs, would have been approximately $11 million. We do not seek hedge accounting under SFAS 133 due to the insufficient short-term correlation between mortgages and hedging instruments. During the first quarter, we recorded $1 million of revenue related to a sale of $1 billion in servicing assets, a $7 million sequential quarter decline. To further reduce our risk of future servicing asset impairment, we intend to make selective servicing sales later in the year. We originated $2.8 billion of mortgage loans during the quarter, recording net origination fees and gains on sales of $25 million, compared with $3.5 billion of originations and $34 million of gains during the fourth quarter. As previously announced, during the quarter, we sold certain retail and credit union channel branches which no longer fit our growth strategy. Exit costs attributed to these sales totaled approximately $1.2 million; we anticipate modest additional costs will be incurred in the second quarter as these transactions are finalized. We anticipate that we will recognize some incremental revenue over the next three years as part of an earn-out based remuneration for these branches. Commercial banking net revenues were largely unchanged from the fourth quarter. Net income of $5.5 million for this segment was a decline of $1.3 million from the prior quarter principally reflecting increased personnel expenses related to recent new office expansions in Sacramento and Southern California. Deposit growth of $294 million outpaced loan portfolio growth of $56 million. Net interest margin was 3.75 percent during the quarter, down from 3.81 percent during the fourth quarter, reflecting temporary investment of excess deposits in lower yielding investments and an increase in internally allocated coupon-bearing capital. We anticipate stronger loan growth in the second quarter and with that growth, believe both net interest income and margin will expand, aided by our strong deposit growth. Credit quality continues to be strong, notwithstanding an increase in thirty-day and greater delinquencies to 0.66 percent at March 31. The increase in delinquencies was attributable to three commercial credits, each of which we believe to have minimal loss exposure. Our loan and lease loss provision of $1.0 million increased modestly during the quarter and compared to charge-offs of only $0.4 million. We anticipate our quarterly provision will increase modestly in 2005 as loan growth continues. Net income in our home equity segment totaled $6.9 million, up from $6.4 million during the fourth quarter. As noted in the table above, credit quality continues to show improvement. Loan originations totaled $430 million in the first quarter, up 28 percent from $335 million in the fourth quarter. We sold $322 million of loans during the quarter, for a net gain on sale of $8 million. Our loan and lease loss provision of $0.4 million compared to net charge-offs of $0.3 million. Our residual interests totaled $46 million at March 31, down from $52 million at December 31. We recorded $0.5 million in residual trading gains during the quarter, compared to $10 million during the fourth quarter. In addition, we recorded $10.5 million of other revenues during the quarter related to increased valuations of our incentive servicing fee derivatives. These derivatives are created through certain whole loan sales transactions (credit risk sold) and have value when our servicing and collections practices exceed industry-based credit standards. At March 31, 2005, we discounted these derivatives at rates between 30 and 40 percent, taking into consideration a variety of factors, including volatility of anticipated cash flow, credit quality, loan-to-value ratio, and anticipated prepayment speeds. We service $0.9 billion of loans for third parties on which we own incentive servicing rights and carry those incentive rights at $13.7 million as of March 31. Please see the MD&A of our home equity segment in our 10-Q filing for more detail. Our commercial finance line of business earned $0.7 million in the first quarter, a $0.4 million decline as compared to the fourth quarter. The decline in quarterly net income was largely attributable to a one-time increase in non-interest expenses related to our resolution of a contract dispute. Loan and lease fundings totaled $83 million during the quarter compared to $115 million in the fourth quarter. Our loan and lease portfolio in this segment now totals $644 million, a $19 million increase from December 31. Net interest margin declined modestly to 4.85 percent, from 4.95 percent during the fourth quarter. Our loan and lease loss provision in this segment totaled $2.1 million during the quarter, up modestly from $2.0 million in the fourth quarter. Net charge-offs declined on a sequential quarter basis by $2.6 million or 65 percent to $1.4 million, largely reflecting an elevated level in our commercial finance segment during the fourth quarter. Our thirty-day and greater delinquency ratio in this segment increased to 1.10 percent from 0.70 percent as of December 31. Our non-performing assets increased approximately 3 percent to $4 million. About Irwin Financial Irwin(R) Financial Corporation (http://www.irwinfinancial.com/) is a bank holding company with a history tracing to 1871. The Corporation, through its principal lines of business - Irwin Mortgage Corporation, Irwin Union Bank, Irwin Home Equity Corporation and Irwin Commercial Finance - provides a broad range of financial services to consumers and small businesses in selected markets in the United States and Canada. About Forward-Looking Statements This press release contains forward-looking statements and estimates that are based on management's expectations, estimates, projections, and assumptions. These statements and estimates include but are not limited to earnings estimates and projections of financial performance and profitability, and projections of business strategies and future activities. These statements involve inherent risks and uncertainties that are difficult to predict and are not guarantees of future performance. Words that convey our beliefs, views, expectations, assumptions, estimates, forecasts, outlook and projections or similar language, or that indicate events we believe could, would, should, may or will occur (or might not occur) or are likely (or unlikely) to occur, and similar expressions, are intended to identify forward- looking statements, which may include, among other things: * statements and assumptions relating to projected growth in our earnings, projected loan originations, net interest and margins, and the relative performance of our lines of business; * statements and assumptions relating to projected trends or potential changes in our asset quality, loan delinquencies, charge-offs, reserves and asset valuations, including valuations of our servicing portfolio and incentive servicing fee derivatives; and * any other statements that are not historical facts. Actual future results may differ materially from what is projected due to a variety of factors including: potential changes in, volatility and relative movement (basis risk) of interest rates, which may affect consumer demand for our products and the success of our interest rate risk management strategies; staffing fluctuations in response to product demand; the relative profitability of our lending operations; the valuation and management of our servicing and derivatives portfolios, including assumptions we embed in the valuation and short-term swings in the valuation of such portfolios due to quarter-end movements in secondary market interest rates which are inherently volatile; borrowers' refinancing opportunities, which may affect the prepayment assumptions used in our valuation estimates and which may affect loan demand; unanticipated deterioration in the credit quality of our loan assets; unanticipated deterioration in or changes in estimates of the carrying value of our other assets, difficulties in delivering loans to the secondary market as planned; difficulties in expanding our business and obtaining funding as needed; competition from other financial service providers for experienced managers as well as for customers; changes in the value of companies in which we invest; changes in variable compensation plans related to the performance and valuation of lines of business where we have compensation systems tied to line of business performance; unanticipated outcomes in litigation; legislative or regulatory changes, including changes in tax laws or regulations, changes in the interpretation of regulatory capital rules, changes in consumer or commercial lending rules or rules affecting corporate governance, and the availability of resources to address these rules; changes in applicable accounting policies or principles or their application to our businesses or final audit adjustments; or governmental changes in monetary or fiscal policies. We undertake no obligation to update publicly any of these statements in light of future events, except as required in subsequent reports we file with the Securities and Exchange Commission. The Corporation will host a conference call to review results today, April 29, at 1:00 p.m. EDT, 12:00 p.m. EST. The toll-free number for the call is (866) 406-3488; please tell the operator you would like to join the Irwin Financial call. A replay of the call will be available for 48 hours by calling (877) 213-9653, passcode 11563078# and on the Irwin Financial Corporation website at http://www.irwinfinancial.com/ir-set.html. IRWIN FINANCIAL CORPORATION Selected Consolidated Financial Highlights ($'s in thousands, except per share data) Q1-2005 Q1-2004 $ Change % Change Q4-2004 Net Interest Income $60,213 $59,203 $1,010 1.7 $62,959 Provision for Loan and Lease Losses (3,291) (8,146) 4,855 59.6 (2,357) Noninterest Income 46,220 82,454 (36,234) (43.9) 60,653 Total Net Revenues 103,142 133,511 (30,369) (22.7) 121,255 Noninterest Expense 98,099 100,436 (2,337) (2.3) 96,550 Income before Income Taxes 5,043 33,075 (28,032) (84.8) 24,705 Income Taxes 1,418 12,734 (11,316) (88.9) 10,281 Net Income $3,625 $20,341 ($16,716) (82.2) $14,424 Dividends on Common Stock $2,851 $2,260 $591 26.2 $2,276 Diluted Earnings Per Share (28,791 Weighted Average Shares Outstanding) $0.13 $0.67 (0.54) (80.6) $0.48 Basic Earnings Per Share (28,462 Weighted Average Shares Outstanding) 0.13 0.72 (0.59) (81.9) 0.51 Dividends Per Common Share 0.10 0.08 0.02 25.0 0.08 Net Charge-Offs $2,115 $8,158 ($6,043) (74.1) $5,757 Performance Ratios - Quarter to Date: Return on Average Assets 0.3% 1.7% 1.0% Return on Average Equity 2.9% 18.4% 11.7% March 31, March 31, $ % December 31, 2005 2004 Change Change 2004 Loans Held for Sale $1,053,871 $996,219 $57,652 5.8 $890,711 Loans and Leases in Portfolio 3,487,697 3,222,296 265,401 8.2 3,450,440 Allowance for Loan and Lease Losses (45,428) (63,681) 18,253 28.7 (44,443) Total Assets 5,565,481 5,146,170 419,311 8.1 5,239,341 Total Deposits 3,770,415 3,309,007 461,408 13.9 3,395,263 Shareholders' Equity 503,849 453,185 50,664 11.2 502,644 Shareholders' Equity available to Common Shareholders (per share) 17.67 16.04 1.63 10.2 17.67 Average Equity/Average Assets 9.3% 9.1% 9.0% Tier I Capital $657,468 $585,287 $72,181 12.3 $641,079 Tier I Leverage Ratio 12.0% 11.8% 11.6% Total Risk-based Capital Ratio 15.0% 15.3% 15.9% Nonperforming Assets to Total Assets 0.75% 0.87% 0.86% MORTGAGE BANKING Q1-2005 Q1-2004 $ Change % Change Q4-2004 Net Interest Income $7,723 $8,662 ($939) (10.8) $10,179 Recovery of (Provision for) Loan Losses 189 107 82 76.6 (178) Gain on Sales of Loans 24,973 42,782 (17,809) (41.6) 34,169 Gain on Sale of Servicing 1,185 6,489 (5,304) (81.7) 7,824 Loan Servicing Fees, Net of Amortization Expense 4,415 (1,411) 5,826 412.9 5,123 Recovery (Impairment) of Servicing Assets, Net of Hedging (14,895) 10,168 (25,063) (246.5) (13,853) Other Revenues 2,184 1,839 345 18.7 1,341 Total Net Revenues 25,774 68,636 (42,862) (62.4) 44,605 Salaries, Pension, and Other Employee Expense 23,868 29,528 (5,660) (19.2) 26,299 Other Expenses 17,541 22,941 (5,400) (23.5) 15,813 Income Before Income Taxes (15,635) 16,167 (31,802) (196.7) 2,493 Income Taxes (6,018) 6,435 (12,453) (193.5) 1,526 Net Income ($9,617) $9,732 ($19,349) (198.8) $967 Total Mortgage Loan Originations: $2,812,411 $2,930,716 ($118,305) (4.0) $3,460,886 Percent retail 16% 23% 16% Percent wholesale 36% 43% 30% Percent brokered 11% 9% 11% Percent correspondent 37% 25% 43% Refinancings as a Percentage of Total Originations 54% 61% 52% March 31, March 31, $ % December 31, 2005 2004 Change Change 2004 Owned Servicing Portfolio Balance $24,458,656 $29,563,330 ($5,104,674) (17.3) $26,196,627 Weighted average interest rate 5.72% 5.73% 5.75% Delinquency ratio (30+days): 3.46% 2.74% 4.59% Conventional 2.01% 1.57% 2.94% Government 5.67% 5.41% 7.43% Loans held for sale $727,310 $781,224 (53,914) (6.9) $662,832 Servicing Asset 336,555 298,486 38,069 12.8 319,225 HOME EQUITY LENDING Q1-2005 Q1-2004 $ Change % Change Q4-2004 Residual Asset Interest Income $2,340 $3,258 ($918) (28.2) $2,615 Net Interest Income - Unsold Loans and Other 18,092 21,438 (3,346) (15.6) 19,146 (Provision for) Recovery of Loan Losses (371) (5,899) 5,528 93.7 592 Trading Gains 480 4,641 (4,161) (89.7) 9,536 Gain on Sales of Loans, Including Points and Fees 8,268 8,689 (421) (4.8) 9,017 Servicing Income, net 2,419 3,064 (645) (21.0) 2,675 Other Revenues 11,537 1,261 10,276 814.9 1,360 Total Net Revenues 42,765 36,452 6,313 17.3 44,941 Salaries, Pension, and Other Employee Expense 21,069 16,126 4,943 30.7 23,031 Other Expense 10,152 9,260 892 9.6 10,457 Income Before Income Taxes 11,544 11,066 478 4.3 11,453 Income Taxes 4,624 4,433 191 4.3 5,064 Net Income $6,920 $6,633 $287 4.3 $6,389 Loan Volume $429,614 $306,877 $122,737 40.0 $334,838 Loans Sold 322,054 202,432 119,622 59.1 469,683 Net Charge-offs (Loans Held for Investment) 336 5,694 (5,358) (94.1) 1,257 March 31, March 31, $ % December 31, 2005 2004 Change Change 2004 Home Equity Loans Held for Sale $325,719 $213,864 $111,855 52.3 $227,740 Home Equity Loans Held for Investment 553,310 721,685 (168,375) (23.3) 590,175 Allowance for Loan and Lease Losses (11,364) (29,456) 18,092 61.4 (11,330) Residual Asset 45,900 68,692 (22,792) (33.2) 51,542 Servicing Asset 46,765 30,870 15,895 51.5 44,000 Managed Portfolio 1,159,076 1,473,356 (314,280) (21.3) 1,147,137 Delinquency Ratio (30+ days) 3.69% 4.72% 4.76% COMMERCIAL BANKING Q1-2005 Q1-2004 $ Change % Change Q4-2004 Net Interest Income $24,560 $20,546 $4,014 19.5 $24,513 Provision for Loan and Lease Losses (1,000) (1,200) 200 16.7 (750) Other Revenues 4,381 4,776 (395) (8) 4,590 Total Net Revenues 27,941 24,122 3,819 15.8 28,353 Salaries, Pension, and Other Employee Expense 11,947 9,322 2,625 28.2 10,311 Other Expenses 6,808 5,761 1,047 18.2 6,778 Income Before Income Taxes 9,186 9,039 147 1.6 11,264 Income Taxes 3,717 3,622 95 2.6 4,544 Net Income $5,469 $5,417 $52 1.0 $6,720 Net Charge-offs $412 $1,170 ($758) (64.8) $565 Net Interest Margin 3.75% 3.79% 3.81% March 31, March 31, $ % December 31, 2005 2004 Change Change 2004 Securities and Short- Term Investments $493,251 $210,647 $282,604 134.2 $327,664 Loans and Leases 2,279,907 2,007,917 271,990 13.5 2,223,474 Allowance for Loan and Lease Losses (22,819) (22,086) (733) (3.3) (22,230) Interest-Bearing Deposits 2,352,569 1,800,571 551,998 30.7 2,095,644 Noninterest-Bearing Deposits 331,888 281,986 49,902 17.7 295,195 Delinquency Ratio (30+ days): 0.66% 0.29% 0.11% COMMERCIAL FINANCE Q1-2005 Q1-2004 $ Change % Change Q4-2004 Net Interest Income $7,612 $6,754 $858 12.7 $7,392 Provision for Loan and Lease Losses (2,110) (1,153) (957) (83.0) (2,021) Other Revenues 1,908 448 1,460 325.9 1,838 Total Net Revenues 7,410 6,049 1,361 22.5 7,209 Salaries, Pension, and Other Employee Expense 3,948 3,362 586 17.4 3,848 Other Expenses 2,238 836 1,402 167.7 759 Income Before Income Taxes 1,224 1,851 (627) (33.9) 2,602 Income Taxes 528 2,144 (1,616) (75.4) 1,520 Net Income (Loss) $696 ($293) $989 337.5 $1,082 Net Charge-Offs $1,368 $1,294 $74 5.7 $3,932 Loans sold 12,403 7,694 4,709 61 9,313 Net Interest Margin 4.85% 5.74% 4.95% Total Fundings of Loans and Leases $83,362 $71,652 $11,710 16.3 $115,344 March 31, March 31, $ % December 31, 2005 2004 Change Change 2004 Investment in Loans and Leases $644,020 $479,364 $164,657 34.3 $625,140 Allowance for Loan and Lease Losses (10,186) (10,962) 776 7.1 (9,624) Weighted Average Yield 8.77% 9.24% 8.93% Delinquency ratio (30+ days) 1.10% 0.86% 0.70% DATASOURCE: Irwin Financial Corporation CONTACT: Suzie Singer, Corporate Communications, +1-812-376-1917, or Greg Ehlinger, CFO, +1-812-379-7603, both of Irwin Financial Corporation Web site: http://www.irwinfinancial.com/

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