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 September 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 October 31, 1995, there were outstanding 5,622,693 common
shares, no par value, of the Registrant.
XXX PAGE 2 XXX
Part I. Financial Information
Item I. Financial Statements
<TABLE>
<CAPTION>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET September 30, December 31,
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 41,726,593 $36,840,452
Federal funds sold 10,000,000 14,000,000
------------ ------------
Cash and cash equivalents 51,726,593 50,840,452
Interest-bearing deposits with financial
institutions 6,801,597 12,164,206
Investment securities (Market value:
$64,678,817 in 1995 and $76,387,652
in 1994) - Note 2 63,822,337 77,356,575
Mortgage loans held for sale - Note 3 352,941,002 154,964,484
Loans and leases, net of unearned income -
Note 4 413,593,896 308,411,082
Less: Allowance for possible loan and
lease losses - Note 5 (4,463,373) (3,863,223)
------------- -------------
409,130,523 304,547,859
Capitalized servicing, net of
amortization 40,544,293 20,301,577
Accrued interest receivable 4,233,485 3,117,400
Premises and equipment 15,339,662 13,838,677
Other assets 34,407,783 22,539,270
------------- -------------
$978,947,275 $659,670,500
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $201,838,537 $154,081,893
Interest-bearing 286,174,558 264,361,775
Certificates of deposits over
$100,000 63,631,768 21,474,306
------------- -------------
551,644,863 439,917,974
Short-term borrowings - Note 6 277,056,707 93,981,072
Long-term debt - Note 7 21,524,821 24,029,410
Other liabilities 35,189,967 20,638,098
------------- -------------
Total liabilities 885,416,358 578,566,554
------------- -------------
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
194,249 and 220,732 shares in treasury
in 1995 and 1994, respectively 29,965,287 29,965,287
Unrealized loss on investment
securities (16,206) (279,063)
Retained earnings 69,115,477 57,080,536
------------- -------------
99,064,558 86,766,760
Less treasury stock, at cost 5,533,641 5,662,814
------------- -------------
Total shareholders' equity 93,530,917 81,103,946
------------- -------------
$978,947,275 $659,670,500
============= =============
</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 Three Months Ended
September 30,
1995 1994
Interest income: ----------- -----------
<S> <C> <C>
Loans and Leases $ 9,747,565 $ 6,355,810
Investment securities:
Taxable 1,085,147 1,363,875
Tax-exempt 105,914 120,686
Loans held for sale 6,244,510 4,258,184
Federal funds sold 366,232 529,888
----------- -----------
Total interest income 17,549,368 12,628,443
----------- -----------
Interest expense:
Deposits 3,798,619 2,336,987
Short-term borrowings 3,850,165 1,842,114
Long-term debt 371,555 346,077
----------- -----------
Total interest expense 8,020,339 4,525,178
----------- -----------
Net interest income 9,529,029 8,103,265
Provision for possible loan and lease
losses-Note 5 910,000 368,000
----------- -----------
Net interest income after provision for
possible loan and lease losses 8,619,029 7,735,265
----------- -----------
Other income:
Mortgage loan and servicing right
income - Note 1 17,525,833 6,204,166
Mortgage loan servicing fees 8,571,811 8,546,506
Gain on sale of mortgage servicing 2,798,847 3,893,555
Brokerage fees and commissions 525,579 450,031
Trust and advisory fees 608,339 520,522
Service charges on deposit accounts 337,098 313,057
Insurance commissions, fees and
premiums 282,783 268,650
Investment security gains 0 0
Other 652,256 733,680
----------- -----------
31,302,546 20,930,167
----------- -----------
Other expense:
Salaries 16,684,527 11,777,980
Pension and other employee benefits 2,528,584 2,167,582
Office expense 1,810,669 913,699
Occupancy 1,953,868 1,230,349
Equipment, maintenance, & repair 1,245,346 1,048,574
Amortization of capitalized mortgage
loan servicing 1,295,000 380,000
Communications 705,148 425,415
Travel & business development 666,664 501,281
Other 3,694,686 2,800,538
----------- -----------
30,584,492 21,245,418
----------- -----------
Income before income taxes 9,337,083 7,420,014
Federal income taxes 2,631,000 2,297,000
State income taxes 667,000 645,000
----------- -----------
Net income $ 6,039,083 $ 4,478,014
=========== ===========
Net income per share of common stock -
Note 1 $ 1.05 $ 0.76
=========== ===========
Dividends per share of common stock $ 0.11 $ 0.09
=========== ===========
Weighted average shares of common stock
outstanding 5,759,401 5,877,061
=========== ===========
</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 (con't) Nine Months Ended
September 30,
1995 1994
Interest income: ----------- -----------
<S> <C> <C>
Loans and Leases $25,732,636 $18,269,490
Investment securities:
Taxable 3,486,777 3,726,667
Tax-exempt 333,866 364,446
Loans held for sale 12,894,957 13,321,033
Federal funds sold 1,532,665 1,272,825
----------- -----------
Total interest income 43,890,901 36,954,461
----------- -----------
Interest expense:
Deposits 10,417,539 6,514,732
Short-term borrowings 7,086,545 5,662,661
Long-term debt 1,144,414 918,754
----------- -----------
Total interest expense 18,648,498 13,096,147
----------- -----------
Net interest income 25,332,403 23,858,314
Provision for possible loan and lease
losses-Note 5 2,140,000 928,000
----------- -----------
Net interest income after provision for
possible loan and lease losses 23,192,403 22,930,314
----------- -----------
Other income:
Mortgage loan and servicing right income
- Note 1 34,738,351 22,988,724
Mortgage loan servicing fees 25,884,557 24,010,439
Gain on sale of mortgage servicing 12,972,541 12,399,285
Brokerage fees and commissions 2,060,735 1,459,407
Trust and advisory fees 1,747,429 1,623,548
Service charges on deposit accounts 903,463 953,797
Insurance commissions, fees and
premiums 897,353 809,621
Investment security gains 0 9,374
Other 2,429,010 1,704,053
----------- -----------
81,633,439 65,958,248
----------- -----------
Other expense:
Salaries 43,395,092 36,906,832
Pension and other employee benefits 7,883,492 6,768,519
Office expense 4,679,170 3,235,038
Occupancy 5,420,011 3,443,716
Equipment, maintenance, & repair 3,749,224 3,163,090
Amortization of purchased mortgage loan
servicing 2,525,000 1,720,000
Communications 1,886,211 1,318,839
Travel & business development 2,028,115 1,724,316
Other 10,225,124 9,342,630
----------- -----------
81,791,439 67,622,980
----------- -----------
Income before income taxes 23,034,403 21,265,582
Federal income taxes 6,471,000 6,662,000
State income taxes 1,778,000 1,765,000
----------- -----------
Net income $14,785,403 $12,838,582
=========== ===========
Net income per share of common stock
-Note 1 $ 2.58 $ 2.17
=========== ===========
Dividends per share of common stock $ 0.33 $ 0.27
=========== ===========
Weighted average shares of common stock
outstanding 5,731,984 5,913,662
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements
XXX PAGE 4 XXX
<TABLE>
<CAPTION>
IRWIN FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended
September 30, September 30,
1995 1994
------------ -------------
<S> <C> <C>
Net income $14,785,403 $ 12,838,582
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 5,132,727 4,088,327
Provision for possible loan and lease
losses 2,140,000 928,000
Amortization of premiums, less accretion of discounts:
Held-to-maturity 195,911 (331,991)
Available-for-sale 115,439 (196,633)
Mortgage loan originations (2,419,012,253) (2,347,461,501)
Sales of mortgage loan 2,221,035,735 2,553,013,473
Gain on sale of mortgage servicing (12,972,541) (12,399,285)
Other, net 1,797,960 (6,015,575)
------------ -------------
Net cash provided (used) by operating
activities (186,781,619) 204,463,397
Lending and investing activities:
Proceeds from maturities/calls of investment
securities:
Held-to-maturity 44,462,071 25,787,008
Available-for-sale 7,013,979 46,106,761
Proceeds from sales of investment securities:
Available-for-sale 0 2,029,289
Purchase of investment securities:
Held-to maturity (32,822,678) (58,817,032)
Available-for-sale (5,430,484) (8,755,752)
Net decrease in interest-bearing
deposits with financial
institutions 5,362,609 22,107,205
Net increase in loans (106,722,664) (37,506,824)
Net additions to premises and
equipment (3,590,607) (2,830,855)
Additions to capitalized mortgage
servicing (33,238,928) (16,301,888)
Proceeds from sale of mortgage
servicing 22,957,816 22,962,391
------------- ------------
Net cash provided (used) by lending and investing
activities (102,008,886) (5,219,697)
Financing activities:
Net increase (decrease) in deposits 111,726,889 (63,285,708)
Net increase (decrease) in short-term
borrowings 183,075,635 (167,133,649)
Proceeds (repayment) of long-term
debt (2,504,589) 4,700,614
Purchase of treasury stock (2,034,598) (3,487,528)
Proceeds from sale of stock 1,273,056 1,185,074
Dividends paid (1,859,747) (1,567,036)
------------ ------------
Net cash provided (used) by financing
activities 289,676,646 (229,588,233)
------------ ------------
Net increase in cash and cash
equivalents 886,141 (30,344,533)
Cash and cash equivalents at
beginning of year 50,840,452 76,110,552
------------ ------------
Cash and cash equivalents at end
of year $51,726,593 $45,766,019
=========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $17,849,806 $12,979,295
=========== ============
Income taxes $ 3,829,990 $ 8,861,931
=========== ============
</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 protion 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.
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 1995
results was an increase to net income in the third quarter of
$4,600,000 and $8,100,000 year to date 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.
XXX PAGE 6 XXX
NOTE 2 - INVESTMENT SECURITIES
The carrying amounts of investment securities, including net
unrealized losses of $27,009 at September 30, 1995 and $465,103
at December 31, 1994, are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- ------------
Held-to-Maturity
U.S. Treasury and Government
<S> <C> <C>
obligations $35,071,362 $41,826,087
Obligations of states and political
subdivisions 6,655,771 7,548,613
Mortgage-backed securities 6,794,430 9,982,166
Corporate obligations 0 1,000,000
----------- -----------
Total Held-to-Maturity 48,521,563 60,356,866
----------- ------------
Available-for-Sale
U.S. Treasury and Government
obligations 15,300,774 13,833,515
Mortgage-backed securities 0 3,166,194
----------- -----------
Total Available-for-Sale 15,300,774 16,999,709
----------- -----------
Total Investments $63,822,337 $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.
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>
September 30, December 31,
1995 1994
------------ -------------
Commercial, financial and
<S> <C> <C>
agricultural $216,738,988 $136,082,836
Real estate-construction 18,156,133 21,960,246
Real estate-mortgage 62,842,404 47,422,827
Consumer 66,431,536 55,322,568
Direct finance leases 59,994,342 58,348,603
Unearned income (10,569,507) (10,725,998)
------------- -------------
$413,593,896 $308,411,082
============ ============
</TABLE>
XXX PAGE 7 XXX
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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>
September 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 2,140,000 1,727,000
Recoveries 283,079 408,821
Charge-offs (1,822,929) (1,566,000)
---------- -----------
Balance at end of period $4,463,373 $3,863,223
========== ===========
</TABLE>
NOTE 6 - SHORT-TERM BORROWINGS
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -----------
Repurchase agreements and drafts payable related
<S> <C> <C>
to mortgage loan closings $202,846,866 $75,943,986
Commercial Paper 19,577,237 15,538,086
Federal funds 51,900,000 199,000
Other 2,732,604 2,300,000
----------- -----------
$277,056,707 $93,981,072
=========== ===========
</TABLE>
Repurchase agreements at September 30, 1995 and December 31,
1994 include $125,666,634 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
$69,591,539 and $23,422,309 at September 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 6.69% to the lenders' prime rate.
NOTE 7 -- LONG-TERM DEBT
Long-term debt at September 30, 1995 of $21,524,821 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 8 XXX
PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net income for the third quarter ended September 30, 1995,
was $6,039,083, up 34.9% from the third quarter 1994 net income
of $4,478,014. Net income per share was $1.05 for the third
quarter of 1995 as compared to $0.76 for the same period in 1994.
Return on equity for the third quarter of 1995 was 26.50%, up
from 22.52% in 1994.
For the year to date, the Corporation recorded net income
of $14,785,403, up 15.2% from 1994. Net income per share was
$2.58, up from $2.17 a year earlier. Return on equity for the
year to date was 22.92% as compared to 22.79% 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 9 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 September 30,
1995 1994
---------- ----------
<S> <C> <C>
Mortgage banking $6,245,693 $3,949,293
Community banking 877,737 798,072
Investor services 18,948 858
Equipment leasing (22,843) 168,382
Home equity lending (1,841,159) 0
Credit insurance 25,973 20,145
Venture capital 0 0
Parent (including consolidating
entries) 734,734 (458,736)
---------- ---------
$6,039,083 $4,478,014
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1995 1994
---------- -----------
<S> <C> <C>
Mortgage banking $14,813,072 $11,022,968
Community banking 2,430,661 2,090,805
Investor services 263,420 (47,639)
Equipment leasing (174,687) 721,065
Home equity lending (4,362,778) 0
Credit insurance 28,912 46,744
Venture capital 0 0
Parent (including consolidating
entries) 1,786,803 (995,361)
---------- -----------
$14,785,403 $12,838,582
========== ===========
</TABLE>
MORTGAGE BANKING
Selected Financial Data (shown in thousands):
<TABLE>
<CAPTION>
Three Months
Ended September 30,
1995 1994
------- -------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $ 3,760 $ 3,331
Mortgage loan and servicing right
origination income 17,439 6,174
Loan servicing fees 8,572 8,547
Gain on sale of servicing 2,799 3,894
Other income 107 130
Operating expense (22,485) (15,401)
---------- --------
Income before tax 10,192 6,675
Income tax (3,946) (2,726)
---------- --------
Net income $ 6,246 $ 3,949
========== ========
Mortgage loan originations $1,110,803 $616,847
=========== =========
</TABLE>
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1995 1994
------- -------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $ 9,494 $ 9,787
Mortgage loan origination and
servicing right income 34,566 22,850
Loan servicing fees 25,885 24,010
Gain on sale of servicing 12,973 12,399
Other income 456 377
Operating expense (58,690) (50,781)
---------- -----------
Income before tax 24,684 18,642
Income tax (9,871) (7,619)
----------- -----------
Net income $ 14,813 $ 11,023
========== ===========
Mortgage loan originations $2,419,012 $2,347,462
========== ===========
</TABLE>
XXX PAGE 10 XXX
<TABLE>
<CAPTION>
SELECTED OPERATING DATA: September 30, December 31,
1995 1994
---------- -----------
<S> <C> <C>
Servicing portfolio $9,684,199 $8,818,502
Mortgage loans held for sale 283,349 67,373
Net capitalized servicing 41,187 20,302
</TABLE>
Net income for the third quarter was $6,245,693, up 58.1% from
the same period in 1994. Year to date, net income is
$14,813,072, compared to $11,022,968 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 and first quarter 1995 mortgage banking
activities reported in the financial statements were accounted
for under the original SFAS 65. A summary of the impact of the
change in the accounting standards to mortgage banking net income
for the third quarter and year to date 1995 is as follows (in
thousands):
<TABLE>
<CAPTION>
Third Quarter Year to Date
<S> <C> <C>
Increase in gain from sales of loans $8,549 $14,778
Increase in amortization of mortgage
servicing rights (545) (685)
Increase in provision for impairment of
mortgage servicing rights (300) (510)
Increase in income tax expense (3,082) (5,434)
-------- ---------
Increase to net income $4,622 $8,149
======== ==========
</TABLE>
Mortgage loan originations of $1.1 billion (including $75.5
million of brokered loans) were 80.1% above the third quarter of
1994. For the year, originations totaled $2.4 billion, up 3.0%
from 1994. Refinances accounted for 12.4% of loan production in
the third quarter of 1995 and 8.3% year to
XXXX PAGE 11 XXXX
date. This compares to 5.3% and 18.1%, respectively, in 1994.
Mortgage loan and servicing right origination income, excluding
the effect of SFAS 122, was up 0.8% in the third quarter to $6.2
million, and year to date was down 25.0% to $17.1 million. Net
revenues in 1995 from mortgage originations were offset somewhat
by loan pricing concessions which totaled $1.8 million during the
quarter, an increase of $1.5 million over 1994. However,
mortgage loan applications in process totaled $1.2 billion at
September 30, 1995, compared to $576.4 million a year earlier.
Mortgage servicing fees increased 0.3% in the third quarter
and 7.8% year to date to $8.6 million and $25.9 million,
respectively. Servicing fees in 1995 are reported net of
mortgage servicing rights impairment charges of $300.0 thousand
for the quarter and $510.2 thousand year to date. The mortgage
servicing portfolio totaled $9.7 billion at September 30, 1994,
up 13.7% from a year earlier and 10.2% from December 31, 1994.
Capitalized on-balance sheet mortgage servicing rights totaled
$41.2 million at September 30, 1995, up 103.0% from December 31,
1994, reflecting the adoption of SFAS 122 during the second
quarter of 1995.
Revenues from the sale of mortgage servicing were down
28.1% from the third quarter of 1994 to $2.8 million. Year to
date servicing sale revenues totaled $13.0 million, up 4.6% from
$12.4 million in 1994.
Consistent with the fluctuation in mortgage loan closings
from 1994, net interest income was up in the third quarter and
nearly even year to date. Net interest income for the three
months ended September 30, 1995 was $3.8 million, up 12.9% from
the third quarter 1994. Year to date, net interest income
totaled $9.5 million, compared to $9.8 million in 1994.
Operating expenses were up $6.5 million, or 42.5% from the
third quarter of 1994 and $7.2 million or 14.2% 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 12 XXX
COMMUNITY BANKING
Selected Financial Data (shown in thousands):
<TABLE>
<CAPTION>
Three Months
Ended September 30,
1995 1994
-------- ----------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $4,494 $3,894
Provision for loan and lease losses (655) (187)
Other income 1,033 748
Operating expense (3,551) (3,272)
------- -------
Income before tax 1,321 1,183
Income tax (443) (385)
------- -------
Net income $ 878 $ 798
======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1995 1994
-------- ----------
Selected Income Statement Data:
<S> <C> <C>
Net interest revenue $12,974 $10,967
Provision for loan and lease losse (1,488) (614)
Other income 2,787 2,341
Operating expense (10,620) (9,597)
------- -------
Income before tax 3,653 3,097
Income tax (1,222) (1,006)
------- -------
Net income $ 2,431 $ 2,091
======= =======
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
Selected Balance Sheet Data: 1995 1994
--------- ---------
<S> <C> <C>
Cash and investments $ 96,278 $104,676
Loans and leases 295,837 255,719
Allowance for loan and lease
losses (3,545) (3,417)
All other assets 13,385 13,046
--------- ---------
Total assets $401,955 $370,024
========= =========
Interest-bearing deposits $299,238 $274,319
Noninterest-bearing deposits 61,245 66,283
All other liabilities 13,479 3,738
--------- --------
Total liabilities $373,962 $344,340
========= ========
Shareholder's equity $ 27,994 $ 25,684
========= ========
</TABLE>
Community banking activities are conducted by Irwin Union
Bank through locations in six counties in south-central Indiana.
Net income was up in the third quarter to $877,737 from $798,072.
Year to date, net income improved $339.9 thousand from 1994, or
16.3%. The provision for loan and lease losses increased 250.7%
to $655.0 thousand in the third quarter compared with a provision
of $186.7 thousand a year earlier. Year to date, the provision
for loan and lease losses totaled $1.5 million, compared to
$614.2 thousand in 1994. This increased provision reflects
growth in the loan and lease portfolios which have increased
22.6% year-over-year and net charge-offs of $1.3 million for the
year to date, up 87.9% from 1995.
XXX PAGE 13 XXX
Following is an analysis of net interest income and net
interest margin for community banking computed on a tax
equivalent basis:
<TABLE>
<CAPTION>
For the Three Months ended September 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 $378,372 $ 8,305 8.71% $317,527 $ 6,190 7.73%
Interest -
bearing
liabilities $321,329 $ 3,695 4.56% $261,994 $ 2,250 3.41%
-------- --------
Net interest
income - $ 4,610 - 0 $ 3,940 -
Net interest margin - - 4.83% - - 4.92%
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months ended September 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 $367,055 $23,608 8.60% $313,531 $19,910 8.49%
Interest -
bearing
liabilities $310,429 $10,273 4.42% $256,487 $ 8,661 4.51%
-------- --------
Net interest income - $13,335 - 0 $11,249 -
Net interest margin - - 4.86% - - 4.80%
</TABLE>
Other income in the third quarter was up 38.2% to $1.0
million from $747.5 thousand in 1994. For the year to date,
other income increased 19.1% to $2.8 million. This was largely
the result of a $221.0 thousand refund of FDIC premiums
previously paid. The refund of FDIC premiums was part of the
FDIC's restructuring of deposit insurance premiums to reflect the
now fully-funded position of the insurance fund. Deposit
insurance premiums are based on individual institution's adequacy
of capital. Irwin Union Bank's capital is currently at a level
categorized by the FDIC as "well-capitalized," which will allow
it to take advantage of the new premium rate of $0.04 per $100.00
of deposits as compared with the prior rate of $0.23 per $100.00.
Other expenses increased 8.5% or $279.6 thousand from the
third quarter of 1994 to $3.6 million. For the year, these
expenses were up $1.0 million to $10.6 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
XXX PAGE 14 XXX
align more effectively the management of this business unit with
its primary geographic unit.
INVESTOR SERVICES
Earnings for investor services were $18,948 in the third
quarter of 1995 compared to $858 in the same period a year
earlier. For the year, earnings have totaled $263,420, up from a
$47,639 loss in 1994. 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 $314.1 thousand in the
third quarter of 1995, compared to $259.5 thousand in 1994. For
the year, they are up 83.2% to $1.5 million.
Trust revenues increased 12.5% and 5.1% in the third
quarter and year to date, respectively. Trust revenues totaled
$644.9 thousand in the third quarter and $1.8 million year to
date. The increase is consistent with the increase in trust
client assets which totaled $335.7 million at September 30, 1995,
up 12.7% from a year earlier.
Reflecting the change in retail securities brokerage
management and reporting noted above, investor services' other
expenses declined 5.4% for the year to $3.3 million. For the
quarter, they declined $43.0 thousand to $1.0 million.
EQUIPMENT LEASING
The equipment leasing business recorded pre-tax losses for
the quarter and for the year of $22,843 and $174,687,
respectively. This compares to pre-tax income of $168,382 and
$721,065 in the third quarter and year to date 1994,
respectively. Net interest revenue was down 20.8% for the quarter
and 36.7% for the year. Increased competition in the market for
small-ticket medical equipment financing has negatively affected
the company's spreads for several quarters. In response to these
conditions, the company has recently entered into new private-
label financing agreements with several equipment manufacturers
and has launched a revolving credit product to compliment its
lease offerings.
Lease volume of $6.3 million in the third quarter was up
14.6% from volume in the third quarter of 1994. Year to date,
volume totaled $18.8 million, up 5.7% from a year earlier. Other
expenses were up 11.0% for the quarter to $1.0 million. For the
year, they increased 9.9% to $3.0 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
$1,841,159 during its third quarter of operations and $4,362,778
year to date. Total
XXX PAGE 15 XXX
loan originations for the year were $52.3 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 third quarter of 1995 was
$734,734 compared to a loss of $458,736 in 1994. Year to date,
net income of $1,786,803 was recorded, compared to a loss of
$995,361 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
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.
Approximately $680.0 thousand of income was recorded by the
parent for this tax benefit.
CONSOLIDATED INCOME STATEMENT ANALYSIS
Net interest income for the third quarter of 1995 totaled
$9.5 million, up 17.6% from the third quarter of 1994. For the
year, it increased 6.2% to $25.3 million. The improvement was
due to a combination of an increase in the community banking and
home equity loan and lease portfolios along with increased
mortgage loan originations in the mortgage banking business.
The loan and lease loss provision was $910.0 thousand for
the third quarter of 1995, as compared to $368.0 thousand for the
same period in 1994. For the year, it totaled $2.1 million, up
from $928.0 thousand a year earlier. This increase reflects the
growth in the home equity and community bank loans outstanding,
as well as increased charge-offs at the community bank. See the
section on credit risk for further discussion.
Other income was up 49.6% in the third quarter of 1995 to
$31.3 million. Year to date other income increased 23.8% to
$81.6 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 $25.6
million for the third quarter, up $7.0 million from the third
quarter of 1994. For the year, they totaled $70.2 million, an
increase of $10.8 million over 1994.
Other expense also increased in 1995 as the third quarter
was up $9.3 million or 44.0% from 1994. For the year, other
expense increased $14.2 million or 21.0% 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 in the
third quarter was 35.3%, compared to 39.6% a year earlier. The
lower 1995 rate reflects adjustments made in the third quarter to
accrue federal income taxes at a 34% rate rather than the 35%
rate which had been used. The adjustments were made to reflect
current estimates of the Corporation's 1995 taxable income and
the resulting applicable income tax rate. The year to date
effective income tax rate was 35.8%, down from 39.6% in 1994.
This decline is due in part to the reduced federal income tax
rate, but also as a result of stock options exercised in the
second quarter. Options totaling $680.0 thousand will be
XXX PAGE 16 XXX
deducted for income tax purposes, but were not expensed on the
Corporation's books.
CONSOLIDATED BALANCE SHEET ANALYSIS
Total assets of Irwin Financial Corporation at September 30,
1995, were $978,947,275, an increase of 48.4% from December 31,
1994 total assets of $659,670,500. The increase was attributed
to an increase in mortgage loans held for sale of $198.0 million
and an increase in the loan and lease portfolio of $105.2
million.
The increase in assets was accompanied by an increase in
short-term borrowings of $183.1 million and an increase in
deposits of $111.7 million or 25.3%. 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 $153.9 million at September 30, 1995, up from
$88.8 million at December 31, 1994.
Shareholders' equity grew to $93,530,917, or $16.54 per
share, a 14.8% 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 9.55%, 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) September 30,1995 Dec. 31,1994 Dec. 31, 1993
------------ ------------ -------------
<S> <C> <C> <C>
Servicing portfolio balance $9,684,199 $8,818,502 $7,922,299
---------- ---------- ----------
Value @1.5% $ 145,263 $ 132,278 $118,834
Less: capitalized servicing 40,544 20,301 13,299
Tax liability at 40% 41,887 44,790 42,214
---------- ---------- ----------
Net value $ 62,832 $ 67,187 $ 63,321
========== ========== ========
Per share of common stock $ 11.11 $ 11.93 $ 10.90
========== ========== ========
</TABLE>
XXX PAGE 17 XXX
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 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 September 30, 1995, the allowance for possible loan
and lease losses as a percentage of total loans and leases was
1.08%, compared to 1.25% at December 31, 1994. For the three
months ended September 30, 1995, the provision for possible loan
and lease losses totaled $910.0 thousand, a 147.3% increase over
the amount recorded in the third quarter of 1994. Year to date,
the provision totaled $2.1 million, up from $928.0 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 $435.3 thousand as compared to
$619.4 thousand in 1994. Year to date net charge-offs totaled
$1.5 million, up from $0.9 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 September
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.
XXX PAGE 18 XXX
<TABLE>
<CAPTION>
Nonperforming Assets
(In Thousands) September 30, June 30, December 31, December 31,
1995 1995 1994 1993
-------- --------- ------------ -----------
Accruing loans past due
90 days or more:
<S> <C> <C> <C> <C>
Commercial $ 572 $ 263 $ 113 $ 800
Leasing 0 0 0 0
Real Estate 31 0 0 141
Consumer 245 254 93 88
------ ------ ------ -------
Subtotal 848 517 206 1,029
------ ------ ------ -------
Nonaccrual loans:
Commercial 686 892 1,523 1,373
Leasing 275 320 363 242
Real Estate 702 613 689 848
Consumer 0 0 0 39
------ ------ ------ -------
Subtotal 1,663 1,825 2,575 2,502
------ ------ ------ -------
Total nonperforming
loans 2,511 2,342 2,781 3,531
------ ------ ------ -------
Other real estate
owned 409 382 489 623
------ ------ ------ -------
Total nonperforming
assets $2,920 $2,724 $3,270 $ 4,154
====== ====== ====== =======
Nonperforming assets to
total assets 0.30% 0.30% 0.50% 0.47%
======= ======= ======= ========
</TABLE>
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.
XXX PAGE 19 XXX
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 a 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 September 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 $ 1,611 $ 4,195 $ 996
Federal funds sold 10,000 0 0
Taxable investment
securities 15,260 10,483 31,423
Tax-exempt investment
securities 166 590 5,900
Mortgages held for sale 352,941 0 0
Loans, net of unearned
income 213,273 33,068 167,253
-------- -------- --------
Total interest-earning
assets 593,251 48,336 205,572
-------- -------- --------
Interest-bearing liabilities:
Money Market checking 15,471 0 46,411
Money Market savings 16,340 0 10,210
Regular savings 27,966 2,215 20,943
Time deposits 114,363 51,454 44,433
Short-term borrowings 266,809 5,248 5,000
Long-term debt 1,974 5,315 14,236
-------- -------- --------
Total interest-bearing
liabilities 442,923 64,232 141,233
-------- -------- --------
Interest sensitivity gap 150,328 (15,896) 64,339
-------- -------- --------
Cumlative interest
sensitivity gap $150,328 $134,432 $198,771
======== ======== ========
</TABLE>
As the above table shows, the consolidated one-year gap at
September 30, 1995 was a positive $134.4 million. This compares
to a positive gap of $116.6 million at December 31, 1994. The
large positive gaps at September 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 September 30, 1995, it means that,
with respect to net interest income, the Corporation was
positioned to benefit from rising
XXX PAGE 20 XXX
rates, or to be harmed by declining rates. However, if rates
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 quarters.
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>
September 30, December 31, December31,
1995 1994 1993
----- ----------- -----------
<S> <C> <C> <C>
Equity to Assets 9.55% 12.29% 7.95%
Risk-Based Capital
Ratio 14.15% 19.18% 15.68%
Tier I Capital Ratio 13.45% 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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
----- ----- ----- -----
PRIMARY
Average number of shares
<S> <C> <C> <C> <C>
outstanding 5,652,839 5,769,425 5,632,890 5,809,074
Assumed exercise of stock
options 106,562 107,636 99,094 104,588
---------- --------- ----------- ----------
Total shares 5,759,401 5,877,061 5,731,984 5,913,662
========== ========== =========== ===========
Net income $6,039,083 $4,478,014 $14,785,403 $12,838,582
========== ========== =========== ===========
Net income per share $1.05 $0.76 $2.58 $2.17
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
FULLY DILUTED
<S> <C> <C> <C> <C>
Average number of shares
outstanding 5,652,839 5,769,425 5,632,890 5,809,074
Assumed exercise of stock
options(Note 1) 115,130 116,888 107,098 113,683
--------- --------- --------- ----------
Total shares 5,767,969 5,886,313 5,739,988 5,922,757
========= ========= ========= ==========
Net income $6,039,083 $4,478,014 $14,785,403 $12,838,582
========== ========== =========== ===========
Net income per share $1.05 $0.76 $2.58 $2.17
===== ===== ===== =====
</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> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 41,726
<INT-BEARING-DEPOSITS> 6,802
<FED-FUNDS-SOLD> 10,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,314
<INVESTMENTS-CARRYING> 48,565
<INVESTMENTS-MARKET> 49,362
<LOANS> 413,594
<ALLOWANCE> 4,463
<TOTAL-ASSETS> 978,947
<DEPOSITS> 551,645
<SHORT-TERM> 277,057
<LIABILITIES-OTHER> 35,190
<LONG-TERM> 21,525
<COMMON> 29,965
0
0
<OTHER-SE> 63,566
<TOTAL-LIABILITIES-AND-EQUITY> 978,947
<INTEREST-LOAN> 25,733
<INTEREST-INVEST> 3,821
<INTEREST-OTHER> 14,428
<INTEREST-TOTAL> 43,981
<INTEREST-DEPOSIT> 10,418
<INTEREST-EXPENSE> 18,648
<INTEREST-INCOME-NET> 25,332
<LOAN-LOSSES> 2,140
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 81,791
<INCOME-PRETAX> 23,034
<INCOME-PRE-EXTRAORDINARY> 23,034
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,785
<EPS-PRIMARY> 2.58<F1>
<EPS-DILUTED> 0
<YIELD-ACTUAL> .05<F1>
<LOANS-NON> 1,663
<LOANS-PAST> 849
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,863
<CHARGE-OFFS> 1,823
<RECOVERIES> 283
<ALLOWANCE-CLOSE> 4,463
<ALLOWANCE-DOMESTIC> 3,073
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,390
<FN>
<F1>information not in 1,000
</FN>
</TABLE>
