- Significant Credit Reserves Taken in Response to Residential Real
Estate Deterioration COLUMBUS, Ind., Jan. 29 /PRNewswire-FirstCall/
-- Irwin Financial Corporation (NYSE:IFC), a bank holding company
focusing on small business and consumer mortgage lending, today
announced a loss of $13.0 million from Continuing Operations for
the fourth quarter of 2007, or $0.47 per diluted share, after
preferred dividends. Inclusive of a loss of $3.4 million from
Discontinued Operations, the Corporation had a consolidated net
loss of $16.4 million or $0.58 per share in the quarter. For the
year, the Corporation had a loss of $14.4 million from Continuing
Operations or $0.57 per diluted share. Inclusive of a $30.5 million
loss from Discontinued Operations, the Corporation had a
consolidated loss of $44.9 million for the year. "Our performance
during the fourth quarter, like that of many banks, reflected a
significantly deteriorating residential real estate market. This
has affected our home equity segment and, to a lesser extent, our
commercial lending businesses as well. Our losses from consumer
mortgage credits continued to increase in recent months. During the
quarter, we set aside substantial reserves for losses we expect in
coming quarters," said Will Miller, Chairman and CEO of Irwin
Financial. "On a positive note, the pace of loan repurchase demands
in our discontinued conventional mortgage operations has abated. It
is our judgment, based on current conditions, that the substantial
reserves we took in the third quarter should be sufficient to cover
our risks in this area. "Not to be overshadowed by our consolidated
performance in 2007 are the results we achieved in the commercial
finance segment. Income in this segment, started in 2000, has grown
steadily and reached a record $14 million in 2007. Loan and lease
outstandings have increased nicely, we have developed good
secondary outlets, and credit quality has been good, even in the
current stressed environment. "Forecasting in the current
environment is very difficult," Miller continued. "Home equity
delinquencies rose sharply in the fourth quarter; we are currently
projecting this trend will continue with additional deterioration
in the first quarter at about the same pace as we have observed in
the last six months. Assuming that this projection holds true --
and that commercial banking delinquencies do not erode further --
we believe we can return to near break even performance in the
first quarter. Because we husbanded our capital during 2007 by
suspending our repurchase program early in the year and by
moderating net loan and lease growth through increased loan sales
and participations, we enter 2008 with a good level of capital."
Financial highlights for Continuing Operations (commercial bank,
commercial finance, and home equity lending) for the period
include: Consolidated Results $ in millions, except EPS 4Q 3Q
Percent 4Q Percent Percent 2007 2007 Change 2006 Change 2007 2006
Change Net Interest Income $65 $65 0% $67 (2)% $262 $257 2%
Provision for Losses (48) (28) (69)% (10) (383)% (119) (35) (240)%
Non-Interest Income 12 7 65% 14 (19)% 27 45 (39)% Total
Consolidated Net Revenues 29 44 (34)% 71 (59)% 171 267 (36)%
Non-Interest Expense 54 46 17% 56 (3)% 200 211 (5)% Net Income
(Loss) From Continuing Operations (13) (1) (1514)% 11 NM (14) 37 NM
Earning (Loss) per Share from Continuing Operations (diluted)
(0.47) (0.05) (840)% 0.35 NM (0.57) 1.25 NM Loans and Leases 5,696
5,677 0% 5,238 9% Deposits 3,325 3,503 (5)% 3,552 (6)%
Shareholders' Equity 469 489 (4)% 531 (12)% Total Risk-Based
Capital Ratio 12.8% 12.9% 13.4% Return on Average Equity (10.6)%
(0.6)% 8.1% (2.8)% 7.1% Consolidated net revenues for the fourth
quarter decreased on a sequential quarter and year-over-year basis,
reflecting increased loan loss provision for the home equity
portfolio. Net interest income of $65 million was relatively flat
on a sequential quarter and up on a year-over-year basis,
reflecting modest volume growth, but narrower interest margins.
Non-interest expenses increased from the third quarter attributable
in part to significant severance and other restructuring charges at
our home equity lending operation and more modest severance
expenses at the commercial banking and parent segments.
Non-interest expense declined on a year-over- year basis,
reflecting expense reductions undertaken to improve profitability
and reduced expenses for performance-based compensation. Reflecting
tightening of underwriting guidelines and economic conditions, the
consolidated loan and lease portfolio was unchanged during the
quarter, totaling $5.7 billion as of December 31. Loans and leases
increased $458 million or 9 percent during 2007. The bulk of this
increase came from growth in our commercial finance portfolio.
Liquidity for the Corporation remains good, with no reliance on
warehouse funding. Average core deposits declined during the fourth
quarter and totaled $2.3 billion at December and $2.5 billion at
September 30. The consolidated net interest margin declined to 4.43
percent as compared to 4.53 percent during the third quarter,
reflecting increased wholesale funding costs. The Corporation had
$469 million or $15.55 per share in common shareholders' equity as
of December 31. At quarter-end, the Tier 1 Leverage Ratio and Total
Risk-based Capital Ratio were 10.4 percent and 12.8 percent,
respectively, compared to 10.8 percent and 12.9 percent as of
September 30, 2007. Nonperforming loans and leases totaled $76
million or 1.34 percent of total loans and leases as of December
31, 2007, up from $61 million or 1.07 percent of loans and leases
at September 30. The increase principally reflects $6 and $7
million increases in the commercial banking and home equity
segments, respectively. The increases in both segments are not
concentrated in any market. Management believes that the
substantial additional loss provision taken during the quarter will
address expected losses from these loans. The allowance for loan
and lease losses for the Corporation's portfolios totaled $129
million as of December 31, up from $105 million at the end of the
third quarter. The ratio of allowance for loan and lease losses to
nonperforming loans and leases was 169 percent at December 31,
compared to 173 percent at September 30. Other real estate owned,
which is carried at fair value, totaled $17 million at December 31,
down from $19 million at September 30. The consolidated loan and
lease loss provision totaled $48 million in the fourth quarter, up
from $28 million in the third quarter of 2007. This increase
principally reflects a $16 million sequential quarter increase in
provision for the home equity portfolio. Thirty-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 principal credit-related portfolios are shown in the
next table. Home Equity Commercial Managed Commercial Banking
Portfolio Finance December 31, 2007 Portfolio (in $Billions) $2.95
$1.61 $1.29 30-Day and Greater Delinquencies -December 31, 2007
0.85% 5.78% 0.69% -September 30, 2007 0.41 4.72 0.79 -June 30, 2007
0.25 3.64 0.68 -March 31, 2007 0.22 2.95 0.64 -December 31, 2006
0.13 3.16 0.60 Annualized Net Charge-offs -December 31, 2007 0.27
4.62 0.90 -September 30, 2007 0.29 3.10 0.56 -June 30, 2007 0.17
2.18 0.76 -March 31, 2007 0.67 3.01 0.76 -December 31, 2006 0.09
1.50 0.33 Allowance to Loans and Leases -December 31, 2007 1.08
5.47 1.33 -September 30, 2007 0.93 4.00 1.36 -June 30, 2007 0.92
3.40 1.34 -March 31, 2007 0.93 2.95 1.39 -December 31, 2006 0.93
2.63 1.28 Segment Results Net income (loss) by line of business is
shown below. Additional detail for each segment will be available
later in the first quarter in the Annual Report on Form 10-K. Net
Income(loss) ($ in millions) 4Q 3Q Percent 4Q Percent Percent 2007
2007 Change 2006 Change 2007 2006 Change Commercial Banking $4 $5
(24)% $8 (55)% $18 $31 -42% Commercial Finance 5 4 21% 4 31% 14 13
11% Home Equity (20) (8) (146)% 1 NM (40) 2 NM Other Segments,
Including Parent (1) (1) 8% (2) 46% (6) (8) 23% Net Income (Loss)
From Continuing Operations (13) (1) (1514)% 11 NM (14) 37 NM Income
(Loss) From Discontinued Operations - Mortgage Banking (3) (17) 80%
(6) 40% (31) (36) 14% Consolidated Net Income (Loss) (16) (18) 9% 5
NM (45) 2 NM The commercial banking segment earned $3.6 million
during the fourth quarter, a decrease of $1.2 million as compared
to the third quarter, reflecting increased loss provision. Net
income for the year totaled $17.8 million, a $13.1 million or 42
percent decline as compared to 2006. To improve profitability in
subsequent quarters, management has taken a number of steps
including an 11 percent reduction in staff during the fourth
quarter. The commercial banking segment's loan portfolio was
unchanged during the quarter, reflecting a slowing in credit
demand. Net interest margin decreased to 3.83 percent during the
quarter, down from 3.97 percent during the third quarter,
reflecting product mix as well as loan repricing at a faster rate
than deposit repricing. Credit quality in the commercial banking
portfolio weakened significantly across several of its markets.
Thirty-day and greater delinquencies rose to 0.85 percent, compared
to 0.41 percent at September 30. Non-performing assets increased
during the quarter from $29 million to $34 million as of December
31. The majority of the increase in non-performing loans is related
to deteriorating commercial real estate credits in connection with
the residential housing markets, both in the Midwest and Western
markets. To address the increase in potential losses, the
commercial banking segment recorded a loss provision of $6.5
million during the quarter, bringing its allowance for losses to
1.08 percent of loans as of December 31, up from 0.93 percent as of
September 30. Net loan losses recorded during the fourth quarter
totaled $2.0 million, compared to $2.1 million during the third
quarter. The commercial finance line of business earned $4.6
million in the fourth quarter of 2007, up from $3.8 million in the
third quarter. Earnings for the year totaled $13.9 million compared
to $12.6 million in 2006. Both 2007 figures represent records for
the segment, reflecting growth in net interest income, good credit
quality, and modest expense growth. The commercial finance loan and
lease portfolio totaled $1.3 billion as of December 31, compared to
$1.2 billion at September 30. Loan and lease originations totaled
$212 million during the fourth quarter and franchise finance loan
sales totaled $13 million along with loan participations totaling
$25 million. Net interest margin rose to 4.56 percent up from 4.44
percent in the third quarter, due in part to product mix. Credit
quality in this portfolio remains within expectations. Thirty-day
and greater delinquencies were 0.69 percent at quarter-end,
compared to 0.79 percent at September 30. Non-performing loans
totaled $9 million, up from $6 million at the end of September and
were addressed by a $1 million increase in the quarterly loan and
lease provision. The commercial finance segment's loan and lease
loss provision totaled $3.5 million during the fourth quarter,
compared to net charge-offs of $2.8 million. The home equity
segment lost $20.0 million during the fourth quarter, compared to a
loss of $8.1 million during the third quarter. The increased loss
reflects the effect of higher loan losses and delinquency rates as
well as significant restructuring costs incurred during the period.
The segment lost $40 million in 2007, compared to a 2006 profit of
$2 million. The segment's portfolio of loans totaled $1.5 billion
as of December 31, unchanged as compared to the end of the third
quarter. Reflecting management's intention to have insignificant
secondary market risk in the current environment, loans
held-for-sale totaled $6 million, up from $4 million at the end of
the third quarter and well below the December 31, 2006 balance of
$237 million. Mortgage loan originations totaled $39 million during
the fourth quarter, down from $104 million during the third
quarter. The decline in production reflects tightening of
guidelines and significantly reduced demand in the secondary
market. Credit costs continue to rise in this segment. Thirty-day
and greater delinquencies on the managed portfolio increased during
the quarter to 5.78 percent from 4.72 percent as of September 30.
Non-performing loans were $40 million compared to $34 million at
prior quarter-end, reflective of unsettled market conditions. Loan
loss provision in the segment totaled $38 million, up from $23
million during the third quarter. Net charge-offs on the segment's
managed portfolio totaled $19 million (4.6 percent annualized), an
increase from $13 million (3.1 percent annualized) recorded during
the third quarter of 2007. Management continues to assess the
operating expense of the segment. During the course of the year,
the number of employees in this segment has been reduced by
approximately 152 or 31 percent. During the fourth quarter, $4.2
million of severance and other restructuring costs were incurred.
At this point, management expects to incur modest additional
restructuring charges in the first quarter. The parent and other
consolidating entities lost $1.1 million during the fourth quarter,
compared to a loss of $1.2 million in the third quarter of 2007.
These entities lost $6 million during 2007, compared to $8 million
in 2006. Discontinued Operations -- Conventional Mortgage Segment
The discontinued conventional mortgage segment reported a loss
during the fourth quarter of $3.4 million, compared to a $17
million loss in the third quarter. For the year, the discontinued
operations lost $31 million, compared to a loss of $36 million
during 2006. The loss in the current period principally reflects
downward adjustments to servicing sale receivables and operating
expenses required to oversee the wind-down of activities. Losses
due to repurchase claims have moderated during the past four months
and substantial progress has been made in addressing those claims
which have been received. The loan repurchase liability totaled $25
million as of December 31, as compared to $29 million at September
30. Assets held for sale totaled $4 million as of December 31,
compared with $8 million as of September 30. Included in the $4
million are $1 million of loans held for sale. 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 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 or decline in our earnings, projected loan
originations and deposits, 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 portfolios;
-- statements about the expected behavior of and our response to
secondary market conditions; -- statements about conditions in the
mortgage markets or mortgage industry; -- statements about expected
results from the discontinued operations of our conventional
mortgage banking segment; 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 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 and deposit 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 as planned;
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, bank or thrift, 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
the interpretation of regulatory capital or other rules; the
availability of resources to address changes in laws, rules or
regulations or to respond to regulatory actions; changes in
applicable accounting policies or principles or their application
to our businesses or final audit adjustments, including additional
guidance and interpretation on accounting issues and details of the
implementation of new accounting methods; the effects of general
economic conditions, including fluctuations in housing prices; the
final disposition of our remaining assets and obligations of our
discontinued mortgage banking segment, including the possibility
that repurchase demands by third parties could exceed our current
estimates; 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 on Tuesday, January 29, at 1:00 p.m. EST. Greg Ehlinger,
CFO, Will Miller, CEO, and Jody Littrell, FVP and Controller, of
Irwin Financial Corporation, will be the speakers on the call. The
toll-free number for the call is (800) 640-0097; please tell the
operator you would like to join the Irwin Financial call,
confirmation #20468627. A replay of the call will be available on
the Irwin Financial Corporation website at:
http://www.irwinfinancial.com/investors/index_ir.htm. IRWIN
FINANCIAL CORPORATION Selected Consolidated Financial Highlights
($'s in thousands, except per share data) Unaudited Q4-2007 Q4-2006
$ Change % Change Q3-2007 Net Interest Income $65,276 $66,693
($1,417) (2.1) $65,146 Provision for Loan and Lease Losses (48,037)
(9,946) (38,091) (383.0) (28,493) Noninterest Income 11,584 14,232
(2,648) (18.6) 7,032 Total Net Revenues 28,823 70,979 (42,156)
(59.4) 43,685 Noninterest Expense 54,074 55,717 (1,643) (2.9)
46,344 (Loss) Income from Continuing Operations before Income Taxes
(25,251) 15,262 (40,513) (265.5) (2,659) Income Taxes on Continuing
Operations (12,289) 4,615 (16,904) (366.3) (1,856) Net (Loss)
Income from Continuing Operations (12,962) 10,647 (23,609) (221.7)
(803) (Loss) from Discontinued Operations (3,420) (5,726) 2,306
40.3 (17,227) Net (Loss) Income ($16,382) $4,921 ($21,303) (432.9)
($18,030) Dividends on Common Stock $3,509 $3,292 $217 6.6 $3,504
Diluted Earnings Per Share (29,221 Weighted Average Shares
Outstanding) From Continuing Operations (0.47) 0.35 ($0.82) (234.3)
(0.05) From All Operations (0.58) 0.16 (0.74) (462.5) (0.64) Basic
Earnings Per Share (29,219 Weighted Average Shares Outstanding)
From Continuing Operations (0.45) 0.36 (0.81) (225.0) (0.04) From
All Operations (0.57) 0.17 (0.74) (435.3) (0.63) Dividends Per
Common Share 0.12 0.11 0.01 9.1 0.12 Net Charge-Offs $23,698 $7,939
$15,759 198.5 $16,654 Performance Ratios - Quarter to Date: Return
on Average Assets from Continuing Operations (0.8)% 0.7% (0.1)%
Return on Average Equity from Continuing Operations (10.6)% 8.1%
(0.6)% YTD-2007 YTD-2006 $ Change % Change Net Interest Income
$262,393 $257,439 $4,954 1.9 Provision for Loan and Lease Losses
(119,193) (35,101) (84,092) (239.6) Noninterest Income 27,384
44,621 (17,237) (38.6) Total Net Revenues 170,584 266,959 (96,375)
(36.1) Noninterest Expense 199,767 210,688 (10,921) (5.2) (Loss)
Income from Continuing Operations before Income Taxes (29,183)
56,271 (85,454) (151.9) Income Taxes on Continuing Operations
(14,796) 18,870 (33,666) (178.4) Net (Loss) Income from Continuing
Operations (14,387) 37,401 (51,788) (138.5) (Loss) from
Discontinued Operations (30,543) (35,674) 5,131 14.4 Net (Loss)
Income ($44,930) $1,727 ($46,657) (2701.6) Dividends on Common
Stock $14,046 $13,110 $936 7.1 Diluted Earnings Per Share (29,353
Weighted Average Shares Outstanding) From Continuing Operations
(0.57) 1.25 (1.82) (145.6) From All Operations (1.61) 0.05 (1.66)
(3320.0) Basic Earnings Per Share (29,347 Weighted Average Shares
Outstanding) From Continuing Operations (0.54) 1.27 (1.81) (142.5)
From All Operations (1.58) 0.06 (1.64) (2733.3) Dividends Per
Common Share 0.48 0.44 0.04 9.1 Net Charge-Offs $72,145 $22,539
$49,606 220.1 Performance Ratios - Year to Date: Return on Average
Assets from Continuing Operations (0.2)% 0.6% Return on Average
Equity from Continuing Operations (2.8)% 7.1% Dec. 31, Dec. 31,
Sept. 30, 2007 2006 $ Change % Change 2007 Loans Held for Sale
$6,134 $237,510 ($231,376) (97.4) $3,253 Loans and Leases in
Portfolio 5,696,230 5,238,193 458,037 8.7 5,676,690 Allowance for
Loan and Lease Losses (129,060) (74,468) (54,592) (73.3) (104,444)
Assets Held for Sale IMC 3,814 56,573 (52,759) (93.3) 8,364 Total
Assets 6,170,192 6,237,958 (67,766) (1.1) 6,161,848 Total Deposits
3,325,488 3,551,516 (226,028) (6.4) 3,503,070 Shareholders' Equity
469,043 530,502 (61,459) (11.6) 488,796 Shareholders' Equity
available to Common Shareholders (per share) 15.55 17.30 (1.75)
(10.1) 16.25 Average Equity/ Average Assets (YTD) 8.3% 8.1% 8.4%
Tier I Capital $632,647 $712,403 ($79,756) (11.2) $657,218 Tier I
Leverage Ratio 10.4% 11.5% 10.8% Total Risk-based Capital Ratio
12.8% 13.4% 12.9% Nonperforming Assets to Total Assets 1.51% 0.93%
1.33% COMMERCIAL BANKING Q4-2007 Q4-2006 $ Change % Change Q3-2007
Net Interest Income $29,462 $31,515 ($2,053) (6.5) $29,989
Provision for Loan and Lease Losses (6,500) (1,253) (5,247) (418.8)
(3,100) Other Revenues 4,382 4,620 (238) (5.2) 4,099 Total Net
Revenues 27,344 34,882 (7,538) (21.6) 30,988 Salaries, Pension, and
Other Employee Expense 11,057 12,538 (1,481) (11.8) 13,048 Other
Expenses 10,752 10,229 523 5.1 10,534 Income Before Income Taxes
5,535 12,115 (6,580) (54.3) 7,406 Income Taxes 1,976 4,127 (2,151)
(52.1) 2,697 Net Income $3,559 $7,988 ($4,429) (55.4) $4,709 Net
Charge-offs $2,009 $670 $1,339 199.9 $2,118 Net Interest Margin
3.83% 4.24% 3.97% YTD-2007 YTD-2006 $ Change % Change Net Interest
Income $118,929 $124,726 ($5,797) (4.6) Provision for Loan and
Lease Losses (15,041) (5,734) (9,307) (162.3) Other Revenues 16,615
18,173 (1,558) (8.6) Total Net Revenues 120,503 137,165 (16,662)
(12.1) Salaries, Pension, and Other Employee Expense 51,374 53,111
(1,737) (3.3) Other Expenses 41,232 35,821 5,411 15.1 Income Before
Income Taxes 27,897 48,233 (20,336) (42.2) Income Taxes 10,125
17,373 (7,248) (41.7) Net Income $17,772 $30,860 ($13,088) (42.4)
Net Charge-offs $10,206 $3,291 $6,915 210.1 Net Interest Margin
3.91% 4.12% Dec. 31, Dec. 31, Sept. 30, 2007 2006 $ Change % Change
2007 Investment Securities $37,905 $32,679 $5,226 16.0 $35,957
Loans and Leases 2,950,356 2,901,029 49,327 1.7 2,941,207 Allowance
for Loan and Lease Losses (31,948) (27,113) (4,835) (17.8) (27,457)
Interest-Bearing Deposits 2,221,177 2,270,946 (49,769) (2.2)
2,390,799 Noninterest-Bearing Deposits 307,544 364,434 (56,890)
(15.6) 385,116 Delinquency Ratio (30+ days): 0.85% 0.13% 0.41%
COMMERCIAL FINANCE Q4-2007 Q4-2006 $ Change % Change Q3-2007 Net
Interest Income $14,533 $12,328 $2,205 17.9 $13,258 Provision for
Loan and Lease Losses (3,488) (2,139) (1,349) (63.1) (2,860) Gain
on Sales of Loans 1,975 372 1,603 430.9 1,768 Derivative Losses,
net (221) (72) (149) (206.9) (51) Other Revenues 2,133 1,034 1,099
106.4 1,764 Total Net Revenues 14,932 11,523 3,409 29.6 13,878
Salaries, Pension, and Other Employee Expense 4,329 3,234 1,095
33.9 4,629 Other Expenses 3,111 3,004 107 3.6 2,970 Income Before
Income Taxes 7,492 5,285 2,207 41.8 6,279 Income Taxes 2,896 1,781
1,115 62.6 2,471 Net Income $4,596 $3,504 $1,092 31.2 $3,808 Net
Charge-Offs $2,846 $852 $1,994 234.0 $1,651 Net Interest Margin
4.56% 4.77% 4.44% Total Fundings of Loans and Leases $211,887
$163,781 $48,106 29.4 $185,478 YTD-2007 YTD-2006 $ Change % Change
Net Interest Income $52,721 $42,545 $10,176 23.9 Provision for Loan
and Lease Losses (12,880) (6,701) (6,179) (92.2) Gain on Sales of
Loans 6,779 2,563 4,216 164.5 Derivative Losses, net (547) (263)
(284) (108.0) Other Revenues 6,874 5,718 1,156 20.2 Total Net
Revenues 52,947 43,862 9,085 20.7 Salaries, Pension, and Other
Employee Expense 18,441 13,155 5,286 40.2 Other Expenses 11,666
10,800 866 8.0 Income Before Income Taxes 22,840 19,907 2,933 14.7
Income Taxes 8,909 7,307 1,602 21.9 Net Income $13,931 $12,600
$1,331 10.6 Net Charge-Offs $8,533 $3,678 $4,855 132.0 Net Interest
Margin 4.58% 4.55% Total Fundings of Loans and Leases $700,718
$595,319 $105,399 17.7 Dec. 31, Dec. 31, Sept. 30, 2007 2006 $
Change % Change 2007 Investment in Loans and Leases $1,287,060
$1,056,406 $230,654 21.8 $1,234,312 Allowance for Loan and Lease
Losses (17,167) (13,525) (3,642) (26.9) (16,790) Weighted Average
Coupon 9.64% 9.29% 9.49% Delinquency ratio (30+ days) 0.69% 0.60%
0.79% HOME EQUITY LENDING Q4-2007 Q4-2006 $ Change % Change Q3-2007
Net Interest Income 22,653 24,261 (1,608) (6.6) 23,405 Provision
for Loan Losses (38,050) (6,548) (31,502) (481.1) (22,533) Gain on
Sales of Loans, Including Points and Fees 25 59 (34) (57.6) 1,122
Servicing Income, net 1,496 4,108 (2,612) (63.6) 1,646 Other
Revenues (159) 870 (1,029) (118.3) 440 Total Net Revenues (14,035)
22,750 (36,785) (161.7) 4,080 Salaries, Pension, and Other Employee
Expense 10,803 11,360 (557) (4.9) 11,172 Other Expense 8,542 9,406
(864) (9.2) 6,466 (Loss) Income before Income Taxes (33,380) 1,984
(35,364) (1782.5) (13,558) Income Taxes (13,349) 807 (14,156)
(1754.2) (5,420) Net (Loss) Income ($20,031) $1,177 ($21,208)
(1801.9) ($8,138) Loan Volume $39,027 $253,935 ($214,908) (84.6)
$103,559 Loans Sold 17,384 60,275 (42,891) (71.2) 23,708 Net
Charge-offs 18,843 6,383 12,460 195.2 12,884 Net Interest Margin
5.88% 6.18% 5.96% YTD-2007 YTD-2006 $ Change % Change Net Interest
Income 95,095 96,068 (973) (1.0) Provision for Loan Losses (91,272)
(22,659) (68,613) (302.8) Loss on Sales of Loans, Including Points
and Fees (5,153) (2,386) (2,767) (116.0) Servicing Income, net
6,752 12,081 (5,329) (44.1) Other Revenues 936 5,491 (4,555) (83.0)
Total Net Revenues 6,358 88,595 (82,237) (92.8) Salaries, Pension,
and Other Employee Expense 44,528 51,335 (6,807) (13.3) Other
Expense 28,904 34,632 (5,728) (16.5) (Loss) Income before Income
Taxes (67,074) 2,628 (69,702) (2652.3) Income Taxes (26,805) 1,090
(27,895) (2559.2) Net (Loss) Income ($40,269) $1,538 ($41,807)
(2718.3) Loan Volume $454,944 $1,003,833 ($548,889) (54.7) Loans
Sold 186,436 612,803 (426,367) (69.6) Net Charge-offs 53,406 15,534
37,872 243.8 Net Interest Margin 6.09% 6.19% Dec. 31, Dec. 31,
Sept. 30, 2007 2006 $ Change % Change 2007 Home Equity Loans Held
for Sale $5,865 $236,636 ($230,771) (97.5) $3,732 Home Equity Loans
Held for Investment 1,458,564 1,280,497 178,067 13.9 1,500,919
Allowance for Loan and Lease Losses (79,730) (33,614) (46,116)
(137.2) (59,981) Residual Asset 3,120 2,760 360 13.0 3,250
Servicing Asset 20,071 28,231 (8,160) (28.9) 22,047 Managed
Portfolio 1,605,032 1,708,975 (103,943) (6.1) 1,653,606 Delinquency
Ratio (30+ days) 5.78% 3.16% 4.72% 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/
http://www.irwinfinancial.com/investors/index_ir.htm
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