Irwin Financial Corporation Announces Major Strategic Restructuring to Refocus on Small Business and Local Community Banking
July 24 2008 - 5:17PM
PR Newswire (US)
Mortgage Assets Sold COLUMBUS, Ind., July 24 /PRNewswire-FirstCall/
-- Irwin Financial Corporation (NYSE:IFC) today announced
transactions that, when completed in the third quarter, will
accomplish a strategic restructuring of the Corporation and Irwin
Union Bank. As the 137-year old institution returns to its core
businesses, the restructuring will enable Irwin to re-focus on core
banking services to small businesses and branch-based customers.
The restructuring will cap Irwin's remaining exposure to the
national home equity lending business, which has been a principal
driver of recent losses. "We are pleased to announce the execution
of an agreement to sell our home equity residual interests to
Roosevelt Management Company LLC, a New York-based financial
services firm focused on investments in, and servicing of, seasoned
residential mortgage loans and securities. This will remove $1.0
billion of home equity loans from our balance sheet. In addition,
we have reached agreement with Roosevelt to deliver substantially
all of the remaining loans in our home equity business into a
securitization structure that will cap our remaining exposure at
less than $100 million. To further strengthen our liquidity, we
also entered into agreements to sell our small-ticket leasing
business in Canada to RoyNat Inc., a subsidiary of Scotiabank
Group, and in the United States to Equilease Financial Services,
Inc. for $600 million prior to associated costs. The Corporation
will keep its profitable franchise financing business. "We believe
these transactions will enhance Irwin Financial's capital and
liquidity to support our focus on our traditional strengths in
serving the banking needs of small businesses and our local
communities. These transactions and the strategic restructuring
actions they entail will return our core operations to
profitability," said Will Miller, Chairman and CEO of Irwin
Financial. "Together, these transactions are expected to remove
approximately $1.6 billion of home equity and small ticket assets
from Irwin Financial's balance sheet by September 30, 2008.
Although pricing on these transactions will result in losses and we
expect to book additional restructuring costs (substantially all of
which will be incurred by the end of 2008), we will continue to
have capital ratios that exceed the statutory requirements for Well
Capitalized. The asset sales will significantly enhance liquidity
and help us return our core business to profitability. We
anticipate having each of these transactions substantially
completed by September 30, 2008," said Mr. Miller. "Going forward,
we will focus on building more strength into our historic deposit
and lending services and our commercial franchise services to small
business, which we have been reporting as our 'Commercial Banking'
and 'Franchise Finance' platforms. We will continue serving our
community bank customers in our branch network communities with
banking, trust, investment, and insurance services," Mr. Miller
said. The Corporation will host a conference call at 1:00 EDT on
Friday, July 25, 2008, to discuss these transactions. To join the
call, dial either 1 (866) 825-3967 or outside the U.S. 1 (847)
413-3371 and provide confirmation number: 22334966. Irwin Financial
expects to release its second quarter 2008 results and pro forma
results that reflect the effect of these transactions when it files
its next Form 10-Q. About Irwin Financial Irwin(R) Financial
Corporation ( http://www.irwinfinancial.com/ ) is a bank holding
company with a history tracing to 1871. The Corporation provides a
broad range of banking services to small businesses and consumers
in selected markets. 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
projections of financial performance, profitability, 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 about: -- our intent to
substantially reduce and cap the Corporation's exposure to the
national home equity lending business; -- our intent to exit the
U.S. and Canadian small-ticket leasing business; -- the expected
timing for completion of the restructuring transactions described
above; and -- the expected effect of the transactions on the
Corporation's balance sheet, profitability, liquidity, and capital
ratios. We qualify any forward-looking statements entirely by these
and the following cautionary factors. Actual future results may
differ materially from what is projected due to a variety of
factors including: unforeseen difficulties the parties may
experience in completing the transactions described in this press
release as currently contemplated, such as a material adverse
change in the sellers, a failure to obtain the necessary regulatory
approvals or third-party consents or to meet closing conditions,
difficulties in obtaining the desired tax and accounting treatment
for the home equity securitization, or unanticipated regulatory
constraints; difficulty in obtaining the expected treatment for the
restructuring transactions on our balance sheet; potential
deterioration or effects of general economic conditions,
particularly in sectors relating to real estate and/or mortgage
lending or small business-based manufacturing; fluctuations in
housing prices; potential effects related to the Corporation's
decision to suspend the payment of dividends on its common,
preferred and trust preferred securities; 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 collectability
of our loan and lease assets, including deterioration resulting
from the effects of natural disasters; difficulties in accurately
estimating any future repurchases of residential mortgage or other
loans or leases due to alleged violations of representations and
warranties we made marketing sales or securitizations;
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 or retaining
deposit or other 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 lawsuits or 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, and
other laws, rules or regulations affecting the rights and
responsibilities our Corporation, our 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 and application 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 final disposition of our remaining assets
and obligations of our discontinued mortgage banking segment, and,
after the transactions contemplated above, our home equity and
small-ticket commercial leasing segments; 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: Susan Matthews, Media, +1-317-590-3202, Suzie
Singer, Corporate Communications, +1-812-376-1917, both of Irwin
Financial Corporation Web site: http://www.irwinfinancial.com/
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