Irwin Financial Corporation Announces Second Quarter 2005 Results *
Quarterly Loss of $0.04 per Share -- Reflects Loss in Mortgage
Segment; * Good Loan Growth in Other Segments With Strong Credit
Quality; * Management Expects Improved Second Half Due to Portfolio
Loan Growth and Reduced Servicing Asset Exposure COLUMBUS, Ind.,
July 29 /PRNewswire-FirstCall/ -- Irwin Financial Corporation
(NYSE:IFC), a bank holding company focusing on mortgage banking,
small business banking and home equity lending, today announced a
loss for the second quarter of 2005 of $1.1 million or $0.04 per
diluted share. This compares with net income of $3.6 million or
$0.13 per diluted share in the first quarter of 2005 and earnings
of $17.9 million or $0.60 per share in the second quarter of 2004.
The current period loss is attributable to results in the first
mortgage segment. Management expects the strong second quarter loan
growth in the other segments and significantly reduced exposure to
net servicing impairment will return the Corporation to
profitability in the third quarter. "Our mortgage banking net
income for the last six months has been very disappointing and is
overshadowing good progress we are making in other areas of the
Corporation and even within the mortgage segment where we expect
improved performance, starting in the third quarter," noted Irwin
Financial Chairman Will Miller. "The critical issues in our
mortgage banking line business are the low origination margins and
the effectiveness of our management of the servicing asset," Miller
continued. "We are actively addressing both. On the production
side, we have introduced a number of new, higher margin products
which have been well received both by our customers and by the
secondary markets to whom we sell the loans. On the servicing asset
management side, we have reduced our mark-to-market exposure
through servicing sales. In addition, while it is a more expensive
strategy to implement, we have modified our hedging practices and
structures to provide additional protection against falling rates.
The net hedge position currently in place would provide
meaningfully improved protection against declining rates as
compared to the same point in the second quarter. "We continue to
make good strides in our credit-retained portfolios. Portfolio
growth in commercial banking, commercial finance and home equity
lending was very strong in the second quarter. We continue to be
pleased with the credit quality of these portfolios. While expenses
related to portfolio growth have suppressed current period income,
we believe we are well positioned for improvements in net interest
income and profitability in the second half of 2005." Financial
highlights for the period include: Consolidated Results 2Q 2Q
Percent 1Q Percent $ in millions, except EPS 2005 2004 Change 2005
Change Net Interest Income After Provision for Losses $56 $62 (10)%
$57 (2)% Non-Interest Income 22 76 (71) 46 (52) Total Consolidated
Net Revenues 78 138 (43) 103 (24) Non-Interest Expense 80 108 (26)
98 (18) Net Income (Loss) -1.1 17.9 N/M 3.6 N/M Earnings per Share
(diluted) (0.04) 0.60 N/M 0.13 N/M Loans and Leases 4,077 3,203 27
3,488 17 Mortgage Loans Held for Sale 1,047 1,196 (12) 1,054 (1)
Deposits 3,841 3,361 14 3,770 2 Shareholders' Equity 500 469 7 504
(1) Total Risk-Based Capital Ratio 13.8% 14.8% 15.0% Return on
Average Equity N/M 15.4 2.9 Consolidated net revenues declined on
both a sequential quarter basis and compared with the year earlier
quarter. The majority of the decline relative to each prior period
occurred in our first mortgage segment reflecting net impairment of
mortgage servicing assets. Our consolidated loan and lease
portfolio of $4.1 billion as of June 30, 2005, increased $0.6
billion or 17 percent from the end of the first quarter. During the
second quarter, our two commercial portfolios increased $0.25
billion or 8 percent. Our second mortgage loan portfolio increased
$0.3 billion or 39 percent and was funded, in large part, with a
matched maturity on-balance sheet asset-backed financing arranged
in June. Our loans held for sale in the first and second mortgage
segments ended the quarter largely unchanged from the end of the
first quarter at $1.0 billion. Deposits totaled $3.8 billion at
June 30, up a modest $71 million or 2 percent from March 31.
However, average core deposits of $2.4 billion rose $117 million or
5 percent during the second quarter. The relatively slower rate of
growth in total deposits compared with the strong growth of core
deposits reflects a reduction in mortgage servicing escrow deposits
which declined as we have sold mortgage servicing rights to reduce
mark-to-market valuation risk. We had $500 million or $17.53 per
share in common shareholders' equity as of June 30, 2005. At
quarter end, our Tier 1 Leverage Ratio and Total Risk- based
Capital Ratio were 11.3 percent and 13.8 percent, respectively,
compared to 12.0 percent and 15.0 percent as of March 31, 2005. The
capital ratios declined as a result of strong loan growth, coupled
with the consolidated net loss. The current capital ratios and
management's forward projection of capital to assets remain above
the Corporation's minimum policy targets. Nonperforming assets
(including other real estate owned of $13 million) were $47 million
or 0.77 percent of total assets as of June 30, 2005, up from $41
million or 0.75 percent of total assets at the end of March. Our
on- balance sheet allowance for loan and lease losses totaled $51
million as of June 30, up $6 million from the end of the first
quarter. The ratio of on- balance sheet allowance for loan and
lease losses to nonperforming loans and leases was 154 percent at
June 30, compared to 163 percent at March 31. Our consolidated loan
and lease loss provision totaled $9 million, up $6 million from the
first quarter of 2005 and compared favorably to quarterly net
charge-offs, which totaled $3 million. The increase in quarterly
provision reflected the strong portfolio growth experienced during
the quarter. Our 30- day and greater delinquencies fell
meaningfully in each of our three on- balance sheet credit
portfolios. The specific levels 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, we are pleased with and encouraged by the recent
credit performance of the portfolios. Home Equity Home Equity
Commercial Lending On- Lending Off- Commercial Banking Balance
Sheet(1) Balance Sheet(2) Finance June 30, 2005, Portfolio (in
$Millions) $2,474 $895 $226 $694 30-Day and Greater Delinquencies *
June 30, 2005 0.15% 1.70% 10.83% 0.54% * March 31, 2005 0.66 1.82
9.38 1.10 * December 31, 2004 0.11 1.93 11.71 0.70 * September 30,
2004 0.24 1.87 10.78 0.95 * June 30, 2004 0.19 1.45 9.92 0.88
Annualized Charge-offs * 2Q05 0.13% 0.43% 2.46% 0.88% * 1Q05 0.07
0.15 2.98 0.88 * 4Q04 0.10 0.79 4.48 2.67 * 3Q04 0.11 0.68 3.19
1.47 * 2Q04 0.15 1.08 4.25 0.87 Allowance to Loans and Leases *
June 30, 2005 0.96% 1.84% 2.03% 1.42% * March 31, 2005 1.00 2.05
2.54 1.58 * December 31, 2004 1.00 1.92 3.40 1.54 * September 30,
2004 1.02 1.97 5.98 2.05 * June 30, 2004 1.06 3.16 8.13 2.30 (1)
Home Equity on-balance sheet Allowance to Loans and Leases relates
to Loans Held for Investment portfolio only. (2) Off-balance sheet
loans underlie our residual interests. These loans have been
treated as sold under SFAS 140 and have a reserve methodology that
reflects life-of-account loss expectations, whereas our policy for
on-balance sheet loans requires that we hold loss reserve coverage
sufficient for potential losses inherent in the portfolio at the
balance sheet date. The figures for reserves in the column labeled
"Home Equity Lending Off-Balance Sheet," therefore, are not balance
sheet accounts of "allowance for loan and lease losses," but
instead represent the percentage of undiscounted losses assumed in
our residual valuation relative to the underlying loan balances
supporting the residual interests. Segment Results Net income
(loss) by line of business is shown below, with additional detail
available in the segment summary tables at the end of this release
and in our Form 10-Q. Net Income (loss)($ in millions) 2Q 2Q
Percent 1Q Percent 2005 2004 Change 2005 Change Mortgage Banking
$(9.2) $5.5 NM $(9.6) 5 Commercial Banking 5.6 5.8 (3) 5.5 3 Home
Equity 1.7 8.9 (81) 6.9 (75) Commercial Finance 1.4 1.3 9 0.7 105
Other Segments, Including Parent (0.7) (3.6) 79 0.1 NM Consolidated
Net Income (Loss) (1.1) 17.9 NM 3.6 NM Net Income (loss)($ in
millions) YTD YTD Percent 2005 2004 Change Mortgage Banking $(18.8)
$15.2 NM Commercial Banking 11.1 11.2 (1) Home Equity 8.7 15.5 (44)
Commercial Finance 2.1 1.0 108 Other Segments, Including Parent
(0.6) (4.7) 87 Consolidated Net Income (Loss) 2.5 38.3 (93)
Mortgage banking recorded a net loss of $9.2 million, compared to
earnings of $5.5 million a year earlier. These results principally
reflect net servicing impairment of $27 million pre-tax in the
current quarter. If both net impairment and the gain on the sale of
servicing during the second quarter were excluded, mortgage banking
would have made $5.6 million before tax rather than having a $15.8
million loss before tax, which is more reflective of the current
underlying performance of this line of business. Reflecting a
quarterly decline for 30-year fixed rate mortgages of approximately
0.50 percent, gross servicing asset impairment totaled $51 million
and offsetting derivative gains were $24 million, resulting in net
impairment of $27 million. We continue to reduce our holdings of
mortgage servicing assets and during the second quarter we recorded
$5.5 million of revenue related to a sale of $3.1 billion in
servicing assets. To further reduce our risk of future servicing
asset impairment, we intend to make additional servicing sales
later in the year. Our carrying value of the mortgage servicing
asset in this segment was $239 million at June 30, 2005, or 1.15
percent of the underlying portfolio balance of $20.8 billion,
compared with a carrying value of $337 million or 1.38 percent of
the portfolio at March 31, 2005. Loan production of $2.6 billion
declined only modestly from the first quarter level of $2.8
billion, in spite of the sale at the end of the first quarter of
the majority of the retail distribution channel. Secondary margins
declined due in part to channel mix changes. Origination fees and
gains on sales of loans totaled $17 million or 0.64 percent of
originations, compared with $25 million of gains or 0.89 percent of
originations during the first quarter. Commercial banking earned
net income of $5.6 million, a $0.1 million increase over the first
quarter, but a decline of $0.2 million from the second quarter of
2004. The year-over-year decline principally reflects the impact of
increased expenses incurred to drive loan portfolio growth in
future quarters. We had good growth in both loans and deposits in
this segment during the quarter. Average loans were $2.4 billion, a
6 percent increase over the first quarter. As noted above, average
core deposits grew 5 percent during the period. Net interest margin
was 3.80 percent during the quarter, up from 3.75 percent during
the first quarter, reflecting improved pricing and loan portfolio
growth. Credit quality continues to be strong. As noted in the
table above, thirty-day and greater delinquencies declined to 0.15
percent as of June 30, compared to 0.66 percent at March 31. Our
loan and lease loss provision of $1.6 million was a $0.6 million
sequential quarter increase reflecting portfolio growth and
compared favorably to net charge-offs of only $0.7 million. We
anticipate our quarterly provision will continue to increase
modestly in 2005 due principally to loan growth. Net income in our
home equity segment totaled $1.7 million, down from $6.9 million
during the first quarter. Revenue declined due to sequential
quarter decreases in gains on the sale of loans and other revenue,
as well as a significant increase in loan loss provision. Loan sale
gains and loss provision were influenced by the low level of loan
sales relative to previous quarters. We believe the portfolio
growth of the second quarter will provide immediate benefit to this
segment as a more stable and predictable earnings stream. Credit
quality continues to meet management's expectations. Loan
originations totaled $500 million in the second quarter, up 16
percent from $430 million in the first quarter. To more fully
utilize our capital and build our portfolio we sold only $111
million of loans during the quarter, for a net gain on sale of $4
million, compared to loan sales of $322 million and net gains on
sales of $8.3 million in the first quarter. Our loan and lease loss
provision of $6 million exceeded net charge-offs of $1 million and
was due to the $342 million sequential quarter growth in the home
equity loan portfolio. Our residual interests totaled $38 million
at June 30, down from $46 million at March 31. We recorded $2.3
million in residual trading gains during the quarter, compared to
$0.5 million during the first quarter, as continuing improvements
in credit quality of the underlying loans relative to previous
estimates were recognized. In addition, we recognized $4.7 million
of other revenues during the quarter related to increased
valuations of our incentive servicing fee derivatives. The revenue
recognition principally reflects four factors: discount rate
accretion, actual performance which was better than previously
modeled, adjustments to loss and prepayment speed expectations, and
increases in serviced loans eligible for such incentive payments.
At June 30, 2005, we discounted these derivatives at rates between
20 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
$1.3 billion of loans for third parties on which we have the right
to receive incentive servicing rights -- up from $0.9 billion at
March 31 -- and carry those incentive rights at $17.7 million as of
June 30. Our commercial finance line of business earned $1.4
million in the second quarter, a $0.7 million increase as compared
to the first quarter. Loan and lease fundings totaled $110 million
during the quarter compared to $83 million in the first quarter.
Our loan and lease portfolio in this segment now totals $694
million a $50 million or 8 percent increase from March 31. Net
interest margin declined to 4.77 percent from 4.85 percent during
the first quarter. Our loan and lease loss provision in this
segment totaled $1.2 million during the quarter, down from the $2.1
million in the first quarter, reflecting improved credit quality,
particularly reflected in lower delinquency rates in our domestic
lease portfolio. Net charge-offs increased modestly on a sequential
quarter basis to $1.4 million. Our thirty-day and greater
delinquency ratio in this segment decreased to 0.54 percent from
1.10 percent as of March 31. 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 and residual
portfolios 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 residual, 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 and lease assets;
unanticipated deterioration in or changes in estimates of the
carrying value of our other assets; difficulties in delivering
products 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 tie
compensation systems 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, July 29, at 1:00
p.m. EDT, 12:00 p.m. CDT. The toll-free number for the call is
(888) 545-0687; 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 12207960# and on the
Irwin Financial Corporation website at
http://www.irwinfinancial.com/ir-set.html . For further
information, contact: Suzie Singer, Corporate Communications
812.376.1917 Greg Ehlinger, CFO 812.379.7603 IRWIN FINANCIAL
CORPORATION Selected Consolidated Financial Highlights ($'s in
thousands, except per share data) Unaudited Q2-2005 Q2-2004 $
Change % Change Q1-2005 Net Interest Income $64,845 $64,256 $589
0.9 $60,213 Provision for Loan and Lease Losses (8,872) (1,794)
(7,078) (394.5) (3,291) Noninterest Income 22,413 76,008 (53,595)
(70.5) 46,220 Total Net Revenues 78,386 138,470 (60,084) (43.4)
103,142 Noninterest Expense 80,138 107,757 (27,619) (25.6) 98,099
Income before Income Taxes (1,752) 30,713 (32,465) (105.7) 5,043
Income Taxes (608) 12,769 (13,377) (104.8) 1,418 Net Income
($1,144) $17,944 ($19,088) (106.4) $3,625 Dividends on Common Stock
$2,855 $2,262 $593 26.2 $2,851 Diluted Earnings Per Share (28,482
Weighted Average Shares Outstanding) ($0.04) $0.60 ($0.64) (106.7)
$0.13 Basic Earnings Per Share (28,506 Weighted Average Shares
Outstanding) (0.04) 0.64 ($0.68) (106.3) 0.13 Dividends Per Common
Share 0.10 0.08 0.02 25.0 0.10 Net Charge-Offs $3,281 $4,460
($1,179) (26.4) $2,115 Performance Ratios - Quarter to Date: Return
on Average Assets (0.1)% 1.4% 0.3% Return on Average Equity (0.9)%
15.4% 2.9% YTD-2005 YTD-2004 $ Change % Change Net Interest Income
$125,058 $123,459 $1,599 1.3 Provision for Loan and Lease Losses
(12,163) (9,940) (2,223) (22.4) Noninterest Income 68,633 158,462
(89,829) (56.7) Total Net Revenues 181,528 271,981 (90,453) (33.3)
Noninterest Expense 178,238 208,193 (29,955) (14.4) Income before
Income Taxes 3,290 63,788 (60,498) (94.8) Income Taxes 810 25,502
(24,692) (96.8) Net Income $2,480 $38,286 ($35,806) (93.5)
Dividends on Common Stock $5,706 $4,523 $1,183 26.2 Diluted
Earnings Per Share (28,770 Weighted Average Shares Outstanding)
$0.09 $1.27 (1.18) (92.9) Basic Earnings Per Share (28,482 Weighted
Average Shares Outstanding) 0.09 1.36 (1.27) (93.4) Dividends Per
Common Share 0.20 0.16 0.04 25.0 Net Charge-Offs $5,396 $12,618
($7,222) (57.2) Performance Ratios - Year to Date: Return on
Average Assets 0.1% 1.5% Return on Average Equity 1.0% 17.0% June
30, June 30, March 31, 2005 2004 $ Change % Change 2005 Loans Held
for Sale $1,047,446 $1,196,130 ($148,684) (12.4) $1,053,871 Loans
and Leases in Portfolio 4,076,511 3,203,279 873,232 27.3 3,487,697
Allowance for Loan and Lease Losses (50,935) (53,837) 2,902 5.4
(45,428) Total Assets 6,096,816 5,425,172 671,644 12.4 5,565,481
Total Deposits 3,840,963 3,361,264 479,699 14.3 3,770,415
Shareholders' Equity 500,471 469,486 30,985 6.6 503,849
Shareholders' Equity available to Common Shareholders (per share)
17.53 16.60 0.93 5.6 17.67 Average Equity/Average Assets (YTD) 9.0%
8.9% 9.3% Tier I Capital $643,829 $614,003 $29,826 4.9 $657,468
Tier I Leverage Ratio 11.3% 11.5% 12.0% Total Risk-based Capital
Ratio 13.8% 14.8% 15.0% Nonperforming Assets to Total Assets 0.77%
0.74% 0.75% MORTGAGE BANKING Q2-2005 Q2-2004 $ Change % Change
Q1-2005 Net Interest Income $9,026 $11,781 ($2,755) (23.4) $7,723
Recovery of (Provision for) Loan Losses 94 284 (190) (66.9) 189
Gain on Sales of Loans 17,002 34,870 (17,868) (51.2) 24,973 Gain on
Sale of Servicing 5,471 1,928 3,543 183.8 1,185 Loan Servicing
Fees, Net of Amortization Expense 5,515 1,484 4,031 271.6 4,415
(Impairment) Recovery of Servicing Assets, Net of Hedging (26,943)
13,512 (40,455) (299.4) (14,895) Other Revenues 1,699 2,052 (353)
(17.2) 2,184 Total Net Revenues 11,864 65,911 (54,047) (82.0)
25,774 Salaries, Pension, and Other Employee Expense 16,043 31,654
(15,611) (49.3) 23,868 Other Expenses 11,667 25,062 (13,395) (53.4)
17,541 Income (Loss) Before Income Taxes (15,846) 9,195 (25,041)
(272.3) (15,635) Income Taxes (6,685) 3,680 (10,365) (281.7)
(6,018) Net Income (Loss) ($9,161) $5,515 ($14,676) (266.1)
($9,617) Total Mortgage Loan Originations: $2,643,669 $3,727,591
($1,083,922) (29.1) $2,812,411 Percent retail 9% 20% 16% Percent
wholesale 52% 33% 36% Percent brokered 2% 11% 11% Percent
correspondent 37% 36% 37% Refinancings as a Percentage of Total
Originations 44% 54% 54% YTD-2005 YTD-2004 $ Change % Change Net
Interest Income $16,749 $20,443 ($3,694) (18.1) Recovery of
(Provision for) Loan Losses 283 390 (107) (27.4) Gain on Sales of
Loans 41,976 77,652 (35,676) (45.9) Gain on Sale of Servicing 6,656
8,418 (1,762) (20.9) Loan Servicing Fees, Net of Amortization
Expense 9,930 73 9,857 nm (Impairment) Recovery of Servicing
Assets, Net of Hedging (41,839) 23,680 (65,519) (276.7) Other
Revenues 3,883 3,891 (8) (0.2) Total Net Revenues 37,638 134,547
(96,909) (72.0) Salaries, Pension, and Other Employee Expense
39,911 61,182 (21,271) (34.8) Other Expenses 29,209 48,003 (18,794)
(39.2) Income (Loss) Before Income Taxes (31,482) 25,362 (56,844)
(224.1) Income Taxes (12,703) 10,114 (22,817) (225.6) Net Income
(Loss) ($18,779) $15,248 ($34,027) (223.2) Total Mortgage Loan
Originations: $5,456,081 $6,658,307 ($1,202,226) (18.1) Percent
retail 13% 22% Percent wholesale 44% 37% Percent brokered 6% 10%
Percent correspondent 37% 31% Refinancings as a Percentage of Total
Originations 49% 57% June 30, June 30, March 31, 2005 2004 $ Change
% Change 2005 Owned Servicing Portfolio Balance $20,754,361
$28,844,599 ($8,090,238) (28.0) $24,458,656 Weighted average
interest rate 5.66% 5.70% 5.72% Delinquency ratio (30+ days): 3.88%
3.34% 3.46% Conventional 2.49% 1.98% 2.01% Government 7.31% 6.20%
5.67% Loans Held for Sale $724,204 $735,278 ($11,074) (1.5)
$727,310 Servicing Asset 239,238 365,775 (126,537) (34.6) 336,555
COMMERCIAL BANKING Q2-2005 Q2-2004 $ Change % Change Q1-2005 Net
Interest Income $26,977 $21,191 $5,786 27.3 $24,560 Provision for
Loan and Lease Losses (1,575) (750) (825) (110.0) (1,000) Other
Revenues 3,806 5,061 (1,255) (24.8) 4,381 Total Net Revenues 29,208
25,502 3,706 14.5 27,941 Salaries, Pension, and Other Employee
Expense 12,363 9,665 2,698 27.9 11,947 Other Expenses 7,481 6,201
1,280 20.6 6,808 Income Before Income Taxes 9,364 9,636 (272) (2.8)
9,186 Income Taxes 3,750 3,867 (117) (3.0) 3,717 Net Income $5,614
$5,769 ($155) (2.7) $5,469 Net Charge-offs $743 $787 ($44) (5.6)
$412 Net Interest Margin 3.80% 3.64% 3.75% YTD-2005 YTD-2004 $
Change % Change Net Interest Income $51,537 $41,737 $9,800 23.5
Provision for Loan and Lease Losses (2,575) (1,950) (625) (32.1)
Other Revenues 8,187 9,837 (1,650) (16.8) Total Net Revenues 57,149
49,624 7,525 15.2 Salaries, Pension, and Other Employee Expense
24,310 18,987 5,323 28.0 Other Expenses 14,289 11,961 2,328 19.5
Income Before Income Taxes 18,550 18,676 (126) (0.7) Income Taxes
7,467 7,489 (22) (0.3) Net Income $11,083 $11,187 ($104) (0.9) Net
Charge-offs $1,155 $1,957 ($802) (41.0) Net Interest Margin 3.78%
3.71% June 30, June 30, March 31, 2005 2004 $ Change % Change 2005
Securities and Short-Term Investments $425,363 $313,580 $111,783
35.6 $493,251 Loans and Leases 2,473,621 2,081,788 391,833 18.8
2,279,907 Allowance for Loan and Lease Losses (23,651) (22,049)
(1,602) (7.3) (22,819) Interest-Bearing Deposits 2,340,284
1,938,282 402,002 20.7 2,352,569 Noninterest-Bearing Deposits
387,371 341,896 45,475 13.3 331,888 Delinquency Ratio (30+ days):
0.15% 0.19% 0.66% HOME EQUITY LENDING Q2-2005 Q2-2004 $ Change %
Change Q1-2005 Residual Asset Interest Income $1,994 $3,285
($1,291) (39.3) $2,340 Net Interest Income - Unsold Loans and Other
19,199 22,874 (3,675) (16.1) 18,092 Recovery of (provision for)
Loan Losses (6,181) 706 (6,887) (975.5) (371) Trading Gains 2,316
6,688 (4,372) (65.4) 480 Gain on Sales of Loans, Including Points
and Fees 3,861 3,035 826 27.2 8,268 Servicing Income, net 2,392
2,313 79 3.4 2,419 Other Revenues 5,270 2,797 2,473 88.4 11,537
Total Net Revenues 28,851 41,698 (12,847) (30.8) 42,765 Salaries,
Pension, and Other Employee Expense 15,514 17,865 (2,351) (13.2)
21,069 Other Expense 10,436 8,990 1,446 16.1 10,152 Income Before
Income Taxes 2,901 14,843 (11,942) (80.5) 11,544 Income Taxes 1,171
5,945 (4,774) (80.3) 4,624 Net Income $1,730 $8,898 ($7,168) (80.6)
$6,920 Loan Volume $500,283 $403,822 $96,461 23.9 $429,614 Loans
Sold 111,288 223,956 (112,668) (50.3) 322,054 Net Charge-offs
(Loans Held for Investment) 1,093 2,626 (1,533) (58.4) 336 YTD-2005
YTD-2004 $ Change % Change Residual Asset Interest Income $4,334
$6,543 ($2,209) (33.8) Net Interest Income - Unsold Loans and Other
37,291 44,310 (7,019) (15.8) Provision for Loan Losses (6,551)
(5,193) (1,358) (26.2) Trading Gains 2,796 11,329 (8,533) (75.3)
Gain on Sales of Loans, Including Points and Fees 12,129 11,725 404
3.4 Servicing Income, net 4,810 5,377 (567) (10.5) Other Revenues
16,807 4,059 12,748 314.1 Total Net Revenues 71,616 78,150 (6,534)
(8.4) Salaries, Pension, and Other Employee Expense 36,583 33,991
2,592 7.6 Other Expense 20,588 18,250 2,338 12.8 Income Before
Income Taxes 14,445 25,909 (11,464) (44.2) Income Taxes 5,795
10,378 (4,583) (44.2) Net Income $8,650 $15,531 ($6,881) (44.3)
Loan Volume $929,897 $710,700 $219,197 30.8 Loans Sold 433,342
426,388 6,954 1.6 Net Charge-offs (Loans Held for Investment) 1,428
8,320 (6,892) (82.8) June 30, June 30, March 31, 2005 2004 $ Change
% Change 2005 Home Equity Loans Held for Sale $322,837 $460,118
($137,281) (29.8) $325,719 Home Equity Loans Held for Investment
895,033 598,021 297,012 49.7 553,310 Allowance for Loan and Lease
Losses (16,452) (18,902) 2,450 13.0 (11,364) Residual Asset 38,438
73,219 (34,781) (47.5) 45,900 Servicing Asset 44,575 28,122 16,453
58.5 46,765 Managed Portfolio 1,434,108 1,543,457 (109,349) (7.1)
1,159,076 Delinquency Ratio (30+ days) 3.14% 4.16% 3.69% COMMERCIAL
FINANCE Q2-2005 Q2-2004 $ Change % Change Q1-2005 Net Interest
Income $7,928 $6,881 $1,047 15.2 $7,612 Provision for Loan and
Lease Losses (1,211) (2,034) 823 40.5 (2,110) Gain on Sales of
Loans 104 792 (688) (86.9) 679 Derivative (Losses) Gains, net (159)
597 (756) (126.6) (146) Other Revenues 1,406 1,233 173 14.0 1,375
Total Net Revenues 8,068 7,469 599 8.0 7,410 Salaries, Pension, and
Other Employee Expense 4,409 3,477 932 26.8 3,948 Other Expenses
1,237 1,588 (351) (22.1) 2,238 Income Before Income Taxes 2,422
2,404 18 0.7 1,224 Income Taxes 993 1,087 (94) (8.6) 528 Net Income
$1,429 $1,317 $112 8.5 $696 Net Charge-Offs $1,448 $1,051 $397 37.8
$1,368 Loans Sold 2,028 15,939 (13,911) (87.3) 12,403 Net Interest
Margin 4.77% 5.62% 4.85% Total Fundings of Loans and Leases
$110,273 $88,586 $21,687 24.5 $83,362 YTD-2005 YTD-2004 $ Change %
Change Net Interest Income $15,541 $13,635 $1,906 14.0 Provision
for Loan and Lease Losses (3,321) (3,187) (134) (4.2) Gain on Sales
of Loans 783 1,179 (396) (33.6) Derivative Losses, net (306) (349)
43 12.3 Other Revenues 2,782 2,240 542 24.3 Total Net Revenues
15,479 13,518 1,961 14.5 Salaries, Pension, and Other Employee
Expense 8,357 6,839 1,518 22.2 Other Expenses 3,475 2,424 1,051
43.4 Income Before Income Taxes 3,647 4,255 (608) (14.3) Income
Taxes 1,522 3,231 (1,709) (52.9) Net Income $2,125 $1,024 $1,101
107.5 Net Charge-Offs $2,816 $2,345 $471 20.1 Loans Sold 14,428
23,634 (9,206) (39.0) Net Interest Margin 4.81% 5.68% Total
Fundings of Loans and Leases $193,635 $160,238 $33,397 20.8 June
30, June 30, March 31, 2005 2004 $ Change% Change 2005 Investment
in Loans and Leases $693,900 $510,308 $183,592 36.0 $644,020
Allowance for Loan and Lease Losses (9,885) (11,738) 1,853 15.8
(10,186) Weighted Average Yield 8.74% 9.10% 8.77% Delinquency ratio
(30+ days) 0.54% 0.88% 1.10% 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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