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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission File Number 0-6835
 IRWIN
FINANCIAL CORPORATION
 (Exact Name of Corporation as Specified in its Charter)
 Indiana
    
    35-1286807(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)500 Washington Street Columbus, Indiana
    
    47201(Address of Principal Executive Offices)
    
    (Zip Code)
 (812) 376-1909
    
    www.irwinfinancial.com(Corporations Telephone Number, Including Area Code)
    
    (Web Site)
  þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



FORM 10-Q
 TABLE OF CONTENTS
 PAGENO.About Forward-Looking Statements
    
    
    3PART I FINANCIAL INFORMATIONItem 1 Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    31Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    61Item 4 Controls and Procedures
    
    
    61PART II OTHER INFORMATIONItem 1 Legal ProceedingsItem 1A Risk FactorsItem 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    62Item 4 Submission of Matters to a Vote of Security Holders
    
    
    62Item 5
Other Information
    
    
    62Item 6 Exhibits
    
    
    63Signatures
    
    
    67EX-2.7EX-2.8EX-10.41EX-10.42EX-31.1EX-31.2EX-32.1EX-32.2
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About Forward-looking Statements
   
    
    transactions involved in our strategic restructuring, including capital raising and
deleveraging activities;
 
    
    our plans and strategies, including the expected results or costs and impact of
implementing or changing such plans and strategies;
 
    
    our projected revenues, earnings or earnings per share, as well as managements
short-term and long-term performance goals;
 
    
    projected trends or potential changes in asset quality (particularly with regard to loans
or other exposures including loan repurchase risk, in sectors in which we deal in real
estate or residential mortgage lending), loan delinquencies, charge-offs, reserves, asset
valuations, regulatory capital levels, or financial performance measures;
 
    
    the expected effects on the Corporations balance sheet, profitability, liquidity, and
capital ratios of the strategic restructuring, our proposed shareholder rights offer, the
possible private placement of equity, the possible exchange of trust preferred securities
for common shares, asset sales undertaken to de-lever the balance sheet, and other elements
of the completion of our capital plan;
 
    
    potential litigation developments and the anticipated impact of potential outcomes of
pending legal matters;
 
    
    predictions about conditions in the national or regional economies, housing markets,
commercial real estate development, industries associated with housing, mortgage markets,
franchise restaurant finance or mortgage industry;
 
    
    the anticipated effects on results of operations or financial condition from recent
developments or events; and
 
    
    any other projections or expressions that are not historical facts.
   
    
    difficulties in completing our recapitalization plan, including the failure to
sufficiently capitalize through our proposed rights offer, possible private placement of
equity, or a possible exchange of term, mezzanine debt and/or trust preferred securities for
common shares or by other means, the failure of a sufficient number of shareholders to
participate in the rights offer or to exercise fully their rights, the failure to satisfy
the conditions that require the standby purchasers to exercise fully their subscription
privileges, the failure to receive assistance in substantially the form proposed to the U.S.
Treasury and banking regulators, the failure to complete in a timely manner anticipated
asset sales to de-lever the balance sheet and provide additional liquidity, or the failure
to obtain any necessary regulatory approvals;
 
    
    potential further deterioration or effects of general economic conditions, particularly
in sectors relating to real estate and/or real estate lending and small business lending;
 
    
    fluctuations in housing prices;
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
    
    potential effects related to the Corporations prior decision to suspend the payment of
dividends on its common, preferred and trust preferred securities;
 
    
    potential changes in direction, volatility and relative movement (basis risk) of interest
rates, which may affect consumer and commercial demand for our products and the management
and success of our interest rate risk management strategies;
 
    
    staffing fluctuations in response to product demand or the implementation of corporate
strategies that affect our work force and potential associated charges;
 
    
    the relative profitability of our lending and deposit operations;
 
    
    the valuation and management of our portfolios, including the use of external and
internal modeling assumptions we embed in the valuation of those portfolios and short-term
swings in the valuation of such portfolios;
 
    
    borrowers refinancing opportunities, which may affect the prepayment assumptions used in
our valuation estimates and which may affect loan demand;
 
    
    unanticipated deterioration in the credit quality or collectability of our loan and lease
assets, including deterioration resulting from the effects of natural disasters (including a
pandemic);
 
    
    difficulties in accurately estimating any future repurchases of residential mortgage,
home equity, or other loans or leases due to alleged violations of representations and
warranties we made when selling these loans and leases to the secondary market or in
securitizations;
 
    
    unanticipated deterioration or changes in estimates of the carrying value of our other
assets, including securities, and reductions in value resulting from changes in ratings by
rating agencies;
 
    
    difficulties in delivering products to the secondary market as planned;
 
    
    difficulties in expanding our businesses and obtaining or retaining deposit or other
funding sources as needed, including the loss of public fund deposits or any actions that
may be taken by the state of Indiana and its political subdivisions;
 
    
    competition from other financial service providers, including companies that have
recently purchased our assets, for our staff and customers;
 
    
    changes in the value of our segments, subsidiaries, or companies in which we invest;
 
    
    unanticipated lawsuits or outcomes in litigation;
 
    
    legislative or regulatory changes, including changes in laws, rules or regulations that
affect tax, consumer or commercial lending, corporate governance and disclosure
requirements, and other laws, rules or regulations affecting the rights and responsibilities
of our Corporation, or our state-chartered bank or federal savings bank subsidiary;
 
    
    regulatory actions that impact our Corporation, bank or thrift, including the written
agreement the Corporation and its state-chartered bank subsidiary, Irwin Union Bank and
Trust Company, entered into with the Federal Reserve Bank of Chicago and the Indiana
Department of Financial Institutions on October 10, 2008, and
the Stipulation and Consent to the
Issuance of an Order to Cease and Desist the Corporations federal savings bank subsidiary,
Irwin Union Bank, F.S.B., entered into with the Office of Thrift Supervision on July 24,
2009;
 
    
    changes in the interpretation and application of regulatory capital or other rules;
 
    
    the availability of resources to address changes in laws, rules or regulations or to
respond to regulatory actions;
 
    
    changes in applicable accounting policies or principles or their application to our
business or final audit adjustments, including additional guidance and interpretation on
accounting issues and details of the implementation of new accounting methods;
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
    
    the final disposition of the remaining assets and obligations of segments we have exited
or are exiting, including the mortgage banking segment, small ticket commercial leasing
segment and home equity segment; or governmental changes in monetary, regulatory, or fiscal
policies.
  5




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PART I. FINANCIAL INFORMATION.
 
 Item 1.
    
    Financial Statements.
 IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
 June 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Assets:Cash and cash equivalents
    
    $
    192,115
    
    
    $
    233,698Interest-bearing deposits with financial institutions
    
    
    5,187
    
    
    
    26,023Residual interests
    
    
    8,656
    
    
    
    9,180Investment securities- held-to-maturity (Fair value: $16,964
June 30, 2009 and $17,300 at December 31, 2008)  Note 2
    
    
    16,553
    
    
    
    17,258Investment securities- available-for-sale  Note 2
    
    
    12,172
    
    
    
    31,895Investment securities- other  Note 2
    
    
    52,717
    
    
    
    61,056Loans held for sale  Note 3
    
    
    279,015
    
    
    
    841,333Loans and leases, net of unearned income  Note 4
    
    
    2,723,261
    
    
    
    3,512,048Less: Allowance for loan and lease losses  Note 5
    
    
    (148,180
    )
    
    
    (137,015
    )2,575,081
    
    
    
    3,375,033Servicing assets  Note 6
    
    
    5,483
    
    
    
    18,116Accounts receivable
    
    
    23,162
    
    
    
    19,706Accrued interest receivable
    
    
    10,362
    
    
    
    19,673Premises and equipment
    
    
    30,012
    
    
    
    32,417Other assets
    
    
    156,150
    
    
    
    228,927Total assets
    
    $
    3,366,665
    
    
    $
    4,914,315Liabilities and Shareholders Equity:DepositsNoninterest-bearing
    
    $
    342,308
    
    
    $
    319,857Interest-bearing
    
    
    1,822,551
    
    
    
    2,082,809Certificates of deposit over $100,000
    
    
    550,832
    
    
    
    615,2692,715,691
    
    
    
    3,017,935Other borrowings  Note 8
    
    
    266,703
    
    
    
    512,012Collateralized debt  Note 9
    
    
    68,940
    
    
    
    912,792Other long-term debt
    
    
    233,868
    
    
    
    233,868Other liabilities
    
    
    123,954
    
    
    
    127,046Total liabilities
    
    
    3,409,156
    
    
    
    4,803,653Commitments and contingencies  Note 15Shareholders equityPreferred stock, no par value  authorized 4,000,000
shares: Noncumulative perpetual preferred stock - 15,000 issued;
    
    
    14,441
    
    
    
    14,441Common stock, no par value  authorized 200,000,000 shares; issued 30,038,450 and
29,913,008 as of June 30, 2009 and December 31, 2008; 315,796 and 389,520
shares in treasury as of June 30, 2009 and December 31, 2008, respectively
    
    
    117,153
    
    
    
    116,893Additional paid-in capital
    
    
    
    
    
    
    Accumulated other comprehensive loss, net of deferred income tax benefit of
$4,251 and $5,258 as of June 30, 2009 and December 31, 2008
    
    
    (10,718
    )
    
    
    (7,988
    )Retained earnings
    
    
    (157,236
    )
    
    
    (5,079
    )(36,360
    )
    
    
    118,267Less treasury stock, at cost
    
    
    (6,131
    )
    
    
    (7,605
    )Total shareholders equity  Note 16
    
    
    (42,491
    )
    
    
    110,662Total liabilities and shareholders equity
    
    $
    3,366,665
    
    
    $
    4,914,315
  6




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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 For the Three Months Ended June 30,2009
    
    
    2008(Dollars in thousands, except per share)Interest income:Loans and leases
    
    $
    51,095
    
    
    $
    109,503Loans and leases held for sale
    
    
    906
    
    
    
    8Residual interests
    
    
    123
    
    
    
    195Investment securities
    
    
    793
    
    
    
    2,035Federal funds sold
    
    
    
    
    
    
    161Total interest income
    
    
    52,917
    
    
    
    111,902Interest expense:Deposits
    
    
    16,750
    
    
    
    26,521Short-term borrowings
    
    
    3,842
    
    
    
    5,926Collateralized debt
    
    
    14,140
    
    
    
    13,702Other long-term debt
    
    
    3,918
    
    
    
    3,879Total interest expense
    
    
    38,650
    
    
    
    50,028Net interest income
    
    
    14,267
    
    
    
    61,874Provision for loan and lease losses  Note 5
    
    
    45,431
    
    
    
    157,829Net interest expense after provision for loan and lease losses
    
    
    (31,164
    )
    
    
    (95,955
    )Other income:Loan servicing fees
    
    
    1,599
    
    
    
    2,833(Amortization) and (impairment) recovery of servicing assets  Note 6
    
    
    (466
    )
    
    
    1,939Gain from sales of loans and loans held for sale
    
    
    115
    
    
    
    1,172Trading losses
    
    
    (470
    )
    
    
    (1,120
    )Derivative gains, net
    
    
    726
    
    
    
    3,003Other than temporary impairment  Note 2
    
    
    (2,227
    )
    
    
    (6,838
    )Other
    
    
    21,768
    
    
    
    5,53221,045
    
    
    
    6,521Other expense:Salaries
    
    
    15,639
    
    
    
    20,006Pension and other employee benefits
    
    
    2,631
    
    
    
    5,966Office expense
    
    
    1,828
    
    
    
    2,024Premises and equipment
    
    
    10,322
    
    
    
    5,289Marketing and development
    
    
    899
    
    
    
    1,207Professional fees
    
    
    3,974
    
    
    
    3,328Other
    
    
    12,825
    
    
    
    6,17748,118
    
    
    
    43,997Loss before income taxes
    
    
    (58,237
    )
    
    
    (133,431
    )Provision for income taxes
    
    
    (1,079
    )
    
    
    (26,699
    )Net loss
    
    $
    (57,158
    )
    
    $
    (106,732
    )Earnings per share:  Note 12Basic
    
    $
    (1.92
    )
    
    $
    (3.64
    )Diluted
    
    $
    (1.92
    )
    
    $
    (3.64
    )Dividends per share
    
    $
    
    
    
    $
    
  7




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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 For the Six Months Ended June 30,2009
    
    
    2008(Dollars in thousands, except per share)Interest income:Loans and leases
    
    $
    106,598
    
    
    $
    226,846Loans held for sale
    
    
    22,549
    
    
    
    154Residual interests
    
    
    146
    
    
    
    469Investment securities
    
    
    2,095
    
    
    
    4,325Federal funds sold
    
    
    
    
    
    
    199Total interest income
    
    
    131,388
    
    
    
    231,993Interest expense:Deposits
    
    
    35,640
    
    
    
    55,459Short-term borrowings
    
    
    8,152
    
    
    
    13,162Collateralized debt
    
    
    35,410
    
    
    
    28,873Other long-term debt
    
    
    7,813
    
    
    
    8,190Total interest expense
    
    
    87,015
    
    
    
    105,684Net interest income
    
    
    44,373
    
    
    
    126,309Provision for loan and lease losses  Note 5
    
    
    109,433
    
    
    
    202,350Net interest expense after provision for loan and lease losses
    
    
    (65,060
    )
    
    
    (76,041
    )Other income:Loan servicing fees
    
    
    4,220
    
    
    
    5,291Amortization and impairment of servicing assets  Note 6
    
    
    (4,614
    )
    
    
    (2,280
    )(Loss) gain from sales of loans and loans held for sale
    
    
    (10,221
    )
    
    
    8,003Loss from sale of servicing asset
    
    
    (7,262
    )
    
    
    Trading losses
    
    
    (359
    )
    
    
    (2,177
    )Derivative gains, net
    
    
    292
    
    
    
    2,046Other than temporary impaiment  Note 2
    
    
    (2,333
    )
    
    
    (19,995
    )Other
    
    
    30,726
    
    
    
    11,17710,449
    
    
    
    2,065Other expense:Salaries
    
    
    30,004
    
    
    
    42,635Pension and other employee benefits
    
    
    6,940
    
    
    
    13,674Office expense
    
    
    3,374
    
    
    
    4,235Premises and equipment
    
    
    17,142
    
    
    
    11,055Marketing and development
    
    
    1,877
    
    
    
    2,340Professional fees
    
    
    5,731
    
    
    
    5,426Other
    
    
    27,544
    
    
    
    16,58692,612
    
    
    
    95,951Loss before income taxes
    
    
    (147,223
    )
    
    
    (169,927
    )Provision for income taxes
    
    
    3,768
    
    
    
    (41,029
    )Net loss
    
    $
    (150,991
    )
    
    $
    (128,898
    )Earnings per share:  Note 12Basic
    
    $
    (5.08
    )
    
    $
    (4.40
    )Diluted
    
    $
    (5.08
    )
    
    $
    (4.40
    )Dividends per share
    
    $
    
    
    
    $
    
  8




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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF  CHANGES IN SHAREHOLDERS EQUITY (Unaudited)
For the Six Months Ended June 30, 2009, and 2008
 Accumulated Other Comprehensive IncomeDefined
    
    Additional
    
    
    
    PerpetualRetained
    
    
    Foreign
    
    
    Unrealized Gain/Loss
    
    
    Benefit
    
    
    Paid in
    
    
    Common
    
    
    Treasury
    
    
    PreferredTotal
    
    
    Earnings

    
    
    Currency
    
    

    Securities
    
    

    Derivatives
    
    

    Plans
    
    

    Capital
    
    

    Stock
    
    

    Stock
    
    

    Stock(Dollars in thousands)Balance at January 1, 2009
    
    $
    110,662
    
    
    $
    (5,079
    )
    
    $
    89
    
    
    $
    (1,712
    )
    
    $
    (191
    )
    
    $
    (6,174
    )
    
    $
    
    
    
    $
    116,893
    
    
    $
    (7,605
    )
    
    $
    14,441Net loss
    
    
    (150,991
    )
    
    
    (150,991
    )Unrealized loss on investment
securities
    
    
    (2,878
    )
    
    
    
    
    
    
    
    
    
    
    (2,878
    )Unrealized loss on derivatives
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Foreign currency adjustment
    
    
    137
    
    
    
    
    
    
    
    137Other comprehensive loss
    
    
    (2,730
    )Total comprehensive loss
    
    
    (153,721
    )Stock compensation expense
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    502Stock:Purchase of 13,449 shares
    
    
    (81
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81
    )Sales of 87,173 shares
    
    
    147
    
    
    
    (1,166
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (502
    )
    
    
    260
    
    
    
    1,555Balance at June 30, 2009
    
    $
    (42,491
    )
    
    $
    (157,236
    )
    
    $
    226
    
    
    $
    (4,590
    )
    
    $
    (180
    )
    
    $
    (6,174
    )
    
    $
    
    
    
    $
    117,153
    
    
    $
    (6,131
    )
    
    $
    14,441Balance at January 1, 2008
    
    $
    459,300
    
    
    $
    337,524
    
    
    $
    9,158
    
    
    $
    (1,445
    )
    
    $
    (1,576
    )
    
    $
    (5,105
    )
    
    $
    2,557
    
    
    $
    116,542
    
    
    $
    (12,796
    )
    
    $
    14,441Net loss
    
    
    (128,898
    )
    
    
    (128,898
    )Unrealized loss on investment
securities net of $214 tax benefit
    
    
    (322
    )
    
    
    
    
    
    
    
    
    
    
    (322
    )Unrealized loss on derivatives
net of $573 tax benefit
    
    
    (860
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (860
    )Foreign currency adjustment
    
    
    (1,232
    )
    
    
    
    
    
    
    (1,232
    )Other comprehensive loss
    
    
    (2,414
    )Total comprehensive loss
    
    
    (131,312
    )Stock compensation expense
    
    
    1,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,356Stock:Purchase of 3,747 shares
    
    
    (50
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )Sales of 110,159 shares
    
    
    597
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,549
    )
    
    
    40
    
    
    
    2,106Balance at June 30, 2008
    
    $
    329,891
    
    
    $
    208,626
    
    
    $
    7,926
    
    
    $
    (1,767
    )
    
    $
    (2,436
    )
    
    $
    (5,105
    )
    
    $
    2,364
    
    
    $
    116,582
    
    
    $
    (10,740
    )
    
    $
    14,441
  9




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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 For the Six Months ended June 30,2009
    
    
    2008(Dollars in thousands)Net loss
    
    $
    (150,991
    )
    
    $
    (128,898
    )Adjustments to reconcile net loss to cash provided
by operating activities:Depreciation, amortization, and accretion, net
    
    
    8,518
    
    
    
    5,291Other than temporary impairment
    
    
    2,333
    
    
    
    19,995Amortization and impairment of servicing assets
    
    
    4,614
    
    
    
    2,280Valuation allowance on deferred taxes
    
    
    60,133
    
    
    
    24,900Provision for loan and lease losses
    
    
    109,433
    
    
    
    202,350Loss on sale of mortgage servicing asset
    
    
    7,262
    
    
    
    Loss (gain) from sales of loans held for sale
    
    
    10,221
    
    
    
    (8,003
    )Originations and purchases of loans held for sale
    
    
    (129,113
    )
    
    
    (116,801
    )Proceeds from sales and repayments of loans held for sale
    
    
    328,149
    
    
    
    194,630Net decrease in residuals
    
    
    312
    
    
    
    3,041Net (increase) decrease in accounts receivable
    
    
    (3,456
    )
    
    
    5,862Other, net
    
    
    (4,027
    )
    
    
    (86,343
    )Net cash provided by operating activities
    
    
    243,388
    
    
    
    118,304Investing activities:Proceeds from maturities/calls of investment securities:Held-to-maturity
    
    
    3,634
    
    
    
    2,140Available-for-sale
    
    
    24,290
    
    
    
    2,146Purchase of investment securities:Held-to-maturity
    
    
    (3,134
    )
    
    
    (2,004
    )Available-for-sale
    
    
    (99
    )
    
    
    (230
    )Net decrease in interest-bearing deposits
    
    
    20,836
    
    
    
    1,797Net decrease in loans, excluding sales
    
    
    250,973
    
    
    
    46,661Other, net
    
    
    (248
    )
    
    
    (272
    )Net cash provided by investing activities
    
    
    296,252
    
    
    
    50,238Financing activities:Net (decrease) increase in deposits
    
    
    (302,244
    )
    
    
    179,299Net decrease in other borrowings
    
    
    (245,309
    )
    
    
    (169,014
    )Proceeds from issuance of collateralized debt
    
    
    
    
    
    
    96,415Repayments of collateralized debt
    
    
    (33,759
    )
    
    
    (198,154
    )Repayments of long term debt
    
    
    
    
    
    
    (5
    )Purchase of treasury stock for employee benefit plans
    
    
    (81
    )
    
    
    (50
    )Proceeds from sale of stock for employee benefit plans
    
    
    147
    
    
    
    597Net cash used by financing activities
    
    
    (581,246
    )
    
    
    (90,912
    )Effect of exchange rate changes on cash
    
    
    23
    
    
    
    (471
    )Net (decrease) increase in cash and cash equivalents
    
    
    (41,583
    )
    
    
    77,159Cash and cash equivalents at beginning of period
    
    
    233,698
    
    
    
    78,212Cash and cash equivalents at end of period
    
    $
    192,115
    
    
    $
    155,371Supplemental disclosures of cash flow information:Cash flow during the period:Interest paid
    
    $
    85,149
    
    
    $
    100,446Income taxes (received) paid
    
    $
    (75,747
    )
    
    $
    3,545Noncash transactions:Derecognition of loans held for sale, other assets and collateralized debt
    
    $
    793,365
    
    
    $
    Other real estate owned
    
    $
    27,013
    
    
    $
    6,445
  10




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies
 Consolidation:
  Capital, Liquidity, and Going Concern Considerations:
     11




---



##### Table of Contents



Use of Estimates:
 Basis of Presentation:
 Recent Accounting Developments:
    12




---



##### Table of Contents



13




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##### Table of Contents



Note 2  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value(Dollars in thousands)Held-to-Maturity:Debt Issued by U.S. Treasury and Other Government Agencies
    
    $
    12,696
    
    
    $
    403
    
    
    $
    
    
    
    $
    13,099
    
    
    $
    12,696Debt of States and Political Subdivisions of States
    
    
    3,200
    
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    3,200Residential mortgage-backed securities
    
    
    657
    
    
    
    8
    
    
    
    
    
    
    
    665
    
    
    
    657Total Held-to-Maturity
    
    $
    16,553
    
    
    $
    411
    
    
    $
    
    
    
    $
    16,964
    
    
    $
    16,553Available-for-Sale:Other Securities
    
    $
    3,962
    
    
    $
    
    
    
    $
    (33
    )
    
    $
    3,929
    
    
    $
    3,929Residential mortgage-backed securities
    
    
    729
    
    
    
    15
    
    
    
    
    
    
    
    744
    
    
    
    744Collateralized debt obligations
    
    
    12,077
    
    
    
    
    
    
    
    (4,578
    )
    
    
    7,499
    
    
    
    7,499Total Available-for-Sale
    
    $
    16,768
    
    
    $
    15
    
    
    $
    (4,611
    )
    
    $
    12,172
    
    
    
    12,172Other SecuritiesFHLB stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    46,324Federal Reserve Bank stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,393Total Other Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,717
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value(Dollars in thousands)Held-to-Maturity:Debt Issued by U.S. Treasury and Other Government Agencies
    
    $
    13,054
    
    
    $
    266
    
    
    $
    
    
    
    $
    13,320
    
    
    $
    13,054Debt of States and Political Subdivisions of States
    
    
    3,320
    
    
    
    
    
    
    
    
    
    
    
    3,320
    
    
    
    3,320Residential mortgage-backed securities
    
    
    884
    
    
    
    
    
    
    
    (224
    )
    
    
    660
    
    
    
    884Total Held-to-Maturity
    
    $
    17,258
    
    
    $
    266
    
    
    $
    (224
    )
    
    $
    17,300
    
    
    $
    17,258Available-for-Sale:Other Securities
    
    $
    3,863
    
    
    $
    
    
    
    $
    (122
    )
    
    $
    3,741
    
    
    $
    3,741Residential mortgage-backed securities
    
    
    16,426
    
    
    
    155
    
    
    
    (27
    )
    
    
    16,554
    
    
    
    16,554Collateralized debt obligations
    
    
    14,458
    
    
    
    1,639
    
    
    
    (4,497
    )
    
    
    11,600
    
    
    
    11,600Total Available-for-Sale
    
    $
    34,747
    
    
    $
    1,794
    
    
    $
    (4,646
    )
    
    $
    31,895
    
    
    
    31,895Other SecuritiesFHLB stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    46,324Federal Reserve Bank stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,732Total Other Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    61,056
 14




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##### Table of Contents



Due after
    
    
    Due afterone year
    
    
    five yearsDue within
    
    
    through five
    
    
    through ten
    
    
    Due afterone year
    
    
    years
    
    
    years
    
    
    ten years(Dollars in thousands)Held-to-Maturity:Debt Issued by U.S. Treasury   and Other Government Agencies
    
    $
    5,358
    
    
    $
    7,338
    
    
    $
    
    
    
    $
    Debt of States and Political Subdivisions of States
    
    
    
    
    
    
    530
    
    
    
    90
    
    
    
    2,580Residential mortgage-backed securities
    
    
    145
    
    
    
    
    
    
    
    21
    
    
    
    491Total Book Value of Held-to-Maturity Securities
    
    $
    5,503
    
    
    $
    7,868
    
    
    $
    111
    
    
    $
    3,071Total Fair Value of Held-to-Maturity Securities
    
    $
    5,581
    
    
    $
    8,191
    
    
    $
    112
    
    
    $
    3,080Available-for-Sale:Debt of States and PoliticalSubdivisions of States
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Residential mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    737Collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,499Total Fair Value of Available-for-Sale Securities
    
    $
    
    
    
    $
    
    
    
    $
    7
    
    
    $
    8,236
  Securities with unrealized losses at June 30, 2009less than 12 months
    
    12 months or more
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossFair
    
    unrealized
    
    Fair
    
    unrealized
    
    Fair
    
    unrealizedvalue
    
    losses
    
    value
    
    losses
    
    value
    
    losses(Dollars in thousands)Residential mortgage-backed securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    6,767
    
    
    
    (4,578
    )
    
    
    6,767
    
    
    
    (4,578
    )Total securities with unrealized losses
    
    $
    
    
    
    $
    
    
    
    $
    6,767
    
    
    $
    (4,578
    )
    
    $
    6,767
    
    
    $
    (4,578
    )
 Securities
with unrealized losses at December 31, 2008less than 12 months
    
    12 months or more
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossFair
    
    unrealized
    
    Fair
    
    unrealized
    
    Fair
    
    unrealizedvalue
    
    losses
    
    value
    
    losses
    
    value
    
    losses(Dollars in thousands)Residential mortgage-backed securities
    
    $
    444
    
    
    $
    (2
    )
    
    $
    7,152
    
    
    $
    (25
    )
    
    $
    7,596
    
    
    $
    (27
    )Collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    8,040
    
    
    
    (4,497
    )
    
    
    8,040
    
    
    
    (4,497
    )Other
securities
    
    
    
    
    
    
    
    
    
    
    3,741
    
    
    
    (122
    )
    
    
    3,741
    
    
    
    (122
    )Total securities with unrealized losses
    
    $
    444
    
    
    $
    (2
    )
    
    $
    18,933
    
    
    $
    (4,644
    )
    
    $
    19,377
    
    
    $
    (4,646
    )
 15




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##### Table of Contents



Note 3  Loans and Leases Held for Sale
  Note 4  Loans and Leases
  June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Commercial, financial and agricultural
    
    $
    1,467,175
    
    
    $
    1,862,877Real estate-construction & land development
    
    
    353,882
    
    
    
    466,598Real estate-mortgage
    
    
    456,200
    
    
    
    523,837Consumer
    
    
    17,800
    
    
    
    24,022Commercial financingFranchise financing
    
    
    587,413
    
    
    
    922,429Domestic leasing
    
    
    8,444
    
    
    
    11,305Unearned incomeFranchise financing
    
    
    (166,713
    )
    
    
    (297,600
    )Domestic leasing
    
    
    (940
    )
    
    
    (1,420
    )Total
    
    $
    2,723,261
    
    
    $
    3,512,048
   16




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##### Table of Contents



Note 5  Allowance for Loan and Lease Losses
  For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)
    
    (Dollars in thousands)Balance at beginning of period
    
    $
    155,403
    
    
    $
    158,598
    
    
    $
    137,015
    
    
    $
    144,855Provision for loan and lease losses
    
    
    45,431
    
    
    
    157,829
    
    
    
    109,433
    
    
    
    202,350Charge-offs
    
    
    (48,106
    )
    
    
    (101,936
    )
    
    
    (94,559
    )
    
    
    (133,730
    )Recoveries
    
    
    1,552
    
    
    
    1,401
    
    
    
    2,391
    
    
    
    3,008Reduction due to reclassification to loans held for sale
    
    
    (6,100
    )
    
    
    (176
    )
    
    
    (6,100
    )
    
    
    (638
    )Foreign currency adjustment
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (131
    )Balance at end of period
    
    $
    148,180
    
    
    $
    215,714
    
    
    $
    148,180
    
    
    $
    215,714
  June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Accruing loans past due 90 days or more
    
    $
    446
    
    
    $
    3,031Nonaccrual loans and leases
    
    
    216,781
    
    
    
    165,154Total nonperforming loans and leases
    
    $
    217,227
    
    
    $
    168,185
 Note 6  Servicing Assets
   For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2009
    
    2008

    

    2009
    
    2008(Dollars in thousands)Beginning balance
    
    $
    2,310
    
    
    $
    15,864
    
    
    $
    14,804
    
    
    $
    19,724Sale of Servicing Asset
    
    
    
    
    
    
    
    
    
    
    (9,194
    )
    
    
    Changes in fair value:Due to changes in valuation inputs or assumptions (1)
    
    
    0
    
    
    
    3,390
    
    
    
    (2,700
    )
    
    
    800Other changes in fair value (2)
    
    
    (100
    )
    
    
    (1,180
    )
    
    
    (700
    )
    
    
    (2,450
    )Balance at the end of the period
    
    $
    2,210
    
    
    $
    18,074
    
    
    $
    2,210
    
    
    $
    18,074
 
 (1)
    
    Principally reflects changes in discount rates and prepayment spread assumptions, primarily
due to changes in interest rates.(2)
    
    Represents changes due to realization of expected cash flows. 17




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##### Table of Contents



For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)Beginning balance
    
    $
    3,097
    
    
    $
    3,479
    
    
    $
    3,312
    
    
    $
    3,510Additions
    
    
    543
    
    
    
    291
    
    
    
    1,243
    
    
    
    619Sales
    
    
    
    
    
    
    
    
    
    
    (68
    )
    
    
    Amortization
    
    
    (411
    )
    
    
    (307
    )
    
    
    (1,401
    )
    
    
    (646
    )Recovery
    
    
    44
    
    
    
    36
    
    
    
    187
    
    
    
    16Balance at the end of the period
    
    $
    3,273
    
    
    $
    3,499
    
    
    $
    3,273
    
    
    $
    3,499
 Note 7  Income Taxes
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)Income taxes computed at the statutory rate
    
    $
    (20,383
    )
    
    $
    (46,701
    )
    
    $
    (51,528
    )
    
    $
    (59,475
    )Increase (decrease) resulting from:Nontaxable interest from investment securities and loans
    
    
    (18
    )
    
    
    (28
    )
    
    
    (37
    )
    
    
    (58
    )Nontaxable income from bank owned life insurance
    
    
    45
    
    
    
    (158
    )
    
    
    83
    
    
    
    (350
    )State tax, net of federal benefit
    
    
    (1,931
    )
    
    
    (4,536
    )
    
    
    (4,880
    )
    
    
    (5,904
    )Foreign operations
    
    
    (1
    )
    
    
    (29
    )
    
    
    6
    
    
    
    44Reserve adjustment(1)
    
    
    137
    
    
    
    190
    
    
    
    271
    
    
    
    346Federal tax credits
    
    
    (326
    )
    
    
    (448
    )
    
    
    (652
    )
    
    
    (721
    )Other items  net
    
    
    135
    
    
    
    111
    
    
    
    372
    
    
    
    189Valuation allowance
    
    
    21,263
    
    
    
    24,900
    
    
    
    60,133
    
    
    
    24,900$
    (1,079
    )
    
    $
    (26,699
    )
    
    $
    3,768
    
    
    $
    (41,029
    )
 
 (1)
    
    Tax reserves are adjusted as we align our tax liability to a level commensurate with our
current identified tax exposures.  18




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##### Table of Contents



Note 8  Other Borrowings
  June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Federal Home Loan Bank borrowings
    
    $
    266,703
    
    
    $
    487,012Federal funds
    
    
    
    
    
    
    25,000Total
    
    $
    266,703
    
    
    $
    512,012Weighted average interest rate
    
    
    4.46
    %
    
    
    4.48
    %
    Note 9  Collateralized Debt
   WeightedAverageInterest Rate atContractual
    
    June 30,
    
    June 30,
    
    December 31,Maturity
    
    2009
    
    2009
    
    2008(Dollars in thousands)Home equity line of business2004-1 variable rate asset backed notes(2)
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    52,9632005-1 variable and fixed rate asset backed notes(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,5832006-1 variable and fixed rate asset backed notes(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,1172006-2 variable and fixed rate asset backed notes(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,9022006-3 variable and fixed rate asset backed notes(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,8392007-1 variable and fixed rate asset backed notes(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    215,4352008-1 variable and fixed rate asset backed notes(1)
    
    
    9/2048
    
    
    
    6.5
    
    
    
    4,880
    
    
    
    6,7452008-2 fixed rate asset backed notes(1)
    
    
    9/2048
    
    
    
    19.0
    
    
    
    58,720
    
    
    
    72,7492008-3 fixed rate asset backed notes(1)
    
    
    9/2048
    
    
    
    19.4
    
    
    
    5,340
    
    
    
    7,459Total
    
    
    
    
    
    
    
    
    
    $
    68,940
    
    
    $
    912,792
 
 (1)
    
    Shown at fair value in accordance with SFAS No. 159.(2)
    
    Removed from balance sheet in 2009 in connection with the related loan derecognition -
see Note 3. 19




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##### Table of Contents



Note 10  Derivatives
      20




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##### Table of Contents



Asset Derivatives
    
    Liability DerivativesJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Balance
    
    
    
    
    
    BalanceSheet
    
    
    
    
    
    Sheet
    
    Fair
    
    Balance Sheet
    
    Fair
    
    Balance Sheet
    
    FairLocation
    
    Fair Value
    
    Location
    
    Value
    
    Location
    
    Value
    
    Location
    
    Value(In thousands)
    
    (In thousands)Derivatives designated
as hedging instruments
under Statement 133Interest rate contracts
    
    Other assets
    
    $
    
    
    
    Other assets
    
    $
    
    
    
    Other Liabilities
    
    $
    1,135
    
    
    Other Liabilities
    
    $
    763Derivatives not
designated as hedging
instruments under
Statement 133Interest rate contracts
    
    Other assets
    
    $
    212
    
    
    Other assets
    
    $
    1,219
    
    
    Other Liabilities
    
    $
    337
    
    
    Other Liabilities
    
    $
    6,000Foreign exchange
contracts
    
    Other assets
    
    
    
    
    
    Other assets
    
    
    1,498
    
    
    Other Liabilities
    
    
    
    
    
    Other Liabilities
    
    
    35Total
    
    
    
    $
    212
    
    
    
    
    $
    2,717
    
    
    
    
    $
    337
    
    
    
    
    $
    6,035Total derivatives
    
    
    
    $
    212
    
    
    
    
    $
    2,717
    
    
    
    
    $
    1,472
    
    
    
    
    $
    6,798
  Amount of Gain or (Loss)Amount of Gain or (Loss)
    
    Location of Gain or (Loss)
    
    Reclassified from AccumulatedRecognized in OCI on Derivative
    
    Reclassified from Accumulated
    
    OCI Into Income (EffectiveDerivatives In Statement 133 Cash Flow
    
    (Effective Portion)
    
    OCI Into Income (Effective
    
    Portion)Hedging Relationships
    
    2009
    
    2008
    
    Portion)
    
    2009
    
    2008(In Thousands)
    
    
    
    (In Thousands)Interest rate contracts
    
    $
    
    
    
    $
    161
    
    
    Interest Expense
    
    $
    10
    
    
    $
    (1,021
    )
 Recognized in Income onInstruments Not Designated as Hedging
    
    Recognized in Income on
    
    Derivativesunder Statement 133
    
    Derivatives
    
    2009
    
    2008(In Thousands)Interest rate contracts
    
    Derivative gain (loss)
    
    $
    282
    
    
    $
    2,980Foreign exchange contracts
    
    Derivative gain (loss)
    
    
    
    
    
    
    1,721Interest rate contracts
    
    Gain on sale of loans
    
    
    (125
    )
    
    
    (8
    )Total
    
    
    
    $
    157
    
    
    $
    4,693
  21




---



##### Table of Contents



Note 11  Employee Retirement Plans
  Employee Pension Plan
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Service cost
    
    $
    87
    
    
    $
    1,167
    
    
    $
    173
    
    
    $
    2,335Interest cost
    
    
    591
    
    
    
    683
    
    
    
    1,215
    
    
    
    1,365Expected return on plan assets
    
    
    (437
    )
    
    
    (657
    )
    
    
    (894
    )
    
    
    (1,314
    )Amortization of prior service cost
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    19Amortization of actuarial loss
    
    
    (64
    )
    
    
    71
    
    
    
    69
    
    
    
    142Net periodic benefit cost
    
    $
    177
    
    
    $
    1,273
    
    
    $
    563
    
    
    $
    2,547
 Supplemental Executive Retirement Plan
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Service cost
    
    $
    
    
    
    $
    22
    
    
    $
    
    
    
    $
    43Interest cost
    
    
    83
    
    
    
    81
    
    
    
    166
    
    
    
    162Amortization of transition obligation
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    6Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net periodic benefit cost
    
    $
    83
    
    
    $
    106
    
    
    $
    166
    
    
    $
    212
  Note 12  Fair Value
  
    
    Level 1  Quoted prices for identical instruments in active markets.
 
    
    Level 2  Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived valuations
in which all significant inputs and significant value drivers are observable in active
markets.
 
    
    Level 3  Model derived valuations in which one or more significant inputs or significant
value drivers are unobservable.
 22




---



##### Table of Contents



Level 1
    
    Level 2
    
    Level 3
    
    Total(Dollars in thousands)June 30, 2009AssetsResidual interests
    
    $
    
    
    
    $
    
    
    
    $
    8,656
    
    
    $
    8,656Investment securities  available-for-sale
    
    
    
    
    
    
    4,673
    
    
    
    7,499
    
    
    
    12,172Servicing assets
    
    
    
    
    
    
    
    
    
    
    2,210
    
    
    
    2,210Total assets
    
    $
    
    
    
    $
    4,673
    
    
    $
    18,365
    
    
    $
    23,038LiabilitiesCollateralized debt
    
    $
    
    
    
    $
    
    
    
    $
    68,940
    
    
    $
    68,940Derivatives
    
    
    
    
    
    
    1,260
    
    
    
    
    
    
    
    1,260Total liabilities
    
    $
    
    
    
    $
    1,260
    
    
    $
    68,940
    
    
    $
    70,200
   Net realized/unrealized
    
    Purchases,gain(losses) included in
    
    issuances and
    
    
    
    
    
    Unrealized gains (losses)January 1, 2009
    
    earnings(1) (2)
    
    settlements
    
    June 30, 2009
    
    still held(3)(Dollars in thousands)AssetsResidual interests
    
    $
    9,180
    
    
    $
    (524
    )
    
    $
    
    
    
    $
    8,656
    
    
    $
    Investment securities  available-for-sale
    
    
    12,091
    
    
    
    (4,449
    )
    
    
    (143
    )
    
    
    7,499
    
    
    
    (4,578
    )Servicing assets
    
    
    14,804
    
    
    
    (3,400
    )
    
    
    (9,194
    )
    
    
    2,210
    
    
    
    Total assets
    
    $
    36,075
    
    
    $
    (8,373
    )
    
    $
    (9,337
    )
    
    $
    18,365
    
    
    $
    (4,578
    )LiabilitiesCollateralized debt
    
    $
    86,953
    
    
    $
    21,335
    
    
    $
    (3,322
    )
    
    $
    68,940
    
    
    $
    Total liabilities
    
    $
    86,953
    
    
    $
    21,335
    
    
    $
    (3,322
    )
    
    $
    104,966
    
    
    $
    
 
 (1)
    
    Unrealized gains (losses) on residual interests are recorded in Trading gains (losses) on
the statement of income(2)
    
    Unrealized gains (losses) on servicing assets are recorded in Amortization and impairment of
servicing assets on the statement of income(3)
    
    Represents the amount of total gains or losses for the period, included in earnings,
attributable to the change in unrealized gains (losses) relating to assets classified as Level
3 that are still held at June 30, 2009 23




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##### Table of Contents



Level 1
    
    Level 2
    
    Level 3
    
    Total(Dollars in thousands)June 30, 2009AssetsLoans held for investment (1)
    
    $
    
    
    
    $
    
    
    
    $
    157,048
    
    
    $
    157,048Loans and leases held for sale
    
    
    247,000
    
    
    
    
    
    
    
    32,015
    
    
    
    279,015Mortgage servicing assets
    
    
    
    
    
    
    
    
    
    
    3,273
    
    
    
    3,273Other real
estate owned (2)
    
    
    
    
    
    
    
    
    
    
    37,844
    
    
    
    37,844Total assets
    
    $
    247,000
    
    
    $
    
    
    
    $
    230,180
    
    
    $
    477,180
 
 (1)
    
    Represents the carrying amount of impaired loans (i.e., unpaid principal balance less
specific loan loss reserves) with impairment calculated based on appraised collateral values(2)
    
    Other real estate owned is compromised of real estate
acquired in partial or full satisfaction of loans and is included in
other assets. Fair value is generally based on third party appraisals. Determination of Fair Value
 Cash and cash equivalents:
 Interest-bearing deposits with financial institutions, Deposit liabilities, Other borrowings,
and Long-term and collateralized debt:
 Loans and leases and loans held for sale:
 Residual interests:
 Servicing assets:
 Investment securities:
 Derivative instruments:
 Collateralized Debt:
 24




---



##### Table of Contents



Other Long-term Debt:
   At June 30, 2009
    
    At December 31, 2008Carrying
    
    Estimated Fair
    
    Carrying
    
    Estimated FairAmount
    
    Value
    
    Amount
    
    Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    192,115
    
    
    $
    192,115
    
    
    $
    233,698
    
    
    $
    233,698Interest-bearing deposits with
financial institutions
    
    
    5,187
    
    
    
    5,187
    
    
    
    26,023
    
    
    
    26,057Residual Interests
    
    
    8,656
    
    
    
    8,656
    
    
    
    9,180
    
    
    
    9,180Investment securities
    
    
    81,442
    
    
    
    81,853
    
    
    
    110,209
    
    
    
    110,251Loans and leases held for sale
    
    
    279,015
    
    
    
    279,015
    
    
    
    841,333
    
    
    
    841,333Loans and leases, net of allowance
    
    
    2,575,081
    
    
    
    2,364,553
    
    
    
    3,375,033
    
    
    
    3,218,678Servicing asset
    
    
    5,483
    
    
    
    6,204
    
    
    
    18,116
    
    
    
    19,145Financial liabilities:Deposits
    
    
    2,715,691
    
    
    
    2,639,065
    
    
    
    3,017,935
    
    
    
    2,973,910Other borrowings
    
    
    266,703
    
    
    
    281,952
    
    
    
    512,012
    
    
    
    543,794Collateralized debt
    
    
    68,940
    
    
    
    68,940
    
    
    
    912,792
    
    
    
    912,792Other long-term debt
    
    
    233,868
    
    
    
    13,193
    
    
    
    233,868
    
    
    
    93,378Derivatives
    
    
    1,260
    
    
    
    1,260
    
    
    
    8,496
    
    
    
    8,496
   25




---



##### Table of Contents



Note 13  Earnings Per Share
  Three Months ended June 30, 2009Basic
    
    
    
    
    
    DilutedNet
    
    Preferred
    
    Earnings
    
    Effect of
    
    EarningsLoss
    
    Dividends
    
    Per Share
    
    Stock Options
    
    Per Share(Dollars in thousands, except per share amounts)Net loss allocable to common shareholders:
    
    $
    (57,158
    )
    
    $
    
    
    
    $
    (57,158
    )
    
    $
    
    
    
    $
    (57,158
    )Shares
    
    
    
    
    
    
    
    
    
    
    29,697
    
    
    
    
    
    
    
    29,697Per-share amount
    
    
    
    
    
    
    
    
    
    $
    (1.92
    )
    
    $
    
    
    
    $
    (1.92
    )Three Months ended June 30, 2008Basic
    
    
    
    
    
    DilutedNet
    
    Preferred
    
    Earnings
    
    Effect of
    
    EarningsLoss
    
    Dividends
    
    Per Share
    
    Stock Options
    
    Per Share(Dollars in thousands, except per share amounts)Net loss allocable to common shareholders:
    
    $
    (106,732
    )
    
    $
    
    
    
    $
    (106,732
    )
    
    $
    
    
    
    $
    (106,732
    )Shares
    
    
    
    
    
    
    
    
    
    
    29,313
    
    
    
    
    
    
    
    29,313Per-share amount
    
    
    
    
    
    
    
    
    
    $
    (3.64
    )
    
    $
    
    
    
    $
    (3.64
    )Six Months ended June 30, 2009Basic
    
    
    
    
    
    DilutedNet
    
    Preferred
    
    Earnings
    
    Effect of
    
    EarningsLoss
    
    Dividends
    
    Per Share
    
    Stock Options
    
    Per Share(Dollars in thousands, except per share amounts)Net loss allocable to common shareholders:
    
    $
    (150,991
    )
    
    $
    
    
    
    $
    (150,991
    )
    
    $
    
    
    
    $
    (150,991
    )Shares
    
    
    
    
    
    
    
    
    
    
    29,723
    
    
    
    
    
    
    
    29,723Per-share amount
    
    
    
    
    
    
    
    
    
    $
    (5.08
    )
    
    $
    
    
    
    $
    (5.08
    )Six Months ended June 30, 2008Basic
    
    
    
    
    
    DilutedNet
    
    Preferred
    
    Earnings
    
    Effect of
    
    EarningsLoss
    
    Dividends
    
    Per Share
    
    Stock Options
    
    Per Share(Dollars in thousands, except per share amounts)Net loss allocable to common shareholders:
    
    $
    (128,898
    )
    
    $
    
    
    
    $
    (128,898
    )
    
    $
    
    
    
    $
    (128,898
    )Shares
    
    
    
    
    
    
    
    
    
    
    29,281
    
    
    
    
    
    
    
    29,281Per-share amount
    
    
    
    
    
    
    
    
    
    $
    (4.40
    )
    
    $
    
    
    
    $
    (4.40
    )
  Note 14  Industry Segment Information
   26




---



##### Table of Contents



Commercial
    
    
    Commercial
    
    
    HomeBanking
    
    
    Finance
    
    
    Equity
    
    
    Other
    
    
    Consolidated(Dollars in thousands)For the Three Months Ended June 30, 2009Net interest income
    
    $
    22,559
    
    
    $
    12,990
    
    
    $
    (6,927
    )
    
    $
    (14,355
    )
    
    $
    14,267Intersegment interest
    
    
    (1,844
    )
    
    
    (7,883
    )
    
    
    (2,168
    )
    
    
    11,895
    
    
    
    Provision for loan and lease losses
    
    
    (25,087
    )
    
    
    (5,881
    )
    
    
    (14,463
    )
    
    
    
    
    
    
    (45,431
    )Other revenue
    
    
    2,378
    
    
    
    2,057
    
    
    
    16,526
    
    
    
    84
    
    
    
    21,045Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total net revenues
    
    
    (1,994
    )
    
    
    1,283
    
    
    
    (7,032
    )
    
    
    (2,376
    )
    
    
    (10,119
    )Other expense
    
    
    25,319
    
    
    
    1,542
    
    
    
    14,322
    
    
    
    6,935
    
    
    
    48,118Intersegment expenses
    
    
    984
    
    
    
    153
    
    
    
    271
    
    
    
    (1,408
    )
    
    
    Income (loss) before taxes
    
    
    (28,297
    )
    
    
    (412
    )
    
    
    (21,625
    )
    
    
    (7,903
    )
    
    
    (58,237
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,079
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (57,158
    )
 Commercial
    
    
    Commercial
    
    
    HomeBanking
    
    
    Finance
    
    
    Equity
    
    
    Other
    
    
    Consolidated(Dollars in thousands)For the Three Months Ended June 30, 2008Net interest income
    
    $
    29,555
    
    
    $
    25,248
    
    
    $
    26,056
    
    
    $
    (18,985
    )
    
    $
    61,874Intersegment interest
    
    
    (2,633
    )
    
    
    (11,784
    )
    
    
    (4,445
    )
    
    
    18,862
    
    
    
    Provision for loan and lease losses
    
    
    (24,481
    )
    
    
    (48,201
    )
    
    
    (85,147
    )
    
    
    
    
    
    
    (157,829
    )Other revenue
    
    
    4,401
    
    
    
    2,825
    
    
    
    3,379
    
    
    
    (4,084
    )
    
    
    6,521Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    (34
    )
    
    
    Total net revenues
    
    
    6,842
    
    
    
    (31,912
    )
    
    
    (60,123
    )
    
    
    (4,241
    )
    
    
    (89,434
    )Other expense
    
    
    20,832
    
    
    
    6,937
    
    
    
    13,290
    
    
    
    2,938
    
    
    
    43,997Intersegment expenses
    
    
    1,113
    
    
    
    460
    
    
    
    620
    
    
    
    (2,193
    )
    
    
    Income (loss) before taxes
    
    
    (15,103
    )
    
    
    (39,309
    )
    
    
    (74,033
    )
    
    
    (4,986
    )
    
    
    (133,431
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,699
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (106,732
    )
 27




---



##### Table of Contents



Commercial
    
    
    Commercial
    
    
    HomeBanking
    
    
    Finance
    
    
    Equity
    
    
    Other
    
    
    Consolidated(Dollars in thousands)For the Six Months Ended June 30, 2009Net interest income
    
    $
    46,942
    
    
    $
    26,120
    
    
    $
    1,351
    
    
    $
    (30,040
    )
    
    $
    44,373Intersegment interest
    
    
    (3,788
    )
    
    
    (15,732
    )
    
    
    (5,748
    )
    
    
    25,268
    
    
    
    Provision for loan and lease losses
    
    
    (62,696
    )
    
    
    (11,411
    )
    
    
    (35,326
    )
    
    
    
    
    
    
    (109,433
    )Other revenue
    
    
    6,876
    
    
    
    2,735
    
    
    
    1,940
    
    
    
    (1,102
    )
    
    
    10,449Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total net revenues
    
    
    (12,666
    )
    
    
    1,712
    
    
    
    (37,783
    )
    
    
    (5,874
    )
    
    
    (54,611
    )Other expense
    
    
    48,296
    
    
    
    4,744
    
    
    
    25,724
    
    
    
    13,848
    
    
    
    92,612Intersegment expenses
    
    
    1,985
    
    
    
    331
    
    
    
    579
    
    
    
    (2,895
    )
    
    
    Income (loss) before taxes
    
    
    (62,947
    )
    
    
    (3,363
    )
    
    
    (64,086
    )
    
    
    (16,827
    )
    
    
    (147,223
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,768Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (150,991
    )Assets at June 30, 2009
    
    $
    2,371,765
    
    
    $
    662,533
    
    
    $
    232,759
    
    
    $
    99,608
    
    
    $
    3,366,665
 Commercial
    
    
    Commercial
    
    
    HomeBanking
    
    
    Finance
    
    
    Equity
    
    
    Other
    
    
    Consolidated(Dollars in thousands)For the Six Months Ended June 30, 2008Net interest income
    
    $
    61,138
    
    
    $
    50,786
    
    
    $
    54,061
    
    
    $
    (39,676
    )
    
    $
    126,309Intersegment interest
    
    
    (6,394
    )
    
    
    (23,383
    )
    
    
    (9,069
    )
    
    
    38,846
    
    
    
    Provision for loan and lease losses
    
    
    (31,061
    )
    
    
    (52,857
    )
    
    
    (118,432
    )
    
    
    
    
    
    
    (202,350
    )Other revenue
    
    
    9,068
    
    
    
    9,114
    
    
    
    419
    
    
    
    (16,536
    )
    
    
    2,065Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    (76
    )
    
    
    Total net revenues
    
    
    32,751
    
    
    
    (16,340
    )
    
    
    (72,945
    )
    
    
    (17,442
    )
    
    
    (73,976
    )Other expense
    
    
    44,427
    
    
    
    14,619
    
    
    
    26,709
    
    
    
    10,196
    
    
    
    95,951Intersegment expenses
    
    
    2,150
    
    
    
    905
    
    
    
    1,212
    
    
    
    (4,267
    )
    
    
    Income (loss) before taxes
    
    
    (13,826
    )
    
    
    (31,864
    )
    
    
    (100,866
    )
    
    
    (23,371
    )
    
    
    (169,927
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41,029
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (128,898
    )Assets at June 30, 2008
    
    $
    3,077,591
    
    
    $
    1,272,671
    
    
    $
    1,280,497
    
    
    $
    301,407
    
    
    $
    5,932,166
 Note 15  Commitments and Contingencies
 Litigation in Connection with Loans Purchased from Community Bank of Northern Virginia
  Hobson v. Irwin Union Bank and Trust Company Hobson Hobson Hobson
 28




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##### Table of Contents



Kossler v. Community Bank of Northern Virginia Kossler Kossler Kossler
 Hobson Kossler Hobson Hobson
 Hobson Kossler Hobson Hobson Kossler
 Hobson Kossler Kessler v.
RFC, et al Kessler Kessler Kessler Kessler Kessler Kessler Kessler
  Hobson Kossler
 Litigation in Connection with Loans Purchased from Freedom Mortgage Corporation.
 Irwin Union Bank, et
al. v. Freedom Mortgage Corp.
  29




---



##### Table of Contents



Freedom Mortgage
Corporation v. Irwin Financial Corporation et al.
  Homer v. Sharp
  EverBank v. Irwin Mortgage Corporation and Irwin Union Bank and Trust Company  Demand for
Arbitration
   Note 16  Shareholders Equity
  30




---



##### Table of Contents



Note 17  Subsequent Event
    
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Strategy and Restructuring
     31




---



##### Table of Contents



Strategic Positioning Once Restructuring is Complete
       Outlook
  32




---



##### Table of Contents



Critical Accounting Policies
  Consolidated Overview
 For the Three Months Ended
    
    For the Six Months EndedJune 30,

    
    June 30,2009
    
    2008
    
    2009
    
    2008Net loss (in thousands)
    
    $
    (57,158
    )
    
    $
    (106,732
    )
    
    $
    (150,991
    )
    
    $
    (128,897
    )Basic earnings per share
    
    
    (1.92
    )
    
    
    (3.64
    )
    
    
    (5.08
    )
    
    
    (4.40
    )Diluted earnings per share
    
    
    (1.92
    )
    
    
    (3.64
    )
    
    
    (5.08
    )
    
    
    (4.40
    )Return on average equity
    
    NM (1)
    
    
    (109.4
    )%
    
    
    (829.2
    )%
    
    
    (61.8
    )%Return on average assets
    
    
    (6.2
    )%
    
    
    (7.2
    )%
    
    
    (7.2
    )%
    
    
    (4.3
    )%
 
 (1)
    
    Not meaningful due to average equity being negative for this period Consolidated Income Statement Analysis
 Net Loss
  Net Interest Income
  33




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##### Table of Contents



For the Six Months Ended June 30,2009
    
    
    2008Annualized
    
    
    
    
    
    
    
    
    
    
    AnnualizedAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)AssetsInterest-earning assets:Interest-bearing deposits with financial institutions
    
    $
    18,697
    
    
    $
    159
    
    
    
    1.71
    %
    
    $
    43,047
    
    
    $
    811
    
    
    
    3.79
    %Federal funds sold
    
    
    0
    
    
    
    0
    
    
    NA
    
    
    
    16,417
    
    
    
    199
    
    
    
    2.44
    %Residual interests
    
    
    9,094
    
    
    
    146
    
    
    
    3.24
    %
    
    
    10,874
    
    
    
    469
    
    
    
    8.67
    %Investment securities
    
    
    99,903
    
    
    
    1,936
    
    
    
    3.91
    %
    
    
    132,226
    
    
    
    3,514
    
    
    
    5.34
    %Loans held for sale
    
    
    423,918
    
    
    
    22,549
    
    
    
    10.73
    %
    
    
    7,831
    
    
    
    154
    
    
    
    3.95
    %Loans and leases, net of unearned income(1)
    
    
    3,376,499
    
    
    
    106,598
    
    
    
    6.37
    %
    
    
    5,592,574
    
    
    
    226,846
    
    
    
    8.16
    %Total interest earning assets
    
    
    3,928,111
    
    
    $
    131,388
    
    
    
    6.75
    %
    
    
    5,802,969
    
    
    $
    231,993
    
    
    
    8.04
    %Noninterest-earning assets:Cash and due from banks
    
    
    154,660
    
    
    
    
    
    
    
    
    
    
    
    69,065Premises and equipment, net
    
    
    31,305
    
    
    
    
    
    
    
    
    
    
    
    38,360Other assets
    
    
    260,122
    
    
    
    
    
    
    
    
    
    
    
    250,027Less allowance for loan and lease losses
    
    
    (147,026
    )
    
    
    
    
    
    
    
    
    
    
    (157,737
    )Total assets
    
    $
    4,227,172
    
    
    
    
    
    
    
    
    
    
    $
    6,002,684Liabilities and Shareholders EquityInterest-bearing liabilities:Money market checking
    
    $
    358,470
    
    
    $
    736
    
    
    
    0.41
    %
    
    $
    316,256
    
    
    $
    2,151
    
    
    
    1.37
    %Money market savings
    
    
    395,946
    
    
    
    1,522
    
    
    
    0.78
    %
    
    
    1,033,065
    
    
    
    13,507
    
    
    
    2.63
    %Regular savings
    
    
    132,324
    
    
    
    1,293
    
    
    
    1.97
    %
    
    
    116,944
    
    
    
    979
    
    
    
    1.68
    %Time deposits
    
    
    1,747,783
    
    
    
    32,089
    
    
    
    3.70
    %
    
    
    1,645,936
    
    
    
    38,822
    
    
    
    4.74
    %Other borrowings
    
    
    363,536
    
    
    
    8,152
    
    
    
    4.52
    %
    
    
    659,697
    
    
    
    13,162
    
    
    
    4.01
    %Collateralized debt
    
    
    505,189
    
    
    
    35,410
    
    
    
    14.13
    %
    
    
    1,187,289
    
    
    
    28,873
    
    
    
    4.89
    %Other long-term debt
    
    
    233,868
    
    
    
    7,813
    
    
    
    6.74
    %
    
    
    233,870
    
    
    
    8,190
    
    
    
    7.04
    %Total interest-bearing liabilities
    
    $
    3,737,116
    
    
    $
    87,015
    
    
    
    4.70
    %
    
    $
    5,193,057
    
    
    $
    105,684
    
    
    
    4.09
    %Noninterest-bearing liabilities:Demand deposits
    
    
    324,704
    
    
    
    
    
    
    
    
    
    
    
    299,500Other liabilities
    
    
    128,633
    
    
    
    
    
    
    
    
    
    
    
    90,436Shareholders equity
    
    
    36,719
    
    
    
    
    
    
    
    
    
    
    
    419,691Total liabilities and shareholders equity
    
    $
    4,227,172
    
    
    
    
    
    
    
    
    
    
    $
    6,002,684Net interest income
    
    
    
    
    
    $
    44,373
    
    
    
    
    
    
    
    
    
    
    $
    126,309Net interest income to average
interest earning assets
    
    
    
    
    
    
    
    
    
    
    2.28
    %
    
    
    
    
    
    
    
    
    
    
    4.38
    %
 
 (1)
    
    For purposes of these computations, nonaccrual loans are included in daily average loan
amounts outstanding. Provision for Loan and Lease Losses
  34




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##### Table of Contents



Noninterest Income
  Noninterest Expense
  Income Tax Provision
   Consolidated Balance Sheet Analysis
  Residual Interests
  35




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##### Table of Contents



Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value(Dollars in thousands)Held-to-Maturity:Debt Issued by U.S. Treasury
and Other Government Agencies
    
    $
    12,696
    
    
    $
    403
    
    
    $
    
    
    
    $
    13,099
    
    
    $
    12,696Debt of States and Political
Subdivisions of States
    
    
    3,200
    
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    3,200Residential mortgage-backed securities
    
    
    657
    
    
    
    8
    
    
    
    
    
    
    
    665
    
    
    
    657Total Held-to-Maturity
    
    $
    16,553
    
    
    $
    411
    
    
    $
    
    
    
    $
    16,964
    
    
    $
    16,553Available-for-Sale:Equity Securities
    
    $
    3,962
    
    
    $
    
    
    
    $
    (33
    )
    
    $
    3,929
    
    
    $
    3,929Residential mortgage-backed securities
    
    
    729
    
    
    
    15
    
    
    
    
    
    
    
    744
    
    
    
    744Collateralized debt obligations
    
    
    12,077
    
    
    
    
    
    
    
    (4,578
    )
    
    
    7,499
    
    
    
    7,499Total Available-for-Sale
    
    $
    16,768
    
    
    $
    15
    
    
    $
    (4,611
    )
    
    $
    12,172
    
    
    
    12,172Other SecuritiesFHLB stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    46,324Fed Reserve stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,393Total Other Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,717
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value(Dollars in thousands)Held-to-Maturity:Debt Issued by U.S. Treasury
and Other Government Agencies
    
    $
    13,054
    
    
    $
    266
    
    
    $
    
    
    
    $
    13,320
    
    
    $
    13,054Debt of States and Political
Subdivisions of States
    
    
    3,320
    
    
    
    
    
    
    
    
    
    
    
    3,320
    
    
    
    3,320Residential mortgage-backed securities
    
    
    884
    
    
    
    
    
    
    
    (224
    )
    
    
    660
    
    
    
    884Total Held-to-Maturity
    
    $
    17,258
    
    
    $
    266
    
    
    $
    (224
    )
    
    $
    17,300
    
    
    $
    17,258Available-for-Sale:Other Securities
    
    $
    3,863
    
    
    $
    
    
    
    $
    (122
    )
    
    $
    3,741
    
    
    $
    3,741Residential mortgage-backed securities
    
    
    16,426
    
    
    
    155
    
    
    
    (27
    )
    
    
    16,554
    
    
    
    16,554Collateralized debt obligations
    
    
    14,458
    
    
    
    1,639
    
    
    
    (4,497
    )
    
    
    11,600
    
    
    
    11,600Total Available-for-Sale
    
    $
    34,747
    
    
    $
    1,794
    
    
    $
    (4,646
    )
    
    $
    31,895
    
    
    
    31,895Other SecuritiesFHLB stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    46,324Federal Reserve Bank stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,732Total Other Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    61,056
 36




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##### Table of Contents



Loans and Leases Held For Sale
  Loans and Leases
  June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Commercial, financial and agricultural
    
    $
    1,467,175
    
    
    $
    1,862,877Real estate-construction & land development
    
    
    353,882
    
    
    
    466,598Real estate-mortgage
    
    
    456,200
    
    
    
    523,837Consumer
    
    
    17,800
    
    
    
    24,022Commercial financingFranchise financing
    
    
    587,413
    
    
    
    922,429Domestic leasing
    
    
    8,444
    
    
    
    11,305Unearned incomeFranchise financing
    
    
    (166,713
    )
    
    
    (297,600
    )Domestic leasing
    
    
    (940
    )
    
    
    (1,420
    )Total
    
    $
    2,723,261
    
    
    $
    3,512,048
 37




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##### Table of Contents



Allowance for Loans and Lease Losses
  For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)
    
    (Dollars in thousands)Balance at beginning of period
    
    $
    155,403
    
    
    $
    158,598
    
    
    $
    137,015
    
    
    $
    144,855Provision for loan and lease losses
    
    
    45,431
    
    
    
    157,829
    
    
    
    109,433
    
    
    
    202,350Charge-offs
    
    
    (48,106
    )
    
    
    (101,936
    )
    
    
    (94,559
    )
    
    
    (133,730
    )Recoveries
    
    
    1,552
    
    
    
    1,401
    
    
    
    2,391
    
    
    
    3,008Reduction
due to reclassification to loans held for sale
    
    
    (6,100
    )
    
    
    (176
    )
    
    
    (6,100
    )
    
    
    (638
    )Foreign currency adjustment
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (131
    )Balance at end of period
    
    $
    148,180
    
    
    $
    215,714
    
    
    $
    148,180
    
    
    $
    215,714
  Deposits
  Other Borrowings
   Collateralized Debt and Other Long-Term Debt
   38




---



##### Table of Contents



Repurchase Liability
     Repurchase Analysis
 YTDVintage
    
    2007
    
    
    2008
    
    
    2009
    
    
    TotalMillionsPre-2002
    
    $
    0.3
    
    
    $
    0.4
    
    
    $
    
    
    
    $
    0.72002
    
    
    1.0
    
    
    
    0.1
    
    
    
    
    
    
    
    1.12003
    
    
    1.0
    
    
    
    1.2
    
    
    
    
    
    
    
    2.22004
    
    
    0.5
    
    
    
    1.8
    
    
    
    
    
    
    
    2.32005
    
    
    5.5
    
    
    
    2.7
    
    
    
    0.3
    
    
    
    8.52006
    
    
    17.9
    
    
    
    3.7
    
    
    
    
    
    
    
    21.62007
    
    
    1.1
    
    
    
    0.7
    
    
    
    
    
    
    
    1.8Totals
    
    $
    27.3
    
    
    $
    10.6
    
    
    $
    0.3
    
    
    $
    38.2Non-EPD
    
    
    48
    %
    
    
    99
    %
    
    
    100
    %
    
    
    62
    %
 Capital
  39




---



##### Table of Contents



To Be WellCapitalized Under
    
    For CapitalActual
    
    
    
    
    
    Prompt Corrective
    
    AdequacyAmount
    
    Ratio
    
    Action Provisions
    
    PurposesAs of June 30, 2009
    
    (Dollars in thousands)Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation
    
    $
    (39,071
    )
    
    
    (1.2
    )%
    
    
    N/A
    
    
    
    8.0
    %Irwin Union Bank and Trust
    
    
    225,840
    
    
    
    8.3
    
    
    
    10.0
    %
    
    
    8.0Irwin Union Bank, F.S.B.
    
    
    46,894
    
    
    
    10.4
    
    
    
    10.0
    
    
    
    8.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation
    
    
    (39,071
    )
    
    
    (1.2
    )
    
    
    N/A
    
    
    
    4.0Irwin Union Bank and Trust
    
    
    160,161
    
    
    
    5.9
    
    
    
    6.0
    
    
    
    4.0Irwin Union Bank, F.S.B.
    
    
    41,276
    
    
    
    9.2
    
    
    
    6.0
    
    
    
    N/ATier I Capital (to Average Assets):Irwin Financial Corporation
    
    
    (39,071
    )
    
    
    (1.1
    )
    
    
    N/A
    
    
    
    4.0Irwin Union Bank and Trust
    
    
    160,161
    
    
    
    5.1
    
    
    
    5.0
    
    
    
    4.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.
    
    
    41,276
    
    
    
    8.0
    
    
    
    5.0
    
    
    
    4.0As of December 31, 2008
    
    (Dollars in thousands)Total Capital (to Risk-Weighted Assets):Irwin Financial Corporation
    
    $
    309,726
    
    
    
    6.6
    %
    
    
    N/A
    
    
    
    8.0
    %Irwin Union Bank and Trust
    
    
    385,136
    
    
    
    9.3
    
    
    
    10.0
    %
    
    
    8.0Irwin Union Bank, F.S.B.
    
    
    57,232
    
    
    
    11.2
    
    
    
    10.0
    
    
    
    8.0Tier I Capital (to Risk-Weighted Assets):Irwin Financial Corporation
    
    
    154,863
    
    
    
    3.3
    
    
    
    N/A
    
    
    
    4.0Irwin Union Bank and Trust
    
    
    302,397
    
    
    
    7.3
    
    
    
    6.0
    
    
    
    4.0Irwin Union Bank, F.S.B.
    
    
    50,839
    
    
    
    9.9
    
    
    
    6.0
    
    
    
    N/ATier I Capital (to Average Assets):Irwin Financial Corporation
    
    
    154,863
    
    
    
    3.1
    
    
    
    N/A
    
    
    
    4.0Irwin Union Bank and Trust
    
    
    302,397
    
    
    
    6.7
    
    
    
    5.0
    
    
    
    4.0Core Capital (to Adjusted Tangible Assets)Irwin Union Bank, F.S.B.
    
    
    50,839
    
    
    
    8.2
    
    
    
    5.0
    
    
    
    4.0
  Capital, Liquidity, and
Going Concern Consideration .
 40




---



##### Table of Contents



Strategy and Restructuring
 Cash Flow Analysis
  Net Results by Segment
  
    
    Commercial Banking
 
    
    Commercial Finance
 
    
    Home Equity Lending
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Pretax results:Commercial Banking
    
    $
    (28,297
    )
    
    $
    (15,103
    )
    
    $
    (62,947
    )
    
    $
    (13,826
    )Commercial Finance
    
    
    (412
    )
    
    
    (39,309
    )
    
    
    (3,363
    )
    
    
    (31,864
    )Home Equity Lending
    
    
    (21,625
    )
    
    
    (74,033
    )
    
    
    (64,086
    )
    
    
    (100,866
    )Other (including consolidating entries)
    
    
    (7,903
    )
    
    
    (4,986
    )
    
    
    (16,827
    )
    
    
    (23,371
    )Net loss before taxes
    
    
    (58,237
    )
    
    
    (133,431
    )
    
    
    (147,223
    )
    
    
    (169,927
    )Provision for income taxes
    
    
    1,079
    
    
    
    26,699
    
    
    
    (3,768
    )
    
    
    41,029Net loss
    
    $
    (57,158
    )
    
    $
    (106,732
    )
    
    $
    (150,991
    )
    
    $
    (128,898
    )
  41




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##### Table of Contents



Commercial Banking
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Selected Income Statement Data:Interest income
    
    $
    32,084
    
    
    $
    45,480
    
    
    $
    66,994
    
    
    $
    95,206Interest expense
    
    
    (11,369
    )
    
    
    (18,558
    )
    
    
    (23,840
    )
    
    
    (40,462
    )Net interest income
    
    
    20,715
    
    
    
    26,922
    
    
    
    43,154
    
    
    
    54,744Provision for loan and lease losses
    
    
    (25,087
    )
    
    
    (24,481
    )
    
    
    (62,696
    )
    
    
    (31,061
    )Noninterest income
    
    
    2,378
    
    
    
    4,401
    
    
    
    6,876
    
    
    
    9,068Total net revenue
    
    
    (1,994
    )
    
    
    6,842
    
    
    
    (12,666
    )
    
    
    32,751Operating expense
    
    
    (26,303
    )
    
    
    (21,945
    )
    
    
    (50,281
    )
    
    
    (46,577
    )Pretax loss
    
    
    (28,297
    )
    
    
    (15,103
    )
    
    
    (62,947
    )
    
    
    (13,826
    )
 June 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Selected Balance Sheet Data at End of Period:Assets
    
    $
    2,371,765
    
    
    $
    2,870,877Securities and short term investments
    
    
    36,605
    
    
    
    39,181Loans held for sale
    
    
    51,182
    
    
    
    1,896Loans and leases
    
    
    2,053,694
    
    
    
    2,583,067Allowance for loan and lease losses
    
    
    (85,248
    )
    
    
    (72,598
    )Deposits
    
    
    1,882,778
    
    
    
    1,974,086Shareholders equity
    
    
    170,812
    
    
    
    208,093Daily Averages:Assets
    
    $
    2,651,991
    
    
    $
    3,011,280Securities and short term investments
    
    
    38,507
    
    
    
    39,214Loans held for sale
    
    
    2,715
    
    
    
    984Loans and leases
    
    
    2,446,093
    
    
    
    2,843,182Allowance for loan and lease losses
    
    
    (82,655
    )
    
    
    (52,592
    )Deposits
    
    
    1,997,548
    
    
    
    2,407,206Shareholders equity
    
    
    195,514
    
    
    
    228,261Shareholders equity to assets
    
    
    7.37
    %
    
    
    7.58
    %
 Overview
  Portfolio Characteristics
  42




---



##### Table of Contents



June 30,
    
    December 31,2009
    
    2008Loans
    
    Percent
    
    Loans
    
    PercentMarkets
    
    Outstanding
    
    of Total
    
    Outstanding
    
    of Total(Dollars in thousands)Indianapolis
    
    $
    285,340
    
    
    
    13.9
    %
    
    $
    432,034
    
    
    
    16.7
    %Central and Western Michigan
    
    
    364,320
    
    
    
    17.7
    
    
    
    393,528
    
    
    
    15.2Southern Indiana
    
    
    301,530
    
    
    
    14.7
    
    
    
    425,529
    
    
    
    16.5Phoenix
    
    
    350,453
    
    
    
    17.1
    
    
    
    426,719
    
    
    
    16.5Las Vegas
    
    
    131,675
    
    
    
    6.4
    
    
    
    174,502
    
    
    
    6.8Sacramento
    
    
    95,659
    
    
    
    4.7
    
    
    
    111,346
    
    
    
    4.3Other
    
    
    524,717
    
    
    
    25.5
    
    
    
    619,409
    
    
    
    24.0Total
    
    $
    2,053,694
    
    
    
    100.0
    %
    
    $
    2,583,067
    
    
    
    100.0
    %
 Core
    
    Percent
    
    Core
    
    PercentDeposits
    
    of Total
    
    Deposits
    
    of TotalIndianapolis
    
    $
    195,812
    
    
    
    11.6
    %
    
    $
    249,524
    
    
    
    14.0
    %Central and Western Michigan
    
    
    176,508
    
    
    
    10.5
    
    
    
    209,986
    
    
    
    11.8Southern Indiana
    
    
    720,650
    
    
    
    42.7
    
    
    
    672,545
    
    
    
    37.8Phoenix
    
    
    102,736
    
    
    
    6.1
    
    
    
    120,284
    
    
    
    6.8Las Vegas
    
    
    101,626
    
    
    
    6.0
    
    
    
    96,061
    
    
    
    5.4Sacramento
    
    
    42,772
    
    
    
    2.5
    
    
    
    55,568
    
    
    
    3.1Other
    
    
    347,323
    
    
    
    20.6
    
    
    
    375,061
    
    
    
    21.1Total
    
    $
    1,687,427
    
    
    
    100.0
    %
    
    $
    1,779,029
    
    
    
    100.0
    %
 43




---



##### Table of Contents



Pretax results
  Net Interest Income
  Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)Net interest income
    
    $
    20,715
    
    
    $
    26,922
    
    
    $
    43,154
    
    
    $
    54,744Average interest earning assets
    
    
    2,409,402
    
    
    
    2,955,785
    
    
    
    2,487,359
    
    
    
    2,964,535Net interest margin
    
    
    3.45
    %
    
    
    3.66
    %
    
    
    3.50
    %
    
    
    3.71
    %
  Provision for Loan and Lease Losses
  Noninterest Income
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Trust fees
    
    $
    476
    
    
    $
    549
    
    
    $
    1,006
    
    
    $
    1,130Service charges on deposit accounts
    
    
    1,021
    
    
    
    1,189
    
    
    
    2,057
    
    
    
    2,273Insurance commissions, fees and
premiums
    
    
    337
    
    
    
    413
    
    
    
    806
    
    
    
    974Gain from sales of loans
    
    
    83
    
    
    
    463
    
    
    
    1,542
    
    
    
    1,064Loan servicing fees
    
    
    357
    
    
    
    334
    
    
    
    696
    
    
    
    670Amortization of servicing assets
    
    
    (366
    )
    
    
    (293
    )
    
    
    (990
    )
    
    
    (608
    )Brokerage fees
    
    
    236
    
    
    
    337
    
    
    
    541
    
    
    
    708Other
    
    
    234
    
    
    
    1,409
    
    
    
    1,218
    
    
    
    2,857Total noninterest income
    
    $
    2,378
    
    
    $
    4,401
    
    
    $
    6,876
    
    
    $
    9,068
 44




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##### Table of Contents



Operating Expenses
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Salaries and employee benefits
    
    $
    11,127
    
    
    $
    11,723
    
    
    $
    22,251
    
    
    $
    25,883Other expenses
    
    
    15,176
    
    
    
    10,222
    
    
    
    28,030
    
    
    
    20,694Total operating expenses
    
    $
    26,303
    
    
    $
    21,945
    
    
    $
    50,281
    
    
    $
    46,577Efficiency ratio
    
    
    113.9
    %
    
    
    70.1
    %
    
    
    100.5
    %
    
    
    73.0
    %Number of employees at period
end(1)
    
    
    
    
    
    
    
    
    
    
    430
    
    
    
    532
 
 (1)
    
    On a full time equivalent basis.  Balance Sheet
  Loan Sales
     45




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##### Table of Contents



Credit Quality
   June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Nonperforming loans
    
    $
    181,207
    
    
    $
    129,953Other real estate owned
    
    
    35,701
    
    
    
    13,377Total nonperforming assets
    
    $
    216,908
    
    
    $
    143,330Nonperforming assets to
total assets
    
    
    9.15
    %
    
    
    4.99
    %Allowance for loan losses
    
    $
    85,248
    
    
    $
    72,598Allowance for loan losses
to total loans
    
    
    4.15
    %
    
    
    2.81
    %
 Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)Provision for loan losses
    
    $
    25,087
    
    
    $
    24,481
    
    
    $
    62,696
    
    
    $
    31,061Net charge-offs
    
    
    26,462
    
    
    
    14,022
    
    
    
    50,046
    
    
    
    15,991Net charge-offs to
average loans
(annualized)
    
    
    4.48
    %
    
    
    1.93
    %
    
    
    4.13
    %
    
    
    1.10
    %
 46




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##### Table of Contents



Commercial Finance
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Selected Income Statement Data:Net interest income
    
    $
    5,107
    
    
    $
    13,464
    
    
    $
    10,388
    
    
    $
    27,403Provision for loan and lease losses
    
    
    (5,881
    )
    
    
    (48,201
    )      (1)
    
    
    (11,411
    )
    
    
    (52,857
    )(1)Noninterest income
    
    
    2,057
    
    
    
    2,825
    
    
    
    2,735
    
    
    
    9,114Total net revenue
    
    
    1,283
    
    
    
    (31,912
    )
    
    
    1,712
    
    
    
    (16,340
    )Operating expense
    
    
    (1,695
    )
    
    
    (7,397
    )
    
    
    (5,075
    )
    
    
    (15,524
    )Loss before taxes
    
    
    (412
    )
    
    
    (39,309
    )
    
    
    (3,363
    )
    
    
    (31,864
    )Selected Operating Data:Net charge-offs
    
    $
    1,507
    
    
    $
    4,983
    
    
    $
    4,160
    
    
    $
    7,719Net interest margin
    
    
    3.03
    %
    
    
    4.24
    %
    
    
    3.08
    %
    
    
    4.34
    %Total funding of loans and leases
    
    $
    24,228
    
    
    $
    146,444
    
    
    $
    52,245
    
    
    $
    289,003
 June 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Selected Balance Sheet Data at End of Period:Total assets
    
    $
    662,533
    
    
    $
    676,399Loans and leases held for sale
    
    
    227,810
    
    
    
    35,078Loans and leases
    
    
    428,204
    
    
    
    634,714Allowance for loan and lease losses
    
    
    (9,732
    )
    
    
    (8,581
    )Shareholders equity
    
    
    31,507
    
    
    
    33,395
 
 (1)
    
    These leases were reclassified from loans held for investment to loans
held for sale during the second quarter of 2008. A $41 million provision for the three-month and
six-month periods ended June 30, 2008 was recorded related to a mark-to-market adjustment on these
small-ticket leases that were sold in the third quarter of 2008. A writedown to the allowance for
loan and lease losses was recorded to reduce the carrying amount of these leases to lower of cost
or market at the time of the transfer. Overview
  Portfolio Characteristics
   47




---



##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008California
    
    
    15.1
    %
    
    
    14.7
    %Texas
    
    
    12.0
    
    
    
    11.0New York
    
    
    8.1
    
    
    
    9.0New Jersey
    
    
    7.8
    
    
    
    7.1All other states
    
    
    57.0
    
    
    
    58.2Total
    
    
    100.0
    %
    
    
    100.0
    %Total Franchise Portfolio in thousands
    
    $
    646,199
    
    
    $
    624,829
  June 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Domestic franchise loans
    
    $
    646,199
    
    
    $
    624,829Weighted average coupon
    
    
    8.27
    %
    
    
    8.95
    %Delinquency ratio
    
    
    1.45
    
    
    
    3.65
 Pretax Results
  Net Interest Income
  Three Months June 30,
    
    Six Months June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)Net interest income
    
    $
    5,107
    
    
    $
    13,464
    
    
    $
    10,388
    
    
    $
    27,403Average interest earning assets
    
    
    677,130
    
    
    
    1,278,476
    
    
    
    680,590
    
    
    
    1,269,979Net interest margin
    
    
    3.03
    %
    
    
    4.24
    %
    
    
    3.08
    %
    
    
    4.34
    %
  48




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##### Table of Contents



Provision for Loan and Lease Losses
  Noninterest Income
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Gain from sales of loans
    
    $
    181
    
    
    $
    684
    
    
    $
    181
    
    
    $
    6,513Derivative gains (losses), net
    
    
    
    
    
    
    358
    
    
    
    
    
    
    
    (759
    )Other
    
    
    1,876
    
    
    
    1,783
    
    
    
    2,554
    
    
    
    3,360Total noninterest income
    
    $
    2,057
    
    
    $
    2,825
    
    
    $
    2,735
    
    
    $
    9,114
  Operating Expenses
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Salaries and employee benefits
    
    $
    1,333
    
    
    $
    4,433
    
    
    $
    3,346
    
    
    $
    9,567Other
    
    
    362
    
    
    
    2,964
    
    
    
    1,729
    
    
    
    5,957Total operating expenses
    
    $
    1,695
    
    
    $
    7,397
    
    
    $
    5,075
    
    
    $
    15,524Efficiency ratio
    
    
    23.66
    %
    
    
    45.41
    %
    
    
    38.67
    %
    
    
    42.51
    %Number of employees at period end (1)
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    206
 
 (1)
    
    On a full time equivalent basis.  49




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##### Table of Contents



Credit Quality
   June 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Nonperforming leases
    
    $
    20,291
    
    
    $
    16,117Allowance for lease losses
    
    
    9,732
    
    
    
    8,581Allowance for lease
losses to total leases
    
    
    2.27
    %
    
    
    1.35
    %
 Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in thousands)
    
    (Dollars in thousands)Provision for lease losses
    
    $
    5,881
    
    
    $
    48,201
    
    
    $
    11,411
    
    
    $
    52,857Net charge-offs
    
    
    1,507
    
    
    
    4,983
    
    
    
    4,160
    
    
    
    7,719Net charge-offs to average leases
    
    
    0.92
    %
    
    
    1.58
    %
    
    
    1.26
    %
    
    
    1.23
    %
 50




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##### Table of Contents



Home Equity Lending
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)
    
    
    (Dollars in thousands)Selected Income Statement Data:Net interest income
    
    $
    (9,095
    )
    
    $
    21,611
    
    
    $
    (4,397
    )
    
    $
    44,992Provision for loan and lease losses
    
    
    (14,463
    )
    
    
    (85,147
    )
    
    
    (35,326
    )
    
    
    (118,432
    )Noninterest income
    
    
    16,526
    
    
    
    3,413
    
    
    
    1,940
    
    
    
    495Total net revenues
    
    
    (7,032
    )
    
    
    (60,123
    )
    
    
    (37,783
    )
    
    
    (72,945
    )Operating expenses
    
    
    (14,593
    )
    
    
    (13,910
    )
    
    
    (26,303
    )
    
    
    (27,921
    )Loss before taxes
    
    
    (21,625
    )
    
    
    (74,033
    )
    
    
    (64,086
    )
    
    
    (100,866
    )
 June 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Selected Balance Sheet Data:Total assets
    
    $
    232,759
    
    
    $
    1,106,305Home equity loans and lines of credit(1)
    
    
    241,333
    
    
    
    294,020Allowance for loan losses
    
    
    (53,200
    )
    
    
    (55,621
    )Home equity loans held for sale
    
    
    
    
    
    
    803,688Mortgage servicing assets
    
    
    2,210
    
    
    
    15,096Short-term borrowings
    
    
    103,628
    
    
    
    76,701Collateralized debt
    
    
    68,940
    
    
    
    912,792Shareholders equity
    
    
    66,960
    
    
    
    139,064Selected Operating Data:Weighted average coupon rate:Lines of credit
    
    
    9.38
    %
    
    
    8.12
    %Loans
    
    
    12.23
    
    
    
    11.07
 
 (1)
    
    Includes $0.2 billion and $1.1 billion of loans at June 30, 2009 and December 31,
2008, respectively, pledged as collateral as part of securitized financings.  Portfolio
  Pretax Results
  51




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##### Table of Contents



Net Revenue
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Net interest income (expense)
    
    $
    (9,095
    )
    
    $
    21,611
    
    
    $
    (4,397
    )
    
    $
    44,992Provision for loan losses
    
    
    (14,463
    )
    
    
    (85,147
    )
    
    
    (35,326
    )
    
    
    (118,432
    )Gain (loss) on sales of loans
    
    
    (472
    )
    
    
    207
    
    
    
    (19,501
    )
    
    
    754Loan servicing fees
    
    
    1,243
    
    
    
    2,541
    
    
    
    3,527
    
    
    
    4,703(Amortization) and
(impairment) recovery of
servicing assets
    
    
    (100
    )
    
    
    2,232
    
    
    
    (3,623
    )
    
    
    (1,671
    )Derivative gains (losses)
    
    
    (12
    )
    
    
    
    
    
    
    (46
    )
    
    
    (1
    )Other
    
    
    15,867
    
    
    
    (1,567
    )
    
    
    21,583
    
    
    
    (3,290
    )Total net revenue
    
    $
    (7,032
    )
    
    $
    (60,123
    )
    
    $
    (37,783
    )
    
    $
    (72,945
    )
       52




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##### Table of Contents



Operating Expenses
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)
    
    
    (Dollars in thousands)Salaries and employee benefits
    
    $
    4,654
    
    
    $
    8,137
    
    
    $
    7,657
    
    
    $
    15,940Other
    
    
    9,939
    
    
    
    5,773
    
    
    
    18,646
    
    
    
    11,981Total operating expenses
    
    $
    14,593
    
    
    $
    13,910
    
    
    $
    26,303
    
    
    $
    27,921Number of employees at period end (1)
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    290
 
 (1)
    
    On a full time equivalent basis.  Credit Quality
  June 30,
    
    December 31,2009
    
    2008Loan Portfolio
    
    (Dollars in thousands)Total Loans
    
    $
    241,333
    
    
    $
    1,097,70830 days past due
    
    
    13.74
    %
    
    
    11.13
    %90 days past due
    
    
    6.40
    
    
    
    4.77
  Parent and Other
  53




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##### Table of Contents



Risk Management
  
    
    Credit risk
 
    
    Liquidity risk
 
    
    Market risk (including interest rate and foreign exchange risk)
 
    
    Operational risk
 
    
    Compliance risk
     Credit Risk
  54




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55




---



##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Accruing loans past due 90 days or more:Commercial, financial and
agricultural loans
    
    $
    164
    
    
    $
    2,964Real estate mortgages
    
    
    
    
    
    
    41Consumer loans
    
    
    282
    
    
    
    26446
    
    
    
    3,031Nonaccrual loans and leases:Commercial, financial and
agricultural loans
    
    
    175,700
    
    
    
    124,670Real estate mortgages
    
    
    17,995
    
    
    
    22,387Consumer loans
    
    
    2,795
    
    
    
    1,930Commercial financing:Franchise financing
    
    
    18,795
    
    
    
    13,814Domestic leasing
    
    
    1,496
    
    
    
    2,353216,781
    
    
    
    165,154Total nonperforming
loans and leases
    
    
    217,227
    
    
    
    168,185Other real estate owned & other
    
    
    37,867
    
    
    
    51,786Total nonperforming assets
    
    $
    255,094
    
    
    $
    219,971Nonperforming loans and leases to total
loans and leases
    
    
    8.0
    %
    
    
    4.8
    %Nonperforming assets to total
assets
    
    
    7.6
    %
    
    
    4.5
    %
 56




---



##### Table of Contents



June 30,
    
    December 31,2009
    
    2008(In millions)      Commercial banking
    
    $
    217
    
    
    $
    143      Commercial finance
    
    
    21
    
    
    
    17      Home equity lending
    
    
    17
    
    
    
    58      Mortgage banking
    
    
    1
    
    
    
    2
  Liquidity Risk
      57




---



##### Table of Contents



Market Risk (including Interest Rate and Foreign Exchange Risk)
       58




---



##### Table of Contents




    
    The net asset value sensitivities do not necessarily represent the changes in the
segments net asset value that would actually occur under the given interest rate scenarios,
as sensitivities do not reflect changes in value of the companies as a going concern, or
consider potential rebalancing or other management actions that might be taken in the future
under asset/liability management as interest rates change.
 
    
    The tables below show modeled changes in interest rates for individual asset classes.
Asset classes in our portfolio have interest rate sensitivity tied to different underlying
indices or instruments. While the rate sensitivity of individual asset classes presented
below is our best estimate of changes in value due to interest rate changes, the total
potential change figures are subject to basis risk between value changes of individual
assets and liabilities which have not been included in the model.
 
    
    Few of the asset classes shown react to interest rate changes in a linear fashion. That
is, the point estimates we have made at Current and +/-2% and +/-1% are appropriate
estimates at those amounts of rate change, but it may not be accurate to interpolate
linearly between those points. This is most evident in products that contain optionality in
payment timing or pricing such as mortgage servicing or nonmaturity transaction deposits.
 
    
    Finally, the tables show theoretical outcomes for dramatic changes in interest rates
which do not consider potential rebalancing or repositioning of hedges and balance sheet
mix. Normal fluctuations in non-interest sensitive assets and liabilities can cause
fluctuations in interest-sensitive assets and liabilities that can cause the market value of
equity to fluctuate from year to year.
 Economic Value Change Method
 Present Value at June 30, 2009Change in Interest Rates of:-2%
    
    
    -1%
    
    
    Current
    
    
    +1%
    
    
    +2%(In Thousands)Interest Sensitive AssetsLoans and other assets
    
    $
    2,750,415
    
    
    $
    2,711,022
    
    
    $
    2,670,933
    
    
    $
    2,633,133
    
    
    $
    2,597,688Loans held for sale
    
    
    279,015
    
    
    
    279,015
    
    
    
    279,015
    
    
    
    279,015
    
    
    
    279,015Mortgage servicing rights
    
    
    4,481
    
    
    
    4,700
    
    
    
    5,528
    
    
    
    6,740
    
    
    
    7,190Interest sensitive financial derivatives
    
    
    (1,847
    )
    
    
    (1,516
    )
    
    
    (1,135
    )
    
    
    (779
    )
    
    
    (434
    )Total interest sensitive assets
    
    
    3,032,064
    
    
    
    2,993,221
    
    
    
    2,954,341
    
    
    
    2,918,109
    
    
    
    2,883,459Interest Sensitive LiabilitiesDeposits
    
    
    (2,718,241
    )
    
    
    (2,682,824
    )
    
    
    (2,639,065
    )
    
    
    (2,595,898
    )
    
    
    (2,552,240
    )Short-term borrowings
    
    
    (295,480
    )
    
    
    (288,760
    )
    
    
    (281,952
    )
    
    
    (275,365
    )
    
    
    (269,068
    )Long-term debt (1)
    
    
    (13,910
    )
    
    
    (13,550
    )
    
    
    (13,193
    )
    
    
    (12,865
    )
    
    
    (12,570
    )Total interest sensitive liabilities
    
    
    (3,027,631
    )
    
    
    (2,985,134
    )
    
    
    (2,934,210
    )
    
    
    (2,884,128
    )
    
    
    (2,883,878
    )Net market value as of March 31, 2009
    
    $
    4,433
    
    
    $
    8,087
    
    
    $
    20,131
    
    
    $
    33,981
    
    
    $
    49,581Change from current
    
    $
    (15,698
    )
    
    $
    (12,044
    )
    
    $
    
    
    
    $
    13,850
    
    
    $
    29,450Net market value as of December 31, 2008
    
    $
    90,557
    
    
    $
    82,148
    
    
    $
    74,392
    
    
    $
    78,540
    
    
    $
    85,929Change from current
    
    $
    16,165
    
    
    $
    7,756
    
    
    $
    
    
    
    $
    4,148
    
    
    $
    11,537
 
 (1)
    
    Includes certain debt which is categorized as collateralized borrowings in other sections
of this document 59




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##### Table of Contents



GAAP-Based Value Change Method
 Present Value at June 30, 2009Change in Interest Rates of:-2%
    
    
    -1%
    
    
    Current
    
    
    +1%
    
    
    +2%(In Thousands)Interest Sensitive AssetsLoans and other assets
    
    $
    7,032
    
    
    $
    6,853
    
    
    $
    6,675
    
    
    $
    6,498
    
    
    $
    6,330Loans held for sale
    
    
    279,015
    
    
    
    279,015
    
    
    
    279,015
    
    
    
    279,015
    
    
    
    279,015Mortgage servicing rights
    
    
    4,481
    
    
    
    4,700
    
    
    
    5,528
    
    
    
    6,740
    
    
    
    7,190Interest sensitive financial derivatives
    
    
    (1,847
    )
    
    
    (1,516
    )
    
    
    (1,135
    )
    
    
    (779
    )
    
    
    (434
    )Total interest sensitive assets
    
    
    288,681
    
    
    
    289,052
    
    
    
    290,083
    
    
    
    291,474
    
    
    
    292,101Interest Sensitive LiabilitiesDeposits(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term borrowings(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest sensitive liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net market value as of March 31, 2009
    
    $
    288,681
    
    
    $
    289,052
    
    
    $
    290,083
    
    
    $
    291,474
    
    
    $
    292,101Change from current
    
    $
    (1,402
    )
    
    $
    (1,031
    )
    
    $
    
    
    
    $
    1,391
    
    
    $
    2,018Net market value as of December 31, 2008
    
    $
    66,249
    
    
    $
    66,672
    
    
    $
    64,563
    
    
    $
    67,564
    
    
    $
    70,717Change from current
    
    $
    1,686
    
    
    $
    2,109
    
    
    $
    
    
    
    $
    3,001
    
    
    $
    6,154
 
 1)
    
    Value does not change in GAAP presentation Off-Balance Sheet Instruments
   Derivative Financial Instruments
  Operational and Compliance Risk
  60




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##### Table of Contents



Regulatory Environment
   
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
  
 Item 4.
    
    Controls and Procedures.
  61




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##### Table of Contents



PART II. Other Information.
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
 a)
    
    We held our Annual Meeting of Shareholders on May 29, 2009.
 b)
    
    Proposal No. 1. The following Director Nominees were elected to serve on the Board
until the 2012 Annual Meeting, by the votes set forth below.
 Nominees
    
    Shares For
    
    Shares WithheldDavid W. Goodrich
    
    
    26,439,412
    
    
    
    900,411Brenda J. Lauderback
    
    
    26,439,003
    
    
    
    900,820John C. McGinty, Jr.
    
    
    26,285,044
    
    
    
    1,054,779Marita Zuraitis
    
    
    26,385,381
    
    
    
    954,442
  Sally A. Dean
    
    
    2010R. David Hoover
    
    
    2011William H. Kling
    
    
    2010William I. Miller
    
    
    2011Dayton H. Molendorp
    
    
    2011Lance R. Odden
    
    
    2010
 c)
    
    In addition to the election of directors, the shareholders voted on and approved the
following proposals:
 Shares
    
    
    BrokerMatter
    
    Shares For
    
    
    Shares Against
    
    
    Abstained
    
    
    Non-votesProposal No. 2. Approval of an amendment to the Irwin
Financial Corporation Employees Stock Purchase Plan III to
add shares to the Plan
    
    
    19,781,444
    
    
    
    515,861
    
    
    
    62,068
    
    
    
    6,980,452Proposal No. 3: Approval of the Irwin Financial Corporation
and Affiliates Amended and Restated Short Term Incentive Plan
to qualify the plan as performance-based compensation under
Section 162(m) of the Internal Revenue Code
    
    
    19,695,427
    
    
    
    594,817
    
    
    
    69,131
    
    
    
    6,980,450Proposal No. 4: Confirmation of Independent Public Accountants
    
    
    26,948,155
    
    
    
    342,876
    
    
    
    48,794
    
    
    
    0
 62




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##### Table of Contents



Item 5.
    
    Other Information.
  
 Item 6.
    
    Exhibits.
 ExhibitNumber
    
    Description of Exhibit2.1
    
    
    Asset Purchase Agreement by and among Irwin Financial Corporation, Irwin Mortgage Corporation and Freedom
Mortgage Corporation dated as of August 7, 2006. (Incorporated by reference to Exhibits 2.1 and 2.2 of Form 8-K
filed October 2, 2006, File No. 001-16691.)2.2
    
    
    Asset Purchase Agreement dated as of the 21st day of July, 2008, by and among EQ Acquisitions 2003, Inc.,
Equilease Financial Services, Inc., Irwin Commercial Finance Corporation, Equipment Finance, and Irwin Union
Bank and Trust Company. (Incorporated by reference to Exhibit 2.2 of Form 10-Q Report for quarter ended
September 30, 2008, and filed November 10, 2008, File No. 001-16691.)2.3
    
    
    Letter Amendment to Asset Purchase Agreement dated July 21, 2008 by and among Irwin Commercial Finance
Corporation, Equipment Finance, Irwin Union Bank and Trust Company, EQ Acquisitions 2003, Inc., and Equilease
Financial Services, Inc. dated July 30, 2008. (Incorporated by reference to Exhibit 2.3 of Form 10-Q Report for
quarter ended September 30, 2008, and filed November 10, 2008, File No. 001-16691.)2.4
    
    
    Asset Purchase Agreement dated as of the 23rd day of July, 2008 by and among Roynat Inc. and Irwin Commercial
Finance Canada Corporation and Onset Alberta Ltd. and Irwin Union Bank and Trust Company. (Incorporated by
reference to Exhibit 2.4 of Form 10-Q Report for quarter ended September 30, 2008, and filed November 10, 2008,
File No. 001-16691.)2.5
    
    
    Amended and Restated Asset Purchase Agreement dated as of July 31, 2008 among Roosevelt Management Company LLC,
Navigator Mortgage Loan Trust 2008, Wells Fargo Bank, N.A. and Irwin Union bank and Trust Company. (Incorporated
by reference to Exhibit 2.5 of Form 10-Q Report for quarter ended September 30, 2008, and filed November 10,
2008, File No. 001-16691.)2.6
    
    
    Asset Purchase Agreement dated as of the 31st day of March, 2009 by and among Green Tree Servicing LLC, Irwin
Union Bank and Trust Company and Irwin Home Equity Corporation. (Incorporated by reference to Exhibit 2.6 of
Form 10-Q Report for quarter ended March 31, 2009 and filed May 11, 2009, File No. 001-16691.)2.7
    
    
    Loan Sale and Transfer of Servicing Agreement entered into June 30, 2009 by and between First Financial Bank,
National Association and Irwin Union Bank and Trust Company.2.8
    
    
    Purchase and
Assumption Agreement dated July 1, 2009. Parties: First Financial Bank, N.A., Irwin Union Bank
and Trust Company and Irwin Union Realty, Inc.3.1
    
    
    Restated Articles of Incorporation of Irwin Financial Corporation, as amended November 3, 2008. (Incorporated by
reference to Exhibit 3.1 of Form 10-Q Report for quarter ended September 30, 2008, and filed November 10, 2008,
File No. 001-16691.)3.2
    
    
    Code of By-laws of Irwin Financial Corporation, as amended November 28, 2007. (Incorporated by reference to
Exhibit 3.2 of Form 10-Q Report for quarter ended September 30, 2008, and filed November 10, 2008, File No.
001-16691.)4.1
    
    
    Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 of Form 10-K filed March 9, 2007,
File No. 001-16691.)
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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit4.2
    
    
    Certain instruments defining the rights of the holders of long-term debt of Irwin Financial Corporation and
certain of its subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the
total assets of the Corporation and its subsidiaries on a consolidated basis, have not been filed as Exhibits.
The Corporation hereby agrees to furnish a copy of any of these agreements to the Commission upon request.4.3
    
    
    Rights Agreement, dated as of March 1, 2001, between Irwin Financial Corporation and Irwin Union Bank and Trust.
(Incorporated by reference to Exhibit 4.1 of Form 8-A filed March 2, 2001, File No. 000-06835.)4.4
    
    
    Appointment of Successor Rights Agent dated as of May 11, 2001 between Irwin Financial Corporation and National
City Bank. (Incorporated by reference to Exhibit 4.5 of Form S-8 filed on September 7, 2001, File No.
333-69156.)10.1
    
    
    *Irwin Financial Corporation 1997 Stock Option Plan. (Incorporated by reference to Exhibit 10 of Form 10-Q
Report for quarter ended September 30, 1997, and filed August 12, 1997, File No. 000-06835.)10.2
    
    
    *Amendment Number One to Irwin Financial Corporation 1997 Stock Option Plan. (Incorporated by reference to
Exhibit 10(l) to Form 10-K405 Report for the period ended December 31, 1997, filed March 30, 1998, File No.
000-06835.)10.3
    
    
    *Irwin Union Bank and Trust Company Business Development Board Compensation Program. (Incorporated by reference
to Form S-8 filed on July 19, 2000, File No. 333-41740.)10.4
    
    
    *Irwin Union Bank and Trust Company Business Development Board Compensation Program as amended November 28,
2006. (Incorporated by reference to Exhibit 10.4 of the Form 10-K Report for the period ended December 31, 2007,
filed March 14, 2008, File No. 001-16691.)10.5
    
    
    *Irwin Financial Corporation Amended and Restated 2001 Stock Plan, as amended and restated May 10, 2007.
(Incorporated by reference to Exhibit 99.1 of Form 8-K filed May 16, 2007, File No. 001-16691.)10.6
    
    
    *Amendment Number One to the Irwin Financial Corporation Amended and Restated 2001 Stock Plan. (Incorporated by
reference to Exhibit 10.1 of Form 8-K filed February 11, 2008, File No. 001-16691.)10.7
    
    
    *Irwin Financial Corporation 2001 Stock Plan Form of Stock Option Agreement and Notice of Stock Option Grant.
(Incorporated by reference to Exhibit 99.1 of the Corporations 8-K Current Report, filed May 9, 2005, File No.
001-16691.)10.8
    
    
    *Irwin Financial Corporation 2001 Stock Plan Form of Restricted Stock Agreement and Notice of Restricted Stock
Award. (Incorporated by reference to Exhibit 99.2 of the Corporations 8-K Current Report, filed May 9, 2005,
File No. 001-16691.)10.9
    
    
    *Irwin Financial Corporation 2001 Stock Plan Form of Stock Option Agreement (Canada) (Incorporated by reference
to Exhibit 10.8 of the Corporations 10-Q Report for the quarter ended September 30, 2005, File No. 001-16691.)10.10
    
    
    *Irwin Financial Corporation 2001 Stock Plan Form of Restricted Stock Agreement (with Performance Criteria) and
Notice of Restricted Stock Award with Performance Criteria. (Incorporated by reference to Exhibit 99.2 of Form
8-K, filed May 16, 2007, File No. 001-16691.)10.11
    
    
    *Irwin Financial Corporation 2001 Stock Plan Form of Restricted Stock Unit Agreement (with Performance Criteria)
and Notice of Restricted Stock Unit Award with Performance Criteria. (Incorporated by reference to Exhibit 10.2
of Form 8-K, filed February 11, 2008, File No. 001-16691.)10.12
    
    
    *Irwin Financial Corporation 2001 Stock Plan Form of Restricted Stock Unit Agreement (No Performance Criteria)
and Notice of Restricted Stock Unit Award. (Incorporated by reference to Exhibit 10.12 of the Form 10-K Report
for the period ended December 31, 2007, filed March 14, 2008, File No. 001-16691.)10.13
    
    
    *Irwin Financial Corporation 1999 Outside Director Restricted Stock Compensation Plan. (Incorporated by
reference to Exhibit 2 of the Corporations 2004 Proxy Statement for the Annual Meeting of Shareholders, filed
March 18, 2004, File No. 001-16691.)
 64




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.14
    
    
    *Amendment Number One to the Irwin Financial Corporation 1999 Outside Director Restricted Stock Compensation
Plan, as amended December 4, 2008, and effective January 1, 2005. (Incorporated by reference to Exhibit 10.14 of
Form 10-K Report for period ended December 31, 2008 and filed March 31, 2009, File No. 001-16691.)10.15
    
    
    *Employee Stock Purchase Plan III. (Incorporated by reference to Exhibit 10(a) to Form 10-Q Report for the
quarter ended September 30, 1999, File No. 000-06835.)10.16
    
    
    *Employee Stock Purchase Plan III Amendment One effective September 21, 2001 and Amendment Two effective
September 17, 2008. (Incorporated by reference to Exhibit 10.16 of Form 10-K Report for period ended December
31, 2008 and filed March 31, 2009, File No. 001-16691.)10.17
    
    
    *Employee Stock Purchase Plan III, as amended and filed as Appendix A to the Irwin Financial Corporation
Definitive Proxy Statement on April 17, 2009. (Incorporated by reference, File No. 001-16691.)10.18
    
    
    *Irwin Financial Corporation and Affiliates Amended and Restated Short Term Incentive Plan effective May 8,
2008. (Incorporated by reference to Exhibit 10.17 of Form 10-K Report for period ended December 31, 2008 and
filed March 31, 2009, File No. 001-16691.)10.19
    
    
    *Onset Capital Corporation Employment Agreement. (Incorporated by reference to Exhibit 10.26 to Form 10-Q Report
for the quarter ended September 30, 2002, File No. 000-06835.)10.20
    
    
    *Irwin Financial Corporation Amended and Restated Supplemental Executive Retirement Plan for [Named Executive],
effective January 1, 2005, and as amended December 4, 2008. (Incorporated by reference to Exhibit 10.19 of Form
10-K Report for period ended December 31, 2008 and filed March 31, 2009, File No. 001-16691.)10.21
    
    
    *Amendment One to the Irwin Financial Corporation Supplemental Executive Retirement Plan for [Named Executive],
effective January 1, 2009. (Incorporated by reference to Exhibit 10.20 of Form 10-K Report for period ended
December 31, 2008 and filed March 31, 2009, File No. 001-16691.)10.22
    
    
    *Stock Purchase Agreement by and between Onset Holdings Inc. and Irwin International Corporation dated December
23, 2005. (Incorporated by reference to Exhibit 10.36 of Form 10-K Report for period ended December 31, 2005,
File No. 001-16691.)10.23
    
    
    *Shareholder Agreement Termination Agreement by and between Irwin Commercial Finance Canada Corporation and
Irwin International Corporation dated December 23, 2005. (Incorporated by reference to Exhibit 10.37 of Form
10-K Report for period ended December 31, 2005, File No. 001-16691.)10.24
    
    
    *Irwin Commercial Finance Corporation First Amended and Restated Shareholder Agreement dated May 15, 2007.
(Incorporated by reference to Exhibit 10.41 of Form 10-Q Report for the quarter ended June 30, 2007, File No.
001-16691.)10.25
    
    
    *Irwin Commercial Finance Corporation 2005 Stock Option Agreement Grant of Option to Joseph LaLeggia dated
December 23, 2005. (Incorporated by reference to Exhibit 10.39 of Form 10-K Report for period ended December 31,
2005, File No. 001-16691.)10.26
    
    
    *Irwin Commercial Finance Corporation 2005 Notice of Stock Option Grant to Joseph LaLeggia dated December 23,
2005. (Incorporated by reference to Exhibit 10.40 of Form 10-K Report for period ended December 31, 2005, File
No. 001-16691.)10.27
    
    
    *Irwin Union Bank Amended and Restated Performance Unit Plan. (Incorporated by reference to Exhibit 10.41 of
Form 10- K Report for period ended December 31, 2005, File No. 001-16691.)10.28
    
    
    *Irwin Commercial Finance Amended and Restated Performance Unit Plan. (Incorporated by reference to Exhibit
10.42 of Form 10-K Report for period ended December 31, 2005, File No. 001-16691.)10.29
    
    
    *First Amendment to the Irwin Commercial Finance Amended and Restated Performance Unit Plan, dated October 31,
2006. (Incorporated by reference to Exhibit 10.41 of Form 10-K report for the period ended December 31, 2006,
File No. 001-16691.)
 65




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.30
    
    
    *Irwin Home Equity Corporation Performance Unit Plan. (Incorporated by reference to Exhibit 10.43 of Form 10-K
Report for period ended December 31, 2005, File No. 001-16691.)10.31
    
    
    *Supplemental Performance Unit Grant-Jocelyn Martin-Leano, dated February 6, 2007. (Incorporated by reference to
Exhibit 10.45 of Form 10-K filed March 9, 2007, File No. 001-16691.)10.32
    
    
    *Irwin Financial Corporation Amended and Restated 2007 Performance Unit Plan. (Incorporated by reference to
Exhibit 10.31 of Form 10-K Report for period ended December 31, 2008 and filed March 31, 2009, File No.
001-16691.)10.33
    
    
    *Agreement General Release and Covenant Not to Sue between Irwin Financial Corporation, and Thomas D. Washburn
executed December 5, 2007. (Incorporated by reference to Exhibit 99.1 of Form 8-K filed December 13, 2007, File
No. 001-16691.)10.34
    
    
    *Amendment to 2005 Stock Option Agreement between Irwin Commercial Finance Corporation and Joseph R. LaLeggia,
dated July 28, 2008. (Incorporated by reference to Exhibit 10.41 of Form 10-Q Report for quarter ended September
30, 2008, and filed November 10, 2008, File No. 001-16691.)10.35
    
    
    *Letter setting forth the Redemption Agreement between Irwin Commercial Finance Corporation and Joseph R.
LaLeggia, dated July 29, 2008. (Incorporated by reference to Exhibit 10.42 of Form 10-Q Report for quarter ended
September 30, 2008, and filed November 10, 2008, File No. 001-16691.)10.36
    
    
    *Retention Incentive Agreement by and among Irwin Home Equity Corporation, Irwin Financial Corporation and
Jocelyn Martin-Leano dated September 10, 2008. (Incorporated by reference to Exhibit 10.43 of Form 10-Q Report
for quarter ended September 30, 2008, and filed November 10, 2008, File No. 001-16691.)10.37
    
    
    Standby Purchase Agreement, dated as of October 13, 2008, by and between Irwin Financial Corporation and Cummins
Inc. (Incorporated by reference to Exhibit 10.1 of Form 8-K filed October 14, 2008, File No. 001-16691).10.38
    
    
    Written Agreement by and among Irwin Financial Corporation, Irwin Union Bank and Trust Company, the Federal
Reserve Bank of Chicago, and the Indiana Department of Financial Institutions, dated October 10, 2008.
(Incorporated by reference to Exhibit 10.2 of Form 8-K filed October 14, 2008, File No. 001-16691).10.39
    
    
    Supervisory Agreement by and between Irwin Union Bank, F.S.B. and the Office of Thrift Supervision, dated
October 10, 2008. (Incorporated by reference to Exhibit 10.3 of Form 8-K filed October 14, 2008, File No.
001-16691).10.40
    
    
    Extension of Standby Purchase Agreement between Irwin Financial Corporation and Cummins Inc. dated March 5,
2009. (Incorporated by reference to Exhibit 10.39 of Form 10-K Report for period ended December 31, 2008 and
filed March 31, 2009, File No. 001-16691.)10.41
    
    
    Stipulation and Consent to Issuance of Order to Cease and Desist Order by and between the Office of Thrift
Supervision and Irwin Union Bank, F.S.B. effective July 24, 2009.10.42
    
    
    Extension of
Standby Purchase Commitment and Extension of Indication of Interest
between Irwin Financial Corporation and Cummins, Inc. agreed as of
July 31, 2009.11.1
    
    
    Computation of Earnings Per Share is included in the Notes to the Financial Statements.31.1
    
    
    Certification pursuant to 18 U.S.C. Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.31.2
    
    
    Certification pursuant to 18 U.S.C. Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.32.1
    
    
    Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Indicates management contract or compensatory plan or arrangement. 66




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##### Table of Contents



SIGNATURES
  DATE: August 5, 2009
    IRWIN FINANCIAL CORPORATIONBy:
    /s/ Gregory F. EhlingerGREGORY F. EHLINGERCHIEF FINANCIAL OFFICERBy:
    /s/ Jody A. LittrellJODY A. LITTRELLCORPORATE CONTROLLER
(Chief Accounting Officer) 67