##### 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, 2008oro

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
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   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 29, 2009

Part IIIExhibit Index on Pages 139 through 142




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##### 





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

2Explanatory Note

5Part IItem 1



Business

5Item 1A



Risk Factors

20Item 1B



Unresolved Staff Comments

31Item 2



Properties

32Item 3



Legal Proceedings

32Item 4



Submission of Matters to a Vote of Security
    Holders

35Part IIItem 5



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

36Item 6



Selected Financial Data

40Item 7



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

42Item 7A



Quantitative and Qualitative Disclosures about
    Market Risk

84Item 8



Financial Statements and Supplementary Data

84Item 9



Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure

136Item 9A



Controls and Procedures

136Item 9B



Other Information

136Part IIIItem 10



Directors, Executive Officers, and Corporate
    Governance

137Item 11



Executive Compensation

138Item 12



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

138Item 13



Certain Relationships and Related Transactions,
    and Director Independence

138Item 14



Principal Accountant Fees and Services

138Part IVItem 15



Exhibits and Financial Statement Schedules

139SIGNATURES

143EX-10.14EX-10.16EX-10.17EX-10.19EX-10.20EX-10.31EX-10.39EX-11.1EX-12.1EX-14.1EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   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, regulatory capital
    levels, or financial performance measures;
    our plans and strategies, including the expected results or
    costs and impact of implementing or changing such plans and
    strategies;
    transactions involved in our strategic restructuring and the
    expected timing for completion;
    the expected effects on the Corporations balance sheet,
    profitability, liquidity, and capital ratios of the strategic
    restructuring, our proposed shareholder rights offer, the
    possible exchange of trust preferred securities for common
    shares, and other elements of the completion of our capital plan;
    potential litigation developments and the anticipated impact of
    potential outcomes of pending legal matters;
    predictions about conditions in the national or regional
    economies, housing markets, industries associated with housing,
    mortgage markets, franchise restaurant finance 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.      
    difficulties in completing our recapitalization plan, including
    the failure to raise sufficient private investment through our
    proposed rights offer or a possible exchange of trust preferred
    securities for common shares or by other means, the failure of a
    sufficient number of shareholders to participate in the rights
    offer or to exercise fully their rights, the failure to satisfy
    the conditions that require the standby purchasers to exercise
    fully their subscription privileges, the failure to receive
    assistance in substantially the form proposed to the
    U.S. Treasury and banking regulators, or the failure to
    obtain any necessary regulatory approvals;
    difficulty in obtaining the desired treatment for the home
    equity restructuring transactions on our balance sheet;
    difficulty in further reducing the companys home equity
    assets, including a failure to obtain any necessary regulatory
    approvals or third-party consents, higher than anticipated costs
    in removing the home equity assets if we are able to
    successfully negotiate a transaction, or unanticipated
    regulatory constraints; 2




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
    potential further deterioration or effects of general economic
    conditions, particularly in sectors relating to real estate
    and/or
    mortgage lending, small business lending, and franchise
    restaurants finance;
    fluctuations in housing prices;
    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;
    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;
    unanticipated deterioration in the credit quality or
    collectability of our loan and lease assets, including
    deterioration resulting from the effects of natural disasters;
    difficulties in accurately estimating any future repurchases of
    residential mortgage, home equity, or other loans or leases due
    to alleged violations of representations and warranties we made
    when selling these loans and leases to the secondary market or
    in securitizations;
    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, including
    the loss of public fund deposits or any actions that may be
    taken by the state of Indiana and its political subdivisions;
    competition from other financial service providers for
    experienced managers as well as for customers;
    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 lawsuits or 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, or our state-chartered bank
    or federal savings bank subsidiary;
    regulatory actions that impact our Corporation, bank or thrift,
    including the written agreement the Corporation and its
    state-chartered bank subsidiary, Irwin Union Bank and
    Trust Company, entered into with the Federal Reserve Bank
    of Chicago and the Indiana Department of Financial Institutions
    on October 10, 2008, and the supervisory agreement the
    Corporations federal savings bank subsidiary, Irwin Union
    Bank, F.S.B., entered into with the Office of Thrift Supervision
    on the same day;
    changes in the interpretation and application of regulatory
    capital or other rules; 3




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
    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 the remaining assets and obligations of
    lines of business we have exited or are exiting, including the
    mortgage banking segment, small ticket commercial leasing
    segment and home equity segment; or
    governmental changes in monetary or fiscal policies.  Section 1A, Risk Factors,
 4




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Explanatory
    Note  10-K, 10-Q 10-Q),
  10-Q. 10-Q.
 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
   5




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
    Irwin Union Bank and Trust Company organized in 1871, headquartered in Columbus,
    Indiana, is a full service Indiana state-chartered commercial
    bank with offices currently located throughout nine counties in
    central and southern Indiana, as well as in Grandville,
    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, with its home office in Columbus, Indiana,
    that began operations in December 2000. Currently we have
    offices located in Phoenix, Arizona; Costa Mesa and Sacramento,
    California; Louisville, Kentucky; Clayton, Missouri; Reno,
    Nevada; and Albuquerque, New Mexico. We closed offices in
    Florida and Ohio at the end of 2008, and closed the Wisconsin
    office in March 2009.    Commercial
    Finance
      Home
    Equity
      Discontinuance
    of Mortgage Banking
    Customer
    Base
     6




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Competition
      Employees
    and Labor Relations
    Financial
    Information About Geographic Areas
    Supervision
    and Regulation
  General
      and/or
 7




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Agreement Elements

Our StatusSubmit a plan to strengthen board oversight of the management
    and operations of the holding company and the bank.

We have submitted this plan to the FRBC and DFI and are acting
    on it.Submit a report from an independent consultant regarding the
    assessment of the banks management and, as appropriate,
    take steps to address the independent consultants findings.

The report was submitted in November and is being acted upon.Submit a written liquidity and funds management plan and a
    contingency plan that identifies available sources of liquidity
    and includes adverse scenario planning.

We have submitted this plan to the FRBC and DFI and are acting
    on it.Submit a capital plan that will ensure our holding company and
    our bank maintain sufficient capital to comply with regulatory
    capital guidelines and address adversely affected assets,
    concentration of credit, adequacy of allowance for loan and
    leases losses and planned growth and anticipated levels of
    retained earnings.

We have submitted this plan to the FRBC and DFI and are acting
    on it. The previously announced shareholder rights offering,
    standby commitments, possible Trust Preferred Stock (TruPS)
    exchange offers, and proposed modification to the current
    capital programs developed under the Emergency Economic
    Stabiliza-tion Act of 2008 (EESA) are part of this
    plan.Review and revise as necessary our allowance for loan and lease
    losses methodology to assure compliance with relevant
    supervisory guidance, submit a written program for the
    maintenance of an adequate allowance for loan and lease losses,
    and within 30 days from the receipt of any regulatory
    report of examination, charge off all assets classified
    loss.

We have reviewed our allowance methodology and submitted the
    required documentation. We have submitted to the regulators an
    allowance program and continue our practice of charging off
    loans on a timely basis as required by regulation.Submit a three-year strategic plan and a 2009 plan and budget
    for our holding company and the bank.

We submitted the 2009 plan and 3-year strategic plan in the
    fourth quarter.Do not declare or pay any dividend, make any distributions of
    interest or principal on subordinated debentures or trust
    preferred securities, or incur, increase, or guarantee any debt
    or repurchase stock without prior regulatory approval.

We suspended dividends earlier in the year and have no plans for
    further debt issuance, nor need to issue debt to support our
    on-going business plan.  8




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Agreement Elements

Our StatusMaintain capital in the FSB of at least
    9.0 percent Tier 1 (core) and
    11.0 percent Total Capital; do not take on additional
    brokered deposits without prior regulatory approval.

At December 31, 2008, we met the requirement for total capital,
    but not for core capital due to holding excess liquidity.  We
    have submitted a plan to the Office of Thrift Supervision to
    return to compliance with the core capital requirement and are
    acting on it. We have less than $100 million in brokered CDs in
    the FSB and a forward business plan that is not reliant on
    additional issuance.Submit a revised business plan that defines strategies for
    preserving and enhancing the savings banks capital, limits
    high-risk lending activities, identifies strategies designed to
    improve and sustain the savings banks earnings, and
    identifies strategies to stress-test and adjust earnings
    forecasts based on continuing operating results, economic
    conditions and the credit quality of our loan portfolio.

We have submitted this plan to the OTS and are acting on it.Do not increase total FSB assets more than the net interest
    credited on deposit liabilities during the prior quarter; do not
    make any more construction loans or land loans without prior
    regulatory approval.

We stopped making commercial construction and land loans in the
    third quarter through the FSB. We inadvertently violated, but
    then cured, the asset growth restriction during the fourth
    quarter. We have submitted a business plan to the OTS which
    manages our growth within the specified limits.Restructure the management of the FSB so that it operates on an
    independent basis from Irwin Union Bank and Trust. Hire a full
    time President and Chief Executive Officer, Chief Credit Officer
    and Chief Financial Officer for the FSB and add at least two
    independent directors who are not management officials of our
    holding company or our bank.

We have submitted a plan to the OTS which addresses each of
    these points. The new executives and board members have been
    identified from senior managers and independent board members of
    the holding company. The executive officers have begun to act in
    their appointments on a provisional basis, pending OTS approval.Do not have employment agreements or contracts with the FSB
    which contain severance provisions, golden parachute
    payments, and certain other prohibited payments without
    the prior approval of the OTS. In addition, do not enter into,
    renew or revise any third-party contracts for services outside
    the normal course of business without prior approval.

We have and will continue to adhere to these provisions.     Bank
    Holding Company Regulation
   9




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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 subject to limitations;
    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.     10




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Expansion
      Dividends
          Bank
    and Thrift Regulation
   11




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Capital
    Requirements
  Bank Holding Company
    Regulation  Minimum Capital Requirements.
         12




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Prompt
    Corrective Action
    Safety
    and Soundness Standards
    Insurance
    of Deposit Accounts
   13




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Dividend
    Limitations
      Dividends Bank
    Holding Company Regulation
   14




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Prompt
    Corrective Action
  Interstate
    Banking and Branching
      Community
    Reinvestment
    Brokered
    Deposits and Public Funds
   15




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Safety
    and Soundness Standards
        Depositor
    Preference
   16




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Cross-Guarantee
    Provisions
    Transactions
    with Affiliates
      Anti-Money
    Laundering Laws
    Compliance
    with Consumer Protection Laws
   17




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
    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.      Recently
    Adopted and Proposed Federal and State Laws and
    Regulations
  Emergency
    Economic Stabilization Act of 2008
     18




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19




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Executive
    Officers
    Gregory F. Ehlinger
  Bradley J. Kime
  Jocelyn Martin-Leano
  John W. Rinaldi
  Matthew F. Souza
  John Wilcox
  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
    Related to an Investment in Us
  Our independent registered public accountants have expressed
    substantial doubt about our ability to continue as a going
    concern.
   20




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The price of our common shares may fluctuate significantly,
    and this may make it difficult for shareholders to resell common
    shares they own at times or at prices they find attractive.
      
    quarterly variations in our operating results or the quality of
    our assets;
    operating results that vary from the expectations of management,
    securities analysts and investors;
    changes in expectations as to our future financial performance;
    announcements of innovations, new products, strategic
    developments, significant contracts, acquisitions and other
    material events by us or our competitors;
    the operating and securities price performance of other
    companies that investors believe are comparable to us;
    future sales of our equity or equity-related securities;
    our past and future dividend practice;
    our creditworthiness;
    interest rates;
    the credit, mortgage and housing markets, the markets for
    securities relating to mortgages or housing, and developments
    with respect to financial institutions generally;
    the market for similar securities; and
    economic, financial, geopolitical, regulatory, congressional or
    judicial events and actions that affect us or the financial
    markets.    There may be future sales or other dilution of our equity,
    which may adversely affect the market price of our common
    shares.
   21




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The trading volume in the Corporations common shares is
    less than that of other larger financial services companies.
    You may not receive dividends on the common shares.
    The issuance of additional series of our preferred shares
    could adversely affect holders of our common shares which may
    negatively impact shareholders investment.
  winding-up
  We have regulatory restrictions on our ability to receive
    dividends from bank subsidiaries.
    Current levels of market volatility are unprecedented.
   22




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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.
          Risks
    Related to the Capital and Credit Markets
  The current economic environment poses significant challenges
    for us and could adversely affect our financial condition and
    results of operations.
   23




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Our inability to participate in the USTs CPP (or its
    equivalent) could have negative adverse effects on our share
    price, the rights offer and our future growth prospects.
        If we participate in the CPP or its equivalent your ownership
    interest and voting power will be diluted and other rights of
    shareholders could be adversely affected.
    We may need to raise additional capital in the future and
    such capital may not be available when needed or at all.
   24




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Risks
    Related to Our Business
  We may be adversely affected by a general deterioration in
    economic conditions.
    Strategy
  We may be adversely affected by interest rate changes.
           25




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Our operations may be adversely affected if we are unable to
    secure adequate funding; our use of wholesale funding sources
    exposes us to potential liquidity risk.
            If there were an acceleration of the recording of losses on
    our home equity portfolio from our current expectations, it
    could have a material adverse effect on our results of
    operations and capital position.
   26




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We have credit risk inherent in our asset portfolios.
      We hold in our portfolio a significant number of
    construction, land and home equity loans, which may pose more
    credit risk than other types of mortgage loans.
        We may be required to repurchase mortgage loans that we
    previously sold because of breaches of representation and
    warrants we made when selling the loans.
   27




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Certain of our consumer mortgage products were 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, or
    significant changes in senior management, may affect our
    operations adversely.
      Ownership of our common shares is concentrated in persons
    affiliated with us.
    Our future success depends on our ability to compete
    effectively in a highly competitive financial services
    industry.
   28




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We have entered into written agreements with our regulators
    and our business is affected by the highly regulated environment
    in which we operate.
              A deterioration in our regulatory capital position could
    adversely affect us.
   29




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Our bank regulators are monitoring closely our liquidity,
    capital adequacy and ability to continue to operate in a safe
    and sound manner.
    Our strategic restructuring will decrease the diversification
    of our business and significantly increase our reliance on the
    performance of our commercial banking and franchise finance
    segments. If these segments do not perform as we anticipate, the
    decrease in diversification could have a material adverse effect
    on our results of operations.
   30




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Strategy
    The soundness of other financial institutions could adversely
    affect us.
    We are a defendant in class actions and other lawsuits that
    could subject us to material liability.
    Our business may be affected adversely by fraud.
  and/or
  Item 1B.
    Unresolved
    Staff Comments   31




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Item 2.
    Properties    Irwin
    Union Bank and Trust
    Irwin
    Union Bank, F.S.B.
    Irwin
    Commercial Finance Corporation
    Irwin
    Home Equity
    Irwin
    Mortgage
    Item 3.
    Legal
    Proceedings  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
 32




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Kossler Kossler
  Hobson Kossler Hobson Hobson
  Hobson Kossler Hobson Hobson Kossler
  Hobson Kossler Kessler v. RFC, et al Kessler Kessler Kessler Kessler Kessler Kessler Kessler
  (Chatfield v. Irwin Union Bank and Trust Company,
    et al.) Hobson Kossler
    Hobson Kossler
 33




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Litigation
    in Connection with Loans Purchased from Freedom Mortgage
    Corporation.
  Irwin Union Bank, et al. v.
    Freedom Mortgage Corp.
  Freedom Mortgage Corporation v.
    Irwin Financial Corporation et al.
    Homer v.
    Sharp
    EverBank v.
    Irwin Mortgage Corporation and Irwin Union Bank &
    Trust Company Demand for Arbitration
   34




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Item 4.
    Submission
    of Matters to a Vote of Security Holders      Matters

Shares For


Shares Against


Shares Abstained


Broker Non-VoteProposal No. 1. Approval of Amendment to Amend the
    Articles of Incorporation to increase the number of common
    shares, without par value, that the Corporation is authorized to
    issue from 40,000,000 shares to 200,000,00 shares and
    to increase the total number of shares that the Corporation is
    authorized to issue from 44,000,000 shares to
    204,000,000 shares.


16,575,961



3,509,850



56,976Proposal No. 2. Approval, for purposes of the New York
    Stock Exchange Listing Standards, of the issuance of in excess
    of 20% of our outstanding common shares in connection with a
    possible exchange of a portion of the Corporations trust
    preferred securities.


16,595,239



3,465,280



82,169



99  35




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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 Year2007First 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


$
0.482008First quarter

$
11.85


$
4.33


$
5.31


$
Second quarter


6.88



2.62



2.69



Third Quarter


5.19



2.25



3.95



Fourth Quarter


4.00



1.16



1.29






$
0.00  36




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Performance
    Graph
    Five-Year
    Cumulative Total Return at Year-End 2008
  
  2003



2004



2005



2006



2007



2008Irwin Financial



100




92




70




76




26




5Russell 2000



100




118




124




147




144




96Russell 2000 Financial Services Sector



100




121




124




148




123




92SNL BANK



100




112




114




133




103




56     *
    The Corporation was removed from the Russell 2000 and
    Russell 2000 Financial Indices due to the annual
    reconstitution of these Indices on June 27, 2008.     37




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Purchases
    of Subsidiary Stock:
           39




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Item 6.
    Selected
    Financial Data  Five-Year
    Selected Financial Data
  At or For Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands except per share data)For the year:Interest Revenue

$
418,818


$
513,029


$
482,128


$
370,538


$
294,386Interest Expense


212,353



250,636



224,689



139,071



81,372Net interest income


206,465



262,393



257,439



231,467



213,014Provision for loan & lease losses


354,208



134,988



35,101



27,307



14,473Net interest income after provision


(147,743
)


127,405



222,338



204,160



198,541Noninterest revenues


1,041



27,384



44,621



56,721



85,453Net revenues


(146,702
)


154,789



266,959



260,881



283,994Noninterest expense


214,763



199,767



210,688



204,039



203,778(Loss) income before income taxes


(361,465
)


(44,978
)


56,271



56,842



80,216Provision for income taxes


(20,985
)


(20,848
)


18,870



20,595



31,492Net (loss) income from continuing operations


(340,480
)


(24,130
)


37,401



36,247



48,724(Loss) income from discontinued operations






(30,543
)


(35,674
)


(17,260
)


19,721Net (loss) income

$
(340,480
)

$
(54,673
)

$
1,727


$
18,987


$
68,445Common Share Data:Earnings per share from continuing operations:Basic

$
(11.60
)

$
(0.87
)

$
1.27


$
1.27


$
1.72Diluted


(11.60
)


(0.90
)


1.25



1.26



1.64Cash dividends per share






0.48



0.44



0.40



0.32Book value per common share


3.26



15.22



17.30



17.90



17.61Dividend payout
    ratio(1)



%


(25.69
)%


759.12
%


60.18
%


13.24
%Weighted average shares  basic


29,343



29,337



29,501



28,518



28,274Weighted average shares  diluted


29,343



29,344



29,690



28,841



31,278Shares outstanding  end of period


29,523



29,226



29,736



28,618



28,452At year end:Assets

$
4,914,315


$
6,166,105


$
6,237,958


$
6,646,524


$
5,235,820Residual interests


9,180



12,047



10,320



22,116



56,101Loans and leases held for sale


841,333



6,134



237,510



513,554



227,880Loans and leases


3,512,048



5,696,230



5,238,193



4,477,943



3,440,689Allowance for loan and lease losses


137,015



144,855



74,468



59,223



43,441Servicing assets


18,116



23,234



31,949



34,445



47,807Deposits


3,017,935



3,325,488



3,551,516



3,898,993



3,395,263Other borrowings


512,012



802,424



602,443



997,444



237,277Collateralized debt


912,792



1,213,139



1,173,012



668,984



547,477Other long-term debt


233,868



233,873



233,889



270,160



270,172Shareholders equity


110,662



459,300



530,502



512,334



501,185 40




---



##### Table of Contents



At or For Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands except per share data)Selected Financial Ratios:Performance Ratios on continuing operations:Return on average assets


(6.1
)%


(0.4
)%


0.6
%


0.6
%


0.9
%Return on average equity


(105.1
)


(4.8
)


7.1



7.5



10.3Net interest
    margin(2)


3.87



4.50



4.71



4.97



5.46Noninterest income to
    revenues(3)


0.2



9.5



14.8



19.7



28.6Efficiency
    ratio(4)


103.5



68.9



69.8



70.8



68.3Loans and leases and loans held for sale to
    deposits(5)


109.0



126.4



117.3



108.0



80.7Average interest-earning assets to average interest-bearing
    liabilities


107



112



119



126



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


3.9
%


2.5
%


1.4
%


1.3
%


1.3
%Non-performing loans and leases


81



190



199



158



129Net charge-offs to average loans and leases


3.3



1.2



0.5



0.3



0.7Non-performing assets to total assets


4.5



1.5



0.9



0.8



0.9Non-performing loans and leases to total loans and leases


4.8



1.3



0.7



0.8



1.0Ratio of Earnings to Fixed Charges:Including deposit interest


(0.7
)x


0.8
x


1.2
x


1.4
x


2.0
xExcluding deposit interest


(2.3
)


0.6



1.5



2.1



3.3Capital Ratios:Average shareholders equity to average assets


5.8
%


8.3
%


8.1
%


8.0
%


9.0
%Tier 1 capital ratio


3.3



10.2



11.4



10.7



13.0Tier 1 leverage ratio


3.1



10.2



11.5



10.3



11.6Total risk-based capital ratio


6.6



12.6



13.4



13.1



15.9     (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. 41




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Basis of
    Presentation
    Strategy
  137-year
  Restructuring
    Actions Taken in 2008
  and/or
     42




---



##### Table of Contents



Form 10-K.
      Strategic
    Positioning Once Restructuring is Complete
             43




---



##### Table of Contents



Outlook
      Critical
    Accounting Policies/Management Judgments and Accounting
    Estimates
  Summary of Significant Accounting
    Policies and/or
  Valuation
    of Mortgage Servicing Rights
  loan-to-value
   44




---



##### Table of Contents



and/or Servicing Assets
  Allowance
    for Loan and Lease Losses
        case-by-case
 45




---



##### Table of Contents



Repurchase
    Liability
        Accounting
    for Deferred Taxes
  Income Taxes
  Incentive
    Servicing Fees
   46




---



##### Table of Contents



No. D-96,
  Consolidated
    Overview
  2008


% Change


2007


% Change


2006Net (loss) income from continuing operations (millions)

$
(340.5
)


(1311
)%

$
(24.1
)


(165
)%

$
37.4Net (loss) income (millions)


(340.5
)


(523
)%


(54.7
)


(3266
)%


1.7Basic earnings per share from continuing operations


(11.60
)


(1233
)%


(0.87
)


(169
)%


1.27Basic earnings per share


(11.60
)


(507
)%


(1.91
)


(3283
)%


0.06Diluted earnings per share from continuing operations


(11.60
)


(1189
)%


(0.90
)


(172
)%


1.25Diluted earnings per share


(11.60
)


(498
)%


(1.94
)


(3980
)%


0.05Return on average equity from continuing operations


(105.1
)%






(4.8
)%






7.1
%Return on average assets from continuing operations


(6.1
)%






(0.4
)%






0.6
%   Consolidated
    Income Statement Analysis
  Net
    Income from Continuing Operations
    Net
    Interest Income from Continuing Operations
   47




---



##### Table of Contents



December 31,2008


2007


2006Average





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

$
31,951


$
1,516



4.74
%

$
49,587


$
2,668



5.38
%

$
72,110


$
2,925



4.06
%Federal funds sold


33,239



707



2.13



13,765



619



4.50



30,419



1,527



5.02Residual interests


11,561



1,221



10.56



10,458



1,100



10.52



13,512



1,536



11.37Investment securities


124,245



6,789



5.46



138,866



7,647



5.51



117,164



5,816



4.96Loans and leases held for sale


440,301



51,734



11.75



95,815



6,843



7.14



865,061



73,708



8.52Loans and leases, net of unearned
    income(1)


4,688,148



356,851



7.61



5,486,727



496,101



9.04



4,872,487



437,900



8.99Total interest-earning assets


5,329,445


$
418,818



7.86
%


5,795,218


$
514,978



8.89
%


5,970,753


$
523,412



8.77
%Noninterest-earning assets:Cash and due from banks


121,667











74,438











111,382Premises and equipment, net


36,836











38,926











34,349Other assets


231,210











286,597











470,845Less allowance for loan and lease losses


(128,991
)










(92,889
)










(67,383
)Total assets

$
5,590,167










$
6,102,290










$
6,519,946Liabilities and Shareholders EquityInterest-bearing liabilities:Money market checking

$
310,882


$
3,696



1.19
%

$
285,618


$
6,320



2.21
%

$
355,378


$
8,490



2.39
%Money market savings


876,204



20,484



2.34



1,159,705



50,409



4.35



1,169,465



48,673



4.16Regular savings


117,702



2,007



1.71



122,666



2,675



2.18



131,182



2,481



1.89Time deposits


1,781,682



76,325



4.28



1,531,307



77,956



5.09



1,558,128



72,576



4.66Other borrowings


527,369



23,643



4.48



598,888



31,117



5.20



543,719



33,663



6.19Collateralized debt


1,057,231



69,789



6.60



1,233,604



68,601



5.56



1,005,959



53,720



5.34Other long-term debt


233,869



16,409



7.02



233,916



17,335



7.41



246,948



22,486



9.11Total interest-bearing liabilities


4,904,939


$
212,353



4.33
%


5,165,704


$
254,413



4.93
%


5,010,779


$
242,089



4.83
%Noninterest-bearing liabilities:Demand deposits


297,307











329,925











756,624Other liabilities


64,062











101,067











226,379Shareholders equity


323,859











505,594











526,164Total liabilities and shareholders equity

$
5,590,167










$
6,102,290










$
6,519,946Net interest income





$
206,465










$
260,565










$
281,323Net interest income to average interest earning assets










3.87
%










4.50
%










4.71
%Net interest income from discontinued operations


















(1,828
)










23,884Net interest income from continuing operations





$
206,465










$
262,393










$
257,439     (1)

    
    For purposes of these computations, nonaccrual loans are
    included in daily average loan amounts outstanding. 48




---



##### Table of Contents



For the Year Ended December 31,2008 Over 2007


2007 Over 2006Volume


Rate


Total


Volume


Rate


Total(Dollars in thousands)Interest IncomeLoans and leases

$
(72,205
)

$
(67,045
)

$
(139,250
)

$
55,203


$
2,998


$
58,201Loans and leases held for sale


24,603



20,288



44,891



(65,543
)


(1,321
)


(66,864
)Investment securities


(785
)


(73
)


(858
)


1,077



752



1,829Residual interests


116



5



121



(347
)


(90
)


(437
)Interest-bearing deposits with financial institutions


(948
)


(204
)


(1,152
)


(914
)


657



(257
)Federal funds sold


876



(788
)


88



(835
)


(71
)


(906
)Total


(48,343
)


(47,817
)


(96,160
)


(11,359
)


2,925



(8,434
)Interest ExpenseMoney market checking


559



(3,183
)


(2,624
)


(1,666
)


(504
)


(2,170
)Money market savings


(12,323
)


(17,602
)


(29,925
)


(406
)


2,142



1,736Regular savings


(109
)


(559
)


(668
)


(161
)


354



193Time deposits


12,747



(14,378
)


(1,631
)


(1,249
)


6,630



5,381Other borrowings


(3,716
)


(3,758
)


(7,474
)


3,415



(5,960
)


(2,545
)Collateralized debt


(9,809
)


10,997



1,188



12,157



2,724



14,881Other long-term debt


(3
)


(923
)


(926
)


(1,187
)


(3,965
)


(5,152
)Total


(12,654
)


(29,406
)


(42,060
)


10,903



1,421



12,324Net Interest Income

$
(35,689
)

$
(18,411
)

$
(54,100
)

$
(22,262
)

$
1,504


$
(20,758
)     Provision
    for Loan and Lease Losses from Continuing Operations
  loan-to-value
 49




---



##### Table of Contents



Noninterest
    Income from Continuing Operations
    Noninterest
    Expense from Continuing Operations
    Income
    Tax Provision
    Consolidated
    Balance Sheet Analysis
    Residual
    Interests
  No. 99-20,
    December 31,2008


2007


2006(Dollars in thousands)Beginning balance

$
12,047


$
10,320


$
22,116New residuals from sales


1,209



2,107



Mark to market adjustments


(3,096
)


1,126



1,282Cash received


(1,349
)


(2,435
)


(14,614
)Accretion


369



929



1,536Balance at December 31,

$
9,180


$
12,047


$
10,320  50




---



##### Table of Contents



Investment
    Securities
    2008


2007


2006(Dollars in thousands)U.S. Treasury and government obligations

$
13,054


$
13,970


$
13,730Obligations of states and political subdivisions


3,320



3,436



3,545Mortgage-backed securities


20,998



46,216



45,187Other


11,781



14,185



3,380Total


49,153



77,807



65,842Federal Home Loan Bank and Federal Reserve Bank stock


61,056



62,588



62,588Total

$
110,209


$
140,395


$
128,430   non-U.S. government
  other-than-temporary. other-than-temporary
    After


AfterOne But


Five ButWithin


Within


Within


AfterOne


Five


Ten


TenYear


Years


Years


Years


Other


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

$
5,882


$
7,042


$



$
130


$



$
13,054Obligations of states and political subdivisions






220



400



2,700







3,320Other


3,742











8,039







11,781Total


9,624



7,262



400



10,869







28,155Mortgage-backed securities


















20,998



20,998Federal Home Loan Bank and Federal Reserve Bank stock


















61,056



61,056$
9,624


$
7,262


$
400


$
10,869


$
82,054


$
110,209Weighted Average YieldHeld-to-maturity


3.27
%


3.30
%


8.55
%


8.60
%


5.02
%Available-for-sale


4.43
%










2.39
%   available-for-sale
 51




---



##### Table of Contents



Loans and
    Leases Held For Sale
    Loans and
    Leases
      December 31,2008


2007


2006


2005


2004(Dollars in thousands)Commercial, financial and agricultural

$
1,862,877


$
2,099,451


$
2,025,890


$
1,882,079


$
1,643,128Real estate construction & land development


466,598



586,037



601,699



514,005



334,386Real estate mortgage


523,837



1,691,450



1,522,616



1,232,933



806,757Consumer


24,022



32,232



31,581



31,718



31,166Commercial financing:Franchise financing


922,429



925,741



699,969



462,413



330,496Domestic leasing


11,305



306,301



296,056



237,968



174,035Foreign leasing






462,036



358,783



313,581



265,780Unearned income:Franchise financing


(297,600
)


(306,681
)


(211,480
)


(125,474
)


(86,638
)Domestic leasing


(1,420
)


(42,723
)


(42,782
)


(33,267
)


(23,924
)Foreign leasing






(57,614
)


(44,139
)


(38,013
)


(34,497
)Total

$
3,512,048


$
5,696,230


$
5,238,193


$
4,477,943


$
3,440,689     One


Five


FiveYear


Years


Years


Total(Dollars in thousands)Commercial, financial and agricultural

$
529,068


$
897,963


$
435,846


$
1,862,877Real estate construction & land development


438,944



15,434



12,220



466,598Real estate mortgage


23,434



45,564



454,839



523,837Consumer


5,138



16,321



2,563



24,022Commercial financing:Franchise financing


17,261



139,178



468,390



624,829Domestic leasing


535



9,350







9,885 52




---



##### Table of Contents



One


Five


FiveYear


Years


Years


Total(Dollars in thousands)Total

$
1,014,380


$
1,123,810


$
1,373,858


$
3,512,048Loans due after one year with:Fixed interest rates













$
1,620,633Variable interest rates














877,035Total













$
2,497,668   Allowance
    for Loan and Lease Losses
    December 31,2008


2007


2006


2005


2004(Dollars in thousands)Balance at beginning of year

$
144,855


$
74,468


$
59,223


$
43,441


$
63,005Provision for loan and lease losses


354,208



134,988



35,101



27,307



14,473Charge-offs


(159,411
)


(73,994
)


(30,810
)


(20,201
)


(28,180
)Recoveries


5,071



10,099



11,208



8,960



5,335Reduction due to reclassification and sales of loans


(207,628
)


(1,225
)


(246
)


(403
)


(11,435
)Foreign currency adjustment


(80
)


519



(8
)


119



243Balance at end of year

$
137,015


$
144,855


$
74,468


$
59,223


$
43,441     Deposits
     53




---



##### Table of Contents



December 31,2008


2007


2006(Dollars in thousands)Under 3 months

$
217,337


$
350,488


$
404,6843 to 6 months


142,381



183,001



202,4666 to 12 months


81,709



79,649



230,561after 12 months


173,842



48,480



270,070Total Certificates of deposit

$
615,269


$
661,618


$
1,107,781Brokered deposits

$
930,459


$
646,465


$
541,903Mortgage banking escrow deposits

$
340


$
1,479


$
324,913Public Funds

$
461,059


$
473,792


$
405,730Demand deposits


319,513



305,341



362,712Money market accounts


780,484



1,396,562



1,441,358Savings and time deposits


761,757



636,399



602,703Core deposits

$
1,861,754


$
2,338,302


$
2,406,773   Other
    Borrowings
      Collateralized
    and Other Long-Term Debt
     54




---



##### Table of Contents



Capital
      To Be WellCapitalized Under


For CapitalActual


Prompt Corrective


AdequacyAmount


Ratio


Action Provisions


Purposes(Dollars in thousands)As of December 31, 2008Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation

$
309,726



6.6
%


N/A



8.0
%Irwin Union Bank and Trust


385,136



9.3



10.0
%


8.0Irwin Union Bank, F.S.B.


57,232



11.2



10.0



8.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation


154,863



3.3



N/A



4.0Irwin Union Bank and Trust


302,397



7.3



6.0



4.0Irwin Union Bank, F.S.B.


50,839



9.9



6.0



N/ATier I Capital (to Average Assets):Irwin Financial Corporation


154,863



3.1



N/A



4.0Irwin Union Bank and Trust


302,397



6.7



5.0



4.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.


50,839



8.2



5.0



4.0As of December 31, 2007Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation

$
769,868



12.6
%


N/A



8.0
%Irwin Union Bank and Trust


683,999



12.5



10.0
%


8.0Irwin Union Bank, F.S.B.


66,619



10.9



10.0



8.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation


619,656



10.2



N/A



4.0Irwin Union Bank and Trust


584,393



10.7



6.0



4.0Irwin Union Bank, F.S.B.


59,500



9.7



6.0



N/ATier I Capital (to Average Assets):Irwin Financial Corporation


619,656



10.2



N/A



4.0Irwin Union Bank and Trust


584,393



10.6



5.0



4.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.


59,500



9.2



5.0



4.0As of December 31, 2006Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation

$
837,754



13.4
%


N/A



8.0
%Irwin Union Bank and Trust


738,206



12.8



10.0
%


8.0Irwin Union Bank, F.S.B.


59,157



11.3



10.0



8.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation


712,403



11.4



N/A



4.0Irwin Union Bank and Trust


636,506



11.0



6.0



4.0Irwin Union Bank, F.S.B.


55,820



10.6



6.0



N/ATier I Capital (to Average Assets):Irwin Financial Corporation


712,403



11.5



N/A



4.0Irwin Union Bank and Trust


636,506



11.1



5.0



4.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.


55,820



11.1



5.0



4.0  55




---



##### Table of Contents



Capital Requirements
     56




---



##### Table of Contents



Interest RateOrigination

at December 31,


Maturity

$ AmountName

Date

2008


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


4.36


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


3.93


Mar 2037


15,000


quarterly

floating rate of 3 month LIBOR plus 174 basis$
197,750   15-year
    Inflation
    Cash Flow
    Analysis
    Earnings
    by Line of Business
    
    Commercial Banking
    Commercial Finance 57




---



##### Table of Contents




    Home Equity      Year Ended December 31,2008


2007


2006(Dollars in thousands)Commercial Banking

$
(66,661
)

$
24,697


$
48,233Commercial Finance


(39,521
)


22,215



19,907Home Equity


(210,975
)


(79,044
)


2,628Parent and other (including consolidating entries)


(44,308
)


(12,846
)


(14,497
)(Loss) income before income taxes from continuing operations


(361,465
)


(44,978
)


56,271Provision for income taxes


(20,985
)


(20,848
)


18,870Net (loss) income from continuing operations


(340,480
)


(24,130
)


37,401Discontinued operations






(30,543
)


(35,674
)Net (loss) income

$
(340,480
)

$
(54,673
)

$
1,727   Commercial
    Banking
    Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Selected Income Statement Data:Interest income

$
178,279


$
232,006


$
229,193


$
183,052


$
127,029Interest expense


(73,179
)


(113,077
)


(104,467
)


(72,294
)


(37,412
)Net interest income


105,100



118,929



124,726



110,758



89,617Provision for loan and lease losses


(89,561
)


(18,241
)


(5,734
)


(5,286
)


(3,307
)Other income


17,734



16,615



18,173



16,945



18,316Total net revenue


33,273



117,303



137,165



122,417



104,626Operating expense


(99,934
)


(92,606
)


(88,932
)


(77,062
)


(65,450
)(Loss) income before taxes

$
(66,661
)

$
24,697


$
48,233


$
45,355


$
39,176Selected Balance Sheet Data at End of Year:Assets

$
2,870,877


$
3,093,764


$
3,103,547


$
3,162,398


$
2,622,877Securities and short-term investments


39,181



38,780



55,116



340,811
(1)


327,664
(1)Loans and leases


2,583,067



2,950,356



2,901,029



2,680,220



2,223,474Allowance for loan and lease losses


(72,598
)


(35,148
)


(27,113
)


(24,670
)


(22,230
)Deposits


1,974,086



2,528,721



2,635,380



2,797,635



2,390,839Shareholders equity


208,093



235,009



241,556



195,381



143,580Daily Averages:Assets

$
3,011,280


$
3,143,219


$
3,143,439


$
3,025,717


$
2,476,835Securities and short-term investments


38,574



35,626



56,064



391,057
(1)


203,237
(1)Loans and leases


2,843,182



2,902,994



2,797,853



2,460,560



2,094,190Allowance for loan and lease losses


(52,592
)


(26,984
)


(26,175
)


(23,656
)


(22,304
)Deposits


2,407,206



2,753,615



2,826,446



2,766,289



2,258,538Shareholders equity


228,261



234,068



218,076



157,545



147,759Shareholders equity to assets


7.58
%


7.45
%


6.95
%


5.21
%


5.97
%  58




---



##### Table of Contents



(1)

    
    Includes 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
    Commercial
    Banking Strategy
      Portfolio
    Characteristics
      loan-to-value
 59




---



##### Table of Contents



50-95%,
  debt-to-income
    December 31,2008


2007


2006Weighted








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

$
432,034



16.7
%


6.3
%

$
539,008



18.3
%


7.1
%

$
561,343



19.3
%


7.6
%Central and Western Michigan


393,528



15.2



5.7



465,924



15.8



7.3



519,348



17.9



7.7Southern Indiana


425,529



16.5



6.2



463,597



15.7



6.7



475,051



16.4



7.2Phoenix


426,719



16.5



5.9



484,985



16.4



7.0



452,919



15.6



7.9Las Vegas


174,502



6.8



5.0



188,126



6.4



8.2



154,218



5.3



8.1Sacramento


111,346



4.3



5.8



120,149



4.1



7.7



84,949



2.9



8.4Other


619,409



24.0



5.6



688,567



23.3



7.4



653,201



22.6



7.8Total

$
2,583,067



100.0
%


5.7
%

$
2,950,356



100.0
%


7.3
%

$
2,901,029



100.0
%


7.7
%   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

$
249,524



14.0
%


1.8
%

$
225,075



10.0
%


3.5
%

$
259,835



10.8
%


2.4
%Central and Western Michigan


209,986



11.8



2.1



195,818



8.7



2.6



231,666



9.7



3.4Southern Indiana


672,545



37.8



1.5



740,686



33.1



2.9



630,060



26.3



2.8Phoenix


120,284



6.8



2.2



175,617



7.8



3.4



179,502



7.5



3.4Las Vegas


96,061



5.4



2.2



429,693



19.2



3.7



467,708



19.5



4.1Sacramento


55,568



3.1



2.0



45,422



2.0



2.5



15,802



0.7



3.3Other


375,061



21.1



2.4



428,405



19.2



3.3



615,466



25.5



3.5Total

$
1,779,029



100.0
%


1.8
%

$
2,240,716



100.0
%


3.1
%

$
2,400,039



100.0
%


3.3
%   Net
    Income
   60




---



##### Table of Contents



Net
    Interest Income
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Net interest income

$
105,100


$
118,929


$
124,726Average interest earning assets


2,883,316



3,040,560



3,028,527Net interest margin


3.65
%


3.91
%


4.12
%     Provision
    for Loan and Lease Losses
    Noninterest
    Income
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Service charges on deposit accounts

$
4,506


$
3,865


$
4,307Gain from sales of loans


1,873



1,931



2,328Trust fees


2,131



2,307



1,971Insurance commissions, fees and premiums


1,751



1,812



1,955Brokerage fees


1,509



1,623



1,369Loan servicing fees


1,376



1,462



1,523Amortization and impairment of servicing assets


(1,067
)


(1,084
)


(1,140
)Other


5,655



4,699



5,860Total noninterest income

$
17,734


$
16,615


$
18,173    61




---



##### Table of Contents



Operating
    Expenses
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Salaries and employee benefits

$
51,624


$
51,374


$
53,111Other expenses


48,310



41,232



35,821Total operating expenses

$
99,934


$
92,606


$
88,932Efficiency ratio


81.4
%


68.3
%


62.2
%Number of employees at period
    end(1)


526



532



585     (1)

    
    On a full time equivalent basis    Balance
    Sheet
    Credit
    Quality
   62




---



##### Table of Contents



December 31,2008


2007


2006(Dollars in thousands)Nonperforming loans

$
129,953


$
27,001


$
14,455Other real estate owned


13,377



6,895



4,423Total nonperforming assets

$
143,330


$
33,896


$
18,878Nonperforming assets to total assets


4.99
%


1.09
%


0.61
%Allowance for loan losses

$
72,598


$
35,148


$
27,113Allowance for loan losses to total loans


2.81
%


1.19
%


0.93
%For the Year Ended:Provision for loan losses

$
89,561


$
18,241


$
5,734Net charge-offs


52,111



10,206



3,291Net charge-offs to average loans


1.83
%


0.35
%


0.13
%     December 31,Markets

2008


2007


2006Indianapolis


3.39
%


1.02
%


0.24
%Central and Western Michigan


4.19
%


2.52
%


2.72
%Southern Indiana


0.38
%


0.53
%


0.14
%Phoenix


10.30
%


1.20
%


0.52
%Las Vegas


17.91
%


0.01
%


0.00
%Sacramento


6.27
%


4.15
%


0.00
%Other


4.58
%


0.49
%


0.06
%Total


5.55
%


1.15
%


0.65
%  63




---



##### Table of Contents



Commercial
    Finance
  Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Selected Income Statement Data:Net interest income

$
42,640


$
52,721


$
42,545


$
33,683


$
28,084Provision for loan and lease losses


(60,159
)


(13,505
)


(6,701
)


(6,211
)


(6,798
)Noninterest income


13,240



13,106



8,018



7,437



6,275Total net revenue


(4,279
)


52,322



43,862



34,909



27,561Operating expense


(35,242
)


(30,107
)


(23,955
)


(22,224
)


(18,782
)(Loss) income before taxes

$
(39,521
)

$
22,215


$
19,907


$
12,685


$
8,779Selected Balance Sheet Data at End of Year:Total assets

$
676,399


$
1,302,688


$
1,073,552


$
831,657


$
636,604Loans and leases


634,714



1,287,060



1,056,406



817,208



625,140Allowance for loan and lease losses


(8,581
)


(17,792
)


(13,525
)


(10,756
)


(9,624
)Shareholders equity


33,395



119,574



88,587



71,568



55,993Selected Operating Data:Net charge-offs

$
16,411


$
8,533


$
3,678


$
4,806


$
8,235Net interest margin


4.20
%


4.58
%


4.55
%


4.80
%


5.33
%Total funding of loans and leases

$
435,871


$
700,718


$
595,319


$
451,524


$
366,545   Overview
    Strategy
    Portfolio
    Characteristics
  multi-unit
  multi-unit
 64




---



##### Table of Contents



December 31,2008


2007California


14.7
%


12.9
%Texas


11.0



12.6New York


9.0



7.0New Jersey


7.1



8.6All other states


58.2



58.9Total United States


100.0
%


100.0
%Total Portfolio in thousands

$
624,829


$
619,060     December 31,2008


2007(Dollars in thousands)Franchise loans

$
624,829


$
619,060Weighted average coupon


8.95
%


9.38
%Delinquency ratio


3.65



0.04   Net
    Income
    Net
    Interest Income
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Net interest income

$
42,640


$
52,721


$
42,545Average interest earning assets


1,015,584



1,151,470



936,519Net interest margin


4.20
%


4.58
%


4.55
%    65




---



##### Table of Contents



Provision
    for Loan and Lease Losses
    Noninterest
    Income
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Gain from sales of loans

$
8,141


$
6,779


$
2,563Derivative losses, net


(1,662
)


(547
)


(263
)Other


6,761



6,874



5,718Total noninterest income

$
13,240


$
13,106


$
8,018     Operating
    Expenses
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Salaries and employee benefits

$
17,388


$
18,441


$
13,155Other


17,854



11,666



10,800Total operating expenses

$
35,242


$
30,107


$
23,955Efficiency ratio


63.1
%


45.7
%


47.4
%Number of employees at Year
    end(1)


73



215



202     (1)

    
    On a full time equivalent basis    Credit
    Quality
   66




---



##### Table of Contents



December 31,2008


2007


2006(Dollars in thousands)Franchise Loans:Nonperforming loans

$
13,815


$
3,630


$
791Allowance for loan losses


7,727



5,961



5,769Allowance for loan losses to total loans


1.24
%


0.96
%


1.18
%For the Year Ended:Provision for loan losses

$
9,571


$
2,567


$
2,598Net charge-offs


7,806



1,093



445Net charge-offs to average loans


1.71
%


0.21
%


0.11
%  67




---



##### Table of Contents



Home
    Equity
    Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Selected Income Statement Data:Net interest income

$
64,033


$
95,095


$
96,068


$
88,290


$
98,983Provision for loan and lease losses


(204,488
)


(103,242
)


(22,659
)


(15,811
)


(4,369
)Noninterest income


(175
)


2,535



15,186



33,667



67,847Total net revenues


(140,630
)


(5,612
)


88,595



106,146



162,461Operating expenses


(70,345
)


(73,432
)


(85,967
)


(102,339
)


(114,779
)(Loss) income before taxes

$
(210,975
)

$
(79,044
)

$
2,628


$
3,807


$
47,682Selected Balance Sheet Data:Total assets

$
1,106,305


$
1,481,306


$
1,617,219


$
1,602,400


$
992,979Home equity loans and lines of
    credit(1)


294,020



1,458,564



1,280,497



980,406



590,175Allowance for loan losses


(55,621
)


(91,700
)


(33,614
)


(23,552
)


(11,330
)Home equity loans held for
    sale(1)


803,688



5,865



236,636



513,231



227,740Residual interests






3,120



2,760



15,580



51,542Mortgage servicing assets


15,096



20,071



28,231



30,502



44,000Other borrowings


76,701



291,293



446,163



920,636



359,902Collateralized debt


912,792



970,733



948,939



452,615



352,625Shareholders equity


139,064



156,894



155,791



151,677



136,260Selected Operating Data:Loan volume:Lines of credit


NA


$
33,106


$
150,306


$
436,451


$
508,287Loans


NA



421,838



853,527



1,255,185



934,027Total managed portfolio balance


1,216,897



1,605,032



1,708,975



1,593,509



1,147,137Delinquency
    ratio(2)


10.5
%


5.8
%


3.2
%


3.0
%


4.8
%Total managed portfolio balance Including credit risk sold

$
1,788,808


$
2,377,464


$
2,853,726


$
3,058,842


$
2,807,367Weighted average coupon rate:Lines of credit


8.12
%


10.62
%


11.13
%


10.17
%


9.18
%Loans


11.07



11.07



10.75



10.18



11.87Gain on sale of loans to loans sold


2.23



0.51



1.32



2.51



2.24Net home equity charge-offs to average managed portfolio


7.63



3.24



1.00



0.60



2.48     (1)

    
    Includes $1.1 billion, $1.1 billion,
    $1.1 billion, $0.5 billion and $0.4 billion of
    loans and loans held for sale at December 31, 2008, 2007,
    2006, 2005, and 2004, respectively, that collateralize
    securitized financings.(2)

    
    Nonaccrual loans are included in the delinquency ratio.  Overview
  and/or
 68




---



##### Table of Contents



Portfolio
        December 31,


December 31,2008


2007Weighted








WeightedAverage








AverageAmount


% of Total


Coupon


Amount


% of Total


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

$
316,492



26.01
%


8.94
%

$
425,939



26.54
%


9.04
%Lines of credit
    £
    100% CLTV


186,892



15.36



6.75



246,524



15.36



9.35First mortgages
    £
    100% CLTV


36,395



2.99



7.66



49,962



3.11



7.68Total
    £
    100% CLTV


539,779



44.36



8.09



722,425



45.01



9.05Loans > 100% CLTV


587,625



48.29



12.50



766,168



47.74



12.50Lines of credit > 100% CLTV


66,937



5.50



11.63



87,825



5.47



14.00First mortgages > 100% CLTV


18,468



1.52



8.40



23,584



1.47



8.48Total > 100% CLTV


673,030



55.31



12.30



877,577



54.68



12.54Other


4,088



0.33



12.54



5,030



0.31



13.58Total managed
    portfolio(1)

$
1,216,897



100.00
%


10.44
%

$
1,605,032



100.00
%


10.97
%     (1)

    
    We define our Managed Portfolio as the portfolio of
    loans ($1.2 billion) that we service and on which we carry
    credit risk. At December 31, 2008, we also serviced another
    $0.6 billion of loans for which the credit risk is held by
    others.    Net
    Income
   69




---



##### Table of Contents



Net
    Revenue
      Year Ended December 31,2008


2007


2006(Dollars in thousands)Net interest income

$
64,033


$
95,095


$
96,068Provision for loan losses


(204,488
)


(103,242
)


(22,659
)Gain on sale of whole loans


843



950



5,048Gain on intercompany transactions






2,091



866Valuation adjustment on loans held for sale


(4,463
)


(8,194
)


(8,300
)Loss on sales of loans


(3,620
)


(5,153
)


(2,386
)Loan servicing fees


10,080



17,813



31,322Amortization of servicing assets


(57
)


(115
)


(19,887
)(Impairment) recovery of servicing assets


(4,917
)


(10,946
)


647Derivative (losses) gains


(192
)


(350
)


3,136Other


(1,469
)


1,286



2,354Total net revenue

$
(140,630
)

$
(5,612
)

$
88,595            70




---



##### Table of Contents



Operating
    Expenses
    Year Ended December 31,2008


2007


2006(Dollars in thousands)Salaries and employee benefits

$
30,942


$
44,528


$
51,335Other


39,403



28,904



34,632Total operating expenses

$
70,345


$
73,432


$
85,967Number of employees at year
    end(1)


152



340



492     (1)

    
    On a full time equivalent basis.    Home
    Equity Servicing and Credit Quality
        December 31,2008


2007(Dollars in thousands)Loan PortfolioTotal Loans

$
1,097,708


$
1,464,42930 days past due


11.13
%


6.18
%90 days past due


4.77



2.76Net Chargeoff Rate


7.99



3.58    71




---



##### Table of Contents



Parent
    and Other
      Risk
    Management
    
    Credit risk
    Liquidity risk
    Market risk (including interest rate and foreign exchange risk)
    Operational risk
    Compliance risk         72




---



##### Table of Contents



Credit
    Risk
  and/or
         73




---



##### Table of Contents



12-month
     74




---



##### Table of Contents



At or for the Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Loans and leases outstanding at end of period, net of unearned
    income

$
3,512,048


$
5,696,230


$
5,238,193


$
4,477,943


$
3,440,689Average loans and leases for the period, net of unearned income

$
4,688,148


$
5,486,727


$
4,854,368


$
3,875,394


$
3,312,785Allowance for possible loan and
    lease losses:Balance beginning of period

$
144,855


$
74,468


$
59,223


$
43,441


$
63,005Charge-offs:Commercial, financial and agricultural loans


9,293



9,160



3,503



2,976



3,262Real estate mortgage loans


128,893



52,665



21,418



10,656



15,381Consumer loans


3,985



1,846



328



723



351Commercial Financing:Franchise financing


7,852



1,093



481



870



88Domestic leasing


4,649



6,091



2,709



2,190



6,581Canadian leasing


4,739



3,139



2,371



2,786



2,517Total charge-offs


159,411



73,994



30,810



20,201



28,180Recoveries:Commercial, financial and agricultural loans


128



597



576



767



318Real estate mortgage loans


3,896



7,515



8,595



7,068



3,899Consumer loans


217



197



154



85



169Commercial Financing:Franchise financing


47







35



25



Domestic leasing


451



1,313



923



583



626Canadian leasing


332



477



925



432



323Total recoveries


5,071



10,099



11,208



8,960



5,335Net charge-offs


(154,340
)


(63,895
)


(19,602
)


(11,241
)


(22,845
)Reduction due to sale of loans






(1,225
)






(403
)


(627
)Reduction due to reclassification of loans


(207,628
)






(246
)






(10,808
)Foreign currency adjustment


(80
)


519



(8
)


119



243Provision charged to expense


354,208



134,988



35,101



27,307



14,473Balance end of period

$
137,015


$
144,855


$
74,468


$
59,223


$
43,441Allowance for possible loan and
    lease losses by  category:Commercial, financial and agricultural loans

$
68,255


$
33,667


$
25,593


$
19,927


$
18,126Real estate mortgage loans


55,964



91,934



33,840



23,553



11,330Consumer loans


4,215



1,462



1,510



4,879



4,242Commercial Financing:Franchise financing


7,727



5,961



5,769



4,118



3,728Domestic leasing


854



7,503



4,326



3,144



2,926Canadian






4,328



3,430



3,602



3,089Totals

$
137,015


$
144,855


$
74,468


$
59,223


$
43,441 75




---



##### Table of Contents



At or for the Year Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Per cent of loans and leases to total
    loans  and leases by category:Commercial, financial and agricultural loans


50
%


37
%


39
%


42
%


48
%Real estate mortgage loans


41



40



40



39



33Consumer loans


3



1



1



1



1Commercial Financing:Franchise financing


6



11



9



7



7Domestic leasing






4



5



5



4Canadian






7



6



6



7Ratios:Net charge-offs to average loans and
    leases(1)


3.3
%


1.2
%


0.4
%


0.3
%


0.7
%Allowance for possible loan losses to 
    loans and leases outstanding


3.9
%


2.5
%


1.4
%


1.3
%


1.3
%    76




---



##### Table of Contents



December 31,2008


2007


2006


2005


2004(Dollars in thousands)Accruing loans past due 90 days or more:Commercial, financial and agricultural loans

$
2,964


$
177


$



$



$
Real estate mortgages


41



151











Consumer loans


26



41



73



455



645Commercial financing:Franchise financing


















Domestic leasing






311



83



73



Foreign leasing






177



236



71



123,031



857



392



599



657Nonaccrual loans and leases:Commercial, financial and agricultural loans


124,670



25,797



13,296



17,693



20,394Real estate mortgages


22,387



40,681



18,125



14,237



8,510Consumer loans


1,930



587



696



1,335



208Commercial financing:Franchise financing


13,814



3,630



791



720



1,193Domestic leasing


2,353



2,595



2,495



1,383



1,029Foreign leasing






2,163



1,768



1,452



1,702165,154



75,453



37,171



36,820



33,036Total nonperforming loans and leases


168,185



76,310



37,563



37,419



33,693Nonperforming Loans held for Sale


32,485



79



5,564



965



2,066Other real estate owned & other repossessed assets


19,301



16,885



15,170



15,226



9,427Total nonperforming assets

$
219,971


$
93,274


$
58,297


$
53,610


$
45,186Nonperforming loans and leases to total loans and leases


4.8
%


1.3
%


0.7
%


0.8
%


1.0
%Nonperforming assets to total assets


4.5
%


1.5
%


0.9
%


0.8
%


0.9
%       December 31,


December 31,2008


2007(In millions)   Commercial banking

$
143


$
34   Commercial finance


17



10   Home equity


58



46   Parent and other


2



3    77




---



##### 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

$
1,846,679


$
1,105,209


$
614,983


$
121,856


$
4,631Deposits without a stated maturity


1,171,256



1,171,256











Other borrowings


512,012



313,972



56,024



99,516



42,500Collateralized debt


912,792



137,724



257,857



141,399



375,813Other long-term debt


233,868











30,000



203,868Operating leases


44,974



12,018



21,665



7,250



4,041Total

$
4,721,581


$
2,740,179


$
950,529


$
400,021


$
630,853   and/or
     78




---



##### Table of Contents




    Lines of credit with correspondent banks, including fed funds
    lines: $25 million outstanding out of $35 million
    available but not committed.
    Lines of credit with non-correspondent banks: none outstanding.
    Federal Reserve Bank Discount Window:  none
    outstanding on $312 million of loans and securities pledged 79




---



##### 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, or consider potential rebalancing or other
    management actions that might be taken in the future under
    asset/liability management as interest rates change.
    The tables below show modeled changes in interest rates for
    individual asset classes. Asset classes in our portfolio have
    interest rate sensitivity tied to different underlying indices
    or instruments. While the rate sensitivity of individual asset
    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 between value
    changes of individual assets and liabilities which have not been
    included in the model.
    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. 80




---



##### Table of Contents




    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.
    Normal fluctuations in non-interest sensitive assets and
    liabilities can cause fluctuations in interest-sensitive assets
    and liabilities that can cause the market value of equity to
    fluctuate from year to year.  Economic
    Value Change Method
  Present Value at December 31, 2008Change in Interest Rates of:−2%


−1%


Current


+1%


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

$
4,904,136


$
4,838,154


$
4,773,716


$
4,716,174


$
4,662,779Mortgage servicing rights


14,323



16,414



19,247



21,976



24,332Interest sensitive financial derivatives


(6,319
)


(6,980
)


(8,635
)


(6,759
)


(3,583
)Total interest sensitive assets


4,912,140



4,847,588



4,784,328



4,731,391



4,683,528Interest Sensitive LiabilitiesDeposits


(3,070,857
)


(3,021,400
)


(2,973,910
)


(2,929,121
)


(2,880,449
)Short-term borrowings


(566,343
)


(555,337
)


(543,794
)


(532,693
)


(522,046
)Long-term
    debt(1)


(1,199,695
)


(1,189,026
)


(1,178,132
)


(1,168,694
)


(1,160,356
)Total interest sensitive liabilities


(4,836,895
)


(4,765,763
)


(4,695,836
)


(4,630,508
)


(4,562,851
)Net market value as of December 31, 2008

$
75,245


$
81,825


$
88,492


$
100,883


$
120,677Change from current

$
(13,247
)

$
(6,667
)

$



$
12,391


$
32,185Net 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
)     (1)

    
    Includes certain debt which is categorized as
    collateralized debt in other sections of this
    document. 81




---



##### Table of Contents



GAAP-Based
    Value Change Method
  Present Value at December 31, 2008Change in Interest Rates of:−2%


−1%


Current


+1%


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

$
47,371


$
45,755


$
44,246


$
42,841


$
41,526Mortgage servicing rights


14,323



16,414



19,247



21,156



22,682Interest sensitive financial derivatives


(6,319
)


(6,980
)


(8,635
)


(6,759
)


(3,583
)Total interest sensitive assets


55,375



55,189



54,858



57,238



60,625Interest Sensitive LiabilitiesDeposits(1)


















Short-term
    borrowings(1)


















Long-term
    debt(1)


(89,340
)


(88,080
)


(86,850
)


(85,650
)


(84,470
)Total interest sensitive liabilities


(89,340
)


(88,080
)


(86,850
)


(85,650
)


(84,470
)Net market value as of December 31, 2008

$
(33,965
)

$
(32,891
)

$
(31,992
)

$
(28,412
)

$
(23,845
)Change from current

$
(1,973
)

$
(899
)

$



$
3,580


$
8,147Net market value as of December 31, 2007

$
16,354


$
26,253


$
36,354


$
44,920


$
52,505Change from current

$
(20,000
)

$
(10,101
)

$



$
8,566


$
16,151     (1)

    
    Value does not change in GAAP presentation.  Off-Balance
    Sheet Instruments
      Derivative
    Financial Instruments
   82




---



##### Table of Contents



Operational
    and Compliance Risk
          Regulatory
    Environment
    Item 1A. Risk Factors
 83




---



##### Table of Contents



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
    -s- William I. Miller

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

Gregory F. Ehlinger
    Chief Financial Officer  84




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 
    85




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 
    86




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,


December 31,2008


2007(Dollars in thousands)Assets:Cash and cash equivalents  Note 2

$
233,698


$
78,212Interest-bearing deposits with financial institutions


26,023



31,841Residual interests


9,180



12,047Investment securities- held-to-maturity (Fair value: $17,300 and
    $18,134 at December 31, 2008 and 2007) 
    Note 3


17,258



18,123Investment securities- available-for-sale  Note 3


31,895



59,684Investment securities- other  Note 3


61,056



62,588Loans and leases held for sale  Note 4


841,333



6,134Loans and leases, net of unearned income  Note 4


3,512,048



5,696,230Less: Allowance for loan and lease losses  Note 5


(137,015
)


(144,855
)3,375,033



5,551,375Servicing assets  Note 6


18,116



23,234Accounts receivable


19,706



38,710Accrued interest receivable


19,673



26,291Premises and equipment  Note 7


32,417



38,178Other assets


228,927



219,688Total assets

$
4,914,315


$
6,166,105Liabilities and Shareholders Equity:DepositsNoninterest-bearing

$
319,857


$
306,820Interest-bearing


2,082,809



2,357,050Certificates of deposit over $100,000


615,269



661,6183,017,935



3,325,488Other borrowings  Note 9


512,012



802,424Collateralized debt  Note 10


912,792



1,213,139Other long-term debt  Note 11


233,868



233,873Other liabilities


127,046



131,881Total liabilities


4,803,653



5,706,805Commitments and contingencies  Notes 12, 13, and
    15Shareholders equityPreferred stock, no par value  authorized
    4,000,000 shares; Noncumulative perpetual preferred
    stock  15,000 issued;


14,441



14,441Common stock, no par value  authorized
    200,000,000 shares; issued 29,913,008 shares and
    29,896,464 as of December 31, 2008 and 2007; 389,520 and
    670,169 shares in treasury as of December 31, 2008 and
    2007


116,893



116,542Additional paid-in capital






2,557Accumulated other comprehensive income (loss), net of deferred
    income tax benefit of $5,258 and $4,367 as of December 31,
    2008 and 2007


(7,988
)


1,032Retained earnings


(5,079
)


337,524118,267



472,096Less treasury stock, at cost


(7,605
)


(12,796
)Total shareholders equity


110,662



459,300Total liabilities and shareholders equity

$
4,914,315


$
6,166,105    87




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
  For the Year Ended December 31,2008


2007


2006(Dollars in thousands, except per share)Interest income:Loans and leases

$
356,851


$
494,165


$
435,952Loans and leases held for sale


51,734



6,830



34,372Residual interests


1,221



1,100



1,536Investment securities


8,305



10,315



8,741Federal funds sold


707



619



1,527Total interest income


418,818



513,029



482,128Interest expense:Deposits


102,512



137,360



132,221Other borrowings


23,643



29,064



19,482Collateralized debt


69,789



68,601



53,720Other long-term debt


16,409



15,611



19,266Total interest expense


212,353



250,636



224,689Net interest income


206,465



262,393



257,439Provision for loan and lease losses  Note 5


354,208



134,988



35,101Net interest income after provision for loan and lease losses


(147,743
)


127,405



222,338Other income:Loan servicing fees


11,349



19,275



32,844Amortization of servicing assets  Note 6


(1,124
)


(1,199
)


(21,027
)(Impairment) recovery of servicing assets  Note 6


(4,918
)


(10,946
)


646Net loan administration income


5,307



7,130



12,463Gain from sales of loans


6,032



3,363



1,766Trading (losses) gains


(3,053
)


1,329



1,282Other than temporary impairment on securities


(23,117
)






Derivative (losses) gains, net


(9,134
)


(9,720
)


3,820Other


25,006



25,282



25,2901,041



27,384



44,621Other expense:Salaries


83,538



97,028



107,864Pension and other employee benefits


23,915



27,519



27,602Office expense


8,208



9,316



9,130Premises and equipment


35,296



23,539



22,748Marketing and development


4,748



5,532



3,041Professional fees


14,889



8,915



10,738Other


44,169



27,918



29,565214,763



199,767



210,688(Loss) income before income taxes from continuing operations


(361,465
)


(44,978
)


56,271Provision for income taxes


(20,985
)


(20,848
)


18,870Net (loss) income from continuing operations


(340,480
)


(24,130
)


37,401Loss from discontinued operations, net of $20,581 and $23,832
    income tax benefit in 2007 and 2006, respectively






(30,543
)


(35,674
)Net (loss) income

$
(340,480
)

$
(54,673
)

$
1,727Loss per share from continuing operations: 
    Note 19Basic

$
(11.60
)

$
(0.87
)

$
1.27Diluted

$
(11.60
)

$
(0.90
)

$
1.25Loss per share:  Note 19Basic

$
(11.60
)

$
(1.91
)

$
0.06Diluted

$
(11.60
)

$
(1.94
)

$
0.05Dividends per share

$



$
0.48


$
0.44    88




---



##### 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, 2006

$
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































2,387Stock: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 tax liability


1,743



1,743Cash 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
)Stock:Purchase of 673,615 shares


(12,804
)






































(12,804
)Sales of 164,506 shares


1,994



























(1,626
)


350







3,270rBalance at December 31, 2007

$
459,300


$
337,524


$
9,158


$
(1,445
)

$
(1,576
)

$
(5,105
)

$



$
2,557


$
116,542


$
14,441


$
(12,796
)Net loss


(340,480
)


(340,480
)Unrealized loss on investment securities net of $177 tax benefit


(267
)










(267
)Unrealized gain on interest rate swap net of $923 tax liability


1,385















1,385Foreign currency adjustment


(9,069
)






(9,069
)Defined benefit retirement plans:Minimum pension and SERP liability, net of $713 tax benefit


(1,069
)


















(1,069
)Other comprehensive income


(9,020
)Total comprehensive income


(349,500
)Subsidiary stock purchase


(2,313
)


























(2,313
)Stock compensation expense


2,375



























2,375Stock :Purchase of 15,082 shares


(247
)






































(247
)Sales of 312,275 shares


1,047



(2,123
)






















(2,619
)


351







5,438Balance at December 31, 2008

$
110,662


$
(5,079
)

$
89


$
(1,712
)

$
(191
)

$
(6,174
)

$



$



$
116,893


$
14,441


$
(7,605
)    89




---



##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2008


2007


2006(Dollars in thousands)(Loss) income from continuing operations

$
(340,480
)

$
(24,130
)

$
37,401(Loss) from discontinued operations






(30,543
)


(35,674
)Net (loss) income


(340,480
)


(54,673
)


1,727Adjustments to reconcile net (loss) income to cash provided
    by operating activities:Depreciation, amortization, and accretion, net


16,203



10,413



10,141Other than temporary impairment


23,117







Amortization and impairment of servicing assets


6,042



12,395



61,370Provision for loan and lease losses


354,208



134,988



35,288Deferred income tax


(18,853
)


(34,582
)


(109,018
)Gain on sale of mortgage servicing assets










17,961Gain from sales of loans held for sale


(6,032
)


9,056



(39,754
)Originations and purchases of loans held for sale


(562,498
)


(559,298
)


(7,237,809
)Proceeds from sales and repayments of loans held for sale


646,862



791,712



8,262,743Proceeds from sale of mortgage servicing assets






139



267,094Net (increase) decrease in residuals


992



(627
)


13,332Net decrease (increase) in accounts receivable


19,004



169,875



(96,952
)Other, net


(3,790
)


(49,706
)


(100,215
)Net cash provided by operating activities


134,775



429,692



1,085,908Investing activities:Proceeds from maturities/calls of investment securities:Held-to-maturity


5,406



2,036



2,313Available-for-sale


5,887



3,658



13,112Purchase of investment securities:Held-to-maturity


(4,132
)


(2,167
)


(4,114
)Available-for-sale


(526
)


(17,455
)


(23,197
)Net decrease (increase) in interest-bearing deposits


5,818



21,265



(1,976
)Net decrease (increase) in loans, excluding sales


908,961



(485,986
)


(820,664
)Other, net


(838
)


(9,100
)


(11,376
)Net cash provided (used) by investing activities


920,576



(487,749
)


(845,902
)Financing activities:Net decrease in deposits


(307,553
)


(226,028
)


(347,477
)Net (decrease) increase in other borrowings


(290,412
)


199,981



(395,001
)Repayments of long-term debt


(5
)


(16
)


(14
)Proceeds from issuance of collateralized debt


202,284



364,579



931,406Repayments of collateralized debt


(501,993
)


(324,505
)


(427,373
)Proceeds from the issuance of trust preferred securities










61,500Redemption of trust preferred securities










(77,509
)Proceeds from the sale of noncumulative perpetual preferred stock










14,518Subsidiary stock purchase


(2,313
)






Purchase of treasury stock for employee benefit plans


(247
)


(12,804
)


(4,363
)Proceeds from sale of stock for employee benefit plans


1,047



2,085



7,740Dividends paid






(15,381
)


(13,110
)Net cash used in financing activities


(899,192
)


(12,089
)


(249,683
)Effect of exchange rate changes on cash


(673
)


2,593



(44
)Net increase (decrease) in cash and cash equivalents


155,486



(67,553
)


(9,721
)Cash and cash equivalents at beginning of period


78,212



145,765



155,486Cash and cash equivalents at end of period

$
233,698


$
78,212


$
145,765Supplemental disclosures of cash flow information:Cash flow during the period:Interest paid

$
198,270


$
251,019


$
239,934Income taxes (received) paid

$
(3,324
)

$
13,098


$
93,687Noncash transactions:Adoption of FAS 156

$



$
2,905


$
Reclassification of loans to held for sale

$
803,688Reclassification of loans from held for sale to loans held for
    investment

$



$
166,773


$
Other real estate owned

$
18,741


$
13,544


$
11,675Conversion of trust preferred stock to common stock

$



$



$
20,248    90




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Summary
    of Significant Accounting Policies  Consolidation:
      Capital, Liquidity, and Going Concern
    Considerations:
       91




---



##### Table of Contents



Use of Estimates:
  Foreign Currency:
  Cash and Cash Equivalents:
  Investment Securities:
  Residual Interests: No. 99-20,
 92




---



##### Table of Contents



Loans Held For Sale:
  Loans:
    Allowance for Loan and Lease Losses:
      case-by-case
  Repurchase Liabilities:
 93




---



##### Table of Contents



Servicing Assets:
    Incentive Servicing Fees:
  No. D-96,
 94




---



##### Table of Contents



Derivative Instruments:
      Premises and Equipment:
  Other Assets:
  Income Taxes:
  Recent Accounting Developments: No. 02-3,
   95




---



##### Table of Contents



Note 2 
    Restrictions
    on Cash and Dividends           96




---



##### Table of Contents



Note 3 
    Investment
    Securities    Gross


GrossAmortized


Unrealized


Unrealized


Fair


CarryingCost


Gains


Losses


Value


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

$
13,054


$
266


$



$
13,320


$
13,054Obligations of states and political subdivisions


3,320











3,320



3,320Mortgage-backed securities


884







(224
)


660



884Total held-to-maturity


17,258



266



(224
)


17,300



17,258Available-for-Sale:Mortgage-backed securities


19,490



1,794



(1,170
)


20,114



20,114Other


15,257







(3,476
)


11,781



11,781Total available-for-sale


34,747



1,794



(4,646
)


31,895



31,895Federal Home Loan Bank and Federal Reserve Bank stock


61,056











61,056



61,056Total investment securities

$
113,061


$
2,060


$
(4,870
)

$
110,251


$
110,209  97




---



##### Table of Contents



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     Securities with Unrealized Losses at December 31,
    2008less 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

$
444


$
(2
)

$
7,152


$
(1,168
)

$
7,596


$
(1,170
)Other securities










11,781



(3,476
)


11,781



(3,476
)Total securities with unrealized losses

$
444


$
(2
)

$
18,933


$
(4,644
)

$
19,377


$
(4,646
)   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
)      98




---



##### Table of Contents



Amortized


FairCost


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

$
5,882


$
5,938Due after one years through five years


7,262



7,471Due after five years through ten years


400



400Due after ten years


2,830



2,83116,374



16,640Mortgage-backed securities


884



66017,258



17,300Available-for-Sale:Due in one year or less


3,863



3,742Due after ten years


11,394



8,03915,257



11,781Mortgage-backed securities


19,490



20,11434,747



31,895Federal Home Loan Bank and Federal Reserve Bank stock


61,056



61,056Total investment securities

$
113,061


$
110,251    99




---



##### Table of Contents



Note 4 
    Loans and
    Leases Held for Sale and Loans and Leases  Loans and
    Leases Held for Sale
    Loans and
    Leases
    December 31,2008


2007(Dollars in thousands)Commercial, financial and agricultural

$
1,862,877


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


466,598



586,037Real estate-mortgage


523,837



1,691,450Consumer


24,022



32,232Commercial financingFranchise financing


922,429



925,741Domestic leasing


11,305



306,301Foreign leasing






462,036Unearned incomeFranchise financing


(297,600
)


(306,681
)Domestic leasing


(1,420
)


(42,723
)Foreign leasing






(57,614
)Total

$
3,512,048


$
5,696,230          100




---



##### Table of Contents



December 31,2008


2007(Dollars in thousands)Minimum lease payments receivable

$
11,096


$
757,609Initial direct costs


209



10,728Less unearned income


(1,420
)


(100,337
)Less allowance for lease losses


(854
)


(11,206
)Net investment in leases

$
9,031


$
656,794   Note 5 
    Allowance
    for Loan and Lease Losses    December 31,2008


2007


2006(Dollars in thousands)Balance at beginning of year

$
144,855


$
74,468


$
59,223Provision for loan and lease losses


354,208



134,988



35,101Charge-offs


(159,411
)


(73,994
)


(30,810
)Recoveries


5,071



10,099



11,208Reduction due to reclassification to loans held for sale


(207,628
)


(1,225
)


(246
)Foreign currency adjustment


(80
)


519



(8
)Balance at end of period

$
137,015


$
144,855


$
74,468     December 31,2008


2007(Dollars in thousands)Impaired loans with valuation reserve

$
66,891


$
22,889Impaired loans with no valuation reserve


71,593



4,420Total impaired loans

$
138,484


$
27,309Valuation reserve on impaired loans

$
18,917


$
6,519      101




---



##### Table of Contents



December 31,2008


2007(Dollars in thousands)Accruing loans past due 90 days or more

$
3,031


$
857Nonaccrual loans and leases


165,154



75,453Total nonperforming loans and leases

$
168,185


$
76,310   Note 6 
    Servicing
    Assets        December 31,2008


2007And the Year Then Ended(Dollars in thousands)Beginning balance

$
19,724


$
27,725Gain from initial adoption of SFAS 156






2,905Changes in fair value:Due to changes in valuation inputs or
    assumptions(1)


(360
)


(1,589
)Other changes in fair
    value(2)


(4,560
)


(9,317
)Mortgage servicing assets

$
14,804


$
19,724     (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. 102




---



##### Table of Contents



December 31,2008


2007And the Year Then Ended(Dollars in thousands)Beginning balance

$
3,510


$
31,949Initial adoption of SFAS 156






(27,725
)Additions


924



530Sales






(5
)Amortization


(1,124
)


(1,199
)(Impairment) recovery


2



(40
)Mortgage servicing assets

$
3,312


$
3,510     December 31,2008


2007And the Year Then EndedBalance at beginning of year

$
191


$
483Transfer of assets from amortizing to fair value






(332
)Impairment (recovery)


(2
)


40Valuation allowance from continuing operations

$
189


$
191     Fair value of mortgage servicing assets

$
19,145Constant prepayment speed


18.04
%Impact on fair value of 10% adverse change

$
(905
)Impact on fair value of 20% adverse change


(1,712
)Discount rate


11.68
%Impact on fair value of 10% adverse change

$
(434
)Impact on fair value of 20% adverse change


(821
)       2008

2007Prepayment rates (range):


7 to 54
%


3 to 35
%Discount rates (range):


10 to 16
%


9 to 15
%  103




---



##### Table of Contents



Note 7 
    Premises and Equipment
    December 31,2008


2007


Useful Lives(Dollars in thousands)Land

$
3,283


$
3,302



n/aBuilding and leasehold improvements


31,464



30,827



7-40 yearsFurniture and equipment


36,389



54,611



3-10 years71,136



88,740Less accumulated depreciation


(38,719
)


(50,562
)Total

$
32,417


$
38,178     Note 8 
    Lease
    Obligations      (Dollars in thousands)Year Ended December 31,2009

$
12,0182010


11,4662011


10,1992012


4,4592013


2,791Thereafter


4,695Total minimum rental payments

$
45,628Total payments from subleases


(9,331
)Net minimum rental payments

$
36,297   Note 9 
    Other
    borrowings    December 31,2008


2007(Dollars in thousands)Federal Home Loan Bank borrowings

$
487,012


$
574,424Federal funds


25,000



228,000Total

$
512,012


$
802,424Weighted average interest rate


4.48
%


5.20
%    104




---



##### Table of Contents



Note 10 
    Collateralized
    Debt        WeightedAverageInterest Rate atContractual


December 31,


December 31,


December 31,Maturity


2008


2008


2007(Dollars in thousands)Commercial finance line of businessCanadian asset backed notes:Note 1














46,183Note 2














192,103Note 3














4,120Home equity line of business2004-1
    variable rate asset backed notes


12/2024-12/2034



2.0



52,963



58,5082005-1
    variable and fixed rate asset backed notes


6/2025-6/2035



4.6



119,583



145,8052006-1
    variable and fixed rate asset backed notes


9/2035



4.9



139,117



165,1152006-2
    variable and fixed rate asset backed notes


2/2036



4.6



156,902



184,3132006-3
    variable and fixed rate asset backed notes


1/2037-9/2037



4.2



141,839



168,3242007-1
    variable and fixed rate asset backed notes


8/2037



3.9



215,435



248,6682008-1
    variable and fixed rate asset backed
    notes(1)


9/2048



7.2



6,745



2008-2 fixed
    rate asset backed
    notes(1)


9/2048



19.0



72,749



2008-3 fixed
    rate asset backed
    notes(1)


9/2048



19.4



7,459



Total









$
912,792


$
1,213,139     (1)

    
    Shown at fair value in accordance with SFAS No. 159. 105




---



##### Table of Contents



Note 11 
    Other
    Long-Term Debt        InterestRate at





Subordinated DebtOrigination


December 31,


Maturity


December 31,Name

Date


2007


Date


2008


2007


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



4.36



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 basisIFC 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 basisIFC 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 basisIFC Capital Trust XI


Dec 2006



3.93



Mar 2037



15,464



15,464


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


$
203,868   Note 12 
    Commitments
    and Contingencies  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
 106




---



##### Table of Contents



Kossler Kossler
  Hobson Kossler Hobson Hobson
  Hobson Kossler Hobson Hobson Kossler
  Hobson Kossler Kessler v. RFC, et al Kessler Kessler Kessler Kessler Kessler Kessler Kessler
  (Chatfield v. Irwin Union Bank and Trust Company,
    et al.) Hobson Kossler
    Hobson Kossler
 107




---



##### Table of Contents



Litigation
    in Connection with Loans Purchased from Freedom Mortgage
    Corporation.
  Irwin Union Bank, et al. v.
    Freedom Mortgage Corp.
  Freedom Mortgage Corporation v.
    Irwin Financial Corporation et al.
    Homer v.
    Sharp
    EverBank v.
    Irwin Mortgage Corporation and Irwin Union Bank &
    Trust Company Demand for Arbitration
   108




---



##### Table of Contents



Note 13 
    Financial
    Instruments With Off-Balance Sheet Risk      Note 14 
    Derivative
    Financial Instruments       109




---



##### Table of Contents



Asset Derivatives


Liability DerivativesDecember 31,


December 31,2008


2007


2008


2007Balance





Balance





Balance





BalanceSheet





Sheet


Fair


Sheet


Fair


Sheet


FairLocation


Fair Value


Location


Value


Location


Value


Location


Value(In thousands)








(In thousands)Derivatives designated as hedging instruments under Statement
    133Interest rate contracts


Other assets


$




Other assets


$




Other Liabilities


$




Other Liabilities


$
2,708Derivatives not designated as hedging instruments under
    Statement 133Interest rate contracts


Other assets


$
1



Other assets


$
12



Other Liabilities


$
8,636



Other Liabilities


$
2,350Foreign exchange contracts


Other assets







Other assets



1,574



Other Liabilities







Other Liabilities



Total





$
1






$
1,586






$
8,636






$
2,350Total derivatives





$
1






$
1,586






$
8,636






$
5,058     Amount of Gain or (Loss)Amount of Gain or (Loss)

Location of Gain or (Loss)

Reclassified fromRecognized in OCI on Derivative

Reclassified from

Accumulated OCI IntoDerivates In Statement 133 Cash

(Effective Portion)

Accumulated OCI Into

Income (Effective Portion)Flow Hedging Relationships

2008

2007

Income (Effective Portion)

2008

2007(In thousands)



(In thousands)Interest rate contracts

$
507


$
(1,758
)


Interest Expense


$
(877
)

$
(212
)   Amount of Gain or (Loss)Derivates Not Designated as Hedging

Location of Gain or (Loss)


Reconized in Income on DerivativesInstuments under Statement 133

Reconized in Income on Derivatives


2008


2007(In thousands)Interest rate contracts


Derivative gain (loss
)

$
(8,185
)

$
(2,775
)Foreign exchange contracts






1,880



(6,945
)Interest rate contracts


Gain on sale of loans



(9
)


78Total





$
(6,314
)

$
(9,642
)     Note 15 
    Guarantees   110




---



##### Table of Contents



and/or
    December 31,2008


2007(Dollars in thousands)Balance at beginning of year

$
25,124


$
16,863(Recovery) provision


(5,164
)


15,017Repurchases, settlements, make wholes


(9,542
)


(6,756
)Balance at end of period

$
10,418


$
25,124Gross principal amount of loans repurchased, settled, and for
    which a make-whole payment was made to purchasers

$
28,412


$
19,141   agreed-upon 60-180 days
   111




---



##### Table of Contents



Note 16 
    Regulatory
    Matters        To Be WellCapitalized UnderFor Capital


Prompt CorrectiveActual


Adequacy Purposes


Action ProvisionsAmount


Ratio


Amount


Ratio


Amount


Ratio(Dollars in thousands)As of December 31,2008Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation

$
309,726



6.6
%

$
373,138



8.0
%


N/A



N/AIrwin Union Bank and Trust


385,136



9.3



331,300



8.0



414,125



10.0Irwin Union Bank, F.S.B.


57,232



11.2



40,913



8.0



51,141



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


154,863



3.3



186,569



4.0



N/A



N/AIrwin Union Bank and Trust


302,397



7.3



165,650



4.0



248,475



6.0Irwin Union Bank, F.S.B.


50,839



9.9



N/A







30,685Tier I Capital (to Average Assets):Irwin Financial Corporation


154,863



3.1



202,046



4.0



N/A



N/AIrwin Union Bank and Trust


302,397



6.7



179,935



4.0



224,919



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


50,839



8.2



24,975



4.0



31,218



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


50,839



8.2



9,450



1.5



N/A



N/A 112




---



##### Table of Contents



To Be WellCapitalized UnderFor Capital


Prompt CorrectiveActual


Adequacy Purposes


Action ProvisionsAmount


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
%

$
487,509



8.0
%


N/A



N/AIrwin 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



N/A



N/AIrwin 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



N/A



N/AIrwin 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.


59,500



9.2



9,695



1.5



N/A



N/A        113




---



##### Table of Contents



Note 17 
    Fair
    Value Measurement  No. 02-3, 02-3),
    Fair
    Value Hierarchy
    
    Level 1  Quoted prices for identical instruments
    in active markets.
    Level 2  Quoted prices for similar instruments
    in active markets; quoted prices for identical or similar
    instruments in markets that are not active; and model-derived
    valuations in which all significant inputs and significant value
    drivers are observable in active markets.
    Level 3  Model derived valuations in which one
    or more significant inputs or significant value drivers are
    unobservable. 114




---



##### Table of Contents



Level 1


Level 2


Level 3


Total(Dollars in thousands)December 31, 2008AssetsResidual interests

$



$



$
9,180


$
9,180Investment securities 
    available-for-sale






19,804



12,091



31,895Servicing assets










14,804



14,804Total assets

$



$
19,804


$
36,075


$
55,879LiabilitiesCollateralized debt

$



$



$
86,953


$
86,953Derivatives






8,635







8,635Total liabilities

$



$
8,635


$
86,953


$
95,588       NetRealized/UnrealizedGain(losses)


Purchases,





Unrealized GainsIncluded in


Issuances and


December 31,


(Losses) StillJanuary 1, 2008


Earnings
    (1)(2)


Settlements


2008


Held(3)(Dollars in thousands)AssetsResidual interests

$
12,047


$
(2,727
)

$
(140
)

$
9,180


$
(3,096
)Investment securities -
    available-for-sale


37,682



(25,591
)






12,091



(2,858
)Servicing assets


19,724



(4,920
)






14,804



(3,150
)Total assets

$
69,453


$
(33,238
)

$
(140
)

$
36,075


$
(9,104
)LiabilitiesCollateralized debt

$



$
(3,966
)

$
90,919


$
86,953


$
278Total liabilities

$



$
(3,966
)

$
90,919


$
86,953


$
278     (1)

    
    Unrealized gains (losses) on residual interests are recorded in
    Trading gains (losses) on the statement of income(2)

    
    Unrealized gains (losses) on servicing assets are recorded in
    Amortization and impairment of servicing assets on
    the statement of income(3)

    
    Represents the amount of total gains or losses for the period,
    included in earnings, attributable to the change in unrealized
    gains (losses) relating to assets classified as Level 3 that are
    still held at December 31, 2008 115




---



##### Table of Contents



Level 1


Level 2


Level 3


Total(Dollars in thousands)December 31, 2008AssetsLoans held for
    investment(1)

$



$



$
106,451


$
106,451Loans and leases held for
    sale(2)






803,688



37,645



841,333Mortage servicing assets










3,312



3,312Total assets

$



$
803,688


$
147,408


$
951,096     (1)

    
    Represents the carrying amount of impaired loans (i.e., unpaid
    principal balance less specific loan loss reserves) with
    impairment calculated based on appraised collateral values(2)

    
    A loss of $5 million was recorded to recognize these loans
    at lower of cost or fair value.  Determination
    of Fair Value
  Loans held for sale:
  Residual interests: EITF 99-20.
  Servicing assets:
  Investment securities:
  Derivative instruments:
  Collateralized Debt:
 116




---



##### Table of Contents



Note 18 
    Equity
    Based Compensation          2008Weighted AverageGrant Date FairNumber of Shares


ValueUnvested at the beginning of the year


140,261


$
18.30Awarded


207,588



9.62Vested


(69,998
)


12.04Forfeited


(55,817
)


14.91Unvested at the end of the year


222,034


$
13.01      117




---



##### Table of Contents



For The Year Ended December 31,2008


2007


2006Risk-free interest rates


2.99
%


4.58
%


4.92
%Dividend yield


3.00
%


2.04
%


2.40
%Expected volatility


35
%


31
%


32
%Expected lives (in years)


6



6



6     WeightedAverage


AggregateWeighted


Remaining


IntrinsicNumber of


Average


Contractual


Value as ofShares


Exercise Price


Term


12/31/2008(In thousands)Outstanding at the beginning of the year


2,500,057


$
20.26Granted


191,604



9.93Exercised


0



0.00Canceled


(410,147
)


20.62Outstanding at the end of the year


2,281,514



19.32



4.62


$
Exercisable at the end of the year


2,036,674


$
19.90



4.17


$
  118




---



##### Table of Contents



Note 19 
    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 31,2008Net loss allocable to common shareholders:

$
(340,480
)






(340,480
)





$
(340,480
)Shares










29,343







29,343Per-share amount:









$
(11.60
)





$
(11.60
)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
)

$
0.05     Note 20 
    Income
    Taxes   119




---



##### Table of Contents



2008


2007


2006(Dollars in thousands)Current:Federal

$
1,915


$
11,969


$
18,915State


106



(2,067
)


5,809Foreign


(4,153
)


3,832



1,695(2,132
)


13,734



26,419Deferred:Federal


(3,960
)


(29,975
)


(6,199
)State


(18,935
)


(2,941
)


(1,476
)Foreign


4,042



(1,666
)


126(18,853
)


(34,582
)


(7,549
)Income tax expense:Federal


(2,045
)


(18,006
)


12,716State


(18,829
)


(5,008
)


4,333Foreign


(111
)


2,166



1,821$
(20,985
)

$
(20,848
)

$
18,870     2008


2007


2006(Dollars in thousands)Income taxes computed at the statutory rate

$
(126,513
)

$
(15,742
)

$
19,695Increase (decrease) resulting from:Nontaxable interest from investment securities and loans


(101
)


(117
)


(124
)Nontaxable income from bank owned life insurance


(389
)


(707
)


State tax, net of federal benefit


(12,239
)


(3,255
)


2,816Change in federal deferred tax resulting from tax rate change






(547
)


Foreign operations


105



(180
)


(673
)Reserve
    adjustment(1)


72



87



(611
)Federal tax credits


(1,561
)


(822
)


(2,113
)Valuation
    allowance(2)


119,300Other items  net


341



435



(120
)$
(20,985
)

$
(20,848
)

$
18,870     (1)

    
    Tax reserves are adjusted as we align our tax liability to a
    level commensurate with our current identified tax exposures.(2)

    
    A valuation allowance of $119 million was recorded as of
    December 31, 2008 to reduce our net deferred tax asset to
    an amount more likely than not to be realized under
    SFAS 109. 120




---



##### Table of Contents



December 31,2008


2007(Dollars in thousands)Deferred tax assets:Reserve for credit losses

$
68,281


$
74,995Deferred securitization income


6,917



Deferred compensation


2,511



2,614Retirement benefits


6,007



4,140Leasing






2,776Mark to market


10,726



2,022Capital loss
    carryforward(1)


4,459



4,513Net operating loss
    carryforwards(2)


124,975



3,560Federal credit
    carryforwards(3)


3,120



Other


9,214



7,509236,210



102,129Deferred tax liabilities:Mortgage servicing


(5,924
)


(7,712
)Deferred securitization income






(1,364
)Deferred origination fees and costs


(3,574
)


(7,123
)Other


(1,736
)


(2,301
)(11,234
)


(18,500
)Valuation allowance


(119,300
)


Net deferred tax asset

$
105,676


$
83,629     (1)

    
    As of December 31, 2008, we have $4.5 million (after
    tax) of U.S. capital loss carryforwards which expire in 2009
    ($0.2 million), 2010 ($0.6 million), 2011
    ($2.4 million) and 2012 ($1.2 million).(2)

    
    As of December 31, 2008, we have $125 million
    (after-tax) of U.S. net operating loss carryforwards which
    expire in 2027 ($7 million) and 2028 ($118 million).(3)

    
    As of December 31, 2008, we have $3.1 million
    (after  tax) of U.S. tax credit carryforwards which
    expire in 2027 ($1.7 million) and 2028 ($1.4 million)   121




---



##### Table of Contents



2008(Dollars in thousands)


2007Balance at January 1

$
(13,009
)

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


(5,280
)


(5,206
)Expiration of the statute of limitations


2,856



2,892Balance at December 31

$
(15,433
)

$
(13,009
)         2005-2007 2003-2007.
  Note 21 
    Employee
    Retirement Plans         122




---



##### Table of Contents



Pension Benefits


SERP BenefitsDecember 31,


December 31,2008


2007


2008


2007(Dollars in thousands)


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

$
46,156


$
41,443


$
5,564


$
7,314Service cost


4,171



4,054



101



104Interest cost


2,761



2,425



332



313Actuarial (gain) loss


436



(824
)


130



(1,938
)Benefits paid


(1,149
)


(942
)


(256
)


(229
)Curtailment


(10,174
)






(246
)


Benefit obligation at December 31,


42,201



46,156



5,625



5,564Change in plan assets:Fair value plan assets at January 1,


33,105



31,934







Actual return on plan assets


(9,405
)


2,113







Benefits paid


(1,148
)


(942
)


(256
)


(229
)Employer contributions










256



229Fair value plan assets at December 31,


22,552



33,105







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

$
(19,649
)

$
(13,051
)

$
(5,625
)

$
(5,564
)     Employee
    pension plan
  2008


2007


2006(Dollars in thousands)Service cost

$
4,171


$
4,054


$
3,723Interest cost


2,761



2,425



2,077Expected return on plan assets


(2,591
)


(2,507
)


(2,252
)Amortization of prior service cost


46



37



37Amortization of actuarial loss


355



545



871Curtailment loss


152







Net pension cost

$
4,894


$
4,554


$
4,456   Supplemental
    Executive Retirement Plan
  2008


2007


2006(Dollars in thousands)Service cost

$
101


$
104


$
235Interest cost


332



313



377Transition obligation


6



11



11Amortization of prior service cost


1



1



1Amortization of actuarial loss










97Curtailment loss


(215
)






Net pension cost

$
225


$
429


$
721  123




---



##### Table of Contents



Pension Benefits


SERP BenefitsYear Ending December 31,


Year Ending December 31,2008


2007


2008


2007(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
)Prior service cost






(199
)






(33
)Accumulated loss


(10,104
)


(8,200
)


(187
)


(56
)Accumulated other comprehensive income

$
(10,104
)

$
(8,399
)

$
(187
)

$
(95
)Cumulative employer contributions in excess of net periodic
    benefit cost


(9,545
)


(4,652
)


(5,438
)


(5,469
)Net amount recognized in statement of financial position

$
(19,649
)

$
(13,051
)

$
(5,625
)

$
(5,564
)Changes recognized in accumulated other comprehensive
    incomeNet loss (gain) arising during the period

$
2,258


$
(431
)

$
(116
)

$
(1,938
)Amortization of initial net asset









$
(6
)

$
(11
)Amortization of other recognition of prior service cost


(46
)


(37
)

$
(1
)

$
(1
)Amortization of net gain


(355
)


(545
)Curtailment (gain) loss


(152
)






215



Net increase to accumulated other comprehensive income

$
1,705


$
(1,013
)

$
92


$
(1,950
)   Weighted
    average assumptions:
  2008


2007


2008


2007To determine benefit obligations at December 31,Discount rate


6.00
%


6.00
%


6.00
%


6.00
%Rate of average compensation increases


4.18



4.18



4.25



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


6.00
%


5.75
%


6.00
%


5.75
%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 31,2008


2007


2008


2007(Dollars in thousands)


(Dollars in thousands)Projected benefit obligation

$
42,201


$
46,156


$
5,625


$
5,564Accumulated benefit obligation


42,201



37,243



5,625



5,172Fair value of assets


22,552



33,105







    124




---



##### Table of Contents



Plan
    Assets
    Percentage of Plan Assets


Target AllocationAsset Category

2008


2007


2009Equity securitiesDomestic


37
%


50
%


40
%International


16



11



20Fixed income securities


29



23



24Cash equivalents






16



1Alternative investments


18







15100
%


100
%


100
%       Cash
    Flows
      Pension Benefits


SERP BenefitsExpected benefit payments (in thousands):2009

$
1,164


$
2582010


1,363



2532011


1,531



2482012


1,669



3372013


1,737



348Years
    2014-2018


10,475



1,599   Note 22 
    Industry
    Segment Information   125




---



##### Table of Contents



ConsolidatedCommercial


Commercial





Parent and


Continuing


DiscontinuedBanking


Finance


Home Equity


Other


Operations


Operations


Consolidated(Dollars in thousands)2008Net interest income

$
118,019


$
83,487


$
80,370


$
(75,411
)









$
206,465Intersegment interest


(12,919
)


(40,847
)


(16,337
)


70,103











Provision for loan and lease losses


(89,561
)


(60,159
)


(204,488
)














(354,208
)Other revenue


17,734



13,240



(260
)


(29,673
)










1,041Intersegment revenues










85



(85
)










Total net revenues


33,273



(4,279
)


(140,630
)


(35,066
)










(146,702
)Other expense


95,534



33,864



67,830



17,535











214,763Intersegment expenses


4,400



1,378



2,515



(8,293
)










Income (loss) before taxes


(66,661
)


(39,521
)


(210,975
)


(44,308
)










(361,465
)Income taxes


























(20,985
)Net income (loss)

























$
(340,480
)Assets at December 31,

$
2,870,877


$
676,399


$
1,106,305


$
260,734










$
4,914,3152007Net interest income

$
121,490


$
93,092


$
118,419


$
(70,608
)

$
262,393


$
(1,826
)

$
260,567Intersegment interest


(2,561
)


(40,371
)


(23,324
)


66,256











Provision for loan and lease losses


(18,241
)


(13,505
)


(103,242
)






(134,988
)






(134,988
)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


















(20,848
)


(20,581
)


(41,429
)Net income (loss)

















$
(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

$
119,578


$
72,088


$
130,792


$
(65,019
)

$
257,439


$
23,698


$
281,137Intersegment interest


5,148



(29,543
)


(34,724
)


59,119











Provision for loan and lease losses


(5,734
)


(6,701
)


(22,659
)


(7
)


(35,101
)






(35,101
)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


















18,870



(23,832
)


(4,962
)Net income (loss)

















$
37,401


$
(35,674
)

$
1,727Assets at December 31,

$
3,103,547


$
1,073,552


$
1,617,219


$
443,640










$
6,237,958  126




---



##### Table of Contents



Note 23 
    Fair
    Value of Financial Instruments  Cash and cash equivalents:
  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: EITF 99-20.
  Servicing assets:
  Investment securities:
  Derivative instruments:
  Collateralized Debt:
  Other Long-term Debt:
   127




---



##### Table of Contents



2008


2007Carrying


Estimated Fair


Carrying


Estimated FairAmount


Value


Amount


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

$
233,698


$
233,698


$
78,212


$
78,212Interest-bearing deposits with financial institutions


26,023



26,057



31,841



31,833Residual Interests


9,180



9,180



12,047



12,047Investment securities


110,209



110,251



140,395



140,406Loans and leases held for sale


841,333



841,333



6,134



6,248Loans and leases, net of allowance


3,375,033



3,218,678



5,551,375



5,601,293Servicing asset


18,116



19,145



23,234



24,766Derivatives


1



1



1,578



1,578Assets held for sale


NA



NA



3,814



3,814Financial liabilities:Deposits


3,017,935



2,973,910



3,325,488



3,227,564Other borrowings


512,012



543,794



802,424



812,751Collateralized debt


912,792



912,792



1,213,139



1,226,835Other long-term debt


233,868



93,378



233,873



235,261Derivatives


8,497



8,497



5,065



5,065      128




---



##### Table of Contents



Note 24 
    Irwin
    Financial Corporation (Parent Only) Financial
    Information    Condensed
    Balance Sheets
  December 31,2008


2007(Dollars in thousands)Assets:Cash and short-term investments

$
777


$
1,227Investment in bank subsidiaries


357,703



639,854Investments in non-bank subsidiaries


3,197



3,385Loans to bank subsidiaries


46,044



42,497Other assets


10,236



27,809$
417,957


$
714,772Liabilities:Long-term debt

$
233,868


$
233,868Other liabilities


73,427



21,604307,295



255,472Shareholders equity:Perpetual Preferred Stock


14,441



14,441Common stock


116,893



116,542Other shareholders equity


(20,672
)


328,317110,662



459,300$
417,957


$
714,772  129




---



##### Table of Contents



Condensed
    Statements of Income
  For the Year Ended December 31,2008


2007


2006(Dollars in thousands)Income:Dividends from non-bank subsidiaries

$
621


$
951


$
348Dividends from bank subsidiary






15,000



15,000Interest income


2,627



3,569



3,443Other


15,679



14,846



11,24918,927



34,366



30,040Expenses:Interest expense


16,467



17,302



20,082Salaries and benefits


14,492



13,705



11,416Other


5,528



4,991



5,75436,487



35,998



37,252(Loss) income before income taxes and equity in undistributed
    income of subsidiaries


(17,560
)


(1,632
)


(7,212
)Income tax expense (benefit), less amounts charged to
    subsidiaries


41,802



(6,063
)


(10,230
)(59,362
)


4,431



3,018Equity in undistributed income (loss) of subsidiaries


(281,118
)


(59,104
)


(1,291
)Net (loss) income

$
(340,480
)

$
(54,673
)

$
1,727  130




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##### Table of Contents



Condensed
    Statements of Cash Flows
  For the Year Ended December 31,2008


2007


2006(Dollars in thousands)Net (loss) income

$
(340,480
)

$
(54,673
)

$
1,727Adjustments to reconcile net (loss) income to cash provided by
    operating activities:Equity in undistributed loss of subsidiaries


281,118



59,104



1,291Depreciation and amortization


230



363



2,853Increase (decrease) in taxes payable


48,537



(4,484
)


(8,800
)Decrease (increase) in interest receivable


60



46



(25
)Increase (decrease) in interest payable


13,729







(506
)Net change in other assets and other liabilities


11,291



4,745



14,600Net cash provided by operating activities


14,485



5,101



11,140Lending and investing activities:Net (increase) decrease in loans to subsidiaries


(3,543
)


22,120



1,022Investments in subsidiaries


(9,200
)


(3,500
)


Net sales (purchases) of premises and equipment


(6
)


251



(339
)Net cash (used) provided by lending and investing activities


(12,749
)


18,871



683Financing activities:Proceeds from long-term debt










61,500Payments of long-term debt










(77,509
)Proceeds from the sale of noncumulative perpetual preferred stock






(77
)


14,518Purchase of subsidiary stock


(2,313
)Purchase of treasury stock


(247
)


(12,804
)


(4,363
)Proceeds from sale of stock for employee benefit plans


1,047



2,085



7,740Dividends paid






(15,381
)


(13,110
)Net cash provided (used) by financing activities


(1,513
)


(26,177
)


(11,224
)Net increase (decrease) in cash and cash equivalents


223



(2,205
)


599Effect of exchange rate changes on cash


(673
)


2,593



(44
)Cash and cash equivalents at beginning of year


1,227



839



284Cash and cash equivalents at end of year

$
777


$
1,227


$
839Supplemental disclosures of cash flow information:Cash flow during the year:Interest

$
2,737


$
17,302


$
20,588Income tax (received) payments

$
(6,376
)

$
10,362


$
92,783Non cash transactions:Adoption of FAS 156

$



$
2,905


$
Conversion of trust preferred to common stock

$



$



$
20,248  131




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##### Table of Contents



Note 25 
    Summary
    of Quarterly Financial Information (Unaudited)    2008RestatedFourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter(Dollars in thousands)Summary Income InformationInterest Income

$
86,324


$
100,502


$
111,902


$
120,090Interest expense


(54,386
)


(52,284
)


(50,028
)


(55,655
)Provision for loan and lease losses


(40,906
)


(110,953
)


(157,829
)


(44,520
)Other income


(4,548
)


3,524



6,521



(4,456
)Other expense


(48,483
)


(70,329
)


(43,997
)


(51,954
)(Provision) benefit for income taxes


(42,233
)


22,190



26,699



14,329Net loss

$
(104,232
)

$
(107,350
)

$
(106,732
)

$
(22,166
)Earnings (loss) per share of common stockBasic(1)

$
(3.54
)

$
(3.65
)

$
(3.64
)

$
(0.77
)Diluted(1)


(3.54
)


(3.65
)


(3.64
)


(0.77
)   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) benefit 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

$
(26,125
)

$
(18,030
)

$
(389
)

$
(10,129
)Earnings (loss) 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
)     (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. 132




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##### Table of Contents



Form 10-Q
 133




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##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEET
  September 30, 2008As reported


As restated(Dollars in thousands)Assets:Cash and cash equivalents

$
250,415


$
250,415Interest-bearing deposits with financial institutions


27,018



27,018Residual interests


9,008



9,008Investment securities- held-to-maturity (Fair value: $18,911)


18,690



18,690Investment securities- available-for-sale


36,140



36,140Investment securities- other


62,588



62,588Loans and leases held for
    sale(1)


43,643



869,254Loans and leases, net of unearned
    income(2)


4,651,506



3,671,147Less: Allowance for loan and lease
    losses(3)


(231,802
)


(129,974
)4,419,704



3,541,173Servicing assets


20,003



20,003Accounts receivable


33,608



33,608Accrued interest receivable


21,392



21,392Premises and equipment


34,537



34,537Other assets


282,678



282,678Total assets

$
5,259,424


$
5,206,504Liabilities and Shareholders Equity:DepositsNoninterest-bearing

$
325,676


$
325,676Interest-bearing


2,070,745



2,070,745Certificates of deposit over $100,000


769,450



769,4503,165,871



3,165,871Other borrowings


526,657



526,657Collateralized debt


946,269



946,269Other long-term debt


233,868



233,868Other liabilities


113,210



113,210Total liabilities


4,985,875



4,985,875Commitments and contingencies Shareholders equityPreferred stock, no par value  authorized
    4,000,000 shares;






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


14,441



14,441Common stock, no par value  authorized
    40,000,000 shares; issued 29,902,483 as of
    September 30, 2008; 509,565 shares in treasury as of
    September 30, 2008


116,667



116,667Additional paid-in capital






Accumulated other comprehensive loss, net of deferred income tax
    benefit of $3,704 as of September 30, 2008


(1,612
)


(1,612
)Retained
    earnings(4)


153,878



100,958283,374



230,454Less treasury stock, at cost


(9,825
)


(9,825
)Total shareholders equity


273,549



220,629Total liabilities and shareholders equity

$
5,259,424


$
5,206,504     (1)

    
    Reflects the reclassification of $0.8 billion of home
    equity loans to loans held for sale at the lower of cost or fair
    value(2)

    
    Reflects the reclassification of $1.0 billion of home
    equity loans accounted for at amortized cost basis and
    reclassified to loans held for sale at the lower of cost or fair
    value(3)

    
    Reflects write down of $102 million of home equity loans at
    time of reclassification from loans to loans held for sale at
    the lower of cost or fair value(4)

    
    Reflects $53 million net loss associated with reclassifying
    home equity loans to loans held for sale 134




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##### Table of Contents



IRWIN
    FINANCIAL CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
  For the Three Months Ended September 30,


For the Nine Months Ended September 30,2008


2008As reported


As restated


As reported


As restated(Dollars in thousands, except per share)Interest income:Loans and
    leases(1)

$
95,185


$
69,337


$
322,030


$
296,182Loans and leases held for
    sale(1)


2,663



28,511



2,817



28,665Residual interests


160



160



629



629Investment securities


2,016



2,016



6,341



6,341Federal funds sold


478



478



678



678Total interest income


100,502



100,502



332,495



332,495Interest expense:Deposits


24,362



24,362



79,820



79,820Short-term borrowings


5,663



5,663



18,825



18,825Collateralized debt


18,250



18,250



47,123



47,123Other long-term debt


4,009



4,009



12,199



12,199Total interest expense


52,284



52,284



157,967



157,967Net interest income


48,218



48,218



174,528



174,528Provision for loan and lease
    losses(2)


58,033



110,953



260,384



313,304Net interest expense after provision for loan and lease losses


(9,815
)


(62,735
)


(85,856
)


(138,776
)Other income:Loan servicing fees


3,133



3,133



8,424



8,424Amortization and impairment of servicing assets


(1,747
)


(1,747
)


(4,027
)


(4,027
)Gain from sales of loans and loans held for sale


2,165



2,165



10,169



10,169Trading losses


(979
)


(979
)


(3,156
)


(3,156
)Derivative losses, net


(3,494
)


(3,494
)


(1,449
)


(1,449
)Other than temporary impairment


(2,325
)


(2,325
)


(22,320
)


(22,320
)Other


6,771



6,771



17,948



17,9483,524



3,524



5,589



5,589Other expense:Salaries


22,866



22,866



65,501



65,501Pension and other employee benefits


6,094



6,094



19,768



19,768Office expense


2,164



2,164



6,399



6,399Premises and equipment


15,747



15,747



26,803



26,803Marketing and development


952



952



3,292



3,292Professional fees


4,181



4,181



9,607



9,607Other


18,325



18,325



34,910



34,91070,329



70,329



166,280



166,280Loss before income taxes


(76,620
)


(129,540
)


(246,547
)


(299,467
)Provision for income
    taxes(3)


(22,190
)


(22,190
)


(63,220
)


(63,220
)Net loss

$
(54,430
)

$
(107,350
)

$
(183,327
)

$
(236,247
)Loss per share:  Note 12Basic

$
(1.85
)

$
(3.65
)

$
(6.25
)

$
(8.06
)Diluted

$
(1.85
)

$
(3.65
)

$
(6.25
)

$
(8.06
)Dividends per share

$



$



$



$
     (1)

    
    Reflects a $26 million reclassification between interest on
    loans and interest on loans held for sale(2)

    
    Reflects $53 million of additional loan loss provision
    associated with the reclassification of loans to held for sale
    at the lower of cost or fair value(3)

    
    A full valuation allowance was recorded against the associated
    deferred tax benefit. Thus, there was no change in income tax
    provision 135




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##### 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  Retention
    Incentive Agreement
  Form 8-K Form 8-K Form 8-K/A
   136




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##### Table of Contents



and/or
    Reduction
    in Base Salary; Waiver of Incentive Payment
   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Form 10-K.
 137




---



##### Table of Contents



www.irwinfinancial.com
  
    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.
    Our Risk Committee Charter.
    Our Executive Committee Charter.  e-mail 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.   138




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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.)2
.2

Asset Purchase Agreement dated as of the 21st day of July, 2008,
    by and among EQ Acquisitions 2003, Inc., Equilease Financial
    Services, Inc., Irwin Commercial Finance Corporation, Equipment
    Finance, and Irwin Union Bank and Trust Company.
    (Incorporated by reference to Exhibit 2.2 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)2
.3

Letter Amendment to Asset Purchase Agreement dated July 21,
    2008 by and among Irwin Commercial Finance Corporation,
    Equipment Finance, Irwin Union Bank and Trust Company, EQ
    Acquisitions 2003, Inc., and Equilease Financial Services, Inc.
    dated July 30, 2008. (Incorporated by reference to
    Exhibit 2.3 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)2
.4

Asset Purchase Agreement dated as of the 23rd day of July, 2008
    by and among Roynat Inc. and Irwin Commercial Finance Canada
    Corporation and Onset Alberta Ltd. and Irwin Union Bank and
    Trust Company. (Incorporated by reference to
    Exhibit 2.4 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)2
.5

Amended and Restated Asset Purchase Agreement dated as of
    July 31, 2008 among Roosevelt Management Company LLC,
    Navigator Mortgage Loan Trust 2008, Wells Fargo Bank, N.A.
    and Irwin Union bank and Trust Company. (Incorporated by
    reference to Exhibit 2.5 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)3
.1

Restated Articles of Incorporation of Irwin Financial
    Corporation, as amended November 3, 2008. (Incorporated by
    reference to Exhibit 3.1 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)3
.2

Code of By-laws of Irwin Financial Corporation, as amended
    November 28, 2007. (Incorporated by reference to
    Exhibit 3.2 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)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.) 139




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##### Table of Contents



ExhibitNumber

Description of Exhibit4
.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
    request.4
.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 of
    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 of
    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 of
    Form 10-Q
    Report for quarter ended September 30, 1997, and filed
    August 12, 1997, File
    No. 000-06835.)10
.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.
    (Incorporated by reference to Exhibit 10.4 of the
    Form 10-K
    Report for the period ended December 31, 2007, filed
    March 14, 2008, File
    No. 001-16691.)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. (Incorporated by reference to
    Exhibit 10.12 of the
    Form 10-K
    Report for the period ended December 31, 2007, filed
    March 14, 2008, File
    No. 001-16691.)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

*Amendment Number One to the Irwin Financial Corporation 1999
    Outside Director Restricted Stock Compensation Plan, as amended
    December 4, 2009, and effective January 1, 2005.10
.15

*Employee Stock Purchase Plan III. (Incorporated by reference to
    Exhibit 10(a) to
    Form 10-Q
    Report for the quarter ended September 30, 1999, File
    No. 000-06835.) 140




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.16

*Employee Stock Purchase Plan III Amendments One effective
    September 21, 2001 and Amendment Two effective
    September 17, 2008.10
.17

*Irwin Financial Corporation and Affiliates Amended and Restated
    Short Term Incentive Plan effective May 8, 2008.10
.18

*Onset Capital Corporation Employment Agreement. (Incorporated
    by reference to Exhibit 10.26 to
    Form 10-Q
    Report for the quarter ended September 30, 2002, File
    No. 000-06835.)10
.19

*Irwin Financial Corporation Amended and Restated Supplemental
    Executive Retirement Plan for [Named Executive], effective
    January 1, 2005, and as amended December 4, 2008.10
.20

*Amendment One to the Irwin Financial Corporation Supplemental
    Executive Retirement Plan for [Named Executive], effective
    January 1, 2009.10
.21

*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
.22

*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
.23

*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
.24

*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
.25

*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
.26

*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
.27

*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
.28

*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
.29

*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
.30

*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.)10
.31

*Irwin Financial Corporation Amended and Restated 2007
    Performance Unit Plan.10
.32

*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.)10
.33

*Amendment to 2005 Stock Option Agreement between Irwin
    Commercial Finance Corporation and Joseph R. LaLeggia, dated
    July 28, 2008. (Incorporated by reference to
    Exhibit 10.41 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)10
.34

*Letter setting forth the Redemption Agreement between
    Irwin Commercial Finance Corporation and Joseph R. LaLeggia,
    dated July 29, 2008. (Incorporated by reference to
    Exhibit 10.42 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.)10
.35

*Retention Incentive Agreement by and among Irwin Home Equity
    Corporation, Irwin Financial Corporation and Jocelyn
    Martin-Leano dated September 10, 2008. (Incorporated by
    reference to Exhibit 10.43 of
    Form 10-Q
    Report for quarter ended September 30, 2008, and filed
    November 10, 2008, File
    No. 001-16691.) 141




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.36

Standby Purchase Agreement, dated as of October 13, 2008,
    by and between Irwin Financial Corporation and Cummins Inc.
    (Incorporated by reference to Exhibit 10.1 of
    Form 8-K
    filed October 14, 2008, File
    No. 001-16691).10
.37

Written Agreement by and among Irwin Financial Corporation,
    Irwin Union Bank and Trust Company, the Federal Reserve
    Bank of Chicago, and the Indiana Department of Financial
    Institutions, dated October 10, 2008. (Incorporated by
    reference to Exhibit 10.2 of
    Form 8-K
    filed October 14, 2008, File
    No. 001-16691).10
.38

Supervisory Agreement by and between Irwin Union Bank, F.S.B.
    and the Office of Thrift Supervision, dated October 10,
    2008. (Incorporated by reference to Exhibit 10.3 of
    Form 8-K
    filed October 14, 2008, File
    No. 001-16691).10
.39

Extension of Standby Purchase Agreement between Irwin Financial
    Corporation and Cummins Inc. dated March 5, 2009.11
.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.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 142




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##### Table of Contents



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

Capacity with Corporation

Date/s/  Sally
    A. DeanSally
    A. Dean

Director


March 31, 2009/s/  David
    W. GoodrichDavid
    W. Goodrich

Director


March 31, 2009/s/  R.
    David HooverR.
    David Hoover

Director


March 31, 2009/s/  William
    H. KlingWilliam
    H. Kling

Director


March 31, 2009/s/  Brenda
    J. LauderbackBrenda
    J. Lauderback

Director


March 31, 2009/s/  John
    C. McGinty, Jr.John
    C. McGinty, Jr.

Director


March 31, 2009/s/  William
    I. MillerWilliam
    I. Miller

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


March 31, 2009/s/  Dayton
    H. MolendorpDayton
    H. Molendorp

Director


March 31, 2009/s/  Lance
    R. OddenLance
    R. Odden

Director


March 31, 2009/s/  Marita
    ZuraitisMarita
    Zuraitis

Director


March 31, 2009/s/  Gregory
    F. EhlingerGregory
    F. Ehlinger

Chief Financial Officer (principal financial officer)


March 31, 2009/s/  Jody
    A. LittrellJody
    A. Littrell

First Vice President and Controller (principal accounting
    officer)


March 31, 2009  143