Irwin Financial Corporation Announces Further Steps In Its Restructuring Plan
October 14 2008 - 9:22AM
PR Newswire (US)
-- Registration Statement filed for a $50 million Shareholder
Rights Offering COLUMBUS, Ind., Oct. 14 /PRNewswire-FirstCall/ --
Irwin Financial Corporation (NYSE:IFC), a bank holding company,
today announced the filing of a registration statement in
connection with a planned $50 million rights offering to
shareholders. This rights offering will help the Corporation
maintain and enhance capital strength while completing its
previously announced strategic restructuring efforts to re-focus on
small business and community banking. The Corporation has entered
into various "standby" purchase agreements with five investors to
purchase up to $31 million of common shares after shareholders have
been given the first opportunity to invest in the offering. "We
continue to make progress executing our strategic restructuring
plan to reduce our exposure to the national mortgage lending
industry and return to our traditional focus on delivering banking
services to small businesses and local communities where we have
branches," said Will Miller, Chairman and CEO of Irwin Financial.
"Our restructuring process, while costly in the current difficult
economic environment, is critical to our plan to restore
profitability. The capital raised by this rights offering will help
us continue to maintain required capital levels while we complete
this initiative. "Each member of our Board of Directors has
individually committed to invest through the rights offering. In
addition, five investors have agreed to invest up to $31 million
through the exercise of rights received and by buying shares of
stock representing rights potentially unexercised by our
shareholders," Mr. Miller continued. "Our headquarters community
neighbor, Cummins Inc., has provided up to $25 million of the
commitment. The remainder of the standby commitment is being
provided by me, members of my family, and Henry B. Schacht, a
former Chairman and CEO of Cummins and Lucent Technologies Inc. The
standby investors believe this opportunity to purchase shares of
the Corporation is an attractive investment." The standby
agreements are subject to certain conditions. The company plans to
continue discussions with other investors to provide additional
standby commitments at a later date. Irwin Financial and its
subsidiary banks have also entered into written agreements with the
Indiana Department of Financial Institutions, the Federal Reserve
Bank of Chicago, and the Office of Thrift Supervision. In the
current environment of uncertainty in the banking and financial
industry, the agreements outline a number of steps that have been
agreed upon among the parties, including submission of plans
regarding revised business strategies, liquidity and funds
management, and capital levels; improvements in credit
administration, accounting, and Board oversight; an assessment of
and specific additions to management; and certain restrictions
applicable only to its savings bank, which holds about 13% of the
Corporation's assets. "We do not expect these agreements to have a
significant impact our normal banking operations," Mr. Miller said.
"It is business as usual for our clients. The actions we will take
under these agreements are consistent with the actions we announced
earlier this year to initiate our strategic restructuring and
improve our risk management processes. Because these agreements in
part formalize actions underway to improve the Corporation's
financial condition, we have already completed the majority of them
and have action plans under way to address the remainder. We have a
common goal to maintain the financial soundness of the Corporation,
Irwin Union Bank and Trust Company, and Irwin Union Bank, F.S.B."
Irwin Financial expects to release its third quarter 2008 results
when it files its next Form 10-Q. A registration statement relating
to the rights offering has been filed with the Securities and
Exchange Commission but has not yet become effective. The common
shares in the rights offering may not be sold nor may offers to buy
be accepted prior to the time the registration statement has become
effective. 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 information, statements about: -- our plans to raise
capital and strengthen our capital base; -- our continued
restructuring efforts; -- actions in connection with the agreements
with our regulators; and -- any other statements that are not
historical facts. Actual future results may differ materially from
our forward-looking statements and we qualify all forward-looking
statements by various risks and uncertainties we face, as well as
the assumptions underlying the statements, including the following
cautionary factors: difficulties in raising capital, including the
failure of shareholders to approve measures that would facilitate
the Corporation's plans and the failure of standby commitments for
the capital raising; difficulty in obtaining the expected treatment
for the restructuring transactions on our balance sheet; difficulty
in further reducing the Corporation's home equity assets, including
a failure to obtain the necessary regulatory approvals or
third-party consents, higher than anticipated costs in removing the
assets, or unanticipated regulatory constraints; 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, including the loss of
public fund deposits should Irwin Union Bank and Trust Company
become less than well-capitalized; 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 of our Corporation, bank or thrift; regulatory
actions that impact our Corporation, bank or thrift, including the
written agreement the Corporation and its state- chartered bank
subsidiary, Irwin Union Bank and Trust Company, entered into with
the Federal Reserve Bank of Chicago and the Indiana Department of
Financial Institutions on October 10, 2008, and the written
agreement the Corporation's federal savings bank subsidiary, Irwin
Union Bank, F.S.B., entered into with the Office of Thrift
Supervision on the same day; 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
the remaining assets and obligations of lines of business we have
exited or are exiting, including the mortgage banking segment,
small-ticket commercial leasing, and home equity; 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 for Irwin
Financial Corporation Web site: http://www.irwinfinancial.com/
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