IRWIN FINANCIAL CORPORATION
DEF 14A, 1999-03-31
STATE COMMERCIAL BANKS
Previous: IRWIN FINANCIAL CORPORATION, 10-K405, 1999-03-31
Next: OHIO & SOUTHWESTERN ENERGY CO, NT 10-K, 1999-03-31



<PAGE>   1
 
                                  SCHEDULE 14A
                                 (Rule 14a-101)
                    INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
          Proxy Statement Pursuant to Section 14(a) of the Securities
                     Exchange Act of 1934 (Amendment No.  )
 
Filed by the registrant [ ]
 
Filed by a party other than the registrant [ ]
 
Check the appropriate box:
 
[ ] Preliminary proxy statement             [ ] Confidential, for Use of the
                                                Commission Only (as permitted by
                                                Rule 14a-6(e)(2))
 
[X] Definitive proxy statement
 
[ ] Definitive additional materials
 
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)
                          IRWIN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of filing fee (Check the appropriate box):
 
[ ] No fee required.
 
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1) Title of each class of securities to which transaction applies:
 
- --------------------------------------------------------------------------------
 
(2) Aggregate number of securities to which transaction applies:
 
- --------------------------------------------------------------------------------
 
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
 
- --------------------------------------------------------------------------------
 
(4) Proposed maximum aggregate value of transaction:
 
- --------------------------------------------------------------------------------
 
(5) Total fee paid:
 
- --------------------------------------------------------------------------------
 
[ ] Fee paid previously with preliminary materials.
 
- --------------------------------------------------------------------------------
 
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
 
(1) Amount previously paid:
 
- --------------------------------------------------------------------------------
 
(2) Form, schedule or registration statement no.:
 
- --------------------------------------------------------------------------------
 
(3) Filing party:
 
- --------------------------------------------------------------------------------
 
(4) Date filed:
 
- --------------------------------------------------------------------------------
<PAGE>   2
 
Irwin Financial Corporation   500 Washington Street, Columbus, Indiana 47201
- --------------------------------------------------------------------------------
                                         March 29, 1999
 
Notice of Annual Meeting of Shareholders
- --------------------------------------------------------------------------------
To the Shareholders:
                  The Annual Meeting of Shareholders of Irwin Financial
                  Corporation (the "Corporation") will be held at the Ramada
                  Inn, 2485 Jonathan Moore Pike, Columbus, Indiana, on Thursday,
                  April 29, 1999, at 4:00 p.m., Columbus time, for the following
                  purposes:
 
               1. to elect a Board of Directors to serve for the ensuing year;
 
               2. to act upon the confirmation of independent auditors for the
                  calendar year 1999;
 
               3. to approve the Irwin Financial Corporation Employees' Stock
                  Purchase Plan III;
 
               4. to approve the Irwin Financial Corporation 1999 Outside
                  Director Restricted Stock Compensation Plan;
 
               5. to amend the Articles of Incorporation to increase the total
                  number of authorized Preferred Shares of the Corporation;
 
               6. to amend the Articles of Incorporation to delete an outdated
                  section of Article V;
 
               7. to hear such reports as may be presented; and
 
               8. to transact such other business as may properly come before
                  the meeting or any adjournment thereof.
 
                  Registration of shareholders will start at 3:15 p.m. and the
                  meeting will start at 4:00 p.m. Following the meeting,
                  refreshments will be served.
 
                  I encourage you to date, sign, and mail the enclosed proxy in
                  the postpaid envelope that is provided. If you are present at
                  the meeting and desire to do so, you may revoke your proxy and
                  vote in person.
 
                  A copy of the Corporation's Annual Report to Shareholders for
                  1998 is enclosed and a Proxy Statement accompanies this
                  notice.
 
                  Matt Souza, Secretary
<PAGE>   3
 
Proxy Statement of Irwin Financial Corporation
- --------------------------------------------------------------------------------
                  For Annual Meeting of Shareholders to be held April 29, 1999
 
General Information
- --------------------------------------------------------------------------------
 
                  This proxy statement and the accompanying form of proxy are
                  furnished in connection with the solicitation by the Board of
                  Directors of Irwin Financial Corporation (the "Corporation")
                  of proxies to be used at the Corporation's Annual Meeting of
                  Shareholders on Thursday, April 29, 1999, at the Ramada Inn,
                  Columbus, Indiana, at 4:00 p.m., Columbus time, or any
                  adjournment thereof.
 
                  The costs of the solicitation of proxies in the accompanying
                  form will be borne by the Corporation. The solicitation of
                  proxies will be limited to the use of the mails.
 
                  A shareholder who signs and returns a proxy in such form will
                  have the power to revoke it at any time before it is exercised
                  by giving notice of revocation to the Secretary of the
                  Corporation. All shares represented by the accompanying proxy,
                  if the proxy is executed and returned, will be voted as
                  directed by the shareholder. If a shareholder executes and
                  returns a proxy, but makes no direction as to such
                  shareholder's vote, then the shares will be voted on each
                  matter to come before the meeting in accordance with the
                  recommendation of the Board of Directors.
 
                  The main offices of the Corporation are located at 500
                  Washington Street, Columbus, Indiana 47201.
 
                  This proxy statement will be mailed to shareholders on or
                  about March 30, 1999.
 
 1.
<PAGE>   4
 
Voting Securities and Principal Holders
- --------------------------------------------------------------------------------
 
   
                  Only shareholders of record at the close of business on March
                  11, 1999, will be entitled to vote. On March 11, 1999, there
                  were 21,689,574 common shares outstanding and entitled to
                  vote. Each common share is entitled to one vote on each matter
                  to be voted on at the meeting.
    
 
                  The following information is given as of March 11, 1999, for
                  persons known by management to beneficially own more than 5%
                  of the common shares of the Corporation. All of the shares
                  listed are beneficially owned through voting and investment
                  power held solely by the reported owner, except as otherwise
                  indicated.
 
   
<TABLE>
<CAPTION>
                        -------------------------------------------------------------------------------------------
                        Title of                                            Amount and Nature of
                        Class                Name and Address               Beneficial Ownership    % of Class
                        -------------------------------------------------------------------------------------------
                        <S>                  <C>                            <C>                     <C>        <C>
 
                        Common               IFC Trust Under Trust             5,160,592(1)           23.79%
                        Shares               Agreement
                                             dated 6/29/90,
                                             Clementine M. Tangeman,
                                             Donor,
                                             Irwin Miller, Trustee
                                             301 Washington Street
                                             Columbus, Indiana
 
                        Common               Irwin Miller                    5,304,972(1,2)           24.46%
                        Shares               301 Washington Street
                                             Columbus, Indiana
 
                        Common               William I. Miller              10,835,607(1,3)           49.23%
                        Shares               500 Washington Street
                                             Columbus, Indiana
                        -------------------------------------------------------------------------------------------
</TABLE>
    
 
                1. Certain shares owned by the IFC Trust (5,160,592 shares which
                   were donated to the Trust by the Estate of Mrs. Clementine
                   Tangeman) and Mr. Irwin Miller (5,160,544 shares) are subject
                   to an irrevocable proxy held by Mr. William I. Miller to vote
                   such shares. Mr. William I. Miller holds a right to acquire
                   these same 10,321,136 shares, pursuant to options purchased
                   by Mr. Miller from Mrs. Clementine Tangeman and Mr. Irwin
                   Miller, within 60 days but subject to certain contingencies.
 
                2. Includes 130,000 shares owned by Mr. Irwin Miller's wife,
                   Xenia S. Miller, as to which Mr. Miller holds no voting or
                   investment power and for which Mr. Miller expressly disclaims
                   any beneficial interest; 9,024 shares as to which Mr. Miller
                   holds voting and investment power; 4,604 shares held for the
                   account of Mr. Irwin Miller under the Corporation's Outside
                   Director Restricted Stock Compensation Plan as to which Mr.
                   Miller holds sole voting power but no investment power; and
                   800 shares which Mr. Miller has the right to acquire within
                   60 days of the record date through the exercise of stock
                   options. See "Outside Director Restricted Stock Compensation
                   Plan."
 
                3. See Footnote 1 above. Includes 167,525 shares as to which Mr.
                   Miller holds voting and investment power; 22,812 shares that
                   Mr. Miller is the custodian of on behalf of his children and
                   for which Mr. Miller expressly disclaims any beneficial
                   interest; 2,289 shares that are held in the 1998 William I.
                   Miller Annual Exclusion Trust, Lynne M. Maguire, Trustee, for
                   which Mr. Miller expressly disclaims any beneficial interest;
                   and 321,845 shares which Mr. Miller has the right to acquire
                   within 60 days of the record date through the exercise of
                   stock options.
 
 2.
<PAGE>   5
 
Security Ownership
of Management:    The following information is given as of March 11, 1999, for
                  the nominees for directors, individually, and all executive
                  officers of the Corporation as a group.
 
- --------------------------------------------------------------------------------
 
   
<TABLE>
<CAPTION>
                          Title of             Name of            Amount and Nature of
                            Class          Beneficial Owner      Beneficial Ownership(4)      % of Class
                        --------------------------------------------------------------------------------
                        <S>            <C>                       <C>                          <C>
                        Common Shares  Sally A. Dean(3)                    10,558                 .05%
                        Common Shares  David W. Goodrich(3)                15,144                 .07%
                        Common Shares  John T. Hackett(3)                  28,388                 .13%
                        Common Shares  William H. Kling(3)                  8,609                 .04%
                        Common Shares  Brenda J. Lauderback(3)              3,408                 .02%
                        Common Shares  John C. McGinty, Jr.(3)             11,520                 .05%
                        Common Shares  Irwin Miller(3)                  5,304,972(1)            24.46%
                        Common Shares  William I. Miller(3)            10,835,607(2)            49.23%
                        Common Shares  John A. Nash(3)                    603,165                2.75%
                        Common Shares  Lance R. Odden(3)                   11,601                 .05%
                        Common Shares  Theodore M. Solso(3)                21,494                 .10%
                        Common Shares  Director Nominees and
                                       Executive Officers as a
                                       Group (22 persons)              12,236,741(5)            56.34%
                        -------------
</TABLE>
    
 
                1. See Footnotes 1 and 2 under "Voting Securities and Principal
                   Holders."
 
                2. See Footnotes 1 and 3 under "Voting Securities and Principal
                   Holders."
 
                3. Director nominee.
 
   
                4. For director nominees, Dean (5,078 shares), Goodrich (3,668
                   shares), Hackett (2,800 shares), Kling (5,809 shares),
                   Lauderback (2,288 shares), McGinty (6,752 shares), Irwin
                   Miller (4,604 shares), Odden (5,809 shares) and Solso (5,490
                   shares), includes shares as to which the director nominee
                   holds sole voting power but no investment power under the
                   Corporation's Outside Director Restricted Stock Compensation
                   Plan.
    
 
                5. Includes shares which the following director nominees and
                   executive officers have the right to acquire within 60 days
                   of the record date through the exercise of stock options:
                   William Miller (321,845 shares), Nash (278,210 shares), other
                   director nominees and executive officers (307,520 shares).
                   Also includes an aggregate of 42,298 shares held for the
                   accounts of nine director nominees as to which the director
                   nominees hold sole voting power, but limited or no investment
                   power. See "Outside Director Restricted Stock Compensation
                   Plan" and Footnote 4 above.
 
 3.
<PAGE>   6
 
1. Election of Directors
- --------------------------------------------------------------------------------
 
                  Eleven directors are to be elected to the Corporation's Board
                  of Directors at the Annual Meeting. Proxies granted for use at
                  the Annual Meeting cannot be voted for more than eleven
                  nominees.
 
                  Directors are elected annually to hold office until the next
                  Annual Meeting of Shareholders and until their successors are
                  elected and have qualified. The persons named as Proxies in
                  the accompanying form of proxy will, unless otherwise
                  indicated in the form of proxy, vote the shares covered by
                  proxies for the election of the nominees named in the
                  following table. Management has no reason to believe that any
                  nominee named herein will be unable to serve. However, should
                  any nominee for director become unavailable for election, and
                  unless the Board of Directors or the Executive Committee shall
                  reduce the size of the Board to a number that shall be equal
                  to the number of nominees who are able and willing to serve,
                  the persons named in the accompanying form of proxy will vote
                  for a substitute who will be designated by the Board of
                  Directors or the Executive Committee.
 
                  The following table sets forth, as of March 11, 1999, (a) the
                  name, age, year in which the nominee was first elected as a
                  director of the Corporation or of Irwin Union Bank and Trust
                  Company, and principal occupation for the past five years of
                  each nominee for election as a director; (b) the percentage of
                  the total number of meetings of the Board of Directors of the
                  Corporation, and meetings of committees of the Board of
                  Directors of the Corporation of which the director is a
                  member, attended by each director during 1998; and (c) all
                  other directorships held by each nominee in other corporations
                  subject to the reporting requirements of the Securities
                  Exchange Act of 1934 and in any investment company. There are
                  no family relationships among any of the director nominees or
                  executive officers, except that William I. Miller is the son
                  of Irwin Miller.
 
                  --------------------------------------------------------------
 
Sally A. Dean     Sally A. Dean
                  (Director since 1995)
                         

                  Ms. Dean is a retired Senior Vice President of Dillon, Read &
                  Co. Inc. (investment bank). She serves as Chairman of the
                  Paideia School Endowment Board and Trustee and Immediate Past
                  President of the Board of Trustees, Randolph-Macon Woman's
                  College. In 1998, Ms. Dean attended 100% of the Corporation's
                  Board and Committee meetings of which she is a member. Age 50.
                  --------------------------------------------------------------

 
 4.
<PAGE>   7
 
<TABLE>
<S>                      <C>
David W. Goodrich        David W. Goodrich
                         (Director since 1986)

                         Mr. Goodrich is President of the Indianapolis, Indiana Colliers Turley Martin Tucker
                         Company (realty company). He is the Vice Chairman of Clarian Health Partners, Inc.;
                         Executive Vice President and board member of Colliers Turley Martin Tucker Company; Vice
                         President of the Board of Citizens Gas and Coke Utility; and board member of American
                         United Life Insurance Company. In 1998, Mr. Goodrich attended 100% of the Corporation's
                         Board and Committee meetings of which he is a member. Age 51.
                         ------------------------------------------------------------------------------------------
 
John T. Hackett          John T. Hackett*
                         (Director since 1981)

                         Mr. Hackett is Managing General Partner of CID Equity Partners, L.P. (a private equity
                         investment partnership). He is a board member of Meridian Insurance Group, Inc., the
                         Wabash National Corp., and the Ball Corporation. In 1998, Mr. Hackett attended 100% of the
                         Corporation's Board and Committee meetings of which he is a member. Age 66.
                         ------------------------------------------------------------------------------------------
 
William H. King          William H. Kling
                         (Director since 1993)

                         Mr. Kling has been President of Minnesota Public Radio since 1966(regional network of 29
                         public radio stations). In 1987, he became the President of the Greenspring Company (a
                         diversified media, direct marketing, and mail order company). He is a board member of The
                         St. Paul Companies, The Wenger Corporation, Media One of St. Paul and several Funds of the
                         American Funds family of the Capital Group. In 1998, Mr. Kling attended 100% of the
                         Corporation's Board and Committee meetings of which he is a member. Age 56.
                         ------------------------------------------------------------------------------------------
 
Brenda J. Lauderback     Brenda J. Lauderback
                         (Director since 1996)

                         Ms. Lauderback was Former President of the Wholesale Group of the Nine West Group, Inc.
                         She is a board member of Consolidated Stores, a Trustee for the Hord Foundation, and
                         serves on the Advisory Committee of For All Kids Foundation. In 1998, Ms. Lauderback
                         attended 100% of the Corporation's Board meetings. Age 48.
                         ------------------------------------------------------------------------------------------
 
John C. McGinty, Jr.     John C. McGinty, Jr.
                         (Director since 1991)

                         Mr. McGinty is President of Peregrine Associates, Inc. (healthcare, governance, and
                         leadership consulting firm). He is the Managing Director of The Greeley Company
                         (healthcare leadership consulting, strategic planning, education, and publications). From
                         1986 to 1997, Mr. McGinty was the President and Chief Executive Officer of Southeastern
                         Indiana Health Management, Inc. and Columbus Regional Hospital. In 1998, Mr. McGinty
                         attended 100% of the Corporation's Board and Committee meetings of which he is a member.
                         Age 48.
                         ------------------------------------------------------------------------------------------
</TABLE>
 
 5.
<PAGE>   8
 
   
<TABLE>
Irwin Miller
                         Irwin Miller(1)
                         (Director since 1939)
                         Mr. Miller is the former Chairman of Cummins Engine Company, Inc. (manufacturer of
                         diesel engines). He is a former director of Cummins Engine Company, Inc. and a
                         member of the Business Council, The American Academy of Arts and Sciences, and the
                         American Philosophical Society. In 1998, Mr. Miller attended 40% of the Corporation's
                         Board meetings. Age 89.
<S>                      <C>
                         ---------------------------------------------------------------------------------------
    
 
   
William I. Miller        William I. Miller*
                         (Director since 1985)
                         Mr. Miller is Chairman of Irwin Financial Corporation. He is a director of Cummins
                         Engine Company, Inc., The Tennant Company, Public Radio International, and the New
                         Perspective Fund, Inc. of the American Funds family of the Capital Group. He is a
                         Trustee of EuroPacific Growth Fund of the American Funds family of the Capital Group
                         and Taft School. In 1998, Mr. Miller attended 100% of the Corporation's Board and
                         Committee meetings of which he is a member. Age 42.
                         ---------------------------------------------------------------------------------------
    
 
   
John A. Nash             John A. Nash*
                         (Director since 1972)
                         Mr. Nash is Chairman of the Executive Committee and the President of Irwin Financial
                         Corporation. He is the past Chairman of the Columbus Indiana Economic Development Board
                         and the Chairman of the Board of Trustees of Columbus Regional Hospital. In 1998, Mr.
                         Nash attended 100% of the Corporation's Board and Committee meetings of which he is a
                         member. Age 61.
                         ---------------------------------------------------------------------------------------
    
 
   
Lance R. Odden           Lance R. Odden
                         (Director since 1991)
                         Mr. Odden is President of Taft School (private educational institution). He has been
                         Headmaster since 1972. Mr. Odden is a Trustee of the National Association of
                         Independent Schools, The Gunnery School, and The Mattuck Museum. In 1998, Mr. Odden
                         attended 89% of the Corporation's Board and Committee meetings of which he is a member.
                         Age 59.
                         ---------------------------------------------------------------------------------------
    
 
   
Theodore M. Solso        Theodore M. Solso*
                         (Director since 1993)
                         Mr. Solso is President and Chief Operating Officer of Cummins Engine Company, Inc. He
                         served as Executive Vice President and Chief Operating Officer of Cummins during 1994
                         and 1995. Mr. Solso was Executive Vice President-Operations of Cummins from 1992 to
                         1994. He is a board member of the Cyprus AMAX Minerals Company, and Cummins Engine
                         Company, Inc., and a Trustee of DePauw University. In 1998, Mr. Solso attended 100% of
                         the Corporation's Board meetings. Age 52.
                         ---------------------------------------------------------------------------------------
</TABLE>
    
 
 6.
<PAGE>   9
 
   
                * Member of the Executive Committee.
    
 
                1. Includes service as a director of Irwin Union Bank and Trust
                  Company prior to the formation of the Corporation in 1972.
 
                  There are no material proceedings to which any director,
                  executive officer, or affiliate of the Corporation, any owner
                  of record or beneficial owner of more than five percent of any
                  class of voting securities of the Corporation, or any
                  associate of any such director, executive officer, affiliate,
                  or security holder is a party adverse to the Corporation or
                  any of its subsidiaries or has a material interest adverse to
                  the Corporation or any of its subsidiaries.
 
Compliance with
Section 16(a) of the
Securities Exchange
Act of 1934       Section 16(a) of the Securities Exchange Act of 1934 requires
                  the Corporation's directors and executive officers, and
                  persons who own more than ten percent of a registered class of
                  the Corporation's equity securities, to file with the
                  Securities and Exchange Commission initial reports of
                  ownership and reports of changes in ownership of common shares
                  and other equity securities of the Corporation. Executive
                  officers, directors, and greater than ten percent shareholders
                  are required by SEC regulation to furnish the Corporation with
                  copies of all Section 16(a) forms they file.
 
                  To the Corporation's knowledge, based solely on a review of
                  the copies of such reports furnished to the Corporation and
                  written representations that no other reports were required,
                  all Section 16(a) filing requirements applicable to its
                  executive officers, directors, and greater than ten percent
                  shareholders were met.
 
 7.
<PAGE>   10
 
Director Meetings and Committees
- --------------------------------------------------------------------------------
 
                  The Board of Directors of the Corporation held five meetings
                  in 1998.
 
                  The Corporation's Audit Committee has primary responsibility
                  for the discharge of the following functions: recommendation
                  of the firm to be employed as the Corporation's independent
                  auditors; consultation with the independent auditors with
                  regard to the plan of audit; review, in consultation with the
                  independent auditors, of the report of audit, or proposed
                  report of audit, and the accompanying management letter, if
                  any; review and direction of the work performed by the
                  internal audit department of the Corporation; review of
                  regulatory examination reports received by the Corporation and
                  its subsidiaries; and consultation with the independent and
                  internal auditors with regard to the adequacy of internal
                  controls. In 1998, the Audit Committee was composed of
                  directors Dean, Hackett, and McGinty. The Committee held four
                  meetings during 1998.
 
                  The Corporation's Compensation Committee reviews and considers
                  recommendations from management concerning the executive
                  compensation policies, employee benefit plans and the salary
                  administration program of the Corporation, which includes an
                  annual review of the total compensation and recommended
                  adjustments for all officers of the Corporation and its
                  subsidiaries. The Committee administers the Management
                  Performance Plan and the Long-Term Performance Plan. The
                  Committee also administers existing stock option and employee
                  savings plans. The deliberations of the Committee are reported
                  to the Board of Directors for review and approval. The
                  Committee members are Dean, Goodrich, and Kling. The
                  Compensation Committee held two meetings in 1998.
 
                  The Corporation's Nominating Committee makes recommendations
                  to the Board of Directors regarding general qualifications for
                  nominees as directors, desired areas of community and business
                  representation, size of the Board of Directors, director
                  compensation, and the retirement policy for directors. On the
                  basis of these general determinations, the Committee
                  recommends qualified individuals to serve as directors.
                  Shareholder recommendations for nominees will be accepted by
                  the Committee; however, no formal procedures have been
                  developed to consider such recommendations. In 1998, the
                  members of the Nominating Committee were directors Goodrich,
                  McGinty, W. Miller, Nash, and Odden. The Nominating Committee
                  held four meetings in 1998.
 
                  The Corporation's Executive Committee acts on the Board's
                  behalf at such times as may be designated by the Board
                  pursuant to the conduct of the business of the Board. In 1998,
                  the members of the Executive Committee were directors Hackett,
                  McGinty, W. Miller, Nash, and Solso. The Executive Committee
                  held no meetings in 1998.
 
 8.
<PAGE>   11
 
Outside Director
Compensation      Under the outside directors' fee schedule, effective January
                  1, 1997, each outside director of the Corporation earns a
                  retainer of $15,000 for one year's service. $5,000 of the
                  retainer is paid in the form of stock options. The remainder
                  of the retainer is payable in cash, additional stock options,
                  or in common shares issued pursuant to the Outside Director
                  Restricted Stock Compensation Plan.
 
                  In addition to the annual retainer described above, in 1998,
                  each outside director of the Corporation received $1,000 for
                  attendance at each meeting of the Board of Directors of the
                  Corporation, $1,000 for attendance at each meeting of a
                  subsidiary Board, $500 for attendance at each meeting of a
                  committee of the Board of Directors, and $350 for attendance
                  at each meeting of a committee of the Board of Directors of a
                  subsidiary company.
 
                  The Outside Director Restricted Stock Compensation Plan (the
                  "Plan") covers only non-employee directors of the Corporation
                  and its subsidiaries. The Plan allows an outside director to
                  elect to receive his or her annual retainer and/or meeting
                  fees in cash or in common shares with a market value
                  equivalent to the cash. The Plan permits the grant of up to
                  540,000 common shares over a ten-year period. Grants under the
                  Plan may be for one or more years of future service, and in
                  such cases, the common shares granted under the Plan are
                  forfeitable until vested in accordance with the Plan.
 
                  The Plan is administered by a Committee, appointed by the
                  Board of Directors. Directors may elect vesting of common
                  shares issued pursuant to multiple-year grants in equal
                  amounts at the end of each year covered by the grant. Common
                  share certificates issued by the Plan Committee are held by
                  the Corporation for at least two years prior to their delivery
                  to participants. Upon cessation of a participant's service as
                  an outside director for any reason other than ordinary
                  retirement, permanent disability, or death, non-vested common
                  shares will revert to the Corporation. Directors have voting
                  and dividend rights with respect to granted shares commencing
                  on the date of grant, but may not sell, pledge, or otherwise
                  transfer or encumber any such shares until they are vested, or
                  the director receives certificates representing such shares
                  from the Corporation, whichever is later.
 
   
                  During 1998, director nominees Dean, Goodrich, Hackett, Kling,
                  Lauderback, McGinty, Irwin Miller, Odden, and Solso
                  participated in the Plan. At present, a total of 42,298 common
                  shares are registered in the names of the participating
                  director nominees. Other grants made under the Plan since its
                  inception in 1989 total 57,664 common shares. A total of
                  99,962 shares have been granted to participants in the Plan.
    
 
                  No other fees are paid to directors for services rendered in
                  that capacity. Directors who are officers of the Corporation
                  or any of its subsidiaries do not receive any directors' fees.
 
 9.
<PAGE>   12
 
Executive Compensation and Other Information
- --------------------------------------------------------------------------------
 
Summary of Cash and Certain Other Compensation
- --------------------------------------------------------------------------------
 
                  The following table provides certain summary information
                  concerning compensation paid or accrued by the Corporation and
                  its subsidiaries, to or on behalf of the Corporation's
                  Chairman (the Corporation does not formally use the title of
                  Chief Executive Officer) and each of the four other most
                  highly compensated executive officers of the Corporation for
                  the fiscal years ended December 31, 1996, 1997 and 1998:
 
                                    SUMMARY COMPENSATION TABLE
                  --------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                                              Long-Term
                                                                                            Compensation        All Other
                                                                Annual Compensation(1,4)       Awards        Compensation(7)
                        ----------------------------------------------------------------------------------------------------
                         Name & Principal Position      Year    Salary(2)      Bonus(3)     Option/SAR(#)
                                    (a)                 (b)        (c)           (d)             (g)               (i)
                        <S>                             <C>     <C>           <C>           <C>              <C>
                        ----------------------------------------------------------------------------------------------------
                        William I. Miller               1998     $393,000      $440,000        28,020           $ 80,624(5,6)
                        Chairman                        1997     $374,600      $425,863        42,180           $ 69,481(5,6)
                                                        1996     $347,200      $437,588        41,400           $ 49,328(5,6)
                        ----------------------------------------------------------------------------------------------------
                        John A. Nash                    1998     $295,000      $240,000        16,760           $192,988(5,6)
                        President                       1997     $281,667      $232,902        27,240           $158,886(5,6)
                                                        1996     $273,000      $234,250        33,800           $150,752(5,6)
                        ----------------------------------------------------------------------------------------------------
                        Rick L. McGuire                 1998     $213,333      $289,007         2,420           $ 10,172(6,8)
                        President-Irwin                 1997     $200,000      $227,286         4,320           $ 10,172(6,8)
                        Mortgage Corporation            1996     $185,000      $226,700         6,800           $  9,772(6,8)
                        ----------------------------------------------------------------------------------------------------
                        Thomas D. Washburn              1998     $186,667      $133,000         6,140           $  3,269(6)
                        Senior Vice President and       1997     $175,000      $128,709        12,500           $  3,840(6)
                        Chief Financial Officer         1996     $161,667      $125,606        14,800           $  2,445(6)
                        ----------------------------------------------------------------------------------------------------
                        Claude E. Davis                 1998     $150,000      $105,710         3,700           $  2,925(6)
                        President-Irwin Union           1997     $138,000      $110,242         6,960           $  3,840(6)
                        Bank and Trust Company          1996     $130,000      $ 56,767        11,200           $  3,840(6)
                        ----------------------------------------------------------------------------------------------------
</TABLE>
 
                1. Amounts other than salary are reported on an accrual basis.
 
                2. Includes amounts directed by the executive officer to be
                   contributed on a pre-tax basis to Corporation savings plans.
 
                3. Includes short-term bonus payments from the Corporation and
                   certain subsidiaries.
 
                4. With respect to each individual named in the Summary
                   Compensation Table there were no perquisites or other
                   personal benefits, securities or property which, in the
                   aggregate, exceeded either $50,000 or 10% of the total of
                   such individual's annual salary and bonus.
 
                5. Includes accruals made under a Supplemental Retirement
                   Benefit Plan. See "Supplemental Retirement Benefit Plan."
                   (See Note 7.)
 
                6. Includes contributions by the Corporation or certain
                   subsidiaries to qualified savings plans. (See Note 7.)
 
                7. Detailed information relevant to the "All Other Compensation"
                   column in the Summary Compensation Table above is shown in
                   the following table.
 
                8. Excludes compensation payable to Rick L. McGuire under the
                   terms of the Inland Mortgage Corporation Long-Term Incentive
                   Plan disclosed elsewhere herein. (See Long-Term Incentive
                   Plans.)
 
 10.
<PAGE>   13
 
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                 Qualified         Corporate Life
                                       Name                        SERP         Savings Plan         Insurance
                        <S>                                      <C>            <C>                <C>
                        -----------------------------------------------------------------------------------------
 
<CAPTION>
                                                                   1998             1998                1998
                        -----------------------------------------------------------------------------------------
                        <S>                                      <C>            <C>                <C>
                        William I. Miller                        $ 76,784          $3,840                   0
                        John A. Nash                             $189,148          $3,840                   0
                        Rick L. McGuire                             0              $7,400              $2,772
                        Thomas D. Washburn                          0              $3,269                   0
                        Claude E. Davis                             0              $2,925                   0
                        -----------------------------------------------------------------------------------------
</TABLE>
 
Stock Options and Stock Appreciation Rights
- --------------------------------------------------------------------------------
 
                  The following table contains information concerning the grant
                  of stock options under the Corporation's 1997 Stock Option
                  Plan to the named executive officers:
 
                              OPTION/SAR GRANTS IN LAST FISCAL YEAR
                  --------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                  Percent of                                Alternative to (f)
                                                                    Total                                        and (g):
                                                                 Options/SARs     Exercise                   Grant Date Value
                                                  Options/        Granted to      or Base                   ------------------
                                                    SARs          Employees        Price      Expiration        Grant Date
                                Name             Granted(1)#    in Fiscal Year     ($/SH)        Date        Present Value(2)
                                 (a)                 (b)             (c)            (d)          (e)               (h)
                        ------------------------------------------------------------------------------------------------------
                        <S>                      <C>            <C>               <C>         <C>           <C>
                        William I. Miller          28,020           21.85%        $28.1875    4/20/2008          $343,245
                        John A. Nash               16,760           13.07%        $28.1875    4/20/2008          $205,310
                        Rick L. McGuire             2,420            1.89%        $28.1875    4/20/2008          $ 29,645
                        Thomas D. Washburn          6,140            4.79%        $28.1875    4/20/2008          $ 75,215
                        Claude E. Davis             3,700            2.88%        $28.1875    4/20/2008          $ 45,325
</TABLE>
 
                  --------------------------------------------------------------
 
                1. All grants are subject to a vesting schedule where 25% of
                   each grant is vested on the date of the grant and 25% of each
                   grant vests on the anniversary date of each grant in each of
                   the three years following the grant.
 
                2. Total option values shown in Column (h) were derived using
                   the Binomial option pricing model. Assumptions used in the
                   valuation included an expected volatility factor of .25, an
                   expected future dividend yield of .01, and a risk-free rate
                   of return of .0585. The Binomial model suggests a valuation
                   of $12.25 per share under these assumptions. The
                   Black-Scholes option pricing model would suggest a valuation
                   of $12.14 per share under these same assumptions. The use of
                   a single value as shown in the table above implies a
                   precision to stock option valuation which the Corporation
                   does not believe exists and which therefore may cause the
                   above table to be misleading. Accordingly, there is no
                   assurance that the value realized on the options, if any,
                   will be at or near the value estimated by the Binomial option
                   pricing model. Future compensation resulting from option
                   grants is based solely upon the performance of the
                   Corporation's stock price.
 
 11.
<PAGE>   14
 
Option/SAR Exercises and Holdings
- --------------------------------------------------------------------------------
 
                  The following table provides information, with respect to the
                  named executive officers, concerning the exercise of options
                  and/or SARs during the last fiscal year and unexercised
                  options and SARs held as of the end of the fiscal year:
 
                      AGGREGATED OPTIONS/SARs EXERCISED IN LAST FISCAL YEAR
                              AND FISCAL YEAR-END OPTION/SAR VALUES
 
<TABLE>
<CAPTION>
                        ----------------------------------------------------------------------------------------------------------
                                                 Shares
                                                Acquired                    Number of Unexercised
                                                   on                      Options/SARs at Fiscal         Value of Unexercised
                                                Exercise      Value               Year-End              In-the-Money Options/SARs
                                Name              (#)       Realized                 (#)                  at Fiscal Year-End(1)
                        ----------------------------------------------------------------------------------------------------------
                                                                             (d)                           (e)
                                 (a)              (b)          (c)       Exercisable   Unexercisable   Exercisable   Unexercisable
                        <S>                     <C>        <C>           <C>           <C>             <C>           <C>
                        ----------------------------------------------------------------------------------------------------------
                        William I. Miller        n/a           n/a         293,945        52,455       $5,890,148      $455,816
                        John A. Nash             n/a           n/a         258,760        34,640       $5,397,734      $323,559
                        Rick L. McGuire          9,000     $309,847.50      41,665         5,675       $  865,185      $ 57,263
                        Thomas D. Washburn       6,000     $860,895.00      80,285        14,555       $1,575,723      $145,541
                        Claude E. Davis          4,000     $ 91,210.00      42,605         9,055       $  804,283      $ 93,268
                        ----------------------------------------------------------------------------------------------------------
</TABLE>
 
                1. The 1998 year-end stock price was $27.19 per share.
 
Long-Term Incentive Plans
- --------------------------------------------------------------------------------
 
                  The following table provides information concerning an award
                  made during the last fiscal year under the Inland Mortgage
                  Corporation Long-Term Incentive Plan to named executive Rick
                  McGuire. The award represents an accrued liability. This award
                  is performance based with targets established by the Board of
                  Directors of Irwin Mortgage Corporation.
 
                       LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
                  --------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                           Number of
                                            Shares,          Performance or
                                           Units or        Other Period Until         Estimated Future Payouts
                                             Other            Maturation or          Under Non-Stock Price-Based
                             Name           Rights               Payout                    Plans ($ or #)
                              (a)             (b)                  (c)                           (d)
                        <S>                <C>          <C>                          <C>
                        ----------------------------------------------------------------------------------------
                                                        Deferrable Compensation
                        Rick L. McGuire    $144,265     under Terms of the Plan               $144,265
                        ----------------------------------------------------------------------------------------
</TABLE>
 
 12.
<PAGE>   15
 
                                        PENSION PLAN TABLE
                  --------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                          Years of Service
                        -------------------------------------------------------------------------------
                        Remuneration                           15       20       25       30       35
                        -------------------------------------------------------------------------------
                        <S>                                  <C>      <C>      <C>      <C>      <C>
                        $ 50,000                             11,600   15,500   19,300   19,900   20,500
                          75,000                             18,900   25,200   31,500   32,900   34,400
                         100,000                             26,200   35,000   43,700   45,900   48,200
                         125,000                             33,500   44,700   55,900   58,900   62,000
                         150,000                             40,800   54,500   68,100   71,900   75,800
                         175,000                             43,800   58,400   72,900   77,100   81,300
                         200,000                             43,800   58,400   72,900   77,100   81,300
                         225,000                             43,800   58,400   72,900   77,100   81,300
                         250,000                             43,800   58,400   72,900   77,100   81,300
                         275,000                             43,800   58,400   72,900   77,100   81,300
                         300,000                             43,800   58,400   72,900   77,100   81,300
                         350,000                             43,800   58,400   72,900   77,100   81,300
                         400,000                             43,800   58,400   72,900   77,100   81,300
                         450,000                             43,800   58,400   72,900   77,100   81,300
                         500,000                             43,800   58,400   72,900   77,100   81,300
                        -------------------------------------------------------------------------------
</TABLE>
 
Pension Plan      A non-contributory qualified defined benefit Employees'
                  Pension Plan is maintained by the Corporation and certain of
                  its subsidiaries. The Plan provides principally for retirement
                  benefits to substantially all of the officers and employees of
                  these companies. Under the provisions of the Plan,
                  participating companies will contribute assets sufficient to
                  pay all benefits to Plan participants. Contributions to the
                  Plan are actuarially determined to fund the Plan's current
                  service cost on a current basis and to fund initial past
                  service costs over a period of 30 years. Employees who have
                  completed one year of service (1,000 hours worked during a
                  12-month period) are eligible for participation. Benefits vest
                  after five years of credited service. In addition to benefits
                  paid to retiring employees, death and deferred termination
                  benefits are available to employees who meet certain
                  conditions under the Plan.
 
                  The table above shows the estimated annual benefits payable,
                  based upon reasonable assumptions, under the Plan as in effect
                  on December 31, 1998. Basic wages considered for the Plan are
                  for the five consecutive Plan years of highest compensation,
                  and include basic compensation, commissions, and payments from
                  short-term bonus plans. In accordance with Section 401(a)(17)
                  of the Internal Revenue Code of 1986, basic wages above
                  $160,000 are not used in the calculation of Plan benefits.
 
                  The current years of service at December 31, 1998, for the
                  individuals named in the compensation tables above, are as
                  follows: Mr. Nash (32), Mr. Washburn (22), Mr. Davis (11), and
                  Mr. Miller (8). Mr. McGuire is not covered by the Plan.
 
                  Benefits listed in the pension plan table are payable as
                  straight life annuity amounts and are not subject to any
                  deduction for Social Security or other offset amounts. The
                  Plan was amended effective January 1, 1994. For service after
                  January 1, 1994, Mr. Washburn will receive an additional
                  benefit accrual equal to 45% of his usual benefit. For service
                  after January 1, 1994, Mr. Miller will receive an additional
                  benefit accrual equal to 75% of his usual benefit.
 
 13.
<PAGE>   16
 
Supplemental Retirement Benefit Plan
- --------------------------------------------------------------------------------
 
                  On May 19, 1992, the Board of Directors approved the
                  Compensation Committee's recommendation to provide a
                  supplemental executive retirement benefit to William I.
                  Miller. A similar Plan was approved prior to 1992 for John A.
                  Nash. The Plan provides Mr. Miller with an amount of company-
                  provided benefits not provided under the Pension Plan because
                  of the limitations imposed by Sections 415 and 401(a)(17) of
                  the Internal Revenue Code of 1986, as amended. Criteria used
                  to determine amounts payable under the supplemental Plan are
                  the same as those used by the Pension Plan; that is, service
                  with the Corporation, age at retirement, and earnings.
                  Benefits are measured in the same manner as under the Pension
                  Plan, using credited service with the Corporation. Method of
                  payment of the supplemental benefit is a monthly annuity
                  payable for life, with a guarantee of 180 payments.
 
Compensation Committee Interlocks and Insider Participation
- --------------------------------------------------------------------------------
 
                  No member of the Compensation Committee of the Corporation's
                  Board of Directors was, during 1998, an officer or employee of
                  the Corporation or any of its subsidiaries.
 
Board Compensation Committee Report on Executive Compensation
- --------------------------------------------------------------------------------
 
                  Executive compensation is reviewed and approved annually by
                  the Compensation Committee of the Board of Directors. Each
                  member of the Compensation Committee is a non-employee
                  Director. Members of the Committee are Ms. Sally A. Dean, Mr.
                  David W. Goodrich, and Mr. William H. Kling. Set forth below
                  is a report submitted by Ms. Dean and Messrs. Goodrich and
                  Kling in their capacity as the Board's Compensation Committee
                  addressing the Corporation's compensation policies for 1998.
                  The Corporation does not formally use the title "Chief
                  Executive Officer." The principal executive officer of the
                  Corporation is the Chairman, Mr. William I. Miller.
 
       I. Compensation Policy for Executive Officers
       -------------------------------------------------------------------------
                  The Compensation Committee believes that compensation plans
                  make up only one element in the overall management system of
                  the Corporation. Furthermore, appropriate compensation
                  policies are a necessary, but not sufficient, condition for
                  achieving the Corporation's goals. A good compensation system
                  will not guarantee that we achieve our goals, but a poor
                  system can result in those goals not being achieved.
 
                  This interdependence requires that the Corporation's
                  compensation system grow out of and be consistent with our
                  corporate philosophy, our mission and our strategy.
                  Accordingly, what we believe (our Guiding Philosophy), what we
                  want to be (our mission), what we want to do (our strategy),
                  and the kinds of people needed to bring that vision to life
                  are the starting points for developing our philosophy and
                  system of compensation.
 
 14.
<PAGE>   17
 
                  The Corporation's executive compensation system focuses on the
                  total compensation package of the Corporation's top
                  executives. The Corporation's objective is to correlate total
                  compensation with company performance so that median
                  performance relative to similar companies in its industry will
                  produce median total compensation for individuals relative to
                  comparable positions in peer companies, inferior performance
                  will produce below median compensation, and superior
                  performance will produce above median compensation.
 
                  This approach requires that the Corporation start by defining
                  the appropriate peer group, both for individual positions and
                  the Corporation as a whole. For individual positions, this
                  decision is based on the relative level and scope of
                  responsibilities inherent in the position, and the talent and
                  skills required for success.
 
                  The traditional measure for the scope of responsibilities in
                  commercial banks and bank holding companies is asset size.
                  Mortgage banking companies generally look at both loan closing
                  volume and loan servicing size. Consumer finance companies
                  consider origination volume. The Corporation's strategy is to
                  enhance capital productivity, which is defined as generating
                  proportionately larger streams of revenues and profits from a
                  given capital and asset base. Accordingly, asset growth in
                  itself is not one of the strategic objectives of the
                  Corporation, and the Corporation's success at pursuing its
                  strategy is not best defined only by asset size, loan volume,
                  or servicing size. As a result, in calibrating the scope of
                  responsibility of a given position, the Corporation looks at
                  comparable positions in other companies in multiple asset-size
                  groups as well as peer companies defined by other measures
                  (such as total market capitalization or revenues) when they
                  are available.
 
                  Performance comparisons are generally made from the
                  shareholders' perspective. That is, groups of companies are
                  selected that may be seen as alternative investments by
                  current and prospective investors. Even so, the Corporation's
                  most direct competitors for executive talent are not
                  necessarily all of the companies that would be included in a
                  peer group selected to compare shareholder returns. Thus,
                  although there may be some overlap, the surveys selected for
                  compensation review purposes do not contain information on the
                  same companies as those found in the peer group indices in the
                  Comparison of Five-Year Cumulative Total Return graph which
                  follows this report.
 
                  All of the Corporation's operating companies (including the
                  Corporation as a separate entity) use multiple sources of both
                  compensation and performance data because experience has shown
                  that results can vary greatly from one survey to the next. In
                  the case of compensation market data, the Compensation
                  Committee is provided with multiple sources of data on each
                  executive position reviewed. When available, the information
                  is in the form of 25th percentile, median, and 75th percentile
                  compensation. Five different market compensation comparisons
                  were considered for the Chairman in 1998.
 
                  Historically, total compensation has been defined in surveys
                  to include only base salary and the annual bonus. When
                  reliable information on the present value of long-term grants
                  is available, it is used as additional support for
                  compensation decisions.
 
 15.
<PAGE>   18
 
                  The percent of total compensation that is variable increases
                  with the executive's position with the Corporation. This
                  approach is consistent both with the individual's influence on
                  results and his/her economic capacity to tolerate volatility
                  in compensation levels.
 
                  In addition to information on the market level of
                  compensation, members of the Committee review a summary of
                  individual performance over the past year including key
                  accomplishments, strengths, and weaknesses. They also may
                  consider their own subjective assessments of an executive's
                  performance and relative contribution to the organization.
 
       II. The Elements of Executive Compensation and Corporate Performance
 
       -------------------------------------------------------------------------
 
                  There are three elements of Executive Compensation and
                  Corporate Performance: Base Salary, Annual Short-Term Bonus,
                  and Long-Term Incentives.
 
                  A. Base Salary
 
                  Turning to a review of each of the elements of the total
                  compensation package, base salary is important in achieving
                  one of the Corporation's compensation goals which is
                  attracting and retaining qualified executives. Base salary is
                  generally targeted to be at the median of similar positions in
                  the industry. Exceptions may exist when a higher level of base
                  salary would be required to attract or retain a uniquely
                  qualified executive officer. In order to maintain the target
                  position, annual increases are approximately equal to the
                  median increases in the respective industries in which our
                  operating companies compete unless the growth of the company
                  warrants comparison with a larger peer group in that industry.
                  The total base salary paid to the Chairman in 1998 was
                  $393,000, up 5% from 1997.
 
                  B. Annual Short-Term Bonus
 
                  The annual bonus is the component that provides a variable
                  current cash compensation reward for above median current
                  performance. Each executive officer participating in the
                  annual bonus plan has a payment target expressed as a
                  percentage of base salary. The Corporation believes that this
                  method, when combined with properly selected performance
                  targets, rewards managers for making investments in future
                  performance, valuing consistency, and managing risk.
 
                  Operating company presidents receive part of their target
                  annual bonuses based upon the performance of their respective
                  companies, and part based upon consolidated performance of the
                  Corporation. Thus, they have financial incentives to achieve
                  synergies between operating companies.
 
                  We believe that the best performance targets are those which
                  are objectively and consistently measured, as well as easily
                  understood by participants. The bonus plans of the Corporation
                  and its operating companies include return on equity or a
                  proxy therefor as a key performance measure. Specific
                  performance targets for each year are approved by the board of
                  directors of each operating company and of the Corporation and
                  are based upon a variety of factors including historical and
                  expected industry performance, the estimated required rate of
                  return by investors,
 
 16.
<PAGE>   19
 
                  and the prior year's budgeted and actual performance. Bonus
                  payments begin at a threshold level and increase
                  proportionately as performance increases.
 
                  The short-term bonus design includes a mechanism to smooth,
                  over three year rolling periods, the payment of amounts
                  greater than twice target performance and less than threshold
                  performance.
 
                  C. Long-Term Incentives
 
                  Long-term incentive plans are provided to supplement the
                  incentive provided by annual bonus plans for building the
                  value of the Corporation over the long term. Operating company
                  heads may receive the majority of their long-term compensation
                  based upon growth in the value of their subsidiary operating
                  company. Certain holding company executive officers and some
                  operating company executive officers are provided with
                  long-term incentive compensation through grants of
                  non-qualified stock options. Existing stock option plans of
                  the Corporation include the ability to grant stock
                  appreciation rights in addition to options.
 
 17.
<PAGE>   20
 
       III. Formulation of the Chairman's Compensation
 
       -------------------------------------------------------------------------
 
                  The Chairman's current compensation package includes a base
                  salary of $400,000 plus an annual bonus at target performance
                  of 55% of base salary or $220,000. As noted above, there is no
                  single, clear measure of market compensation for executive
                  positions in the Corporation. The Compensation Committee used
                  five different market surveys for the Chairman's position in
                  1998. Based on these surveys, estimates of the 25th
                  percentile, median, and 75th percentile points of total annual
                  compensation were made.
 
                  Actual total cash compensation paid to the Chairman for 1998
                  was $833,000, up 4% from 1997. Return on average equity for
                  1998 was 22.84%, compared to 19.66% in 1997. We believe that
                  both returns are in the top decile of peer performance. Total
                  shareholder return (including dividends and price
                  appreciation) was 30.59% for 1998 and 70.6% for 1997 for Irwin
                  Financial. These returns compare to -9.74% in 1998 and 20.6%
                  in 1997 for the Russell 2000 Financial Services Sector Index.
 
                  For long-term incentive compensation purposes, the Chairman
                  received an option grant of 28,020 shares in 1998 at an
                  exercise price of $28.1875 per share (representing the mean
                  between the high and low prices on the grant date). The
                  Chairman also has received the following grants:
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                             Year                       Number of Options   Exercise Price
                        ----------------------------------------------------------------------------------
                        <S>                                             <C>                 <C>
                        1997                                            42,180                $13.6875
                        1996                                            41,400                 10.65625
                        1995                                            54,800                  7.84375
                        1994                                            66,400                  5.6875
                        1993                                            57,600                  5.525
                        1992                                            56,000                  2.953125
                        ----------------------------------------------------------------------------------
</TABLE>
 
                  These seven grants are the only long-term grants outstanding
                  for the Chairman. Through employment of the "Binomial" option
                  pricing models, we estimate that the present value of the 1998
                  options at grant date was $343,245.
 
                    Sally A. Dean       David W. Goodrich       William H. Kling
 
 18.
<PAGE>   21
 
Comparison of Five-Year Cumulative Total Return
Irwin Financial Corporation, Russell 2000 & Russell 2000 Financial Services
Sector(1)
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                                             1993    1994    1995    1996    1997    1998
<S>                                         <C>     <C>     <C>     <C>     <C>     <C>       
- ----------------------------------------------------------------------------------------------
                           Irwin Financial     100     109     164     206     351     458
- ----------------------------------------------------------------------------------------------
                              Russell 2000     100      98     126     147     177     173
- ----------------------------------------------------------------------------------------------
    Russell 2000 Financial Services Sector     100     101     140     177     231     208
- ----------------------------------------------------------------------------------------------
</TABLE>
 
                1. The Corporation is included in both the Russell 2000 and the
                   Russell 2000 Financial Services indices.
 
Interest of Management in Certain Transactions
- --------------------------------------------------------------------------------
 
                  Certain directors and officers of the Corporation or its
                  subsidiaries, and the associates of such persons, were
                  customers of and had transactions with subsidiaries of the
                  Corporation in the ordinary course of business during the past
                  year, including insurance services, corporate and personal
                  trust services, and general commercial and mortgage banking
                  business. Additional transactions may be expected to take
                  place between such persons and these subsidiaries. All
                  outstanding loans and commitments included in such
                  transactions were made in the ordinary course of business and
                  on substantially the same terms, including interest rates and
                  collateral, as those prevailing at the time for comparable
                  transactions with other employees and did not involve more
                  than the normal risk of collectibility or present other
                  unfavorable features.
 
                  Companies controlled by Irwin Miller, the Estate of Clementine
                  M. Tangeman, and William I. Miller purchased commercial paper
                  from the Corporation from time to time during the year. The
                  maximum amount outstanding during 1998 was $21,602,536 and the
                  amount outstanding at year end was $18,807,537. In the opinion
                  of management, the rates paid by the Corporation on these
                  commercial paper transactions were comparable to the
                  prevailing rates for such transactions at the time of the
                  respective transactions.
 
 19.
<PAGE>   22
 
                  In addition to corporate and personal trust services and
                  general banking business, companies owned or controlled by
                  Messrs. Miller and the Estate of Clementine M. Tangeman
                  purchased insurance services (offered by a subsidiary of Irwin
                  Union Bank, Irwin Union Insurance, Inc., to the companies and
                  to the public, generally, as a regular service) for the sale
                  of which Irwin Union Insurance, Inc. received gross
                  commissions in 1998 of approximately $26,004. The commissions
                  paid were at the same rate as those prevailing on comparable
                  sales to the general public.
 
                  During 1998, the Corporation made payments totaling $45,600 to
                  a company controlled by Messrs. Miller and the Estate of
                  Clementine M. Tangeman in exchange for the administrative and
                  support services of an employee of such company. In the
                  opinion of management, such payment was comparable to, or more
                  favorable to the Corporation than, the cost of hiring an
                  additional employee.
 
                  On November 3, 1998, the Corporation purchased a 12.5%
                  interest in a Hawker 800 aircraft owned by Cummins Engine
                  Company, Inc., primarily for the purpose of enhancing the
                  Chairman's productivity by reducing travel time, leading to
                  increased time available at business meetings and the office.
                  The Corporation paid $1,176,888 for its ownership interest.
                  Concurrently, Cummins agreed to provide maintenance and flight
                  services for the aircraft for management fees and operating
                  costs estimated to be $139,984 for 1999. The agreement
                  terminates on December 31, 2001 at which time Cummins will
                  repurchase the aircraft. The Corporation also entered into a
                  timeshare agreement with Cummins for the use of a substitute
                  aircraft when the jointly-owned aircraft is undergoing major
                  maintenance. The costs charged under the timeshare agreement
                  are those permitted by Federal Aviation Regulations. The costs
                  and terms associated with the ownership interest and operation
                  of the aircraft were considered at least as favorable as other
                  alternative aircraft arrangements. Director nominee William I.
                  Miller is also a director of Cummins Engine Company, Inc.
                  Director nominee Irwin Miller is the former Chairman of
                  Cummins Engine Company, Inc. and was a director of Cummins
                  Engine Company, Inc. until April 7, 1998. Director nominee
                  Theodore M. Solso is President and Chief Operating Officer and
                  a board member of Cummins Engine Company, Inc.
 
                  In 1979, Irwin Union Insurance, Inc., as an independent
                  property/casualty insurance agency, was appointed to represent
                  and offer property/casualty and liability products of The St.
                  Paul Companies to its customers. Director nominee Kling is
                  also a director of The St. Paul Companies. In 1998, Irwin
                  Union Insurance, Inc. received gross agency commissions of
                  $77,221 from The St. Paul Companies. Director nominee Hackett
                  is a director of Meridian Insurance Group, Inc. In 1998, Irwin
                  Union Insurance, Inc. received gross agency commissions of
                  $103,226 from Meridian Insurance Group, Inc.
 
2. Confirming Appointment of Auditors
- --------------------------------------------------------------------------------
 
                  The Board of Directors recommends confirmation of the
                  appointment of PricewaterhouseCoopers L.L.P., certified public
                  accountants, to audit the books and accounts of the
                  Corporation for 1999. No member of the firm has any material
                  interest, financial or otherwise, in the Corporation or any of
                  its subsidiaries.
 
 20.
<PAGE>   23
 
                  Although the selection and appointment of independent public
                  accountants is not required to be submitted to a vote of the
                  shareholders, the Board of Directors has decided, as in the
                  past, to ask the Corporation's shareholders to confirm the
                  appointment. The Board of Directors reserves the right,
                  however, to select a new independent accounting firm at any
                  time during the year if the Board of Directors believes, in
                  its discretion, that such a change would be in the best
                  interests of the Corporation and its shareholders.
 
                  In accordance with past practice, management has invited
                  representatives of PricewaterhouseCoopers L.L.P. to be present
                  at the Annual Shareholders' Meeting. Management expects the
                  representatives to attend the meeting. If present, these
                  representatives will have an opportunity to make a statement,
                  if they so desire, and will be available to respond to
                  appropriate questions from shareholders. See "Director
                  Meetings and Committees" for information regarding the
                  Corporation's Audit Committee.
 
3. Proposal to Adopt an Employee Stock Purchase Plan
- --------------------------------------------------------------------------------
 
                  Subject to approval by the shareholders, the Board of
                  Directors has adopted the Irwin Financial Corporation
                  Employees' Stock Purchase Plan III (the "Plan") pursuant to
                  which full-time employees with six months or more of service
                  will be permitted to purchase common shares of the
                  Corporation. The Corporation intends to register the common
                  shares to be issued under the Plan under the federal
                  securities laws and the Plan will become effective at the same
                  time as such registration. No common shares will be issued or
                  delivered until all applicable federal and state requirements
                  pertaining to the offer and sale of the shares to be issued
                  under the Plan have been satisfied. The essential features of
                  the Plan are summarized below. Copies of the Plan may be
                  obtained by any shareholder upon written request to Matthew F.
                  Souza, Secretary of the Corporation. The Plan is designed to
                  replace the Irwin Financial Corporation Employees' Stock
                  Purchase Plan II, which expires on June 30, 1999 and which was
                  approved by shareholders on April 26, 1994.
 
Purpose           The purpose of the Plan is to provide employees of the
                  Corporation and its subsidiaries with the opportunity and
                  incentive to purchase Corporation common shares in order to
                  provide such employees with a more direct and proprietary
                  interest in the welfare of the Corporation. All employees of
                  the Corporation or its subsidiaries are eligible to
                  participate in the Plan after the completion of six (6) or
                  more months of service, except employees with customary
                  employment of less than twenty (20) hours per week, and
                  employees with customary employment of not more than five (5)
                  months in any calendar year. Management estimates that
                  approximately 1700 employees will be eligible to participate
                  in the Plan.
 
Administration    The Plan will be administered by a committee which shall
                  consist of three members appointed by and serving at the
                  discretion of the Board of Directors (the "Committee"). Each
                  member will be a director, officer, or other employee of the
                  Corporation. The Committee will have the power to interpret
                  and construe the provisions of the Plan. The Board of
                  Directors will appoint a custodian to maintain a record of
                  each participant's interest in the Plan. The custodian may be
                  removed by the Board of Directors on thirty (30) days' written
                  notice. The
 
 21.
<PAGE>   24
 
                  Corporation will register common shares as designated by
                  participants and deliver such common shares to participants in
                  the Plan. Participants will have no right to assign, transfer,
                  pledge or otherwise dispose of funds or rights credited to the
                  Plan on the participant's behalf except pursuant to the terms
                  of the Plan.
 
Option to         The Plan grants to eligible employees who become participants
Purchase          the option to purchase up to an aggregate of 750,000 common
                  shares of the Corporation. Shares required to satisfy
                  exercises of this option may be provided out of the
                  Corporation's treasury shares or its authorized and unissued
                  common shares. The Plan provides that no participant may be
                  granted an option under the Plan if such option, when
                  aggregated with similar options under any other stock purchase
                  plan of the Corporation or any of its affiliates, would
                  entitle the participant to purchase common shares having a
                  fair market value in excess of $25,000 for each calendar year
                  in which such option is outstanding at any time. The Plan also
                  prohibits the granting of an option to a participant who,
                  after the option is granted, would own shares possessing five
                  percent (5%) or more of the total combined voting power or
                  value of all classes of shares of the Corporation or any of
                  its affiliates. Unless terminated earlier by the Board of
                  Directors, the Plan will terminate on the exercise date on
                  which the remaining common shares reserved for the grant of
                  options are insufficient to enable each participant on such
                  date to purchase at least one share.
 
Payroll           In order to participate in the Plan, an eligible employee must
Deductions        authorize his or her employer to deduct a specified amount
                  from the employee's compensation. A participant's
                  authorization remains effective until the participant revokes
                  it by giving notice to the Corporation. The Corporation will
                  transfer all amounts withheld from the participating
                  employee's compensation to the custodian designated by the
                  Board of Directors. The custodian will credit the appropriate
                  amounts to a separate account for each participant. No amount
                  withheld from an employee's compensation pursuant to an
                  authorization under the Plan may be used by the Corporation or
                  any affiliate for any purpose other than the purchase of
                  shares pursuant to the Plan. The Plan provides that the
                  minimum amount of a participant's payroll deduction must be at
                  least $5.00.
 
Purchase of       The option granted under the Plan will be exercised
Shares            automatically on behalf of each participant on the first
                  business day following a payday or at such frequency as may be
                  established by the Committee. On the date of each exercise,
                  the custodian will use the funds accumulated in each
                  participant's account to purchase from the Corporation for the
                  participant the largest number of whole shares for which
                  sufficient funds are available in the participant's account.
                  Initially, the option price for the common shares purchased by
                  the custodian under the Plan will be 85% of the closing price
                  of such shares as reported by the National Association of
                  Securities Dealers Automated Quotation/National Market System
                  ("NASDAQ/NMS") for the last trading day prior to each exercise
                  date or, if not so reported, as reported by such other source
                  as the Committee shall designate. On March 11, 1999, the
                  closing price of the common shares as reported by the
                  NASDAQ/NMS was $22.875. Upon written request to the Committee,
                  a participant shall be entitled to receive a certificate
                  representing the number of whole common shares credited to the
                  participant's account. No certificate will be issued
                  representing fractional shares purchased under the Plan.
                  Amounts credited
 
 22.
<PAGE>   25
 
                  to a participant's account and not used to purchase shares on
                  any exercise date will remain credited to the account and will
                  be available for future purchases. No interest will be paid on
                  amounts held for a participant's account under the Plan.
 
Withdrawals       A participant may suspend payroll deductions or withdraw from
                  the Plan at any time with proper notice to the Committee. Upon
                  such withdrawal, the custodian will pay any balance in the
                  participant's account to the participant. An employee who
                  withdraws from the Plan will be eligible to participate again
                  in the Plan as of the next quarterly enrollment. If a
                  participant's employment terminates for any reason, the
                  balance of the participant's account with the custodian will
                  be paid to the participant or to the beneficiary designated by
                  the participant in case of the participant's death.
               
Federal Income    The Plan is intended to be an "employee stock purchase plan"
Tax Consequences  as defined in Section 423 of the Internal Revenue Code. As a
                  general matter, an employee who purchases shares under the
                  Plan will not realize any taxable income until disposition of
                  the shares, and the employee's basis in the shares will be the
                  purchase price. If an employee remains in the employ of the
                  Corporation and holds the shares acquired under the Plan for
                  at least two years from the date of purchase ("holding
                  period"), on disposition of the shares the employee will
                  realize ordinary income in an amount equal to the excess of
                  (i) the lesser of the fair market value of the shares at the
                  date of purchase or date of disposition, over (ii) the
                  purchase price. Any additional gain on the sale after the
                  holding period is long-term capital gain or, if there is no
                  gain on the disposition of the shares after the holding
                  period, any loss incurred is long-term capital loss. For tax
                  purposes, if an employee dies during the holding period, he or
                  she is deemed to have met the holding period as of the date of
                  death. If a participant disposes of shares purchased under the
                  Plan before the expiration of the holding period, other than
                  by death, he or she will recognize taxable ordinary income in
                  an amount equal to the excess of the fair market value of the
                  shares on the date of purchase over the purchase price, and
                  the difference between the fair market value of the shares on
                  the date of purchase and the disposition price will be capital
                  gain or loss. The Corporation will not be entitled to any tax
                  deduction in connection with the grant or exercise of the
                  option under the Plan unless a participant disposes of shares
                  acquired under the Plan before the expiration of the holding
                  period, in which case the Corporation will be entitled to a
                  tax deduction in an amount equal to the amount of ordinary
                  income recognized by the participant at the time of such
                  disposition.
 
Recapitalization  The Plan provides that the number of shares subject to
                  purchase thereunder shall be adjusted to account for certain
                  recapitalizations, share dividends, or share splits effected
                  without receipt of consideration by the Corporation.
 
Amendments        The Plan may be altered, amended, suspended or discontinued at
                  any time by the Board of Directors with respect to any common
                  shares for which an option has not been granted, except that
                  the Board of Directors may not, without further approval by
                  the holders of a majority of the outstanding common shares of
                  the Corporation, approve an amendment which would (a) increase
                  the maximum number of shares which may be issued under the
                  Plan; (b) change the class of shares which may be issued under
                  the Plan; (c) modify the requirements as to
 
 23.
<PAGE>   26
 
                  eligibility for participation in the Plan, or (d) change the
                  provisions of the Plan concerning the option price.
 
                  THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
                  APPROVAL OF THIS PLAN.
 
4. Proposal to Adopt an Outside Director Restricted Stock Compensation Plan
- --------------------------------------------------------------------------------
 
                  Subject to approval by the shareholders, the Board of
                  Directors has adopted the Irwin Financial Corporation 1999
                  Outside Director Restricted Stock Compensation Plan (the
                  "Plan") pursuant to which outside directors may receive
                  Corporation common shares in lieu of payment of directors
                  fees. The affirmative vote of holders of not less than a
                  majority of the issued and outstanding common shares is
                  required to adopt the Plan. Common shares issued under the
                  Plan will not be issued or delivered until all applicable
                  federal and state securities requirements pertaining to the
                  offer and sale of securities issued under the Plan have been
                  met. The essential features of the Plan are summarized below
                  and copies of the Plan may be obtained by any shareholder upon
                  written request to Matthew F. Souza, Secretary of the
                  Corporation.
 
Purpose           The Plan is designed to encourage ownership of Corporation
                  common shares by outside directors in order to provide such
                  directors with a more direct and proprietary interest in the
                  welfare of the Corporation and to encourage their continuation
                  as directors. The Plan provides outside directors with the
                  opportunity to elect to receive their annual retainer fees
                  and/or meeting attendance fees (collectively "Director Fees")
                  in the form of common shares rather than in cash. Only outside
                  directors of the Corporation or of its subsidiaries
                  (currently, a total of 16 persons) will be eligible to
                  participate in the Plan.
 
Administration    The Plan will be administered by a Plan Committee, which shall
                  initially consist of the Secretary of the Corporation. The
                  Plan Committee will have the power to interpret and construe
                  the provisions of the Plan.
 
Reservation of    The Plan permits the issuance of up to 100,000 common shares
Shares            of the Corporation from July 1, 1999 through December 31,
                  2009. Authorized but unissued shares and reacquired shares may
                  be made available for issuance under the Plan. The Plan
                  provides that the number of shares that may be issued and
                  subject to each outstanding election shall be adjusted to
                  account for a subdivision or consolidation of shares or other
                  capital adjustment, share dividend, share split, or other
                  increase or decrease in the common shares effected without
                  receipt of consideration by the Corporation.
 
Election to       The Plan provides that unless an outside director makes an
ReceiveCommon     election, Director Fees will be paid in cash. Either or both
Shares            of the retainer fees and/or meeting fees will be payable at
                  the election of the outside director in the form of a grant of
                  Corporation common shares equal to the cash value of the fees.
                  The number of common shares issued to a director under the
                  Plan will be determined by dividing the market value of one
                  common share into the dollar amount of Director Fees covered
                  by an election. On March 11, 1999 the closing price of the
                  common shares as reported by NASD was $22.875.
 
 24.
<PAGE>   27
 
                  Except for 1999 and an election for a calendar year in which a
                  person first becomes an outside director, each election shall
                  be effective for not less than one calendar year but may be
                  made for additional calendar years subject to any limitation
                  imposed by the Plan Committee at the time an election is made.
                  A grant of common shares for multiple years of service will be
                  equal to the value of the cash retainer and meeting fees
                  multiplied by the number of service years covered by the
                  grant.
 
                  Each outside director may elect to receive grants under the
                  Plan by delivering to the Plan Committee a written election
                  form. Each election made under the Plan will be irrevocable
                  and will be effective only for the Plan year or Plan years to
                  which such election relates. In the event that an outside
                  director elects to receive a grant covering multiple years of
                  prospective service, such director will not be eligible to
                  make another election under the Plan until all years of
                  service pertaining to the multiple year election have been
                  served.
 
Issuance of       Before delivery to outside directors, certificates issued by
Certificates      the Plan Committee will be held by the Corporation's Secretary
                  for one year after the last date covered by the election
                  pursuant to which the common shares were issued, or an earlier
                  date determined by the Committee. Certificates issued under
                  the Plan are subject to forfeiture on a pro rata basis if the
                  outside director recipient does not serve until the end of the
                  Plan year to which such certificates apply. Common shares so
                  forfeited will revert to the Corporation. If cessation of
                  service is due to retirement, death or disability, the
                  Committee may waive the forfeiture provisions with the result
                  that the outside director may receive the common shares to be
                  issued for the full Plan year in which the cessation of
                  service occurs.
 
Recapitalization  The aggregate number of common shares which may be issued
                  under the Plan will be proportionately adjusted for any
                  increase or decrease in the number of issued and outstanding
                  common shares resulting from a subdivision or consolidation of
                  shares of the Corporation or any other capital adjustment of
                  the Corporation, the payment of a share dividend, a share
                  split, or any other increase or decrease in common shares
                  effected without receipt of consideration by the Corporation.
                  Other than with regard to the laws of descent and distribution
                  and by will, no right to receive shares under the Plan will be
                  assignable or transferable.
 
Rights as a       An outside director shall have no rights as a shareholder with
Shareholder       respect to common shares subject to an election until the date
                  of issuance of a certificate representing those shares. Upon
                  the issuance of a certificate, the shares represented thereby
                  shall be fully paid and nonassessable common shares of the
                  Corporation, the outside director shall have the power to vote
                  those common shares on all matters presented to a vote of the
                  shareholders of the Corporation and shall be entitled to
                  receive all dividends and other distributions declared or paid
                  by the Corporation on those shares. No adjustment will be made
                  for dividends or other rights for which the record date is
                  prior to the date such certificate is issued. An outside
                  director shall have no right to sell, pledge, encumber or
                  otherwise dispose of any common shares issued pursuant to the
                  Plan during the time the certificates representing common
                  shares are held by the Secretary, other than for transactions
                  between the outside director and the Corporation or any
                  director of the Corporation or an affiliate.
 
 25.
<PAGE>   28
 
Term of the Plan  If approved by the holders of a majority of the issued and
and Amendments    outstanding common shares voting in person or by proxy at the
                  1999 Annual Meeting of Shareholders of the Corporation, the
                  Plan shall become effective on July 1, 1999. The Plan shall
                  terminate on December 31, 2009, or on such earlier date as the
                  Board of Directors may determine. No common shares shall be
                  issued under the Plan after the termination date. The Board of
                  Directors, except any members participating in the Plan, may
                  from time to time, alter, amend, suspend, or discontinue the
                  Plan with respect to any common shares for which certificates
                  have not been issued.
 
Federal Income    The issuance of shares to an outside director pursuant to the
Tax               Plan will have no income tax consequences to the Corporation
Consequences      or the director to the extent the shares are nontransferable
                  and subject to a substantial risk of forfeiture under Section
                  83(a) of the Internal Revenue Code ("Code"). Unless a Code
                  Section 83(b) election is made, the director will be deemed to
                  have received ordinary income in an amount equal to the fair
                  market value of the shares on the date the shares first become
                  either transferable or no longer subject to a substantial risk
                  of forfeiture.
 
                  Pursuant to Code Section 83(b) and the Treasury Regulations
                  thereunder, directors receiving shares which are
                  nontransferable and subject to a substantial risk of
                  forfeiture may elect in the alternative to include in income
                  the fair market value of the shares on the date of issuance.
                  An election pursuant to Code Section 83(b) must be made in
                  writing within 30 days of the issuance of the shares to the
                  director pursuant to the Plan, and the election may not be
                  revoked without the consent of the Commissioner of the
                  Internal Revenue Service.
 
                  The director's basis in the shares will equal the fair market
                  value of the shares on the date used to determine the amount
                  to be included in the director's income as ordinary income.
                  The Corporation generally will be entitled to a deduction, in
                  an amount equal to the amount included in the director's
                  income as ordinary income, in the tax year in which the
                  director is required to include the amount in income. Upon the
                  disposition of shares acquired pursuant to the Plan, the
                  director generally will recognize capital gain or capital
                  loss, as the case may be, to the extent of the difference
                  between the director's basis in the shares and the sale price,
                  provided the director is not a dealer in securities.
 
                  The Plan does not impose any obligation on the Corporation or
                  any affiliate to nominate any individual for reelection as a
                  director by the shareholders of the Corporation or an
                  affiliate.
 
                  THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
                  APPROVAL OF THIS PLAN.
 
5. Approval of Amendment of Articles of Incorporation to Increase Authorized
Preferred Shares of the Corporation.
- --------------------------------------------------------------------------------
 
                  The Corporation currently has two authorized classes of
                  shares: common shares and preferred shares. The Board of
                  Directors has adopted, subject to shareholder approval, a
                  proposed amendment to Article V, Section 1 of the Articles of
                  Incorporation of the Corporation, pursuant to which the number
                  of authorized preferred shares would be increased from 50,000
                  to 4,000,000 shares.
 
 26.
<PAGE>   29
 
                  No preferred shares are presently outstanding. Under the terms
                  of the Articles of Incorporation, the Board of Directors has
                  full authority to issue preferred shares and to determine the
                  terms thereof without further approval by the shareholders.
                  The terms of any preferred shares, when issued, could include
                  dividend rates, conversion prices and terms, voting rights,
                  redemption prices, maturity dates and similar matters. The
                  ability of the Board of Directors to determine the terms of
                  preferred shares and approve their issuance could operate as a
                  deterrent to a change in control of the Corporation resulting
                  from the accumulation of outstanding common shares by a third
                  party, as it allows the Board of Directors to grant voting and
                  other rights to a person or persons determined by the Board of
                  Directors and thereby dilute the voting power of the
                  outstanding common shares and/or to otherwise affect their
                  value. To the knowledge of management, no third party has
                  expressed interest in acquiring control of the Corporation.
                  The Board of Directors has had this authority since the
                  Corporation was formed in 1972. Increasing the number of
                  authorized preferred shares will not in substance change the
                  authority of the Board of Directors in this regard.
 
                  The Board of Directors believes that the increase in the
                  authorized preferred shares is appropriate in light of the
                  substantial increase in the number of authorized common shares
                  since the time at which the Corporation's capital structure
                  was initially determined, and in order to provide additional
                  flexibility to the Board of Directors in managing the
                  Corporation's capital needs. In 1972, when the number of
                  50,000 authorized Preferred Shares was set, the Corporation
                  had authorized common shares of 500,000. Since then, the
                  number of authorized common shares has increased to
                  40,000,000. The proposal to increase the authorized preferred
                  shares to 4,000,000 would restore the original ratio of
                  authorized preferred shares to authorized common shares. The
                  preferred shares could be issued in order to raise capital to
                  support the operations of the Corporation or as consideration
                  for the acquisition of other companies or assets. Except as
                  described below, the Board of Directors has no plans or
                  commitments for the issuance of preferred shares.
 
                  The Board of Directors has approved in principle a program
                  under which preferred shares convertible into up to 250,000
                  common shares could be issued to investors thought to be in a
                  position to assist the Corporation's subsidiary, Irwin Union
                  Bank and Trust Company, in generating deposits for branch
                  banking operations. It is contemplated that each preferred
                  share issued to those investors would be issued for cash at a
                  price bearing a close relationship to the current market value
                  of one common share and would automatically convert into one
                  common share at a specified future date. However, if the
                  branch banking operation reached a specified level of deposits
                  prior to the conversion date, then the number of common shares
                  into which a preferred share converts would be increased by as
                  much as 25%, depending upon the date on which the deposit
                  level was attained.
 
                  As noted above, the Board of Directors already has the
                  authority to implement this program. If the proposal to
                  increase the number of authorized preferred shares is passed,
                  preferred shares issued under this program could have a
                  one-for-one conversion ratio into common shares, as described
                  above. Without the increase in the number of authorized
                  preferred shares, the conversion ratio would
 
 27.
<PAGE>   30
 
                  need to be much higher; for example, a ratio of 1,000 common
                  shares for one preferred share could be used. The
                  implementation of this program is subject to continuing review
                  and development by management and to the resolution of certain
                  legal and regulatory issues.
 
                  THE BOARD OF DIRECTORS BELIEVES THAT THE INCREASE IN THE
                  NUMBER OF AUTHORIZED PREFERRED SHARES IS IN THE BEST INTERESTS
                  OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT
                  SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT.
 
6. Approval of Amendment of the Articles of Incorporation to Delete an Outdated
Section of Article V.
- --------------------------------------------------------------------------------
 
                  The Corporation's Articles of Incorporation contain two
                  similar sections: Article V, Section 1 and Article V, Section
                  5.20. Article V, Section 1, which shareholders have been asked
                  to amend in item 5 above, has been amended over the years to
                  increase authorized shares and eliminate par value. Article V,
                  Section 5.20 is a remnant of an earlier version of the
                  Articles and still authorizes the issuance of 500 common
                  shares, par value $10, and 500 preferred shares without par
                  value.
 
                  THE BOARD OF DIRECTORS BELIEVES THAT SECTION 5.20 OF ARTICLE V
                  IS OUTDATED AND NO LONGER APPLICABLE AND RECOMMENDS THAT
                  SHAREHOLDERS VOTE FOR THE DELETION OF THIS SECTION.
 
Voting Procedures
- --------------------------------------------------------------------------------
 
                  Shareholders owning a majority of all the common shares
                  outstanding must be present in person or represented by proxy
                  in order to constitute a quorum for the transaction of
                  business. Thus, approximately 10,844,788 shares will be
                  required at the meeting for such quorum. The eleven nominees
                  receiving the greatest number of votes at the meeting, either
                  in person or by proxy, will be elected as directors for the
                  ensuing year. In order to confirm the appointment of
                  PricewaterhouseCoopers as the Corporation's principal
                  auditors, a majority of the votes present at the meeting,
                  either in person or by proxy, will be required. In order to
                  adopt each of the Irwin Financial Corporation Employees' Stock
                  Purchase Plan III, and the Irwin Financial Corporation 1999
                  Outside Director Restricted Stock Compensation Plan, the
                  approval at the meeting of a majority of the holders of the
                  issued and outstanding common shares of the Corporation,
                  either in person or by proxy, will be required. In order to
                  amend the Articles of Incorporation, a majority of the
                  outstanding common shares of the Corporation will be required.
                  Proxies returned by brokers as "non-votes" on behalf of shares
                  held in street name because the beneficial owner has withheld
                  voting instructions, and proxies returned with abstentions,
                  will be treated as present for purposes of determining a
                  quorum but will not be counted as voting on any matter as to
                  which a non-vote or abstention is indicated on the proxy.
 
 28.
<PAGE>   31
 
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
 
                  Management will furnish to any shareholder, without charge, a
                  copy of the Corporation's Annual Report on Form 10-K for 1998,
                  together with all financial statements, the schedules thereto,
                  and a list of the Exhibits filed therewith. If any shareholder
                  wishes a copy of the Exhibits filed with the Corporation's
                  Annual Report on Form 10-K, the Corporation will furnish the
                  Exhibits without charge. All requests for copies should be in
                  writing and directed to Thomas D. Washburn, Chief Financial
                  Officer, Irwin Financial Corporation, P.O. Box 929, Columbus,
                  Indiana 47202. The Annual Report on Form 10-K will be
                  available to requesting shareholders on or about March 31,
                  1999.
 
Deadline for Shareholder Proposals for the 2000 Annual Meeting
- --------------------------------------------------------------------------------
 
                  As required by law, all proposals of shareholders of the
                  Corporation which are otherwise eligible for inclusion in the
                  Corporation's proxy material must be received at the
                  Corporation's principal executive offices, 500 Washington
                  Street, Columbus, Indiana 47201, prior to December 1, 1999, in
                  order for the proposals to be considered for inclusion in the
                  Corporation's proxy statement and form of proxy for the 2000
                  Annual Meeting.
 
Miscellaneous
- --------------------------------------------------------------------------------
 
                  As of the date of this proxy statement, the Board of Directors
                  of the Corporation has no knowledge of any matters to be
                  presented for consideration at the meeting other than the
                  matters described herein. If (a) any matters not within the
                  knowledge of the Board of Directors as of the date of this
                  proxy statement should properly come before the meeting; (b) a
                  person not named herein is nominated at the meeting for
                  election as a director because a nominee named herein is
                  unable to serve or for good cause will not serve; (c) any
                  proposals properly omitted from this proxy statement and the
                  form of proxy should come before the meeting; or (d) any
                  matters should arise incident to the conduct of the meeting,
                  then the proxies will be voted in accordance with the
                  recommendation of the Board of Directors of the Corporation.
 
                                                        MATT SOUZA, Secretary
                                                        March 30, 1999
 
 29.
<PAGE>   32


                          IRWIN FINANCIAL CORPORATION
                           ANNUAL SHAREHOLDER MEETING
                      APRIL 29, 1999 - 4:00 P.M. (E.S.T.)
                                   RAMADA INN
                      3485 JONATHAN MOORE PIKE (ROUTE 46)
                                        







                                     [MAP]




<PAGE>   33
 
- --------------------------------------------------------------------------------
 
- --------------------------------------------------------------------------------
 
IRWIN FINANCIAL CORPORATION   PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
                              PROXY SOLICITED ON BEHALF OF THE BOARD OF
                              DIRECTORS
 
The undersigned does hereby nominate, constitute, and appoint John A. Nash
     and William I. Miller and each of them (with full power to act without
     the other), with full power of substitution to each, the true and
     lawful Proxies of the undersigned to attend the Annual Meeting of the
     Shareholders of the Corporation, to be held at the Ramada Inn, 2485
     Jonathan Moore Pike, Columbus, Indiana, on Thursday, April 29, 1999,
     at 4:00 p.m. (Columbus time), or at any adjournment thereof, and to
     vote all shares of the Corporation which the undersigned is entitled
     to vote upon the matters referred to in this proxy and in the notice
     of said meeting to the same extent and with all the powers the
     undersigned would possess if personally present and voting at such
     meeting or at any adjournment thereof, and the Proxies are directed
     to:
 
1. Vote FOR [ ] or WITHHOLD AUTHORITY to vote for [ ] the election of the
   11 directors listed below. (The Board of Directors recommends a VOTE FOR
   this proposal.) S. A. Dean; D. W. Goodrich; J. T. Hackett; W. H. Kling;
   B. J. Lauderback, J. C. McGinty, Jr.; Irwin Miller; W. I. Miller; J. A.
   Nash; L. R. Odden and T. M. Solso.
 
Instructions: to withhold authority to vote for any individual nominee,
     print that nominee's name in the space provided below.
 
     ----------------------------------------------------------------------
 
2. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] confirmation
   of the appointment of the firm of PricewaterhouseCoopers, certified
   public accountants, as the Corporation's independent auditors. (The
   Board of Directors recommends a VOTE FOR this proposal.)
 
3. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the approval
   of the Employees' Stock Purchase Plan III. (The Board of Directors
   recommends a VOTE FOR this proposal.)
 
4. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the approval
   of the 1999 Outside Director Restricted Stock Compensation Plan. (The
   Board of Directors recommends a VOTE FOR this proposal.)
 
5. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the amendment
   to the Articles of Incorporation to increase the number of authorized
   Preferred Shares. (The Board of Directors recommends a VOTE FOR this
   proposal.)
 
                                                  (Continued on other side)
 
- --------------------------------------------------------------------------------
 
- --------------------------------------------------------------------------------
 
(Continued from other side)
 
6. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] the amendment
   to the Articles of Incorporation to delete an outdated section of
   Article V. (The Board of Directors recommends a VOTE FOR this proposal.)
 
7. Vote in their discretion upon such other business as may properly come
   before the meeting or any adjournments thereof.
 
This proxy will be voted as you specify on this proxy card. IF NO
     SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THE PROXY WILL BE
     VOTED FOR THE DIRECTORS NAMED IN THE PROXY STATEMENT, FOR THE APPROVAL
     OF THE EMPLOYEES' STOCK PURCHASE PLAN III, FOR THE APPROVAL OF THE
     OUTSIDE DIRECTOR PLAN, FOR THE AMENDMENTS TO THE ARTICLES OF
     INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED PREFERRED SHARES
     AND TO DELETE AN OUTDATED SECTION OF ARTICLE V, FOR THE CONFIRMATION
     OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS THE CORPORATION'S
     INDEPENDENT AUDITORS, AND THE PROXIES MAY VOTE IN THEIR DISCRETION
     UPON SUCH OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR ANY
     ADJOURNMENT THEREOF.
 
The undersigned acknowledges receipt of notice of said meeting and the
     accompanying proxy statement and hereby revokes all proxies heretofore
     given by the undersigned for said meeting.
 
<TABLE>
       <S>                                                           <C>
       THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING     Dated:                                     1999
       THEREOF.                                                      ------------------------------------------------
       SIGN EXACTLY AS NAME(S) APPEAR(S) HERE.                       ------------------------------------------------
                                                                     ------------------------------------------------
                                                                     (If there are two or more co-owners, all must
                                                                     sign.)
                                                                     IMPORTANT: Please sign, date, and return this
                                                                     proxy promptly in the enclosed envelope. No
                                                                     postage required if mailed in the United
                                                                     States.)
</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission