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The loss was lower than the second-quarter loss of $107 million, the company reported in a news release. It said the third-quarter loss principally reflected charges associated with the sales of the corporation's small-ticket leasing portfolios and operations as part of the restructuring of the company and provisions for credit losses in commercial banking and in its liquidating home equity portfolio.
The corporation said it has continued to reduce its exposure to its national home equity portfolio.
"Despite the economic head winds, we made substantial progress on our strategic restructuring during the third quarter," said Will Miller, chairman and CEO of Irwin Financial. "We exited the small-ticket leasing business. We securitized 85 percent of our remaining home equity whole loans, thereby capping our credit loss exposure on those loans. With the home equity portfolio in run-off mode, our credit exposure to the national home equity industry is shrinking.
"Plans to further strengthen our capital base are moving ahead," Miller continued. "We filed a registration statement with the Securities and Exchange Commission relating to a $50 million rights offering to our shareholders. On Nov. 3, we received shareholder approval to increase our authorized shares, which provides us the flexibility to pursue our rights offering or other capital raising activities."
A rights offering is the issuance of "rights" to current shareholders allowing them to purchase additional shares, usually at a discount to market price.
"We were also pleased to secure additional commitments from investors for our previously announced shareholder rights offering, increasing the total standby commitments from $31 million to $37 million."
The company's current difficulties began when a subsidiary that operates in several Western states sustained substantial losses from home equity loans that turned sour with the collapse of the housing market.
"We believe that through our strategic restructuring, we will return to profitability by simplifying our business and returning to the core principles. ... As an example of this renewed focus on our traditional branch-based business, in the third quarter we expanded our loan portfolio in our headquarters community of Columbus, Indiana. We were pleased that Irwin Union Bank was the leading producer of consumer residential mortgage loans to our neighbors in the community during the third quarter -- producing 44 percent more residential loan volume than the next largest competitor locally," Miller concluded in the news release.
The commercial banking segment lost $15.1 million during the third quarter, reflecting increases in loss provisions primarily for commercial real estate-related loans. That segment's loan balances declined during the quarter as it worked to reduce its concentration of commercial real estate loans, the company reported.
The commercial finance line of business reduced its loss to $2 million in the third quarter of 2008, compared with a loss of $23 million in the second quarter.
The franchise finance channel, a continuing part of Irwin Financial included in the commercial finance line of business, earned $3.3 million during the third quarter, up from $1.7 million during the second quarter. The franchise finance portfolio totaled $611 million on Sept. 30, compared with $651 million as of June 30.
The home equity segment lost $24 million during the third quarter, compared with a loss of $44 million during the second quarter.
Irwin Financial Corp. is a bank holding company with a history tracing to 1871. The corporation provides banking services to small businesses and consumers through 31 offices in nine Midwestern and Western markets. Subsidiaries include Irwin-Union Bank, which includes 15 offices in Indiana, including Bloomington, in addition to offices in Arizona, California, Kentucky, Michigan, Missouri, Nevada, New Mexico, Utah and Wisconsin.
To see more of the Herald-Times, or to subscribe to the newspaper, go to http://www.heraldtimesonline.com. Copyright (c) 2008, Herald-Times, Bloomington, Ind. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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