##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, DC 20549
  FORM 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal Year Ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE  SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number 0-6835
  IRWIN FINANCIAL
    CORPORATION
 (Exact name of Corporation as
    Specified in its Charter)
  Indiana(State or Other Jurisdiction of
    Incorporation or Organization)

35-1286807(I.R.S. Employer
    Identification No.)500 Washington Street Columbus, Indiana(Address of Principal Executive
    Offices)

47201(Zip Code)(812) 376-1909(Corporations Telephone
    Number, Including Area Code)

www.irwinfinancial.com(Web
    Site)   Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class:

Common Stock*Title of Class:

8.70% Cumulative Trust Preferred Securities issued by IFC
    Capital Trust VI and the guarantee with respect thereto.  Securities registered pursuant to Section 12(g) of the
    Act: None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
        Documents
    Incorporated by Reference
  Selected Portions of the Following Documents

Part of Form 10-K Into Which IncorporatedDefinitive Proxy Statement for Annual Meeting
    Shareholders to be held May 30, 2008

Part IIIExhibit Index on Pages 119 through 122




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##### 





FORM 10-K
    TABLE OF CONTENTS
   
 About Forward-looking Statements

2Part IItem 1



Business

4Item 1A



Risk Factors

14Item 1B



Unresolved Staff Comments

19Item 2



Properties

19Item 3



Legal Proceedings

20Item 4



Submission of Matters to a Vote of Security
    Holders

22Part IIItem 5



Market for -Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

23Item 6



Selected Financial Data

24Item 7



Managements Discussion and Analysis of
    Financial Condition and Results of Operations

25Item 7A



Quantitative and Qualitative Disclosures about
    Market Risk

71Item 8



Financial Statements and Supplementary Data

71Item 9



Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure

117Item 9A



Controls and Procedures

117Item 9B



Other Information

117Part IIIItem 10



Directors, Executive Officers, and Corporate
    Governance

118Item 11



Executive Compensation

118Item 12



Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

118Item 13



Certain Relationships and Related Transactions,
    and Director Independence

118Item 14



Principal Accountant Fees and Services

118Part IVItem 15



Exhibits and Financial Statement Schedules

119SIGNATURES

123Business Development Board Compensation ProgramNotice of Restricted Stock Unit AwardComputation or Earnings Per ShareComputation of Ratio of Earnings to Fixed ChargesCode of ConductSubsidiariesConsent of Independent Registered Public Accounting FirmConsent of Independent Registered Public Accounting FirmCertification by the CEOCertification by the CFOSection 906 Certification by the CEOSection 906 Certification by the CFO   1




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About
    Forward-looking Statements      
    our projected revenues, earnings or earnings per share, as well
    as managements short-term and long-term performance goals;
    projected trends or potential changes in asset quality
    (particularly with regard to loans or other exposures including
    loan repurchase risk, in sectors in which we deal in real estate
    or residential mortgage lending), loan delinquencies,
    charge-offs, reserves, asset valuations, capital ratios or
    financial performance measures;
    our plans and strategies, including the expected results or
    costs and impact of implementing or changing such plans and
    strategies;
    potential litigation developments and the anticipated impact of
    potential outcomes of pending legal matters;
    predictions about conditions in housing markets, industries
    associated with housing, the mortgage markets or mortgage
    industry;
    the anticipated effects on results of operations or financial
    condition from recent developments or events; and
    any other projections or expressions that are not historical
    facts.      
    potential deterioration or effects of general economic
    conditions, particularly in sectors relating to real estate
    and/or
    mortgage lending or small business-based manufacturing and
    services;
    potential effects related to the Corporations decision to
    suspend the payment of dividends on its common, preferred and
    trust preferred securities.
    potential changes in direction, volatility and relative movement
    (basis risk) of interest rates, which may affect consumer and
    commercial demand for our products and the management and
    success of our interest rate risk management strategies;
    competition from other financial service providers for
    experienced managers as well as for customers;
    staffing fluctuations in response to product demand or the
    implementation of corporate strategies that affect our work
    force and potential associated charges;
    the relative profitability of our lending and deposit operations;
    the valuation and management of our portfolios, including the
    use of external and internal modeling assumptions we embed in
    the valuation of those portfolios and short-term swings in the
    valuation of such portfolios;
    borrowers refinancing opportunities, which may affect the
    prepayment assumptions used in our valuation estimates and which
    may affect loan demand; 2




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
    unanticipated deterioration in the credit quality or
    collectibility of our loan and lease assets, including
    deterioration resulting from the effects of natural disasters;
    difficulties in accurately estimating the future repurchase risk
    of residential mortgage loans due to alleged violations of
    representations and warrants we made when selling the loans to
    the secondary market;
    unanticipated deterioration or changes in estimates of the
    carrying value of our other assets, including securities;
    difficulties in delivering products to the secondary market as
    planned;
    difficulties in expanding our businesses and obtaining or
    retaining deposit or other funding sources as needed;
    changes in the value of our lines of business, subsidiaries, or
    companies in which we invest;
    changes in variable compensation plans related to the
    performance and valuation of lines of business where we tie
    compensation systems to line-of-business performance;
    unanticipated outcomes in litigation;
    legislative or regulatory changes, including changes in laws,
    rules or regulations that affect tax, consumer or commercial
    lending, corporate governance and disclosure requirements, and
    other laws, rules or regulations affecting the rights and
    responsibilities of our Corporation, bank or thrift;
    regulatory actions that impact our Corporation, bank or thrift,
    including the memorandum of understanding entered into as of
    March 1, 2007 between Irwin Union Bank and Trust and the
    Federal Reserve Bank of Chicago;
    changes in the interpretation of regulatory capital or other
    rules;
    the availability of resources to address changes in laws, rules
    or regulations or to respond to regulatory actions;
    changes in applicable accounting policies or principles or their
    application to our business or final audit adjustments,
    including additional guidance and interpretation on accounting
    issues and details of the implementation of new accounting
    methods;
    the final disposition of our remaining assets and obligations of
    our discontinued mortgage banking segment; or
    governmental changes in monetary or fiscal policies.   3




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PART I  Item 1.
    Business  General
        http://www.irwinfinancial.com.
  Form 10-K, Form 10-Q, Form 8-K, Form 10-K.
  Major
    Lines of Business
  Commercial
    Banking
    
    Irwin Union Bank and Trust Company organized in 1871, is a full service Indiana
    state-chartered commercial bank with offices currently located
    throughout nine counties in central and southern Indiana, as 4




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well as in Grandville (near Grand Rapids), Kalamazoo, Lansing
    and Traverse City, Michigan; Carson City and Las Vegas, Nevada;
    and Salt Lake City, Utah.  
    Irwin Union Bank, F.S.B. is a full-service
    federal savings bank that began operations in December 2000.
    Currently we have offices located in Mesa and Phoenix, Arizona;
    Costa Mesa and Sacramento, California; Louisville, Kentucky;
    Clayton (near St. Louis), Missouri; Reno, Nevada;
    Albuquerque, New Mexico; and Milwaukee, Wisconsin. We opened
    offices in Ohio and Florida in 2007.    Commercial
    Finance
      Home
    Equity Lending
      Discontinuance
    of Mortgage Banking
    Customer
    Base
   5




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Competition
      Employees
    and Labor Relations
    Financial
    Information About Geographic Areas
    Supervision
    and Regulation
  General
      and/or
 6




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Bank
    Holding Company Regulation
    Minimum
    Capital Requirements
      
    common stockholders equity;
    qualifying noncumulative perpetual preferred stock;
    qualifying cumulative perpetual preferred stock, and subject to
    some limitations, our Trust Preferred securities; and
    minority interests in the common equity accounts of consolidated
    subsidiaries;    
    Accumulated net gains (losses) on cash flow hedges and increase
    (decrease) recorded in accumulated other comprehensive income
    (AOCI) for defined benefit postretirement plans under
    FAS 158
    goodwill;
    credit-enhancing interest-only strips (certain amounts
    only); and
    specified intangible assets.    
    allowance for loan and lease losses;
    perpetual preferred stock and related surplus;
    hybrid capital instruments including, to the extent not included
    in Tier 1 Capital, Trust Preferred securities;
    unrealized holding gains on equity securities;
    perpetual debt and mandatory convertible debt securities;
    term subordinated debt, including related surplus; and
    intermediate-term preferred stock, including related securities.   7




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Expansion
    Dividends
        Dividend Limitations
  Bank
    and Thrift Regulation
       8




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Capital
    Requirements
  Bank Holding Company
    Regulation  Minimum Capital Requirements.
          Insurance
    of Deposit Accounts
   9




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Dividend
    Limitations
      Dividends Bank Holding Company Regulation 
      Interstate
    Banking and Branching
     10




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Community
    Reinvestment
    Other
    Safety and Soundness Regulations
    Brokered
    Deposits
    Anti-Money
    Laundering Laws
   11




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Compliance
    with Consumer Protection Laws
      
    require lenders to disclose credit terms in meaningful and
    consistent ways;
    prohibit discrimination against an applicant in any consumer or
    business credit transaction;
    prohibit discrimination in housing-related lending activities;
    require certain lenders to collect and report applicant and
    borrower data regarding loans for home purchases or improvement
    projects;
    require lenders to provide borrowers with information regarding
    the nature and cost of real estate settlements;
    prohibit certain lending practices and limit escrow account
    amounts with respect to real estate transactions; and
    prescribe possible penalties for violations of the requirements
    of consumer protection statutes and regulations.       12




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Proposed
    Federal and State Laws and Regulations
    
    establish a federal duty of care owed by mortgage originators to
    mortgage applicants and borrowers;
    prohibit steering of borrowers into subprime loans if they
    qualify for prime loans;
    establish minimum federal standards for licensing or
    registration of mortgage originators, including brokers and bank
    loan officers;
    establish minimum underwriting standards for all mortgages,
    including requiring lenders to determine that borrowers have a
    reasonable ability to repay and that loans provide borrowers a
    tangible net benefit;
    extend limited liability to secondary market securitizers who
    acquire, package and sell interests in home mortgage loans that
    do not meet these standards;
    establish new loan servicing and appraisal standards, and impose
    penalties for violations of these standards; and
    expand and enhance consumer protections for certain
    high-cost, sub-prime and non-traditional loans.      Executive
    Officers
   13




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Gregory F. Ehlinger
  Bradley J. Kime
  Joseph R. LaLeggia
  Jocelyn Martin-Leano
  Matthew F. Souza
 Item 1A.  Risk
    Factors  An investment in our securities involves a number of risks.
    We urge you to read all of the information contained in this
    Report on
    Form 10-K.
    In addition, we urge you to consider carefully the following
    factors in evaluating an investment in our common shares.
  Risks
    Relating to General Economic Conditions and Interest
    Rates.
  We may be adversely affected by a general deterioration in
    economic conditions.
      We may be adversely affected by interest rate changes.
     14




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Risks
    Relating to an Investment in Us.
  We have recently had financial performance below that of
    peers and have lost money in each of the past four quarters.
      
    The unexpected losses sustained by the Corporation in the third
    and fourth quarters of 2007 can be directly traced to the
    unprecedented dislocation in the housing markets, rising
    unemployment, and less liquidity in certain portions of the
    credit markets.  
    The size of the third quarter loss in 2007 was primarily driven
    by the adjustment to the repurchase reserve in discontinued
    operations, reflecting a spike in repurchase demands in the
    third quarter. While we believe that the risk of needing
    additional reserves is declining as time passes (additional
    reserves were not required in the fourth quarter), this
    repurchase risk remains.
    The size of the loss in the fourth quarter of 2007 was primarily
    driven by the acceleration of delinquencies at home equity in
    that quarter. The allowance for loan losses in this segment at
    the end of the fourth quarter was established assuming this
    negative trend continues into 2008.    We may need additional capital in the future and adequate
    financing may not be available to us on acceptable terms, or at
    all.
   15




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Our operations may be adversely affected if we are unable to
    secure adequate funding; our use of wholesale funding sources
    and securitizations exposes us to potential liquidity risk.
      and/or
  We have regulatory restrictions on our ability to receive
    dividends from bank subsidiaries.
    We have credit risk inherent in our asset portfolios.
   16




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Certain of our consumer mortgage products are not sold by
    many financial institutions.
    We rely heavily on our management team and key personnel, and
    the unexpected loss of key managers and personnel may affect our
    operations adversely.
    Ownership of our common stock is concentrated in persons
    affiliated with us.
    Our future success depends on our ability to compete
    effectively in a highly competitive financial services
    industry.
    Our shareholder rights plan, provisions in our restated
    articles of incorporation, our by-laws, and Indiana law may
    delay or prevent an acquisition of us by a third party.
   17




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We are the defendant in class actions and other lawsuits that
    could subject us to material liability.
  Legal Proceedings
  Our business may be affected adversely by Internet fraud.
  and/or
  Our business may be affected adversely by the highly
    regulated environment in which we operate.
     18




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and/or
          Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Irwin
    Union Bank and Trust
   19




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Irwin
    Union Bank, F.S.B.
    Irwin
    Commercial Finance Corporation
    Irwin
    Home Equity
    Irwin
    Mortgage
    Item 3.
    Legal
    Proceedings  Culpepper v.
    Inland Mortgage Corporation
  th th
  Cohens v.
    Inland Mortgage Corporation
   20




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Litigation
    in Connection with Loans Purchased from Community Bank of
    Northern Virginia
    Hobson v. Irwin Union Bank and Trust Company Hobson Hobson Truth-in-Lending Hobson
  Kossler v. Community Bank of Northern Virginia Kossler Kossler Kossler
  Hobson Kossler Hobson Hobson
  Hobson Kossler Hobson Hobson Kossler
  (Chatfield v. Irwin Union Bank and Trust Company,
    et al. Ransom v. Irwin Union Bank and
    Trust Company, et al.)
  Hobson, Chatfield Ransom.
  Hobson, Chatfield Ransom Kossler Kessler v. RFC, et al
 21




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Kessler Kessler Kessler Kessler Kessler Kessler Kessler
  Putkowski v.
    Irwin Home Equity Corporation and Irwin Union Bank and Trust
    Company
      Item 4.
    Submission
    of Matters to a Vote of Security Holders   22




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity
    Securities.    Stock
    Prices and Dividends:
  TotalPrice Range


Quarter


Cash


DividendsHigh


Low


End


Dividends


For Year2006First quarter

$
21.96


$
19.10


$
19.33


$
0.11Second quarter


21.20



17.92



19.39



0.11Third Quarter


20.25



18.08



19.56



0.11Fourth Quarter


23.00



19.34



22.63



0.11


$
0.442007First quarter

$
22.95


$
18.21


$
18.64


$
0.12Second quarter


18.74



14.63



14.97



0.12Third Quarter


15.75



9.32



11.02



0.12Fourth Quarter


12.21



7.21



7.35



0.12


$
0.48         non-cumulative
  Sales of
    Unregistered Securities:
    Issuer
    Purchases of Equity Securities:
   23




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Total Number of Shares


Approximate Dollar ValueTotal Number


Average


Purchased as Part of


of Shares that May Yet Beof Shares


Price Paid


Publicly Announced Plan


Purchased under the PlanCalendar Month

Purchased


per Share


or Program


or ProgramOctober





$







$
34,977,252November













$
34,977,252December





$







$
34,977,252Total





$







$
34,977,252   Item 6.
    Selected
    Financial Data  Five-Year
    Selected Financial Data
    At or For Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands except per share data)For the year:Net revenues

$
154,789


$
266,959


$
260,881


$
283,994


$
135,175Noninterest expense


199,767



210,688



204,039



203,778



144,637Income (loss) before income taxes


(44,978
)


56,271



56,842



80,216



(9,462
)Provision for income taxes


(20,848
)


18,870



20,595



31,492



(5,321
)Net (loss) income from continuing operations


(24,130
)


37,401



36,247



48,724



(4,141
)(Loss) income from discontinued operations


(30,543
)


(35,674
)


(17,260
)


19,721



76,958Net (loss) income

$
(54,673
)

$
1,727


$
18,987


$
68,445


$
72,817Common Share Data:Earnings per share from continuing operations:Basic

$
(0.87
)

$
1.27


$
1.27


$
1.72


$
(0.15
)Diluted


(0.90
)


1.25



1.26



1.64



(0.15
)Cash dividends per share


0.48



0.44



0.40



0.32



0.28Book value per common share


15.22



17.30



17.90



17.61



15.36Dividend payout
    ratio(1)


(25.69
)%


759.12
%


60.18
%


13.24
%


10.76
%Weighted average shares  basic


29,337



29,501



28,518



28,274



27,915Weighted average shares  diluted


29,344



29,690



28,841



31,278



28,240Shares outstanding  end of period


29,226



29,736



28,618



28,452



28,134At year end:Assets

$
6,166,105


$
6,237,958


$
6,646,524


$
5,235,820


$
4,988,359Residual interests


12,047



10,320



22,116



56,101



71,491Loans held for sale


6,134



237,510



513,554



227,880



204,535Loans and leases


5,696,230



5,238,193



4,477,943



3,440,689



3,147,094Allowance for loan and lease losses


144,855



74,468



59,223



43,441



63,005Servicing assets


23,234



31,949



34,445



47,807



31,949Deposits


3,325,488



3,551,516



3,898,993



3,395,263



2,899,662Other borrowings


802,424



602,443



997,444



237,277



429,758Collateralized debt


1,213,139



1,173,012



668,984



547,477



590,131Other long-term debt


233,873



233,889



270,160



270,172



270,184Shareholders equity


459,300



530,502



512,334



501,185



432,260 24




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At or For Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands except per share data)Selected Financial Ratios:Performance Ratios on continuing operations:Return on average assets


(0.4
)%


0.6
%


0.6
%


0.9
%


(0.1
)%Return on average equity


(4.8
)


7.1



7.5



10.3



(1.1
)Net interest
    margin(2)


4.50



4.71



4.97



5.46



5.82Noninterest income to
    revenues(3)


9.5



14.8



19.7



28.6



(10.7
)Efficiency
    ratio(4)


68.9



69.8



70.8



68.3



79.4Loans and leases and loans held for sale to
    deposits(5)


126.4



117.3



108.0



80.7



87.1Average interest-earning assets to average interest-bearing
    liabilities


112



119



126



132



132Asset Quality Ratios:Allowance for loan and lease losses to:Total loans and leases


2.5
%


1.4
%


1.3
%


1.3
%


2.0
%Non-performing loans and leases


190



199



158



129



142Net charge-offs to average loans and leases


1.2



0.5



0.3



0.7



1.1Non-performing assets to total assets


1.5



0.9



0.8



0.9



1.1Non-performing assets to total loans and leases and other real
    estate owned


1.6



1.0



1.2



1.3



1.7Ratio of Earnings to Fixed Charges:Including deposit interest


0.8
x


1.2
x


1.4
x


2.0
x


0.9
xExcluding deposit interest


0.6



1.5



2.1



3.3



0.8Capital Ratios:Average shareholders equity to average assets


8.3
%


8.1
%


8.0
%


9.0
%


7.6
%Tier 1 capital ratio


10.2



11.4



10.7



13.0



11.4Tier 1 leverage ratio


10.2



11.5



10.3



11.6



11.2Total risk-based capital ratio


12.6



13.4



13.1



15.9



15.1     (1)
    
    Dividends paid as a percentage of earnings from total operations.(2)
    
    Net interest income divided by average interest-earning assets.(3)
    
    Revenues consist of net interest income plus noninterest income.(4)
    
    Noninterest expense divided by net interest income plus
    noninterest income.(5)
    
    Excludes first (but not second) mortgage loans held for sale and
    loans collateralizing secured financings.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Strategy
   25




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Identify market niches.
  Attract, develop and retain exceptional management
    with niche expertise.
  Diversify capital and earnings
    risk.
  Focus on organic growth.
  Identify opportunities for coordination and
    efficiencies across the Bank.
  Create and maintain risk management systems
    appropriate to our size, scale and scope.
   26




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Outlook
                    
    In our home equity segment, we had several set-backs in 2007.  1.
    Secondary market liquidity for non-conforming mortgage products
    shut-down in 2007. As a risk-mitigation step, we accelerated the
    securitization of loans in the second quarter and were able to
    match-fund $300 million of loans prior to that market
    collapsing in the summer.   27




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2.
    The lack of secondary market liquidity in the second half of the
    year (and continuing into 2008) meant, however, that we
    needed to modify our product offerings significantly and limit
    our production to the amount we wished to hold on balance sheet.
    This significantly reduced our production and led us to
    meaningfully reduce staff. In total, we reduced staff
    (FTEs) by 152 or 31 percent, incurring
    severance-related charges of $4 million. In this segment,
    we have reduced our annualized non-interest expense by about
    $12 million.3.
    A disproportionate share of our realized and expected losses
    have arisen from a portfolio we originated prior to 2007 and
    held in for sale classification in early 2007. These
    loans were underwritten to
    third-party
    credit guidelines and as mortgage market conditions deteriorated
    in 2007, these
    third-party
    buyers left the market. We ceased origination of these types of
    loans as soon as secondary market outlets for them were
    withdrawn. Rather than selling into a depressed market, we
    reclassified these loans, approximately $167 million, into
    held-for-investment
    status, having  marked them to then current market. Throughout
    2007, the credit quality of these loans continued to
    deteriorate, leading to heightened
    charge-offs
    and higher provisions.    
    In our Discontinued Operations, we have largely
    wound-up
    operational issues, but took significant charges in 2007 to
    reserve for loan repurchase risks, reflecting a spike in
    repurchase demands in the third quarter. Our reserve
    held-up well
    with no additional repurchase reserves needed in the fourth
    quarter. The risk of needing additional reserves is declining as
    time passes; it has been nearly a year and a half since we
    originated our last loan in this segment. We are maintaining a
    limited number of qualified staff who continue to manage our
    residual liabilities and responsibilities from prior activities.        
    Our lead bank, Irwin Union Bank and Trust, began the year 2007
    with a risk-weighted capital ratio of 12.8 percent. In
    spite of losing $45 million in 2007, the Bank ended the
    year with a risk-weighted capital ratio of 12.5 percent.
    This compares to our Capital Policy Limit of 12.0 percent.
    We maintained this strong 28




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capital by proactively reducing our balance sheet to maintain
    capital ratios above our internal limits through asset sales,
    participations, credit tightening, production limitations and
    run off.  
    We have a Liquidity Policy and liquidity contingency plans which
    have been in place for several years. These have been
    functioning well in this time of stress. The primary metric used
    in liquidity planning is Available-But-Unused Funds
    or ABU. While ABU has declined in the past year, principally
    reflecting the loss of escrow deposits as the Corporation
    reduced its risk profile by selling substantially all its
    Mortgage Servicing Rights (MSRs), liquidity remained good. The
    current level of ABU is in excess of $500 million,
    comfortably above the Boards policy limit for ABU of
    $375 million.    non-cumulative
  Critical
    Accounting Policies/Management Judgments and Accounting
    Estimates
  and/or
  Valuation
    of Mortgage Servicing Rights
     29




---



##### Table of Contents



Allowance
    for Loan and Lease Losses and Repurchase Reserves
      case-by-case
      Accounting
    for Deferred Taxes
    Incentive
    Servicing Fees
   30




---



##### Table of Contents



No. D-96,
  Consolidated
    Overview
  2007


% Change


2006


% Change


2005Net (loss) income from continuing operations (millions)

$
(24.1
)


(165
)%

$
37.4



3
%

$
36.2Net (loss) income (millions)


(54.7
)


(3,266
)%


1.7



(91
)%


19.0Basic earnings per share from continuing operations


(0.87
)


(169
)%


1.27



0
%


1.27Basic earnings per share


(1.91
)


(3,283
)%


0.06



(91
)%


0.67Diluted earnings per share from continuing operations


(0.90
)


(172
)%


1.25



(1
)%


1.26Diluted earnings per share


(1.94
)


(3,980
)%


0.05



(92
)%


0.66Return on average equity from continuing operations


(4.8
)%






7.1
%






7.5
%Return on average assets from continuing operations


(0.4
)%






0.6
%






0.6
%     Consolidated
    Income Statement Analysis
  Net
    Income from Continuing Operations
    Net
    Interest Income from Continuing Operations
   31




---



##### Table of Contents



December 31,2007


2006


2005Average





Yield/


Average





Yield/


Average





Yield/Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate(Dollars in thousands)AssetsInterest-earning assets:Interest-bearing deposits with financial institutions

$
49,587


$
2,668



5.38
%

$
72,110


$
2,925



4.06
%

$
80,508


$
1,816



2.26
%Federal funds sold


13,765



619



4.50



30,419



1,527



5.02



15,064



387



2.57Residual interests


10,458



1,100



10.52



13,512



1,536



11.37



39,942



6,948



17.40Investment securities


138,866



7,647



5.51



117,164



5,816



4.96



107,220



5,813



5.42Loans held for sale


95,815



6,843



7.14



865,061



73,708



8.52



1,217,367



94,324



7.75Loans and leases, net of unearned
    income(1)


5,486,727



496,101



9.04



4,872,487



437,900



8.99



3,890,077



312,970



8.05Total interest earning assets


5,795,218


$
514,978



8.89
%


5,970,753


$
523,412



8.77
%


5,350,178


$
422,258



7.89
%Noninterest-earning assets:Cash and due from banks


74,438











111,382











109,837Premises and equipment, net


38,926











34,349











30,543Other assets


286,597











470,845











572,028Less allowance for loan and lease losses


(92,889
)










(67,383
)










(50,322
)Total assets

$
6,102,290










$
6,519,946










$
6,012,264Liabilities and Shareholders EquityInterest-bearing liabilities:Money market checking

$
285,618


$
6,320



2.21
%

$
355,378


$
8,490



2.39
%

$
479,621


$
9,789



2.04
%Money market savings


1,159,705



50,409



4.35



1,169,465



48,673



4.16



1,118,655



29,631



2.65Regular savings


122,666



2,675



2.18



131,182



2,481



1.89



119,349



1,547



1.30Time deposits


1,531,307



77,956



5.09



1,558,128



72,576



4.66



1,204,421



42,894



3.56Other borrowings


598,888



31,117



5.20



543,719



33,663



6.19



421,085



21,244



5.05Collateralized debt


1,233,604



68,601



5.56



1,005,959



53,720



5.34



629,503



25,587



4.06Other long-term debt


233,916



17,335



7.41



246,948



22,486



9.11



290,188



25,676



8.85Total interest-bearing liabilities

$
5,165,704


$
254,413



4.93
%

$
5,010,779


$
242,089



4.83
%

$
4,262,822


$
156,368



3.67
%Noninterest-bearing liabilities:Demand deposits


329,925











756,624











989,234Other liabilities


101,067











226,379











279,784Shareholders equity


505,594











526,164











480,424Total liabilities and shareholders equity

$
6,102,290










$
6,519,946










$
6,012,264Net interest income





$
260,565










$
281,323










$
265,890Net interest income to average interest earning assets










4.50
%










4.71
%










4.97
%Net interest income from discontinued operations






(1,828
)










23,884











34,423Net interest income from continuing operations





$
262,393










$
257,439










$
231,467     (1)
    
    For purposes of these computations, nonaccrual loans are
    included in daily average loan amounts outstanding. 32




---



##### Table of Contents



For the Year Ended December 31,2007 Over 2006


2006 Over 2005Volume


Rate


Total


Volume


Rate


Total(Dollars in thousands)Interest IncomeLoans and leases

$
55,203


$
2,998


$
58,201


$
79,038


$
45,892


$
124,930Mortgage loans held for sale


(65,543
)


(1,321
)


(66,864
)


(27,297
)


6,681



(20,616
)Investment securities


1,077



752



1,829



539



(536
)


3Residual interests


(347
)


(90
)


(437
)


(4,598
)


(814
)


(5,412
)Interest bearing deposits with financial institutions


(914
)


657



(257
)


(189
)


1,298



1,109Federal funds sold


(835
)


(71
)


(906
)


396



744



1,140Total


(11,359
)


2,925



(8,434
)


47,889



53,265



101,154Interest ExpenseMoney market checking


(1,666
)


(504
)


(2,170
)


(2,536
)


1,237



(1,299
)Money market savings


(406
)


2,142



1,736



1,346



17,696



19,042Regular savings


(161
)


354



193



153



781



934Time deposits


(1,249
)


6,630



5,381



12,596



17,086



29,682Other borrowings


3,415



(5,960
)


(2,545
)


6,187



6,232



12,419Collateralized debt


12,157



2,724



14,881



15,302



12,831



28,133Other long-term debt


(1,187
)


(3,965
)


(5,152
)


(3,826
)


636



(3,190
)Total


10,903



1,421



12,324



29,222



56,499



85,721Net Interest Income

$
(22,262
)

$
1,504


$
(20,758
)

$
18,667


$
(3,234
)

$
15,433     Provision
    for Loan and Lease Losses from Continuing Operations
    Noninterest
    Income from Continuing Operations
   33




---



##### Table of Contents



Noninterest
    Expense from Continuing Operations
    Consolidated
    Balance Sheet Analysis
    Investment
    Securities
    2007


2006


2005(Dollars in thousands)U.S. Treasury and government obligations

$
13,970


$
13,730


$
12,571Obligations of states and political subdivisions


3,436



3,545



3,544Mortgage-backed securities


46,216



45,187



28,331Other


14,185



3,380



3,199Total


77,807



65,842



47,645Federal Home Loan Bank and Federal Reserve Bank stock


62,588



62,588



69,697Total

$
140,395


$
128,430


$
117,342     After One


After FiveWithin


But Within


But Within


After TenOne Year


Five Years


Ten Years


Years


Other


Total(Dollars in thousands)U.S. Treasury and government obligations

$
4,229


$
9,741


$



$



$



$
13,970Obligations of states and political subdivisions










620



2,816







3,436Other














14,185







14,185Total


4,229



9,741



620



17,001







31,591Mortgage-backed securities


















46,216



46,216Federal Home Loan Bank and Federal Reserve Bank stock


















62,588



62,588$
4,229


$
9,741


$
620


$
17,001


$
108,804


$
140,395Weighted Average YieldHeld-to-maturity


3.30
%


3.65
%


5.20
%


5.35
%


5.72
%Available-for-sale


4.14
%














5.00
%    34




---



##### Table of Contents



Loans
    Held For Sale
    Loans and
    Leases
      December 31,2007


2006


2005


2004


2003(Dollars in thousands)Commercial, financial and agricultural

$
2,099,451


$
2,025,890


$
1,882,079


$
1,643,128


$
1,503,619Real estate construction & land development


586,037



601,699



514,005



334,386



296,180Real estate mortgage


1,691,450



1,522,616



1,232,933



806,757



856,070Consumer


32,232



31,581



31,718



31,166



27,370Commercial financing:Franchise financing


925,741



699,969



462,413



330,496



207,341Domestic leasing


306,301



296,056



237,968



174,035



157,072Foreign leasing


462,036



358,783



313,581



265,780



207,355Unearned income:Franchise financing


(306,681
)


(211,480
)


(125,474
)


(86,638
)


(56,837
)Domestic leasing


(42,723
)


(42,782
)


(33,267
)


(23,924
)


(22,038
)Foreign leasing


(57,614
)


(44,139
)


(38,013
)


(34,497
)


(29,038
)Total

$
5,696,230


$
5,238,193


$
4,477,943


$
3,440,689


$
3,147,094  35




---



##### Table of Contents



After OneWithin


But Within


After FiveOne Year


Five Years


Years


Total(Dollars in thousands)Commercial, financial and agricultural

$
579,535


$
934,150


$
585,766


$
2,099,451Real estate construction & land development


458,184



113,562



14,291



586,037Real estate mortgage


84,992



158,540



1,447,918



1,691,450Consumer


14,998



13,750



3,484



32,232Commercial financing:Franchise financing


1,134



86,688



531,238



619,060Domestic leasing


16,087



247,196



295



263,578Foreign leasing


23,654



361,423



19,345



404,422Total

$
1,178,584


$
1,915,309


$
2,602,337


$
5,696,230Loans due after one year with:Fixed interest rates













$
3,185,833Variable interest rates














1,331,813Total













$
4,517,646   Allowance
    for Loan and Lease Losses
    December 31,2007


2006


2005(Dollars in thousands)Balance at beginning of year

$
74,468


$
59,223


$
43,441Provision for loan and lease losses


134,988



35,101



27,307Charge-offs


(73,994
)


(30,810
)


(20,201
)Recoveries


10,099



11,208



8,960Reduction due to reclassification and sales of loans


(1,225
)


(246
)


(403
)Foreign currency adjustment


519



(8
)


119Balance at end of period

$
144,855


$
74,468


$
59,223     Deposits
   36




---



##### Table of Contents



December 31,2007


2006


2005(Dollars in thousands)Under 3 months

$
350,488


$
404,684


$
419,5743 to 6 months


183,001



202,466



230,0246 to 12 months


79,649



230,561



231,397after 12 months


48,480



270,070



341,851Total Certificates of deposit

$
661,618


$
1,107,781


$
1,222,846Brokered deposits

$
646,465


$
541,903


$
638,007Mortgage banking escrow deposits

$
1,479


$
324,913


$
412,444Demand deposits


305,341



362,712



342,913Money market accounts


1,396,562



1,441,358



1,602,337Savings and time deposits


636,399



602,703



544,814Core deposits

$
2,338,302


$
2,406,773


$
2,490,064   Other
    Borrowings
      Collateralized
    and Other Long-Term Debt
     37




---



##### Table of Contents



Capital
      December 31,2007


2006


2005(Dollars in thousands)Tier 1 capital

$
619,656


$
712,403


$
675,316Tier 2 capital


150,212



125,351



154,128Total risk-based capital

$
769,868


$
837,754


$
829,444Risk-weighted assets

$
6,099,204


$
6,258,927


$
6,317,797Risk-based ratios:Tier 1 capital


10.2
%


11.4
%


10.7
%Total capital


12.6



13.4



13.1Tier 1 leverage ratio


10.2



11.5



10.3Ending shareholders equity to assets


7.4



8.5



7.7Average shareholders equity to assets


8.3



8.1



8.0   Other
    Safety and Soundness Regulations
       38




---



##### Table of Contents



Interest RateatOrigination

December 31,


Maturity

$ AmountName

Date

2007


Date

in thousands


Dividend

OtherIFC Capital Trust VI

Oct 2002


8.70


Sep 2032

$
34,500


quarterly

fixed rate for termIFC Statutory Trust VII

Nov 2003


7.73


Nov 2033


50,000


quarterly

rate changes quarterly at three month LIBOR plus 290 basis
    pointsIFC Capital Trust VIII

Aug 2005


5.96


Aug 2035


51,750


quarterly

fixed rate for 5 years, variable rate of 3 month LIBOR
    plus 153 basis points thereafterIFC Capital Trust IX

Apr 2006


6.69


Apr 2036


31,500


quarterly

fixed rate for 5 years, variable rate of 3 month LIBOR
    plus 149 basis points thereafterIFC Capital Trust X

Dec 2006


6.53


Dec 2036


15,000


quarterly

fixed rate for 5 years, variable rate of 3 month LIBOR
    plus 175 basis points thereafterIFC Capital Trust XI

Dec 2006


6.89


Mar 2037


15,000


quarterly

floating rate of 3 month LIBOR plus 174 basis$
197,750   15-year
    free-up
   39




---



##### Table of Contents



Inflation
    Cash Flow
    Analysis
    Earnings
    by Line of Business
    
    Commercial Banking
    Commercial Finance
    Home Equity Lending    Year Ended December 31,2007


2006


2005(Dollars in thousands)Net income (loss):Commercial Banking

$
15,853


$
30,860


$
27,379Commercial Finance


13,556



12,600



7,433Home Equity Lending


(47,451
)


1,538



2,252Other (including consolidating entries)


(6,088
)


(7,597
)


(817
)Net income (loss) from continuing operations


(24,130
)


37,401



36,247Discontinued operations


(30,543
)


(35,674
)


(17,260
)Net income (loss)

$
(54,673
)

$
1,727


$
18,987  40




---



##### Table of Contents



Commercial
    Banking
    Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Selected Income Statement Data:Interest income

$
232,006


$
229,193


$
183,052


$
127,029


$
112,679Interest expense


(113,077
)


(104,467
)


(72,294
)


(37,412
)


(33,663
)Net interest income


118,929



124,726



110,758



89,617



79,016Provision for loan and lease losses


(18,241
)


(5,734
)


(5,286
)


(3,307
)


(5,913
)Other income


16,615



18,173



16,945



18,316



21,070Total net revenue


117,303



137,165



122,417



104,626



94,173Operating expense


(92,606
)


(88,932
)


(77,062
)


(65,450
)


(56,699
)Income before taxes


24,697



48,233



45,355



39,176



37,474Income taxes


(8,844
)


(17,373
)


(17,976
)


(15,752
)


(14,997
)Net income

$
15,853


$
30,860


$
27,379


$
23,424


$
22,477Performance Ratios:Return on average equity


6.77
%


14.15
%


17.38
%


15.85
%


15.20
%Selected Balance Sheet Data at End of Period:Assets

$
3,093,764


$
3,103,547


$
3,162,398


$
2,622,877


$
2,203,965Securities and short-term investments


38,780



55,116



340,811(1
)


327,664(1
)


107,668Loans and leases


2,950,356



2,901,029



2,680,220



2,223,474



1,988,633Allowance for loan and lease losses


(35,148
)


(27,113
)


(24,670
)


(22,230
)


(22,055
)Deposits


2,528,721



2,635,380



2,797,635



2,390,839



1,964,274Shareholders equity


235,009



241,556



195,381



143,580



162,050Daily Averages:Assets

$
3,143,219


$
3,143,439


$
3,025,717


$
2,476,835


$
2,119,944Loans and leases


2,902,994



2,797,853



2,460,560



2,094,190



1,914,608Allowance for loan and lease losses


(26,984
)


(26,175
)


(23,656
)


(22,304
)


(21,895
)Deposits


2,753,615



2,826,446



2,766,289



2,258,538



1,894,406Shareholders equity


234,068



218,076



157,545



147,759



147,886Shareholders equity to assets


7.45
%


6.95
%


5.21
%


5.97
%


6.98
%     (1)
    
    Includes $317 million and $293 million of
    inter-company investments in 2005 and 2004, respectively, the
    result of excess liquidity at the commercial banking line of
    business related to deposit growth in excess of its asset
    deployment needs. The funds were redeployed in earning assets at
    our other lines of business.  Overview
   41




---



##### Table of Contents



Commercial
    Banking Strategy
      Portfolio
    Characteristics
    December 31,2007


2006


2005Weighted








Weighted








WeightedLoans


Percent


Average


Loans


Percent


Average


Loans


Percent


AverageMarkets

Outstanding


of Total


Yield


Outstanding


of Total


Yield


Outstanding


of Total


Yield(Dollars in thousands)Indianapolis

$
539,008



18.3
%


7.1
%

$
561,343



19.3
%


7.6
%

$
560,775



20.9
%


7.0
%Central and Western Michigan


465,924



15.8



7.3



519,348



17.9



7.7



516,444



19.3



7.1Southern Indiana


463,597



15.7



6.7



475,051



16.4



7.2



454,236



16.9



6.5Phoenix


484,985



16.4



7.0



452,919



15.6



7.9



447,548



16.7



7.6Las Vegas


188,126



6.4



8.2



154,218



5.3



8.1



112,761



4.2



7.5Other


808,716



27.4



7.5



738,150



25.5



7.9



588,456



22.0



7.2Total

$
2,950,356



100.0
%


7.3
%

$
2,901,029



100.0



7.7
%

$
2,680,220



100.0



7.1
%   Weighted








Weighted








WeightedCore


Percent


Average


Core


Percent


Average


Core


Percent


AverageDeposits


of Total


Yield


Deposits


of Total


Yield


Deposits


of Total


Yield(Dollars in thousands)Indianapolis

$
225,075



10.0
%


3.5
%

$
259,835



10.8
%


2.4
%

$
259,196



10.4
%


2.1
%Central and Western Michigan


195,818



8.7



2.6



231,666



9.7



3.4



238,742



9.6



2.6Southern Indiana


740,686



33.1



2.9



630,060



26.3



2.8



674,923



27.1



2.1Phoenix


175,617



7.8



3.4



179,502



7.5



3.4



190,428



7.6



2.4Las Vegas


429,693



19.2



3.7



467,708



19.5



4.1



413,541



16.6



3.5Other


473,827



21.2



3.2



631,268



26.2



3.5



713,233



28.7



3.3Total

$
2,240,716



100.0
%


3.1
%

$
2,400,039



100.0
%


3.3
%

$
2,490,063



100.0
%


2.7
%  42




---



##### Table of Contents



Net
    Income
    Net
    Interest Income
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Net interest income

$
118,929


$
124,726


$
110,758Average interest earning assets


3,040,560



3,028,527



2,914,352Net interest margin


3.91
%


4.12
%


3.80
%     Provision
    for Loan and Lease Losses
    Noninterest
    Income
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Service charges on deposit accounts

$
3,865


$
4,307


$
4,008Gain from sales of loans


1,931



2,328



2,943Trust fees


2,307



1,971



1,964Insurance commissions, fees and premiums


1,812



1,955



1,827Brokerage fees


1,623



1,369



1,452Loan servicing fees


1,462



1,523



1,473Amortization and recovery of servicing assets


(1,084
)


(1,140
)


(1,058
)Other


4,699



5,860



4,336Total noninterest income

$
16,615


$
18,173


$
16,945  43




---



##### Table of Contents



Operating
    Expenses
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Salaries and employee benefits

$
51,374


$
53,111


$
47,934Other expenses


41,232



35,821



29,128Total operating expenses

$
92,606


$
88,932


$
77,062Efficiency ratio


68.3
%


62.2
%


60.3
%Number of employees at period
    end(1)


532



585



586     (1)
    
    On a full time equivalent basis    Balance
    Sheet
   44




---



##### Table of Contents



Credit
    Quality
    December 31,2007


2006


2005(Dollars in thousands)Nonperforming loans

$
27,001


$
14,455


$
19,483Other real estate owned


6,895



4,423



7,892Total nonperforming assets

$
33,896


$
18,878


$
27,375Nonperforming assets to total assets


1.09
%


0.61
%


0.87
%Allowance for loan losses

$
35,148


$
27,113


$
24,670Allowance for loan losses to total loans


1.19
%


0.93
%


0.92
%For the Period Ended:Provision for loan losses

$
18,241


$
5,734


$
5,286Net charge-offs


10,206



3,291



2,847Net charge-offs to average loans


0.35
%


0.13
%


0.12
%     December 31,Markets

2007


2006


2005Indianapolis


1.02
%


0.24
%


0.58
%Central and Western Michigan


2.52



2.72



3.76Southern Indiana


0.53



0.14



0.24Phoenix


1.20



0.52



0.60Las Vegas


0.01







Other(1)


1.03



0.06



0.16Total


1.15
%


0.65
%


1.02
%     (1)
    
    89% of Other in 2007 relates to a single credit in the
    Sacramento market where our portfolio totals $120 million 45




---



##### Table of Contents



Commercial
    Finance
  Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Selected Income Statement Data:Net interest income

$
52,721


$
42,545


$
33,683


$
28,084


$
22,766Provision for loan and lease losses


(13,505
)


(6,701
)


(6,211
)


(6,798
)


(11,308
)Noninterest income


13,106



8,018



7,437



6,275



5,868Total net revenue


52,322



43,862



34,909



27,561



17,326Operating expense


(30,107
)


(23,955
)


(22,224
)


(18,782
)


(15,072
)Income before taxes


22,215



19,907



12,685



8,779



2,254Income taxes


(8,659
)


(7,307
)


(5,252
)


(5,562
)


(461
)Net income

$
13,556


$
12,600


$
7,433


$
3,217


$
1,793Selected Balance Sheet Data at End of Period:Total assets

$
1,302,688


$
1,073,552


$
831,657


$
636,604


$
474,915Loans and leases


1,287,060



1,056,406



817,208



625,140



463,423Allowance for loan and lease losses


(17,792
)


(13,525
)


(10,756
)


(9,624
)


(11,445
)Shareholders equity


119,574



88,587



71,568



55,993



44,255Selected Operating Data:Net charge-offs

$
8,533


$
3,678


$
4,806


$
8,235


$
7,868Net interest margin


4.58
%


4.55
%


4.80
%


5.33
%


5.63
%Total funding of loans and leases

$
700,718


$
595,319


$
451,524


$
366,545


$
272,685Return on average equity


12.70
%


17.44
%


13.70
%


7.70
%


5.60
%   Overview
    Commercial
    Finance Strategy
   46




---



##### Table of Contents



Portfolio
    Characteristics
    December 31,2007


2006United StatesCalifornia


11.5
%


12.4
%Texas


8.0



5.9New York


4.7



5.0Florida


4.3



4.0All other states


40.1



42.8Total United States


68.6
%


70.1
%Canada(1)Ontario


7.5
%


7.3
%Quebec


7.2



7.1British Columbia


7.2



7.0Alberta


6.5



5.8All other provinces


3.0



2.7Total Canada


31.4
%


29.9
%Total North America


100.0
%


100.0
%Total Portfolio in thousands

$
1,287,060


$
1,056,406     (1)
    
    in U.S. dollars    December 31,2007


2006(Dollars in thousands)Domestic franchise loans

$
619,060


$
488,489Weighted average coupon


9.38
%


8.79
%Delinquency ratio


0.04



0.16Domestic leases

$
263,578


$
253,274Weighted average coupon


10.91
%


10.32
%Delinquency ratio


2.47



1.72Canadian
    leases(1)

$
404,422


$
314,644Weighted average coupon


9.09
%


9.13
%Delinquency ratio


0.51



0.36     (1)
    
    in U.S. dollars  Net
    Income
   47




---



##### Table of Contents



Net
    Interest Income
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Net interest income

$
52,721


$
42,545


$
33,683Average interest earning assets


1,151,470



936,519



701,423Net interest margin


4.58
%


4.55
%


4.80
%       Provision
    for Loan and Lease Losses
    Noninterest
    Income
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Gain from sales of loans

$
6,779


$
2,563


$
2,642Derivative losses, net


(547
)


(263
)


(717
)Other


6,874



5,718



5,512Total noninterest income

$
13,106


$
8,018


$
7,437    48




---



##### Table of Contents



Operating
    Expenses
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Salaries and employee benefits

$
18,441


$
13,155


$
11,306Other


11,666



10,800



10,918Total operating expenses

$
30,107


$
23,955


$
22,224Efficiency ratio


45.7
%


47.4
%


54.0
%Number of employees at period
    end(1)


215



202



184     (1)
    
    On a full time equivalent basis    Credit
    Quality
     49




---



##### Table of Contents



December 31,2007


2006


2005(Dollars in thousands)Small Ticket Leases:Nonperforming leases

$
5,246


$
4,583


$
2,980Repossessed Inventory


1,242



664



804Allowance for lease losses


11,831



7,756



6,638Allowance for lease losses to total leases


1.77
%


1.37
%


1.38
%For the Period Ended:Provision for lease losses

$
10,938


$
4,103


$
4,585Net charge-offs


7,440



3,233



3,961Net charge-offs to average leases


1.20
%


0.60
%


0.93
%Franchise Loans:Nonperforming loans

$
3,630


$
791


$
720Allowance for loan losses


5,961



5,769



4,118Allowance for loan losses to total loans


0.96
%


1.18
%


1.22
%For the Period Ended:Provision for loan losses

$
2,567


$
2,598


$
1,626Net charge-offs


1,093



445



845Net charge-offs to average loans


0.21
%


0.11
%


0.30
%  50




---



##### Table of Contents



Home
    Equity Lending
    Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Selected Income Statement Data:Net interest income

$
95,095


$
96,068


$
88,290


$
98,983


$
106,545Provision for loan and lease losses


(103,242
)


(22,659
)


(15,811
)


(4,369
)


(29,575
)Noninterest income


2,535



15,186



33,667



67,847



(19,525
)Total net revenues


(5,612
)


88,595



106,146



162,461



57,445Operating expenses


(73,432
)


(85,967
)


(102,339
)


(114,779
)


(90,538
)(Loss) income before taxes


(79,044
)


2,628



3,807



47,682



(33,093
)Income taxes


31,593



(1,090
)


(1,555
)


(19,615
)


13,203Net (loss) income

$
(47,451
)

$
1,538


$
2,252


$
28,067


$
(19,890
)Selected Balance Sheet Data:Total assets

$
1,481,306


$
1,617,219


$
1,602,400


$
992,979


$
1,070,634Home equity loans and lines of
    credit(1)


1,458,564



1,280,497



980,406



590,175



692,637Allowance for loan losses


(91,700
)


(33,614
)


(23,552
)


(11,330
)


(29,251
)Home equity loans held for sale


5,865



236,636



513,231



227,740



202,627Residual interests


3,120



2,760



15,580



51,542



70,519Mortgage servicing assets


20,071



28,231



30,502



44,000



28,425Other borrowings


291,293



446,163



920,636



359,902



368,640Collateralized debt


970,733



948,939



452,615



352,625



460,535Shareholders equity


156,894



155,791



151,677



136,260



128,555Selected Operating Data:Loan volume:Lines of credit

$
33,106


$
150,306


$
436,451


$
508,287


$
324,094Loans


421,838



853,527



1,255,185



934,027



809,222Total managed portfolio balance


1,605,032



1,708,975



1,593,509



1,147,137



1,513,289Delinquency
    ratio(2)


5.8
%


3.2
%


3.0
%


4.8
%


5.9
%Total managed portfolio balanceIncluding credit risk sold

$
2,377,464


$
2,853,726


$
3,058,842


$
2,807,367


$
2,568,356Weighted average coupon rate:Lines of credit


10.62
%


11.13
%


10.17
%


9.18
%


9.71
%Loans


11.07



10.75



10.18



11.87



12.07Gain on sale of loans to loans sold


0.51



1.32



2.51



2.24



3.81Net home equity charge-offs to average managed portfolio


3.24



1.00



0.60



2.48



4.37     (1)
    
    Includes $1.1 billion, $1.1 billion,
    $0.5 billion, $0.4 billion and $0.5 billion of
    loans at December 31, 2007, 2006, 2005, 2004, and 2003,
    respectively, that collateralize securitized financings.(2)
    
    Nonaccrual loans are included in the delinquency ratio. 51




---



##### Table of Contents



Overview
    Strategy
        Geographic
    Distribution of our Portfolio and Current Originations
  Portfolio:
  December 31,State

2007


2006California


9.8
%


10.2
%Michigan


7.9



7.8Colorado


7.6



7.0Ohio


6.7



6.2Florida


6.3



7.8All other states


61.7



61.0Total


100.0
%


100.0
%Total managed portfolio in thousands

$
1,605,032


$
1,708,975  52




---



##### Table of Contents



Originations:
  December 31,State

2007


2006California


9.4
%


8.3
%Colorado


7.9



6.5Pennsylvania


5.7



4.0Florida


5.1



14.0Missouri


5.1



2.1All other states


66.8



65.1Total


100.0
%


100.0
%     December 31,


December 31,2007


2006Weighted








WeightedAverage








AverageAmount


% of Total


Coupon


Amount


% of Total


Coupon(Dollars in thousands)Home Equity PortfolioLoans 100% CLTV

$
425,939



26.54
%


9.04
%

$
536,387



31.39
%


9.10
%Lines of credit 100% CLTV


246,524



15.36



9.35



319,415



18.69



9.96First mortgages 100% CLTV


49,962



3.11



7.68



44,727



2.62



7.37Total 100% CLTV


722,425



45.01



9.05



900,529



52.70



9.32Loans > 100% CLTV


766,168



47.74



12.50



677,119



39.62



12.36Lines of credit > 100% CLTV


87,825



5.47



14.00



101,683



5.95



14.55First mortgages > 100% CLTV


23,584



1.47



8.48



22,916



1.34



8.48Total > 100% CLTV


877,577



54.68



12.54



801,718



46.91



12.53Other


5,030



0.31



13.58



6,728



0.39



15.03Total managed
    portfolio(1)

$
1,605,032



100.00
%


10.97
%

$
1,708,975



100.00
%


10.85
%     (1)
    
    We define our Managed Portfolio as the portfolio of
    loans ($1.6 billion) that we service and on which we carry
    credit risk. At December 31, 2007, we also serviced another
    $0.8 billion of loans for which the credit risk is held by
    others. 53




---



##### Table of Contents



Year Ended December 31,Product

2007


2006(Funding amount in thousands)First mortgage loansFunding Amount

$
106,103


$
76,499Weighted Average Disposable Income


5,348



4,944Weighted Average FICO score


698



689Weighted Average Coupon


8.29
%


8.24
%First mortgage loans up to 110%Funding Amount

$
2,427


$
23,163Weighted Average Disposable Income


4,059



5,886Weighted Average FICO score


710



707Weighted Average Coupon


9.09
%


8.50
%Home equity loans up to 100% CLTVFunding Amount

$
97,788


$
440,207Weighted Average Disposable Income


5,527



6,238Weighted Average FICO score


699



703Weighted Average Coupon


10.36
%


10.87
%Home equity loans up to 125% CLTVFunding Amount

$
215,520


$
313,658Weighted Average Disposable Income


4,807



4,382Weighted Average FICO score


699



698Weighted Average Coupon


12.95
%


12.55
%Home equity lines of credit up to 100% CLTVFunding Amount

$
16,877


$
134,574Weighted Average Disposable Income


6,532



6,272Weighted Average FICO score


695



693Weighted Average Coupon


10.99
%


9.67
%Home equity lines of credit up to 125% CLTVFunding Amount

$
16,228


$
15,732Weighted Average Disposable Income


5,332



4,988Weighted Average FICO score


696



690Weighted Average Coupon


15.06
%


15.08
%All ProductsFunding Amount

$
454,944


$
1,003,833Weighted Average Disposable Income


5,164



5,389Weighted Average FICO score


698



699Weighted Average Coupon


11.29
%


11.04
%   Net
    Income
   54




---



##### Table of Contents



Net
    Revenue
      Year Ended December 31,2007


2006Total originations in thousands

$
454,944


$
1,003,833Percent correspondent


35
%


27
%Percent retail loans


8



16Percent brokered


55



32Percent other


2



25     Year Ended December 31,2007


2006


2005(Dollars in thousands)Net interest income

$
95,095


$
96,068


$
88,290Provision for loan losses


(103,242
)


(22,659
)


(15,811
)Gain on sale of whole loans


950



5,048



18,767Gain (loss) on intercompany transactions


2,091



866



(210
)Valuation adjustment on loans held for sale


(8,194
)


(8,300
)


(708
)(Loss) gain on sales of loans


(5,153
)


(2,386
)


17,849Loan servicing fees


17,813



31,322



38,206Amortization of servicing assets


(115
)


(19,887
)


(29,708
)(Impairment) recovery of servicing assets


(10,946
)


647



643Derivative (losses) gains


(350
)


3,136



1,367Other income


1,286



2,354



5,310Total net revenue

$
(5,612
)

$
88,595


$
106,146          55




---



##### Table of Contents



2007


2006


2005(Dollars in thousands)First Quarter

$
1,933


$
1,387


$
325Second Quarter


1,708



4,278



681Third Quarter


1,424



659



851Fourth Quarter


939



2,757



481Year to date

$
6,004


$
9,081


$
2,338       Operating
    Expenses
    Year Ended December 31,2007


2006


2005(Dollars in thousands)Salaries and employee benefits

$
44,528


$
51,335


$
64,432Other


28,904



34,632



37,907Total operating expenses

$
73,432


$
85,967


$
102,339Number of employees at period
    end(1)


340



492



615     (1)
    
    On a full time equivalent basis. 56




---



##### Table of Contents



Home
    Equity Servicing and Credit Quality
               57




---



##### Table of Contents



December 31,2007


2006(Dollars in thousands)Managed PortfolioTotal Loans

$
1,605,032


$
1,708,97530 days past due


5.78
%


3.16
%90 days past due


2.53



1.19Net Chargeoff Rate


3.24



1.00Unsold LoansTotal
    Loans(1)

$
1,458,095


$
1,515,88130 days past due


6.18
%


3.54
%90 days past due


2.76



1.32Net Chargeoff Rate


3.58



1.07Loan Loss Reserve

$
91,700


$
33,614Owned ResidualTotal Loans

$
146,937


$
193,09430 days past due


1.83
%


0.20
%90 days past due


0.29



0.18Net Chargeoff Rate


0.17



0.42Residual Undiscounted Losses

$
870


$
430Credit Risk Sold, Potential Incentive Servicing Fee Retained
    PortfolioTotal Loans

$
461,237


$
627,83830 days past due


7.13
%


5.40
%90 days past due


2.69



2.30     (1)
    
    Excludes deferred fees and costs.  Mortgage
    Banking  (discontinued operations)
     58




---



##### Table of Contents



Parent
    and Other
      Risk
    Management
    
    Credit risk
    Liquidity risk 59




---



##### Table of Contents




    Market risk (including interest rate and foreign exchange risk)
    Operational risk
    Compliance risk    best-in-class
        Credit
    Risk
  and/or
   60




---



##### Table of Contents



61




---



##### Table of Contents



At or for the Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Loans and leases outstanding at end of period, net of unearned
    income

$
5,696,230


$
5,238,193


$
4,477,943


$
3,440,689


$
3,147,094Average loans and leases for the period, net of unearned income

$
5,486,727


$
4,854,368


$
3,875,394


$
3,312,785


$
3,151,325Allowance for possible loan and lease losses:Balance beginning of period

$
74,468


$
59,223


$
43,441


$
63,005


$
50,320Charge-offs:Commercial, financial and agricultural loans


9,160



3,503



2,976



3,262



4,263Real estate mortgage loans


52,665



21,418



10,656



15,381



23,522Consumer loans


1,846



328



723



351



765Commercial Financing:Franchise financing


1,093



481



870



88



146Domestic leasing


6,091



2,709



2,190



6,581



6,026Canadian leasing


3,139



2,371



2,786



2,517



2,590Total charge-offs


73,994



30,810



20,201



28,180



37,312Recoveries:Commercial, financial and agricultural loans


597



576



767



318



77Real estate mortgage loans


7,515



8,595



7,068



3,899



2,198Consumer loans


197



154



85



169



248Commercial Financing:Franchise financing






35



25







Domestic leasing


1,313



923



583



626



448Canadian leasing


477



925



432



323



449Total recoveries


10,099



11,208



8,960



5,335



3,420Net charge-offs


(63,895
)


(19,602
)


(11,241
)


(22,845
)


(33,892
)Reduction due to sale of loans


(1,225
)






(403
)


(627
)


(234
)Reduction due to reclassification of loans






(246
)






(10,808
)


(690
)Foreign currency adjustment


519



(8
)


119



243



582Provision charged to expense


134,988



35,101



27,307



14,473



46,919Balance end of period

$
144,855


$
74,468


$
59,223


$
43,441


$
63,005 62




---



##### Table of Contents



At or for the Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Allowance for possible loan and lease losses by category:Commercial, financial and agricultural loans

$
33,667


$
25,593


$
19,927


$
18,126


$
20,571Real estate mortgage loans


91,934



33,840



23,553



11,330



30,165Consumer loans


1,462



1,510



4,879



4,242



809Commercial Financing:Franchise financing


5,961



5,769



4,118



3,728



2,158Domestic leasing


7,503



4,326



3,144



2,926



6,285Canadian


4,328



3,430



3,602



3,089



3,017Totals

$
144,855


$
74,468


$
59,223


$
43,441


$
63,005Percent of loans and leases to total loans and leases by
    category:Commercial, financial and agricultural loans


37
%


39
%


42
%


48
%


48
%Real estate mortgage loans


40



40



39



33



36Consumer loans


1



1



1



1



1Commercial Financing:Franchise financing


11



9



7



7



5Domestic leasing


4



5



5



4



4Canadian


7



6



6



7



6Ratios:Net charge-offs to average loans and
    leases(1)


1.2
%


0.4
%


0.3
%


0.7
%


1.1
%Allowance for possible loan losses to loans and leases
    outstanding


2.5
%


1.4
%


1.3
%


1.3
%


2.0
%    63




---



##### Table of Contents



December 31,2007


2006


2005


2004


2003(Dollars in thousands)Accruing loans past due 90 days or more:Commercial, financial and agricultural loans

$
177


$



$



$



$
4,172Real estate mortgages


151















Consumer loans


41



73



455



645



226Commercial financing:Franchise financing


















151Domestic leasing


311



83



73







8Foreign leasing


177



236



71



12



70857



392



599



657



4,627Nonaccrual loans and leases:Commercial, financial and agricultural loans


25,797



13,296



17,693



20,394



20,447Real estate mortgages


40,681



18,125



14,237



8,510



14,663Consumer loans


587



696



1,335



208



769Commercial financing:Franchise financing


3,630



791



720



1,193



552Domestic leasing


2,595



2,495



1,383



1,029



1,364Foreign leasing


2,163



1,768



1,452



1,702



1,94375,453



37,171



36,820



33,036



39,738Total nonperforming loans and leases


76,310



37,563



37,419



33,693



44,365Nonperforming Loans held for Sale not guaranteed


79



5,564



965



2,066



1,695Other real estate owned & other repossessed assets


16,885



15,170



15,226



9,427



6,431Total nonperforming assets

$
93,274


$
58,297


$
53,610


$
45,186


$
52,491Nonperforming loans and leases to total loans and leases


1.3
%


0.7
%


0.8
%


1.0
%


1.4
%Nonperforming assets to total assets


1.5
%


0.9
%


0.8
%


0.9
%


1.1
%       December 31,


December 31,2007


2006(In millions) Commercial banking

$
34


$
19 Commercial finance


10



5 Home equity lending


46



23 Mortgage banking


3



11  64




---



##### Table of Contents



Liquidity
    Risk
        Payments Due by PeriodOne Year


Over One to


Over Three to


AfterTotal


or Less


Three Years


Five Years


Five Years(Dollars in thousands)Deposits with contractual maturity

$
1,548,982


$
1,094,464


$
380,741


$
66,628


$
7,149Deposits without a stated maturity


1,776,506



1,776,506











Other borrowings


802,424



456,912



179,241



100,667



65,604Collateralized debt


1,213,139



305,094



414,472



470,081



23,492Other long-term debt


233,878



5











233,873Operating leases


40,964



10,228



16,817



9,385



4,534Total

$
5,615,893


$
3,643,209


$
991,271


$
646,761


$
334,652   and/or
       65




---



##### Table of Contents




    Lines of credit with correspondent banks, including fed funds
    lines: $18 million outstanding out of $175 million
    available but not committed
    Lines of credit with non-correspondent banks, including fed
    funds lines: $210 million outstanding
    Warehouse lines of credit and conduits to fund Canadian
    sourced small ticket leases: $242 million outstanding on
    $391 million of borrowing facilities     66




---



##### Table of Contents



Market
    Risk (including Interest Rate and Foreign Exchange
    Risk)
                  
    The net asset value sensitivities do not necessarily represent
    the changes in the lines of business net asset value that
    would actually occur under the given interest rate scenarios, as
    sensitivities do not reflect changes in value of the companies
    as a going concern, nor consider potential rebalancing or other
    management actions that might be taken in the future under
    asset/liability management as interest rates change. 67




---



##### Table of Contents




    The tables below show modeled changes in interest rates for
    individual asset and liability classes. Asset and liability
    classes in our portfolio have interest rate sensitivity tied to
    different underlying indices or instruments. While the rate
    sensitivity of individual classes presented below is our best
    estimate of changes in value due to interest rate changes, the
    total potential change figures are subject to basis
    risk if all yield curves do not move in parallel as the model
    assumes.
    Few of the asset classes shown react to interest rate changes in
    a linear fashion. That is, the point estimates we have made at
    Current and +/−2% and
    +/−1% are appropriate estimates at those
    amounts of rate change, but it may not be accurate to
    interpolate linearly between those points. This is most evident
    in products that contain optionality in payment timing or
    pricing such as mortgage servicing or nonmaturity transaction
    deposits.
    Finally, the tables show theoretical outcomes for dramatic
    changes in interest rates which do not consider potential
    rebalancing or repositioning of hedges and balance sheet mix.  Economic
    Value Change Method
  Present Value at December 31, 2007Change in Interest Rates of:−2%


−1%


Current


+1%


+2%(In thousands)Interest Sensitive AssetsLoans and other assets

$
6,174,082


$
6,078,649


$
5,984,930


$
5,893,598


$
5,804,628Loans held for sale


6,652



6,467



6,248



5,968



5,648Mortgage servicing rights


17,894



21,052



24,766



27,441



29,196Residual interests


11,831



11,947



12,047



12,184



12,269Interest sensitive financial derivatives


(17,927
)


(11,324
)


(5,061
)


955



7,009Total interest sensitive assets


6,192,532



6,106,791



6,022,930



5,940,146



5,858,750Interest Sensitive LiabilitiesDeposits


(3,287,120
)


(3,256,158
)


(3,227,564
)


(3,194,925
)


(3,160,041
)Short-term
    borrowings(1)


(1,075,226
)


(1,062,628
)


(1,050,608
)


(1,039,129
)


(1,028,158
)Long-term debt


(1,249,658
)


(1,237,609
)


(1,224,238
)


(1,205,172
)


(1,183,541
)Total interest sensitive liabilities


(5,612,004
)


(5,556,395
)


(5,502,410
)


(5,439,226
)


(5,371,740
)Net market value as of December 31, 2007

$
580,528


$
550,396


$
520,520


$
500,920


$
487,010Change from current

$
60,008


$
29,876


$



$
(19,600
)

$
(33,510
)Net market value as of December 31, 2006

$
306,903


$
293,703


$
277,491


$
260,236


$
240,367Potential change

$
29,412


$
16,212


$



$
(17,255
)

$
(37,124
)     (1)
    
    Includes certain debt which is categorized as
    collateralized debt in other sections of this
    document. 68




---



##### Table of Contents



GAAP-Based
    Value Change Method
  Present Value at December 31, 2007Change in Interest Rates of:−2%


−1%


Current


+1%


+2%(In thousands)Interest Sensitive AssetsLoans and other
    assets(1)

$



$



$



$



$
Loans held for sale


6,134



6,134



6,134



5,855



5,534Mortgage servicing rights


16,316



19,496



23,234



25,926



27,693Residual interests


11,831



11,947



12,047



12,184



12,269Interest sensitive financial derivatives


(17,927
)


(11,324
)


(5,061
)


955



7,009Total interest sensitive assets


16,354



26,253



36,354



44,920



52,505Interest Sensitive LiabilitiesDeposits(1)


















Other
    borrowings(1)


















Long-term
    debt(1)


















Total interest sensitive
    liabilities(1)


















Net market value as of December 31, 2007

$
16,354


$
26,253


$
36,354


$
45,920


$
52,505Potential change

$
(20,000
)

$
(10,101
)

$



$
8,566


$
16,151Net market value as of December 31, 2006

$
264,698


$
272,986


$
279,737


$
279,659


$
279,200Potential change

$
(15,039
)

$
(6,751
)

$



$
(78
)

$
(537
)     (1)
    
    Value does not change in GAAP presentation.  Off-Balance
    Sheet Instruments
      Derivative
    Financial Instruments
   69




---



##### Table of Contents



Operational
    and Compliance Risk.
          Regulatory
    Environment
       70




---



##### Table of Contents



Part I, Supervision and
    Regulation Dividends Bank Holding Company Dividend Limitations Bank
    and Thrift Regulation
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    Item 8.
    Financial
    Statements and Supplementary Data  Managements
    Report on Internal Control Over Financial Reporting
    Internal
    Control  Integrated Framework
   71




---



##### Table of Contents



-s- William I. Miller

-s- Gregory F. EhlingerWilliam I. Miller
    Chairman and
    Chief Executive Officer

Gregory F. Ehlinger
    Chief Financial Officer  72




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 
    73




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
               
    74




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
        75




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,


December 31,2007


2006(Dollars in thousands)Assets:Cash and cash equivalents  Notes 1 and 3

$
78,212


$
145,765Interest-bearing deposits with financial institutions


31,841



53,106Residual interests


12,047



10,320Investment securities- held-to-maturity (Fair value: $18,134 and
    $17,893 at December 31, 2007 and 2006) 
    Note 4


18,123



18,066Investment securities- available-for-sale  Note 4


59,684



47,776Investment securities- other  Note 4


62,588



62,588Loans held for sale


6,134



237,510Loans and leases, net of unearned income  Note 5


5,696,230



5,238,193Less: Allowance for loan and lease losses  Note 6


(144,855
)


(74,468
)5,551,375



5,163,725Servicing assets  Note 7


23,234



31,949Accounts receivable


38,710



208,585Accrued interest receivable


26,291



26,470Premises and equipment  Note 8


38,178



36,211Other assets


215,874



139,314Assets held for sale  Note 2


3,814



56,573Total assets

$
6,166,105


$
6,237,958Liabilities and Shareholders Equity:DepositsNoninterest-bearing

$
306,820


$
687,626Interest-bearing


2,357,050



1,756,109Certificates of deposit over $100,000


661,618



1,107,7813,325,488



3,551,516Other borrowings  Note 10


802,424



602,443Collateralized debt  Note 11


1,213,139



1,173,012Other long-term debt  Note 12


233,873



233,889Other liabilities


131,881



146,596Total liabilities


5,706,805



5,707,456Commitments and contingencies  Notes 13, 14, and
    16Shareholders equityPreferred stock, no par value  authorized
    4,000,000 shares;






Noncumulative perpetual preferred stock  15,000
    authorized and issued;


14,441



14,518Common stock, no par value  authorized
    40,000,000 shares; issued 29,896,464 shares and
    29,879,773 as of December 31, 2007 and 2006; 670,169 and
    143,543 shares in treasury as of December 31, 2007 and
    2006


116,542



116,192Additional paid-in capital


2,557



1,583Accumulated other comprehensive income (loss), net of deferred
    income tax benefit of $4,367 and $4,813 as of December 31,
    2007 and 2006


1,032



(4,364
)Retained earnings


337,524



405,835472,096



533,764Less treasury stock, at cost


(12,796
)


(3,262
)Total shareholders equity


459,300



530,502Total liabilities and shareholders equity

$
6,166,105


$
6,237,958    76




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
  For the Year Ended December 31,2007


2006


2005(Dollars in thousands, except per share)Interest income:Loans and leases

$
494,165


$
435,952


$
312,034Loans held for sale


6,830



34,372



43,540Residual interests


1,100



1,536



6,948Investment securities


10,315



8,741



7,629Federal funds sold


619



1,527



387Total interest income


513,029



482,128



370,538Interest expense:Deposits


137,360



132,221



83,861Other borrowings


29,064



19,482



9,521Collateralized debt


68,601



53,720



25,587Other long-term debt


15,611



19,266



20,102Total interest expense


250,636



224,689



139,071Net interest income


262,393



257,439



231,467Provision for loan and lease losses  Note 6


134,988



35,101



27,307Net interest income after provision for loan and lease losses


127,405



222,338



204,160Other income:Loan servicing fees


19,275



32,844



39,678Amortization of servicing assets  Note 7


(1,199
)


(21,027
)


(31,014
)(Impairment) recovery of servicing assets  Note 7


(10,946
)


646



891Net loan administration income


7,130



12,463



9,555Gain from sales of loans


3,363



1,766



22,860Trading gains


1,329



1,282



3,105Derivative (losses) gains, net


(9,720
)


3,820



(2,100
)Other


25,282



25,290



23,30127,384



44,621



56,721Other expense:Salaries


97,028



107,864



110,463Pension and other employee benefits


27,519



27,602



25,812Office expense


9,316



9,130



8,587Premises and equipment


23,539



22,748



21,286Marketing and development


5,532



3,041



4,373Professional fees


8,915



10,738



10,414Other


27,918



29,565



23,104199,767



210,688



204,039(Loss) income before income taxes from continuing operations


(44,978
)


56,271



56,842Provision for income taxes


(20,848
)


18,870



20,595Net (loss) income from continuing operations


(24,130
)


37,401



36,247Loss from discontinued operations, net of $20,581 and $23,832
    and $11,613 income tax benefit, respectively 
    Note 2


(30,543
)


(35,674
)


(17,260
)Net (loss) income

$
(54,673
)

$
1,727


$
18,987Earnings per share from continuing operations: 
    Note 20Basic

$
(0.87
)

$
1.27


$
1.27Diluted

$
(0.90
)

$
1.25


$
1.26Earnings per share:  Note 20Basic

$
(1.91
)

$
0.06


$
0.67Diluted

$
(1.94
)

$
0.05


$
0.66Dividends per share

$
0.48


$
0.44


$
0.40    77




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
    EQUITY
  Accumulated Other Comprehensive IncomeUnrealized


Unrealized


Defined





AdditionalRetained


Foreign


Gain/loss


Gain/loss


Benefit


Deferred


Paid in


Common


Preferred


TreasuryTotal


Earnings


Currency


Securities


Derivatives


Plans


Compensation


Capital


Stock


Stock


Stock(Dollars in thousands)Balance at January 1, 2005

$
501,185


$
412,027


$
2,648


$
60


$



$
(254
)

$
(660
)

$
383


$
112,000


$



$
(25,019
)Net income


18,987



18,987Unrealized loss on investment securities net of $290 tax benefit


(433
)










(433
)Unrealized gain on interest rate cap net of $503 tax liability


754















754Foreign currency adjustment


693







693Minimum SERP liability net of $13 tax benefit


(20
)


















(20
)Other comprehensive income


994Total comprehensive income


19,981Deferred compensation


(99
)






















(99
)Cash dividends


(11,426
)


(11,426
)Tax benefit on stock option exercises


617



























617Treasury stock:Purchase of 51,056 shares


(1,201
)






































(1,201
)Sales of 217,097 shares


3,277



(804
)






















(1,000
)










5,081Balance at December 31, 2005

$
512,334


$
418,784


$
3,341


$
(373
)

$
754


$
(274
)

$
(759
)

$



$
112,000


$



$
(21,139
)Net income


1,727



1,727Unrealized gain on investment securities net of $19 tax liability


29











29Unrealized loss on interest rate swap


(784
)














(784
)Foreign currency adjustment


(457
)






(457
)Defined benefit retirement plans:Minimum pension and SERP liability, net of $61 tax liability


91



















91Other comprehensive income


(1,121
)Total comprehensive income


606Adoption of FAS 158, net of $4,460 tax benefit 
    Note 1


(6,691
)


















(6,691
)Adoption of FAS 123R


























759



50











(809
)Cash dividends


(13,110
)


(13,110
)Tax benefit on stock option exercises


535



























535Stock option expense


1,742



























1,742Conversion of Trust Preferred shares to
    1,013,938 shares of common stock


20,248



(1,058
)


























1,805







19,501Sales of 15,000 shares of preferred stock


14,518



































14,518Sales of 177,181 shares of common stock


2,387































2,387Treasury stock:Purchase of 200,604 shares


(4,363
)






































(4,363
)Sales of 147,097 shares


2,296



(508
)






















(744
)










3,548Balance at December 31, 2006

$
530,502


$
405,835


$
2,884


$
(344
)

$
(30
)

$
(6,874
)

$



$
1,583


$
116,192


$
14,518


$
(3,262
)Net loss


(54,673
)


(54,673
)Unrealized loss on investment securities net of $734 tax benefit


(1,101
)










(1,101
)Unrealized loss on interest rate swap net of $1,031 tax benefit


(1,546
)














(1,546
)Foreign currency adjustment


6,274







6,274Defined benefit retirement plans:Minimum pension and SERP liability, net of $1,193 tax liability


1,769



















1,769Other comprehensive income


5,396Total comprehensive income


(49,277
)Adoption of FAS 156, net of $1,162


1,743



1,743tax liabilityCash dividends  Common stock


(14,046
)


(14,046
)Cash dividends  preferred stock


(1,335
)


(1,335
)Tax benefit on stock option exercises


91



























91Stock compensation expense


2,509



























2,509Stock issuance costs


(77
)


































(77
)Treasury & common stock:Purchase of 673,615 shares


(12,804
)






































(12,804
)Sales of 164,506 shares


1,994



























(1,626
)


350







3,270Balance at December 31, 2007

$
459,300


$
337,524


$
9,158


$
(1,445
)

$
(1,576
)

$
(5,105
)

$



$
2,557


$
116,542


$
14,441


$
(12,796
)    78




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2007


2006


2005(Dollars in thousands)(Loss) income from continuing operations

$
(24,130
)

$
37,401


$
36,247(Loss) from discontinued operations


(30,543
)


(35,674
)


(17,260
)Net (loss) income


(54,673
)


1,727



18,987Adjustments to reconcile net income to cash provided (used)
    by operating activities:Depreciation, amortization, and accretion, net


10,413



10,141



11,602Amortization and impairment of servicing assets


12,395



61,370



80,697Provision for loan and lease losses


134,988



35,288



26,852Deferred income tax


(34,582
)


(109,018
)


(23,789
)Gain on sale of mortgage servicing assets






17,961



(14,412
)(Loss) gain from sales of loans held for sale


9,056



(39,754
)


(98,127
)Originations and purchases of loans held for sale


(559,298
)


(7,237,809
)


(12,883,903
)Proceeds from sales and repayments of loans held for sale


791,712



8,262,743



12,502,574Proceeds from sale of mortgage servicing assets


139



267,094



79,724Net (increase) decrease in residuals


(627
)


13,332



33,986Net decrease (increase) in accounts receivable


169,875



(96,952
)


10,246Other, net


(49,706
)


(100,215
)


4,315Net cash provided (used) by operating activities


429,692



1,085,908



(251,248
)Investing activities:Proceeds from maturities/calls of investment securities:Held-to-maturity


2,036



2,313



461Available-for-sale


3,658



13,112



5,801Purchase of investment securities:Held-to-maturity


(2,167
)


(4,114
)


Available-for-sale


(17,455
)


(23,197
)


(3,599
)Net decrease (increase) in interest-bearing deposits


21,265



(1,976
)


(3,985
)Net increase in loans, excluding sales


(485,986
)


(820,664
)


(1,115,391
)Proceeds from the sale of loans










57,625Other, net


(9,100
)


(11,376
)


(8,331
)Net cash used by investing activities


(487,749
)


(845,902
)


(1,067,419
)Financing activities:Net (decrease) increase in deposits


(226,028
)


(347,477
)


503,730Net (decrease) increase in other borrowings


199,981



(395,001
)


760,167Repayments of long-term debt


(16
)


(14
)


(12
)Proceeds from issuance of collateralized debt


364,579



931,406



472,515Repayments of collateralized debt


(324,505
)


(427,373
)


(351,049
)Proceeds from the issuance of trust preferred securities






61,500



51,750Redemption of trust preferred securities






(77,509
)


(51,750
)Proceeds from the sale of noncumulative perpetual preferred stock






14,518



Purchase of treasury stock for employee benefit plans


(12,804
)


(4,363
)


(1,201
)Proceeds from sale of stock for employee benefit plans


2,085



7,740



3,277Dividends paid


(15,381
)


(13,110
)


(11,426
)Net cash (used) provided by financing activities


(12,089
)


(249,683
)


1,376,001Effect of exchange rate changes on cash


2,593



(44
)


1,051Net (decrease) increase in cash and cash equivalents


(67,553
)


(9,721
)


58,385Cash and cash equivalents at beginning of period


145,765



155,486



97,101Cash and cash equivalents at end of period

$
78,212


$
145,765


$
155,486Supplemental disclosures of cash flow information:Cash flow during the period:Interest paid

$
251,019


$
239,934


$
146,005Income taxes paid

$
13,098


$
93,687


$
19,171Noncash transactions:Adoption of FAS 156

$
2,905


$



$
Transfer of loans from held for sale to held for investment

$
166,773


$



$
Other real estate owned

$
13,544


$
11,675


$
16,236Conversion of trust preferred stock to common stock

$



$
20,248


$
    79




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Summary
    of Significant Accounting Policies  Consolidation:
    Use of Estimates:
  Foreign Currency:
  Cash and Cash Equivalents:
  Investment Securities:
  Residual Interests:
  Loans Held For Sale:
 80




---



##### Table of Contents



Loans:
  Direct Financing Leases:
  Allowance for Loan and Lease Losses:
    case-by-case
  Servicing Assets:
     81




---



##### Table of Contents



Incentive Servicing Fees:
  No. D-96,
  Derivative Instruments:
      Premises and Equipment:
  Other Assets:
  Income Taxes:
  Recent Accounting Developments:
 82




---



##### Table of Contents



Note 2 
    Discontinued
    Operations              For the Year Ended December 31,2007


2006


2005(Dollars in thousands)Net revenues

$
(17,190
)

$
37,983


$
98,643Other expense


(33,934
)


(97,489
)


(127,516
)Loss before income taxes


(51,124
)


(59,506
)


(28,873
)Income taxes


20,581



23,832



11,613Net loss from discontinued operations

$
(30,543
)

$
(35,674
)

$
(17,260
)  83




---



##### Table of Contents



December 31,2007


2006(Dollars in thousands)Loans, net of allowance and Loans held for sale

$
1,281


$
48,555Net servicing asset






385Other assets


2,533



7,633Assets held for sale

$
3,814


$
56,573   Note 3 
    Restrictions
    on Cash and Dividends               84




---



##### Table of Contents



Note 4 
    Investment
    Securities    Gross


GrossAmortized


Unrealized


Unrealized


Fair


CarryingCost


Gains


Losses


Value


Value(Dollars in thousands)Held-to-Maturity:U.S. Treasury and government obligations

$
13,970


$
68


$
(42
)

$
13,996


$
13,970Obligations of states and political subdivisions


3,436











3,436



3,436Mortgage-backed securities


717







(14
)


702



717Total held-to-maturity


18,123



68



(56
)


18,134



18,123Available-for-Sale:Mortgage-backed securities


46,898



20



(1,419
)


45,499



45,499Other


15,196







(1,011
)


14,185



14,185Total available-for-sale


62,094



20



(2,430
)


59,684



59,684Federal Home Loan Bank and Federal Reserve Bank stock


62,588











62,588



62,588Total investment securities

$
142,805


$
88


$
(2,486
)

$
140,406


$
140,395     Gross


GrossAmortized


Unrealized


Unrealized


Fair


CarryingCost


Gains


Losses


Value


Value(Dollars in thousands)Held-to-Maturity:U.S. Treasury and government obligations

$
13,730


$



$
(156
)

$
13,574


$
13,730Obligations of states and political subdivisions


3,545











3,545



3,545Mortgage-backed securities


791



2



(19
)


774



791Total held-to-maturity


18,066



2



(175
)


17,893



18,066Available-for-Sale:Mortgage-backed securities


44,907



44



(555
)


44,396



44,396Other


3,443







(63
)


3,380



3,380Total available-for-sale


48,350



44



(618
)


47,776



47,776Federal Home Loan Bank and Federal Reserve Bank stock


62,588











62,588



62,588Total investment securities

$
129,004


$
46


$
(793
)

$
128,257


$
128,430  85




---



##### Table of Contents



Securities with Unrealized Losses at December 31,
    2007Less than 12 Months


12 Months or More


TotalGross





Gross





GrossFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Losses


Value


Losses


Value


Losses(Dollars in thousands)Mortgage backed securities

$
14,714


$
(775
)

$
25,959


$
(644
)

$
40,673


$
(1,419
)Other securities


15,196



(1,011
)










15,196



(1,011
)Total securities with unrealized losses

$
29,910


$
(1,786
)

$
25,959


$
(644
)

$
55,869


$
(2,430
)         Amortized


FairCost


Value(Dollars in thousands)Held-to-Maturity:Due within one year

$
4,229


$
4,117Due after one years through five years


9,741



9,879Due after ten years


3,436



3,43617,406



17,432Mortgage-backed securities


717



70218,123



18,134Available-for-Sale:Due in one year or less


15,196



14,185Mortgage-backed securities


46,898



45,49962,094



59,684Federal Home Loan Bank & Federal Reserve Bank stock


62,588



62,588Total investment securities

$
142,805


$
140,406    86




---



##### Table of Contents



Note 5 
    Loans and
    Leases    December 31,2007


2006(Dollars in thousands)Commercial, financial and agricultural

$
2,099,451


$
2,025,890Real estate-construction & land development


586,037



601,699Real estate-mortgage


1,691,450



1,522,616Consumer


32,232



31,581Commercial financingFranchise financing


925,741



699,969Domestic leasing


306,301



296,056Foreign leasing


462,036



358,783Unearned incomeFranchise financing


(306,681
)


(211,480
)Domestic leasing


(42,723
)


(42,782
)Foreign leasing


(57,614
)


(44,139
)Total

$
5,696,230


$
5,238,193              87




---



##### Table of Contents



December 31,2007


2006(Dollars in thousands)Minimum lease payments receivable

$
757,609


$
644,118Initial direct costs


10,728



10,721Less unearned income


(100,337
)


(86,921
)Less allowance for lease losses


(11,206
)


(7,756
)Net investment in leases

$
656,794


$
560,162   Note 6 
    Allowance for Loan and Lease Losses and Nonperforming Loans and
    Leases
    December 31,2007


2006


2005(Dollars in thousands)Balance at beginning of year

$
74,468


$
59,223


$
43,441Provision for loan and lease losses


134,988



35,101



27,307Charge-offs


(73,994
)


(30,810
)


(20,201
)Recoveries


10,099



11,208



8,960Reduction due to reclassification and sales of loans


(1,225
)


(246
)


(403
)Foreign currency adjustment


519



(8
)


119Balance at end of period

$
144,855


$
74,468


$
59,223     December 31,2007


2006(Dollars in thousands)Impaired loans with valuation reserve

$
22,889


$
10,893Impaired loans with no valuation reserve


4,420



3,476Total impaired loans

$
27,309


$
14,369Valuation reserve on impaired loans

$
6,519


$
3,086       December 31,2007


2006(Dollars in thousands)Accruing loans past due 90 days or more

$
857


$
392Nonaccrual loans and leases


75,453



37,171Total nonperforming loans and leases

$
76,310


$
37,563  88




---



##### Table of Contents



Note 7 
    Servicing Assets
        December 31,2007


2006And the Year Then Ended(Dollars in thousands)Beginning balance

$
27,725



NAGain from initial adoption of SFAS 156


2,905



NAChanges in fair value:Due to changes in valuation inputs or
    assumptions(1)


(1,589
)


NAOther changes in fair
    value(2)


(9,317
)


NAMortgage servicing assets

$
19,724



NA     (1)
    
    Principally reflects changes in discount rates and prepayment
    speed assumptions, primarily due to changes in interest rates.(2)
    
    Represents changes due to realization of expected cash flows. 89




---



##### Table of Contents



December 31,2007


2006And the Year Then Ended(Dollars in thousands)Beginning balance

$
31,949


$
295,754Initial adoption of SFAS 156


(27,725
)


Additions


530



83,005Sales


(5
)


(285,055
)Amortization


(1,199
)


(61,699
)(Impairment) recovery


(40
)


329Mortgage servicing assets


3,510



32,334Less servicing asset from discontinued operations






385Mortgage servicing asset from continuing operations

$
3,510


$
31,949     December 31,2007


2006And the Year Then EndedBalance at beginning of year

$
483


$
27,243Transfer of assets from amortizing to fair value


(332
)


Impairment (recovery)


40



(329
)Reclass for sales of servicing and clean up calls






(26,431
)Valuation allowance from continuing operations

$
191


$
483     Fair value of mortgage servicing assets

$
24,766Constant prepayment speed


21.95
%Impact on fair value of 10% adverse change

$
(1,036
)Impact on fair value of 20% adverse change


(1,973
)Discount rate


11.70
%Impact on fair value of 10% adverse change

$
(544
)Impact on fair value of 20% adverse change


(988
)    90




---



##### Table of Contents



2007


2006Prepayment rates (range):


3 to 35
%


3 to 39
%Discount rates (range):


9 to 15
%


9 to 15
%   Note 8 
    Premises
    and Equipment    December 31,2007


2006


Useful Lives(Dollars in thousands)Land

$
3,302


$
3,584



n/aBuilding and leasehold improvements


30,827



28,931



7-40 yearsFurniture and equipment


54,611



52,786



3-10 years88,740



85,301Less accumulated depreciation


(50,562
)


(49,090
)Total

$
38,178


$
36,211     Note 9 
    Lease
    Obligations      (Dollars in thousands)Year Ended December 31,2008

$
10,2282009


9,0012010


7,8162011


6,6752012


2,710Thereafter


4,534Total minimum rental payments

$
40,964  91




---



##### Table of Contents



Note 10 
    Other
    borrowings    December 31,2007


2006(Dollars in thousands)Federal Home Loan Bank borrowings

$
574,424


$
371,693Drafts payable related to mortgage loan closings






250Federal funds


228,000



230,500Total

$
802,424


$
602,443Weighted average interest rate


5.20
%


4.49
%       Note 11 
    Collateralized
    Debt   92




---



##### Table of Contents



WeightedAverageInterest Rate atContractual


December 31,


December 31,


December 31,Maturity


2007


2007


2006(Dollars in thousands)Commercial finance line of businessDomestic asset backed note









$



$
5,797Canadian asset backed notes:Note 1


revolving



5.7
%


46,183



30,611Note 2


9/2012



5.3



192,103



179,508Note 3


10/2009



4.5



4,120



8,157Home equity line of business2004-1 asset
    backed notes:Variable rate senior note


12/2024-12/2034



5.1



33,733



50,072Variable rate subordinate note


12/2034



6.0



24,775



24,7752005-1 asset
    backed notes:Variable rate senior note


6/2025-6/2035



5.0



23,484



40,972Fixed rate senior note


6/2035



5.2



59,471



94,129Variable rate subordinate note


6/2035



6.6



10,785



10,785Fixed rate subordinate note


6,2035



5.6



52,127



52,127Unamortized premium/discount










(62
)


(90
)2006-1 asset
    backed notes:Variable rate senior note


9/2035



5.0



44,302



102,252Fixed rate senior note


9/2035



5.5



96,561



96,561Fixed rate lockout senior note


9/2035



5.6



24,264



24,264Unamortized premium/discount










(12
)


(19
)2006-2 asset
    backed notes:Variable rate senior note


2/2036



4.9



82,945



136,386Fixed rate senior note


2/2036



6.3



80,033



80,033Fixed rate lockout senior note


2/2036



6.2



21,348



21,348Unamortized premium/discount










(13
)


(21
)2006-3 asset
    backed notes:Variable rate senior note


1/2037-9/2037



4.9



83,281



130,326Fixed rate senior note


9/2037



5.9



67,050



67,050Fixed rate lockout senior note


9/2037



5.9



18,000



18,000Unamortized premium/discount










(7
)


(11
)2007-1 asset
    backed notes:Variable rate senior note


8/2037



4.9



135,339



Fixed rate senior note


8/2037



6.0



91,346



Fixed rate lockout senior note


8/2037



5.9



22,000



Unamortized premium/discount










(17
)


Total









$
1,213,139


$
1,173,012  93




---



##### Table of Contents



Note 12 
    Other
    Long-Term Debt      InterestRate at





Subordinated DebtOrigination


December 31,


Maturity


December 31,Name

Date


2007


Date


2007


2006


Other(Dollars in thousands)IFC Capital Trust VI


Oct 2002



8.70



Sep 2032


$
35,567


$
35,567


fixed rate for termIFC Statutory Trust VII


Nov 2003



7.73



Nov 2033



51,547



51,547


rate changes quarterly at three month LIBOR plus 290 basis
    pointsIFC Capital Trust VIII


Aug 2005



5.96



Aug 2035



53,351



53,351


fixed rate for 5 years, variable rate of 3 month LIBOR
    plus 153 basis points thereafterIFC Capital Trust IX


Mar 2006



6.69



Mar 2036



32,475



32,475


fixed rate for 5 years, variable rate of 3 month LIBOR
    plus 149 basis points thereafterIFC Capital Trust X


Dec 2006



6.53



Dec 2036



15,464



15,464


fixed rate for 5 years, variable rate of 3 month LIBOR
    plus 175 basis points thereafterIFC Capital Trust XI


Dec 2006



6.89



Mar 2037



15,464



15,464


variable rate of 3 month LIBOR plus 174 basis points$
203,868


$
203,868   Note 13 
    Commitments
    and Contingencies  Culpepper v.
    Inland Mortgage Corporation
  th th
 94




---



##### Table of Contents



Cohens v.
    Inland Mortgage Corporation
    Litigation
    in Connection with Loans Purchased from Community Bank of
    Northern Virginia
    Hobson v. Irwin Union Bank and Trust Company Hobson Hobson Truth-in-Lending Hobson
  Kossler v. Community Bank of Northern Virginia Kossler Kossler Kossler
  Hobson Kossler Hobson Hobson
  Hobson Kossler Hobson Hobson Kossler
  (Chatfield v. Irwin Union Bank and Trust Company,
    et al. Ransom v. Irwin Union Bank and
    Trust Company, et al.)
 95




---



##### Table of Contents



Hobson, Chatfield Ransom.
  Hobson, Chatfield Ransom Kossler Kessler v. RFC, et al Kessler Kessler Kessler Kessler Kessler Kessler Kessler
  Putkowski v.
    Irwin Home Equity Corporation and Irwin Union Bank and Trust
    Company
      Note 14 
    Financial Instruments With Off-Balance Sheet Risk
     96




---



##### Table of Contents



Note 15 
    Derivative Financial Instruments
        2005-1
  2006-1, 2006-2, 2006-3 2007-1
     97




---



##### Table of Contents



Note 16 
    Guarantees
    and/or
  agreed-upon 60-180 days
     98




---



##### Table of Contents



Note 17 
    Regulatory Matters
    well-capitalized.
   99




---



##### Table of Contents



Adequately


WellActual


Capitalized


CapitalizedAmount


Ratio


Amount


Ratio


Amount


Ratio(Dollars in thousands)As of December 31, 2007Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation

$
769,868



12.6
%

$
487,936



8.0
%

$
609,920



10.0
%Irwin Union Bank and Trust


683,999



12.5



437,404



8.0



546,755



10.0Irwin Union Bank, F.S.B.


66,619



10.9



49,140



8.0



61,426



10.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation


619,656



10.2



243,968



4.0



365,952



6.0Irwin Union Bank and Trust


584,393



10.7



218,702



4.0



328,053



6.0Irwin Union Bank, F.S.B.


59,500



9.7



N/A







36,855



6.0Tier I Capital (to Average Assets):Irwin Financial Corporation


619,656



10.2



244,192



4.0



305,240



5.0Irwin Union Bank and Trust


584,393



10.6



221,323



4.0



276,654



5.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.


59,500



9.2



25,854



4.0



32,317



5.0Tangible Capital (to Tangible Assets)Irwin Union Bank, F.S.B.


59,493



9.2



9,695



1.5



N/AAs of December 31, 2006Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation

$
837,754



13.4
%

$
500,714



8.0
%

$
625,893



10.0
%Irwin Union Bank and Trust


738,206



12.8


$
461,943



8.0


$
577,429



10.0Irwin Union Bank, F.S.B.


59,157



11.3


$
42,028



8.0


$
52,535



10.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation


712,403



11.4



250,357



4.0



375,536



6.0Irwin Union Bank and Trust


636,506



11.0



230,971



4.0



346,457



6.0Irwin Union Bank, F.S.B.


55,820



10.6



N/A







31,521



6.0Tier I Capital (to Average Assets):Irwin Financial Corporation


712,403



11.5



247,919



4.0



309,899



5.0Irwin Union Bank and Trust


636,506



11.1



229,605



4.0



287,006



5.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.


55,820



11.1



20,162



4.0



25,203



5.0Tangible Capital (to Tangible Assets)Irwin Union Bank, F.S.B.


55,804



11.1



7,516



1.5



N/A   Note 18 
    Fair
    Values of Financial Instruments    Cash and cash equivalents:
 100




---



##### Table of Contents



Interest-bearing deposits with financial institutions,
    Deposit liabilities, Other borrowings, and Long-term and
    collateralized debt:
  Loans and leases and loans held for sale:
  Residual interests:
  Servicing assets:
  Investment securities:
  Derivative instruments:
      2007


2006Carrying


Estimated Fair


Carrying


Estimated FairAmount


Value


Amount


Value(Dollars in thousands)Financial assets:Cash and cash equivalents

$
78,212


$
78,212


$
145,765


$
145,765Interest-bearing deposits with financial institutions


31,841



31,833



53,106



53,037Residual interests


12,047



12,047



10,320



10,320Investment securities


140,395



140,406



128,430



128,257Loans held for sale


6,134



6,248



237,510



237,859Loans and leases, net of unearned discount


5,696,230



5,746,148



5,238,193



5,259,341Servicing asset


23,234



24,766



31,949



37,370Derivatives


1,578



1,578



3,055



3,055Assets held for sale


3,814



3,814



56,573



56,573Financial liabilities:Deposits


3,325,488



3,227,564



3,551,516



3,441,892Other borrowings


802,424



812,751



602,443



604,590Collateralized debt


1,213,139



1,226,835



1,173,012



1,156,032Other long-term debt


233,873



235,261



233,889



237,271Derivatives


5,065



5,065



612



612    101




---



##### Table of Contents



Note 19 
    Equity
    Based Compensation            December 31, 2007WeightedNumber of


Average GrantShares


Date Fair ValueUnvested at the beginning of the year


84,681


$
21.04Awarded


94,091



16.58Vested


(28,434
)


20.17Forfeited


(10,077
)


20.07Unvested at the end of the year


140,261


$
18.30    102




---



##### Table of Contents



For the Year Ended December 31,2007


2006


2005Risk-free interest rates


4.58
%


4.92
%


3.94
%Dividend yield


2.04
%


2.40
%


1.75
%Expected volatility


31
%


32
%


35
%Expected lives (in years)


6



6



6     2007WeightedWeighted


Average


AggregateAverage


Remaining


IntrinsicNumber of


Exercise


Contractual


Value as ofShares


Price


Term


12/31/2007(In thousands)Outstanding at the beginning of the year


2,445,795


$
20.44Granted


236,169



17.15Exercised


(67,603
)


14.59Canceled


(114,304
)


21.11Outstanding at the of the year


2,500,057



20.26



5.45


$
Exercisable at the end of the year


2,066,740


$
20.69



4.80


$
  103




---



##### Table of Contents



December 31, 2005(Dollars in thousands,except per shareamounts)Net income from continuing operations as reported

$
36,247Equity based compensation expense included in net earnings, net
    of tax


59Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects


(2,966
)Net income from continuing operations pro forma


33,340Net (loss) income from discontinued operations


(17,260
)Pro forma net income

$
16,080Basic earnings per share from continuing operationsAs reported

$
1.27Pro forma


1.17Basic earnings per shareAs reported

$
0.67Pro forma


0.56Diluted earnings per share continuing operationsAs reported

$
1.26Pro forma


1.16Diluted earnings per shareAs reported

$
0.66Pro forma


0.56  104




---



##### Table of Contents



Note 20 
    Earnings
    Per Share    Basic





DilutedNet


Preferred


Earnings


Effect of


EarningsLoss


Dividends


Per Share


Stock Options


Per Share(In thousands, except per share amounts)Year ended December 31,2007Net loss allocable to common shareholders:From continuing operations

$
(24,130
)


(1,335
)


(25,465
)


(1,019
)

$
(26,484
)From discontinued operations


(30,543
)






(30,543
)






(30,543
)Total net loss from all operations

$
(54,673
)


(1,335
)


(56,008
)


(1,019
)

$
(57,027
)Shares










29,337



7



29,344Per-share amount:For continuing operations









$
(0.87
)


(0.03
)

$
(0.90
)For all operations









$
(1.91
)


(0.03
)

$
(1.94
)2006Net income available to common shareholders:From continuing operations









$
37,401



(303
)

$
37,098From discontinued operations










(35,674
)






(35,674
)Total net income from all operations









$
1,727



(303
)

$
1,424Shares










29,501



189



29,690Per-share amount:For continuing operations









$
1.27



(0.02
)

$
1.25For all operations









$
0.06



(0.01
)

$
0.052005Net income available to common shareholders:From continuing operations









$
36,247






$
36,247From discontinued operations










(17,260
)






(17,260
)Total net income from all operations









$
18,987






$
18,987Shares










28,518



323



28,841Per-share amount:For continuing operations









$
1.27



(0.01
)

$
1.26For all operations









$
0.67



(0.01
)

$
0.66     Note 21 
    Income
    Taxes   105




---



##### Table of Contents



2007


2006


2005(Dollars in thousands)Current:Federal

$
11,969


$
18,915


$
18,464State


(2,067
)


5,809



5,208Foreign


3,832



1,695



1,28713,734



26,419



24,959Deferred:Federal


(29,975
)


(6,199
)


(3,485
)State


(2,941
)


(1,476
)


(831
)Foreign


(1,666
)


126



(48
)(34,582
)


(7,549
)


(4,364
)Income tax expense:Federal


(18,006
)


12,716



14,979State


(5,008
)


4,333



4,377Foreign


2,166



1,821



1,239$
(20,848
)

$
18,870


$
20,595     2007


2006


2005(Dollars in thousands)Income taxes computed at the statutory rate

$
(15,742
)

$
19,695


$
19,895Increase (decrease) resulting from:Nontaxable interest from investment securities and loans


(117
)


(124
)


(117
)Nontaxable income from bank owned life insurance


(707
)






State tax, net of federal benefit


(3,255
)


2,816



2,845Change in federal deferred tax resulting from tax rate change


(547
)






Foreign operations


(180
)


(673
)


183Reserve
    adjustment(1)


87



(611
)


(1,870
)Federal tax credits


(822
)


(2,113
)


(507
)Other items  net


435



(120
)


166$
(20,848
)

$
18,870


$
20,595     (1)
    
    Tax reserves are adjusted as we align our tax liability to a
    level commensurate with our current identified tax exposures. 106




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##### Table of Contents



December 31,2007


2006(Dollars in thousands)Deferred tax assets:Reserve for credit losses

$
74,995


$
37,728Deferred compensation


2,614



1,601Retirement benefits


4,140



2,427Leasing


2,776



1,071Mark to market


2,022



1,402Capital loss
    carryforward(1)


4,513



3,511Net operating loss
    carryforwards(2)


3,560



Other


7,509



5,629102,129



53,369Deferred tax liabilities:Mortgage servicing


(7,712
)


(11,513
)Deferred securitization income


(1,364
)


Deferred origination fees and costs


(7,123
)


(5,688
)Other


(2,301
)


(1,973
)(18,500
)


(19,174
)Net deferred tax
    asset(3)

$
83,629


$
34,195     (1)
    
    As of December 31, 2007, we have $4.5 million (after
    tax) of US capital loss carryforwards which expire in 2008
    ($0.2 million), 2010 ($0.6 million), 2011
    ($2.4 million) and 2012 ($1.3 million).(2)
    
    As of December 31, 2007, we have $3.6 million
    (after-tax) of US net operating loss carryforwards which expire
    in 2027.(3)
    
    We have no valuation allowance recorded related to our net
    deferred tax asset at December 31, 2007 and 2006.      (Dollars in thousands)Balance at January 1, 2007

$
(10,695
)Increases related to prior year tax positions


(5,206
)Expiration of the statute of limitations


2,892Balance at December 31, 2007

$
(13,009
)    107




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##### Table of Contents



2004-2006 2003-2006.
  Note 22 
    Employee
    Retirement Plans            Pension Benefits


SERP BenefitsDecember 31,


December 31,2007


2006


2007


2006(Dollars in thousands)


(Dollars in thousands)Change in benefit obligation:Projected benefit obligation at January 1,

$
41,443


$
36,063


$
7,314


$
7,882Service cost


4,054



3,723



104



235Interest cost


2,425



2,077



313



377Actuarial (gain) loss


(824
)


459



(1,938
)


(950
)Benefits paid


(942
)


(879
)


(229
)


(230
)Benefit obligation at December 31,


46,156



41,443



5,564



7,314Change in plan assets:Fair value plan assets at January 1,


31,934



28,699







Actual return on plan assets


2,113



4,114







Benefits paid


(942
)


(879
)


(229
)


(230
)Employer contributions










229



230Fair value plan assets at December 31,


33,105



31,934







Funded status at December 31, (included in Other
    Liabilities)

$
(13,051
)

$
(9,509
)

$
(5,564
)

$
(7,314
)  108




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##### Table of Contents



Employee
    pension plan
  2007


2006


2005(Dollars in thousands)Service cost

$
4,054


$
3,723


$
2,856Interest cost


2,425



2,077



1,741Expected return on plan assets


(2,507
)


(2,252
)


(1,912
)Amortization of prior service cost


37



37



37Amortization of actuarial loss


545



871



687Net pension cost

$
4,554


$
4,456


$
3,409   Supplemental
    Executive Retirement Plan
  2007


2006


2005(Dollars in thousands)Service cost

$
104


$
235


$
257Interest cost


313



377



404Transition obligation


11



11



11Amortization of prior service cost


1



1



1Amortization of actuarial loss






97



167Net pension cost

$
429


$
721


$
840     Pension Benefits


SERP BenefitsYear Ending December 31,


Year Ending December 31,2007


2006


2007


2006(Dollars in thousands)


(Dollars in thousands)Amounts not yet reflected in net periodic benefit cost and
    included in accumulated other comprehensive income:Transition obligation

$



$



$
(6
)

$
(16
)Prior service cost


(199
)


(236
)


(33
)


(34
)Accumulated loss


(8,200
)


(9,175
)


(56
)


(1,995
)Accumulated other comprehensive income

$
(8,399
)

$
(9,411
)

$
(95
)

$
(2,045
)Net periodic benefit cost in excess of cumulative employer
    contributions


(4,652
)


(98
)


(5,469
)


(5,269
)Net amount recognized in statement of financial position

$
(13,051
)

$
(9,509
)

$
(5,564
)

$
(7,314
)Change in accumulated other comprehensive incomeAdditional minimum liability

$



$
(541
)

$



$
Intangible asset offset






236







Accumulated other comprehensive income






(305
)






Net increase to accumulated other comprehensive income

$
(8,399
)

$
(9,106
)

$
(95
)

$
(2,045
)  109




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##### Table of Contents



Weighted
    average assumptions:
  SERPPension Benefits


BenefitsYear Ending


Year EndingDecember 31,


December 31,2007


2006


2007


2006To determine benefit obligations at December 31,Discount rate


6.00
%


5.75
%


6.00
%


5.75
%Rate of average compensation increases


4.18



4.18



4.25



4.25To Determine net periodic benefit cost at January 1,Discount rate


5.75
%


5.50
%


5.75
%


5.50
%Expected rate of return on plan assets


8.00



8.00



N/A



N/ARate of average compensation increases


4.18



4.18



4.25



4.25   December 31,


December 31,2007


2006


2007


2006(Dollars in thousands)


(Dollars in thousands)Projected benefit obligation

$
46,156


$
41,443


$
5,564


$
7,314Accumulated benefit obligation


37,243



32,573



5,172



5,238Fair value of assets


33,105



31,934







     Plan
    Assets
    Percentage of Plan Assets


Target AllocationAsset Category

2007


2006


2008Equity securitiesDomestic


50
%


57
%


30-50
%International


11



14



15-25Fixed income securities


23



25



15-25Cash equivalents


16



4



1-10Alternative investments










10-20100
%


100
%      110




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##### Table of Contents



Cash
    Flows
      Pension


SERPBenefits


BenefitsExpected benefit payments (in thousands):2008

$
997


$
2302009


1,202



2242010


1,460



2192011


1,693



2382012


1,933



346Years
    2013-2017


12,950



1,700   Note 23 
    Industry
    Segment Information        111




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##### Table of Contents



ConsolidatedCommercial


Commercial


Home Equity





Continuing


DiscontinuedBanking


Finance


Lending


Other


Operations


Operations


Consolidated(Dollars in thousands )2007Net interest income

$
103,249


$
79,587


$
15,177


$
(70,608
)

$
127,405


$
(1,826
)

$
125,579Intersegment interest


(2,561
)


(40,371
)


(23,324
)


66,256











Other revenue


16,615



13,106



445



(2,782
)


27,384



(15,364
)


12,020Intersegment revenues










2,090



(2,090
)










Total net revenues


117,303



52,322



(5,612
)


(9,224
)


154,789



(17,190
)


137,599Other expense


88,954



28,492



70,786



11,535



199,767



33,934



233,701Intersegment expenses


3,652



1,615



2,646



(7,913
)










Income (loss) before taxes


24,697



22,215



(79,044
)


(12,846
)


(44,978
)


(51,124
)


(96,102
)Income taxes


8,844



8,659



(31,593
)


(6,758
)


(20,848
)


(20,581
)


(41,429
)Net income (loss)

$
15,853


$
13,556


$
(47,451
)

$
(6,088
)

$
(24,130
)

$
(30,543
)

$
(54,673
)Assets at December 31,

$
3,093,764


$
1,302,688


$
1,481,306


$
288,347










$
6,166,1052006Net interest income

$
113,844


$
65,387


$
108,133


$
(65,026
)

$
222,338


$
23,698


$
246,036Intersegment interest


5,148



(29,543
)


(34,724
)


59,119











Other revenue


18,173



8,018



14,738



3,692



44,621



14,285



58,906Intersegment revenues










448



(448
)










Total net revenues


137,165



43,862



88,595



(2,663
)


266,959



37,983



304,942Other expense


86,170



22,838



83,035



18,645



210,688



97,489



308,177Intersegment expenses


2,762



1,117



2,932



(6,811
)










Income (loss) before taxes


48,233



19,907



2,628



(14,497
)


56,271



(59,506
)


(3,235
)Income taxes


17,373



7,307



1,090



(6,900
)


18,870



(23,832
)


(4,962
)Net income (loss)

$
30,860


$
12,600


$
1,538


$
(7,597
)

$
37,401


$
(35,674
)

$
1,727Assets at December 31,

$
3,103,547


$
1,073,552


$
1,617,219


$
443,640










$
6,237,9582005Net interest income

$
95,131


$
29,392


$
104,645


$
(25,008
)

$
204,160


$
34,878


$
239,038Intersegment interest


10,341



(1,920
)


(32,166
)


23,745











Other revenue


16,686



7,437



33,667



(1,069
)


56,721



63,765



120,486Intersegment revenues


259











(259
)










Total net revenues


122,417



34,909



106,146



(2,591
)


260,881



98,643



359,524Other expense


75,347



21,453



99,119



8,120



204,039



127,516



331,555Intersegment expenses


1,715



771



3,220



(5,706
)










Income (loss) before taxes


45,355



12,685



3,807



(5,005
)


56,842



(28,873
)


27,969Income taxes


17,976



5,252



1,555



(4,188
)


20,595



(11,613
)


8,982Net income (loss)

$
27,379


$
7,433


$
2,252


$
(817
)

$
36,247


$
(17,260
)

$
18,987Assets at December 31,

$
3,162,398


$
831,657


$
1,602,400


$
1,050,069










$
6,646,524  112




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##### Table of Contents



Note 24 
    Irwin
    Financial Corporation (Parent Only) Financial
    Information    Condensed
    Balance Sheets
  December 31,2007


2006(Dollars in thousands)Assets:Cash and short-term investments

$
1,227


$
839Investment in bank subsidiaries


639,854



689,654Investments in non-bank subsidiaries


3,385



3,793Loans to bank subsidiaries


42,497



64,618Other assets


27,809



10,953$
714,772


$
769,857Liabilities:Long-term debt

$
233,868


$
233,868Other liabilities


21,604



5,487255,472



239,355Shareholders equity:Perpetual Preferred Stock


14,441



14,518Common stock


116,542



116,192Other shareholders equity


328,317



399,792459,300



530,502$
714,772


$
769,857  113




---



##### Table of Contents



Condensed
    Statements of Income
  For the Year Ended December 31,2007


2006


2005(Dollars in thousands)Income:Dividends from non-bank subsidiaries

$
951


$
348


$
1,417Dividends from bank subsidiary


15,000



15,000



50,000Interest income


3,569



3,443



4,218Other


14,846



11,249



15,61534,366



30,040



71,250Expenses:Interest expense


17,302



20,082



23,983Salaries and benefits


13,705



11,416



9,973Other


4,991



5,754



6,19135,998



37,252



40,147(Loss) income before income taxes and equity in undistributed
    income of subsidiaries


(1,632
)


(7,212
)


31,103Income tax benefit, less amounts charged to subsidiaries


(6,063
)


(10,230
)


(9,900
)4,431



3,018



41,003Equity in undistributed income (loss) of subsidiaries


(59,104
)


(1,291
)


(22,016
)Net (loss) income

$
(54,673
)

$
1,727


$
18,987  114




---



##### Table of Contents



Condensed
    Statements of Cash Flows
  For the Year Ended December 31,2007


2006


2005(Dollars in thousands)Net (loss) income

$
(54,673
)

$
1,727


$
18,987Adjustments to reconcile net (loss) income to cash provided by
    operating activities:Equity in undistributed income (loss) of subsidiaries


59,104



1,291



22,016Depreciation and amortization


363



2,853



2,652Decrease in taxes payable


(4,484
)


(8,800
)


(11,442
)Decrease (increase) in interest receivable


46



(25
)


661Decrease in interest payable






(506
)


(176
)Net change in other assets and other liabilities


4,745



14,600



(8,847
)Net cash provided by operating activities


5,101



11,140



23,851Lending and investing activities:Net decrease (increase) in loans to subsidiaries


22,120



1,022



(2,289
)Investments in subsidiaries


(3,500
)






(5,081
)Net sales (purchases) of premises and equipment


251



(339
)


15Net cash provided (used) by lending and investing activities


18,871



683



(7,355
)Financing activities:Net decrease in borrowings










(9,024
)Proceeds from long-term debt






61,500



51,750Payments of long-term debt






(77,509
)


(51,750
)Proceeds from the sale of noncumulative perpetual preferred stock


(77
)


14,518



Purchase of treasury stock


(12,804
)


(4,363
)


(1,201
)Proceeds from sale of stock for employee benefit plans


2,085



7,740



3,277Dividends paid


(15,381
)


(13,110
)


(11,426
)Net cash used by financing activities


(26,177
)


(11,224
)


(18,374
)Net (decrease) increase in cash and cash equivalents


(2,205
)


599



(1,878
)Effect of exchange rate changes on cash


2,593



(44
)


1,051Cash and cash equivalents at beginning of year


839



284



1,111Cash and cash equivalents at end of year

$
1,227


$
839


$
284Supplemental disclosures of cash flow information:Cash paid during the year:Interest

$
17,302


$
20,588


$
24,159Income tax payments

$
10,362


$
92,783


$
14,920Non cash transactions:Adoption of FAS 156

$
2,905


$



$
Conversion of trust preferred to common stock

$



$
20,248


$
  115




---



##### Table of Contents



Note 25 
    Summary
    of Quarterly Financial Information (Unaudited)  2007Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter(Dollars in thousands)Summary Income InformationInterest Income

$
127,463


$
129,850


$
128,678


$
127,038Interest expense


(62,187
)


(64,704
)


(62,834
)


(60,910
)Provision for loan and lease losses


(63,832
)


(28,493
)


(19,454
)


(23,208
)Other income


11,584



7,032



9,581



(814
)Other expense


(54,074
)


(46,345
)


(47,064
)


(52,285
)Provision for income taxes


18,341



1,857



(3,436
)


4,085Net (loss) income from continuing operations

$
(22,705
)

$
(803
)

$
5,471


$
(6,094
)Net loss from discontinued operations

$
(3,420
)

$
(17,227
)

$
(5,860
)

$
(4,035
)Net (loss) income

$
(26,125
)

$
(18,030
)

$
(389
)

$
(10,129
)Earnings per share of common stock from continuing operations:Basic(1)

$
(0.79
)

$
(0.04
)

$
0.18


$
(0.22
)Diluted(1)


(0.80
)


(0.05
)


0.17



(0.22
)Earnings (loss) per share of common stock:Basic(1)

$
(0.91
)

$
(0.63
)

$
(0.02
)

$
(0.35
)Diluted(1)


(0.92
)


(0.64
)


(0.03
)


(0.36
)   2006Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter(Dollars in thousands)Summary Income InformationInterest Income

$
129,264


$
123,788


$
117,609


$
111,467Interest expense


(62,571
)


(58,491
)


(53,737
)


(49,889
)Provision for loan and lease losses


(9,946
)


(9,135
)


(6,826
)


(9,193
)Other income


14,232



7,347



9,046



13,996Other expense


(55,717
)


(50,864
)


(51,295
)


(52,814
)Provision for income taxes


(4,615
)


(3,550
)


(5,828
)


(4,877
)Net income from continuing operations

$
10,647


$
9,095


$
8,969


$
8,690Net (loss) income from discontinued operations

$
(5,726
)

$
(13,302
)

$
(6,098
)

$
(10,548
)Net income (loss)

$
4,921


$
(4,207
)

$
2,871


$
(1,858
)Earnings per share of common stock from continuing operations:Basic(1)

$
0.36


$
0.31


$
0.30


$
0.30Diluted(1)


0.35



0.30



0.30



0.30Earnings (loss) per share of common stock:Basic(1)

$
0.17


$
(0.14
)

$
0.10


$
(0.06
)Diluted(1)


0.16



(0.14
)


0.09



(0.07
)     (1)
    
    Our quarterly earnings per share are based on actual quarterly
    data and may not add up exactly to year-to-date earnings per
    share due to rounding and the impact of antidilutive shares. 116




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(b) 15d-15(b) Rule 13a-15(e) 15d-15(e).
  Managements
    Report on Internal Control Over Financial Reporting
    Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(d) 15d-15(d), Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information   117




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Form 10-K.
    
    Our Code of Conduct (our code of business conduct and ethics),
    which is applicable to our directors, officers, and employees,
    including our Chief Executive Officer (principal executive
    officer), our Chief Financial Officer (principal financial
    officer) and our Controller (principal accounting officer). Our
    Code of Conduct is filed as Exhibit 14.1 to this Report on
    Form 10-K.
    Amendments to or waivers for executive officers or directors
    from our Code of Conduct will be posted on our website.
    Our Governance (nominating) Committee Charter.
    Our Compensation Committee Charter.
    Our Audit Committee Charter, which is Appendix A to our
    Proxy Statement.
    Our Risk Committee Charter.   e-mail
  Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   118




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.                          Form 10-K
  ExhibitNumber

Description of Exhibit2
.1

Asset Purchase Agreement by and among Irwin Financial
    Corporation, Irwin Mortgage Corporation and Freedom Mortgage
    Corporation dated as of August 7, 2006. (Incorporated by
    reference to Exhibits 2.1 and 2.2 of
    Form 8-K
    filed October 2, 2006, File
    No. 001-16691.)3
.1

Restated Articles of Incorporation of Irwin Financial
    Corporation, as amended December 20, 2006. (Incorporated by
    reference to Exhibit 3.1 of
    Form 10-K
    for period ended December 31, 2006, and filed March 9,
    2007, File
    No. 001-16691.)3
.2

Code of By-laws of Irwin Financial Corporation, as amended,
    February 15, 2007. (Incorporated by reference to
    Exhibit 3.2 of
    Form 10-K
    filed March 9, 2007, File
    No. 001-16691.)3
.3

Code of By-laws of Irwin Financial Corporation, as amended
    November 28, 2007. (Incorporated by reference to
    Exhibit 3.1 of
    Form 8-K
    filed November 30, 2008.)4
.1

Specimen Common Stock Certificate. (Incorporated by reference to
    Exhibit 4.1 of
    Form 10-K
    filed March 9, 2007, File
    No. 001-16691.)4
.2

Certain instruments defining the rights of the holders of
    long-term debt of Irwin Financial Corporation and certain of its
    subsidiaries, none of which authorize a total amount of
    indebtedness in excess of 10% of the total assets of the
    Corporation and its subsidiaries on a consolidated basis, have
    not been filed as Exhibits. The Corporation hereby agrees to
    furnish a copy of any of these agreements to the Commission upon
    request4
.3

Rights Agreement, dated as of March 1, 2001, between Irwin
    Financial Corporation and Irwin Union Bank and Trust.
    (Incorporated by reference to Exhibit 4.1 to
    Form 8-A
    filed March 2, 2001, File
    No. 000-06835.)4
.4

Appointment of Successor Rights Agent dated as of May 11,
    2001 between Irwin Financial Corporation and National City Bank.
    (Incorporated by reference to Exhibit 4.5 to
    Form S-8
    filed on September 7, 2001, File
    No. 333-69156.)10
.1

*Irwin Financial Corporation 1997 Stock Option Plan.
    (Incorporated by reference to Exhibit 10 to
    Form 10-Q
    Report for quarter ended June 30, 1997, and filed
    August 12, 1997, File
    No. 000-06835.) 119




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.2

*Amendment Number One to Irwin Financial Corporation 1997 Stock
    Option Plan. (Incorporated by reference to Exhibit 10(l) to
    Form 10-K405
    Report for the period ended December 31, 1997, filed
    March 30, 1998, File
    No. 000-06835.)10
.3

*Irwin Union Bank and Trust Company Business Development Board
    Compensation Program. (Incorporated by reference to
    Form S-8
    filed on July 19, 2000, File No.
    333-41740.)10
.4

*Irwin Union Bank and Trust Company Business Development Board
    Compensation Program as amended November 28, 2006.10
.5

*Irwin Financial Corporation Amended and Restated 2001 Stock
    Plan, as amended and restated May 10, 2007. (Incorporated
    by reference to Exhibit 99.1 of
    Form 8-K
    filed May 16, 2007, File
    No. 001-16691.)10
.6

*Amendment Number One to the Irwin Financial Corporation Amended
    and Restated 2001 Stock Plan. (Incorporated by reference to
    Exhibit 10.1 of
    Form 8-K
    filed February 11, 2008, File
    No. 001-16691.)10
.7

*Irwin Financial Corporation 2001 Stock Plan Form of Stock
    Option Agreement and Notice of Stock Option Grant. (Incorporated
    by reference to Exhibit 99.1 of the Corporations
    8-K Current
    Report, filed May 9, 2005, File
    No. 001-16691.)10
.8

*Irwin Financial Corporation 2001 Stock Plan Form of Restricted
    Stock Agreement and Notice of Restricted Stock Award.
    (Incorporated by reference to Exhibit 99.2 of the
    Corporations
    8-K Current
    Report, filed May 9, 2005, File
    No. 001-16691.)10
.9

*Irwin Financial Corporation 2001 Stock Plan Form of Stock
    Option Agreement (Canada) (Incorporated by reference to
    Exhibit 10.8 of the Corporations
    10-Q Report
    for the quarter ended September 30, 2005, File
    No. 001-16691.)10
.10

*Irwin Financial Corporation 2001 Stock Plan Form of Restricted
    Stock Agreement (with Performance Criteria) and Notice of
    Restricted Stock Award with Performance Criteria. (Incorporated
    by reference to Exhibit 99.2 of
    Form 8-K,
    filed May 16, 2007, File
    No. 001-16691.)10
.11

*Irwin Financial Corporation 2001 Stock Plan Form of Restricted
    Stock Unit Agreement (with Performance Criteria) and Notice of
    Restricted Stock Unit Award with Performance Criteria.
    (Incorporated by reference to Exhibit 10.2 of
    Form 8-K,
    filed February 11, 2008, File
    No. 001-16691.)10
.12

*Irwin Financial Corporation 2001 Stock Plan Form of Restricted
    Stock Unit Agreement (No Performance Criteria) and Notice of
    Restricted Stock Unit Award.10
.13

*Irwin Financial Corporation 1999 Outside Director Restricted
    Stock Compensation Plan. (Incorporated by reference to
    Exhibit 2 of the Corporations 2004 Proxy Statement
    for the Annual Meeting of Shareholders, filed March 18,
    2004, File
    No. 001-16691.)10
.14

*Employee Stock Purchase Plan III. (Incorporated by reference to
    Exhibit 10(a) to
    Form 10-Q
    Report for the quarter ended June 30, 1999, File
    No. 000-06835.)10
.15

*Long-Term Management Performance Plan. (Incorporated by
    reference to Exhibit 10(a) to
    Form 10-K
    Report for the period ended December 31, 1986, File
    No. 000-06835.)10
.16

*Long-Term Incentive Plan-Summary of Terms. (Incorporated by
    reference to Exhibit 10(a) to
    Form 10-K
    Report for the period ended December 31, 1986, File
    No. 000-06835.)10
.17

*Amended and Restated Management Bonus Plan. (Incorporated by
    reference to Exhibit 10(a) to
    Form 10-K
    Report for the period ended December 31, 1986, File
    No. 000-06835.)10
.18

*Irwin Financial Corporation Amended and Restated Short Term
    Incentive Plan effective January 1, 2006. (Incorporated by
    reference to Exhibit 10.27 of
    Form 10-Q
    Report for the quarter ended June 30 2006, File
    No. 001-16691.)10
.19

*First Amendment to the Irwin Financial Corporation Amended and
    Restated Short Term Incentive Plan. (Incorporated by reference
    to Exhibit 10.28 of
    Form 10-Q
    Report for the quarter ended June 30 2007, File
    No. 001-16691.)10
.20

*Irwin Commercial Finance Amended and Restated Short Term
    Incentive Plan effective January 1, 2006. (Incorporated by
    reference to Exhibit 10.28 of
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 001-16691.) 120




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.21

*First Amendment to the Irwin Commercial Finance Amended and
    Restated Short Term Incentive Plan. (Incorporated by reference
    to Exhibit 10.30 of
    Form 10-Q
    for the quarter ended June 30, 2007, File
    No. 001-16691.)10
.22

*Irwin Home Equity Amended and Restated Short Term Incentive
    Plan effective January 1, 2006. (Incorporated by reference
    to Exhibit 10.29 of
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 001-16691.)10
.23

*First Amendment to the Irwin Home Equity Amended and Restated
    Short Term Incentive Plan effective January 1, 2006.
    (Incorporated by reference to Exhibit 10.32 of
    Form 10-Q
    for the quarter ended June 30, 2007, File
    No. 001-16691.)10
.24

*Irwin Union Bank and Trust Company Amended and Restated
    Short Term Incentive Plan effective January 1, 2006.
    (Incorporated by reference to Exhibit 10.31 of
    Form 10-Q
    Report for the quarter ended June 30, 2006, File
    No. 001-16691.)10
.25

*First Amendment to the Irwin Union Bank and Trust Company
    Amended and Restated Short Term Incentive Plan (Incorporated by
    reference to Exhibit 10.35 of
    Form 10-Q
    Report for the quarter ended June 30, 2007, File
    No. 001-16691.)10
.26

*Onset Capital Corporation Employment Agreement. (Incorporated
    by reference to Exhibit 10.26 to
    Form 10-Q
    Report for the quarter ended June 30, 2002, File
    No. 000-06835.)10
.27

*Irwin Financial Corporation Restated Supplemental Executive
    Retirement Plan for Named Executives. (Incorporated by reference
    to Exhibit 10.27 to
    Form 10-Q
    Report for period ended June 30, 2002, File
    No. 000-06835.)10
.28

*Irwin Financial Corporation Supplemental Executive Retirement
    Plan for Named Executives. (Incorporated by reference to
    Exhibit 10.28 to
    Form 10-Q
    Report for the quarter ended June 30, 2002, File
    No. 000-06835.)10
.29

*Stock Purchase Agreement by and between Onset Holdings Inc. and
    Irwin International Corporation dated December 23, 2005.
    (Incorporated by reference to Exhibit 10.36 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.30

*Shareholder Agreement Termination Agreement by and between
    Irwin Commercial Finance Canada Corporation and Irwin
    International Corporation dated December 23, 2005.
    (Incorporated by reference to Exhibit 10.37 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.31

*Irwin Commercial Finance Corporation First Amended and Restated
    Shareholder Agreement dated May 15, 2007. (Incorporated by
    reference to Exhibit 10.41 of
    Form 10-Q
    Report for the quarter ended June 30, 2007, File
    No. 001-16691.)10
.32

*Irwin Commercial Finance Corporation 2005 Stock Option
    Agreement Grant of Option to Joseph LaLeggia dated
    December 23, 2005. (Incorporated by reference to
    Exhibit 10.39 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.33

*Irwin Commercial Finance Corporation 2005 Notice of Stock
    Option Grant to Joseph LaLeggia dated December 23, 2005.
    (Incorporated by reference to Exhibit 10.40 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.34

*Irwin Union Bank Amended and Restated Performance Unit Plan.
    (Incorporated by reference to Exhibit 10.41 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.35

*Irwin Commercial Finance Amended and Restated Performance Unit
    Plan. (Incorporated by reference to Exhibit 10.42 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.36

*First Amendment to the Irwin Commercial Finance Amended and
    Restated Performance Unit Plan, dated October 31, 2006.
    (Incorporated by reference to Exhibit 10.41 of
    Form 10-K
    report for the period ended December 31, 2006, File
    No. 001-16691.)10
.37

*Irwin Home Equity Corporation Performance Unit Plan.
    (Incorporated by reference to Exhibit 10.43 of
    Form 10-K
    Report for period ended December 31, 2005, File
    No. 001-16691.)10
.38

*Supplemental Performance Unit Grant-Jocelyn Martin-Leano, dated
    February 6, 2007. (Incorporated by reference to
    Exhibit 10.45 of
    Form 10-K
    filed March 9, 2007, File
    No. 001-16691.) 121




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.39

*Irwin Financial Corporation 2007 Performance Unit Plan.
    (Incorporated by reference to Appendix B of the
    Corporations 2007 Proxy Statement for the Annual Meeting
    of Shareholders, filed April 16, 2007, File
    No. 001-16691.)10
.40

Agreement General Release and Covenant Not to Sue between Irwin
    Financial Corporation, and Thomas D. Washburn executed
    December 5, 2007. (Incorporated by reference to
    Exhibit 99.1 of Form 8-K filed December 13, 2007,
    File No. 001-16691.)11
.1

Computation of Earnings Per Share.12
.1

Computation of Ratio of Earnings to Fixed Charges.14
.1

Code of Conduct.21
.1

Subsidiaries of Irwin Financial Corporation.23
.1

Consent of Independent Registered Public Accounting Firm.23
.2

Consent of Independent Registered Public Accounting Firm.31
.1

Certification pursuant to 18 U.S.C. Section 302 of the
    Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.31
.2

Certification pursuant to 18 U.S.C. Section 302 of the
    Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.32
.1

Certification of the Chief Executive Officer under
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of the Chief Financial Officer under
    Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Indicates management contract or compensatory plan or arrangement 122




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##### Table of Contents



SIGNATURES       By:
    /s/  William
    I. Miller  William I. Miller
 Chief Executive Officer,
    Chairman and President
  Form 10-K
  Signature

Capacity with Corporation

Date/s/  Sally
    A. DeanSally
    A. Dean

Director


March 12, 2008/s/  David
    W. GoodrichDavid
    W. Goodrich

Director


March 12, 2008/s/  R.
    David HooverR.
    David Hoover

Director


March 12, 2008/s/  William
    H. KlingWilliam
    H. Kling

Director


March 12, 2008/s/  Brenda
    J. LauderbackBrenda
    J. Lauderback

Director


March 12, 2008/s/  John
    C. McGinty, Jr.John
    C. McGinty, Jr.

Director


March 12, 2008/s/  William
    I. MillerWilliam
    I. Miller

Director, Chief Executive Officer,
    Chairman and President (principal executive officer)


March 12, 2008/s/  Dayton
    H. MolendorpDayton
    H. Molendorp

Director


March 12, 2008/s/  Lance
    R. OddenLance
    R. Odden

Director


March 12, 2008/s/  Marita
    ZuraitisMarita
    Zuraitis

Director


March 12, 2008/s/  Gregory
    F. EhlingerGregory
    F. Ehlinger

Chief Financial Officer(principal financial officer)


March 12, 2008/s/  Jody
    A. LittrellJody
    A. Littrell

First Vice President and Controller(principal accounting officer)


March 12, 2008  123