SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-6835
IRWIN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1286807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
500 Washington Street, Columbus, IN 47201
(Address of principal executive offices)
(Zip Code)
812/376-1020
Registrant's telephone number, including area code)
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes No
As of July 31, 1995, there were outstanding 5,651,867 common shares,
no par value, of the Registrant.
XXX PAGE 1 XXX
Part I. Financial Information
Item I. Financial Statements
<TABLE>
<CAPTION>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1995 1994
------------ -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 41,378,573 $36,840,452
Federal funds sold 10,000,000 14,000,000
------------ -------------
Cash and cash equivalents 51,378,573 50,840,452
Interest-bearing deposits with financial
institutions 9,932,488 12,164,206
Investment securities (Market
value: $64,675,736 in 1995 and
$76,387,652 in 1994) - Note 2 63,878,851 77,356,575
Mortgage loans held for sale - Note 3 342,906,262 154,964,484
Loans and leases, net of unearned
income - Note 4 371,383,935 308,411,082
Less: Allowance for possible loan and
lease losses - Note 5 (3,988,696) (3,863,223)
------------- -------------
367,395,239 304,547,859
Capitalized servicing, net of amortization 29,801,273 20,301,577
Accrued interest receivable 3,636,240 3,117,400
Premises and equipment 14,927,589 13,838,677
Other assets 30,790,024 22,539,270
------------- -------------
$914,646,539 $659,670,500
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $205,473,792 $154,081,893
Interest-bearing 290,260,173 264,361,775
Certificates of deposits over $100,000 48,000,429 21,474,306
------------- -------------
543,734,394 439,917,974
Short-term borrowings - Note 6 243,125,087 93,981,072
Long-term debt - Note 7 21,836,245 24,029,410
Other liabilities 27,389,991 20,638,098
------------- -------------
Total liabilities 827,085,717 578,566,554
------------- -------------
Shareholders' equity
Preferred stock, no par value--authorized
50,000 shares; none issued 0 0
Common stock, no par value -- authorized
7,500,000 shares; issued 5,850,520
shares in 1995 and 1994; including
210,268 shares in treasury in 1995
and 220,732 in 1994. 29,965,287 29,965,287
Unrealized loss on investment securities (32,142) (279,063)
Retained earnings 63,567,800 57,080,536
------------- ------------
93,500,945 86,766,760
Less treasury stock, at cost 5,940,123 5,662,814
------------- -----------
Total shareholders' equity 87,560,822 81,103,946
------------- -------------
$914,646,539 $659,670,500
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements
XXXPAGE 2 XXX
<TABLE>
<CAPTION>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
June 30,
1995 1994
Interest income: ----------- -----------
<S> <C> <C>
Loans and Leases $ 8,545,331 $ 6,165,712
Investment securities:
Taxable 1,176,964 1,148,820
Tax-exempt 114,818 122,363
Loans held for sale 3,906,066 4,273,447
Federal funds sold 549,651 404,320
----------- -----------
Total interest income 14,292,830 12,114,662
----------- -----------
Interest expense:
Deposits 3,667,352 2,147,303
Short-term borrowings 1,881,741 1,499,743
Long-term debt 377,081 320,245
----------- -----------
Total interest expense 5,926,174 3,967,291
----------- -----------
Net interest income 8,366,656 8,147,371
Provision for possible loan and
lease losses 580,000 235,000
----------- -----------
Net interest income after provision for
possible loan and lease losses 7,786,656 7,912,371
----------- -----------
Other income:
Mortgage loan and servicing right
income - Note 1 12,870,862 8,057,112
Mortgage loan servicing fees 8,617,483 7,863,978
Gain on sale of mortgage servicing 898,150 4,403,247
Brokerage fees and commissions 873,395 455,105
Trust and advisory fees 563,816 526,354
Service charges on deposit accounts 336,290 321,554
Insurance commissions, fees and premiums 299,141 275,416
Investment security gains 0 0
Other 736,228 543,077
----------- -----------
25,195,365 22,445,843
----------- -----------
Other expense:
Salaries 14,419,873 12,645,100
Pension and other employee benefits 2,746,115 2,384,284
Office expense 1,092,235 1,151,115
Occupancy 2,254,769 1,156,493
Equipment, maintenance, & repair 1,144,961 1,092,663
Amortization of purchased mortgage
loan servicing 847,261 659,131
Communications 646,406 450,098
Travel & business development 758,844 656,724
Other 3,339,112 3,302,432
----------- -----------
27,249,576 23,498,040
----------- -----------
Income before income taxes 5,732,445 6,860,174
Federal income taxes 1,134,000 2,149,000
State income taxes 346,000 540,000
----------- -----------
Net income $ 4,252,445 $ 4,171,174
=========== ===========
Net income per share of Common
Stock -Note 1 $ 0.74 $ 0.70
=========== ===========
Dividends per share of Common Stock $ 0.11 $ 0.09
=========== ===========
Average shares of Common Stock outstanding 5,726,929 5,933,498
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements
XXX PAGE 3 XXX
<TABLE>
<CAPTION>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME Six Months Ended
June 30,
1995 1994
Interest income: ----------- -----------
<S> <C> <C>
Loans and Leases $15,985,221 $11,913,680
Investment securities:
Taxable 2,401,630 2,362,792
Tax-exempt 227,952 243,760
Loans held for sale 6,650,447 9,062,849
Federal funds sold 1,166,433 742,937
----------- -----------
Total interest income 26,431,683 24,326,018
----------- -----------
Interest expense:
Deposits 6,619,070 4,177,745
Short-term borrowings 3,236,380 3,820,547
Long-term debt 772,859 572,677
----------- -----------
Total interest expense 10,628,309 8,570,969
----------- -----------
Net interest income 15,803,374 15,755,049
Provision for possible loan and
lease losses 1,230,000 560,000
----------- -----------
Net interest income after provision
for possible loan and lease losses 14,573,374 15,195,049
----------- -----------
Other income:
Mortgage loan and servicing right
income - Note 1 17,002,277 16,784,558
Mortgage loan servicing fees 17,382,987 15,463,933
Gain on sale of mortgage servicing 10,173,694 8,505,730
Brokerage fees and commissions 1,535,156 1,009,376
Trust and advisory fees 1,139,090 1,103,026
Service charges on deposit accounts 566,365 640,740
Insurance commissions, fees and premiums 614,570 540,971
Investment security gains 0 9,374
Other 1,776,754 970,373
----------- -----------
50,190,893 45,028,081
----------- -----------
Other expense:
Salaries 26,710,565 25,128,852
Pension and other employee benefits 5,354,908 4,600,937
Office expense 2,868,501 2,321,339
Occupancy 3,465,160 2,213,367
Equipment, maintenance, & repair 2,504,861 2,114,516
Amortization of purchased mortgage
loan servicing 1,540,268 1,575,770
Communications 1,181,063 893,424
Travel & business development 1,361,451 1,223,035
Other 6,080,170 6,306,322
----------- -----------
51,066,947 46,377,562
----------- -----------
Income before income taxes 13,697,320 13,845,568
Federal income taxes 3,840,000 4,365,000
State income taxes 1,111,000 1,120,000
----------- -----------
Net income $ 8,746,320 $ 8,360,568
=========== ===========
Net income per share of Common
Stock -Note 1 $ 1.53 $ 1.41
=========== ===========
Dividends per share of Common Stock $ 0.22 $ 0.18
=========== ===========
Average shares of Common Stock outstanding 5,717,533 5,933,872
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements
XXXPAGE 4 XXX
<TABLE>
<CAPTION>
IRWIN FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended
June 30, 1995 June 30, 1994
------------ -------------
<S> <C> <C>
Net income $ 8,746,320 $ 8,360,568
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 3,421,924 2,910,242
Provision for possible loan and
lease losses 1,230,000 560,000
Amortization of premiums, less accretion
of discounts:
Held-to-maturity (140,131) (132,645)
Available-for-sale 51,107 (226,500)
Mortgage loan originations (1,308,209,298) (1,730,614,940)
Sales of mortgage loan 1,120,267,520 1,830,610,576
Gain on sale of mortgage servicing (10,173,694) (8,505,730)
Other, net (2,253,215) (9,438,812)
------------ -------------
Net cash provided (used) by operating
activities (187,059,467) 93,522,759
Lending and investing activities:
Proceeds from maturities/calls of
investment securities:
Held-to-maturity 39,932,071 16,128,067
Available-for-sale 7,013,979 40,068,710
Proceeds from sales of investment securities:
Available-for-sale 0 2,029,289
Purchase of investment securities:
Held-to maturity (28,000,378) (32,080,394)
Available-for-sale (5,378,924) (8,585,405)
Net decrease in interest-bearing
deposits with financial institutions 2,231,718 21,732,665
Net increase in loans (64,077,380) (20,052,438)
Net additions to premises and equipment (2,488,133) (2,130,506)
Additions to capitalized mortgage
servicing (16,657,777) (11,525,515)
Proceeds from sale of mortgage servicing 15,791,507 15,849,299
------------- ------------
Net cash provided (used) by lending and
investing activities (51,633,317) 21,433,772
Financing activities:
Net increase (decrease) in deposits 103,816,420 (33,328,623)
Net increase (decrease) in short-term
borrowings 140,144,015 (103,129,886)
Proceeds (repayment) of long-term debt (2,193,165) 2,619,090
Purchase of treasury stock (2,034,598) (975,600)
Proceeds from sale of stock 736,529 929,164
Dividends paid (1,238,296) (1,050,648)
------------ ------------
Net cash provided (used) by financing
activities 239,230,905 (134,936,503)
------------ ------------
Net increase in cash and cash equivalents 538,121 (19,979,972)
Cash and cash equivalents at beginning
of year 50,840,452 76,110,552
------------ ------------
Cash and cash equivalents at end of year $51,378,573 $56,130,580
=========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $10,141,054 $8,443,907
=========== ============
Income taxes $ 3,829,990 $ 6,007,881
=========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements
XXX PAGE 5 XXX
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION:
Irwin Financial Corporation and its subsidiaries, principally Inland
Mortgage Corporation, Irwin Union Bank and Trust Company, Irwin
Union Investor Services, Inc., Affiliated Capital Corp., and Irwin
Home Equity Corporation provide financial services to the domestic
market. Significant accounting policies followed by Irwin Financial
Corporation and its subsidiaries are consistent with those followed
for annual financial reporting. The information herein furnished
reflects all adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of interim periods.
INCOME PER SHARE:
Income per share computations are based on the weighted average
number of shares outstanding during the quarter.
MORTGAGE BANKING:
On May 12, 1995, The Financial Accounting Standards Board issued SFAS
No. 122, "Accounting for Mortgage Servicing Rights", an amendment to
SFAS No. 65. The Corporation has elected to adopt this standard for
its financial statement reporting for the second quarter of 1995.
SFAS No. 122 prohibits retroactive application to 1994. Accordingly,
the Corporation's 1994 and first quarter 1995 mortgage banking
activities reported in the financial statements were accounted for
under the original SFAS No. 65.
SFAS No. 122 requires that a portion of the cost of originating a
mortgage loan be allocated to the mortgage servicing right based on
its fair value relative to the loan as a whole. To determine the
fair value of the servicing rights created during the second quarter
of 1995, the Corporation used the market prices under comparable
servicing sale contracts, when available, or alternatively used a
valuation model that calculates the present value of future cash
flows to determine the fair value of the servicing rights. In using
this valuation method, the Corporation incorporated assumptions that
it is believed market participants would use in estimating future
net servicing income which included estimates of the cost of
servicing per loan, the discount rate, float value, an inflation
rate, ancillary income per loan, prepayment speeds and default
rates.
XXX PAGE 6 XXX
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In determining servicing value impairment at the end of the quarter,
the post-implementation servicing portfolio was disaggregated into
its predominant risk characteristics. The Corporation has
determined those risk characteristics to be loan type and investor
type. These segments of the portfolio were then valued, using
market prices under comparable servicing sale contracts, when
available, or alternatively, using the same model as was used to
originally determine the fair value at origination, using current
assumptions. The calculated value was then compared with the book
value of each segment to determine if a reserve for impairment was
required.
The effect of the change in accounting standards to second quarter
1995 results was an increase to net income of $3,500,000 over what
would have been earned under SFAS No. 65.
RECLASSIFICATIONS:
Certain amounts in the 1994 consolidated financial statements have
been reclassified to conform to the 1995 presentation.
NOTE 2 - INVESTMENT SECURITIES
The carrying amounts of investment securities, including net
unrealized losses on available-for-sale securities of $53,569 at
June 30, 1995 and $465,103 at December 31, 1994, are summarized as
follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
Held-to-Maturity
U.S. Treasury and Government obligations $34,291,371 $41,826,087
Obligations of states and political
subdividions 7,186,376 7,548,613
Mortgage-backed securities 7,087,559 9,982,166
Corporate obligations 0 1,000,000
----------- ------------
Total Held-to-Maturity 48,565,306 60,356,866
----------- ------------
Available-for-Sale
U.S. Treasury and Government obligations 15,313,545 13,833,515
Mortgage-backed securities 0 3,166,194
----------- -----------
Total Available-for-Sale 15,313,545 16,999,709
----------- -----------
Total Investments $63,878,851 $77,356,575
=========== ===========
</TABLE>
Securities which the Corporation has the positive intent and ability
to hold until maturity are classified as "held-to-maturity" and are
stated at cost adjusted for amortization of premium and accretion of
discount. Securities that might be sold prior to maturity are
classified as "available-for-sale" and are stated at fair value.
Unrealized gains and losses, net of the future tax impact, are
reported as a separate component of shareholders' equity until
realized.
XXX PAGE 7 XXX
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - MORTGAGE LOANS HELD FOR SALE
Mortgage loans held for sale are stated at the lower of cost or
market as of the balance sheet date.
NOTE 4 - LOANS AND LEASES
Loans and leases are summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ -------------
<S> <C> <C>
Commercial, financial and agricultural $170,408,517 $136,082,836
Real estate-construction 31,766,523 21,960,246
Real estate-mortgage 55,766,238 47,422,827
Consumer 64,526,470 55,322,568
Direct finance leases 59,374,849 58,348,603
Unearned income (10,458,662) 10,725,998)
------------- -------------
$371,383,935 $308,411,082
============ ============
</TABLE>
NOTE 5 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES
Changes in the allowance for possible loan and lease losses are
summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- -----------
<S> <C> <C>
Balance at beginning of year $3,863,223 $3,293,402
Provision for possible loan and lease losses 1,230,000 1,727,000
Recoveries 158,785 408,821
Charge-offs (1,263,312) (1,566,000)
---------- -----------
Balance at end of period $3,988,696 $3,863,223
========== ==========
</TABLE>
XXX PAGE 8 XXX
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - SHORT-TERM BORROWINGS
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
Repurchase agreements and drafts payable
related to mortgage loan closings $193,403,803 $75,943,986
Commercial Paper 17,330,983 15,538,086
Federal funds 20,100,000 199,000
Other 3,290,301 2,300,000
----------- -----------
$234,125,087 $93,981,072
=========== ===========
</TABLE>
Repurchase agreements at June 30, 1995 and December 31, 1994 include
$119,437,217 and $47,476,177, respectively, in mortgage loans sold
under agreements to repurchase which are used to fund mortgage loans
prior to sale in the secondary market. These repurchase agreements
are collateralized by mortgage loans held for sale.
Drafts payable related to mortgage loan closings totaled $64,113,521
and $23,422,309 at June 30, 1995 and December 31, 1994,
respectively. These borrowings are related to mortgage closings at
the end of the period which have not been presented to the banks for
payment. When presented for payment these borrowings will be funded
internally or by borrowing from lines of credit.
The Corporation has lines of credit available to fund mortgage loans
held for sale. Interest is payable monthly at variable rates ranging
from 6.38% to the lenders' prime rate.
NOTE 7 -- LONG-TERM DEBT
Long-term debt at June 30, 1995 of $21,836,245 consists of various
notes payable at annual interest rates ranging from 6.0% to 9.6% and
maturity dates ranging from August 5, 1996 through August 30, 2000.
Long-term debt as of December 31, 1994 was $24,029,410 and consisted
of various notes payable at annual interest rates ranging from 6.0%
to 9.6% and maturity dates ranging from August 5,1996 to March 30,
2000.
XXX PAGE 9 XXX
PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net income for the second quarter ended June 30, 1995, was
$4,252,445, up 1.9% from the second quarter 1994 net income of
$4,171,174. Net income per share was $0.74 for the second quarter of
1995 as compared to $0.70 for the same period in 1994. Return on
equity for the second quarter of 1995 was 19.69%, down from 21.80% in
1994.
For the year to date, the Corporation recorded net income of
$8,746,320, up 4.6% from 1994. Net income per share was $1.53, up
from $1.41 a year earlier. Return on equity for the year to date was
21.01% as compared to 22.76% for the same period in 1994.
LINES OF BUSINESS
Irwin Financial Corporation has seven subsidiaries, of which five
constitute the principal lines of business of the Corporation:
-Mortgage banking (includes Inland Mortgage Corporation and the
related activities of Irwin Union Bank and Trust)
-Community banking (Irwin Union Bank and Trust)
-Investor services (includes Irwin Union Investor Services and the
trust activities of Irwin Union Bank and Trust)
-Equipment leasing (includes Affiliated Capital Corp. and the related
activities of Irwin Union Bank and Trust)
-Home equity lending (includes Irwin Home Equity and the related
activities of Irwin Union Bank and Trust)
In addition, the Corporation has two other less active lines of
business:
-Credit insurance (Irwin Union Credit Insurance Corporation)
-Venture capital (White River Capital Corporation)
In an effort to report more effectively on the Corporation's
operations, the results of the activities of Irwin Union Bank which
provide funding and invest in assets generated by other Irwin
Financial companies have been included with the results of the other
asset-generating companies. Results for 1994 have been restated to
conform to the 1995 presentation.
XXX PAGE 10 XXX
Listed below are the earnings by line of business for the quarter
and year to date, as compared to the similar periods in 1994:
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1995 1994
---------- ----------
<S> <C> <C>
Mortgage banking $3,920,282 $3,447,114
Community banking 731,155 751,051
Investor services 110,443 (22,670)
Equipment leasing (33,389) 347,092
Home equity lending (1,529,039) 0
Credit insurance (415) 11,685
Venture capital 0 0
Parent (including consolidating
entries) 1,053,408 (327,098)
---------- ----------
$4,252,445 $4,171,174
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1995 1994
---------- ----------
<S> <C> <C>
Mortgage banking $8,567,379 $7,073,675
Community banking 1,552,924 1,292,733
Investor services 244,472 (48,497)
Equipment leasing (151,844) 552,683
Home equity lending (2,521,619) 0
Credit insurance 2,939 26,599
Venture capital 0 0
Parent (including consolidating
entries) 1,052,069 (536,625)
---------- ----------
$8,746,320 $8,360,568
========== ==========
</TABLE>
MORTGAGE BANKING
Selected Financial Data (shown in thousands):
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1995 1994
------- -------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $ 3,217 $ 3,332
Mortgage loan origination and
servicing righ income 12,825 7,974
Loan servicing fees 8,618 7,864
Gain on sale of servicing 898 4,403
Other income 120 137
Operating expense (19,040) (17,878)
-------- --------
Income before tax 6,638 5,832
Income tax (2,718) (2,385)
-------- --------
Net income $ 3,920 $ 3,447
======== ========
Mortgage loan originations $831,332 $871,901
======== ========
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1995 1994
------- -------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $ 5,734 $ 6,456
Mortgage loan origination and
servicing right income 16,916 16,633
Loan servicing fees 17,383 15,464
Gain on sale of servicing 10,174 8,506
Other income 350 289
Operating expense (36,065) (35,381)
---------- -----------
Income before tax 14,492 11,967
Income tax (5,925) (4.893)
----------- -----------
Net income $ 8,567 $ 7,074
========== ===========
Mortgage loan originations $1,308,209 $1,730,615
========== ===========
</TABLE>
XXX PAGE 11 XXX
<TABLE>
<CAPTION>
SELECTED OPERATING DATA: June 30, December 31,
1995 1994
---------- -----------
<S> <C> <C>
Servicing portfolio $9,123,694 $8,818,502
Mortgage loans held for sale 278,793 67,373
Net capitalized servicing 29,801 20,302
</TABLE>
Net income for the second quarter was $3,920,282, up 13.7% from the
same period in 1994. Year to date, net income is $8,567,379, compared
to $7,073,675 in 1994.
The Generally Accepted Accounting Principle (GAAP) which covers
accounting for mortgage servicing rights -- Statement of Financial
Accounting Standards No. 65 (SFAS 65) -- was amended by the Financial
Accounting Standards Board during the second quarter of 1995. The new
standard, SFAS 122, has been adopted by the Corporation for results
beginning April 1, 1995.
SFAS 65 treated Originated Mortgage Servicing Rights (OMSRs)
created through the Corporation's retail network differently from
Purchased Mortgage Servicing Rights (PMSRs) originated through the
Corporation's wholesale network. Under SFAS 65, expenses arising from
OMSRs were recognized immediately, whereas certain costs relating to
PMSRs were capitalized and then amortized as the revenue from the
servicing rights was recognized. SFAS 122 eliminates the distinction
between OMSRs and PMSRs. SFAS 122 requires the recognition of all
Mortgage Servicing Rights (MSRs) originated or purchased by the
Corporation as assets based on their fair market value at the time of
their origination. The MSR asset will be amortized over the life of
the servicing right.
SFAS 122 prohibits the restatement of results for prior periods
to reflect the new accounting. Accordingly, the Corporation's 1994
mortgage banking activities reported in the financial statements were
accounted for under the original FAS 65. A summary of the impact of
the change in the accounting standards to mortgage banking net income
in the second quarter of 1995 is as follows (in thousands):
<TABLE>
<S> <C>
Increase in gain from sales of loans $6,229
Increase in amortization of mortgage
servicing rights (140)
Increase in provision for impairment of
mortgage servicing rights (210)
Increase in income tax expense (2,352)
-------
Increase to net income $3,527
=======
</TABLE>
Mortgage loan originations of $831.3 million (including $53.7
million of brokered loans) were 4.7% below the second quarter of 1994.
For the year, originations totaled $1.3 billion, down 24.4% from 1994.
Refinances accounted for 5.6% of loan production in the second quarter
of 1995 and 4.8% year to date. This compares to 11.4% and 22.8%,
respectively, in 1994. Mortgage loan and servicing right origination
income, excluding the effect of SFAS 122, was down 14.7% in the
XXXX PAGE 12 XXXX
second quarter to $6.8 million, and year to date was down 34.5% to
$10.9 million. However, mortgage loan applications in process totaled
$1.0 billion at June 30, 1995, compared to $723.3 million a year
earlier.
Mortgage servicing fees increased 9.6% in the first quarter and
12.4% year to date to $8.6 million and $17.4 million, respectively.
The increase is reflective of growth in the servicing portfolio which
totaled $9.1 billion at June 30, 1994, up 10.0% from a year earlier
and 3.6% from December 31, 1994. Capitalized on-balance sheet
mortgage servicing rights totaled $29.8 million at June 30, 1995, up
46.8% from December 31, 1994, reflecting in large part the adoption of
SFAS 122 during the second quarter of 1995.
Revenues from the sale of mortgage servicing were down 79.6%
from the second quarter of 1994 to $898.1 thousand. Year to date
servicing sale revenues totaled $10.2 million, up 19.6% from $8.5
million in 1994.
As a result of the decrease in mortgage loan closings from
1994, net interest income was down in the second quarter and year to
date. Net interest income for the three months ended June 30, 1995
was $3.2 million, down 3.4% from the second quarter 1994. Year to
date, net interest income totaled $5.7 million, compared to $6.5
million in 1994.
Operating expenses were up $1.2 million, or 6.5% from the second
quarter of 1994 and $0.7 million or 1.9% year to date. The increase
is related to Inland Mortgage's expansion of its production system.
Inland opened new offices in Washington, Texas, Oklahoma, New Jersey,
Louisiana, Nevada and California, in addition to adding the offices
acquired from All Pacific Mortgage Company in January, 1995.
XXX PAGE 13 XXX
COMMUNITY BANKING
Selected Financial Data (shown in thousands):
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1995 1994
-------- --------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $4,309 $3,718
Provision for loan and lease losses (400) (194)
Other income 939 784
Operating expense (3,779) (3,280)
------- -------
Income before tax 1,069 1,028
Income tax (338) (313)
------- -------
Net income $ 731 $ 715
======= =======
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1995 1994
-------- --------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $8,480 $7,073
Provision for loan and lease losses (833) (427)
Other income 1,755 1,594
Operating expense (7.069) (6,326)
------- -------
Income before tax 2,333 1,914
Income tax (780) (621)
------- -------
Net income $1,553 $1,293
======= =======
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
Selected Balance Sheet Data: 1995 1994
--------- ---------
<S> <C> <C>
Cash and investments $125,261 $104,676
Loans and leases 264,222 255,719
Allowance for loan and lease
losses (3,285) (3,417)
All other assets 13,537 13,046
--------- ---------
Total assets $419,735 $370,024
========= =========
Interest-bearing deposits $301,089 $274,319
Noninterest-bearing deposits 68,623 66,283
All other liabilities 22,923 3,738
--------- --------
Total liabilities $392,635 $344,340
========= ========
Shareholder's equity $ 27,100 $ 25,684
========= ========
</TABLE>
Community banking activities are conducted by Irwin Union Bank
through locations in five counties in south-central Indiana. Net
income was up modestly in the second quarter to $731.2 thousand from
$715.1 thousand. Year to date, net income improved $260.2 thousand
from 1994, or 20.1%. The provision for loan and lease losses
increased 106.2% to $400.0 thousand in the second quarter compared
with a provision of $194.0 thousand a year earlier. Year to date, the
provision for loan and lease losses totaled $833.0 thousand, compared
to $427.0 thousand in 1994. This increased provision reflects growth
in the loan and lease portfolios which have increased 23.7% year-over-
year and net charge-offs of $425.9 thousand during the second quarter
of 1995.
XXX PAGE 14 XXX
Following is an analysis of net interest income and net interest
margin computed on a tax equivalent basis:
<TABLE>
<CAPTION>
For the Three Months ended June 30,
1995 1994
------------------------------------------------------------------------------
(In thousands) Average Interest Yield/Rate Average Interest Yield/Rate
Balance Balance
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest -
earning assets $367,160 $ 7,983 8.72% $312,546 $5,788 7.43%
Interest -
bearing liabilitie $309,442 $ 3,614 4.68% $258,632 $ 2,093 3.24%
-------- --------
Net interest income - $ 4,369 - - $3,695 -
Net interest margin - - 4.77% - 4.75%
</TABLE>
<TABLE>
<CAPTION>
For the Six Months ended June 30,
1995 1994
--------------------------- ----------------------------
(In thousands) Average Interest Yield/Rate Average Interest Yield/Rate
Balance Balance
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest -
earning assets $358,442 $15,304 8.61% $308,270 $11,095 7.26%
Interest -
bearing liabilities $303,037 $ 6,578 4.38% $257,487 $ 4,053 3.17%
-------- --------
Net interest income - $ 8,726 - - $7,042 -
Net interest margin - - 4.91% - - 4.61%
</TABLE>
Other income in the second quarter was up 19.8% to $939.2
thousand from $783.8 thousand in 1994. For the year to date, other
income increased 10.1% to $1.8 million. Other expenses increased
15.2% or $499.3 thousand from the second quarter of 1994 to $3.8
million. For the year, these expenses were up $743.2 thousand to $7.1
million. The increase was due to a combination of increased salaries
and benefits associated with expanded operations and a change in the
management and reporting of retail securities brokerage activities.
Since January 1, 1995, retail securities brokerage activities have
been managed by and reported as a part of the community bank instead
of investor services to align more effectively the management of this
business unit with its primary geographic unit.
INVESTOR SERVICES
Earnings for investor services were $110.0 thousand in the
second quarter of 1995 compared to a net loss of $22.7 thousand in the
same period a year earlier. For the year, earnings have totaled
$244.5 thousand, up from a $48.5 thousand loss in 1994.
XXX PAGE 15 XXX
The improvement was largely the result of an increase in CD
placement fees over 1994, during which time placements were negatively
affected by a sharp rise in short-term interest rates. CD placement
fees totaled $659.4 thousand in the second quarter of 1995, compared
to $253.6 thousand in 1994. For the year, they are up 111.3% to $1.2
million.
Trust revenues increased 2.5% and 1.2% in the second quarter and
year to date, respectively. Trust revenues totaled $588.3 thousand
in the second quarter and $1.2 million year to date. The increase is
consistent with the increase in trust client assets which totaled
$317.3 million at June 30, 1995, up 5.3% from a year earlier.
Reflecting the change in retail securities brokerage management
and reporting noted above, investor services' other expenses declined
6.0% for the year to $2.3 million. However, for the quarter, they
increased $70.2 thousand to $1.2 million.
EQUIPMENT LEASING
The equipment leasing business recorded net losses for the
quarter and for the year of $33.4 thousand and $151.8 thousand,
respectively. This compares to net income of $347.1 thousand and
$552.7 thousand in the second quarter and year to date 1994,
respectively. The decline reflects lower yields due to more intense
price competition and increased funding costs. Management is
implementing a modified strategy to address the increased competition.
Net interest revenue was down 40.8% for the quarter and 42.6% for the
year. The decline was due to a parent company decision to fund
equipment leases with short-term, variable rate liabilities to offset
a consolidated positive interest rate gap for the Corporation. Management
is developing a method of internal hedging. The objective will be to
eliminate the need for the equipment leasing line of business to assume
interest rate risk. Please see the section on interest rate sensitivity
for further discussion.
Lease volume of $6.2 million in the second quarter was flat with
volume in the second quarter of 1994. Year to date, volume totaled
$12.6 million, up 1.6% from a year earlier. Other expenses were up
13.2% for the quarter to $1.0 million. For the year, they increased
9.4% to $2.0 million.
HOME EQUITY LENDING
The Corporation's home equity lending business was begun in 1994
with the incorporation of Irwin Home Equity Corporation. It has a
single production and servicing office located in San Ramon,
California. In 1995, the business began marketing home equity
variable rate lines of credit in 13 states by means of direct mail and
telemarketing.
The home equity lending business recorded pre-tax losses of $1.5
million during its second quarter of operations and $2.5 million year
to date. Total loan originations for the year were $22.6 million.
Results were in line with management's expectations for this start-up
business.
PARENT COMPANY (INCLUDING CONSOLIDATING ENTRIES)
Parent Company net income for the second quarter of 1995 was
$1,053,408 compared to a loss of $327,098 in 1994. Year to date, net
income of $1,052,069 was
XXX PAGE 16 XXX
recorded, compared to a loss of $536,625 a year earlier. The
improvement is due to the income tax credits generated at the home
equity lending business which are recorded on the parent's books,
combined with a tax benefit recorded by the parent resulting from
stock options exercised during the second quarter. The exercise of
these options resulted in a deduction for income tax purposes,
although an expense is not recorded on the books of the Corporation.
Approximately $680.0 thousand of income was recorded by the parent for
this tax benefit.
CONSOLIDATED INCOME STATEMENT ANALYSIS
Net interest income for the second quarter of 1995 totaled $8.4
million, up 2.7% from the second quarter of 1994. For the year, it
increased 0.3% to $15.8 million. The effect of increases in the
community banking and home equity loan and lease portfolios were
partially offset by a combination of a decline in mortgage loan
originations in the mortgage banking business and increased pricing
competition in the equipment leasing business.
The loan and lease loss provision was $580.0 thousand for the
second quarter of 1995, as compared to $235.0 thousand for the same
period in 1994. For the year, it totaled $1.2 million, up from $560.0
thousand a year earlier. This increase reflects the growth in the
home equity and community bank loans outstanding.
Other income was up 12.2% in the second quarter of 1995 to $25.2
million. Year to date other income increased 11.5% to $50.2 million.
This increase was driven primarily by mortgage banking activities.
Total fees from mortgage loan and servicing originations, servicing,
and the sale of servicing were $22.4 million for the second quarter,
up $2.1 million from the second quarter of 1994. For the year, they
totaled $44.6 million, an increase of $3.8 million over 1994.
Other expense also increased in 1995 as the second quarter was
up $3.8 million or 16.0% from 1994. For the year, other expense
increased $4.7 million or 10.1% Costs associated with the start-up of
the home equity lending business and the opening of new mortgage
banking offices accounted for this increase.
The effective income tax rate for the Corporation decreased
significantly in 1995 as a result of stock options exercised in the
second quarter. The tax benefit of $680.0 thousand recorded by the
Corporation lowered its effective tax rate to 25.8% in the second
quarter of 1995 from 39.2% in 1994. The year to date effective tax
rate was 36.1%, down from 39.6% a year earlier. The Corporation's
effective income tax rate in future quarters is expected to be closer
to the 1994 rate.
CONSOLIDATED BALANCE SHEET ANALYSIS
Total assets of Irwin Financial Corporation at June 30, 1995,
were $914,646,539, an increase of 38.7% from December 31, 1994 total
assets of $659,670,500. The increase was attributed to an increase in
mortgage loans held for sale of $187.9 million and an increase in the
loan and lease portfolio of $63.0 million.
XXX PAGE 17 XXX
The increase in assets was accompanied by an increase in
deposits of $103.8 million or 23.6%. A portion of noninterest bearing
deposits is associated with escrow accounts held on loans in the
servicing portfolio of Inland Mortgage. These escrow accounts totaled
$149.2 million at June 30, 1995, up from $88.8 million at December 31,
1994.
Shareholders' equity grew to $87,560,822, or $15.52 per share, a
8.0% increase over the $81,103,946, or $14.41 per share at the end of
1994. Irwin Financial's equity to assets ratio ended the quarter at
9.57%, compared to 12.29% at the end of 1994.
The mortgage loan servicing portfolio represents substantial
economic value which is not recorded on the balance sheet. The
following table demonstrates the estimated after-tax value for the
current quarter as well as the past two year ends.
<TABLE>
<CAPTION>
(In thousands) June 30,1995 Dec. 31,1994 Dec. 31, 1993
------------ ------------ -------------
<S> <C> <C> <C>
Servicing portfolio balance $9,133,694 $8,818,502 $7,922,299
---------- ---------- ----------
Value @1.5% $ 137,005 $ 132,278 $ 118,834
---------- ---------- ----------
Less: capitalized servicing 29,801 18,834 11,505
Tax liability at 40% 42,882 44,790 42,214
---------- ---------- ----------
Net value $ 64,322 $ 67,187 $ 63,321
========== ========== ==========
</TABLE>
Per share of common stock $ 11.40 $ 11.93 $ 10.90
========== ========== ==========
CREDIT RISK
The assumption of credit risk is a key source of earnings for the
community banking, home equity lending, and equipment leasing
businesses. In addition, the mortgage banking business assumes some
credit risk despite the fact that the mortgages are typically secured.
The community banking and home equity lending businesses manage
credit risk through the use of lending policies, credit analysis and
approval procedures, and personal contact with the borrowers. Loans
over a certain size are reviewed prior to approval by a Loan
Committee. The equipment leasing business manages credit risk in a
similar manner through the use of lending policies, credit analysis
procedures, and personal contact with lessees.
Management reviews various ratios as measurements of asset
quality; however, the two most significant areas are delinquent loan
and lease ratios and the adequacy of the allowance for possible loan
and lease losses.
The adequacy of the allowance for possible loan and lease losses
is critical to the fair valuation of net loans and leases recorded on
the Corporation's balance
XXX PAGE 18 XXX
sheet. Management evaluates the creditworthiness of significant
borrowers, past loan and lease loss experience, and current and
anticipated economic conditions. The allowance for possible loan and
lease losses is reduced by loans and leases which, in the opinion of
management, are deemed to be uncollectible. The allowance is
increased by provisions against income. The ending allowance at any
reporting period reflects management's opinion of the possible future
loss potential of all loans and leases currently recorded on the
Corporation's books.
As of June 30, 1995, the allowance for possible loan and lease
losses as a percentage of total loans and leases was 1.07%, compared
to 1.25% at December 31, 1994. For the three months ended June 30,
1995, the provision for possible loan and lease losses totaled $580.0
thousand, a 146.9% increase over the amount recorded in the first
quarter of 1994. Year to date, the provision totaled $1.2 million, up
from $560.0 thousand a year earlier. The higher 1995 provision was
caused by growth in the loan and lease portfolio and increased charge-
offs. Net charge-offs for the quarter were $514.7 thousand as
compared to $67.2 thousand in 1994. Year to date net charge-offs
totaled $1.1 million, up from $0.3 million a year earlier.
The Corporation's percentage of nonperforming assets (loans 90
days past due, nonaccrual, and owned real estate) to total assets
declined from levels experienced in 1994. As of June 30, 1995, this
ratio was 0.30% as compared to 0.50% at December 31, 1994. Although
this ratio has declined from 1994, the Corporation continues to
monitor the loans and property included in this total in evaluating
the status of the current reserve.
<TABLE>
<CAPTION>
Nonperforming Assets
(In Thousands) June 30, March 31, December 31, December 31,
1995 1995 1994 1993
-------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Accruing loans past due
90 days or more:
Commercial $ 263 $ 328 $ 113 $ 800
Leasing 0 0 0 0
Real Estate 0 0 0 141
Consumer 254 158 93 88
------ ------ ------ -------
Subtotal 517 486 206 1,029
------ ------ ------ -------
Nonaccrual loans:
Commercial 892 1,357 1,523 1,373
Leasing 320 437 363 242
Real Estate 613 685 689 848
Consumer 0 0 0 39
------ ------ ------ -------
Subtotal 1,825 2,479 2,575 2,502
------ ------ ------ -------
Total nonperforming
loans 2,342 2,965 2,781 3,531
------ ------ ------ -------
Other real estate
owned 382 288 489 623
------ ------ ------ -------
Total nonperforming
assets $2,724 $3,253 $3,270 $ 4,154
====== ====== ====== =======
Nonperforming assets to
total assets 0.30% 0.47% 0.50% 0.47%
======= ======= ======= ========
</TABLE>
XXX PAGE 19 XXX
LIQUIDITY
Liquidity is the availability of funds to meet the daily
requirements of the business. For financial institutions, demand for
funds comes principally from extensions of credit and withdrawal of
deposits. Liquidity is provided by asset maturities, sales of
investment securities, or short-term borrowings. Seasonal
fluctuations in deposit levels and loan demand require differing
levels of liquidity at various times during the year. Liquidity
measures are formally reviewed by management monthly, and they
continue to show adequate liquidity in all areas of the organization.
INTEREST RATE SENSITIVITY
Interest rate sensitivity refers to the potential for changes in
market rates of interest to cause changes in net interest income.
Since net interest income is the major source of income, it is
extremely important that potential changes are managed prudently. The
following table presents the consolidated interest rate sensitivity,
or gap, as of June 30, 1995.
<TABLE>
<CAPTION>
Within Three Months After
Three Months to One Year One Year
----------- ----------- ---------
(In Thousands)
Interest-earning assets:
Interest-bearing deposits
<S> <C> <C> <C>
with banks $ 3,841 $ 4,995 $ 1,096
Federal funds sold 10,000 0 0
Taxable investment securities 11,561 13,026 32,105
Tax-exempt investment securities 295 761 6,130
Mortgages held for sale 342,906 0 0
Loans, net of unearned income 136,576 36,690 155,417
-------- -------- --------
Total interest-earning assets 179,277 55,472 194,748
-------- -------- --------
Interest-bearing liabilities:
Money Market checking 17,135 0 51,404
Money Market savings 15,247 0 9,742
Regular savings 36,648 2,226 21,049
Time deposits 93,652 42,493 48,664
Short-term borrowings 233,640 485 0
Long-term debt 1,928 5,146 14,762
-------- -------- --------
Total interest-bearing
liabilities 398,250 50,350 145,621
-------- -------- --------
Interest sensitivity gap 149,630 5,122 49,127
-------- -------- --------
Cumlative interest sensitivity
gap $149,630 $154,752 $203,879
======== ======== ========
</TABLE>
XXX PAGE 20 XXX
As the above table shows, the consolidated one-year gap at June 30,
1995 was a positive $154.8 million. This compares to a positive gap
of $116.6 million at December 31, 1994. The large positive gaps at
June 30, 1995 and December 31, 1994 are related to escrow deposits
from the servicing portfolio of Inland Mortgage. These deposits are
generally held in noninterest bearing accounts at Irwin Union Bank.
However, they are invested in earning assets with the rate maturities
of less than one year, including mortgage loans held for sale.
Since the gap was positive at June 30, 1995, it means that the
Corporation was positioned to benefit from rising rates, or to be
harmed by declining rates. However, if rates do decline, we would
expect the resulting declines in net interest revenue to be offset by
increased mortgage loan production revenue. This has been our
experience in previous years. Management is monitoring this exposure
and will hedge the risk if the outlook for interest rates and mortgage
activity changes so as to exacerbate the exposure.
In addition, the static one-year gap is not a reliable measure of
actual changes in market interest rates. Consequently, management
uses simulations of the behavior of net interest revenue to determine
exposure and to develop hedging strategies.
CAPITAL ADEQUACY
Capital is a major focus of regulatory attention, with the risk-
based capital standard being the principal capital adequacy measure.
Based on this standard, financial institutions are currently required
to have a risk-based capital ratio of at least 8.0%. In addition to
the minimum requirements for the risk-based capital ratio, Tier I
capital of at least 4.0% of total assets must be maintained. Equity
and risk-based capital ratios for the Corporation are as follows:
<TABLE>
<CAPTION>
June 30, December 31, December31,
1995 1994 1993
----- ----------- -----------
<S> <C> <C> <C>
Equity to Assets 9.57% 12.29% 7.95%
Risk-Based Capital Ratio 14.49% 19.18% 15.68%
Tier I Capital Ratio 13.81% 18.31% 14.97%
</TABLE>
The Corporation's capital ratios are adequate and above regulatory
minimums.
XXX PAGE 21 XXX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
IRWIN FINANCIAL CORPORATION
By: s/Thomas D. Washburn
________________________
Thomas D. Washburn
Chief Financial Officer
By: s/Marie C. Strack
_________________________
Marie C. Strack
Corporate Controller
(Chief Accounting Officer)
XXX PAGE 22 XXX
PART II
Item 6
(a) Exhibits to Form 10-Q
Number Assigned Sequential Numbering
In Regulation S-K System Page Number
Item 601 Description of Exhibit
(2) No Exhibit
(4) No Exhibit
(11) Computation of
Earnings per Share
(15) No Exhibit
(18) No Exhibit
(19) No Exhibit
(20) No Exhibit
(23) No Exhibit
(24) No Exhibit
(25) No Exhibit
(28) No Exhibit
(b) Reports on Form 8-K
None
Exhibit 11
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
----- ----- ----- -----
PRIMARY
<S> <C> <C> <C> <C>
Average number of shares
outstanding 5,626,769 5,831,359 5,622,751 5,829,190
Assumed exercise of stock
options 100,160 102,139 94,782 104,682
-------- --------- -------- --------
Total shares 5,726,929 5,933,498 5,717,533 5,933,872
========= ========= ========= =========
Net income $4,252,445 $4,171,174 $8,746,320 $8,360,568
========== ========== ========== ==========
Net income per share $0.74 $0.70 $1.53 $1.41
===== ===== ===== =====
FULLY DILUTED
Average number of share
outstanding 5,626,769 5,831,359 5,622,751 5,829,190
Assumed exercise of stock
options (Note 1) 110,176 102,139 104,626 104,682
------- ------- ------- -------
Total shares 5,736,945 5,933,498 5,727,377 5,933,872
========= ========= ========= =========
Net income $4,252,445 $4,171,174 $8,746,320 $8,360,568
========== =========== ========== ==========
Net income per share $0.74 $0.70 $1.53 $1.41
===== ===== ===== =====
</TABLE>
(1) The dilutive effect of stock options is based on the treasury
stock method using the higher of the average market price for the
period or the period-end market price.
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000052617
<NAME> IRWIN FINANCIAL CORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 37,249
<INT-BEARING-DEPOSITS> 9,932
<FED-FUNDS-SOLD> 10,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,314
<INVESTMENTS-CARRYING> 48,565
<INVESTMENTS-MARKET> 49,362
<LOANS> 371,384
<ALLOWANCE> 3,989
<TOTAL-ASSETS> 914,647
<DEPOSITS> 543,734
<SHORT-TERM> 234,125
<LIABILITIES-OTHER> 27,390
<LONG-TERM> 21,836
<COMMON> 29,965
0
0
<OTHER-SE> 57,596
<TOTAL-LIABILITIES-AND-EQUITY> 914,647
<INTEREST-LOAN> 15,985
<INTEREST-INVEST> 2,630
<INTEREST-OTHER> 7,817
<INTEREST-TOTAL> 26,432
<INTEREST-DEPOSIT> 6,619
<INTEREST-EXPENSE> 10,628
<INTEREST-INCOME-NET> 15,804
<LOAN-LOSSES> 1,230
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 51,067
<INCOME-PRETAX> 13,697
<INCOME-PRE-EXTRAORDINARY> 13,697
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,746
<EPS-PRIMARY> 1.53<F1>
<EPS-DILUTED> 0
<YIELD-ACTUAL> .05<F1>
<LOANS-NON> 1,825
<LOANS-PAST> 517
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,863
<CHARGE-OFFS> 1,263
<RECOVERIES> 159
<ALLOWANCE-CLOSE> 3,989
<ALLOWANCE-DOMESTIC> 2,909
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,080
<FN>
<F1>Information not in 1,000
</FN>
</TABLE>
