IFC Irwin Financial Corp

* Third Quarter Net Income of $0.61 per Diluted Share * Strong Loan Originations in Each Segment * Continued Strong Credit Quality COLUMBUS, Ind., Nov. 9 /PRNewswire-FirstCall/ -- Irwin Financial Corporation (NYSE:IFC), a bank holding company focusing on mortgage banking, small business banking and home equity lending, today announced net income for the third quarter of 2005 of $18.5 million or $0.61 per diluted share. This compares with net income of $16.3 in the third quarter of 2004 and a loss of $3.4 million in the second quarter of 2005. All segments had sequential quarter improvement in net income and good loan originations. In the third quarter, return on average equity was 14.6 percent and return on average assets was 1.1 percent. Capital remains strong, with capacity for on-going growth. All figures in this earnings release are unaudited, and figures for prior periods reflect changes in accounting for home equity segment incentive servicing fees (ISFs) that will result in the restatement of certain prior periods as described in more detail in our Quarterly Report on Form 10-Q dated November 9, 2005. "We are obviously pleased with results this quarter. The quarter-over- quarter improvement was fueled by the turn-around in mortgage banking. In addition, our commercial segments continued their steady progress. Loan growth and credit quality remain strong and both our commercial segments reported record quarterly net income," noted Irwin Financial Chairman Will Miller. "Last week we announced that we would need to change the way we record revenues from our home equity incentive servicing fees and, as a result, restate our financial statements from 2004 through the second quarter of 2005," Miller continued. "It is important to understand that the ISF change is an accounting correction at our home equity segment only and does not impact the underlying economics of that business. It simply changes the timing of when we will be recognizing income from these assets. The ISF accounting correction will have no impact on the reported results of any of the other segments. Finally, this development does not change the positive turn-around in our consolidated results we achieved in the third quarter and which we believe will continue into the fourth quarter." Financial highlights for the period include: Consolidated Results. 3Q 3Q Percent 2Q Percent $ in millions, 2005 2004 Change 2005 Change except EPS restated restated Net Interest Income After Provision for Losses $64 $64 0% $56 14% Non-Interest Income 44 66 (34) 18 137 Total Consolidated Net Revenues 107 130 (17) 74 44 Non-Interest Expense 80 102 (22) 80 0 Net Income 18.5 16.3 13 (3.4) N/M Earning per Share (diluted) 0.61 0.54 13 (0.12) N/M Loans and Leases 4,026 3,402 18 4,077 (1) Mortgage Loans Held for Sale 1,565 971 61 1,047 49 Deposits 4,130 3,486 18 3,841 8 Shareholders' Equity 508 485 5 491 4 Total Risk-Based Capital Ratio 13.1% 14.7% 13.8% Return on Average Equity 14.6% 13.4% (2.8) Consolidated net revenues increased on a sequential quarter basis largely due to improved net mortgage servicing right (MSR) valuation and servicing hedge performance, but were down on a year-over-year basis due to reduced secondary market margins on mortgage loan sales. The consolidated loan and lease portfolio was $4.0 billion as of September 30, 2005, a $51 million decline as compared to the end of the second quarter. The decline was attributable to a reduction in "held-for-investment" portfolio in the home equity segment resulting from a strategic decision to sell more home equity product in future quarters and, therefore, a reclassification of $0.2 billion of loans to "held for sale." The two commercial portfolios increased $205 million or 29 percent on an annualized basis. Loans held for sale in the second mortgage segment increased $485 million on a sequential quarter basis while first mortgage loans held for sale were up slightly at $758 million. Deposits totaled $4.1 billion at September 30, up $0.3 billion or 34 percent on an annualized basis from June 30. The majority of deposit growth came from institutional, non-brokered CD sales. This growth helped offset a $137 million or 19 percent decrease in mortgage escrow deposits which declined as MSRs were sold to reduce mark-to-market valuation risk. The Corporation had $508 million or $17.78 per share in common shareholders' equity as of September 30, 2005. At quarter end, our Tier 1 Leverage Ratio and Total Risk-based Capital Ratio were 10.3 percent and 13.1 percent, respectively, compared to 11.1 percent and 13.8 percent as of June 30, 2005. The capital ratios declined as a result of strong loan growth. Nonperforming assets (including other real estate owned of $13 million) were $50 million or 0.77 percent of total assets as of September 30, 2005, up in dollars from $47 million but the same 0.77 percent of total assets at the end of June. The on-balance sheet allowance for loan and lease losses totaled $54 million as of September 30, up $3 million from the end of the second quarter. The ratio of on-balance sheet allowance for loan and lease losses to nonperforming loans and leases was 147 percent at September 30, compared to 154 percent at June 30. The consolidated loan and lease loss provision totaled $6 million, compared with $9 million during the second quarter of 2005 and compared favorably to quarterly net charge-offs, which totaled $3 million. Year-to- date provision totaled $18 million, compared with net charge-offs of $8 million. Consolidated thirty-day and greater delinquencies were largely unchanged on a sequential quarter basis. 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 in the next table. Commercial Home Equity Home Equity Commercial Banking Lending On- Lending Off- Finance Balance Sheet(1) Balance Sheet(2) September 30, 2005 Portfolio (in $Billions) $2.6 $1.4 $0.1 $0.8 30-Day and Greater Delinquencies * September 30, 2005 0.12% 2.01% 11.75% 0.59% * 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 Annualized Net Charge-offs * 3Q05 0.09% 0.36% 1.06% 0.58% * 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 Allowance to Loans and Leases(1) * September 30, 2005 0.93% 2.89% 1.82% 1.37% * 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 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. Included in the consolidated third quarter 2005 loan loss provision and other reserves is a total estimate of $1.7 million of pre-tax losses in our two consumer mortgage segments as a result of hurricanes Katrina and Rita. Our estimates involved the use of considerable judgment and assumptions about uncertain matters including the number of properties damaged, the extent of damage, and insurance recoveries. We will continue to assess the financial impact of the hurricanes as more information becomes available. Segment Results Net income (loss) by line of business is shown below, with additional detail available in the segment summary tables at the end of this release and in our Form 10-Q. Net Income (loss) 3Q 3Q Percent 2Q Percent YTD YTD Percent ($ in millions) 2005 2004 Change 2005 Change 2005 2004 Change restated restated restated Commercial Banking $7.6 $5.5 38% $5.6 36% $18.7 $16.7 12% Mortgage Banking 5.9 4.1 45 (9.2) NM (13.6) 19.3 NM Commercial Finance 2.5 1.1 12 1.4 78 4.7 2.1 118 Home Equity 2.2 7.0 (68) (0.5) NM 3.7 22.1 (83) Other Segments, Including Parent 0.2 (1.4) NM (0.8) NM (1.0) (5.7) 82 Consolidated Net Income (Loss) 18.5 16.3 13 (3.4) NM 12.5 54.5 (77) Commercial banking earned net income of $7.6 million, a $2.0 million increase over the second quarter and an increase of $2.1 million from the third quarter of 2004. The year-over-year increase reflects increases in net interest income from portfolio growth and a modestly improved net interest margin. The quarterly net income is a record for this segment. The commercial banking segment continued to have good loan growth. Average loans outstanding during the third quarter were $2.6 billion, having increased on a sequential quarter basis by an annualized rate of 35 percent. Average core deposits grew more slowly due to increased price competition, rising during the quarter at an annualized rate of 7 percent. Net interest margin was 3.83 percent during the quarter, up from 3.80 percent during the second quarter. Credit quality continues to be strong. As noted in the table above, thirty-day and greater delinquencies declined to 0.12 percent as of September 30, compared to 0.15 percent at June 30. The commercial banking segment's loan and lease loss provision of $1.4 million was a $0.2 million sequential quarter decrease and compared favorably to net charge-offs of only $0.6 million. Mortgage banking recorded net income of $5.9 million, compared to a loss of $9.2 million in the second quarter and prior year earnings of $4.1 million. The sequential quarter improvement in these results principally reflects results in the hedging of our servicing asset. Net servicing and hedging impairment of $1 million in the current quarter compared favorably to net impairment of $27 million in the second quarter of 2005. Loan production of $3.2 billion increased 21 percent as compared to originations of $2.6 billion in the second quarter. Each of the three distribution channels had sequential quarter increases in originations. Net margins, however, reflected in the gain on sale of loans continue to show signs of intense price competition. The segment's gain on sale of loans as a percentage of loans sold were 57 basis points in the current quarter, compared with 66 basis points in the second quarter. Bulk servicing sales totaled $1.8 billion during the third quarter in an effort to continue to reduce the company's mark-to-market valuation risk on its mortgage servicing assets. The company recognized net revenues of $8.6 million from this sale and has now reduced its mortgage servicing portfolio to $18.5 billion, a $10 billion year-over-year decline. The commercial finance line of business earned $2.5 million in the third quarter, a $1.1 million increase as compared to the second quarter of 2005. Loan and lease fundings totaled $119 million during the quarter compared to $110 million in the second quarter. Both the net income and the level of loan originations were quarterly records for the segment. The segment's loan and lease portfolio now totals $754 million, a $60 million or 9 percent increase from June 30. Net interest income totaled $9.0 million, a $1.0 million sequential quarter increase. Gain on sales of loans totaled $1.5 million, compared to $0.1 million in the prior quarter. Net interest margin increased to 4.95 percent from 4.77 percent during the second quarter. The loan and lease loss provision in this segment totaled $1.5 million during the quarter, up modestly from the $1.2 million in the prior quarter, reflecting loan and lease growth. Net charge-offs declined to $1.1 million, as compared to $1.4 million in the second quarter. The thirty-day and greater delinquency ratio in this segment increased slightly to 0.59 percent, from 0.54 percent on June 30. Net income in our home equity segment totaled $2.2 million, up from a $0.5 million loss during the second quarter. Loan sale gains and loss provision in this segment were influenced by the low level of loan sales relative to production. Credit quality continues to meet management's expectations. Loan originations totaled $444 million in the third quarter, down 11 percent from $500 million in the second quarter and compared to loan sales of $151 million during the quarter. As noted above, the company reclassified approximately $209 million from loans-held-for-investment to loans-held-for- sale during the quarter, reflecting a modification of strategy with regard to future balance sheet growth. Management currently expects loan sales in the fourth quarter to be in excess of the $111 million and $151 million, respectively that were sold in the second and third quarters of 2005. The company recognized $0.3 million of mark-to-market gains on its residual asset during the third quarter of 2005. Those assets are carried at fair value at September 30 at $24 million. The company recorded revenues from cash collections of $0.9 million on incentive servicing fees, up from $0.2 million in the third quarter of 2004. Net income for the parent and other consolidating entities was $0.2 million during the third quarter, compared to a loss of $0.8 million in the second quarter of 2005. The net income reflected the release of tax reserves and interest on tax refund receivables. Partially offsetting these items was the write-off of capitalized issuance expenses related to Irwin Capital Trust II which was called in the third quarter. Excluding these items, the parent and other segments would have had a third quarter net loss of approximately $1.1 million which more closely reflects management's expectations for on- going results. 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 fees; and * any other statements that are not historical facts. We qualify any forward-looking statements entirely by these cautionary factors. 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, including deterioration resulting from the effects of recent natural disasters; unanticipated deterioration in or changes in estimates of the carrying value of our other assets, including securities; 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; additional input and consultations on the ISF accounting issue and details of the implementation of the new accounting method; 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 November 10, 2005, at 1:00 p.m. EST. Jody Littrell, Chief Accounting Officer, Greg Ehlinger, Senior Vice President and CFO, and Will Miller, CEO, of Irwin Financial Corporation, will be the speakers on the call. The toll-free number for the call is (866) 868.1109; please tell the operator you would like to join the Irwin Financial call, confirmation #13194308. A replay of the call will be available on the Irwin Financial Corporation website at http://www.irwinfinancial.com/ir-set.html . Conference call, 1:00 P.M., EST November 10, 2005 866.868.1109 Confirmation #13194308 Replay available at http://www.irwinfinancial.com/ir-set.html IRWIN FINANCIAL CORPORATION Selected Consolidated Financial Highlights ($'s in thousands, except per share data) Unaudited Q3-2005 Q3-2004 $ Change % Change Q2-2005 (Restated) (Restated) Net Interest Income $69,515 $65,660 $3,855 5.9 $64,845 Provision for Loan and Lease Losses (5,772) (1,898) (3,874) (204.1) (8,872) Noninterest Income 43,555 65,913 (22,358) (33.9) 18,413 Total Net Revenues 107,298 129,675 (22,377) (17.3) 74,386 Noninterest Expense 79,723 102,492 (22,769) (22.2) 79,916 Income before Income Taxes 27,575 27,183 392 1.4 (5,530) Income Taxes 9,082 10,858 (1,776) (16.4) (2,119) Net Income $18,493 $16,325 $2,168 13.3 ($3,411) Dividends on Common Stock $2,859 $2,266 $593 26.2 $2,855 Diluted Earnings Per Share (31,379 Weighted Average Shares Outstanding) $0.61 $0.54 $0.07 13.0 ($0.12) Basic Earnings Per Share (28,540 Weighted Average Shares Outstanding) 0.65 0.58 $0.07 12.1 (0.12) Dividends Per Common Share 0.10 0.08 0.02 25.0 0.10 Net Charge-Offs $2,865 $4,470 ($1,605) (35.9) $3,281 Performance Ratios - Quarter to Date: Return on Average Assets 1.1% 1.2% -0.2% Return on Average Equity 14.6% 13.4% -2.8% YTD-2005 YTD-2004 $ Change % Change (Restated) Net Interest Income $194,573 $189,119 $5,454 2.9 Provision for Loan and Lease Losses (17,935) (11,838) (6,097) (51.5) Noninterest Income 98,009 223,513 (125,504) (56.2) Total Net Revenues 274,647 400,794 (126,147) (31.5) Noninterest Expense 256,753 310,686 (53,933) (17.4) Income before Income Taxes 17,894 90,108 (72,214) (80.1) Income Taxes 5,358 35,599 (30,241) (84.9) Net Income $12,536 $54,509 ($41,973) (77.0) Dividends on Common Stock $8,565 $6,788 $1,777 26.2 Diluted Earnings Per Share (28,770 Weighted Average Shares Outstanding) $0.44 $1.81 (1.37) (75.7) Basic Earnings Per Share (28,503 Weighted Average Shares Outstanding) 0.44 1.93 (1.49) (77.2) Dividends Per Common Share 0.30 0.24 0.06 25.0 Net Charge-Offs $8,261 $17,089 ($8,828) (51.7) Performance Ratios - Year to Date: Return on Average Assets 0.3% 1.4% Return on Average Equity 3.3% 15.6% September 30, September 30, June 30, 2005 2004 $ Change % Change 2005 (Restated) (Restated) Loans Held for Sale $1,565,460 $971,357 $594,104 61.2 $1,047,446 Loans and Leases in Portfolio 4,025,815 3,401,643 624,172 18.3 4,076,511 Allowance for Loan and Lease Losses (53,896) (47,796) (6,100) (12.8) (50,935) Total Assets 6,497,606 5,412,686 1,084,920 20.0 6,079,116 Total Deposits 4,130,290 3,486,457 643,833 18.5 3,840,963 Shareholders' Equity 508,379 485,376 23,003 4.7 490,576 Shareholders' Equity available to Common Shareholders (per share) 17.78 17.13 0.65 3.8 17.18 Average Equity/Average Assets (YTD) 8.6% 8.9% 9.0% Tier I Capital $663,393 $618,424 $44,969 7.3 $632,809 Tier I Leverage Ratio 10.3% 11.2% 11.1% Total Risk-based Capital Ratio 13.1% 14.7% 13.8% Nonperforming Assets to Total Assets 0.77% 0.79% 0.77% MORTGAGE BANKING Q3-2005 Q3-2004 $ Change % Change Q2-2005 Net Interest Income $11,304 $10,202 $1,102 10.8 $9,026 Recovery of (Provision for) Loan Losses 183 67 116 173.1 94 Gain on Sales of Loans 18,518 39,351 (20,833) (52.9) 17,002 Gain on Sale of Servicing 8,585 440 8,145 1851.1 5,471 Loan Servicing Fees, Net of Amortization Expense 2,341 3,583 (1,242) (34.7) 5,515 (Impairment) Recovery of Servicing Assets, Net of Hedging (869) 4,858 (5,727) (117.9) (26,943) Other Revenues 1,866 1,421 445 31.3 1,699 Total Net Revenues 41,928 59,922 (17,994) (30.0) 11,864 Salaries, Pension, and Other Employee Expense 16,236 30,958 (14,722) (47.6) 16,043 Other Expenses 15,861 21,950 (6,089) (27.7) 11,667 Income (Loss) Before Income Taxes 9,831 7,014 2,817 40.2 (15,846) Income Taxes 3,967 2,963 1,004 33.9 (6,685) Net Income (Loss) $5,864 $4,051 $1,813 44.8 ($9,161) Total Mortgage Loan Originations: $3,203,536 $2,973,889 $229,647 7.7 $2,643,669 Percent retail 8% 20% 9% Percent wholesale 54% 31% 52% Percent brokered 1% 13% 2% Percent correspondent 37% 36% 37% Refinancings as a Percentage of Total Originations 46% 40% 44% YTD-2005 YTD-2004 $ Change % Change Net Interest Income $28,053 $30,646 ($2,593) (8.5) Recovery of (Provision for) Loan Losses 466 457 9 2.0 Gain on Sales of Loans 60,493 117,003 (56,510) (48.3) Gain on Sale of Servicing 15,241 8,857 6,384 72.1 Loan Servicing Fees, Net of Amortization Expense 12,272 3,656 8,616 235.7 (Impairment) Recovery of Servicing Assets, Net of Hedging (42,708) 28,538 (71,246) (249.7) Other Revenues 5,749 5,312 437 8.2 Total Net Revenues 79,566 194,469 (114,903) (59.1) Salaries, Pension, and Other Employee Expense 56,146 92,140 (35,994) (39.1) Other Expenses 46,139 69,954 (23,815) (34.0) Income (Loss) Before Income Taxes (22,719) 32,375 (55,094) (170.2) Income Taxes (9,163) 13,077 (22,240) (170.1) Net Income (Loss) ($13,556) $19,298 ($32,854) (170.2) Total Mortgage Loan Originations: $8,659,616 $9,632,196 ($972,580) (10.1) Percent retail 11% 21% Percent wholesale 47% 35% Percent brokered 5% 11% Percent correspondent 37% 33% Refinancings as a Percentage of Total Originations 48% 52% September 30, September 30, June 30, 2005 2004 $ Change % Change 2005 Owned Servicing Portfolio Balance $18,451,674 $28,531,292 ($10,079,618) (35.3) $20,754,361 Weighted average interest rate 5.73% 5.70% 5.66% Delinquency ratio (30+ days): 4.70% 3.99% 3.88% Conventional 3.18% 2.46% 2.49% Government 8.24% 7.05% 7.31% Loans Held for Sale $757,527 $670,361 $87,166 13.0 $724,204 Servicing Asset 259,549 345,185 (85,636) (24.8) 239,238 COMMERCIAL BANKING Q3-2005 Q3-2004 $ Change % Change Q2-2005 Net Interest Income $28,639 $23,367 $5,272 22.6 $26,977 Provision for Loan and Lease Losses (1,361) (607) (754) (124.2) (1,575) Other Revenues 4,442 3,889 551 14.2 3,806 Total Net Revenues 31,720 26,649 5,071 19.0 29,208 Salaries, Pension, and Other Employee Expense 11,897 11,124 773 7.0 12,363 Other Expenses 7,394 6,289 1,105 17.6 7,481 Income Before Income Taxes 12,429 9,236 3,193 34.6 9,364 Income Taxes 4,795 3,719 1,076 28.9 3,750 Net Income $7,634 $5,517 $2,117 38.4 $5,614 Net Charge-offs $590 $611 ($21) (3.4) $743 Net Interest Margin 3.83% 3.74% 3.80% YTD-2005 YTD-2004 $ Change % Change Net Interest Income $80,175 $65,104 $15,071 23.1 Provision for Loan and Lease Losses (3,936) (2,557) (1,379) (53.9) Other Revenues 12,629 13,726 (1,097) (8.0) Total Net Revenues 88,868 76,273 12,595 16.5 Salaries, Pension, and Other Employee Expense 36,207 30,111 6,096 20.2 Other Expenses 21,682 18,250 3,432 18.8 Income Before Income Taxes 30,979 27,912 3,067 11.0 Income Taxes 12,262 11,208 1,054 9.4 Net Income $18,717 $16,704 $2,013 12.1 Net Charge-offs $1,745 $2,567 ($822) (32.0) Net Interest Margin 3.80% 3.72% September 30, September 30, June 30, 2005 2004 $ Change % Change 2005 Securities and Short- Term Investments $421,395 $358,109 $63,285 17.7 $425,363 Loans and Leases 2,618,692 2,159,976 458,716 21.2 2,473,621 Allowance for Loan and Lease Losses (24,421) (22,045) (2,376) (10.8) (23,651) Interest-Bearing Deposits 2,552,463 2,123,975 428,488 20.2 2,340,284 Noninterest-Bearing Deposits 364,272 286,300 77,972 27.2 387,371 Delinquency Ratio (30+ days): 0.12% 0.24% 0.15% HOME EQUITY LENDING Q3-2005 Q3-2004 $ Change % Change Q2-2005 (Restated) (Restated) Residual Asset Interest Income $1,260 $3,350 ($2,090) (62.4) $1,994 Net Interest Income - Unsold Loans and Other 22,140 23,017 (877) (3.8) 19,199 Recovery of (provision for) Loan Losses (3,113) 232 (3,345) (1441.8) (6,181) Trading Gains 324 4,310 (3,986) (92.5) 2,316 Gain on Sales of Loans, Including Points and Fees 3,734 8,438 (4,704) (55.7) 3,861 Servicing Income, net 2,549 2,302 247 10.7 3,074 Other Revenues 1,218 (780) 1,998 256.3 588 Total Net Revenues 28,112 40,869 (12,757) (31.2) 24,851 Salaries, Pension, and Other Employee Expense 15,701 18,627 (2,926) (15.7) 15,244 Other Expense 8,671 10,423 (1,752) (16.8) 10,484 Income Before Income Taxes 3,740 11,819 (8,079) (68.4) (877) Income Taxes 1,503 4,773 (3,270) (68.5) (340) Net Income $2,237 $7,046 ($4,809) (68.2) ($537) Loan Volume $443,606 $396,776 $46,830 11.8 $500,283 Loans Sold 150,730 405,120 (254,390) (62.8) 111,288 Net Charge-offs (Loans Held for Investment) 1,222 1,906 (684) (35.9) 1,093 YTD-2005 YTD-2004 $ Change % Change (Restated) Residual Asset Interest Income $5,594 $9,893 ($4,299) (43.5) Net Interest Income - Unsold Loans and Other 59,431 67,328 (7,897) (11.7) Provision for Loan Losses (9,665) (4,961) (4,704) (94.8) Trading Gains 3,120 15,640 (12,520) (80.1) Gain on Sales of Loans, Including Points and Fees 15,863 20,163 (4,300) (21.3) Servicing Income, net 8,365 8,384 (19) (0.2) Other Revenues 2,841 1,709 1,132 66.2 Total Net Revenues 85,549 118,156 (32,607) (27.6) Salaries, Pension, and Other Employee Expense 50,193 52,618 (2,425) (4.6) Other Expense 29,074 28,673 401 1.4 Income Before Income Taxes 6,282 36,865 (30,583) (83.0) Income Taxes 2,537 14,805 (12,268) (82.9) Net Income $3,745 $22,060 ($18,315) (83.0) Loan Volume $1,373,502 $1,107,476 $266,026 24.0 Loans Sold 584,071 831,508 (247,437) (29.8) Net Charge-offs (Loans Held for Investment) 2,651 10,225 (7,574) (74.1) September 30, September 30, June 30, 2005 2004 $ Change % Change 2005 Home Equity Loans Held for Sale $807,673 $300,171 $507,502 169.1 $322,837 Home Equity Loans Held for Investment 635,435 668,633 (33,198) (5.0) 895,033 Allowance for Loan and Lease Losses (18,343) (13,179) (5,164) (39.2) (16,452) Residual Asset 23,720 68,584 (44,864) (65.4) 38,438 Servicing Asset 38,950 40,356 (1,406) (3.5) 44,575 Managed Portfolio 1,577,238 1,395,721 181,517 13.0 1,434,108 Delinquency Ratio (30+ days) 2.92% 4.59% 3.14% COMMERCIAL FINANCE Q3-2005 Q3-2004 $ Change % Change Q2-2005 Net Interest Income $8,959 $7,058 $1,901 26.9 $7,928 Provision for Loan and Lease Losses (1,481) (1,589) 108 6.8 (1,211) Gain on Sales of Loans 1529.89 224.73 1,305 580.0 104 Derivative (Losses) Gains, net (226.97) (225.38) (2) (0.9) (159) Other Revenues 1,010 1,366 (356) (26.0) 1,406 Total Net Revenues 9,791 6,835 2,956 43.2 8,068 Salaries, Pension, and Other Employee Expense 4,680 3,646 1,034 28.3 4,409 Other Expenses 733 1,268 (535) (42.2) 1,237 Income Before Income Taxes 4,378 1,921 2,457 127.9 2,422 Income Taxes 1,840 810 1,030 127.2 993 Net Income $2,538 $1,111 $1,427 128.4 $1,429 Net Charge-Offs $1,052 $1,958 ($906) (46.3) $1,448 Loans Sold 19,804 3,863 15,941 412.7 2,028 Net Interest Margin 4.95% 5.25% 4.77% Total Fundings of Loans and Leases $119,345 $90,966 $28,379 31.2 $110,273 YTD-2005 YTD-2004 $ Change % Change Net Interest Income $24,499 $20,692 $3,807 18.4 Provision for Loan and Lease Losses (4,801) (4,777) (24) (0.5) Gain on Sales of Loans 2,313 $1,404 909 64.7 Derivative Losses, net (532.78) (574.40) 41 7.1 Other Revenues 3,793 3,607 186 5.2 Total Net Revenues 25,271 20,352 4,919 24.2 Salaries, Pension, and Other Employee Expense 13,037 10,486 2,551 24.3 Other Expenses 4,209 3,691 518 14.0 Income Before Income Taxes 8,025 6,175 1,850 30.0 Income Taxes 3,362 4,040 (678) (16.8) Net Income $4,663 $2,135 $2,528 118.4 Net Charge-Offs $3,869 $4,303 ($434) (10.1) Loans Sold 34,232 27,497 6,735 24.5 Net Interest Margin 4.86% 5.53% Total Fundings of Loans and Leases $312,980 $251,204 $61,776 24.6 September 30, September 30, June 30, 2005 2004 $ Change % Change 2005 Investment in Loans and Leases $754,214 $559,801 $194,413 34.7 $693,900 Allowance for Loan and Lease Losses (10,366) (11,488) 1,122 9.8 (9,885) Weighted Average Yield 8.74% 8.98% 8.74% Delinquency ratio (30+ days) 0.59% 0.95% 0.54% DATASOURCE: Irwin Financial Corporation CONTACT: Suzie Singer, Corporate Communications, +1-812-376-1917, or Greg Ehlinger, Chief Financial Officer, +1-812-379-7603, both of Irwin Financial Corporation Web site: http://www.irwinfinancial.com/

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