Irwin Financial Corporation Announces Preliminary Fourth Quarter Results
January 03 2008 - 4:05PM
PR Newswire (US)
-- Consolidated Loss, Including Discontinued Operations, in a Range
of $15 to $20 Million; COLUMBUS, Ind., Jan. 3
/PRNewswire-FirstCall/ -- Irwin Financial Corporation (NYSE:IFC), a
bank holding company focusing on small business and consumer
mortgage lending, today announced that it expects to report a loss
from operations for the fourth quarter of 2007 due to the effects
of conditions in the mortgage market and housing markets. "During
the fourth quarter, we saw continued deterioration of credit
conditions in our housing-related portfolios. The bulk of weakness
was in our home equity mortgage portfolio, but we have also seen
some softening in certain portions of our commercial real estate
portfolio. While realized losses have been manageable, we believe
it is prudent to take additional provisions to prepare for
potential increases in loss rates in 2008. During the fourth
quarter, we took several steps to align operational and staffing
costs to the current environment. These will be reflected in
restructuring charges of approximately $5 million during the
quarter; we expect at this point to take less than $2 million more
in the first quarter," said Will Miller, Chairman and CEO of Irwin
Financial. "In our home equity segment, we are being negatively
affected by the non- core portfolio we transferred from
'held-for-sale' when the secondary market collapsed in the first
quarter of 2007. These loans, which were originated for sale and
did not meet our core portfolio credit guidelines, are adding to
our delinquencies and required provision at a rate that is
disproportionate to the portfolio as a whole. In addition, we are
seeing greater than expected rate of delinquencies and losses on
loans where loan-to-values at origination approached 100 percent.
We believe reductions in real estate prices are impacting this
portion of the portfolio due to erosion of the limited amount of
equity these borrowers had in their homes. Conversely, our
portfolio of loans where loan-to-value ratios were above 100% at
origination are performing in-line with our delinquency and loss
expectations. "We will report an increase in non-performing loans
in our commercial banking segment, reflecting weakness in
residential real estate in some of our Midwestern and Western
markets. We believe our collateral position in each of these loans
remains good and, therefore, do not expect material losses will
result. Nonetheless, the deteriorating condition of the residential
real estate markets suggests some additional reserves are
warranted. "We have seen a leveling-off of repurchase requests in
our Discontinued Operations. We averaged 13 per month in the fourth
quarter, down from an average of 23 per month in the third quarter.
Additionally, we are starting to see opportunities for material
recoveries from losses we have incurred in representation and
warranty claims. Pursuing these opportunities will be a high
priority in 2008. "Finally, on a positive note, our commercial
finance segment continues to exhibit the strength we have seen all
year. We expect the segment will conclude 2007 with another quarter
of record net income and good credit quality," Miller concluded.
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, provides a broad range of financial services to
small businesses and consumers in selected markets in the United
States and Canada. About Forward-Looking Statements This press
release contains forward-looking statements that are based on
management's expectations, estimates, projections, and assumptions.
These statements 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. We qualify any forward- looking
statements entirely by these cautionary factors as well as those
described below. Investors are cautioned that the Corporation has
not yet closed its books and records for the fourth quarter. Actual
future results may differ materially from what is projected due to
a variety of factors including: potential changes in direction,
volatility and relative movement (basis risk) of interest rates,
which may affect consumer demand for our products and the
management and success of our interest rate risk management
strategies; staffing fluctuations in response to product demand or
the implementation of corporate strategies that affect our work
force; the relative profitability of our lending operations; the
valuation and management of our portfolios, including the use of
external and internal modeling assumptions we embed in the
valuation of those portfolios and short- term swings in the
valuation of such portfolios; 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 or collectibility of our loan
and lease assets, including deterioration resulting from the
effects of natural disasters; unanticipated deterioration or
changes in estimates of the carrying value of our other assets,
including securities; difficulties in delivering products to the
secondary market, including the consequences of our decision to
hold loans on our balance sheet rather than sell into an
unfavorable market; difficulties in expanding our business and
obtaining funding sources as needed; competition from other
financial service providers for experienced managers as well as for
customers; changes in the value of our lines of business,
subsidiaries or 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 laws, rules
or regulations that affect tax, consumer or commercial lending,
corporate governance and disclosure requirements, regulatory
capital and other laws or regulations affecting the rights and
responsibilities of our Corporation, bank or thrift; regulatory
actions that impact our Corporation, including the memorandum of
understanding entered into as of March 1, 2007 between our
subsidiary bank and the Federal Reserve Bank of Chicago; changes in
applicable accounting policies or principles or their application
to our businesses or final audit adjustments; the availability of
resources to address legislative, regulatory or policy changes or
to respond to regulatory actions; additional guidance and
interpretation on accounting issues and details of the
implementation of new accounting methods; the final disposition of
our remaining assets and obligations of our discontinued mortgage
banking segment; 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. DATASOURCE: Irwin Financial Corporation CONTACT: Suzie
Singer, Corporate Communications, Irwin Financial Corporation,
+1-812-376-1917 Web site: http://www.irwinfinancial.com/
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