##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For 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)
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



FORM 10-Q
TABLE OF CONTENTS
 PAGENO.PART I
    
    FINANCIAL INFORMATION
    
    
    3Item 1
    
    Financial Statements
    
    
    3Item 2
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    54Item 4
    
    Controls and Procedures
    
    
    54PART II
    
    OTHER INFORMATION
    
    
    54Item 1
    
    Legal Proceedings
    
    
    54Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    54Item 6
    
    Exhibits
    
    
    55Signatures
    
    
    59302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION.
 
 Item 1. Financial Statements.
 IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Assets:Cash and cash equivalents  Note 1
    
    $
    103,029
    
    
    $
    78,212Interest-bearing deposits with financial institutions
    
    
    39,685
    
    
    
    31,841Residual interests
    
    
    10,974
    
    
    
    12,047Investment securities- held-to-maturity (Fair value: $16,419
March 31, 2008 and $18,134 at December 31, 2007)  Note 2
    
    
    17,603
    
    
    
    18,123Investment securities- available-for-sale  Note 2
    
    
    45,941
    
    
    
    59,684Investment securities- other  Note 2
    
    
    62,588
    
    
    
    62,588Loans held for sale
    
    
    2,747
    
    
    
    6,134Loans and leases, net of unearned income  Note 3
    
    
    5,583,538
    
    
    
    5,696,230Less: Allowance for loan and lease losses  Note 4
    
    
    (158,598
    )
    
    
    (144,855
    )5,424,940
    
    
    
    5,551,375Servicing assets  Note 5
    
    
    19,343
    
    
    
    23,234Accounts receivable
    
    
    33,329
    
    
    
    38,710Accrued interest receivable
    
    
    23,450
    
    
    
    26,291Premises and equipment
    
    
    38,282
    
    
    
    38,178Other assets
    
    
    235,156
    
    
    
    215,874Assets held for sale
    
    
    
    
    
    
    3,814Total assets
    
    $
    6,057,067
    
    
    $
    6,166,105Liabilities and Shareholders Equity:DepositsNoninterest-bearing
    
    $
    324,135
    
    
    $
    306,820Interest-bearing
    
    
    2,299,933
    
    
    
    2,357,050Certificates of deposit over $100,000
    
    
    774,924
    
    
    
    661,6183,398,992
    
    
    
    3,325,488Other borrowings  Note 6
    
    
    674,258
    
    
    
    802,424Collateralized debt  Note 7
    
    
    1,186,123
    
    
    
    1,213,139Other long-term debt
    
    
    233,871
    
    
    
    233,873Other liabilities
    
    
    127,817
    
    
    
    131,881Total liabilities
    
    
    5,621,061
    
    
    
    5,706,805Commitments and contingencies  Note 12Shareholders 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
29,896,464 as of March 31, 2008 and December 31, 2007; 636,616 and 670,169
shares in treasury as of March 31, 2008 and December 31, 2007, respectively
    
    
    116,542
    
    
    
    116,542Additional paid-in capital
    
    
    3,227
    
    
    
    2,557Accumulated other comprehensive (loss) income, net of deferred income tax
benefit of $6,131 and $4,367 as of March 31, 2008 and December 31, 2007
    
    
    (1,472
    )
    
    
    1,032Retained earnings
    
    
    315,358
    
    
    
    337,524448,096
    
    
    
    472,096Less treasury stock, at cost
    
    
    (12,090
    )
    
    
    (12,796
    )Total shareholders equity
    
    
    436,006
    
    
    
    459,300Total liabilities and shareholders equity
    
    $
    6,057,067
    
    
    $
    6,166,105
  3




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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 For the Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands, except per share)Interest income:Loans and leases
    
    $
    117,322
    
    
    $
    119,349Loans held for sale
    
    
    166
    
    
    
    4,942Residual interests
    
    
    275
    
    
    
    270Investment securities
    
    
    2,289
    
    
    
    2,457Federal funds sold
    
    
    38
    
    
    
    20Total interest income
    
    
    120,090
    
    
    
    127,038Interest expense:Deposits
    
    
    28,938
    
    
    
    33,451Other borrowings
    
    
    7,236
    
    
    
    7,806Collateralized debt
    
    
    15,170
    
    
    
    15,815Other long-term debt
    
    
    4,311
    
    
    
    3,838Total interest expense
    
    
    55,655
    
    
    
    60,910Net interest income
    
    
    64,435
    
    
    
    66,128Provision for loan and lease losses  Note 4
    
    
    44,520
    
    
    
    23,208Net interest income after provision for loan and lease losses
    
    
    19,915
    
    
    
    42,920Other income:Loan servicing fees
    
    
    2,458
    
    
    
    5,912Amortization and impairment of servicing assets  Note 9
    
    
    (4,219
    )
    
    
    (4,950
    )Gain (loss) from sales of loans held for sale
    
    
    6,831
    
    
    
    (5,907
    )Trading losses  Note 9
    
    
    (1,057
    )
    
    
    (264
    )Derivative losses, net
    
    
    (957
    )
    
    
    (1,089
    )Other than temporary impairment  Note 2
    
    
    (13,157
    )
    
    
    Other
    
    
    5,645
    
    
    
    5,484(4,456
    )
    
    
    (814
    )Other expense:Salaries
    
    
    22,629
    
    
    
    25,735Pension and other employee benefits
    
    
    7,708
    
    
    
    7,738Office expense
    
    
    2,212
    
    
    
    2,337Premises and equipment
    
    
    5,766
    
    
    
    5,628Marketing and development
    
    
    1,132
    
    
    
    1,209Professional fees
    
    
    2,098
    
    
    
    2,086Other
    
    
    10,409
    
    
    
    7,55251,954
    
    
    
    52,285Loss before income taxes from continuing operations
    
    
    (36,495
    )
    
    
    (10,179
    )Provision for income taxes
    
    
    (14,329
    )
    
    
    (4,085
    )Net loss from continuing operations
    
    
    (22,166
    )
    
    
    (6,094
    )Loss from discontinued operations, net of $2,742 income tax
benefit March 31, 2007
    
    
    
    
    
    
    (4,035
    )Net loss
    
    $
    (22,166
    )
    
    $
    (10,129
    )Earnings per share from continuing operations:  Note 10Basic
    
    $
    (0.76
    )
    
    $
    (0.22
    )Diluted
    
    $
    (0.77
    )
    
    $
    (0.22
    )Earnings per share:  Note 10Basic
    
    $
    (0.76
    )
    
    $
    (0.35
    )Diluted
    
    $
    (0.77
    )
    
    $
    (0.36
    )Dividends per share
    
    $
    
    
    
    $
    0.12
  4




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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)
For the Three Months Ended March 31, 2008, and 2007
 Accumulated Other Comprehensive lossDefined
    
    
    Additional
    
    
    
    
    
    
    PerpetualRetained
    
    
    Foreign
    
    
    Unrealized Gain/Loss
    
    
    Benefit
    
    
    Paid in
    
    
    Common
    
    
    Preferred
    
    
    TreasuryTotal
    
    
    Earnings
    
    
    Currency
    
    
    Securities
    
    
    Derivatives
    
    
    Plans
    
    
    Capital
    
    
    Stock
    
    
    Stock
    
    
    Stock(Dollars in thousands)Balance at January 1, 2008
    
    $
    459,300
    
    
    $
    337,524
    
    
    $
    9,158
    
    
    $
    (1,445
    )
    
    $
    (1,576
    )
    
    $
    (5,105
    )
    
    $
    2,557
    
    
    $
    116,542
    
    
    $
    14,441
    
    
    $
    (12,796
    )Net loss
    
    
    (22,166
    )
    
    
    (22,166
    )Unrealized gain on investment
securities net of $29 tax liability
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    44Unrealized loss on derivatives
net of $743 tax benefit
    
    
    (1,114
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,114
    )Foreign currency adjustment
    
    
    (1,434
    )
    
    
    
    
    
    
    (1,434
    )Other comprehensive loss
    
    
    (2,504
    )Total comprehensive loss
    
    
    (24,670
    )Stock compensation expense
    
    
    1,147
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,147Stock:Purchase of 835 shares
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Sales of 34,388 shares
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (477
    )
    
    
    
    
    
    
    
    
    
    
    712Balance at March 31, 2008
    
    $
    436,006
    
    
    $
    315,358
    
    
    $
    7,724
    
    
    $
    (1,401
    )
    
    $
    (2,690
    )
    
    $
    (5,105
    )
    
    $
    3,227
    
    
    $
    116,542
    
    
    $
    14,441
    
    
    $
    (12,090
    )Balance at January 1, 2007
    
    $
    530,502
    
    
    $
    405,835
    
    
    $
    2,884
    
    
    $
    (344
    )
    
    $
    (30
    )
    
    $
    (6,874
    )
    
    $
    1,583
    
    
    $
    116,192
    
    
    $
    14,518
    
    
    $
    (3,262
    )Net loss
    
    
    (10,129
    )
    
    
    (10,129
    )Unrealized gain on investment
securities net of $21 tax liability
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    31Unrealized gain on derivatives
net of $121 tax liability
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183Foreign currency adjustment
    
    
    365
    
    
    
    
    
    
    
    365Other comprehensive income
    
    
    579Total comprehensive loss
    
    
    (9,550
    )Cash dividends  common stock
    
    
    (3,533
    )
    
    
    (3,533
    )Cash dividends  preferred stock
    
    
    (352
    )
    
    
    (352
    )FAS 156 adoption, net of tax
    
    
    1,743
    
    
    
    1,743Tax benefit on stock option exercises
    
    
    116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116Stock compensation expense
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    363Stock issuance costs
    
    
    (72
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72
    )Stock:Purchase of 359,848 shares
    
    
    (7,668
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,668
    )Sales of 74,199 shares
    
    
    (1320
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (374
    )
    
    
    54
    
    
    
    
    
    
    
    1,640Balance at March 31, 2007
    
    $
    512,869
    
    
    $
    393,564
    
    
    $
    3,249
    
    
    $
    (313
    )
    
    $
    153
    
    
    $
    (6,874
    )
    
    $
    1,688
    
    
    $
    116,246
    
    
    $
    14,446
    
    
    $
    (9,290
    )
  5




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##### Table of Contents



CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 For the Three Months ended March 31,2008
    
    
    2007(Dollars in thousands)Loss from continuing operations
    
    $
    (22,166
    )
    
    $
    (6,094
    )Loss from discontinued operations
    
    
    
    
    
    
    (4,035
    )Net Loss
    
    
    (22,166
    )
    
    
    (10,129
    )Adjustments to reconcile net loss to cash provided
by operating activities:Depreciation, amortization, and accretion, net
    
    
    2,604
    
    
    
    2,356Other than temporary impairment
    
    
    13,157
    
    
    
    Amortization and impairment of servicing assets
    
    
    4,219
    
    
    
    5,199Provision for loan and lease losses
    
    
    44,520
    
    
    
    23,208(Gain) loss from sales of loans held for sale
    
    
    (6,831
    )
    
    
    10,155Originations and purchases of loans held for sale
    
    
    (64,436
    )
    
    
    (208,830
    )Proceeds from sales and repayments of loans held for sale
    
    
    130,272
    
    
    
    261,224Net decrease in residuals
    
    
    1,348
    
    
    
    971Net decrease in accounts receivable
    
    
    5,381
    
    
    
    137,994Other, net
    
    
    (19,999
    )
    
    
    (92,243
    )Net cash provided by operating activities
    
    
    88,069
    
    
    
    129,905Investing activities:Proceeds from maturities/calls of investment securities:Held-to-maturity
    
    
    1,132
    
    
    
    127Available-for-sale
    
    
    685
    
    
    
    974Purchase of investment securities:Held-to-maturity
    
    
    (451
    )
    
    
    (100
    )Available-for-sale
    
    
    (187
    )
    
    
    (7,240
    )Net (increase) decrease in interest-bearing deposits
    
    
    (7,844
    )
    
    
    9,713Net decrease (increase) in loans, excluding sales
    
    
    27,251
    
    
    
    (44,957
    )Other, net
    
    
    (1,869
    )
    
    
    (4,120
    )Net cash provided (used) by investing activities
    
    
    18,717
    
    
    
    (45,603
    )Financing activities:Net increase (decrease) in deposits
    
    
    73,505
    
    
    
    (104,118
    )Net (decrease) increase in other borrowings
    
    
    (128,166
    )
    
    
    16,861Proceeds from issuance of collateralized debt
    
    
    96,415
    
    
    
    27,206Repayments of collateralized debt
    
    
    (123,444
    )
    
    
    (98,208
    )Payments on long term debt
    
    
    (3
    )
    
    
    (4
    )Purchase of treasury stock for employee benefit plans
    
    
    (6
    )
    
    
    (7,668
    )Proceeds from sale of stock for employee benefit plans
    
    
    235
    
    
    
    1,436Dividends paid
    
    
    
    
    
    
    (3,885
    )Net cash used by financing activities
    
    
    (81,464
    )
    
    
    (168,380
    )Effect of exchange rate changes on cash
    
    
    (505
    )
    
    
    134Net increase (decrease) in cash and cash equivalents
    
    
    24,817
    
    
    
    (83,944
    )Cash and cash equivalents at beginning of period
    
    
    78,212
    
    
    
    145,765Cash and cash equivalents at end of period
    
    $
    103,029
    
    
    $
    61,821Supplemental disclosures of cash flow information:Cash flow during the period:Interest paid
    
    $
    50,740
    
    
    $
    59,659Income taxes paid
    
    $
    2,216
    
    
    $
    6,152Noncash transactions:Adoption of FAS 156
    
    $
    
    
    
    $
    1,743Other real estate owned
    
    $
    1,225
    
    
    $
    2,664
  6




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies
 Consolidation:
  Use of Estimates:
 Foreign Currency:
 Cash and Cash Equivalents:
 Investment Securities:
 Residual Interests:
 Loans Held For Sale:
 Loans:
 7




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##### Table of Contents



Direct Financing Leases:
 Allowance for Loan and Lease Losses:
   Servicing Assets:
   Incentive Servicing Fees:
 8




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##### Table of Contents



Derivative Instruments:
   Premises and Equipment:
 Other Assets:
 Income Taxes:
 Recent Accounting Developments:
   9




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##### Table of Contents



Note 2  Investment Securities
  March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Held-to-Maturity:U.S. Treasury and
government obligations
    
    $
    13,569
    
    
    $
    13,970Obligations of states
and political subdivisions
    
    
    3,321
    
    
    
    3,436Mortgage-backed securities
    
    
    713
    
    
    
    717Total held-to-maturity
    
    
    17,603
    
    
    
    18,123Available-for-Sale:Mortgage-backed securities
    
    
    30,868
    
    
    
    45,499Other
    
    
    15,073
    
    
    
    14,185Total available-for-sale
    
    
    45,941
    
    
    
    59,684Federal Home Loan Bank and Federal Reserve Bank stock
    
    
    62,588
    
    
    
    62,588Total investment securities
    
    $
    126,132
    
    
    $
    140,395
  Note 3  Loans and Leases
  March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Commercial, financial and agricultural
    
    $
    2,079,136
    
    
    $
    2,099,451Real estate-construction & land development
    
    
    585,356
    
    
    
    586,037Real estate-mortgage
    
    
    1,638,213
    
    
    
    1,691,450Consumer
    
    
    27,327
    
    
    
    32,232Commercial financingFranchise financing
    
    
    910,565
    
    
    
    925,741Domestic leasing
    
    
    292,582
    
    
    
    306,301Foreign leasing
    
    
    447,011
    
    
    
    462,036Unearned incomeFranchise financing
    
    
    (301,549
    )
    
    
    (306,681
    )Domestic leasing
    
    
    (39,507
    )
    
    
    (42,723
    )Foreign leasing
    
    
    (55,596
    )
    
    
    (57,614
    )Total
    
    $
    5,583,538
    
    
    $
    5,696,230
   10




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Note 4  Allowance for Loan and Lease Losses
  March 31,
    
    December 31,2008
    
    2007And the Three MonthsThen Ended
    
    And the Year Then Ended(Dollars in thousands)Balance at beginning of year
    
    $
    144,855
    
    
    $
    74,468Provision for loan and lease losses
    
    
    44,520
    
    
    
    134,988Charge-offs
    
    
    (31,794
    )
    
    
    (73,994
    )Recoveries
    
    
    1,607
    
    
    
    10,099Reduction due to reclassification and sales of loans
    
    
    (461
    )
    
    
    (1,225
    )Foreign currency adjustment
    
    
    (129
    )
    
    
    519Balance at end of period
    
    $
    158,598
    
    
    $
    144,855
  March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Accruing loans past due 90 days or more
    
    $
    867
    
    
    $
    857Nonaccrual loans and leases
    
    
    98,439
    
    
    
    75,453Total nonperforming loans and leases
    
    $
    99,306
    
    
    $
    76,310
 Note 5  Servicing Assets
   11




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##### Table of Contents



March 31,
    
    
    December 31,2008
    
    
    2007And the Three Months
    
    
    And the Year ThenThen Ended
    
    
    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)
    
    
    (2,590
    )
    
    
    (1,589
    )Other
changes in fair value (2)
    
    
    (1,270
    )
    
    
    (9,317
    )Balance at the end of the period
    
    $
    15,864
    
    
    $
    19,724
 
 (1)
    
    Principally reflects changes in discount rates and prepayment spread assumptions,
primarily due to changes in interest rates.(2)
    
    Represents changes due to realization of expected cash flows.  March 31,
    
    
    December 31,2008
    
    
    2007And the Three Months
    
    
    And the YearThen Ended
    
    
    Then Ended(Dollars in thousands)Beginning balance
    
    $
    3,510
    
    
    $
    31,949Initial adoption of SFAS 156
    
    
    
    
    
    
    (27,725
    )Additions
    
    
    328
    
    
    
    530Sales
    
    
    
    
    
    
    (5
    )Amortization
    
    
    (339
    )
    
    
    (1,199
    )Impairment
    
    
    (20
    )
    
    
    (40
    )Balance at the end of the period
    
    $
    3,479
    
    
    $
    3,510
  March 31,
    
    
    December 31,2008
    
    
    2007And the Three MonthsThen Ended
    
    
    And the Year Then Ended(Dollars in thousands)Balance at beginning of year
    
    $
    191
    
    
    $
    483Transfer of assets from amortizing to fair value
    
    
    
    
    
    
    (332
    )Impairment
    
    
    20
    
    
    
    40Balance at the end of the period
    
    $
    211
    
    
    $
    191
 12




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##### Table of Contents



Note 6  Other borrowings
  March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Federal Home Loan Bank borrowings
    
    $
    604,258
    
    
    $
    574,424Federal funds
    
    
    70,000
    
    
    
    228,000Total
    
    $
    674,258
    
    
    $
    802,424Weighted average interest rate
    
    
    4.36
    %
    
    
    5.20
    %
   Note 7  Collateralized Debt
  13




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##### Table of Contents



WeightedAverageInterest Rate atContractual
    
    March 31,
    
    March 31,
    
    December 31,Maturity
    
    2008
    
    2008
    
    2007(Dollars in thousands)Commercial finance line of businessCanadian asset backed notes:Note 1
    
    revolving
    
    
    
    
    
    
    $
    
    
    
    $
    46,183Note 2
    
    
    9/2012
    
    
    
    4.4
    
    
    
    162,076
    
    
    
    192,103Note 3
    
    
    10/2009
    
    
    
    4.5
    
    
    
    3,192
    
    
    
    4,120Note 4
    
    
    12/2013
    
    
    
    5.2
    
    
    
    89,012
    
    
    
    Home equity line of business2004-1 asset backed notes:Variable rate senior note
    
    
    12/2024-12/2034
    
    
    
    3.5
    
    
    
    33,029
    
    
    
    33,733Variable rate subordinate note
    
    
    12/2034
    
    
    
    4.3
    
    
    
    23,889
    
    
    
    24,7752005-1 asset backed notes:Variable rate senior note
    
    
    6/2025-6/2035
    
    
    
    3.4
    
    
    
    22,356
    
    
    
    23,484Fixed rate senior note
    
    
    6/2035
    
    
    
    5.2
    
    
    
    53,084
    
    
    
    59,471Variable rate subordinate note
    
    
    6/2035
    
    
    
    4.9
    
    
    
    10,785
    
    
    
    10,785Fixed rate subordinate note
    
    
    6/2035
    
    
    
    5.6
    
    
    
    52,127
    
    
    
    52,127Unamortized premium/discount
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (62
    )2006-1 asset backed notes:Variable rate senior note
    
    
    9/2035
    
    
    
    3.3
    
    
    
    37,378
    
    
    
    44,302Fixed rate senior note
    
    
    9/2035
    
    
    
    5.5
    
    
    
    96,561
    
    
    
    96,561Fixed rate lockout senior note
    
    
    9/2035
    
    
    
    5.6
    
    
    
    24,264
    
    
    
    24,264Unamortized premium/discount
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (12
    )2006-2 asset backed notes:Variable rate senior note
    
    
    2/2036
    
    
    
    3.3
    
    
    
    75,394
    
    
    
    82,945Fixed rate senior note
    
    
    2/2036
    
    
    
    6.3
    
    
    
    80,033
    
    
    
    80,033Fixed rate lockout senior note
    
    
    2/2036
    
    
    
    6.2
    
    
    
    21,348
    
    
    
    21,348Unamortized premium/discount
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (13
    )2006-3 asset backed notes:Variable rate senior note
    
    
    1/2037-9/2037
    
    
    
    3.3
    
    
    
    75,604
    
    
    
    83,281Fixed rate senior note
    
    
    9/2037
    
    
    
    5.9
    
    
    
    67,050
    
    
    
    67,050Fixed rate lockout senior note
    
    
    9/2037
    
    
    
    5.9
    
    
    
    18,000
    
    
    
    18,000Unamortized premium/discount
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (7
    )2007-1 asset backed notes:Variable rate senior note
    
    
    8/2037
    
    
    
    3.3
    
    
    
    127,681
    
    
    
    135,339Variable funding notes
    
    
    8/2037
    
    
    
    3.3
    
    
    
    11
    
    
    
    Fixed rate senior note
    
    
    8/2037
    
    
    
    6.0
    
    
    
    91,346
    
    
    
    91,346Fixed rate lockout senior note
    
    
    8/2037
    
    
    
    5.9
    
    
    
    22,000
    
    
    
    22,000Unamortized premium/discount
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (17
    )Total
    
    
    
    
    
    
    
    
    
    $
    1,186,123
    
    
    $
    1,213,139
 14




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##### Table of Contents



Note 8  Employee Retirement Plans
  Employee Pension Plan
 For the Three Months EndedMarch 31,2008
    
    
    2007(Dollars in thousands)Service cost
    
    $
    1,167
    
    
    $
    1,070Interest cost
    
    
    683
    
    
    
    586Expected return on plan assets
    
    
    (657
    )
    
    
    (638
    )Amortization of prior service cost
    
    
    9
    
    
    
    9Amortization of actuarial loss
    
    
    71
    
    
    
    157Net pension cost
    
    $
    1,273
    
    
    $
    1,184
 Supplemental Executive Retirement Plan
 For the Three Months EndedMarch 31,2008
    
    
    2007(Dollars in thousands)Service cost
    
    $
    22
    
    
    $
    59Interest cost
    
    
    81
    
    
    
    100Amortization of prior service cost
    
    
    3
    
    
    
    3Amortization of actuarial loss
    
    
    
    
    
    
    19Net SERP cost
    
    $
    106
    
    
    $
    181
  Note 9  Fair Value
   
    
    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.
 15




---



##### Table of Contents



Level 1
    
    Level 2
    
    Level 3
    
    Total(Dollars in thousands)For the Three Months Ended March 31, 2008AssetsResidual interests
    
    $
    
    
    
    $
    
    
    
    $
    10,974
    
    
    $
    10,974Investment securities  available-for-sale
    
    
    
    
    
    
    21,416
    
    
    
    24,525
    
    
    
    45,941Servicing assets
    
    
    
    
    
    
    
    
    
    
    15,864
    
    
    
    15,864Total assets
    
    $
    
    
    
    $
    21,413
    
    
    $
    51,363
    
    
    $
    72,776LiabilitiesDerivatives
    
    
    
    
    
    
    7,101
    
    
    
    
    
    
    
    7,101Total liabilities
    
    $
    
    
    
    $
    7,101
    
    
    $
    
    
    
    $
    7,101
   Netrealized/unrealizedgain(losses)
    
    Purchases,
    
    
    
    
    
    Unrealized gainsincluded in
    
    issuances and
    
    
    
    
    
    (losses) stillJanuary 1, 2008
    
    earnings(1)(2)
    
    settlements
    
    March 31, 2008
    
    held(3)(Dollars in thousands)AssetsResidual interests
    
    $
    12,047
    
    
    $
    (925
    )
    
    $
    (148
    )
    
    $
    10,974
    
    
    $
    (1,057
    )Investment securities  available-for-sale
    
    
    37,682
    
    
    
    (13,157
    )
    
    
    
    
    
    
    24,525
    
    
    
    Servicing assets
    
    
    19,724
    
    
    
    (3,860
    )
    
    
    
    
    
    
    15,864
    
    
    
    (3,860
    )Total assets
    
    $
    69,453
    
    
    $
    (17,942
    )
    
    $
    (148
    )
    
    $
    51,363
    
    
    $
    (4,937
    )
 
 1
    
    Unrealized gains (losses) on residual interests are recorded in Trading gains
(losses) on the statement of income2
    
    Unrealized gains (losses) on servicing assets are recorded in Amortization and
impairment of servicing assets on the statement of income3
    
    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 March 31, 2008  Level 1
    
    Level 2
    
    Level 3
    
    Total(Dollars in thousands)For the Three Months Ended March 31, 2008AssetsLoans held for investment (1)
    
    $
    
    
    
    $
    
    
    
    $
    30,379
    
    
    $
    30,379Loans held for sale(2)
    
    
    
    
    
    
    
    
    
    
    2,747
    
    
    
    2,747Mortage servicing assets(3)
    
    
    
    
    
    
    
    
    
    
    3,479
    
    
    
    3,479Total assets
    
    $
    
    
    
    $
    
    
    
    $
    36,605
    
    
    $
    36,605
 
 (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 16




---



##### Table of Contents



(2)
    
    Represents the carrying value of loans held for sale which are valued at lower of cost
or market value. Market value is determined based upon discounted cash flow models adjusted
for prepayment assumptions(3)
    
    Represents the carrying value of mortgage servicing assets
which are valued at lower of cost or market. Market value is
determined based upon observed pricing on similar, market-traded
servicing rights and discounted cash flow models Note 10  Earnings Per Share
  Three Months ended March 31, 2008Basic
    
    
    
    
    
    DilutedNet
    
    Preferred
    
    Earnings
    
    Effect of
    
    EarningsLoss
    
    Dividends
    
    Per Share
    
    Stock Options
    
    Per Share(Dollars in thousands, except per share amounts)Net loss allocable to common shareholders:
    
    $
    (22,166
    )
    
    $
    
    
    
    $
    (22,166
    )
    
    $
    (363
    )
    
    $
    (22,529
    )Shares
    
    
    
    
    
    
    
    
    
    
    29,249
    
    
    
    
    
    
    
    29,249Per-share amount
    
    
    
    
    
    
    
    
    
    $
    (0.76
    )
    
    $
    (0.01
    )
    
    $
    (0.77
    )
 Three Months ended March 31, 2007Basic
    
    
    
    
    
    DilutedNet
    
    Preferred
    
    Earnings
    
    Effect of
    
    EarningsLoss
    
    Dividends
    
    Per Share
    
    Stock Options
    
    Per Share(Dollars in thousands, except per share amounts)Net loss allocable to common shareholders:From continuing operations
    
    $
    (6,094
    )
    
    $
    (352
    )
    
    $
    (6,446
    )
    
    $
    (189
    )
    
    $
    (6,635
    )From discontinued operations
    
    
    (4,035
    )
    
    
    
    
    
    
    (4,035
    )
    
    
    
    
    
    
    (4,035
    )Total net loss for all operations
    
    $
    (10,129
    )
    
    $
    (352
    )
    
    
    (10,481
    )
    
    
    (189
    )
    
    
    (10,670
    )Shares
    
    
    
    
    
    
    
    
    
    
    29,623
    
    
    
    
    
    
    
    29,623Per-share for continuing operations
    
    
    
    
    
    
    
    
    
    $
    (0.22
    )
    
    $
    
    
    
    $
    (0.22
    )Per-share for all operations
    
    
    
    
    
    
    
    
    
    $
    (0.35
    )
    
    $
    (0.01
    )
    
    $
    (0.36
    )
  Note 11  Industry Segment Information
     17




---



##### Table of Contents



Commercial
    
    Commercial
    
    Home EquityBanking
    
    Finance
    
    Lending
    
    Other
    
    Consolidated(Dollars in thousands)For the Three Months Ended March 31, 2008Net interest income
    
    $
    25,003
    
    
    $
    20,883
    
    
    $
    (5,280
    )
    
    $
    (20,691
    )
    
    $
    19,915Intersegment interest
    
    
    (3,761
    )
    
    
    (11,599
    )
    
    
    (4,624
    )
    
    
    19,984
    
    
    
    Other revenue
    
    
    4,667
    
    
    
    6,288
    
    
    
    (2,960
    )
    
    
    (12,451
    )
    
    
    (4,456
    )Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    (42
    )
    
    
    Total net revenues
    
    
    25,909
    
    
    
    15,572
    
    
    
    (12,822
    )
    
    
    (13,200
    )
    
    
    15,459Other expense
    
    
    23,594
    
    
    
    7,681
    
    
    
    13,419
    
    
    
    7,260
    
    
    
    51,954Intersegment expenses
    
    
    1,037
    
    
    
    446
    
    
    
    592
    
    
    
    (2,075
    )
    
    
    Income (loss) before taxes
    
    
    1,278
    
    
    
    7,445
    
    
    
    (26,833
    )
    
    
    (18,385
    )
    
    
    (36,495
    )Income taxes
    
    
    191
    
    
    
    3,000
    
    
    
    (10,732
    )
    
    
    (6,788
    )
    
    
    (14,329
    )Net income (loss)
    
    $
    1,087
    
    
    $
    4,445
    
    
    $
    (16,101
    )
    
    $
    (11,597
    )
    
    $
    (22,166
    )Assets at March 31, 2008
    
    $
    3,088,222
    
    
    $
    1,281,596
    
    
    $
    1,411,521
    
    
    $
    275,728
    
    
    $
    6,057,067
 Commercial
    
    Commercial
    
    Home Equity
    
    
    
    
    
    
    
    
    
    DiscontinuedBanking
    
    Finance
    
    Lending
    
    Other
    
    Consolidated
    
    Operations
    
    Consolidated(Dollars in thousands)For the Three Months Ended March 31, 2007Net interest income
    
    $
    25,913
    
    
    $
    17,469
    
    
    $
    17,128
    
    
    $
    (17,590
    )
    
    $
    42,920
    
    
    $
    (340
    )
    
    $
    42,580Intersegment interest
    
    
    (968
    )
    
    
    (8,940
    )
    
    
    (7,652
    )
    
    
    17,560
    
    
    
    
    
    
    
    
    
    
    
    Other revenue
    
    
    3,947
    
    
    
    2,791
    
    
    
    (6,897
    )
    
    
    (655
    )
    
    
    (814
    )
    
    
    (4,381
    )
    
    
    (5,195
    )Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    Total net revenues
    
    
    28,892
    
    
    
    11,320
    
    
    
    2,680
    
    
    
    (786
    )
    
    
    42,106
    
    
    
    (4,721
    )
    
    
    37,385Other expense
    
    
    23,440
    
    
    
    6,782
    
    
    
    18,914
    
    
    
    3,149
    
    
    
    52,285
    
    
    
    2,056
    
    
    
    54,341Intersegment expenses
    
    
    851
    
    
    
    352
    
    
    
    667
    
    
    
    (1,870
    )
    
    
    
    
    
    
    
    
    
    
    Income (loss) before taxes
    
    
    4,601
    
    
    
    4,186
    
    
    
    (16,901
    )
    
    
    (2,065
    )
    
    
    (10,179
    )
    
    
    (6,777
    )
    
    
    (16,956
    )Income taxes
    
    
    1,438
    
    
    
    1,595
    
    
    
    (6,752
    )
    
    
    (366
    )
    
    
    (4,085
    )
    
    
    (2,742
    )
    
    
    (6,827
    )Net income (loss)
    
    $
    3,163
    
    
    $
    2,591
    
    
    $
    (10,149
    )
    
    $
    (1,699
    )
    
    $
    (6,094
    )
    
    $
    (4,035
    )
    
    $
    (10,129
    )Assets at March 31, 2007
    
    $
    3,245,400
    
    
    $
    1,071,924
    
    
    $
    1,586,174
    
    
    $
    114,238
    
    
    
    
    
    
    
    
    
    
    $
    6,017,736
 Note 12  Commitments and Contingencies
 Culpepper v. Inland Mortgage Corporation
 th th
 Litigation in Connection with Loans Purchased from Community Bank of Northern Virginia
  18




---



##### Table of Contents



Hobson v. Irwin Union Bank and Trust Company Hobson Hobson Hobson
 Kossler v. Community Bank of Northern Virginia Kossler Kossler Kossler
 Hobson Kossler Hobson Hobson
 Hobson Kossler Hobson Hobson Kossler
 (Chatfield v. Irwin Union Bank and Trust Company, et al. Ransom v. Irwin
Union Bank and Trust Company, et al.)
 Hobson,
Chatfield Ransom.
 Hobson, Chatfield Ransom Kossler Kessler v. RFC, et al Kessler Kessler Kessler Kessler Kessler Kessler Kessler
 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.
 19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 About Forward-looking Statements
   
    
    our projected revenues, earnings or earnings per share, as well as managements
short-term and long-term performance goals;
    
    projected trends or potential changes in asset quality (particularly with regard to loans
or other exposures including loan repurchase risk, in sectors in which we deal in real
estate or residential mortgage lending), loan delinquencies, charge-offs, reserves, asset
valuations, capital ratios or financial performance measures;
    
    our plans and strategies, including the expected results or costs and impact of
implementing or changing such plans and strategies;
    
    potential litigation developments and the anticipated impact of potential outcomes of
pending legal matters;
    
    predictions about conditions in housing markets, industries associated with housing, the
mortgage markets or mortgage industry;
    
    the anticipated effects on results of operations or financial condition from recent
developments or events; and
    
    any other projections or expressions that are not historical facts.
   
    
    potential deterioration or effects of general economic conditions, particularly in
sectors relating to real estate and/or mortgage lending or small business-based
manufacturing and services;
    
    potential effects related to the Corporations decision to suspend the payment of
dividends on its common, preferred and trust preferred securities.
    
    difficulties in reducing risk associated with home equity
loans on our balance sheet or obtaining the desired tax treatment for
any dispositions associated with the portfolio;
 20




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##### Table of Contents




    
    potential changes in direction, volatility and relative movement (basis risk) of interest
rates, which may affect consumer and commercial demand for our products and the management
and success of our interest rate risk management strategies;
    
    competition from other financial service providers for experienced managers as well as
for customers;
    
    staffing fluctuations in response to product demand or the implementation of corporate
strategies that affect our work force and potential associated charges;
    
    the relative profitability of our lending and deposit operations;
    
    the valuation and management of our portfolios, including the use of external and
internal modeling assumptions we embed in the valuation of those portfolios and short-term
swings in the valuation of such portfolios;
    
    borrowers refinancing opportunities, which may affect the prepayment assumptions used in
our valuation estimates and which may affect loan demand;
    
    unanticipated deterioration in the credit quality or collectibility of our loan and lease
assets, including deterioration resulting from the effects of natural disasters;
    
    difficulties in accurately estimating the future repurchase risk of residential mortgage
loans due to alleged violations of representations and warranties we made when selling the
loans to the secondary market;
    
    unanticipated deterioration or changes in estimates of the carrying value of our other
assets, including securities;
    
    difficulties in delivering products to the secondary market as planned;
    
    difficulties in expanding our businesses and obtaining or retaining deposit or other
funding sources as needed;
    
    changes in the value of our lines of business, subsidiaries, or companies in which we
invest;
    
    changes in variable compensation plans related to the performance and valuation of lines
of business where we tie compensation systems to line-of-business performance;
    
    unanticipated outcomes in litigation;
    
    legislative or regulatory changes, including changes in laws, rules or regulations that
affect tax, consumer or commercial lending, corporate governance and disclosure
requirements, and other laws, rules or regulations affecting the rights and responsibilities
of our Corporation, bank or thrift;
    
    regulatory actions that impact our Corporation, bank or thrift, including the memorandum
of understanding entered into as of March 1, 2007 between Irwin Union Bank and Trust and the
Federal Reserve Bank of Chicago;
    
    changes in the interpretation of regulatory capital or other rules;
    
    the availability of resources to address changes in laws, rules or regulations or to
respond to regulatory actions;
    
    changes in applicable accounting policies or principles or their application to our
business or final audit adjustments, including additional guidance and interpretation on
accounting issues and details of the implementation of new accounting methods;
    
    the final disposition of our remaining assets and obligations of our discontinued
mortgage banking segment; or
    
    governmental changes in monetary or fiscal policies.
 21




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##### Table of Contents



Strategy
   Identify market niches.
 Attract, develop and retain exceptional management with niche expertise.
 Diversify capital and earnings risk.
 Focus on organic growth.
 Identify opportunities for coordination and efficiencies across the Bank.
 Create and maintain risk management systems appropriate to our size, scale and scope.
 22




---



##### Table of Contents



Critical Accounting Policies
  Consolidated Overview
  For the Three Months EndedMarch 31,2008
    
    2007
    
    % ChangeNet (loss) income from continuing operations (in thousands)
    
    $
    (22,166
    )
    
    $
    (6,094
    )
    
    
    (263.7
    )%Net loss including discontinued operations (in thousands)
    
    
    (22,166
    )
    
    
    (10,129
    )
    
    
    (118.8
    )Basic earnings per share from continuing operations
    
    
    (0.76
    )
    
    
    (0.22
    )
    
    
    (245.5
    )Basic earnings per share including discontinued operations
    
    
    (0.76
    )
    
    
    (0.35
    )
    
    
    (117.1
    )Diluted earnings per share from continuing operations
    
    
    (0.77
    )
    
    
    (0.22
    )
    
    
    (250.0
    )Diluted earnings per share including discontinued operations
    
    
    (0.77
    )
    
    
    (0.36
    )
    
    
    (113.9
    )Return on average equity from continuing operations
    
    
    (20.0
    )%
    
    
    (4.7
    )%
    
    
    (325.5
    )Return on average assets from continuing operations
    
    
    (1.5
    )%
    
    
    (0.4
    )%
    
    
    (275.0
    )
 Outlook
   23




---



##### Table of Contents



1
 
 1
    
    This pro forma statement assumes a hypothetical
situation in which the entire home equity portfolio is either moved off the
balance sheet without compensation or is written down to a zero value. This
analysis ignores potential non-loan restructuring charges and potential
proceeds from a sale of loans or loan assets, although we understand there is
value in these portfolios. For the loans funded with financing
securitizations, it assumes the associated debt is removed from the balance
sheet as well. Finally, it assumes the Corporation would be able to deduct any
losses for income tax purposes, which management believes would be the case. Consolidated Income Statement Analysis
 Net Loss From Continuing Operations
  Net Interest Income From Continuing Operations
  24




---



##### Table of Contents



For the Three Months Ended March 31,2008
    
    2007Annualized
    
    
    
    
    
    
    
    
    
    AnnualizedAverage
    
    
    
    
    
    Yield/
    
    Average
    
    
    
    
    
    Yield/Balance
    
    Interest
    
    Rate
    
    Balance
    
    Interest
    
    Rate(Dollars in thousands)AssetsInterest-earning assets:Interest-bearing deposits with financial institutions
    
    $
    42,644
    
    
    $
    466
    
    
    
    4.40
    %
    
    $
    56,768
    
    
    $
    680
    
    
    
    4.86
    %Federal funds sold
    
    
    5,538
    
    
    
    38
    
    
    
    2.76
    %
    
    
    1,386
    
    
    
    20
    
    
    
    5.85
    %Residual interests
    
    
    11,722
    
    
    
    275
    
    
    
    9.44
    %
    
    
    10,155
    
    
    
    270
    
    
    
    10.78
    %Investment securities
    
    
    139,215
    
    
    
    1,823
    
    
    
    5.27
    %
    
    
    130,070
    
    
    
    1,777
    
    
    
    5.54
    %Loans held for sale
    
    
    9,112
    
    
    
    166
    
    
    
    7.33
    %
    
    
    269,832
    
    
    
    5,626
    
    
    
    8.46
    %Loans and leases, net of unearned
income(1)
    
    
    5,624,289
    
    
    
    117,322
    
    
    
    8.39
    %
    
    
    5,255,104
    
    
    
    119,489
    
    
    
    9.22
    %Total interest earning assets
    
    
    5,832,520
    
    
    $
    120,090
    
    
    
    8.28
    %
    
    
    5,723,315
    
    
    $
    127,862
    
    
    
    9.06
    %Noninterest-earning assets:Cash and due from banks
    
    
    78,666
    
    
    
    
    
    
    
    
    
    
    
    72,781Premises and equipment, net
    
    
    38,172
    
    
    
    
    
    
    
    
    
    
    
    36,782Other assets
    
    
    254,725
    
    
    
    
    
    
    
    
    
    
    
    306,319Less allowance for loan and lease
losses
    
    
    (149,299
    )
    
    
    
    
    
    
    
    
    
    
    (77,096
    )Total assets
    
    $
    6,054,784
    
    
    
    
    
    
    
    
    
    
    $
    6,062,101Liabilities and Shareholders EquityInterest-bearing liabilities:Money market checking
    
    $
    319,110
    
    
    $
    1,271
    
    
    
    1.60
    %
    
    $
    298,977
    
    
    $
    1,780
    
    
    
    2.41
    %Money market savings
    
    
    1,042,507
    
    
    
    7,593
    
    
    
    2.93
    %
    
    
    1,128,166
    
    
    
    12,481
    
    
    
    4.49
    %Regular savings
    
    
    116,275
    
    
    
    526
    
    
    
    1.82
    %
    
    
    125,004
    
    
    
    678
    
    
    
    2.20
    %Time deposits
    
    
    1,656,355
    
    
    
    19,548
    
    
    
    4.75
    %
    
    
    1,483,026
    
    
    
    18,512
    
    
    
    5.06
    %Other borrowings
    
    
    643,544
    
    
    
    7,236
    
    
    
    4.52
    %
    
    
    645,767
    
    
    
    8,428
    
    
    
    5.29
    %Collateralized debt
    
    
    1,213,801
    
    
    
    15,170
    
    
    
    5.03
    %
    
    
    1,141,472
    
    
    
    15,815
    
    
    
    5.62
    %Other long-term debt
    
    
    233,871
    
    
    
    4,311
    
    
    
    7.41
    %
    
    
    233,887
    
    
    
    4,380
    
    
    
    7.59
    %Total interest-bearing liabilities
    
    $
    5,225,463
    
    
    $
    55,655
    
    
    
    4.28
    %
    
    $
    5,056,299
    
    
    $
    62,074
    
    
    
    4.98
    %Noninterest-bearing liabilities:Demand deposits
    
    
    299,915
    
    
    
    
    
    
    
    
    
    
    
    369,518Other liabilities
    
    
    78,454
    
    
    
    
    
    
    
    
    
    
    
    109,131Shareholders equity
    
    
    450,952
    
    
    
    
    
    
    
    
    
    
    
    527,153Total liabilities and
shareholders equity
    
    $
    6,054,784
    
    
    
    
    
    
    
    
    
    
    $
    6,062,101Net interest income
    
    
    
    
    
    $
    64,435
    
    
    
    
    
    
    
    
    
    
    $
    65,788Net interest income to average
interest earning assets
    
    
    
    
    
    
    
    
    
    
    4.44
    %
    
    
    
    
    
    
    
    
    
    
    4.66
    %Net interest income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (340
    )Net interest income from continuing operations
    
    
    
    
    
    $
    64,435
    
    
    
    
    
    
    
    
    
    
    $
    66,128
 
 (1)
    
    For purposes of these computations, nonaccrual loans are included in daily average loan
amounts outstanding. Provision for Loan and Lease Losses From Continuing Operations
  25




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##### Table of Contents



Noninterest Income From Continuing Operations
  Noninterest Expense From Continuing Operations
  Income Tax Provision From Continuing Operations
  Consolidated Balance Sheet Analysis
  Investment Securities
  March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Held-to-Maturity:U.S. Treasury and
government obligations
    
    $
    13,569
    
    
    $
    13,970Obligations of states
and political subdivisions
    
    
    3,321
    
    
    
    3,436Mortgage-backed securities
    
    
    713
    
    
    
    717Total held-to-maturity
    
    
    17,603
    
    
    
    18,123Available-for-Sale:Mortgage-backed securities
    
    
    30,868
    
    
    
    45,499Other
    
    
    15,073
    
    
    
    14,185Total available-for-sale
    
    
    45,941
    
    
    
    59,684Federal Home Loan Bank and Federal Reserve Bank stock
    
    
    62,588
    
    
    
    62,588Total investment securities
    
    $
    126,132
    
    
    $
    140,395
  Loans Held For Sale
  26




---



##### Table of Contents



Loans and Leases
  March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Commercial, financial and agricultural
    
    $
    2,079,136
    
    
    $
    2,099,451Real estate-construction & land development
    
    
    585,356
    
    
    
    586,037Real estate-mortgage
    
    
    1,638,213
    
    
    
    1,691,450Consumer
    
    
    27,327
    
    
    
    32,232Commercial financingFranchise financing
    
    
    910,565
    
    
    
    925,741Domestic leasing
    
    
    292,582
    
    
    
    306,301Foreign leasing
    
    
    447,011
    
    
    
    462,036Unearned incomeFranchise financing
    
    
    (301,549
    )
    
    
    (306,681
    )Domestic leasing
    
    
    (39,507
    )
    
    
    (42,723
    )Foreign leasing
    
    
    (55,596
    )
    
    
    (57,614
    )Total
    
    $
    5,583,538
    
    
    $
    5,696,230
 Allowance for Loan and Lease Losses
  March 31,
    
    December 31,2008
    
    2007And the Three
    
    And the YearMonths Then Ended
    
    Then Ended(Dollars in thousands)Balance at beginning of year
    
    $
    144,855
    
    
    $
    74,468Provision for loan and lease losses
    
    
    44,520
    
    
    
    134,988Charge-offs
    
    
    (31,794
    )
    
    
    (73,994
    )Recoveries
    
    
    1,607
    
    
    
    10,099Reduction due to reclassification and sales of loans
    
    
    (461
    )
    
    
    (1,225
    )Foreign currency adjustment
    
    
    (129
    )
    
    
    519Balance at end of period
    
    $
    158,598
    
    
    $
    144,855
 Deposits
  Other Borrowings
  27




---



##### Table of Contents



Collateralized and Other Long-Term Debt
   Capital
   March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Tier 1 capital
    
    $
    590,211
    
    
    $
    619,656Tier 2 capital
    
    
    156,219
    
    
    
    150,212Total risk-based capital
    
    $
    746,430
    
    
    $
    769,868Risk-weighted assets
    
    $
    5,976,905
    
    
    $
    6,099,204Risk-based ratios:Tier 1 capital
    
    
    9.9
    %
    
    
    10.2
    %Total capital
    
    
    12.5
    
    
    
    12.6Tier 1 leverage ratio
    
    
    9.8
    
    
    
    10.2Ending shareholders equity to assets
    
    
    7.2
    
    
    
    7.4Average shareholders equity to assets
    
    
    7.4
    
    
    
    8.3
  28




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##### Table of Contents



Cash Flow Analysis
  Earnings by Line of Business
  
    
    Commercial Banking
    
    Commercial Finance
    
    Home Equity Lending
  Three Months EndedMarch 31,2008
    
    
    2007(Dollars in thousands)Net income (loss):Commercial Banking
    
    $
    1,087
    
    
    $
    3,163Commercial Finance
    
    
    4,445
    
    
    
    2,591Home Equity Lending
    
    
    (16,101
    )
    
    
    (10,149
    )Other (including consolidating entries)
    
    
    (11,597
    )
    
    
    (1,699
    )Net
(loss) income from continuing operations
    
    
    (22,166
    )
    
    
    (6,094
    )Discontinued operations
    
    
    
    
    
    
    (4,035
    )Net loss
    
    $
    (22,166
    )
    
    $
    (10,129
    )
 29




---



##### Table of Contents



Commercial Banking
  Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Selected Income Statement Data:Interest income
    
    $
    49,726
    
    
    $
    57,473Interest expense
    
    
    (21,904
    )
    
    
    (27,887
    )Net interest income
    
    
    27,822
    
    
    
    29,586Provision for loan and lease losses
    
    
    (6,580
    )
    
    
    (4,641
    )Other income
    
    
    4,667
    
    
    
    3,947Total net revenue
    
    
    25,909
    
    
    
    28,892Operating expense
    
    
    (24,631
    )
    
    
    (24,291
    )Income before taxes
    
    
    1,278
    
    
    
    4,601Income taxes
    
    
    (191
    )
    
    
    (1,438
    )Net income
    
    $
    1,087
    
    
    $
    3,163Performance Ratios:Return on Average Equity
    
    
    1.85
    %
    
    
    5.56
    %
 March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Selected Balance Sheet Data at End of Period:Assets
    
    $
    3,088,222
    
    
    $
    3,093,764Securities and short-term investments
    
    
    38,606
    
    
    
    38,780Loans and leases
    
    
    2,923,006
    
    
    
    2,950,356Allowance for loan and lease losses
    
    
    (39,759
    )
    
    
    (35,148
    )Deposits
    
    
    2,581,448
    
    
    
    2,528,721Shareholders equity
    
    
    234,968
    
    
    
    235,009Daily Averages:Assets
    
    $
    3,065,614
    
    
    $
    3,143,219Loans and leases
    
    
    2,931,281
    
    
    
    2,902,994Allowance for loan and lease losses
    
    
    (35,460
    )
    
    
    (26,984
    )Deposits
    
    
    2,587,739
    
    
    
    2,753,615Shareholders equity
    
    
    236,362
    
    
    
    234,068Shareholders equity to assets
    
    
    7.71
    %
    
    
    7.45
    %
 Overview
  30




---



##### Table of Contents



Portfolio Characteristics
  March 31,
    
    December 31,2008
    
    2007Weighted
    
    
    
    
    
    
    
    
    
    WeightedLoans
    
    Percent
    
    Average
    
    Loans
    
    Percent
    
    AverageMarkets
    
    Outstanding
    
    of Total
    
    Yield
    
    Outstanding
    
    of Total
    
    Yield(Dollars in thousands)Indianapolis
    
    $
    537,415
    
    
    
    18.4
    %
    
    
    6.5
    %
    
    $
    539,008
    
    
    
    18.3
    %
    
    
    7.1
    %Central and Western Michigan
    
    
    447,728
    
    
    
    15.3
    
    
    
    6.2
    
    
    
    465,924
    
    
    
    15.8
    
    
    
    7.3Southern Indiana
    
    
    464,870
    
    
    
    15.9
    
    
    
    6.5
    
    
    
    463,597
    
    
    
    15.7
    
    
    
    6.7Phoenix
    
    
    485,279
    
    
    
    16.6
    
    
    
    7.0
    
    
    
    484,985
    
    
    
    16.4
    
    
    
    7.0Las Vegas
    
    
    195,754
    
    
    
    6.7
    
    
    
    6.7
    
    
    
    188,126
    
    
    
    6.4
    
    
    
    8.2Sacramento
    
    
    118,124
    
    
    
    4.0
    
    
    
    5.5
    
    
    
    120,149
    
    
    
    4.1
    
    
    
    7.7Other
    
    
    673,836
    
    
    
    23.1
    
    
    
    6.2
    
    
    
    688,567
    
    
    
    23.3
    
    
    
    7.4Total
    
    $
    2,923,006
    
    
    
    100.0
    %
    
    
    6.5
    %
    
    $
    2,950,356
    
    
    
    100.0
    %
    
    
    7.3
    %
 Weighted
    
    
    
    
    
    
    
    
    
    WeightedCore
    
    Percent
    
    Average
    
    Core
    
    Percent
    
    AverageDeposits
    
    of Total
    
    Yield
    
    Deposits
    
    of Total
    
    YieldIndianapolis
    
    $
    232,649
    
    
    
    10.8
    %
    
    
    2.0
    %
    
    $
    225,075
    
    
    
    10.0
    %
    
    
    3.5
    %Central and Western Michigan
    
    
    165,372
    
    
    
    7.6
    
    
    
    2.2
    
    
    
    195,818
    
    
    
    8.7
    
    
    
    2.6Southern Indiana
    
    
    741,410
    
    
    
    34.4
    
    
    
    2.0
    
    
    
    740,686
    
    
    
    33.1
    
    
    
    2.9Phoenix
    
    
    162,648
    
    
    
    7.4
    
    
    
    2.3
    
    
    
    175,617
    
    
    
    7.8
    
    
    
    3.4Las Vegas
    
    
    415,702
    
    
    
    19.2
    
    
    
    2.6
    
    
    
    429,693
    
    
    
    19.2
    
    
    
    3.7Sacramento
    
    
    39,417
    
    
    
    1.8
    
    
    
    1.1
    
    
    
    45,228
    
    
    
    2.0
    
    
    
    2.5Other
    
    
    404,701
    
    
    
    18.8
    
    
    
    2.4
    
    
    
    428,599
    
    
    
    19.2
    
    
    
    6.3Total
    
    $
    2,161,899
    
    
    
    100.0
    %
    
    
    2.2
    %
    
    $
    2,240,716
    
    
    
    100.0
    %
    
    
    3.1
    %
 Net Income
  Net Interest Income
  Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Net interest income
    
    $
    27,822
    
    
    $
    29,586Average interest earning assets
    
    
    2,973,285
    
    
    
    3,005,995Net interest margin
    
    
    3.76
    %
    
    
    3.99
    %
  31




---



##### Table of Contents



Provision for Loan and Lease Losses
  Noninterest Income
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Trust fees
    
    $
    581
    
    
    $
    573Service charges on deposit accounts
    
    
    1,084
    
    
    
    868Insurance commissions, fees and premiums
    
    
    561
    
    
    
    585Gain from sales of loans
    
    
    601
    
    
    
    457Loan servicing fees
    
    
    336
    
    
    
    384Amortization of servicing assets
    
    
    (315
    )
    
    
    (279
    )Brokerage fees
    
    
    370
    
    
    
    352Other
    
    
    1,449
    
    
    
    1,007Total noninterest income
    
    $
    4,667
    
    
    $
    3,947
  Operating Expenses
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Salaries and employee benefits
    
    $
    14,160
    
    
    $
    14,353Other expenses
    
    
    10,471
    
    
    
    9,938Total operating expenses
    
    $
    24,631
    
    
    $
    24,291Efficiency ratio
    
    
    75.8
    %
    
    
    72.4
    %Number of employees at period end(1)
    
    
    514
    
    
    
    592
 
 (1)
    
    On a full time equivalent basis.  Balance Sheet
  32




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##### Table of Contents



Credit Quality
  March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Nonperforming loans
    
    $
    47,427
    
    
    $
    27,001Other real estate owned
    
    
    7,136
    
    
    
    6,895Total nonperforming assets
    
    $
    54,563
    
    
    $
    33,896Nonperforming assets to total assets
    
    
    1.77
    %
    
    
    1.09
    %Allowance for loan losses
    
    $
    39,759
    
    
    $
    35,148Allowance for loan losses to total loans
    
    
    1.36
    %
    
    
    1.19
    %
 Three Months Ended March 31,2008
    
    2007For the Period Ended:Provision for loan losses
    
    $
    6,580
    
    
    $
    4,641Net charge-offs
    
    
    1,969
    
    
    
    4,826Net charge-offs to average loans
    
    
    0.27
    %
    
    
    0.68
    %
  March 31,
    
    December 31,Markets
    
    2008
    
    2007Indianapolis
    
    
    0.98
    %
    
    
    1.02
    %Central and Western Michigan
    
    
    2.32
    %
    
    
    2.52
    %Southern Indiana
    
    
    0.47
    %
    
    
    0.53
    %Phoenix
    
    
    3.26
    %
    
    
    1.20
    %Las Vegas
    
    
    0.37
    %
    
    
    0.01
    %Sacramento
    
    
    14.47
    %
    
    
    4.15
    %Other
    
    
    0.46
    %
    
    
    0.49
    %Total
    
    
    1.87
    %
    
    
    1.15
    %
 33




---



##### Table of Contents



Commercial Finance
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Selected Income Statement Data:Net interest income
    
    $
    13,940
    
    
    $
    12,008Provision for loan and lease losses
    
    
    (4,656
    )
    
    
    (3,479
    )Noninterest income
    
    
    6,288
    
    
    
    2,791Total net revenue
    
    
    15,572
    
    
    
    11,320Operating expense
    
    
    (8,127
    )
    
    
    (7,134
    )Income before taxes
    
    
    7,445
    
    
    
    4,186Income taxes
    
    
    (3,000
    )
    
    
    (1,595
    )Net income
    
    $
    4,445
    
    
    $
    2,591Selected Operating Data:Net charge-offs
    
    $
    2,736
    
    
    $
    1,946Net charge-offs to average loans
    
    
    0.68
    %
    
    
    0.22
    %Net interest margin
    
    
    4.44
    %
    
    
    4.64
    %Total funding of loans and leases
    
    $
    142,559
    
    
    $
    128,835Return on average equity
    
    
    13.81
    %
    
    
    11.83
    %
 March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Selected Balance Sheet Data at End of Period:Total assets
    
    $
    1,281,596
    
    
    $
    1,302,688Loans and leases
    
    
    1,253,506
    
    
    
    1,287,060Allowance for loan and lease losses
    
    
    (19,038
    )
    
    
    (17,792
    )Shareholders equity
    
    
    127,977
    
    
    
    119,574
 Overview
   34




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##### Table of Contents



Portfolio Characteristics
  March 31,
    
    
    December 31,United States
    
    2008
    
    
    2007California
    
    
    12.1
    %
    
    
    11.5
    %Texas
    
    
    7.7
    
    
    
    8.0New York
    
    
    4.6
    
    
    
    4.7Florida
    
    
    4.3
    
    
    
    4.3All other states
    
    
    40.1
    
    
    
    40.1Total United States
    
    
    68.8
    %
    
    
    68.6
    %Canada(1)Ontario
    
    
    7.4
    %
    
    
    7.5
    %Quebec
    
    
    7.2
    
    
    
    7.2British Columbia
    
    
    7.0
    
    
    
    7.2Alberta
    
    
    6.6
    
    
    
    6.5All other provinces
    
    
    3.0
    
    
    
    3.0Total Canada
    
    
    31.2
    %
    
    
    31.4
    %Total ICF
    
    
    100.0
    %
    
    
    100.0
    %Total Portfolio
    
    $
    1,253,506
    
    
    $
    1,287,060
  March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Domestic franchise loans
    
    $
    609,016
    
    
    $
    619,060Weighted average coupon
    
    
    10.66
    %
    
    
    9.38
    %Delinquency ratio
    
    
    0.57
    
    
    
    0.04Domestic leases
    
    $
    253,075
    
    
    $
    263,578Weighted average coupon
    
    
    10.99
    %
    
    
    10.91
    %Delinquency ratio
    
    
    3.08
    
    
    
    2.47Canadian leases (1)
    
    $
    391,415
    
    
    $
    404,422Weighted average coupon
    
    
    8.99
    %
    
    
    9.09
    %Delinquency ratio
    
    
    0.54
    
    
    
    0.51
 
 (1)
    
    In U.S. dollars. Net Income
  35




---



##### Table of Contents



Net Interest Income
  Three Months March 31,2008
    
    2007(Dollars in thousands)Net interest income
    
    $
    13,940
    
    
    $
    12,008Average interest earning assets
    
    
    1,261,482
    
    
    
    1,049,950Net interest margin
    
    
    4.44
    %
    
    
    4.64
    %
   Provision for Loan and Lease Losses
  Noninterest Income
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Gain from sales of loans
    
    $
    5,829
    
    
    $
    1,571Derivative losses, net
    
    
    (1,117
    )
    
    
    (16
    )Other
    
    
    1,576
    
    
    
    1,236Total noninterest income
    
    $
    6,288
    
    
    $
    2,791
  Operating Expenses
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Salaries and employee benefits
    
    $
    5,134
    
    
    $
    4,583Other
    
    
    2,993
    
    
    
    2,551Total operating expenses
    
    $
    8,127
    
    
    $
    7,134Efficiency ratio
    
    
    38.34
    %
    
    
    52.54
    %Number of employees at period end (1)
    
    
    209
    
    
    
    211
 
 (1)
    
    On a full time equivalent basis. 36




---



##### Table of Contents



Credit Quality
   March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Canadian Leases:Nonperforming leases
    
    $
    3,073
    
    
    $
    2,340Repossessed Inventory
    
    
    414
    
    
    
    351Allowance for lease losses
    
    
    4,455
    
    
    
    4,328Allowance for lease losses to total leases
    
    
    1.14
    %
    
    
    1.07
    %
 Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Provision for lease losses
    
    $
    985
    
    
    $
    552Net charge-offs
    
    
    737
    
    
    
    653Net charge-offs to average leases
    
    
    0.73
    %
    
    
    0.84
    %
 March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Domestic Leases:Nonperforming leases
    
    $
    3,897
    
    
    $
    2,906Repossessed Inventory
    
    
    1,153
    
    
    
    891Allowance for lease losses
    
    
    8,257
    
    
    
    7,503Allowance for lease losses to total leases
    
    
    2.11
    %
    
    
    1.86
    %
 Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Provision for lease losses
    
    $
    2,157
    
    
    $
    2,504Net charge-offs
    
    
    1,403
    
    
    
    1,257Net charge-offs to average leases
    
    
    2.20
    %
    
    
    2.00
    %
 March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Franchise Loans:Nonperforming loans
    
    $
    3,558
    
    
    $
    3,630Allowance for loan losses
    
    
    6,326
    
    
    
    5,961Allowance for loan losses to total loans
    
    
    1.04
    %
    
    
    0.96
    %
 Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Provision for loan losses
    
    $
    1,514
    
    
    $
    423Net charge-offs
    
    
    596
    
    
    
    36Net charge-offs to average loans
    
    
    0.45
    %
    
    
    0.03
    %
 37




---



##### Table of Contents



Home Equity Lending
  Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Selected Income Statement Data:Net interest income
    
    $
    23,381
    
    
    $
    24,564Provision for loan and lease losses
    
    
    (33,285
    )
    
    
    (15,088
    )Noninterest income
    
    
    (2,918
    )
    
    
    (6,796
    )Total net revenues
    
    
    (12,822
    )
    
    
    2,680Operating expenses
    
    
    (14,011
    )
    
    
    (19,581
    )Loss before taxes
    
    
    (26,833
    )
    
    
    (16,901
    )Income taxes
    
    
    10,732
    
    
    
    6,752Net Loss
    
    $
    (16,101
    )
    
    $
    (10,149
    )Selected Operating Data:Loan volume:Lines of credit
    
    $
    3,563
    
    
    $
    12,611Loans
    
    
    25,797
    
    
    
    176,609Net home equity charge-offs to average
managed portfolio
    
    
    6.56
    %
    
    
    3.01
    %Gain on sale of loans to loans sold
    
    
    2.46
    %
    
    
    0.17
    %
 March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Selected Balance Sheet Data:Total assets
    
    $
    1,411,521
    
    
    $
    1,481,306Home equity loans and lines of credit(1)
    
    
    1,406,639
    
    
    
    1,458,564Allowance for loan losses
    
    
    (99,504
    )
    
    
    (91,700
    )Home equity loans held for sale
    
    
    904
    
    
    
    5,865Residual interests
    
    
    1,900
    
    
    
    3,120Mortgage servicing assets
    
    
    16,168
    
    
    
    20,071Short-term borrowings
    
    
    248,397
    
    
    
    291,293Collateralized debt
    
    
    931,843
    
    
    
    970,733Shareholders equity
    
    
    176,017
    
    
    
    156,894Selected Operating Data:Total managed portfolio balance
    
    
    1,541,039
    
    
    
    1,605,032Delinquency ratio(2)
    
    
    5.7
    %
    
    
    5.8
    %Weighted average coupon rate:Lines of credit
    
    
    9.43
    %
    
    
    10.62
    %Loans
    
    
    11.08
    
    
    
    11.07
 
 (1)
    
    Includes $1.1 billion of collateralized loans at both March 31, 2008 and December 31, 2007,
as part of securitized financings.(2)
    
    Nonaccrual loans are included in the delinquency ratio. Overview
   38




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##### Table of Contents



Geographic Distribution of our Portfolio and Current Originations
 Portfolio:
 March 31,
    
    December 31,State
    
    2008
    
    2007California
    
    
    9.9
    %
    
    
    9.8
    %Michigan
    
    
    7.9
    
    
    
    7.9Colorado
    
    
    7.6
    
    
    
    7.6Ohio
    
    
    6.8
    
    
    
    6.7Florida
    
    
    6.1
    
    
    
    6.3All other states
    
    
    61.7
    
    
    
    61.7Total
    
    
    100.0
    %
    
    
    100.0
    %Total managed portfolio in thousands
    
    $
    1,541,039
    
    
    $
    1,605,032
 Originations:
 March 31,State
    
    2008
    
    2007Missouri
    
    
    14.1
    %
    
    
    3.4
    %California
    
    
    13.3
    
    
    
    9.1Pennsylvania
    
    
    10.7
    
    
    
    5.1Colorado
    
    
    6.9
    
    
    
    7.7Virginia
    
    
    5.7
    
    
    
    4.0All other states
    
    
    49.3
    
    
    
    70.7Total
    
    
    100.0
    %
    
    
    100.0
    %
 Production and Portfolio Characteristics
  39




---



##### Table of Contents



March 31, 2008
    
    
    December 31, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageAmount
    
    
    % of Total
    
    
    Coupon
    
    
    Amount
    
    
    % of Total
    
    
    Coupon(Dollars in thousands)Home Equity PortfolioLoans ≤
 100% CLTV
    
    $
    406,106
    
    
    
    26.35
    %
    
    
    9.02
    %
    
    $
    425,939
    
    
    
    26.54
    %
    
    
    9.04
    %Lines of credit ≤
 100% CLTV
    
    
    232,499
    
    
    
    15.09
    
    
    
    8.11
    
    
    
    246,524
    
    
    
    15.36
    
    
    
    9.35First mortgages ≤
 100% CLTV
    
    
    45,233
    
    
    
    2.94
    
    
    
    7.64
    
    
    
    49,962
    
    
    
    3.11
    
    
    
    7.68Total ≤
 100% CLTV
    
    
    683,838
    
    
    
    44.38
    
    
    
    8.62
    
    
    
    722,425
    
    
    
    45.01
    
    
    
    9.05Loans > 100% CLTV
    
    
    743,599
    
    
    
    48.25
    
    
    
    12.50
    
    
    
    766,168
    
    
    
    47.74
    
    
    
    12.50Lines of credit > 100% CLTV
    
    
    85,643
    
    
    
    5.56
    
    
    
    12.79
    
    
    
    87,825
    
    
    
    5.47
    
    
    
    14.00First mortgages > 100% CLTV
    
    
    23,319
    
    
    
    1.51
    
    
    
    8.48
    
    
    
    23,584
    
    
    
    1.47
    
    
    
    8.48Total > 100% CLTV
    
    
    852,561
    
    
    
    55.32
    
    
    
    12.42
    
    
    
    877,577
    
    
    
    54.68
    
    
    
    12.54Other
    
    
    4,640
    
    
    
    0.30
    
    
    
    13.64
    
    
    
    5,030
    
    
    
    0.31
    
    
    
    13.58Total managed portfolio (1)
    
    $
    1,541,039
    
    
    
    100.00
    %
    
    
    10.73
    %
    
    $
    1,605,032
    
    
    
    100.00
    %
    
    
    10.97
    %
 
 (1)
    
    We define our Managed Portfolio as the portfolio of loans ($1.5 billion) that we
service and on which we carry credit risk. At March 31, 2008, we also serviced another $0.8
billion of loans for which the credit risk is held by others. 40




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##### Table of Contents



Three Months Ended March 31,Product
    
    2008
    
    2007(Funding amount in thousands)First mortgage loansFunding Amount
    
    
    19,315
    
    
    
    43,776Weighted Average Disposable Income
    
    
    5,582
    
    
    
    4,912Weighted Average FICO score
    
    
    716
    
    
    
    687Weighted Average Coupon
    
    
    8.13
    %
    
    
    8.14
    %First mortgage loans up to 110%Funding Amount
    
    
    
    
    
    
    1,839Weighted Average Disposable Income
    
    
    
    
    
    
    3,722Weighted Average FICO score
    
    
    
    
    
    
    701Weighted Average Coupon
    
    
    
    
    
    
    9.29
    %Home equity loans up to 100% CLTVFunding Amount
    
    
    2,255
    
    
    
    53,276Weighted Average Disposable Income
    
    
    5,437
    
    
    
    5,479Weighted Average FICO score
    
    
    715
    
    
    
    695Weighted Average Coupon
    
    
    10.89
    %
    
    
    10.27
    %Home equity loans up to 125% CLTVFunding Amount
    
    
    4,228
    
    
    
    77,719Weighted Average Disposable Income
    
    
    5,191
    
    
    
    4,648Weighted Average FICO score
    
    
    710
    
    
    
    700Weighted Average Coupon
    
    
    13.21
    %
    
    
    12.29
    %Home equity lines of credit up to 100% CLTVFunding Amount
    
    
    1,033
    
    
    
    9,281Weighted Average Disposable Income
    
    
    8,699
    
    
    
    5,900Weighted Average FICO score
    
    
    731
    
    
    
    684Weighted Average Coupon
    
    
    9.91
    %
    
    
    10.86
    %Home equity lines of credit up to 125% CLTVFunding Amount
    
    
    2,529
    
    
    
    3,330Weighted Average Disposable Income
    
    
    5,104
    
    
    
    5,275Weighted Average FICO score
    
    
    711
    
    
    
    684Weighted Average Coupon
    
    
    13.54
    %
    
    
    15.36
    %All ProductsFunding Amount
    
    
    29,360
    
    
    
    189,220Weighted Average Disposable Income
    
    
    5,583
    
    
    
    4,997Weighted Average FICO score
    
    
    715
    
    
    
    695Weighted Average Coupon
    
    
    9.60
    %
    
    
    10.72
    %
 Net Income
  41




---



##### Table of Contents



Net Revenue
   For the Three Months Ended March 31,2008
    
    2007(Dollars in thousands)Total originations
    
    $
    29,360
    
    
    $
    189,220Percent broker
    
    
    86
    %
    
    
    50
    %Percent correspondent
    
    
    10
    
    
    
    38Percent retail loans
    
    
    4
    
    
    
    7Percent other
    
    
    
    
    
    
    5
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Net interest income
    
    $
    23,381
    
    
    $
    24,564Provision for loan losses
    
    
    (33,285
    )
    
    
    (15,088
    )Gain on sales of whole loans
    
    
    552
    
    
    
    191Valuation adjustment on loans held for sale
    
    
    (4
    )
    
    
    (7,913
    )Gain (loss) on sales of loans
    
    
    548
    
    
    
    (7,722
    )Loan servicing fees
    
    
    2,163
    
    
    
    5,528Amortization and impairment of servicing assets
    
    
    (3,904
    )
    
    
    (4,671
    )Derivative losses
    
    
    (1
    )
    
    
    (294
    )Other
    
    
    (1,724
    )
    
    
    363Total net revenue
    
    $
    (12,822
    )
    
    $
    2,680
     42




---



##### Table of Contents



Incentive
Servicing Fees)
  Operating Expenses
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Salaries and employee benefits
    
    $
    7,803
    
    
    $
    12,162Other
    
    
    6,208
    
    
    
    7,419Total operating expenses
    
    $
    14,011
    
    
    $
    19,581Number of employees at period end (1)
    
    
    292
    
    
    
    483
 
 (1)
    
    On a full time equivalent basis.  Home Equity Servicing and Credit Quality
   43




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44




---



##### Table of Contents



March 31,
    
    December 31,2008
    
    2007(Dollars in thousands)Managed PortfolioTotal Loans
    
    $
    1,541,039
    
    
    $
    1,605,03230 days past due
    
    
    5.66
    %
    
    
    5.78
    %90 days past due
    
    
    2.76
    
    
    
    2.53Net Chargeoff Rate
    
    
    6.56
    
    
    
    4.62Unsold Loans   FinancedTotal Loans
    
    $
    1,068,453
    
    
    $
    1,118,03230 days past due
    
    
    5.36
    %
    
    
    5.56
    %90 days past due
    
    
    2.51
    %
    
    
    2.39
    %Net Chargeoff Rate
    
    
    7.10
    %
    
    
    4.80
    %Loan Loss Reserve
    
    $
    64,091
    
    
    $
    58,262Unsold Loans   OtherTotal Loans
    
    $
    332,564
    
    
    $
    340,06330 days past due
    
    
    8.21
    %
    
    
    8.22
    %90 days past due
    
    
    4.34
    %
    
    
    3.95
    %Net Chargeoff Rate
    
    
    7.29
    %
    
    
    5.89
    %Loan Loss Reserve
    
    $
    35,413
    
    
    $
    33,438Owned ResidualTotal Loans
    
    $
    140,022
    
    
    $
    146,93730 days past due
    
    
    1.95
    %
    
    
    1.83
    %90 days past due
    
    
    0.94
    
    
    
    0.29Net Chargeoff Rate
    
    
    0.68
    
    
    
    0.35Residual Undiscounted Losses
    
    $
    2,070
    
    
    $
    870Credit Risk Sold, Potential Incentive
Servicing Fee Retained PortfolioTotal Loans
    
    $
    435,309
    
    
    $
    461,23730 days past due
    
    
    6.04
    %
    
    
    7.13
    %90 days past due
    
    
    2.67
    
    
    
    2.69
 
 (1)
    
    Excludes deferred fees and costs. Parent and Other
    45




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##### Table of Contents



Risk Management
  
    
    Credit risk
    
    Liquidity risk
    
    Market risk (including interest rate and foreign exchange risk)
    
    Operational risk
    
    Compliance risk
      46




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##### Table of Contents



Credit Risk
     Annualized for the Three Months EndedMarch 31,
    
    December 31,2008
    
    2007Commercial Bank
    
    
    0.27
    %
    
    
    0.27
    %Commercial Finance
    
    
    0.88
    
    
    
    0.90Home Equity Lending
    
    
    7.15
    
    
    
    5.05Total
    
    
    2.16
    %
    
    
    1.66
    %
   47




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##### Table of Contents



March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Accruing loans past due 90 days or more:Commercial, financial and
agricultural loans
    
    $
    265
    
    
    $
    177Real estate mortgages
    
    
    
    
    
    
    151Consumer loans
    
    
    225
    
    
    
    41Commercial financing:Franchise financing
    
    
    
    
    
    
    Domestic leasing
    
    
    189
    
    
    
    311Canadian leasing
    
    
    188
    
    
    
    177867
    
    
    
    857Nonaccrual loans and leases:Commercial, financial and
agricultural loans
    
    
    45,017
    
    
    
    25,797Real estate mortgages
    
    
    41,351
    
    
    
    40,681Consumer loans
    
    
    1,920
    
    
    
    587Commercial financing:Franchise financing
    
    
    3,558
    
    
    
    3,630Domestic leasing
    
    
    3,708
    
    
    
    2,595Canadian leasing
    
    
    2,885
    
    
    
    2,16398,439
    
    
    
    75,453Total nonperforming
loans and leases
    
    
    99,306
    
    
    
    76,310Other real estate owned & other
    
    
    17,184
    
    
    
    16,964Total nonperforming assets
    
    $
    116,490
    
    
    $
    93,274Nonperforming loans and leases to total
loans and leases
    
    
    1.8
    %
    
    
    1.3
    %Nonperforming assets to total
assets
    
    
    1.9
    %
    
    
    1.5
    %
   March 31,2008    Commercial banking
    
    $
    54    Commercial finance
    
    
    12    Home Equity
Lending
    
    
    48    Parent and other
    
    
    2
  48




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##### Table of Contents



Liquidity Risk
        
    
    Lines of credit with correspondent banks, including fed funds lines: none outstanding out
of $45 million available but not committed
    
    Lines of credit with non-correspondent banks: $70 million outstanding
    
    Small ticket Canadian leases financed via commercial paper conduits $254 million
    
    Federal Reserve Bank Discount Window: none outstanding on $363 million of loans pledged
 49




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##### Table of Contents



Market Risk (including Interest Rate and Foreign Exchange Risk)
         
    
    The net asset value sensitivities do not necessarily represent the changes in the lines
of business net asset value that would actually occur under the given interest rate
scenarios, as sensitivities do not reflect changes in value of the companies as a going
concern, nor consider potential rebalancing or other management actions that might be taken
in the future under asset/liability management as interest rates change.
    
    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
 50




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##### Table of Contents



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.
    
    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. Further, 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 period to period.
 Economic Value Change Method
 Present Value at March 31, 2008Change in Interest Rates of:-2%
    
    
    -1%
    
    
    Current
    
    
    +1%
    
    
    +2%(In Thousands)Interest Sensitive AssetsLoans and other assets
    
    $
    6,238,414
    
    
    $
    6,124,614
    
    
    $
    6,023,080
    
    
    $
    5,924,643
    
    
    $
    5,828,837Loans held for sale
    
    
    2,809
    
    
    
    2,785
    
    
    
    2,755
    
    
    
    2,713
    
    
    
    2,666Mortgage servicing rights
    
    
    14,225
    
    
    
    17,153
    
    
    
    20,833
    
    
    
    23,535
    
    
    
    25,359Residual interests
    
    
    12,188
    
    
    
    11,469
    
    
    
    10,974
    
    
    
    10,947
    
    
    
    10,966Interest sensitive financial
derivatives
    
    
    (24,971
    )
    
    
    (16,995
    )
    
    
    (9,365
    )
    
    
    (2,055
    )
    
    
    4,980Total interest sensitive assets
    
    
    6,242,665
    
    
    
    6,139,026
    
    
    
    6,048,277
    
    
    
    5,959,783
    
    
    
    5,872,808Interest Sensitive LiabilitiesDeposits
    
    
    (3,367,652
    )
    
    
    (3,326,540
    )
    
    
    (3,290,048
    )
    
    
    (3,252,600
    )
    
    
    (3,215,951
    )Short-term borrowings (1)
    
    
    (1,179,283
    )
    
    
    (1,162,000
    )
    
    
    (1,145,426
    )
    
    
    (1,129,518
    )
    
    
    (1,114,240
    )Long-term debt
    
    
    (1,221,653
    )
    
    
    (1,208,154
    )
    
    
    (1,191,927
    )
    
    
    (1,169,521
    )
    
    
    (1,146,336
    )Total interest sensitive liabilities
    
    
    (5,768,588
    )
    
    
    (5,696,694
    )
    
    
    (5,627,401
    )
    
    
    (5,551,639
    )
    
    
    (5,476,527
    )Net market value as of March 31,
2008
    
    $
    474,077
    
    
    $
    442,332
    
    
    $
    420,876
    
    
    $
    408,144
    
    
    $
    396,281Change from current
    
    $
    53,201
    
    
    $
    21,456
    
    
    $
    
    
    
    $
    (12,732
    )
    
    $
    (24,595
    )Net market value as of December 31,
2007
    
    $
    580,528
    
    
    $
    550,396
    
    
    $
    520,520
    
    
    $
    500,920
    
    
    $
    487,010Change from current
    
    $
    60,008
    
    
    $
    29,876
    
    
    $
    
    
    
    $
    (19,600
    )
    
    $
    (33,510
    )
 
 (1)
    
    Includes certain debt which is categorized as collateralized borrowings in other sections
of this document 51




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##### Table of Contents



GAAP-Based Value Change Method
 Present Value at March 31, 2008Change in Interest Rates of:-2%
    
    
    -1%
    
    
    Current
    
    
    +1%
    
    
    +2%(In Thousands)Interest Sensitive AssetsLoans and other assets (1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Loans held for sale
    
    
    2,747
    
    
    
    2,747
    
    
    
    2,747
    
    
    
    2,704
    
    
    
    2,658Mortgage servicing rights
    
    
    12,736
    
    
    
    15,664
    
    
    
    19,343
    
    
    
    22,045
    
    
    
    23,870Residual interests
    
    
    12,188
    
    
    
    11,469
    
    
    
    10,974
    
    
    
    10,947
    
    
    
    10,966Interest sensitive financial
derivatives
    
    
    (24,971
    )
    
    
    (16,995
    )
    
    
    (9,365
    )
    
    
    (2,055
    )
    
    
    4,980Total interest sensitive assets
    
    
    2,700
    
    
    
    12,885
    
    
    
    23,699
    
    
    
    33,641
    
    
    
    42,474Interest Sensitive LiabilitiesDeposits (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term borrowings (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest sensitive liabilities
(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net market value as of March 31, 2008
    
    $
    2,700
    
    
    $
    12,885
    
    
    $
    23,699
    
    
    $
    33,641
    
    
    $
    42,474Potential change
    
    $
    (20,999
    )
    
    $
    (10,814
    )
    
    $
    
    
    
    $
    9,942
    
    
    $
    18,775Net market value as of December 31,
2007
    
    $
    16,354
    
    
    $
    26,253
    
    
    $
    36,354
    
    
    $
    44,920
    
    
    $
    52,505Potential change
    
    $
    (20,000
    )
    
    $
    (10,101
    )
    
    $
    
    
    
    $
    8,566
    
    
    $
    16,151
 
 (1)
    
    Value does not change in GAAP presentation Off-Balance Sheet Instruments
   Derivative Financial Instruments
   52




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##### Table of Contents



Operational and Compliance Risk.
  53




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk.
  
 Item 4. Controls and Procedures.
   
 PART II. Other Information.
 
 Item 1. Legal Proceedings.
 Since the time we filed our Report on Form 10-K for the year ended December 31, 2007, we experienced developments as noted in the litigation described below:
 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.,
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  54




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##### Table of Contents



Item 6. Exhibits.
 ExhibitNumber
    
    Description of Exhibit2.1
    
    Asset Purchase Agreement by and among Irwin Financial Corporation, Irwin Mortgage Corporation and Freedom
Mortgage Corporation dated as of August 7, 2006. (Incorporated by reference to Exhibits 2.1 and 2.2 of Form 8-K
filed October 2, 2006, File No. 001-16691.)3.1
    
    Restated Articles of Incorporation of Irwin Financial Corporation, as amended December 20, 2006. (Incorporated
by reference to Exhibit 3.1 of Form 10-K for period ended December 31, 2006, and filed March 9, 2007, File No.
001-16691.)3.2
    
    Code of By-laws of Irwin Financial Corporation, as amended, February 15, 2007. (Incorporated by reference to
Exhibit 3.2 of Form 10-K filed March 9, 2007, File No. 001-16691.)3.3
    
    Code of By-laws of Irwin Financial Corporation, as amended November 28, 2007. (Incorporated by reference to
Exhibit 3.1 of Form 8-K filed November 30, 2007.)4.1
    
    Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 of Form 10-K filed March 9, 2007,
File No. 001-16691.)4.2
    
    Certain instruments defining the rights of the holders of long-term debt of Irwin Financial Corporation and
certain of its subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the
total assets of the Corporation and its subsidiaries on a consolidated basis, have not been filed as Exhibits.
The Corporation hereby agrees to furnish a copy of any of these agreements to the Commission upon 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 June 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.)
 55




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.8
    
    *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
    
    *Employee Stock Purchase Plan III. (Incorporated by reference to Exhibit 10(a) to Form 10-Q Report for the
quarter ended June 30, 1999, File No. 000-06835.)10.15
    
    *Long-Term Management Performance Plan. (Incorporated by reference to Exhibit 10(a) to Form 10-K Report for the
period ended December 31, 1986, File No. 000-06835.)10.16
    
    *Long-Term Incentive Plan-Summary of Terms. (Incorporated by reference to Exhibit 10(a) to Form 10-K Report for
the period ended December 31, 1986, File No. 000-06835.)10.17
    
    *Amended and Restated Management Bonus Plan. (Incorporated by reference to Exhibit 10(a) to Form 10-K Report for
the period ended December 31, 1986, File No. 000-06835.)10.18
    
    *Irwin Financial Corporation Amended and Restated Short Term Incentive Plan effective January 1, 2006.
(Incorporated by reference to Exhibit 10.27 of Form 10-Q Report for the quarter ended June 30 2006, File No.
001-16691.)10.19
    
    *First Amendment to the Irwin Financial Corporation Amended and Restated Short Term Incentive Plan.
(Incorporated by reference to Exhibit 10.28 of Form 10-Q Report for the quarter ended June 30 2007, File No.
001-16691.)10.20
    
    *Irwin Commercial Finance Amended and Restated Short Term Incentive Plan effective January 1, 2006.
(Incorporated by reference to Exhibit 10.28 of Form 10-Q for the quarter ended June 30, 2006, File No.
001-16691.)10.21
    
    *First Amendment to the Irwin Commercial Finance Amended and Restated Short Term Incentive Plan. (Incorporated
by reference to Exhibit 10.30 of Form 10-Q for the quarter ended June 30, 2007, File No. 001-16691.)10.22
    
    *Irwin Home Equity Amended and Restated Short Term Incentive Plan effective January 1, 2006. (Incorporated by
reference to Exhibit 10.29 of Form 10-Q for the quarter ended June 30, 2006, File No. 001-16691.)
 56




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.23
    
    *First Amendment to the Irwin Home Equity Amended and Restated Short Term Incentive Plan effective January 1,
2006. (Incorporated by reference to Exhibit 10.32 of Form 10-Q for the quarter ended June 30, 2007, File No.
001-16691.)10.24
    
    *Irwin Union Bank and Trust Company Amended and Restated Short Term Incentive Plan effective January 1, 2006.
(Incorporated by reference to Exhibit 10.31 of Form 10-Q Report for the quarter ended June 30, 2006, File No.
001-16691.)10.25
    
    *First Amendment to the Irwin Union Bank and Trust Company Amended and Restated Short Term Incentive Plan
(Incorporated by reference to Exhibit 10.35 of Form 10-Q Report for the quarter ended June 30, 2007, File No.
001-16691.)10.26
    
    *Onset Capital Corporation Employment Agreement. (Incorporated by reference to Exhibit 10.26 to Form 10-Q Report
for the quarter ended June 30, 2002, File No. 000-06835.)10.27
    
    *Irwin Financial Corporation Restated Supplemental Executive Retirement Plan for Named Executives. (Incorporated
by reference to Exhibit 10.27 to Form 10-Q Report for period ended June 30, 2002, File No. 000-06835.)10.28
    
    *Irwin Financial Corporation Supplemental Executive Retirement Plan for Named Executives. (Incorporated by
reference to Exhibit 10.28 to Form 10-Q Report for the quarter ended June 30, 2002, File No. 000-06835.)10.29
    
    *Stock Purchase Agreement by and between Onset Holdings Inc. and Irwin International Corporation dated December
23, 2005. (Incorporated by reference to Exhibit 10.36 of Form 10-K Report for period ended December 31, 2005,
File No. 001-16691.)10.30
    
    *Shareholder Agreement Termination Agreement by and between Irwin Commercial Finance Canada Corporation and
Irwin International Corporation dated December 23, 2005. (Incorporated by reference to Exhibit 10.37 of Form
10-K Report for period ended December 31, 2005, File No. 001-16691.)10.31
    
    *Irwin Commercial Finance Corporation First Amended and Restated Shareholder Agreement dated May 15, 2007.
(Incorporated by reference to Exhibit 10.41 of Form 10-Q Report for the quarter ended June 30, 2007, File No.
001-16691.)10.32
    
    *Irwin Commercial Finance Corporation 2005 Stock Option Agreement Grant of Option to Joseph LaLeggia dated
December 23, 2005. (Incorporated by reference to Exhibit 10.39 of Form 10-K Report for period ended December 31,
2005, File No. 001-16691.)10.33
    
    *Irwin Commercial Finance Corporation 2005 Notice of Stock Option Grant to Joseph LaLeggia dated December 23,
2005. (Incorporated by reference to Exhibit 10.40 of Form 10-K Report for period ended December 31, 2005, File
No. 001-16691.)10.34
    
    *Irwin Union Bank Amended and Restated Performance Unit Plan. (Incorporated by reference to Exhibit 10.41 of
Form 10- K Report for period ended December 31, 2005, File No. 001-16691.)10.35
    
    *Irwin Commercial Finance Amended and Restated Performance Unit Plan. (Incorporated by reference to Exhibit
10.42 of Form 10-K Report for period ended December 31, 2005, File No. 001-16691.)10.36
    
    *First Amendment to the Irwin Commercial Finance Amended and Restated Performance Unit Plan, dated October 31,
2006. (Incorporated by reference to Exhibit 10.41 of Form 10-K report for the period ended December 31, 2006,
File No. 001-16691.)10.37
    
    *Irwin Home Equity Corporation Performance Unit Plan. (Incorporated by reference to Exhibit 10.43 of Form 10-K
Report for period ended December 31, 2005, File No. 001-16691.)
 57




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.38
    
    *Supplemental Performance Unit Grant-Jocelyn Martin-Leano, dated February 6, 2007. (Incorporated by reference to
Exhibit 10.45 of Form 10-K filed March 9, 2007, File No. 001-16691.)10.39
    
    *Irwin Financial Corporation 2007 Performance Unit Plan. (Incorporated by reference to Appendix B of the
Corporations 2007 Proxy Statement for the Annual Meeting of Shareholders, filed April 16, 2007, File No.
001-16691.)10.40
    
    *Agreement General Release and Covenant Not to Sue between Irwin Financial Corporation, and Thomas D. Washburn
executed December 5, 2007. (Incorporated by reference to Exhibit 99.1 of Form 8-K filed December 13, 2007, File
No. 001-16691.)11.1
    
    Computation of Earnings Per Share is included in the notes to the financial statements.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. 58




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##### Table of Contents



SIGNATURES
  DATE: May 6, 2008
    IRWIN FINANCIAL CORPORATIONBy:
    /s/ Gregory F. EhlingerGREGORY F. EHLINGERCHIEF FINANCIAL OFFICERBy:
    /s/ Jody A. LittrellJODY A. LITTRELLCORPORATE CONTROLLER 
(Chief Accounting Officer) 59