UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

(Mark One)

[X

For the quarterly period ended June 30, 2001

OR

[  ] 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 registrant as specified in its charter)



|INDIANA                                                        | 35-1286807                       
|-------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of Incorporation or organization) | (IRS Employer Identification No.)





500 Washington Street, Columbus, IN  47201

(Address or principal executive offices)

(Zip Code)



(812) 376-1909

(Registrant's telephone number, including area code)

________________________________________________________________

(Former name, former address and former fiscal year if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes __X__   No _____

As of August 9, 2001 there were outstanding 21,252,233 common shares, no par value, of the Registrant.

---

|Part I                                                                                     
|-------------------------------------------------------------------------------------------
|                                                                                           
|Item 1                                                                                     
|                                                                                           
|IRWIN FINANCIAL CORPORATION
      AND SUBSIDIARIES                                         
|CONSOLIDATED BALANCE SHEET (Unaudited)                                                     
|                                                                                           
|                                                                                           
|(In thousands,
      except for shares)                                                    
|Assets:                                                                                    
|Cash
      and cash equivalents                                                            
|Interest-bearing
      deposits with financial institutions                                
|Trading
      assets                                                                       
|Investment
      securities (Market value: $32,855 in 2001 and $37,163 in 2000) - Note 2   
|Loans
      held for sale                                                                  
|Loans
      and leases, net of unearned income - Note 3                                    
|Less:
      Allowance for loan and lease losses - Note 4                                   
|                                                                                           
|Servicing
      assets - Note 5                                                            
|Accounts
      receivable                                                                  
|Accrued
      interest receivable                                                          
|Premises
      and equipment                                                               
|Other
      assets                                                                         
|Total
      assets                                                                         
|Liabilities
      and Shareholders' Equity:                                                
|Deposits                                                                                   
|Noninterest-bearing                                                                        
|Interest-bearing                                                                           
|Certificates
      of deposit over $100,000                                                
|                                                                                           
|Short-term
      borrowings- Note 6                                                        
|Long-term
      debt- Note 7                                                               
|Other
      liabilities                                                                    
|Company-obligated
      mandatorily redeemable                                             
|preferred
      securities of subsidiary trust- Note 8                                     
|Total
      liabilities                                                                    
|                                                                                           
|Commitments
      and contingencies - Note 9                                               
|                                                                                           
|Shareholders'
      equity                                                                 
|Preferred
      stock, no par value - authorized                                           
|4,000,000 shares;
      issued 96,336 shares as of June 30, 2001 and                       
|December
      31, 2000                                                                    
|Common
      stock; no par value - authorized 40,000,000 shares;                           
|issued
      23,402,080 shares as of June 30, 2001 and December 31, 2000;                  
|including
      2,210,486 and 2,376,119 shares in treasury as of June 30,                  
|2001
      and December 31, 2000, respectively                                             
|Additional
      paid-in capital                                                           
|Minority
      interest                                                                    
|Accumulated
      other comprehensive income net of deferred income tax                    
|asset
      of ($290) and ($305) in 2001 and 2000, respectively                            
|Retained
      earnings                                                                    
|                                                                                           
|Less
      treasury stock, at cost                                                         
|Total
      shareholders' equity                                                           
|Total
      liabilities and shareholders' equity                                           
|                                                                                           
|The accompanying notes are
      an integral part of the consolidated financial statements.
|                                                                                           
|                                                                                           
|IRWIN FINANCIAL CORPORATION
      AND SUBSIDIARIES                                         
|CONSOLIDATED STATEMENT OF
      INCOME (Unaudited)                                         
|                                                                                           
|                                                                                           
|(In
      thousands, except for per share)                                                 
|Interest
      income:                                                                     
|Loans
      and leases                                                                     
|Investment
      securities:                                                               
|Taxable                                                                                    
|Tax-exempt                                                                                 
|Loans
      held for sale                                                                  
|Trading
      account                                                                      
|Federal
      funds sold                                                                   
|Total
      interest income                                                                
|Interest
      expense:                                                                    
|Deposits                                                                                   
|Short-term
      borrowings                                                                
|Long-term
      debt                                                                       
|Preferred
      securities distribution                                                    
|Total
      interest expense                                                               
|Net
      interest income                                                                  
|Provision
      for loan and lease losses                                                  
|Net
      interest income after provision for                                              
|loan
      and lease losses                                                                
|Other
      income:                                                                        
|Loan
      origination fees                                                                
|Gain
      from sales of loans                                                             
|Loan
      servicing fees                                                                  
|Amortization
      and impairment of servicing assets                                      
|Net
      loan administration income                                                       
|Gain
      on sale of mortgage servicing assets                                            
|Trading
      gains (losses)                                                               
|Other                                                                                      
|Total
      other income                                                                   
|Other
      expense:                                                                       
|Salaries                                                                                   
|Pension
      and other employee benefits                                                  
|Office
      expense                                                                       
|Premises
      and equipment                                                               
|Marketing
      and development                                                            
|Other                                                                                      
|Total
      other expense                                                                  
|Income
      before income taxes                                                           
|Provision
      for income taxes                                                           
|Income
      before minority interest                                                      
|Minority
      interest                                                                    
|Net
      income                                                                           
|                                                                                           
|Earnings
      per share of common stock available to shareholders:                        
|Basic
      - Note 10                                                                      
|Diluted
      - Note 10                                                                    
|Dividends
      per share of common stock                                                  
|                                                                                           
|The accompanying notes are
      an integral part of the consolidated financial statements.
|                                                                                           
|                                                                                           
|IRWIN FINANCIAL CORPORATION
      AND SUBSIDIARIES                                         
|CONSOLIDATED
      STATEMENT OF INCOME (Unaudited)                                         
|June 30,                                                                                   
|                                                                                           
|(In
      thousands, except for per share)                                                 
|Interest
      income:                                                                     
|Loans
      and leases                                                                     
|Investment
      securities:                                                               
|Taxable                                                                                    
|Tax-exempt                                                                                 
|Loans
      held for sale                                                                  
|Trading
      account                                                                      
|Federal
      funds sold                                                                   
|Total
      interest income                                                                
|Interest
      expense:                                                                    
|Deposits                                                                                   
|Short-term
      borrowings                                                                
|Long-term
      debt                                                                       
|Preferred
      securities distribution                                                    
|Total
      interest expense                                                               
|Net
      interest income                                                                  
|Provision
      for loan and lease losses - Note 4                                         
|Net
      interest income after provision for                                              
|loan
      and lease losses                                                                
|Other
      income:                                                                        
|Loan
      origination fees                                                                
|Gain
      from sales of loans                                                             
|Loan
      servicing fees                                                                  
|Amortization
      and impairment of servicing assets                                      
|Net
      loan administration income                                                       
|Gain
      on sale of mortgage servicing assets                                            
|Trading
      gains (losses)                                                               
|Other                                                                                      
|                                                                                           
|Other
      expense:                                                                       
|Salaries                                                                                   
|Pension
      and other employee benefits                                                  
|Office
      expense                                                                       
|Premises
      and equipment                                                               
|Marketing
      and development                                                            
|Other                                                                                      
|                                                                                           
|Income
      before income taxes                                                           
|Provision
      for income taxes                                                           
|Income
      before minority interest                                                      
|Minority
      interest                                                                    
|Income
      before cumulative effect of change in accounting principle                    
|Cumulative
      effect of change in accounting principle, net of tax                      
|Net
      income                                                                           
|                                                                                           
|Earnings
      per share of common stock available to shareholders:                        
|Basic
      - Note 10                                                                      
|Diluted
      - Note 10                                                                    
|Dividends
      per share of common stock                                                  

---

|IRWIN FINANCIAL CORPORATION
      AND SUBSIDIARIES                         
|---------------------------------------------------------------------------
|CONSOLIDATED STATEMENT OF
      CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
|FOR THE THREE MONTHS ENDED
      JUNE 30, 2001 AND 2000                    
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Balance
      at April 1, 2001                                             
|Net
      income                                                           
|Unrealized
      gain on investment                                        
|securities
      net of $17 tax liability                                  
|Foreign
      currency adjustment net of                                   
|$144
      tax credit                                                      
|Deferred
      compensation                                                
|Total
      comprehensive income                                           
|Cash
      dividends                                                       
|Tax
      benefit on stock option exercises                                
|Treasury
      stock:                                                      
|Purchase
      of 3,640 shares                                             
|Sales
      of 28,520 shares                                               
|Minority
      Interest                                                    
|Balance
      June 30, 2001                                                
|                                                                           
|Balance
      at April 1, 2000                                             
|Net
      income                                                           
|Unrealized
      loss on investment                                        
|securities
      net of $5 tax liability                                   
|Total
      comprehensive income                                           
|Cash
      dividends                                                       
|Treasury
      stock:                                                      
|Purchase
      of 20,661 shares                                            
|Sales
      of 56,554 shares                                               
|Issuance
      of 96,336 shares of preferred stock                         
|Balance
      June 30, 2000                                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|FOR THE SIX MONTHS ENDED
      JUNE 30, 2001 AND 2000                      
|(Unaudited)                                                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Balance
      at January 1, 2001                                           
|Net
      income                                                           
|Unrealized
      gain on investment                                        
|securities
      net of $59 tax liability                                  
|Foreign
      currency adjustment net of                                   
|$43
      tax credit                                                       
|Deferred
      compensation                                                
|Total
      comprehensive income                                           
|Cash
      dividends                                                       
|Tax
      benefit on stock option exercises                                
|Treasury
      stock:                                                      
|Purchase
      of 93,760 shares                                            
|Sales
      of 259,393 shares                                              
|Minority
      Interest                                                    
|Balance
      June 30, 2001                                                
|                                                                           
|Balance
      at January 1, 2000                                           
|Net
      income                                                           
|Unrealized
      loss on investment                                        
|securities
      net of $23 tax credit                                     
|Total
      comprehensive income                                           
|Cash
      dividends                                                       
|Treasury
      stock:                                                      
|Purchase
      of 218,914 shares                                           
|Sales
      of 85,723 shares                                               
|Issuance
      of 96,336 shares of preferred stock                         
|Balance
      June 30, 2000                                                
|                                                                           

---

|IRWIN FINANCIAL CORPORATION
      AND SUBSIDIARIES                                         
|-------------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENT OF
      CASH FLOWS (Unaudited)                                     
|                                                                                           
|For
      the six months ended June 30,                                                    
|(In
      thousands)                                                                       
|Net
      income                                                                           
|Adjustments
      to reconcile net income to cash provided                                 
|by operating
      activities:                                                             
|Depreciation
      and amortization                                                        
|Amortization
      and impairment of servicing assets                                      
|Provision
      for loan and lease losses                                                  
|Increase
      in loans held for sale                                                      
|Gain
      on sale of mortgage servicing assets                                            
|Net
      increase in trading assets                                                       
|Decrease
      (increase)in accounts receivable                                            
|Other,
      net                                                                           
|Net
      cash used by operating activities                                                
|                                                                                           
|Lending
      and investing activities:                                                    
|Proceeds
      from maturities/calls of investment securities:                             
|Held-to-maturity                                                                           
|Available-for-sale                                                                         
|Purchase
      of investment securities:                                                   
|Held-to-maturity                                                                           
|Available-for-sale                                                                         
|Net
      increase in interest-bearing                                                     
|deposits
      with financial institutions                                                 
|Net
      increase in loans, excluding sales                                               
|Sale
      of loans                                                                        
|Additions
      to mortgage servicing assets                                               
|Proceeds
      from sale of mortgage servicing assets                                      
|Other,
      net                                                                           
|Net
      cash used by lending and investing activities                                    
|                                                                                           
|Financing
      activities:                                                                
|Net
      increase in deposits                                                             
|Net
      increase (decrease) in short-term borrowings                                     
|Repayments
      of long-term debt                                                         
|Issuance
      of preferred stock                                                          
|Purchase
      of treasury stock for employee benefit plans                                
|Proceeds
      from sale of stock for employee benefit plans                               
|Dividends
      paid                                                                       
|Net
      cash provided by financing activities                                            
|Effect
      of exchange rate changes on cash                                              
|Net
      increase in cash and cash equivalents                                            
|Cash
      and cash equivalents at beginning of period                                     
|Cash
      and cash equivalents at end of period                                           
|                                                                                           
|Supplemental disclosures of
      cash flow information:                                   
|Cash paid during the period:                                                               
|Interest                                                                                   
|Income
      taxes                                                                         
|                                                                                           
|The accompanying notes are
      an integral part of the consolidated financial statements.

---

|NOTES TO THE
      FINANCIAL STATEMENTS (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 1 -
      SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Basis of
      Presentation: The interim financial data as of June 30, 2001 and for the
      three and six month periods ended June 30, 2001 and June 30, 2000 is
      unaudited; however, in the opinion of Management, the interim data
      includes all adjustments, consisting only of normal recurring adjustments,
      necessary for a fair statement of the results for the interim periods. The
      accompanying financial statements should be read in conjunction with the
      financial statements and related notes included with the Corporation's
      Annual Report on Form 10-K for the year ended December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Reclassifications:
      Certain amounts in the 2000 consolidated financial statements have been
      reclassified to conform to the 2001 presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Foreign Currency:
      Assets and liabilities denominated in Canadian dollars are translated into
      U. S. dollars at rates prevailing on the balance sheet date; income and
      expenses are translated at average rates of exchange for the period.
      Unrealized foreign currency translation gains and losses (net of related
      income taxes) are recorded in accumulated other comprehensive income in
      shareholders' equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Loans Held for
      Sale: Loans held for sale are stated at the lower of cost or market as of
      the balance sheet date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Derivatives: On
      January 1, 2001, the Corporation adopted the provisions of Statement of
      Financial Accounting Standards ("SFAS") No. 133,
      "Accounting for Derivative Instruments and Hedging Activities."
      This standard obligates the Corporation to record all derivatives at fair
      value and permits the Corporation to designate derivative instruments as
      being used to hedge changes in fair value or changes in cash flows.
      Changes in the fair value of derivatives that offset changes in cash flows
      of a hedged item are recorded initially in other comprehensive income.
      Amounts recorded in other comprehensive income are subsequently
      reclassified into earnings during the same period the hedged item affects
      earnings. If a derivative qualifies as a fair value hedge, then changes in
      the fair value of the hedging derivative are recorded in earnings and are
      offset by changes in fair value attributable to the hedged risk of the
      hedged item. Any portion of the changes in the fair value of derivatives
      designated as a hedge that is deemed ineffective is recorded in earnings
      along with changes in the fair value of derivatives with no hedge
      designation.                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The Corporation
      enters into forward contracts to protect it from interest rate
      fluctuations from the date of loan commitment until the loans are sold.
      However, the Corporation has not designated these transactions as hedges
      to qualify for hedge accounting treatment, and therefore, the Corporation
      is required to mark the derivatives to market every accounting period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Commitments to
      originate loans: The Company enters into commitments to originate loans
      whereby the interest rate on the loan is determined prior to funding (rate
      lock commitments). Rate lock commitments on loans that are intended to be
      sold are considered to be derivatives and are therefore recorded at fair
      value with changes in fair value recorded in earnings. For purposes of
      determining their fair value, the Company performs a net present value
      analysis of the anticipated cash flows associated with the rate lock
      commitments. Included in the net present value analysis are anticipated
      cash flows associated with the retained servicing of the loans. Rate lock
      commitments expose the Company to interest rate risk. The Company manages
      this risk by acquiring forward sales contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Hedges of loans
      held for sale: Loans held for sale expose the Company to interest rate
      risk. The Company manages the interest rate risk associated with loans
      held for sale by entering into forward sales agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Trading Assets:
      Trading assets are stated at fair value. Unrealized gains and losses are
      included in earnings. Included in trading assets are interest-only strips.
      When the Corporation sells receivables in securitizations of residential
      mortgage loans, it retains interest-only strips, one or more subordinated
      tranches, servicing rights, and in some cases a cash reserve account, all
      of which are retained interests in the securitized receivables. Gain or
      loss on the sale of the receivables depends in part on the previous
      carrying amount of the financial assets involved in the transfer,
      allocated between the assets sold and the retained interests based on
      their relative fair value at the date of transfer. To obtain fair value,
      quoted market prices are used if available. However, quotes are generally
      not available for retained interests, so the Corporation generally
      estimates fair value based on the present value of expected cash flows
      using management's best estimates of the key assumptions that market
      participants would use - prepayment speeds, credit losses, forward yield
      curves, and discount rates commensurate with the risks involved. 
      Adjustments to carrying values are recorded as trading gains or losses.                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Recent Accounting
      Developments: In September 2000, the FASB issued SFAS No. 140,
      "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities." SFAS No. 140, which replaces SFAS
      No. 125, "Accounting for Transfers and Servicing of Financial Assets
      and Extinguishments of Liabilities," provides accounting and
      reporting standards for securitizations and other transfers of assets. The
      Standard is based on the application of a financial components approach
      that focuses on control, and provides consistent standards for
      distinguishing transfers of financial assets that are sales from transfers
      that are secured borrowings. The Standard requires disclosure of
      information about securitized assets, including principal outstanding of
      securitized and other managed assets, accounting policies, key assumptions
      related to the determination of the fair value of retained interests,
      delinquencies and credit losses. The accounting requirements of the
      Standard were effective for transfers and servicing of financial assets
      and extinguishments of liabilities occurring after March 31, 2001. 
      Adoption of this statement did not have a material impact on the
      Corporation's financial position or results of operations.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|On June 29, 2001 the FASB
      approved its proposed Statements of Financial Accounting Standards (SFAS)
      No. 141, Business Combinations, and No. 142 Goodwill and Other Intangible
      Assets. SFAS 141 eliminates the pooling-of-interest method of accounting -
      requiring that purchase accounting, with its recognition of intangible
      assets separately from goodwill, be applied to all business combinations
      initiated after June 30, 2001. Unallocated negative goodwill is required
      to be written off immediately as an extraordinary gain (instead of being
      deferred and amortized).
      Under the provisions of SFAS 142, goodwill
      will no longer be amortized against earnings. Instead, goodwill and
      intangible assets deemed to have an indefinite life will be reviewed for
      impairment at least annually. The amortization period of intangible assets
      with finite lives will no longer be limited to forty years. This standard
      will be effective for fiscal years beginning after December 15, 2001.
      Management does not believe the implementation of SFAS 141 or 142 will
      have a material effect on the earnings or equity of the company.                                                                                                                                                       
|NOTE 2 - INVESTMENT
      SECURITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The carrying amounts of
      investment securities, including net unrealized gain of $137 thousand and
      loss of $9 thousand on available-for-sale securities at June 30, 2001 and
      December 31, 2000, respectively, are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Held-to-maturity,
      at amortized cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|US
      Treasury and Government obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Obligations
      of states and political subdivisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Mortgage-backed
      securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Corporate
      obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Total
      held-to-maturity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Available-for-sale,
      at fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|US
      Treasury and Government obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mortgage-backed
      securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Total
      Available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Total
      investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Securities which the
      Corporation has the positive intent and ability to hold until maturity are
      classified as "held-to-maturity" and are stated at cost adjusted
      for amortization of premium and accretion of discount. Securities that
      might be sold prior to maturity are classified as
      "available-for-sale" and are stated at fair value. Unrealized
      gains and losses on available-for-sale securities, net of the future tax
      impact, are reported as a separate component of shareholders' equity until
      realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 3 - LOANS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Loans and leases are summarized
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Commercial,
      financial and agricultural                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Real
      estate-construction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Real
      estate-mortgage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Consumer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Direct
      financing leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Domestic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Canadian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Unearned income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Domestic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Canadian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 4 - ALLOWANCE FOR LOAN
      AND LEASE LOSSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Changes in the
      allowance for loan and lease losses are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Balance
      at beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Provision
      for loan and lease losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Recoveries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Charge-offs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Balance
      at end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 5- SERVICING ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Included on the consolidated
      balance sheet at June 30, 2001 and December 31, 2000 are $181.3 million
      and $130.5 million, respectively, of servicing assets. These amounts
      relate to the principal balances of loans serviced by the Corporation for
      investors. Although they are not generally held for sale, there is an
      active secondary market for servicing assets. The Corporation has
      periodically sold servicing assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Mortgage Servicing
      Asset:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Beginning
      Balance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Additions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Amortization
      and impairment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Reduction
      for servicing sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 6- SHORT-TERM
      BORROWINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Short-term borrowings are
      summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Federal
      Home Loan Bank borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Federal
      funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Lines
      of credit and other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Repurchase
      agreements and drafts payable related to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|mortgage
      loan closings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Commercial
      paper                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Repurchase agreements at June
      30, 2001 and December 31, 2000, include $3.3 million and $0.1 million
      respectively, in mortgage loans sold under agreements to repurchase which
      are used to fund mortgage loans sold prior to sale in the secondary
      market. These repurchase agreements are collateralized by mortgage loans
      held for sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Drafts payable related to
      mortgage loan closings totaled $173.9 million and $64.5 million at June
      30, 2001 and December 31, 2000, respectively. These borrowings are related
      to mortgage closings at the end of the period which have not been
      presented for payment. When presented for payment these borrowings will be
      funded internally or by borrowing from the lines of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The Corporation has lines of
      credit available to fund mortgage loans held for sale. Interest on the
      lines of credit is payable monthly at variable rates ranging from 4.4% to
      the lender's prime rate at June 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 7 --
      LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Long-term debt at June 30, 2001
      and December 31, 2000 consisted of a note payable of $30.0 million with an
      interest rate of 7.58% that will mature on July 7, 2014. The note is shown
      on the balance sheet net of capitalized issuance costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 8 -- COMPANY-OBLIGATED
      MANDATORILY REDEEMABLE PREFERRED SECURITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|OF SUBSIDIARY
      TRUST                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|In January 1997, the
      Corporation issued $50.0 million of trust preferred securities through IFC
      Capital Trust I, a trust created and controlled by the Corporation. The
      securities were issued at $25 per share with a cumulative dividend rate of
      9.25% payable quarterly. They have an initial maturity of 30 years with a
      19-year extension option. The securities are callable at par after five
      years from issuance, or immediately, in the event of an adverse tax
      development affecting the Corporation's classification of the securities
      for federal income tax purposes. They are not convertible into common
      stock of the Corporation. The securities are shown on the balance sheet
      net of capitalized issuance costs. The sole assets of IFC Capital Trust I
      are subordinated debentures of the Corporation with a principal balance of
      $51.5 million, an interest rate of 9.25% and an initial maturity of 30
      years with a 19-year extension option.                                                                                                                                                                                                                                                                                                                                                     
|In November 2000, the
      Corporation issued $51.75 million of trust preferred securities through
      IFC Capital Trust II and $51.75 million of convertible trust preferred
      securities through IFC Capital Trust III, trusts created and controlled by
      the Corporation. The securities were issued at $25 per share with
      cumulative dividend rates of 10.5% and 8.75%, respectively, payable
      quarterly. They have an initial maturity of 30 years. The trust preferred
      securities of Capital Trust II are not convertible into common stock of
      the Corporation. The convertible trust preferred securities of Capital
      Trust III have an initial conversion ratio of 1.261 shares of common stock
      for each convertible preferred security (equivalent to an initial
      conversion price of $19.825 per share of common stock). The securities are
      shown on the balance sheet net of capitalized issuance costs. The sole
      assets of IFC Capital Trust II and III are subordinated debentures of the
      Corporation with principal balances of $53.35 million each, interest rates
      of 10.5% and 8.75% respectively, and an initial maturity of 30 years.                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 9 --
      CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|In the normal
      course of business, Irwin Financial Corporation and its subsidiaries are
      subject to various claims and other pending and possible legal actions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Irwin Mortgage
      Corporation (IMC) is a defendant in a class action lawsuit relating to
      IMC's payment of broker fees to mortgage brokers. On June 15, 2001, IMC's
      appeal on the issue of class certification was denied by a panel of the
      United States Court of Appeals for the 11th Circuit. On July 11, 2001, IMC
      filed a motion for a rehearing before the Court of Appeals on the class
      certification issue. Although the Corporation has not yet formed a
      reasonable estimate of the amount of potential loss, if any, that the
      Corporation could suffer, it is expected that an adverse outcome in this
      litigation could have a material adverse effect on the Corporation's
      financial condition and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Irwin Leasing
      Corporation (formerly Affiliated Capital Corp.), Irwin Equipment Finance
      Corporation and Irwin Financial Corporation (collectively, "the Irwin
      Companies") are defendants in an action relating to alleged
      misrepresentations made to obtain Medicare reimbursement for treatments
      performed with medical equipment financed by the Irwin Companies. The
      Irwin Companies filed a motion to dismiss on February 12, 2001 in the U.S.
      District Court for the Middle District of Pennsylvania. Because the case
      is in the early stages of litigation, the Corporation is unable at this
      time to form a reasonable estimate of the amount of potential loss, if
      any, that the Corporation could suffer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Irwin Union Bank
      and Trust Company and Irwin Home Equity Corporation (collectively "Irwin")
      are defendants in a lawsuit in the U.S. District Court for the District of
      Rhode Island, which seeks certification as a class action and alleges that
      Irwin's disclosures and closing procedure for certain home equity loans
      did not comply with the Truth in Lending Act. Because the case has only
      recently been filed, the Corporation has not formed a reasonable estimate
      of the amount of potential loss, if any, that the Corporation could
      suffer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 10 --
      EARNINGS PER SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Earnings per share
      calculations are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In thousands,
      except share data)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Three months ended
      June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Net
      income available to common shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Per-Share
      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Six
      months ended June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Net
      income before cumulative effect of change in accounting principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Per-Share
      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Cumulative
      effect of change in accounting principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Per-Share
      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Net
      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Per-Share
      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Three months ended
      June 30, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Net
      income available to common shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Per-Share
      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Six months ended
      June 30, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Net
      income available to common shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Per-Share
      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

---

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                 |                 |                   |                 |                |                  |                   |                   |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------- | --------------- | ----------------- | --------------- | -------------- | ---------------- | ----------------- | ----------------- | ---------
|NOTE 11 --
      INDUSTRY SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The Corporation
      has five principal segments that provide a broad range of financial
      services throughout the United States. The Home Equity Lending line of
      business originates and services home equity loans. The Mortgage Banking
      line of business originates, sells and services residential first mortgage
      loans. The Commercial Banking line of business provides commercial banking
      services. The Equipment Leasing line of business leases commercial
      equipment. The Venture Capital line of business invests in early-stage
      financial services-oriented technology companies. Other consists primarily
      of the parent company including eliminations. |                 |                
|The accounting
      policies of each segment are the same as those described in the
      "Summary of Significant Accounting Policies." Below is a summary
      of each segment's revenues, net income, and assets for 2001 and 2000:                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                 |                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                 |                 |                   |                 |                |                  |                   |                   |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Home Equity     | Mortgage        | Commercial        | Equipment       | Venture        |                  |                   |                   |          
|(In thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Lending         | Banking         | Banking           | Leasing         | Capital        | Other            | Consolidated      | Consolidated      |          
|For
      the three months ended June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                 |                 |                   |                 |                |                  |                   |                   |          
|Net
      interest income, net of provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $
      14,516  | $
      6,749   | $
      10,319    | $
      1,395   | $
      (121)  | $
      (1,811)  | $
      31,047    | $
      31,047    | 0        
|Intersegment
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (549)           | (269)           | -                 | (5)             | -              | 823              | -                 | 0                 | 0        
|Other
      revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 19,333          | 47,416          | 3,404             | 349             | (2,202)        | 116              | 68,416            | 68,416            | 0        
|Intersegment
      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | -               | -               | 53                | -               | 135            | (188)            | -                 | 0                 | 0        
|Total
      net revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 33,300          | 53,896          | 13,776            | 1,739           | (2,188)        | (1,060)          | 99,463            | 99,463            | 0        
|Other
      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 23,073          | 40,296          | 10,257            | 2,225           | 301            | 2,240            | 78,392            | 78,392            | 0        
|Intersegment
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 113             | 347             | 644               | -               | -              | (1,104)          | -                 | 0                 | 0        
|Income
      before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 10,114          | 13,253          | 2,875             | (486)           | (2,489)        | (2,196)          | 21,071            | 21,071            | 0        
|Income
      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 4,045           | 5,098           | 1,134             | -               | (926)          | (877)            | 8,474             | 8,474             | 0        
|Income
      before minority interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 6,069           | 8,155           | 1,741             | (486)           | (1,563)        | (1,319)          | 12,597            | 12,597            | -        
|Minority
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | -               | -               | -                 | (211)           | -              | -                | (211)             | (211)             | -        
|Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 6,069           | 8,155           | 1,741             | (275)           | (1,563)        | (1,319)          | 12,808            | 12,808            | 0        
|Assets
      at June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $
      662,296 | $
      977,956 | $
      1,443,534 | $
      201,686 | $
      11,100 | $
      (34,915) | $
      3,261,657 | $
      3,261,657 | 0        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                 |                 |                   |                 |                |                  |                   |                   |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                 |                 |                   |                 |                |                  |                   |                   |          
|For
      the three months ended June 30, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                 |                 |                   |                 |                |                  |                   |                   |          
|Net
      interest income, net of provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $
      8,959   | $
      3,195   | $
      8,457     | $
      132     | $
      (89)   | $
      (1,112)  | $
      19,542    | $
      19,542    | 0        
|Intersegment
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (459)           | (803)           | -                 | (27)            | -              | 1,289            | -                 | 0                 | 0        
|Other
      revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 15,900          | 33,943          | 2,903             | 9               | (15)           | (152)            | 52,588            | 52,588            | 0        
|Intersegment
      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | -               | -               | 41                | -               | 100            | (141)            | -                 | 0                 | 0        
|Total
      net revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 24,400          | 36,335          | 11,401            | 114             | (4)            | (116)            | 72,130            | 72,130            | 0        
|Other
      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 17,257          | 29,358          | 8,041             | 980             | 100            | 2,299            | 58,035            | 58,035            | 0        
|Intersegment
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 688             | 585             | 638               | 18              | -              | (1,929)          | -                 | 0                 | 0        
|Income
      before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 6,455           | 6,392           | 2,722             | (884)           | (104)          | (486)            | 14,095            | 14,095            | 0        
|Income
      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2,520           | 2,626           | 1,075             | -               | (50)           | (581)            | 5,590             | 5,590             | 0        
|Net
      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $
      3,935   | $
      3,766   | $
      1,647     | $
      (884)   | $
      (54)   | $
      95       | $
      8,505     | $
      8,505     | $
      -
|Assets
      at June 30, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $
      458,395 | $
      558,941 | $
      950,887   | $
      51,170  | $
      15,622 | $
      (43,206) | $
      1,991,809 | $
      1,991,809 | 0        



PART I - FINANCIAL STATEMENTS.
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

Management's discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and footnotes.  This discussion contains forward-looking statements that are based on management's expectations, estimates, projections and assumptions.  Words such as "expected," "assumptions," "estimate," and similar expressions are intended to identify forward-looking statements, which include, but are not limited to, projections of business strategies and future activities.  These statements are not guarantees of future performance and involve uncertainties that are difficult to predict.  Actual future results may differ materially from what is projected due to a variety of factors, including, but not limited to, unexpected changes in interest rates which may affect consumer demand for our products and the valuation of our servicing portfolio; refinancing opportunities, which may affect the prepayment assumptions used in our valuation estimates; changes in the economies served by the Corporation; competition from other financial service providers for experienced managers as well as for customers; unanticipated difficulties in expanding the Corporation's businesses, such as higher than expected entry costs in new markets; availability of appropriate investment opportunities; changes in the value of technology-related companies; legislative or regulatory changes, or governmental changes in monetary or fiscal policy.

Overview

Net income for the second quarter ended June 30, 2001, was $12.8 million, up 50.6% from the second quarter 2000 net income of $8.5 million.  Net income per share (diluted) was $0.56 for the second quarter of 2001 as compared to $0.40 for the same period in 2000.  Return on equity for the second quarter of 2001 was 25.35% compared to 20.38% in 2000.

For the year to date, the Corporation recorded net income of $22.0 million, up 29.4% from 2000.  Net income per share (diluted) was $0.97, up from $0.80 a year earlier.  Return on equity for the year to date was 22.51% as compared to 20.64% for the same period in 2000.

Lines of Business

Irwin Financial Corporation has five principal lines of business:

- Home equity lending (includes Irwin Home Equity Corporation and the related activities of Irwin Union Bank and Trust Company ("Irwin Union Bank"))
- Mortgage banking (includes Irwin Mortgage Corporation and the related activities of Irwin Union Bank)
- Commercial banking (includes Irwin Union Bank and Irwin Union Bank, F.S.B.)
- Equipment leasing (includes Irwin Business Finance and the related activities of Irwin Union Bank)
- Venture capital (includes Irwin Ventures LLC and the related activities of Irwin Union Bank)

Listed below are the earnings by line of business for the quarter and year to date, as compared to the same periods in 2000:

| | Three Months   | Six Months    
| | -------------- | --------------
| | Ended June 30, | Ended June 30,

|(In Thousands)                          | 2001    | 2000   | 2001    | 2000   
|--------------------------------------- | ------- | ------ | ------- | -------
|                                        |         |        |         |        
|Home equity lending                     | $6,069  | $3,935 | $9,457  | $6,554 
|Mortgage banking                        | 8,155   | 3,766  | 14,488  | 6,249  
|Commercial banking                      | 1,741   | 1,647  | 3,142   | 3,553  
|Equipment leasing                       | (275)   | (884)  | (968)   | (1,799)
|Venture capital                         | (1,563) | (54)   | (3,007) | 4,243  
|Parent (includes
consolidating entries) | (1,319) | 95     | (1,133) | (1,813)
|                                        |         |        |         |        
|                                        | $12,808 | $8,505 | $21,979 | $16,987



Home Equity Lending

Selected Financial Data (shown in thousands):

| | Three Months   | Six Months    
| | -------------- | --------------
| | Ended June 30, | Ended June 30,

|Selected Income Statement Data                    | 2001      | 2000         | 2001    | 2000  
|------------------------------------------------- | --------- | ------------ | ------- | ------
|                                                  |           |              |         |       
|Net interest income-unsold loans
and other        | $6,397    | $5,818       | $13,879 | $8,739
|I/O strip interest income                         | 7,570     | 2,682        | 14,697  | 5,166 
|Loan origination fees                             | 254       | 277          | 351     | 309   
|Gain from sales of loans                          | 18,732    | 9,876        | 33,307  | 18,801
|Loan servicing fees                               | 3,306     | 1,605        | 6,287   | 3,112 
|Amortization and impairment of servicing assets   | (611)     | (322)        | (1,166) | (710) 
|Trading gains (losses)                            | (2,477)   | 4,902        | (2,547) | 8,291 
|Other revenue                                     | 129       | (438)        | 210     | (202) 
|Total net revenues                                | 33,300    | 24,400       | 65,018  | 43,506
|                                                  |           |              |         |       
|Salaries and employee benefits                    | 13,782    | 9,234        | 30,394  | 15,995
|Other operating expenses                          | 9,404     | 8,711        | 18,862  | 16,690
|                                                  |           |              |         |       
|Income before tax                                 | 10,114    | 6,455        | 15,762  | 10,821
|Income tax                                        | 4,045     | 2,520        | 6,305   | 4,267 
|Net income                                        | $6,069    | $3,935       | $9,457  | $6,554
|                                                  |           |              |         |       
|                                                  |           |              |         |       
|Other Selected Financial Data:                    | June 30,  | December 31,
|                                                  | 2001      | 2000        
|                                                  |           |             
|Home equity loans and loans held
for sale         | $357,579  | $334,718    
|Interest-only strips                              | 189,788   | 152,614     
|Managed portfolio                                 | 1,826,853 | 1,625,719   
|Managed portfolio including subserviced portfolio | 1,985,946 | 1,825,527   



Irwin Home Equity, in combination with the related activities of Irwin Union Bank (together, the home equity line of business), originates and services home equity and first mortgage loans nationwide through direct mail and telemarketing, broker and correspondent channels, acquisition channels and Internet-based solicitations.

Net income for the home equity lending business was $6.1 million during the second quarter of 2001 and $9.5 million for the year to date 2001.  These results are compared to 2000 second quarter and year to date income of $3.9 million and $6.6 million, respectively.

Net interest income increased for unsold loans and other, as well as on interest-only strips for both the quarter and year to date versus 2000.  The total increase in net interest income after provision for loan losses over 2000 was $5.5 million for the second quarter and $14.7 million year to date.  These increases are a result of increased loan production during 2001 compared to 2000.

During the second quarter of 2001, home equity loan and line of credit production (originated and purchased) totaled $271.4 million, compared with $211.5 million in 2000.  Year to date, loan production totaled $452.2 million, compared to $408.1 million in 2000.  Included in the year to date 2001 increases were $0.2 million in home equity loans which were acquired in bulk form from other prime credit, high loan-to-value lenders.  This compares to second quarter and year to date 2000 acquisitions totaling $52.6 million and $151.9 million, respectively.

|                                          | Three Months   | Six Months    
|----------------------------------------- | -------------- | --------------
|Gains From Securitizations (in millions): | Ended June 30, | Ended June 30,

|                                                             | 2001  | 2000  | 2001  | 2000 
|------------------------------------------------------------ | ----- | ----- | ----- | -----
|Gain from sale of loans                                      | $18.7 | $9.9  | $33.3 | $18.8
|Gain from sale of loans as a percentage of loans securitized | 8.6%  | 4.4%  | 8.3%  | 5.3% 
|Unrealized gain on interest-only strips                      | 3.1   | 1.0   | 5.4   | 2.7  
|Total gains from securitizations                             | $21.8 | $10.9 | $38.7 | $21.5

Gains from the securitization of loans totaled $21.8 million in the second quarter 2001, double the second quarter 2000.  Year to date gains from securitization of loans totaled $38.7 million versus $21.5 million in 2000.  The company sold $218.7 million and $402.0 million, respectively, of product in the quarter and six month period ended June 30, 2001, versus $224.6 million and $356.2 million, respectively, during the quarter and six month period ended June 30, 2000.  These improvements include a higher mix of loans originated with early repayment options, a higher risk-adjusted interest rate on the underlying collateral, a lower relative acquisition cost structure due to continued expansion of new distribution channels, an ability to sell a portion of the residual interest at inception of the transaction, and otherwise improved excess spread due to benefits realized from the company's consistent performance history.  Furthermore, the results are impacted by the introduction of loss frequency curves beginning in the first quarter of 2001 which replaced previously utilized static loss assumptions.  The introduction of loss frequency curves, which may result in a corresponding lower unrealized gain/loss over time, was made to conform valuations with the observed behavior of the loans.

Servicing Portfolio (in thousands):

|                                                       | June 30, 2001 | December 31, 2000
|------------------------------------------------------ | ------------- | -----------------
|                                                       |               |                  
|Managed portfolio                                      | $1,826,853    | $1,625,719       
|Delinquency ratio                                      | 4.45%         | 4.35%            
|                                                       |               |                  
|Managed portfolio including      subserviced portfolio | 1,985,946     | 1,825,527        
|Delinquency ratio                                      | 4.50%         | 4.31%            

The home equity lending business services the loans it has securitized and collects an annual fee of up to 2% of the outstanding principal balance of the securitized loans. The managed portfolio included in the schedule above includes all loans being serviced by the home equity lending business for which the company retains risk of ownership.  Also included in the table above is the portfolio of loans serviced by the company including loans for which the underlying residual interest has been sold to an independent third party.  Net servicing fee income totaled $2.7 million in the second quarter of 2001, up 110.1% from the same period in 2000.  Year to date, net servicing fee income totaled $5.1 million, a 113.2% increase over 2000.  The increase is due to growth in the servicing portfolio.

The securitization of loans into the secondary market results in the creation of a residual asset which we refer to as an interest-only strip ("I/O strip").  This interest-only strip is equal to the discounted future cash flows of the interest paid by borrowers less servicing fees, expected losses, third party fees and interest paid to investors.  Interest-only strips are carried on the balance sheet as a trading asset and recorded at their estimated fair values determined using assumptions about the duration and performance of the securitized loans.  At June 30, 2001, the weighted average assumptions used in the valuation of the interest-only strips were as follows:



|Product type                         | Unpaid principal balance | Weighted avg. constant prepayment rate (CPR) | Remaining weighted avg. life (years) | Weighted avg. annual loss rate
|------------------------------------ | ------------------------ | -------------------------------------------- | ------------------------------------ | ------------------------------
|HELs (home equity loans)             | $302,275                 | 22.77%                                       | 3.32                                 | 0.81%                         
|HELOCs (home equity lines of credit) | 149,286                  | 27.17%                                       | 2.75                                 | 0.90%                         
|125 HELs                             | 588,599                  | 16.60%                                       | 3.99                                 | 2.20%                         
|125 LTV HELOCs                       | 86,624                   | 17.80%                                       | 4.07                                 | 2.44%                         
|First mortgages                      | 44,490                   | 16.32%                                       | 4.42                                 | 0.25%                         
|Other HELs and HELOCs                | 60,068                   | 23.66%                                       | 2.88                                 | 6.17%                         
|Purchased I/O strips                 | 238,578                  | 28.00%                                       | 2.23                                 | 2.92%                         



Included in trading gains (losses) during the second quarter of 2001 was an unrealized trading loss of $5.6 million recorded to adjust the carrying value of interest-only strips to their estimated fair values.  This loss compares with a $3.2 million gain recorded in the second quarter of 2000.  Year to date, these unrealized trading losses totaled $8.0 million, compared with gains of $5.5 million in 2000.  The decline in 2001 is primarily due to the declining interest rate environment and the refinement in loss estimates noted above.

Operating expenses were $23.2 million in the second quarter of 2001, up $5.2 million from 2000.  Year to date operating expenses were $49.3 million compared to $32.7 million a year earlier.  These increases are reflective of the growth in the company's managed portfolio and growth in production.

Mortgage Banking

Selected Financial Data (shown in thousands):

| | Three Months   | Six Months    
| | -------------- | --------------
| | Ended June 30, | Ended June 30,

|Selected Income Statement Data                                    | 2001        | 2000         | 2001       | 2000      
|----------------------------------------------------------------- | ----------- | ------------ | ---------- | ----------
|                                                                  |             |              |            |           
|Loan origination fees                                             | $16,088     | $8,931       | $27,531    | $16,359   
|Gain from sales of loans                                          | 26,323      | 11,677       | 44,436     | 22,508    
|Loan servicing fees                                               | 12,228      | 12,958       | 24,798     | 26,337    
|Amortization and impairment of
servicing assets, net of hedging   | (12,105)    | (6,269)      | (15,606)   | (11,881)  
|Net interest income                                               | 6,381       | 2,328        | 9,590      | 8,601     
|Provision for loan losses                                         | 99          | 64           | 76         | 21        
|Gain on sale of servicing                                         | 3,689       | 5,470        | 5,781      | 5,723     
|Other income                                                      | 1,193       | 1,176        | 2,540      | 2,147     
|Total net revenues                                                | 53,896      | 36,335       | 99,146     | 69,815    
|                                                                  |             |              |            |           
|Salaries and employee benefits                                    | 27,474      | 18,057       | 49,855     | 35,929    
|Other operating expenses                                          | 13,169      | 11,886       | 25,680     | 23,410    
|                                                                  |             |              |            |           
|Income before tax                                                 | 13,253      | 6,392        | 23,611     | 10,476    
|Income tax                                                        | 5,098       | 2,626        | 9,298      | 4,227     
|Income before cumulative effect of change in accounting principle | 8,155       | 3,766        | 14,313     | 6,249     
|                                                                  |             |              |            |           
|Cumulative effect of change in accounting principle               | 0           | 0            | 175        | 0         
|                                                                  |             |              |            |           
|Net income                                                        | $8,155      | $3,766       | $14,488    | $6,249    
|                                                                  |             |              |            |           
|                                                                  |             |              |            |           
|Mortgage loan originations                                        | $2,468,737  | $1,080,673   | $4,359,940 | $1,942,990
|                                                                  |             |              |            |           
|                                                                  |            
|Selected Operating Data:                                          | June 30,    | December 31,
|                                                                  | 2001        | 2000        
|                                                                  |             |             
|Servicing portfolio                                               | $10,474,246 | $9,196,513  
|Mortgage loans held for sale                                      | 663,541     | 249,580     
|Mortgage servicing asset                                          | 170,723     | 121,555     

Irwin Mortgage Corporation, in combination with the related activities of Irwin Union Bank, (together, the mortgage banking line of business) originates, purchases, sells, and services conventional and government agency backed (i.e., FHA and VA) residential mortgage loans throughout the United States.

Net income from mortgage banking for the second quarter was $8.2 million, up 116.5% from the same period in 2000.  Year to date, net income was $14.5 million compared to $6.2 million in 2000  This increase relates to increased production as a result of a declining interest rate environment.

As a result of the declining interest rate environment, mortgage loan originations of $2.5 billion were 128.4% ahead of the second quarter of 2000.  For the year, originations totaled $4.4 billion, up 124.4% from 2000.  Refinanced loans accounted for 50.4% of loan production in the second quarter of 2001, and 52.9% year to date.  This compares to 12.8% and 14.0%, respectively, in 2000.  Higher production volume caused mortgage loan origination income to increase 80.1% in the second quarter to $16.1 million.  Year to date it was up 68.3% to $27.5 million.

As a result of higher loan production in the second quarter of 2001, gains on the sale of loans increased 125.4% to $26.3 million and net interest income increased 174.1% to $6.4 million.  Year to date, gain on sales of loans increased 97.4% to $44.4 million.  Net interest income year to date increased 11.5% to $9.6 million.  Included in first quarter 2000 interest income was $3.0 million related to interest earned pursuant to a refund of federal income taxes due the company relating to a prior period tax return.  Excluding the impact of the tax refund in 2000, net interest income for the six month period ended June 30, 2001, increased 71.2% compared to the same period in 2000.

Mortgage loan servicing fees totaled $12.2 million and $24.8 million for the second quarter and year to date 2001.  This represents a decrease of 5.6% and 5.8%, respectively.  The servicing portfolio totaled $10.5 billion at June 30, 2001, a 13.9% increase from December 31, 2000.

Mortgage servicing assets totaled $170.7 million at June 30, 2001, up 40.4% from December 31, 2000.  The mortgage banking line of business has followed a strategy to manage the interest rate risk associated with the servicing portfolio by selling servicing rights on those loans that are most likely to refinance as interest rates decline.  During 2001, the line of business sold servicing rights to help manage its investment in the portfolio and to monetize existing gains in its servicing portfolio.  In the second quarter and six month period ended June 30, 2001, the business recognized revenues of $3.7 million and $5.8 million, respectively, from these sales, compared to $5.5 million and $5.7 million for the comparable periods in 2000.  Due to the relatively low coupon on current production, the line of business has modified its sales strategy slightly in recent months, choosing to retain more conventional servicing in its portfolio.  As a result, its servicing portfolio principal balance increased to $10.5 billion, a 2.1% increase compared to a year earlier.

The amortization and impairment of servicing assets, net of hedging, of $12.1 million in the second quarter of 2001 represents an increase of 93.1% compared to the same period in 2000.  Year to date amortization and impairment, net of hedging, totaled $15.6 million, up 31.4% from 2000. These 2001 amounts include a $4.1 million trading loss on economic hedging instruments in the second quarter 2001 and a $0.8 million trading loss year to date.  There were no trading gains or losses recorded during these same periods in 2000.  At June 30, 2001, the company held $2.5 billion notional amount of Eurodollar future contracts related to economically hedging these servicing assets.

Salaries and employee benefits increased 52.2% to $27.5 million for the second quarter of 2001.  Year to date, salaries and employee benefits increased 38.8% to $49.9 million.  These increases reflect the company's increased production in 2001 versus 2000.  The increased loan production also impacted other operating expenses which increased 10.8% in the second quarter of 2001 and 9.7% year to date.

Commercial Banking

Selected Financial Data (shown in thousands):

| | Three Months   | Six Months    
| | -------------- | --------------
| | Ended June 30, | Ended June 30,

|Selected Income Statement Data        | 2001      | 2000         | 2001    | 2000   
|------------------------------------- | --------- | ------------ | ------- | -------
|                                      |           |              |         |        
|Net interest income                   | $12,023   | $9,181       | $22,332 | $18,181
|Provision for loan losses             | (1,704)   | (724)        | (2,504) | (1,168)
|Other income                          | 3,457     | 2,944        | 6,580   | 5,876  
|Total net revenues                    | 13,776    | 11,401       | 26,408  | 22,889 
|                                      |           |              |         |        
|Salaries and employee benefits        | 6,456     | 5,280        | 12,422  | 10,373 
|Other operating expenses              | 4,445     | 3,399        | 8,793   | 6,681  
|Income before tax                     | 2,875     | 2,722        | 5,193   | 5,835  
|Income tax                            | 1,134     | 1,075        | 2,051   | 2,282  
|Net income                            | $1,741    | $1,647       | $3,142  | $3,553 
|                                      |           |              |         |        
|                                      |           |              |         |        
|                                      |           |              |         |        
|Selected Balance Sheet Data:          | June 30,  | December 31,
|                                      | 2001      | 2000        
|                                      |           |             
|Securities and short-term
Investments | $17,017   | $27,286     
|Loans and leases                      | 1,277,658 | 1,067,980   
|Allowance for loan losses             | (11,000)  | (9,228)     
|Deposits                              | 1,305,352 | 998,892     

Commercial banking activities are conducted by Irwin Union Bank and Trust Company and Irwin Union Bank, F.S.B. (together, the "commercial bank").  In recent years, the commercial bank has implemented a growth plan that calls for expansion into new markets outside of its traditional markets in south-central Indiana using de novo offices staffed by senior commercial loan officers who have experience with other commercial banks.  As a result, the commercial bank currently operates in nine counties in Indiana as well as Kalamazoo, Grandville (Grand Rapids), Lansing and Traverse City, Michigan; Brentwood (St. Louis), Missouri; Las Vegas and Carson City, Nevada; Phoenix, Arizona; and Salt Lake City, Utah.

Net income for the commercial bank increased in the second quarter by $0.1 million to $1.7 compared to the second quarter of 2000.  Year to date, net income was $3.1 million, a decrease of 11.6% compared to the same period in 2000.  Net interest income improved 31.0% to $12.0 million in the second quarter of 2001.  Year to date net interest income improved 22.8% to $22.3 million.  The provision for loan losses increased 135.4% to $1.7 million in the second quarter 2001 compared with a provision of $0.7 million a year earlier.  Year to date provision increased 114.4% to $2.5 million compared with a provision of $1.2 million a year earlier.  The year to date decrease in net income, increase in net interest income, and increase in provision for loan losses relate primarily to the commercial bank's continued growth in new markets.  Loans outstanding at June 30, 2001 were 46.3% higher than at June 30, 2000.

Following is an analysis of net interest income and net interest margin computed on a tax equivalent basis:



|For the Three Months
Ended June 30, |                 | 2001     |             |                 | 2000     |            
|----------------------------------- | --------------- | -------- | ----------- | --------------- | -------- | -----------
|(In Thousands)                      | Average
Balance | Interest | Yield/
Rate | Average
Balance | Interest | Yield/
Rate
|                                    |                 |          |             |                 |          |            
|Interest-earning
Assets             | $1,269,255      | $26,692  | 8.43%       | $862,298        | $19,498  | 9.09%      
|                                    |                 |          |             |                 |          |            
|Interest-bearing
Liabilities        | 1,135,319       | 14,611   | 5.16%       | 790,880         | 10,263   | 5.22%      
|                                    |                 |          |             |                 |          |            
|Net interest income                 |                 | $12,081  |             |                 | $9,235   |            
|                                    |                 |          |             |                 |          |            
|Net interest margin                 |                 |          | 3.82%       |                 |          | 4.31%      



|For the Six Months
Ended June 30, |                 | 2001     |             |                 | 2000     |            
|--------------------------------- | --------------- | -------- | ----------- | --------------- | -------- | -----------
|(In Thousands)                    | Average
Balance | Interest | Yield/
Rate | Average
Balance | Interest | Yield/
Rate
|                                  |                 |          |             |                 |          |            
|Interest-earning
Assets           | $1,203,726      | $51,525  | 8.63%       | $822,818        | $36,642  | 8.96%      
|                                  |                 |          |             |                 |          |            
|Interest-bearing
Liabilities      | 1,085,180       | 29,078   | 5.40%       | 744,700         | 18,353   | 4.96%      
|                                  |                 |          |             |                 |          |            
|Net interest income               |                 | $22,447  |             |                 | $18,289  |            
|                                  |                 |          |             |                 |          |            
|Net interest margin               |                 |          | 3.76%       |                 |          | 4.47%      

Interest margins during the first six months of 2001 have declined as shown above compared to the same period in 2000.  Net interest margin was 3.76% for the first half of 2001 compared to 4.47% in the same period a year earlier.  The reduction in net interest margin is due primarily to the fact that the commercial bank was negatively impacted by repricing a significant portion of its commercial loan portfolio which is tied to the Prime rate in advance of corresponding declines in its funding base which is more closely tied to LIBOR and similar market-driven rate indices.

Total operating expenses, including salaries and benefits, increased 25.6% from the second quarter of 2000 to $10.9 million.  Year to date, total operating expenses were $21.2 million, an increase of 24.4% compared to the same period in 2000.  The continued expansion of operations in new markets led to the increased non-interest expense in 2001.

Equipment Leasing

During 1999, the Corporation formed a new leasing subsidiary, Irwin Business Finance.  The company began lease originations in early 2000.  On July 14, 2000, the Corporation completed its acquisition of a 78% ownership position in Onset Capital Corporation, a Canadian small-ticket equipment leasing company.  Irwin Business Finance and Onset Capital Corporation, together with the related activities of Irwin Union Bank, form the leasing line of business.

During the second quarter of 2001, the leasing line of business incurred a pre-tax loss of $0.3 million.  Year to date, the leasing line of business incurred a pre-tax loss of $1.0 million.  These losses compare to losses of $0.9 million in the second quarter of 2000 and $1.8 million during the first half of 2000 and reflect expenses related to staffing, systems development and portfolio growth initiatives in excess of portfolio revenue.  Total loan and lease receivables originated during the three month and six month periods ended June 30, 2001 were $39.7 million and $73.6 million, respectively.  Originations during the three and six month periods ended June 30, 2000 totaled $32.4 million and $46.2 million, respectively.  The loan and lease portfolio totaled $196.0 million at June 30, 2001.

Lease Portfolio (in thousands):

|                       | June 30, 2001 | December 31, 2000
|---------------------- | ------------- | -----------------
|Domestic Leases        | $124,136      | $91,946          
|Weighted average yield | 10.91%        | 10.84%           
|Delinquency ratio      | 1.70%         | .66%             
|Canadian Leases        | 71,869        | 62,988           
|Weighted average yield | 12.05%        | 12.52%           
|Delinquency ratio      | 1.37%         | 1.61%            



Venture Capital

Irwin Ventures LLC, is a venture capital company that generally makes minority investments in early-stage financial services-related businesses.  During the second quarter of 2001 the venture capital line of business recorded a net loss of $1.6 million.  Year to date, the venture capital line of business recorded a $3.0 million loss in 2001.  These losses in 2001 resulted principally from valuation adjustments to one of its portfolio investments.  This compares to net income of $4.2 million during the first half of 2000 for the venture capital line of business, the result of an upward valuation adjustment to the same portfolio company.  Venture capital investments held by Irwin Ventures are carried at fair value with changes in fair value recognized in other income.

At June 30, 2001, the business had investments in the following companies:



|Company           | Public/Private | Investment At Cost | Carrying Value
|----------------- | -------------- | ------------------ | --------------
|                  |                |                    |               
|LiveCapital.com   | Private        | $1.94 million      | $4.40 million 
|Bremer Associates | Private        | $2.52 million      | $2.52 million 
|DocuTouch         | Private        | $2.00 million      | $1.61 million 
|Zoologic          | Private        | $0.67 million      | $0.67 million 
|PayCycle          | Private        | $0.95 million      | $0.95 million 
|Total             |                | $8.08 million      | $10.15 million



Parent Company (including consolidating entries)

For the quarter ended June 30, 2001, the parent company recorded a net loss of $1.3 million compared with net income of $95 thousand a year earlier.  Year to date, the parent company recorded $1.1 million in net income compared to a $1.8 million net loss in 2000.  The parent company recorded $0.1 million and $0.4 million of income tax benefit related to Irwin Business Finance for the three month and six month periods ended June 30, 2001.  The parent company will continue to record tax benefits resulting from the operating losses of Irwin Business Finance until such time as Irwin Business Finance becomes profitable and utilizes all of its operating loss carryforwards.

Parent company operating results improved in 2001 year to date versus the same period in 2000 in part as a result of an intercompany allocation of interest-bearing capital from the parent company to its subsidiaries.  During the first half of 2001, $4.3 million in interest expense related to this interest-bearing capital was allocated to the subsidiaries versus $1.7 million during the first half of 2000.  The parent began this allocation process on April 1, 2000.

Consolidated Income Statement Analysis

Net interest income for the second quarter of 2001 totaled $33.9 million, up 63.8% from the second quarter of 2000.  For the year, net interest income totaled $63.0 million, a 57.3% increase over 2000.  The increase was due to increased loan and lease outstandings at each of the company's asset generating lines of business.  The home equity line of business accounted for $14.7 million of the $22.9 million increase year to date.

The loan and lease loss provision was $2.8 million for the second quarter of 2001, as compared with $1.1 million for the same period in 2000.  For the year, the provision totaled $4.4 million versus $2.3 million in 2000.  The increased provision related primarily to the commercial bank and equipment leasing lines of business.  See the section on credit risk for additional information on the loan loss provision.

Noninterest income was up 30.1% to $68.4 million in the second quarter of 2001.  Year to date, noninterest income was up 27.1% to $130.2 million.  The increase in 2001 versus 2000 was primarily a result of higher revenues at the mortgage line of business due to the lower interest rate environment which increased loan production activity. Included in the "other" component of noninterest income were the fair value adjustments made at the venture capital line of business.  Also contributing to the increase in noninterest income were higher revenues at the home equity line of business resulting from increased production and increased loan sales.

Other expenses increased 35.1% in the second quarter of 2001 to $78.4 million.  For the year, other expenses increased $41.0 million or 36.6% over 2000.

The effective income tax rate for the Corporation was 39.8% during the second quarter of 2001 and 39.3% year to date.  This compares with 39.7% in the second quarter of 2000 and 39.9% year to date 2000.

Consolidated Balance Sheet Analysis

Total assets of the Corporation at June 30, 2001, totaled $3.3 billion, up from December 31, 2000 total assets of $2.4 billion.  The increase in total assets was due to growth in loans held for sale at the mortgage lending line of business of $0.4 billion and growth in loans at the commercial bank of $0.4 billion.  The increase in assets was accompanied by a $0.4 billion increase in interest-bearing deposits primarily at the commercial bank.  A portion of noninterest bearing deposits is associated with escrow accounts held on loans in the servicing portfolio of Irwin Mortgage.  These escrow accounts totaled $259.0 million at June 30, 2001, up from $145.3 million at December 31, 2000.

Shareholders' equity grew to $210.3 million as of June 30, 2001, an increase of 10.7% over year-end 2000 shareholders' equity of $189.9 million.  Shareholders' equity as of June 30, 2001 represented $9.86 per common share, an increase of 16.5% compared to December 31, 2000.  The Corporation's equity to assets ratio ended the quarter at 6.45% compared to 7.84% at the end of 2000.

Credit Risk

The assumption and management of credit risk is a key source of earnings for the home equity lending, commercial banking and equipment leasing lines of business. In addition, the mortgage banking business assumes some credit risk despite the fact that its mortgages are typically insured.

The credit risk in the loan portfolios of the home equity lending business and commercial bank have the most potential to have a significant effect on consolidated financial performance.  These lines of business manage credit risk through the use of lending policies, credit analysis and approval procedures,  periodic loan reviews, and personal contact with borrowers.  Loans over a certain size are reviewed by a loan committee prior to approval.

An allowance for loan and lease losses is established as an estimate of the probable credit losses on the loans held by the Corporation. A specific allowance is determined by evaluating those loans which are either substandard or have the potential to become substandard. In general, commercial loans, mortgage loans, and leases are evaluated individually to determine the appropriate allowance. Consumer loans, including home equity loans, are generally evaluated as a group. A specific allowance is set at a level which management considers sufficient to cover probable losses on these loans. A general allowance is determined by analyzing historical loss experience by loan type and then adjusting these loss factors for current conditions affecting the portfolio such as economic conditons, loans seasoning, geographic dispersion, industry concentration, and asset quality trends which are not reflected in prior experience.  For interest-only strips, a loss estimate is embedded in the discounted residual value of the asset, and therefore there is no amount included in the allowance.

Loans and leases that are determined by management to be uncollectible are charged against the allowance. The allowance is increased by provisions against income and recoveries of loans and leases previously charged off.  As of June 30, 2001, the allowance for loan and lease losses as a percentage of total loans and leases was 1.02% compared to 1.06% at December 31, 2000.

Net charge-offs in the second quarter of 2001 were $1.3 million, compared to $0.5 million in the second quarter of 2000.  Net charge-offs for the six month period ended June 30, 2001, were $2.4 million compared to $0.8 million during the same period in 2000.  Higher net charge-offs in 2001 relate to the loan growth at the commercial bank and charge-offs at Onset Capital Corporation.  Onset was acquired by Irwin in July 2000 and had an existing portfolio of seasoned leases.

Total nonperforming loans and leases at June 30, 2001 were $9.9 million, up $2.6 million compared to December 31, 2000.  Nonperforming loans and leases as a percent of total loans and leases were 0.66% at June 30, 2001, compared to 0.58% at the end of 2000.  Other real estate owned totaled $6.0 million at June 30, 2001, up from $2.8 million at December 31, 2000, an increase primarily attributable to the home equity lending line of business.  Total nonperforming assets were $15.9 million, or 0.49% of total assets at June 30, 2001, compared to $10.1 million, or 0.42%, at year-end 2000.



|Nonperforming Assets
(In thousands)                 | June 30,2001 | December 31,2000
|--------------------------------------------------- | ------------ | ----------------
|Accruing loans and leases past due 90 days or more: |              |                 
|Commercial                                          | $787         | $324            
|Consumer                                            | 113          | 510             
|Leasing -- domestic                                 | 277          | 627             
|Leasing -- Canadian                                 | 27           | 0               
|Subtotal                                            | 1,204        | 1,461           
|Nonaccrual loans and leases:                        |              |                 
|Real estate mortgage                                | 2,897        | 1,922           
|Commercial                                          | 1,093        | 752             
|Leasing -- domestic                                 | 2,180        | 960             
|Leasing -- Canadian                                 | 1,617        | 1,209           
|Consumer                                            | 873          | 918             
|Subtotal                                            | 8,660        | 5,761           
|Total nonperforming loans and leases                | 9,864        | 7,222           
|Other real estate owned                             | 6,008        | 2,833           
|Total nonperforming assets                          | $15,872      | $10,055         
|Nonperforming assets to
total assets                | 0.49%        | 0.42%           



Liquidity

Liquidity is the availability of funds to meet the daily requirements of the Corporation's business.  For financial institutions, demand for funds results principally from extensions of credit and withdrawal of deposits.  Liquidity is provided by asset maturities or sales and through deposits and short-term borrowings.
The objectives of liquidity management are to ensure that funds will be available to meet current demands and that funds are available at a reasonable cost.  Liquidity is managed by the parent company via daily interaction with the lines of business and periodic liquidity planning and asset liability meeting with each operating company.
Since loans are less marketable than securities, the ratio of total loans to total deposits is a traditional measure of liquidity for banks and bank holding companies.  At June 30, 2001, the ratio of loans and loans held for sale to total deposits was 129.8%.  The Corporation is comfortable with this relatively high level due to its position in mortgage loans held for sale which represent 40.6% of total loans and loans held for sale.  These loans carry an interest rate at or near current market rates for first and second lien mortgage loans.  Since the Corporation securitizes and sells nearly all these mortgage loans within a 90-day period, our liquidity is significantly higher than the ratio would suggest by traditional standards.  Excluding mortgage loans held for sale, the loan-to-deposit ratio is 77.1% at June 30, 2001.

Interest Rate Risk

The primary market risk associated with asset/liability management activities is interest rate risk.  Because the assets are not perfectly matched with the liabilities funding those assets, sensitivity of earnings to interest rate changes exists. Interest rate exposure is the sensitivity of net interest income and the fair market value of net assets to changes in interest rates.

An Asset/Liability Management Committee at each of the Corporation's lines of business monitors the repricing structure of assets, liabilities, and off-balance-sheet items, over various time horizons and exposure to varying interest rate scenarios.  Numerous factors are incorporated into the model including early repayment options speeds, net interest margin, fee income, and the impact that a comprehensive mark-to-market valuation would have on equity.  Risk measures and assumptions are regularly reevaluated and modeling tools are enhanced as needed.

The commercial banking, home equity, and leasing lines of business assume interest rate risk in the pricing of their loan and lease products, and mitigate this risk by managing the duration of the liabilities raised to support their portfolios.

The mortgage banking business assumes interest rate risk by entering into commitments to extend loans to borrowers at a fixed rate for a limited period of time.  Closed loans are held only temporarily until a pool is formed.  To mitigate this risk, the mortgage bank buys commitments to deliver loans at a fixed price.

The mortgage and home equity lines of business are also exposed to interest rate risk through their ownership of servicing assets and interest only strips.  As discussed in the analysis of each line of business earlier in this report, offsets to these exposures include maintaining a strong production operation, selective sales of the servicing rights, match funded asset-backed securities sales, and the use of financial hedges to economically hedge the assets.

The following tables reflect management's estimate of the present value of interest sensitive assets, liabilities, and off-balance-sheet items as of June 30, 2000.  In addition to showing the estimated fair market value at current rates, it also includes estimates of the fair market value of existing business based on a hypothetical up and down 100 and 200 basis point instantaneous shock in interest rates.

The first table is an economic analysis showing the present value impact of changes in interest rates, assuming a comprehensive mark-to-market environment.  The second table is an accounting analysis showing the same net present value impact, adjusted for expected GAAP treatment.  Neither analysis takes into account the book value of the non-interest sensitive assets and liabilities (such as cash, accounts receivable, and fixed assets), the value of which is not directly determined by interest rates.

The analyses are based on discounted cash flows over the remaining estimated lives of the financial instruments.  The interest rate sensitivities apply to June 30, 2000 book of business only.  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 hedging actions that might be taken in the future under asset/liability management.



|Economic Value Change Method |                                           
|---------------------------- | ------------------------------------------
|                             | Present Value                             
|                             | At June 30, 2001                          
|                             | Instantaneous Change in Interest Rates of:

|(In Thousands)                           | -2%         | -1%         | Current     | +1%         | +2%        
|---------------------------------------- | ----------- | ----------- | ----------- | ----------- | -----------
|                                         |             |             |             |             |            
|Interest Sensitive Assets                |             |             |             |             |            
|Loans and Other Assets                   | $1,834,986  | $1,802,966  | $1,772,451  | $1,743,305  | $1,715,346 
|Loans Held for Sale                      | 881,929     | 874,752     | 867,800     | 860,949     | 853,838    
|Mortgage Servicing Rights                | 90,026      | 134,336     | 206,823     | 245,684     | 262,526    
|Interest-Only Strips                     | 176,972     | 183,342     | 191,905     | 200,654     | 209,421    
|Total Interest Sensitive Assets          | 2,983,913   | 2,995,397   | 3,038,979   | 3,050,593   | 3,041,132  
|                                         |             |             |             |             |            
|Interest Sensitive Liabilities           |             |             |             |             |            
|Deposits                                 | (1,326,411) | (1,317,170) | (1,308,379) | (1,300,032) | (1,292,067)
|Short Term Borrowings                    | (1,163,567) | (1,160,359) | (1,157,196) | (1,154,077) | (1,151,005)
|Long Term Debt                           | (211,249)   | (202,820)   | (193,664)   | (182,745)   | (170,823)  
|Total Interest Sensitive Liabilities     | (2,701,227) | (2,680,349) | (2,659,240) | (2,636,854) | (2,613,896)
|                                         |             |             |             |             |            
|Interest Sensitive Financial Derivatives | 9,806       | 4,311       | (1,115)     | (6,468)     | (11,744)   
|                                         |             |             |             |             |            
|Net Market Value as of
June 30, 2001     | $292,492    | $319,359    | $378,624    | $407,270    | $415,492   
|                                         |             |             |             |             |            
|Potential Change                         | ($86,132)   | ($59,265)   | $-          | $28,647     | $36,868    
|                                         |             |             |             |             |            
|Net Market value as of
December 31, 2000 | $303,443    | $312,277    | $338,895    | $353,270    | $348,506   
|                                         |             |             |             |             |            
|Potential Change                         | ($35,452)   | ($26,618)   | $-          | $14,375     | $9,611     











|GAAP-Based Value Change Method |                                           
|------------------------------ | ------------------------------------------
|                               | Present Value                             
|                               | At June 30, 2001                          
|                               | Instantaneous Change in Interest Rates of:

|(In Thousands)                           | -2%        | -1%        | Current    | +1%        | +2%       
|---------------------------------------- | ---------- | ---------- | ---------- | ---------- | ----------
|                                         |            |            |            |            |           
|Interest Sensitive Assets                |            |            |            |            |           
|Loans and Other Assets (1)               | $-         | $-         | $-         | $-         | $-        
|Loans Held for Sale                      | 867,800    | 867,800    | 867,800    | 860,949    | 853,838   
|Mortgage Servicing Rights                | 94,041     | 138,725    | 184,012    | 184,930    | 187,694   
|Interest-Only Strips                     | 175,741    | 181,657    | 189,788    | 198,294    | 206,949   
|Total Interest Sensitive Assets          | 1,137,583  | 1,188,182  | 1,241,600  | 1,244,173  | 1,248,480 
|                                         |            |            |            |            |           
|Interest Sensitive
Liabilities           |            |            |            |            |           
|Deposits (1)                             |            |            |            |            |           
|Short Term Borrowings (1)                |            |            |            |            |           
|Long Term Debt (1)                       |            |            |            |            |           
|Total Interest Sensitive Liabilities (1) |            |            |            |            |           
|                                         |            |            |            |            |           
|Interest Sensitive Financial Derivatives | 11,393     | 5,358      | (592)      | (6,453)    | (12,221)  
|                                         |            |            |            |            |           
|Net Market Value as of
June 30, 2001     | $1,148,976 | $1,193,540 | $1,241,007 | $1,237,720 | $1,236,259
|                                         |            |            |            |            |           
|Potential Change                         | ($92,031)  | ($47,467)  | $-         | ($3,287)   | ($4,748)  
|                                         |            |            |            |            |           
|Net Market Value as of
December 31, 2000 | $818,322   | $837,172   | $856,432   | $859,801   | $849,783  
|                                         |            |            |            |            |           
|Potential Change                         | ($38,110)  | ($19,260)  | $-         | $3,369     | ($6,649)  

1. Value does not change in GAAP presentation.



Derivative Financial Instruments

The Corporation utilizes certain derivative instruments which do not qualify for hedge accounting treatment under SFAS No. 133.  These derivatives are accounted for as trading securities and marked to market on the income statement.

The Corporation economically hedges its interest rate risk on mortgage loans held for sale using mandatory commitments to sell the loans at a future date. Certain of the Corporation's interest-only strips are hedged using interest rate caps which had a fair value of $0.2 million and a notional amount of $19.6 million at June 30, 2001.  Interest rate caps are classified as trading securities on the balance sheet and carried at their fair values.  Adjustments to fair values are recorded as trading gains or losses on the income statement.  The Corporation recorded minor losses in both 2001 and 2000 related to these derivative products.

The Corporation also engaged in economically hedging its mortgage servicing rights through the use of Eurodollar and U.S. Treasury futures contracts.  For the second quarter of 2001, the Corporation experienced $0.1 million of realized gains and $4.2 million of unrealized losses on these economic hedges.  Year to date, the Corporation recorded $0.2 million of realized gains and $1.0 million of unrealized losses on these economic hedges.  The futures contracts were marked-to-market as trading securities with changes in value recorded in the income statement.  The Corporation held $2.5 billion in notional amount of Eurodollar contracts at June 30, 2001, with expiration ranging from the 3rd quarter of 2001 to the first quarter of 2008.  The Corporation did not hold any Eurodollar or US Treasury futures contracts at June 30, 2000.

Onset Capital Corporation uses two interest rate swaps to reduce repricing risk associated with a funding source.  The interest rate risk is created due to a repricing mismatch between the fixed-rate payment stream from leasing assets and floating rate funding. The notional amounts of the swaps were $27.1 million and $26.0 million as of June 30, 2001.  The notional values of both interest rate swaps amortize on a schedule designed to approximate the principal pay down of the loan portfolio, and have a final maturity date of May 25, 2004.  Onset can reduce the notional value of the swaps by up to 10% if early prepayments on the loans are greater than originally anticipated.

The Corporation has foreign currency contracts to protect the value of intercompany loans made to Onset Capital against changes in the exchange rate.  The Corporation had a notional amount of $25.5 million in forward contracts outstanding as of June 30, 2001.  Gains and losses associated with these contracts are included in other expense on the income statement.



Capital Adequacy

The Corporation, Irwin Union Bank, and Irwin Union Bank, F.S.B. are subject to various regulatory capital requirements administered by federal banking agencies.  Quantitative measures established by regulation to ensure capital adequacy require these bank subsidiaries and the Corporation to maintain minimum ratios of Total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier I capital to average assets (as defined).  Irwin Union Bank, F.S.B. is also required to maintain minimum ratios of core capital (as defined) to adjusted tangible assets and tangible capital (as defined) to tangible assets.  The Corporation, Irwin Union Bank, and Irwin Union Bank, F.S.B, were all well capitalized at June 30, 2001.  The Corporation's equity and risk-based capital ratios are as follows:

|                   | Ratio         |          |              | 
|------------------ | ------------- | -------- | ------------ | 
|                   | Required to   |          |              | 
|                   | be considered |          |              | 
|                   | Well-         | June 30, | December 31, | 
|                   | Capitalized   | 2001     | 2000         | 
|                   |               |          |              | 
|Equity to Assets   | n/a           | 6.45%    | 7.84%        | 
|Risk-Based Capital | 10.0%         | 11.42%   | 13.59%       | 
|Tier I Capital     | 6.0%          | 7.81%    | 8.87%        | 
|Tier I Leverage    | 5.0%          | 9.84%    | 12.41%       | 



On July 16, 2001, the Corporation sold $15 million of 10.25 percent trust preferred stock.  These securities will immediately qualify as Tier 2 regulatory capital and are eligible for inclusion in Tier 1 capital.  The privately placed securities are callable beginning in July 2006 and mature in July 2031.



PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

On May 9, 2001, Irwin Union Bank and Trust Company and Irwin Home Equity Corporation (collectively "Irwin") received notice that they were named as defendants in
Thompson v. Irwin Union Bank and Trust Company and Irwin Home Equity Corporation, a lawsuit filed in the U.S. District Court for the District of Rhode Island.  The suit alleges that Irwin's disclosures and closing procedure for certain home equity loans did not comply with certain provisions of the Truth in Lending Act.  The suit also requests that the court certify a plaintiff class in this action. On June 18, Irwin filed a motion with the court to compel arbitration pursuant to the provisions in the home equity loan agreement.  Because the case has only recently been filed, the Corporation has not formed a reasonable estimate of the amount of potential loss, if any, that the Corporation could suffer.

On June 15, 2001, a panel of the United States Court of Appeals for the 11th Circuit denied the appeal of Irwin Mortgage Corporation ("IMC") (formerly Inland Mortgage Corporation), and upheld the trial court's certification of a limited class of borrowers in
Culpepper, et. al v. Inland Mortgage Corporation.  This lawsuit was filed against IMC in April, 1996, in the United States District Court for the Northern District of Alabama.  The suit alleges that IMC violated the Real Estate Settlement Procedures Act (RESPA) in connection with certain payments IMC made to mortgage brokers.  The decision allowing the class certification to stand does not conclude the lawsuit or otherwise establish liability.  On July 11, 2001, IMC filed a motion seeking a rehearing before the 11th Circuit Court of Appeals and will continue to vigorously defend this lawsuit.  Although the Corporation is unable at this stage of the litigation to determine a reasonable estimate of potential losses, it is expected that an adverse outcome in this litigation could have a material adverse effect on the Corporation's financial condition and results of operations.

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

a.  The Annual Meeting of Shareholders of Registrant was held on April 26, 2001.

b.  The following directors were elected at the meeting to serve the terms indicated:



|                     | Expiration of Term | Affirmative Votes | Negative
 Votes | Votes 
Withheld | Votes Abstained
|-------------------- | ------------------ | ----------------- | --------------- | --------------- | ---------------
|Sally A. Dean        | 2004               | 18,902,697        | 150,057         | 72,132          | 39,017         
|David W. Goodrich    | 2003               | 18,974,829        | 150,057         | 0               | 39,017         
|John T. Hackett      | 2003               | 18,969,637        | 150,057         | 5,192           | 39,017         
|William H. Kling     | 2004               | 18,901,196        | 150,057         | 73,633          | 39,017         
|Brenda J. Lauderback | 2003               | 18,889,158        | 150,057         | 85,671          | 39,017         
|John C. McGinty      | 2003               | 18,898,576        | 150,057         | 76,253          | 39,017         
|William I. Miller    | 2002               | 17,841,337        | 150,057         | 1,133,492       | 39,017         
|John A. Nash         | 2002               | 17,843,799        | 150,057         | 1,131,030       | 39,017         
|Lance R. Odden       | 2004               | 18,897,639        | 150,057         | 77,190          | 39,017         
|Theodore M. Solso    | 2002               | 18,875,504        | 150,057         | 99,325          | 39,017         

c.  Other matters voted on during the meeting were as follows:
     2001 Irwin Financial Corporation Stock Plan:  15,306,615 Affirmative; 1,894,144 Negative; 180,789 Abstained.



Item 5.  Market for Corporation's Common Equity and Related Stockholder Matters.On July 5, 2001, the Corporation issued 1,051 shares of common stock pursuant to elections made by nine outside directors of the Corporation to receive board compensation under the 1999 Outside Director Restricted Stock Compensation Plan in lieu of cash fees.
All of these shares were issued in reliance on the private placement exemption from registration provided in section 4(2) of the Securities Act.



Item 6.   Exhibits and Reports on Form 8-K.

1. Exhibits to Form 10-Q



|Number Assigned
In Regulation S-K |                                                                                           
|--------------------------------- | ------------------------------------------------------------------------------------------
|Item 601                          | Description                                                                               
|(2)                               | No Exhibit                                                                                
|(3)                               | No Exhibit                                                                                
|(4)                               | No Exhibit                                                                                
|(10)                              | No Exhibit                                                                                
|(11)                              | Computation of earnings per share is included in the footnotes to the financial statements
|(15)                              | No Exhibit                                                                                
|(18)                              | No Exhibit                                                                                
|(19)                              | No Exhibit                                                                                
|(22)                              | No Exhibit                                                                                
|(23)                              | No Exhibit                                                                                
|(24)                              | No Exhibit                                                                                
|(99)                              | No Exhibit                                                                                



(b) Reports on Form 8-K



|8-K | April 19, 2001 | Attaching press release announcing record first quarter earnings                                                           
|--- | -------------- | ---------------------------------------------------------------------------------------------------------------------------
|8-K | April 26, 2001 | Attaching press release announcing second quarter common stock dividend                                                    
|8-K | May 9, 2001    | Item 4, Changes in Registrant's Certifying Accountant                                                                      
|8-K | May 25, 2001   | Attaching press release announcing delay in filing first quarter Form 10-Q                                                 
|8-K | June 29, 2001  | Item 4, Changes in Registrant's Certifying Accountant and attached press release announcing completion of accounting review





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





|IRWIN FINANCIAL CORPORATION                
|-------------------------------------------
|By:___/S/________________________________  
|Gregory F. Ehlinger                        
|Chief Financial Officer                    
|                                           
|                                           
|                                           
|                                           
|By:____/S/_________________________________
|Jody A. Littrell                           
|Corporate Controller                       
|(Chief Accounting Officer)