UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
STATE OF
INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS
INDIANAPOLIS, INDIANA
In the Matter of

          Docket Nos. 09-126-B-HC                IRWIN FINANCIAL CORPORATION  
09-126-B-SM                Columbus, Indiana           IRWIN UNION BANK AND
TRUST COMPANY     Columbus, Indiana    

     WHEREAS, in recognition of their common goal to restore and maintain the
financial soundness of Irwin Financial Corporation, Columbus, Indiana (“Irwin”),
a registered bank holding company, and its subsidiary bank, Irwin Union Bank and
Trust Company, Columbus, Indiana (the “Bank”), an Indiana state chartered bank
that is a member of the Federal Reserve System, Irwin and the Bank have
consented to the issuance of a Cease and Desist Order (the “Order”) by the Board
of Governors of the Federal Reserve System (the “Board of Governors”) and the
Indiana Department of Financial Institutions (the “DFI”);
     WHEREAS, on October 10, 2008, Irwin and the Bank entered into a Written
Agreement with the Federal Reserve Bank of Chicago (the “Reserve Bank”) and the
DFI designed to correct certain deficiencies at Irwin and the Bank relating to
safety and soundness (the “Written Agreement”);

 

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     WHEREAS, Irwin and the Bank have taken steps to comply with the Written
Agreement but have not yet fully complied with all of the provisions of the
Written Agreement; and
     WHEREAS, on September 11, 2009, the boards of directors of Irwin and the
Bank at duly constituted meetings adopted resolutions authorizing and directing
William I. Miller to enter into this Order on behalf of Irwin and the Bank and
consenting to compliance with each and every applicable provision of this Order
by Irwin, the Bank, and their institution-affiliated parties, as defined in
sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the
“FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)), and waiving any and all rights
that Irwin and the Bank may have pursuant to section 8 of the FDI Act (12 U.S.C.
§ 1818) and to Ind. Code § 28-11-4 et seq. to: (i) a hearing for the purpose of
taking evidence on any matters set forth in this Order; (ii) judicial review of
this Order; (iii) contest the issuance of this Order by the Board of Governors
and the DFI; and (iv) challenge or contest, in any manner, the basis, issuance,
validity, terms, effectiveness or enforceability of this Order or any provisions
hereof.
     NOW, THEREFORE, IT IS HEREBY ORDERED that, pursuant to sections 8(b)(1) and
(3) of the FDI Act and Ind. Code § 28-11-4-5, that Irwin and the Bank and their
institution-affiliated parties shall cease and desist and take affirmative
action as follows:
Source of Strength
     1. Irwin shall take appropriate steps to fully utilize its financial and
managerial resources to assist the Bank in functioning in a safe and sound
manner pursuant to Regulation Y of the Board of Governors (12 C.F.R. § 225.4)
and to ensure that Irwin Union Bank, F.S.B., Columbus, Indiana (the “Thrift”), a
federally chartered savings association, complies with the Order to Cease and
Desist entered into with the Office of Thrift Supervision (the “OTS”) effective
as of July 24, 2009.

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Minimum Capital Ratios
     2. By September 30, 2009, Irwin shall achieve and maintain a consolidated
total risk-based capital ratio of at least eleven percent (11%), as defined in
the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure,
Appendix A of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App.
A).
     3. By September 30, 2009, the Bank shall achieve and maintain a total
risk-based capital ratio of at least twelve percent (12%), as defined in the
Capital Adequacy Guidelines for State Member Banks: Risk-Based Measure,
Appendix A of Regulation H of the Board of Governors (12 C.F.R. Part 208, App.
A).
     4. Irwin and the Bank shall notify the Reserve Bank and the DFI, in
writing, no more than 10 business days after the end of any month in which
Irwin’s consolidated total risk-based capital ratio or the Bank’s total
risk-based capital ratio falls below the capital ratio required by paragraphs 2
and 3, as appropriate. Together with the notification, Irwin and the Bank shall
submit an acceptable written plan that details the steps Irwin and the Bank, as
appropriate, will take to achieve and maintain the capital ratio required by
this Order.
Liquidity/Funds Management
     5. (a) Within 10 days of this Order, Irwin and the Bank shall submit to the
Reserve Bank and the DFI an acceptable plan to reduce the Bank’s reliance on
wholesale deposits. The plan shall reduce the aggregate dollar amount of
wholesale deposits from the levels that exist as of August 17, 2009, in
accordance with the following schedule:
(i) By September 30, 2009, reduce aggregate wholesale deposits by 33% from the
levels that exist as of August 17, 2009;

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(ii) By December 31, 2009, reduce aggregate wholesale deposits by 50%from the
levels that exist as of August 17, 2009; and
(iii) By March 31, 2010, reduce aggregate wholesale deposits by 75% from the
levels that exist as of August 17, 2009.
Asset Sales
     6. As of the date of this Order, Irwin and the Bank shall not sell or
dispose of any asset without the prior written approval of the Reserve Bank and
the DFI. All requests for prior written approval shall be received by the
Reserve Bank and the DFI at least 5 business days prior to the proposed sale.
All requests shall contain, at a minimum, the terms of the proposed sale and the
projected impact of the proposed sale on the franchise value, strategic plan,
capital, and liquidity of Irwin and the Bank, as applicable.
Compliance with the Agreement
     7. Within 10 days after the end of each month following the date of this
Order, Irwin and the Bank, as applicable, shall submit to the Reserve Bank and
the DFI written progress reports detailing the form and manner of all actions
taken to secure compliance with this Order and the results thereof.
Approval, Implementation, and Progress Reports
     8. (a) Irwin and the Bank shall submit a written plan that is acceptable to
the Reserve Bank and the DFI within the applicable time period set forth in
paragraph 5 of this Order.
          (b) Within 10 days of approval by the Reserve Bank and the DFI, Irwin
and the Bank shall adopt the approved plan. Upon adoption, Irwin and the Bank
shall promptly implement the approved plan and thereafter fully comply with it.

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          (c) During the term of this Order, the approved plan shall not be
amended or rescinded without the prior written approval of the Reserve Bank and
the DFI.
Communications
     9. All communications regarding this Order shall be sent to:

  (a)   Ms. Cathy Lemieux
Senior Vice President
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, Illinois 60690     (b)   Mr. David Mills
Director
Indiana Department of Financial Institutions
30 South Meridian Street, Suite 300
Indianapolis, Indiana 46204     (c)   Mr. William I. Miller, Chairman, and Chief
Executive Officer
Irwin Financial Corporation
Irwin Union Bank and Trust Company
500 Washington Street
Columbus, IN 47202-0929

Miscellaneous
     10. Notwithstanding any provision of this Order to the contrary, the
Reserve Bank and the DFI may, in their sole discretion, grant written extensions
of time to Irwin and the Bank to comply with any provision of this Order.
     11. The provisions of this Order shall be binding upon Irwin, the Bank, and
their institution-affiliated parties, in their capacities as such, and their
successors and assigns.
     12. Each provision of this Order shall remain effective and enforceable
until stayed, modified, terminated, or suspended in writing by the Reserve Bank
and the DFI.
     13. The provisions of this Order shall not bar, estop or otherwise prevent
the Board of Governors, the Reserve Bank, the DFI or any other federal or state
agency from taking any other

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action affecting Irwin, the Bank, any nonbank subsidiaries of Irwin, or any of
their current or former institution-affiliated parties and their successors and
assigns.
     14. This Order does not supersede, stay, terminate, or suspend any
provision of the Written Agreement.
     By Order of the Board of Governors of the Federal Reserve System and the
DFI effective this 15th day of September, 2009.

                      IRWIN FINANCIAL CORPORATION       BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM    
 
                   
By:
  /s/ William I. Miller       By:   /s/ Jennifer J. Johnson    
 
                   
 
  William I. Miller           Jennifer J. Johnson    
 
  Chairman and Chief Executive Officer           Secretary of the Board    
 
                    IRWIN UNION BANK AND TRUST COMPANY       INDIANA DEPARTMENT
OF FINANCIAL INSTITUTIONS    
 
                   
By:
  /s/ William I. Miller       By:   /s/ David Mills    
 
                   
 
  William I. Miller           David Mills    
 
  Chairman and Chief Executive Officer           Director    

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