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, 1997
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, 1997, there were outstanding 11,041,675 common
shares, no par value, of the Registrant.
<TABLE>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
September 30, December 31,
Assets: 1997 1996
<S> <C> <C>
Cash and due from banks $51,871,269 $71,365,788
Federal funds sold 6,356,001 0
Cash and cash equivalents 58,227,270 71,365,788
Interest-bearing deposits with financial institutions 11,333,456 11,343,546
Investment securities (Market value:$60,948,999 in 1997
and $73,819,203 in 1996)-Note 2 60,312,875 73,124,455
Mortgage loans held for sale 474,433,077 445,100,504
Loans and leases, net of unearned income - Note 4 584,273,742 529,050,970
Less: Allowance for loan and lease losses - Note 5 (8,594,293) (6,874,944)
575,679,449 522,176,026
Capitalized servicing - Note 6 106,456,902 86,757,254
Accounts receivable 51,205,244 41,712,662
Accrued interest receivable 7,782,319 6,724,973
Premises and equipment 19,151,977 18,687,620
Other assets 47,243,918 26,893,283
$1,411,826,487 $1,303,886,111
Liabilities and Shareholders' Equity:
Deposits
Noninterest-bearing $278,737,533 $239,347,589
Interest-bearing 335,993,973 334,301,111
Certificates of deposit over $100,000 94,767,360 66,504,205
709,498,866 640,152,905
Short-term borrowings- Note 7 436,611,516 461,882,725
Long-term debt- Note 8 8,189,705 17,642,526
Other liabilities 82,835,127 65,305,875
Total liabilities 1,237,135,214 1,184,984,031
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust- Note 9 47,908,556 0
Shareholders' equity
Preferred stock, no par value - authorized
50,000 shares; none issued 0 0
Common stock; no par value - authorized 40,000,000 shares;
issued 11,701,040 shares in 1997 and 1996; including
634,020 and 332,268 shares in treasury in 1997 and
1996, respectively. 29,965,287 29,965,287
Additional paid in capital 647,311 0
Unrealized gains 1,079,298 56,523
Retained earnings 110,013,041 94,083,540
141,704,937 124,105,350
Less treasury stock, at cost (14,922,220) (5,203,270)
Total shareholders' equity 126,782,717 118,902,080
$1,411,826,487 $1,303,886,111
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Three Months Ended
September
Interest income: 1997 1996
<S> <C> <C>
Loans and leases $14,111,212 $14,286,206
Investment securities:
Taxable 1,589,390 1,071,351
Tax-exempt 55,986 88,412
Loans held for sale 9,931,981 7,497,647
Federal funds sold 156,177 61,950
Total interest income 25,844,746 23,005,566
Interest expense:
Deposits 5,621,049 4,649,118
Short-term borrowings 6,485,602 5,437,005
Long-term debt 197,408 471,717
Total interest expense 12,304,059 10,557,840
Net interest income 13,540,687 12,447,726
Provision for loan and lease losses - Note 5 2,183,470 1,148,500
Net interest income after provision for possible loan
and lease losses 11,357,217 11,299,226
Other income:
Loan origination fees 11,395,906 10,750,565
Gain from sales of loans 8,862,209 8,650,297
Loan servicing fees 17,283,791 12,263,517
Gain on sale of mortgage servicing 10,397,328 4,411,321
Brokerage fees and commissions 132,158 255,841
Trust fees 400,085 696,700
Service charges on deposit accounts 397,974 550,339
Insurance commissions, fees and premiums 407,533 360,734
Other 555,200 748,691
49,832,184 38,688,005
Other expense:
Salaries 23,304,916 19,304,154
Pension and other employee benefits 3,438,453 3,284,347
Office expense 2,717,892 2,481,214
Premises and equipment 4,306,399 3,494,441
Amortization of capitalized servicing 6,420,973 3,925,026
Marketing and development 1,760,871 1,651,759
Other 5,764,485 6,672,081
47,713,989 40,813,022
Income before income taxes 13,475,412 9,174,209
Income taxes 4,989,400 3,671,660
8,486,012 5,502,549
Distribution on company-obligated mandatorily
redeemable preferred securities of subsidiary trust 1,174,250 0
Net income available to common shareholders $7,311,762 $5,502,549
Net income per share of common stock:
Net income -Note 1 $0.64 $0.47
Dividends per share of common stock $0.07 $0.06
Weighted average shares of common stock outstanding 11,441,859 11,635,514
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Nine Months Ended
September 30,
<S> <C> <C>
Interest income: 1997 1996
Loans and leases $41,718,226 $37,858,483
Investment securities:
Taxable 4,319,453 3,345,808
Tax-exempt 198,249 270,888
Loans held for sale 24,512,230 22,238,995
Federal funds sold 521,595 1,135,064
Total interest income 71,269,753 64,849,238
Interest expense:
Deposits 15,219,409 13,469,270
Short-term borrowings 16,532,434 14,574,204
Long-term debt 729,440 1,319,441
Total interest expense 32,481,283 29,362,915
Net interest income 38,788,470 35,486,323
Provision for loan and lease losses - Note 5 5,055,236 3,375,855
Net interest income after provision for possible loan
and lease losses 33,733,234 32,110,468
Other income:
Loan origination fees 30,667,951 33,592,084
Gain from sales of loans 27,257,139 25,426,830
Loan servicing fees 47,672,779 35,559,236
Gain on sale of mortgage servicing 24,065,463 8,940,791
Brokerage fees and commissions 510,877 1,568,107
Trust fees 1,467,519 1,546,165
Service charges on deposit accounts 1,199,636 1,233,351
Insurance commissions, fees and premiums 1,150,182 1,176,864
Other 2,228,490 1,951,969
136,220,036 110,995,397
Other expense:
Salaries 63,376,421 57,872,178
Pension and other employee benefits 10,655,573 9,754,047
Office expense 7,942,807 7,815,066
Premises and equipment 12,487,001 10,060,585
Amortization of capitalized servicing 17,454,713 10,624,318
Marketing and development 6,506,690 5,631,604
Other 17,623,974 15,213,451
136,047,179 116,971,249
Income before income taxes 33,906,091 26,134,616
Income taxes 12,330,530 10,616,094
21,575,561 15,518,522
Distribution on company-obligated mandatorily
redeemable preferred securities of subsidiary trust 3,299,128 0
Net income available to common shareholders $18,276,433 $15,518,522
Net income per share of common stock:
Net income -Note 1 $1.59 $1.33
Dividends per share of common stock $0.21 $0.18
Weighted average shares of common stock outstanding 11,516,195 11,625,792
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
September 30, 1997 1996
<S> <C> <C>
Net income $18,276,432 $15,518,522
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 20,773,707 14,427,734
Provision for loan and lease losses 5,055,236 3,375,855
Amortization of premiums, less accretion of discounts 891,064 1,223,196
Mortgage loan originations (3,912,526,334) (3,803,631,068)
Sales of mortgage loans 3,883,193,761 3,864,007,092
Gain on sale of mortgage servicing (24,065,463) (8,940,791)
Other, net (12,776,366) (3,145,905)
Net cash (used) provided by operating activities (21,177,963) 82,834,635
Lending and investing activities:
Proceeds from maturities/calls of investment securities:
Held-to-Maturity 6,485,470 2,045,000
Available-for-Sale 26,827,505 29,777,845
Purchase of investment securities:
Held-to-Maturity (3,069,972) (13,598,670)
Available-for-Sale (18,322,487) (28,129,470)
Net increase in interest-bearing
deposits with financial institutions 10,090 (2,257,912)
Net increase in loans, excluding sales (250,763,079) (200,518,153)
Sale of loans 192,204,420 35,776,050
Net additions to premises and equipment (3,153,932) (4,467,116)
Additions to mortgage servicing assets (65,436,819) (66,962,442)
Proceeds from sale of mortgage servicing assets 52,146,332 47,933,663
Net cash used by lending and investing activities (63,072,472) (200,401,205)
Financing activities:
Net increase in deposits 69,345,961 49,713,987
Net increase (decrease) in short-term borrowings (25,271,209) 49,234,180
Repayment of long-term debt (9,452,821) (2,059,499)
Sale of company-obligated manditorily redeemable
preferred securities of subsidiary trust 47,908,556 0
Purchase of treasury stock (10,798,110) (1,039,753)
Proceeds from sale of stock for employee benefit plans 1,726,472 961,530
Dividends paid (2,346,932) (2,044,407)
Net cash provided by financing activities 71,111,917 94,766,038
Net increase in cash and cash equivalents (13,138,518) (22,800,532)
Cash and cash equivalents at beginning of year 71,365,788 64,256,953
Cash and cash equivalents at end of year $58,227,270 $41,456,421
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $31,999,339 $28,739,849
Income taxes $6,337,225 3,550,200
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Consolidations: Irwin Financial Corporation and its subsidiaries (the
Corporation) provide financial services throughout the United States. The
Corporation is engaged in the mortgage banking, commercial banking, home
equity lending, and equipment leasing lines of business. Intercompany balances
and transactions have been eliminated in consolidation. Significant accounting
policies followed by the Corporation are consistent with those followed for
annual financial reporting. The information furnished reflects all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the results of interim periods.
Reclassifications: Certain amounts in the 1996 consolidated financial
statements have been reclassified to conform to the 1997 presentation.
Transfer of Assets: On January 1, 1997, the Corporation adopted Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125). This
statement establishes the accounting treatment to be used for the
securitization of all financial assets. Under the provisions of SFAS No.
125, the net carrying values of assets sold and retained are allocated based
on their relative fair values. The adoption of SFAS No. 125 did not have a
material effect on the Corporation's financial position or results of
operations.
Earnings per share: Earnings per share computations are based on the weighted
average number of common shares outstanding during the year.
In February 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128).
This statement specifies the computation, presentation and disclosure
requirements for earnings per share. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997. If the
Corporation had calculated earnings per share in accordance with SFAS No. 128,
the following amounts would have been reported:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1997 1996
<S> <C> <C>
Basic earnings per share $0.66 $0.48
Diluted earnings per share $0.65 $0.48
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Basic earnings per share $1.63 $1.37
Diluted earnings per share $1.60 $1.35
</TABLE>
NOTE 2 - INVESTMENT SECURITIES
The carrying amounts of investment securities, including net unrealized gains of
$94,607 and $51,159 on available-for-sale securities at September 30, 1997 and
December 31, 1996, respectively, are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
Held-to-Maturity
US Treasury and Government obligations $24,989,832 $38,317,039
Obligations of states and political subdivisions 3,964,166 4,466,043
Mortgage-backed securities 4,472,480 7,153,865
Total Held-to-Maturity 33,426,478 49,936,947
Available-for-Sale
US Treasury and Government obligations 23,318,234 19,924,047
Mortgage-backed securities 3,200,608 3,237,633
Other 367,555 25,828
Total Available for Sale 26,886,397 23,187,508
Total Investments $60,312,875 $73,124,455
</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
<TABLE>
<CAPTION>
Loans and leases are summarized as follows:
September 30, December 31,
1997 1996
<S> <C> <C>
Real estate-mortgage $219,997,224 $210,697,305
Commercial, financial and agricultural 241,686,344 179,650,053
Real estate-construction 20,868,952 48,990,519
Consumer 44,257,005 38,371,100
Lease financing 74,928,714 62,371,808
Unearned income (17,464,497) (11,029,815)
$584,273,742 $529,050,970
</TABLE>
NOTE 5 - ALLOWANCE FOR LOAN AND LEASE LOSSES
<TABLE>
Changes in the allowance for loan and lease losses are summarized as follows:
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
Balance at beginning of year $6,874,944 $5,033,181
Provision for loan and lease losses 5,055,236 4,552,649
Reduction due to sale of loans (1,469,858) (930,750)
Recoveries 334,814 593,421
Charge-offs (2,200,843) (2,373,557)
Balance at end of period $8,594,293 $6,874,944
</TABLE>
NOTE 6- CAPITALIZED SERVICING
Included in capitalized servicing at September 30, 1997 and December 31, 1996
are $78,324,402 and $70,551,101, respectively, of servicing assets. These
amounts represent the capitalized, contractually specified servicing fees earned
on securitized loans. Capitalized servicing also includes interest only strips
totaling $28,132,500 and $16,206,153 at September 30, 1997 and December 31,
1996, respectively.
NOTE 7- SHORT-TERM BORROWINGS
<TABLE>
Short-term borrowings are summarized as follows:
<CAPTION>
September 30, December 31,
1997 1996
Repurchase agreements and drafts payable related to
<S> <C> <C>
mortgage loan closings $213,625,312 $264,998,449
Federal funds 90,100,000 74,118,000
Lines of Credit 117,564,911 105,591,525
Commercial paper 15,321,293 17,174,751
Total $436,611,516 $461,882,725
</TABLE>
Repurchase agreements at September 30, 1997 and December 31, 1996, include
$110,806,943 and $183,869,533 respectively, in mortgage loans sold under
agreements to repurchase which are used to fund mortgage loans sold 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 $94,619,660 and
$74,042,188 at September 30, 1997 and December 31, 1996. These borrowings are
related to mortgage closings at the end of the period which have not been
presented to banks for payment. When presented for payment these borrowings
will be funded internally or by borrowing from the lines of credit.
The Corporation has lines of credit available to fund mortgage loans held for
sale. Interest on the lines of credit is payable monthly at variable rates
ranging from 5.38% to the lender's prime rate.
NOTE 8 -- LONG-TERM DEBT
Long-term debt at September 30, 1997 of $8,189,705 consists of various notes
payable at annual interest rates ranging from 6.3% to 9.6% and maturity dates
ranging from January 31, 1997 through April 30, 2002. Long-term debt as of
December 31, 1996 was $17,642,526 and consisted of various notes payable at
annual interest rates ranging from 6.3% to 9.6% and maturity dates through
April 30, 2002.
NOTE 9 -- COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES
OF SUBSIDIARY TRUST
In January 1997, the Corporation issued $50,000,000 of trust preferred
securities through IFC Capital Trust I, a trust created and controlled by the
Corporation. The securities were issued at $25 per share with a cumulative
dividend rate of 9.25%, payable quarterly. They have an initial maturity of
30 years with a 19-year extension option. The securities are callable at par
after five years, or immediately, in the event of an adverse tax development
affecting the Corporation's classification of the securities for federal income
tax purposes. They are not convertible into common stock of the Corporation.
The securities are shown on the balance sheet net of capitalized issuance costs.
The sole assets of IFC Capital Trust I are subordinated debentures of the
Corporation with a principal balance of $51,546,400, an interest rate of 9.25%
and an initial maturity of 30 years with a 19-year extension option.
NOTE 10 -- CONTINGENCIES
In the normal course of business, Irwin Financial Corporation and its
subsidiaries are subject to various claims and other pending and possible legal
actions.
As of September 30, 1997, Inland Mortgage Corporation (Inland) was a defendant
to three separate class action lawsuits relating to the following: Inland's
administration of mortgage escrow accounts, Inland's right to require its
borrowers to pay premiums for private mortgage insurance, and Inland's right to
pay broker fees to mortgage brokers.
At present, it is not possible for the Corporation to predict the likelihood of
an unfavorable outcome or to establish the possible extent or amount of
liability or potential loss exposure with respect to the litigation.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Net income for the third quarter ended September 30, 1997,
was $7,311,762 up 32.9% from the third quarter 1996 net income of
$5,502,549. Net income per share was $0.64 for the third quarter
of 1997 as compared to $0.47 for the same period in 1996. Return
on equity for the third quarter of 1997 was 23.14% compared to
19.78% in 1996.
For the year to date, the Corporation recorded net income
of $18,276,433 up 17.8% from 1996. Net income per share was
$1.59, up from $1.33 a year earlier. Return on equity for the
year to date was 19.91% as compared to 19.47% for the same period
in 1996.
Lines of Business
Irwin Financial Corporation has four lines of business:
Mortgage banking (includes Inland Mortgage Corporation and
the related activities of Irwin Union Bank)
Community banking (Irwin Union Bank and Irwin Union Advisory
Services)
Home equity lending (includes Irwin Home Equity and the
related activities of Irwin Union Bank)
Equipment leasing (includes Affiliated Capital Corp. and the
related activities of Irwin Union Bank)
Listed below are the earnings by line of business for the
quarter and year to date, as compared to the same periods in
1996:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Mortgage banking $6,880,279 $5,081,710 $15,874,479 $16,373,225
Community banking 1,207,828 1,043,852 3,848,774 3,241,458
Home equity lending 158,810 (942,372) 1,860,642 (5,053,884)
Equipment leasing 75,020 24,873 146,160 39,493
Parent (including consolidating entries)
(1,010,175) 294,486 (3,453,622) 918,230
$7,311,762 $5,502,549 $18,276,433 $15,518,522
</TABLE>
Mortgage Banking
<TABLE>
Selected Financial Data (shown in thousands):
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Selected Income Statement Data:
<S> <C> <C> <C> <C>
Loan servicing fees $13,039 $11,442 $37,619 $32,620
Loan origination fees 11,300 10,681 30,350 33,354
Gain on sale of servicing 10,397 4,411 24,065 8,941
Gain from sales of loans 5,781 7,464 13,900 23,818
Net interest income 4,819 4,002 13,060 12,854
Provision for loan losses (914) (160) (1,621) (602)
Other income 380 277 969 720
Operating expense (33,372) (29,442) (91,728) (84,061)
Income before tax 11,430 8,675 26,614 27,644
Income tax (4,550) (3,593) (10,740) (11,271)
Net income $6,880 $5,082 $15,874 $16,373
Return on average equity 39.20% 33.90% 30.10% 36.40%
Mortgage loan originations $1,518,506 $1,216,781 $3,912,526 $3,803,631
</TABLE>
<TABLE>
<CAPTION>
Selected Operating Data: September 30, December 31,
1997 1996
<S> <C> <C>
Servicing portfolio $10,647,802 $10,810,988
Mortgage loans held for sale 379,813 371,058
Mortgage servicing asset 77,125 70,551
</TABLE>
Net income for the third quarter was $6.9 million, up 35.4%
from the same period in 1996. Year to date, net income was $15.9
million compared to $16.4 million in 1996.
Mortgage loan originations of $1.5 billion (including $98.9
million of brokered loans) were 24.8% above the third quarter of
1996. For the year, originations totaled $3.9 billion, up 2.9%
from 1996. Refinances accounted for 22.1% of loan production in
the third quarter of 1997 and 18.9% year to date. This compares
to 11.0% and 20.1%, respectively, in 1996. Improved third
quarter production caused mortgage loan origination income to
increase 5.8% for the quarter to $11.3 million. However, year to
date was down 9.0% to $30.4 million. Mortgage loans held for
sale and applications in process totaled $1.8 billion at
September 30, 1997, up 2.7% from a year earlier.
Gains on the sale of loans decreased 22.5% in the third
quarter to $5.8 million. Year to date, gains on the sale of
loans totaled $13.9 million compared with $23.8 million in 1996.
Mortgage servicing fees increased 14.0% in the third
quarter and 15.3% year to date to $13.0 million and $37.6
million, respectively. The increase is reflective of a more
profitable mix of types of loans serviced by the company. The
servicing portfolio totaled $10.6 billion at September 30, 1997,
down 2.1% from a year earlier and 1.5% from December 31, 1996.
Mortgage servicing assets totaled $77.1 million at September 30,
1997, up 9.3% from December 31, 1996.
Revenues from the sale of mortgage servicing were up 135.7%
from the third quarter of 1996 to $10.4 million. Included in the
third quarter 1997 gain is $2.2 million of revenue recognized
from a change in the estimate of reserves required for previous
servicing sales. Year to date servicing sale revenues totaled
$24.1 million, up from $8.9 million in 1996.
As a result of the increase in mortgage loan closings from
1996, net interest income was up in the third quarter and year to
date. Net interest income for the three months ended September
30, 1997 was $4.8 million, up 20.4% from the third quarter 1996.
Year to date, net interest income totaled $13.1 million, compared
to $12.9 million in 1996. The provision for loan losses
increased to $0.9 million in the third quarter of 1997, up from
$0.2 million a year earlier. Year to date, the provision for
loan losses totaled $1.6 million as compared to $0.6 million in
1996.
Operating expenses were up $3.9 million, or 13.3% from the
third quarter of 1996 and $7.7 million or 9.1% year to date.
Included in third quarter operating expenses is $4.0 million of
amortization expense relating to mortgage servicing assets, an
increase of $0.2 million from 1996. Year to date amortization
expense totaled $10.9 million, up $1.1 million from the previous
year. The increase in other operating expense reflects the
significant investments in technology being made by this line of
business in order to remain competitive in the current
environment of the industry.
Community Banking
<TABLE>
Selected Financial Data (shown in thousands):
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Selected Income Statement Data:
<S> <C> <C> <C> <C>
Net interest revenue $5,621 $5,103 $16,101 $14,528
Provision for loan losses (560) (556) (1,555) (1,508)
Other income 2,036 2,090 7,010 6,925
Operating expense (5,176) (4,996) (15,440) (14,838)
Income before tax 1,921 1,641 6,116 5,107
Income tax (713) (597) (2,267) (1,866)
Net income 1,208 1,044 3,849 3,241
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
Selected Balance Sheet Data: 1997 1996
<S> <C> <C>
Securities and short-term investments $88,444 $116,533
Loans and leases 388,177 336,580
Allowance for loan and lease losses
(5,433) (4,790)
All other assets 43,428 55,184
Total assets $514,616 $503,507
Deposits $461,782 $453,879
All other liabilities 15,680 15,661
Total liabilities 477,462 $469,540
Shareholder's equity $37,154 $33,967
</TABLE>
Community banking activities are conducted by Irwin Union
Bank through locations in seven counties in central Indiana. Net
income was up in the third quarter to $1.2 million from $1.0
million. Year to date, net income was $3.8 million, up from $3.2
million in 1996. The provision for loan and lease losses
increased 0.7% to $560.2 thousand in the third quarter compared
with a provision of $556.0 thousand a year earlier. Year to
date, the provision for loan and lease losses increased 3.1% to
$1.6 million.
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
September 30, 1997 1996
Average Yield/ Average Yield/
(In thousands) Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Interest -
earning assets, $484,828 $10,543 8.82% $439,739 $9,153 8.26%
Interest -
bearing liabilities 327,057 4,850 6.01% 381,838 4,039 4.20%
Net interest income $5,693 $5,114
Net interest margin 4.66% 4.61%
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, 1997 1996
Average Yield/ Average Yield/
(In thousands) Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Interest -
earning assets $475,318 $30,227 8.48% $414,560 $26,153 8.43%
Interest -
bearing liabilities 320,383 13,899 5.78% 354,593 11,659 4.40%
Net interest income $16,328 $14,494
Net interest margin 4.59% 4.67%
</TABLE>
Other income in the third quarter was down 2.6% to $2.0 million
from $2.1 million in 1996. For the year to date, other
income increased 1.2% to $7.0 million. Operating expenses
increased 3.6% from the third quarter of 1996 to $5.2 million.
For the year, these expenses were up 4.1% to $15.4 million. The
continued expansion of operations in new markets has increased
non-interest expense in 1997. However, this increase was
partially offset by a decline in certain expenses incurred in
1996 relating to the restructuring of trust operations.
Home Equity Lending
<TABLE>
<CAPTION>
Selected Financial Data (shown in thousands):
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Selected Income Statement Data:
<S> <C> <C> <C> <C>
Net interest revenue $1,037 $2,001 $3,842 $4,187
Provision for loan and lease losses (394) (276) (1,125) (790)
Gain from sale of loans 2,706 1,022 12,701 1,022
Loan servicing fees 4,009 676 9,393 2,520
Other revenue 73 55 193 94
Total net revenues 7,431 3,478 25,004 7,033
Amortization of capitalized
servicing (2,402) (175) (6,423) (726)
Operating expense (4,870) (4,245) (16,720) (11,361)
Pre-tax income (loss) $159 ($942) $1,861 ($5,054)
</TABLE>
<TABLE>
<CAPTION>
Other Selected Financial Data: September 30, December 31,
1997 1996
<S> <C> <C>
Home equity loans, net of allowance $111,366 $117,588
Net capitalized servicing 29,343 15,343
Servicing portfolio 334,347 230,450
</TABLE>
The 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 lines of credit
by means of direct mail and telemarketing.
The home equity lending business recorded pre-tax income of
$0.2 million during the third quarter of 1997 and $1.9 million
year to date. These results are compared to 1996 quarterly and
year to date losses of $0.9 million and $5.1 million,
respectively. Net revenues for the quarter totaled $7.4 million,
up from $3.5 million a year earlier. Year to date net revenues
increased to $25.0 million from $7.0 million in 1996. Included in
1997 net revenues are gains from the securitization of $35.1
million of home equity loans during the quarter and $160.1
million year to date.
Net revenues for the third quarter include $4.0 million of
servicing fees, up from $0.7 million a year earlier. Year to
date, servicing fees totaled $9.4 million, up from $2.5 million
in 1996. The home equity lending business has retained the
servicing rights on all the loans it has securitized. Its
managed portfolio of home equity loans totaled $334.3 million as
of September 30, 1997, compared with $230.5 million at December
31, 1996. Loan volume for the quarter ended September 30, 1997
totaled $60.1 million, an increase of 25.0% from 1996. Year-to-
date loan volume increased 34.0% to $161.5 million.
The business will maintain the flexibility of either holding
the loans it produces or securitizing them. Management will
evaluate these options throughout the year in light of market
conditions and financial objectives.
Operating expenses were $7.3 million in the third quarter of
1997, up 64.5% from 1996. Year to date, they increased 91.5% to
$23.1 million. The increase is reflective of the increased
production activities of the company in 1997. Included in
operating expenses is the amortization of capitalized servicing
which totaled $2.4 million in the third quarter, up from $0.2
million in 1996. For the year to date, amortization expense
totaled $6.4 million compared with $0.7 million in the previous
year. The increase results from the growth in capitalized
servicing which was $29.3 million at September 30, 1997, up from
$15.3 million at December 31, 1996 and $5.9 million a year
earlier.
Equipment Leasing
The equipment leasing business recorded pre-tax income for
the quarter and for the year to date of $75.0 thousand and $146.2
thousand, respectively. This compares to pre-tax income of $24.9
thousand and $39.5 thousand in the third quarter and year to date
1996, respectively. Net revenues were up 0.9% for the quarter to
$1.1 million and 3.7% year to date to $3.3 million. Operating
expenses totaled $1.0 million in the third quarter and $3.1
million year to date in 1997, down 3.9% and up 0.3%,
respectively, from 1996. Lease volume was $11.3 million in the
third quarter of 1997, up 19.5% from a year earlier. Year-to-
date volume was $29.6 million, up 12.3%.
Parent Company (Including Consolidating Entries)
For the quarter ended September 30, 1997, the parent company
recorded a net loss of $1.0 million, compared with net income of
$0.3 million a year earlier. Year to date, the parent company's
net loss totaled $3.5 million compared with net income of $0.9
million in 1996. There are two primary reasons for the decline.
First, the parent company records the income tax expense or
benefit generated at the home equity lending and equipment
leasing businesses until such time that all net operating losses
carried forward are fully used. In the third quarter and year to
date 1997, the parent recorded $93.5 thousand and $802.7
thousand, respectively, of income tax expense related to these
lines of business. This compares with $367.0 thousand and $2.0
million of income tax benefit recorded in the third quarter and
year to date, respectively, in 1996.
The second factor in the decline in the parent company's
1997 results is the distributions on trust preferred securities
which were sold in January 1997. During the third quarter and
year to date 1997, $1.2 million and $3.3 million, respectively,
was distributed.
Consolidated Income Statement Analysis
Net interest income for the third quarter of 1997 totaled
$13.5 million, up 8.8% from the third quarter of 1996. For the
year, it increased 9.3% to $38.8 million. The increases were the
result of increased production of mortgage and home equity loans
and growth in the loan portfolio of the community bank.
The loan and lease loss provision was $2.2 million for the
third quarter of 1997, as compared with $1.1 million for the same
period in 1996. For the year, it totaled $5.1 million, up from
$3.4 million a year earlier. This increase is consistent with an
increase in nonperforming assets which the Corporation has
experienced during 1997. See the section on credit risk for more
discussion of this subject.
Other income was up $11.3 million or 29.3% in the third
quarter of 1997. Year to date other income increased $25.9
million or 23.3%. This increase was driven primarily by home
equity lending and mortgage banking activities. Total income
from home equity loan sales and servicing was $6.9 million in the
third quarter of 1997 and $22.7 million year to date. This
compares to 1996 revenues of $1.7 million and $3.5 million in the
third quarter and year to date, respectively. Gains from the
sale of mortgage servicing increased $6.0 million in the third
quarter of 1997 and $15.1 million year to date.
Operating expenses also increased in 1997 as the third
quarter was up $7.1 million or 17.4% from 1996. For the year,
operating expenses increased $19.7 million or 16.9%. This
increase is due in part to the growth of the Corporation through
the continued expansion of the home equity lending business,
investments in new technology at the mortgage banking business,
and the community bank's growth in new markets. Also
contributing to the increase was additional amortization expense
associated with capitalized servicing assets on the balance
sheets of the mortgage bank and home equity lending business.
Amortization expense increased $2.5 million in the third quarter
to $6.4 million. Year to date, the expense grew to $17.5 million
from $10.6 million a year earlier.
The effective income tax rate for the Corporation was 40.6%
in the third quarter of 1997 and 40.3% year to date. This is
compared with 40.0% in the third quarter of 1996 and 40.6% year
to date 1996.
In February 1997 the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS No. 128). This statement specifies
the computation, presentation and disclosure requirements for
earnings per share. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997. If
the Corporation had calculated earnings per share in accordance
with SFAS No. 128, the following amounts would have been
reported:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Basic earnings per share $0.66 $0.48 $1.63 $1.37
Diluted earnings per share $0.65 $0.48 $1.60 $1.35
</TABLE>
Consolidated Balance Sheet Analysis
Total assets of the Corporation at September 30, 1997, were
$1.4 billion, an increase of $0.1 billion from December 31, 1996
total assets of $1.3 billion. The increase was attributed to an
increase in loans and leases of $55.2 million or 10.4% and an
increase in mortgage loans held for sale of $29.3 million or
6.6%.
The increase in assets was accompanied by an increase in
deposits of $69.3 million or 10.8%. 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 $214.1 million at September 30, 1997, up from
$171.1 million at December 31, 1996.
Shareholders' equity grew to $126.8 million or $11.46 per
share, a 6.6% increase over the $118.9 million or $10.46 per
share at the end of 1996. The Corporation's equity to assets
ratio ended the quarter at 8.98%, compared to 9.12% at the end of
1996. During 1997 the Corporation repurchased 381,569 shares of
its stock under a share repurchase program originally put in
place in 1994. The program was replaced during the third quarter
of 1997 with a new program under which up to 1.1 million
additional shares are authorized to be repurchased.
Prior to the adoption of new mortgage banking accounting
standards in the third quarter of 1995, mortgage banking
accounting did not allow the full value of mortgage servicing
rights to be reflected on the balance sheet. Since a significant
portion of the Corporation's mortgage servicing portfolio was
generated prior to the adoption of the new accounting standards,
it 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, December 31, December 31,
1997 1996 1995
<S> <C> <C> <C>
Servicing portfolio balance $10,647,802 $10,810,988 $10,301,914
Value @1.5% $159,717 $162,165 $154,529
Less: Capitalized servicing 77,125 70,551 51,783
Tax liability at 40% 33,037 36,646 41,098
Net value not on balance sheet $49,555 $54,968 $61,648
Per share of common stock $4.48 $4.84 $5.44
</TABLE>
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 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 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 future loss potential of all loans
and leases currently recorded on the Corporation's books.
As of September 30, 1997, the allowance for loan and lease
losses as a percentage of total loans and leases was 1.47%,
compared to 1.25% at December 31, 1996. For the three months
ended September 30, 1997, the provision for possible loan and
lease losses totaled $2.2 million, a 90.1% increase over the
amount recorded in the third quarter of 1996. Year to date, the
provision totaled $5.1 million, up from $3.4 million a year
earlier. The higher 1997 reserve and provision are consistent
with the increase in nonperforming assets experienced by the
Corporation. Net charge-offs for the quarter were $502.0
thousand as compared to $413.5 thousand in 1996. Year to date
net charge-offs totaled $1.9 million, up from $1.1 million a year
earlier.
Nonperforming assets (loans 90 days past due, nonaccrual,
and owned real estate) were $11.1 million or 0.79% of total
assets at September 30, 1997, up from $7.2 million or 0.55% at
December 31, 1996 and $2.7 million or 0.26% at December 31, 1995.
The most significant increases occurred at the mortgage bank and
community bank where nonperforming assets were up $1.0 million
and $3.5 million, respectively, from year end 1996. The
Corporation monitors the loans and property included in this
total in evaluating the status of the current reserve.
<TABLE>
<CAPTION>
Nonperforming Assets September 30, December 31, December 31,
(In Thousands) 1997 1996 1995
<S> <C> <C> <C>
Accruing loans past due
90 days or more:
Commercial $1,197 $256 $418
Leasing 0 0 0
Real Estate 0 234 0
Consumer 104 205 202
Subtotal 1,301 695 620
Nonaccrual loans:
Commercial 2,511 2,739 670
Leasing 689 1,261 415
Real Estate 4,043 260 694
Consumer 49 0 0
Subtotal 7,292 4,260 1,779
Total nonperforming loans 8,593 4,955 2,399
Other real estate owned 2,520 2,239 295
Total nonperforming assets $11,113 $7,194 $2,694
Nonperforming assets to
total assets 0.79% 0.55% 0.26%
</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.
Interest Rate Sensitivity
Interest rate sensitivity refers to the degree to which the
Corporation's short- and long-term earnings would change due to
changes in market rates of interest. The Corporation's goal in
addressing this risk is to manage its businesses so that
movements of interest rates have an immaterial impact on net
income and on the value of its assets and liabilities. To
measure its sensitivity to changes in interest rates and
appropriate hedging strategies, the Corporation uses a
combination of measurement techniques including simulation, rate
shock analysis, and gap analysis.
The following table shows in summary form the Corporation's
interest rate sensitivity based on expected interest rate
repricing intervals for the balance sheet as of September 30,
1997 (a "gap" analysis). For example, a 30-year adjustable rate
residential mortgage held in the portfolio of Irwin Union Bank is
included in the "4-12 month" category since that is the time
frame over which the asset will reprice. Fixed rate assets and
liabilities such as mortgage servicing rights and the escrow
deposits associated with them are analyzed based on their
expected maturities which reflect estimated pre-payment
characteristics, rather than their maximum contractual
maturities. Some items, such as certain deposit accounts, are
non-interest bearing, but will vary in balance due to interest
rate changes. Since the Corporation relies on such accounts in
its operations and would need to replace them with "at market"
liabilities should the non-interest bearing ones be unavailable,
they are included in the gap table and in simulations as "non-
market" items.
<TABLE>
<CAPTION>
Within 4-12 1-5 Over 5 Subtotal Non- Total
3 Months Years Years market
Months
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-bearing
deposits with banks $3,150 $3,872 $4,311 $0 $11,333 $0 $11,333
Federal Funds Sold 6,356 0 0 0 6,356 0 6,356
Taxable investment
securities 19,205 7,340 20,384 9,420 56,349 0 56,349
Tax-exempt investment
securities 0 600 962 2,402 3,964 0 3,964
Mortgages held for sale 474,433 0 0 0 474,433 0 474,433
Loans, net of unearned
income 299,688 72,813 121,063 90,709 584,273 0 584,274
Total interest-earning
assets 802,832 84,625 146,720 102,531 1,136,709 0 1,136,708
Liabilities:
Non-interest bearing
deposits 0 0 0 0 0 278,635 278,635
Money Market checking 23,367 0 44,258 8,743 76,368 0 76,368
Money Market savings 2,661 0 8,192 0 10,853 0 10,853
Regular savings 28,089 2,017 10,756 8,311 49,173 0 49,173
Time deposits 158,235 83,021 52,107 1,004 294,367 0 294,367
Short-term borrowings 436,611 0 0 0 436,611 0 436,612
Long-term debt 1,205 2,815 4,170 0 8,190 0 8,190
Total interest-bearing
liabilities 650,168 87,853 119,483 18,058 875,562 278,635 1,154,198
Trust preferred
securities 0 0 0 50,000 50,000 0 50,000
Interest sensitivity 152,664 (3,228) 27,237 34,473 211,146 (278,635) (67,489)
gap
Cumulative interest
sensitivity gap 152,664 149,436 176,673 211,147 (67,489)
</TABLE>
As the above table shows, the consolidated one-year gap at
September 30, 1997 was a positive $149.4 million. This compares
to a positive gap of $133.2 million at December 31, 1996.
Since the gap was positive at September 30, 1997, it means that
the Corporation's net interest income was positioned to benefit
from rising rates, or to be harmed from declining rates. While
traditional interest rate risk focuses on the changes in net
interest income due to interest rate changes, the Corporation
engages in other activities which are also affected by interest
rate changes. Principal among these are mortgage loan
origination and servicing. Through the use of simulations using
regression modeling and option-adjusted valuation techniques for
modeling expected customer behavior, the Corporation attempts to
analyze and mitigate the interest rate risks associated with the
negatively correlated activities of mortgage loan origination and
servicing. For example, if interest rates decline, management
expects an increase in mortgage loan origination income and a
decline in the value of mortgage servicing rights. Management
attempts to monitor this exposure to traditional interest rate
risk as well as interest rate influences on production and
servicing value in a comprehensive manner.
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
10.0% to be considered well-capitalized. In addition to the
requirements for the risk-based capital ratio, Tier I capital of
at least 6.0% of total risk-adjusted assets must be maintained to
be considered well-capitalized. Equity and risk-based capital
ratios for the Corporation are as follows:
<TABLE>
<CAPTION>
September 30, December 31, December 31,
1997 1996 1995
<S> <C> <C> <C>
Equity to Assets 8.98% 9.12% 9.56%
Risk-Based Capital Ratio 16.99% 14.23% 14.49%
Tier I Capital Ratio 16.15% 13.47% 13.80%
</TABLE>
The Corporation's capital ratios are deemed adequate by
management and above regulatory minimums.
Other Matters
The Corporation, like many financial institutions, is
actively addressing its exposure to the "Year 2000
Bug" (which is commonly defined as the ability of
information and other business systems to function
fully and accurately from, into, and between the
twentieth and twenty-first centuries). The
Corporation has developed a five-stage project plan
which culminates in final testing and implementation
by mid-1999.
The Corporation is currently in the assessment
stage of its plan and cannot definitively estimate
the extent of the problem for the Corporation or the
cost to remedy it. The Corporation has developed a
technology strategy which primarily uses systems
developed by third parties and has very few
internally developed applications. Consequently, the
Corporation's principal focus will be on assuring
Year 2000 compliance from its commercial application
vendors.
PART II
Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits to Form 10-Q
Number Assigned
In Regulation S-K
Item 601 Description
(11) Computation of
Earnings per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
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)
Exhibit 11
IRWIN FINANCIAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Primary
<S> <C> <C> <C> <C>
Average number of shares
outstanding 11,106,069 11,373,018 11,205,884 11,354,826
Assumed exercise of stock
options 335,790 262,496 310,311 270,966
Total shares 11,441,859 11,635,514 11,516,195 11,625,792
Net income $7,311,762 $5,502,549 $18,276,433 $15,518,522
Net income per share $0.64 $0.47 $1.59 $1.33
Fully Diluted
Average number of shares
outstanding 11,106,069 11,373,018 11,205,884 11,354,826
Assumed exercise of stock
options (Note 1) 380,844 262,496 380,821 270,966
Total shares 11,486,913 11,635,514 11,586,705 11,625,792
Net income $7,311,762 $5,502,549 $18,276,433 $15,518,522
Net income per share $0.64 $0.47 $1.58 $1.33
</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 CORPORATION
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 51,871
<INT-BEARING-DEPOSITS> 11,333
<FED-FUNDS-SOLD> 6,356
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 26,886
<INVESTMENTS-CARRYING> 60,313
<INVESTMENTS-MARKET> 60,949
<LOANS> 584,274
<ALLOWANCE> 8,594
<TOTAL-ASSETS> 1,411,826
<DEPOSITS> 709,499
<SHORT-TERM> 436,612
<LIABILITIES-OTHER> 82,835
<LONG-TERM> 8,190
0
0
<COMMON> 29,965
<OTHER-SE> 96,818
<TOTAL-LIABILITIES-AND-EQUITY> 1,411,826
<INTEREST-LOAN> 41,718
<INTEREST-INVEST> 4,518
<INTEREST-OTHER> 25,034
<INTEREST-TOTAL> 71,270
<INTEREST-DEPOSIT> 15,219
<INTEREST-EXPENSE> 17,262
<INTEREST-INCOME-NET> 38,788
<LOAN-LOSSES> 5,055
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 136,047
<INCOME-PRETAX> 33,906
<INCOME-PRE-EXTRAORDINARY> 33,906
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,276
<EPS-PRIMARY> 1.59<F1>
<EPS-DILUTED> 1.59
<YIELD-ACTUAL> .04<F1>
<LOANS-NON> 7,292
<LOANS-PAST> 1,301
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,875
<CHARGE-OFFS> 2,201
<RECOVERIES> 335
<ALLOWANCE-CLOSE> 8,594
<ALLOWANCE-DOMESTIC> 8,594
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,104
<FN>
<F1>information not in 1,000
</FN>
</TABLE>
