UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



[X

For the quarterly period ended June 30, 2002

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to _____________



Commission File Number:    0-6835



IRWIN FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)



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





500 Washington Street, Columbus, IN  47201

(Address or principal executive offices)

(Zip Code)



(812) 376-1909

(Registrant's telephone number, including area code)

____________________________________________________________________

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



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

Yes __X__   No _____



As of August 5, 2002, there were outstanding 27,736,886 common shares, no par value, of the
Registrant

---

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEET (Unaudited)

|(In thousands, except for shares)                                                                                                                                                                                                                                                                | June 30,   | December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------- | ------------
|Assets:                                                                                                                                                                                                                                                                                          | 2002       | 2001        
|Cash and cash equivalents                                                                                                                                                                                                                                                                        | $110,865   | $158,291    
|Interest-bearing deposits with financial
      institutions                                                                                                                                                                                                                                      | 19,527     | 14,247      
|Trading assets                                                                                                                                                                                                                                                                                   | 183,539    | 199,071     
|Investment securities (Market value:
      $36,641 in 2002 and $38,937 in 2001) - Note 2                                                                                                                                                                                                         | 36,448     | 38,796      
|Loans held for sale                                                                                                                                                                                                                                                                              | 437,147    | 502,086     
|Loans and leases, net of unearned
      income - Note 3                                                                                                                                                                                                                                          | 2,675,915  | 2,137,747   
|Less: Allowance for loan and lease
      losses - Note 4                                                                                                                                                                                                                                         | (37,286)   | (22,283)    
|                                                                                                                                                                                                                                                                                                 | 2,638,629  | 2,115,464   
|Servicing assets - Note 5                                                                                                                                                                                                                                                                        | 212,453    | 228,624     
|Accounts receivable                                                                                                                                                                                                                                                                              | 42,008     | 41,996      
|Accrued interest receivable                                                                                                                                                                                                                                                                      | 15,562     | 14,063      
|Premises and equipment                                                                                                                                                                                                                                                                           | 33,589     | 34,988      
|Other assets                                                                                                                                                                                                                                                                                     | 97,815     | 100,067     
|Total assets                                                                                                                                                                                                                                                                                     | $3,827,582 | $3,447,693  
|Liabilities and Shareholders' Equity:                                                                                                                                                                                                                                                            |            |             
|Deposits                                                                                                                                                                                                                                                                                         |            |             
|Noninterest-bearing                                                                                                                                                                                                                                                                              | $428,840   | $533,983    
|Interest-bearing                                                                                                                                                                                                                                                                                 | 1,026,038  | 889,448     
|Certificates of deposit over
      $100,000                                                                                                                                                                                                                                                      | 802,428    | 885,587     
|                                                                                                                                                                                                                                                                                                 | 2,257,306  | 2,309,018   
|Short-term borrowings - Note 6                                                                                                                                                                                                                                                                   | 380,612    | 487,963     
|Long-term debt - Note 7                                                                                                                                                                                                                                                                          | 464,968    | 30,000      
|Company-obligated mandatorily redeemable
      preferred securities of subsidiary trust                                                                                                                                                                                                          | 198,500    | 198,500     
|Other liabilities                                                                                                                                                                                                                                                                                | 196,075    | 189,889     
|Total liabilities                                                                                                                                                                                                                                                                                | 3,497,461  | 3,215,370   
|                                                                                                                                                                                                                                                                                                 |            |             
|Commitments and contingencies - Note 8                                                                                                                                                                                                                                                           |            |             
|Minority interest                                                                                                                                                                                                                                                                                | 846        | 658         
|                                                                                                                                                                                                                                                                                                 |            |             
|Shareholders' equity                                                                                                                                                                                                                                                                             |            |             
|Preferred stock, no par value -
      authorized 4,000,000 shares; issued none as of June 30, 2002 and 96,336
      shares as of December 31, 2001                                                                                                                                               | -          | 1,386       
|Common stock, no par value -
      authorized 40,000,000 shares; issued 29,612,080 and 23,402,080 shares as
      of June 30, 2002 and December 31, 2001, respectively; including 1,879,658
      and 2,096,947 shares in treasury as of June 30, 2002 and December 31,
      2001, respectively | 112,159    | 29,965      
|Additional paid-in capital                                                                                                                                                                                                                                                                       | 3,794      | 4,426       
|Deferred compensation                                                                                                                                                                                                                                                                            | (359)      | (449)       
|Accumulated other comprehensive loss, net
      of deferred income tax benefit of $83 and $216 in 2002 and 2001,
      respectively                                                                                                                                                              | (125)      | (325)       
|Retained earnings                                                                                                                                                                                                                                                                                | 255,932    | 241,725     
|                                                                                                                                                                                                                                                                                                 | 371,401    | 276,728     
|Less treasury stock, at cost                                                                                                                                                                                                                                                                     | (42,126)   | (45,063)    
|Total shareholders' equity                                                                                                                                                                                                                                                                       | 329,275    | 231,665     
|Total liabilities and shareholders' equity                                                                                                                                                                                                                                                       | $3,827,582 | $3,447,693  

The accompanying notes are an integral part of
the consolidated financial statements.

---

IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (Unaudited)

|(In thousands, except for per share)                                | For the Three Months Ended
      June 30,
|------------------------------------------------------------------- | -----------------------------------------
|                                                                    | 2002                                     
|Interest income:                                                    |                                          
|Loans and leases                                                    | $52,663                                  
|Loans held for sale                                                 | 9,159                                    
|Trading account                                                     | 8,789                                    
|Investment securities:                                              |                                          
|Taxable                                                             | 340                                      
|Tax-exempt                                                          | 57                                       
|Federal funds sold                                                  | 11                                       
|Total interest income                                               | 71,019                                   
|Interest expense:                                                   |                                          
|Deposits                                                            | 13,894                                   
|Short-term borrowings                                               | 3,796                                    
|Long-term debt                                                      | 794                                      
|Preferred securities distribution                                   | 4,818                                    
|Total interest expense                                              | 23,302                                   
|Net interest income                                                 | 47,717                                   
|Provision for loan and lease losses                                 | 9,500                                    
|Net interest income after provision for
      loan and lease losses | 38,217                                   
|Other income:                                                       |                                          
|Loan origination fees                                               | 15,072                                   
|Gain from sales of loans                                            | 26,202                                   
|Loan servicing fees                                                 | 17,809                                   
|Amortization and impairment of servicing
      assets               | (62,257)                                 
|Net loan administration income                                      | (44,448)                                 
|Gain on sale of mortgage servicing assets                           | 9,809                                    
|Trading losses                                                      | (5,757)                                  
|Other                                                               | 50,221                                   
|                                                                    | 51,099                                   
|Other expense:                                                      |                                          
|Salaries                                                            | 40,326                                   
|Pension and other employee benefits                                 | 7,979                                    
|Office expense                                                      | 4,395                                    
|Premises and equipment                                              | 8,523                                    
|Marketing and development                                           | 1,024                                    
|Professional Fees                                                   | 2,098                                    
|Other                                                               | 11,924                                   
|                                                                    | 76,269                                   
|Income before income taxes                                          | 13,047                                   
|Provision for income taxes                                          | 5,069                                    
|Income before minority interest                                     | 7,978                                    
|Minority interest in losses of subsidiaries                         | (8)                                      
|Net income                                                          | $7,986                                   
|                                                                    |                                          
|Earnings per share: - Note 9                                        |                                          
|Basic                                                               | $0.29                                    
|Diluted                                                             | $0.28                                    
|Dividends per share                                                 | $0.0675                                  

The accompanying notes are an integral part of
the consolidated financial statements.

---

IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (Unaudited)

|                                                                                     | For the Six Months Ended
      June 30,
|------------------------------------------------------------------------------------ | ---------------------------------------
|                                                                                    
|(In thousands, except for per share)                                                 | 2002                                   
|Interest income:                                                                     |                                        
|Loans and leases                                                                     | $99,854                                
|Loans held for sale                                                                  | 19,096                                 
|Trading account                                                                      | 18,068                                 
|Investment securities:                                                               |                                        
|Taxable                                                                              | 1,395                                  
|Tax-exempt                                                                           | 113                                    
|Federal funds sold                                                                   | 30                                     
|Total interest income                                                                | 138,556                                
|Interest expense:                                                                    |                                        
|Deposits                                                                             | 28,028                                 
|Short-term borrowings                                                                | 7,395                                  
|Long-term debt                                                                       | 1,363                                  
|Preferred securities distribution                                                    | 9,638                                  
|Total interest expense                                                               | 46,424                                 
|Net interest income                                                                  | 92,132                                 
|Provision for loan and lease losses                                                  | 19,832                                 
|Net interest income after provision for
      loan and lease losses                  | 72,300                                 
|Other income:                                                                        |                                        
|Loan origination fees                                                                | 30,611                                 
|Gain from sales of loans                                                             | 62,698                                 
|Loan servicing fees                                                                  | 36,466                                 
|Amortization and impairment of servicing
      assets                                | (65,550)                               
|Net loan administration income                                                       | (29,084)                               
|Gain on sale of mortgage servicing assets                                            | 9,716                                  
|Trading losses                                                                       | (13,059)                               
|Other                                                                                | 46,125                                 
|                                                                                     | 107,007                                
|Other expense:                                                                       |                                        
|Salaries                                                                             | 79,133                                 
|Pension and other employee benefits                                                  | 16,693                                 
|Office expense                                                                       | 8,604                                  
|Premises and equipment                                                               | 16,741                                 
|Marketing and development                                                            | 1,626                                  
|Professional Fees                                                                    | 5,245                                  
|Other                                                                                | 22,787                                 
|                                                                                     | 150,829                                
|Income before income taxes                                                           | 28,478                                 
|Provision for income taxes                                                           | 11,075                                 
|Income before minority interest                                                      | 17,403                                 
|Minority interest in losses of subsidiaries                                          | (34)                                   
|Income before cumulative effect of change
      in accounting principle              | 17,437                                 
|Cumulative effect of change in accounting
      principle, net of tax                | 495                                    
|Net income                                                                           | $17,932                                
|                                                                                     |                                        
|Earnings per share before cumulative effect
      of change in accounting principle: |                                        
|Basic                                                                                | $0.67                                  
|Diluted                                                                              | $0.65                                  
|Earnings per share: - Note 9                                                         |                                        
|Basic                                                                                | $0.69                                  
|Diluted                                                                              | $0.67                                  
|Dividends per share                                                                  | $0.1350                                

The accompanying notes are an integral part of
the consolidated financial statements.

---

|IRWIN
      FINANCIAL CORPORATION AND SUBSIDIARIES                                         
|-------------------------------------------------------------------------------------------
|CONSOLIDATED
      STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)                
|                                                                                           
|FOR
      THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001                                    
|(Dollars
      in thousands)                                                               
|Balance
      at April 1, 2002                                                             
|Net
      income                                                                           
|Unrealized
      loss on investment securities net of $13 tax benefit                      
|                                                                                           
|Foreign
      currency adjustment net of $170 tax liability                                
|                                                                                           
|Total
      comprehensive income                                                           
|Deferred
      compensation                                                                
|Cash
      dividends                                                                       
|Additional
      costs for equity offering                                                 
|Tax
      benefit on stock option exercises                                                
|Treasury
      stock:                                                                      
|Purchase
      of 54,732 shares                                                            
|Sales
      of 245,054 shares                                                              
|Conversion
      of preferred stock to common stock                                        
|Balance
      June 30, 2002                                                                
|                                                                                           
|Balance
      at April 1, 2001                                                             
|Net
      income                                                                           
|Unrealized
      loss on investment securities net of $17 tax liability                    
|Foreign
      currency adjustment net of $144 tax benefit                                  
|                                                                                           
|Total
      comprehensive income                                                           
|Deferred
      compensation                                                                
|Cash
      dividends                                                                       
|Tax
      benefit on stock option exercises                                                
|Treasury
      stock:                                                                      
|Purchase
      of 3,640 shares                                                             
|Sales
      of 28,520 shares                                                               
|Balance
      June 30, 2001                                                                
|FOR THE SIX MONTHS ENDED JUNE 30, 2002
      AND 2001                                      
|(Dollars
      in thousands)                                                               
|Balance
      at January 1, 2002                                                           
|Net
      income                                                                           
|Unrealized
      gain on investment securities net of $32 tax benefit                      
|                                                                                           
|Foreign
      currency adjustment net of $166 tax liability                                
|                                                                                           
|Total
      comprehensive income                                                           
|Deferred
      compensation                                                                
|Cash
      dividends                                                                       
|Sale
      of 6,210,000 shares of common stock                                             
|Tax
      benefit on stock option exercises                                                
|Treasury
      stock:                                                                      
|Purchase
      of 55,345 shares                                                            
|Sales
      of 272,634 shares                                                              
|Conversion
      of preferred stock to common stock                                        
|Balance
      June 30, 2002                                                                
|                                                                                           
|Balance
      at January 1, 2001                                                           
|Net
      income                                                                           
|Unrealized
      gain on investment securities net of $59 tax liability                    
|89                                                                                         
|Foreign
      currency adjustment net of $43 tax benefit                                   
|(65)                                                                                       
|Total
      comprehensive income                                                           
|Deferred
      compensation                                                                
|Cash
      dividends                                                                       
|Tax
      benefit on stock option exercises                                                
|Treasury
      stock:                                                                      
|Purchase
      of 93,760 shares                                                            
|Sales
      of 259,393 shares                                                              
|Balance
      June 30, 2001                                                                
|The accompanying notes are an integral
      part of the consolidated financial statements.

---

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

---

|NOTES
      TO THE FINANCIAL STATEMENTS (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|NOTE
      1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Consolidation:
      Irwin Financial Corporation and its subsidiaries provide financial
      services throughout the United States and Canada. We are engaged in the
      mortgage banking, commercial banking, home equity lending, equipment
      leasing, and venture capital lines of business. Intercompany balances and
      transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Use
      of Estimates: The preparation of financial statements in conformity
      with generally accepted accounting principles requires us to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual
      results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Derivative
      Instruments: Effective January 1, 2001, we adopted the provisions of
      Statement of Financial Accounting Standards ("SFAS") No. 133,
      "Accounting for Derivative Instruments and Hedging Activities,"
      as amended. Under the provisions of this standard, all derivative
      instruments have been recorded at fair value as assets or liabilities in
      the December 31, 2001 consolidated balance sheet. Unrealized holding gains
      and losses from all derivative instruments classified as fair value hedges
      or freestanding derivative instruments have been recorded in the
      consolidated statement of income. The adoption of SFAS 133 resulted in a
      cumulative change in accounting principle, increasing net income by $175
      thousand in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|We
      utilize certain derivative instruments that do not qualify for hedge
      accounting treatment under SFAS 133. These derivatives are included in
      other assets and marked to market on the consolidated statement of income
      as other income or other expense. While we do not seek GAAP hedge
      accounting treatment for most of these instruments, their economic purpose
      is to hedge existing exposures to either interest rate risk or foreign
      currency risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|We
      enter into forward contracts to protect against interest rate fluctuations
      from the date of mortgage loan commitment until the loans are sold. At
      December 31, 2001, we designated the portion of these transactions hedging
      the closed mortgage loans as hedges that qualify for hedge accounting
      treatment under SFAS 133. The basis of the hedged closed loans is adjusted
      for changes in value associated with the risk being hedged. The effect of
      these hedging activities, which do not have a material impact on our net
      income, was recorded through earnings as gain from sales of loans. Hedge
      ineffectiveness recorded in gain from sales of loans related to these
      hedging activities was immaterial.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Additionally,
      we enter into commitments to originate loans for which the interest rate
      is determined prior to funding (rate lock commitments). Rate lock
      commitments on first mortgage loans intended to be sold are considered to
      be derivatives. At the time of interest rate lock commitment, no gain or
      loss is recognized. Any subsequent changes in fair value are recorded in
      earnings. These derivatives are recorded on the balance sheet at fair
      value at period end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Recent
      Accounting Developments: In September 2000, the FASB issued SFAS No.
      140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities." SFAS 140, which replaces SFAS 125,
      "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities," provides accounting and reporting
      standards for securitizations and other transfers of assets. SFAS 140 is
      based on the application of a financial components approach that focuses
      on control, and provides consistent standards for distinguishing between
      transfers of financial assets that are sales and transfers that are
      secured borrowings. The Standard requires disclosure of information about
      securitized assets, including the principal outstanding of securitized and
      other managed assets, accounting policies, key assumptions related to the
      determination of the fair value of residual interests, delinquencies and
      credit losses. The accounting requirements of SFAS 140 were effective for
      transfers and servicing of financial assets and extinguishments of
      liabilities occurring after March 31, 2001. Adoption of this statement did
      not have a material impact on our financial position or results of
      operations.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|On
      June 29, 2001 the FASB approved SFAS No. 141, "Business
      Combinations," and No. 142 "Goodwill and Other Intangible
      Assets." SFAS 141 eliminated the pooling-of-interests method of
      accounting - requiring that purchase accounting, with its recognition of
      intangible assets separately from goodwill, be applied to all business
      combinations initiated after June 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Under
      the provisions of SFAS 142, goodwill is no longer amortized against
      earnings. Instead, goodwill and intangible assets deemed to have an
      indefinite life are reviewed for impairment at least annually. The
      amortization period of intangible assets with finite lives is no longer
      limited to forty years. This standard became effective January 1, 2002. We
      discontinued the amortization of goodwill with a net carrying value of
      $1.8 million on the date of adoption and annual amortization of $0.2
      million that resulted from business combinations prior to the adoption of
      SFAS 141. In addition, as required by the standard, we wrote off, as a
      cumulative effect of a change in accounting principle, unamortized
      negative goodwill totaling $0.5 million net of tax at the date of adoption
      arising from a prior business combination at our leasing line of business.                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The
      FASB has also issued SFAS No. 143, "Accounting for Asset Retirement
      Obligations," and SFAS No. 144, "Accounting for the Impairment
      or Disposal of Long-Lived Assets." SFAS 143 addresses accounting for
      the retirement of tangible long-lived assets and the associated asset
      retirement costs. The effective date is for fiscal years beginning after
      June 15, 2002. SFAS 144, effective for fiscal years beginning after
      December 15, 2001, supersedes FASB No. 121 "Accounting for the
      Impairment of Long-Lived Assets to Be Disposed Of" and APB Opinion
      No. 30, "Reporting the Results of Operations - Reporting the Effects
      of Disposal of a Segment of a Business, and Extraordinary, Unusual and
      Infrequently Occurring Events and Transactions," for the disposal of
      a segment of a business. Management does not believe the implementation of
      SFAS 143 or SFAS 144 will have a material effect on our earnings or
      financial condition.                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Reclassifications:
      Certain amounts in the 2001 consolidated financial statements have been
      reclassified to conform to the 2002 presentation. These changes had no
      impact on previously reported net income or shareholders' equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|NOTE
      2 - INVESTMENT SECURITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The carrying amounts of investment
      securities, including a net unrealized gain of $43 thousand and a net
      unrealized loss of $124 thousand on available-for-sale securities at June
      30, 2002 and December 31, 2001, respectively, are summarized as follows:                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Held-to-maturity,
      at amortized cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Obligations of states and political subdivisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Corporate obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Total
      held-to-maturity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Available-for-sale,
      at fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|US Treasury and Government obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Total
      available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Total
      investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Securities
      that we have a positive intent and ability to hold until maturity are
      classified as "held-to-maturity" and are stated at cost adjusted
      for amortization of premium and accretion of discount. Securities that
      might be sold prior to maturity are classified as
      "available-for-sale" and are stated at fair value. Unrealized
      gains and losses on available-for-sale securities, net of the future tax
      impact, are reported as a separate component of shareholders' equity until
      realized.                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE
      3 - LOANS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Loans
      and leases are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Commercial,
      financial and agricultural                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Real
      estate-construction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Real
      estate-mortgage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Real
      estate-mortgage securitized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Consumer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Direct
      financing leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Domestic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Canadian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Unearned
      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Domestic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Canadian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Total
      loans and leases, net of unearned income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE
      4 - ALLOWANCE FOR LOAN AND LEASE LOSSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Changes
      in the allowance for loan and lease losses are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Balance
      at beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Provision
      for loan and lease losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Charge-offs
      *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Recoveries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Balance
      at end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|*
      In addition, not included in the caption were charge-offs of $2.0 million
      and $2.3 million at June 30, 2002 and December 31, 2001, respectively,
      that were charged directly to a valuation allowance at our home equity
      line of business. This valuation allowance was recorded when approximately
      $38 million of loans held for sale were transferred at market value to
      loans held for investment in late 2001.                                                                                                                                    
|NOTE 5- SERVICING ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Included
      on the consolidated balance sheet at June 30, 2002 and December 31, 2001
      are $212.5 million and $228.6 million, respectively, of servicing assets.
      The servicing asset recorded represents the discounted cash flows of
      estimated future servicing income and cost. These amounts relate to the
      principal balances of loans that we service for investors. Although they
      are not generally held for sale, there is an active secondary market for
      servicing assets. We have periodically sold servicing assets.                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Servicing
      Asset:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Beginning
      Balance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Additions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Amortization
      and impairment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Reduction
      for servicing sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE
      6- SHORT-TERM BORROWINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Short-term
      borrowings are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(In
      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Federal
      Home Loan Bank borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Repurchase
      agreements and drafts payable related to mortgage loan closings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|ines
      of credit and other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Federal
      funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Commercial
      paper                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Repurchase
      agreements at June 30, 2002 and December 31, 2001, include $0.3 million
      and $0.1 million respectively, in mortgage loans sold under agreements to
      repurchase which are used to fund mortgage loans sold prior to sale in the
      secondary market. These repurchase agreements are collateralized by
      mortgage loans held for sale.                                                                                                                                                                                                                    
|Drafts
      payable related to mortgage loan closings totaled $119.5 million and
      $154.0 million at June 30, 2002 and December 31, 2001, respectively. These
      borrowings are related to mortgage closings at the end of the period which
      have not been presented for payment. When presented for payment these
      borrowings will be funded internally or by borrowing from the lines of
      credit.                                                                                                                                                                 
|We
      have lines of credit available to fund loan originations and operations.
      Interest on the lines of credit is payable monthly or quarterly with rates
      ranging from 2.3% to 3.5% .                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE
      7- LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Long-term
      debt is summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|In thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Subordinated
      debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2002-1
      asset backed notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Interest
      only senior note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Variable
      rate senior note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Variable
      rate senior note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Variable
      rate subordinate note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Variable
      rate subordinate note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Variable
      rate subordinate note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Beginning in the second quarter of 2002, we
      changed the structure of our securitizations resulting in the elimination
      of transactions accounted for as sales under generally accepted accounting
      principles. Securitization of loans since this time have been structured
      as secured financings. This type of securitization structure results in
      cash being received and debt being recorded. In connection with these
      transactions, the 2002-1 notes are collateralized by $434.0 million in
      home equity loans and home equity lines of credit.

|NOTE
      8 -- CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Our
      subsidiary, Irwin Mortgage Corporation, is a defendant in a class action
      lawsuit in the United States District Court for the northern District of
      Alabama alleging that Irwin Mortgage violated the federal Real Estate
      Settlement Procedures Act (RESPA) relating to Irwin Mortgage's payment of
      broker fees to mortgage brokers. A second suit was filed September, 2001
      seeking consolidation with this case. In July, 2001, the plaintiffs filed
      a motion for partial summary judgment asking the court to find Irwin
      Mortgage summarily liable for violating RESPA. Irwin Mortgage filed a
      motion in opposition and these motions are now pending before the district
      court.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|In
      November, 2001, by order of the district court, the parties filed
      supplemental briefs analyzing the impact of a new HUD policy statement
      that explicitly disagrees with the judicial interpretation of RESPA by the
      Court of Appeals for the 11th Circuit in its ruling upholding class
      certification in this case. Irwin Mortgage filed a petition for certiorari
      with the United States Supreme Court seeking review of the 11th Circuit's
      class certification ruling and also filed a motion in the district court
      seeking a stay of further proceedings until the 11th Circuit renders
      decisions in the other three RESPA cases pending before it. The Supreme
      Court denied Irwin Mortgage's petition. On March 8, 2002, the district
      court granted Irwin Mortgage's motion to stay proceedings in this case.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|At
      this stage of the litigation we are unable to determine the outcome or a
      reasonable estimate of potential loss. However, we expect that an adverse
      outcome in this lawsuit could result in substantial monetary damages that
      could be material to our financial position. We have not established any
      reserves for this case or for the second suit that seeks consolidation
      with this one. The second case, which seeks class action status and
      contains allegations similar to those in the first case, has been stayed
      until the 11th Circuit renders decisions in the other three RESPA cases
      pending before it. An adverse outcome in the second case could cause the
      company to suffer material losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|In
      January, 2001, we and two subsidiaries, Irwin Leasing Corporation
      (formerly Affiliated Capital Corp.) and Irwin Equipment Finance
      Corporation, our indirect and direct subsidiaries, respectively (for
      purposes of this paragraph, the Irwin companies), were served as
      defendants in an action filed in the U.S. District Court for the Middle
      District of Pennsylvania. The suit alleges that a manufacturer/importer of
      certain medical devices made misrepresentations to health care
      professionals and to government officials to improperly obtain Medicare
      reimbursement for treatment using the devices, and that the Irwin
      companies, through Affiliated Capital's financing activities, aided in
      making the alleged misrepresentations. The Irwin companies filed a motion
      to dismiss on February 12, 2001. On August 10, 2001, the court granted our
      motion in part by dismissing us and Irwin Equipment Finance as defendants
      in the suit. Irwin Leasing remains a defendant. We have not established
      any reserves for this case. Because the case is in the early stages of
      litigation, we are unable at this time to form a reasonable estimate of
      the amount of potential loss, if any, that we could suffer.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|In
      May, 2001, Irwin Union Bank and Trust and Irwin Home Equity, our direct
      and indirect subsidiaries, respectively (for purposes of this paragraph,
      Irwin), received notice that they were named as defendants in a lawsuit
      filed in the U.S. District Court for the District of Rhode Island. The
      suit alleges that Irwin's disclosures and closing procedure for certain
      home equity loans did not comply with certain provisions of the Truth in
      Lending Act. The suit also requests that the court certify a plaintiff
      class in this action. On June 18, 2001, Irwin filed a motion with the
      court to compel arbitration pursuant to the provisions in the home equity
      loan agreement. On October 20, 2001, the Court entered judgment in favor
      of Irwin compelling arbitration and dismissing the plaintiffs' complaint,
      and the plaintiffs appealed to the United States Court of Appeals for the
      First Circuit. The First Circuit heard oral argument in April, 2002. We
      have not established any reserves for this case. If arbitration is
      ultimately upheld, we do not expect to suffer a material loss in this
      case.                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|In
      an amended complaint, our subsidiary Irwin Union Bank and Trust was named
      in place of our indirect subsidiary, Irwin Home Equity, as a defendant in
      a suit originally filed in July, 2001 in the U.S. District Court for the
      District of Massachusetts. The suit relates to a loan purchased by Irwin
      Union Bank and Trust and serviced by Irwin Home Equity. The plaintiff
      alleges that the loan documents did not comply with certain provisions of
      the Truth in Lending Act relating to high rate loans. The suit also
      requests that the court certify a plaintiff class in this action. Irwin
      Union Bank and Trust filed an answer to the amended complaint denying
      plaintiff's allegations. Because the case is in the early stages of
      litigation, we are unable at this time to form a reasonable estimate of
      the amount of potential loss, if any, that we could suffer. We have not
      established any reserves for this case.                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|On
      January 25, 2002, a jury awarded the plaintiffs damages of $1.434 million
      jointly and severally against defendants, including our subsidiary Irwin
      Mortgage, in a case filed in August 1998 in the Baltimore, Maryland, City
      Circuit Court. The nine plaintiffs alleged that a home rehabilitation
      company defrauded them by selling them defective homes at inflated prices
      and that Irwin Mortgage, which provided the plaintiff borrowers mortgage
      loans on the home purchases, participated in the fraud. Prior to the
      outcome of the jury trial, we had no reserves for this case. On February
      6, 2002, plaintiffs filed a petition for attorney's fees. On the same
      date, Irwin Mortgage filed post-trial motions for judgment notwithstanding
      the verdict, new trial and/or remittitur, which is a request for the court
      to reduce the amount of damages awarded by the jury. In May, 2002 the
      court denied Irwin Mortgage's post-trial motion. In June, 2002, Irwin
      Mortgage filed a notice of appeal with the Maryland Court of Special
      Appeals.                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|We
      and our subsidiaries are from time to time engaged in various matters of
      litigation including the matters described above, other assertions of
      improper or fraudulent loan practices or lending violations, and other
      matters, and we have a number of unresolved claims pending. In addition,
      as part of the ordinary course of business, we and our subsidiaries are
      parties to litigation involving claims to the ownership of funds in
      particular accounts, the collection of delinquent accounts, challenges to
      security interests in collateral, and foreclosure interests, that is
      incidental to our regular business activities. While the ultimate
      liability with respect to these other litigation matters and claims cannot
      be determined at this time, we believe that damages, if any, and other
      amounts relating to pending matters are not likely to be material to our
      consolidated financial position, results of operations, or cash flows,
      except as described above. Reserves have been established for these
      various matters of litigation, when appropriate, based upon the advice of
      legal counsel.                                                                                                        

|NOTE
      9 -- EARNINGS PER SHARE                                                |                               
|--------------------------------------------------------------------------------- | ------------------------------
|                                                                                  |                               
|Earnings
      per share calculations are summarized as follows:                  |                               
|(In thousands, except share
      data)                                           | Basic
      Earnings Per Share
|Three
      months ended June 30, 2002                                            |                               
|Net
      income available to common shareholders                                 | $
      7,986                 
|Shares                                                                            | 27,553                        
|Per-Share
      amount                                                            | $
      0.29                  
|                                                                                 
|Three
      months ended June 30, 2001                                            |                               
|Net
      income before cumulative effect of change in accounting
      principle
|$
      12,808                                                                    | $
      -                     
|Shares                                                                            | 21,150                        
|Per-Share
      amount                                                            | $
      0.61                  
|                                                                                  |                               
|(In thousands, except share
      data)                                           | Basic
      Earnings Per Share
|Six
      months ended June 30, 2002                                              |                               
|Net
      income available to common shareholders                                 | $
      17,437                
|Shares                                                                            | 25,880                        
|Per-Share
      amount                                                            | 0.67                          
|Cumulative
      effect of change in accounting principle                         | 495                           
|Per-Share
      amount                                                            | 0.02                          
|Net
      income                                                                  | 17,932                        
|Per-Share
      amount                                                            | $
      0.69                  
|                                                                                  |                               
|Six
      months ended June 30, 2001                                              |                               
|Net
      income before cumulative effect of change in accounting
      principle | $ 21,804                      
|Shares                                                                            | 21,109                        
|Per-Share
      amount                                                            | 1.03                          
|Cumulative
      effect of change in accounting principle                         | 175                           
|Per-Share
      amount                                                            | 0.01                          
|Net
      income                                                                  | 21,979                        
|Per-Share
      amount                                                            | $
      1.04                  



|NOTE
      10 -- INDUSTRY SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|We
      have five principal segments that provide a broad range of financial
      services throughout the United States and Canada. The Mortgage Banking
      line of business originates, sells and services residential first mortgage
      loans. The Commercial Banking line of business provides commercial banking
      services. The Home Equity Lending line of business originates and services
      home equity loans. The Commercial Finance line of business originates
      loans and leases on commercial equipment. The Venture Capital line of
      business invests in early-stage companies that seek to transform the way
      financial services are delivered. Our Other segment includes the parent
      company and eliminations.
|The
      accounting policies of each segment are the same as those described in the
      "Summary of Significant Accounting Policies." Below is a summary
      of each segment's revenues, net income, and assets for 2002 and 2001:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(In thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|For
      the three months ended June 30, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Net
      interest income, net of provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Intersegment
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Other
      revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Total
      net revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Other
      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Income
      (loss) before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Income
      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Income
      (loss) before Minority Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Minority
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Net
      income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Assets
      at June 30, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|For the three months ended June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Net
      interest income, net of provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Intersegment
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Other
      revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Total
      net revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Other
      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Income
      (loss) before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Income
      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Income
      (loss) before Minority Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Minority
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Net
      income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Assets
      at June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(In thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|For
      the six months ended June 30, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Net
      interest income, net of provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Intersegment
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Other
      revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Total
      net revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Other
      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Income
      (loss) before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Income
      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Income
      (loss) before Minority Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Minority
      Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Income
      (loss) before cumulative effect of change in accounting principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Cumulative
      effect of change in accounting principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Net
      income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Assets
      at June 30, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|For the six months ended June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Net
      interest income, net of provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Intersegment
      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Other
      revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Total
      net revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Other
      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intersegment
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Income
      (loss) before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Income
      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Income
      (loss) before Minority Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Minority
      Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Income
      (loss) before cumulative effect of change in accounting principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Cumulative
      effect of change in accounting principle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Net
      income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Assets
      at June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion in conjunction with our consolidated financial statements, footnotes, and tables. This discussion and other sections of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking these safe harbor provisions. Words such as:  "expect(s)," "expected," "expectation(s)," "estimate(s)," "estimated," "assumption(s)," "believe(s)," "forecasts," "projections," "projected," "may," "would," "will," "should," "might," "as long as," "anticipate(d)," "probable," and similar expressions are intended to identify forward-looking statements, which may include, among other things:

- statements and assumptions relating to projected growth, earnings, earnings per share, and other financial performance measures, as well as management's short-term and long-term performance goals;
- statements relating to the anticipated effects on results of operations or financial condition from recent and expected developments or events, including the recently revised regulatory capital rules relating to residual interests;
- statements relating to our business and growth strategies, including potential acquisitions; and
- any other statements, projections or assumptions that are not historical facts.

Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from our expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. Actual future results may differ materially from what is projected due to a variety of factors, including, but not limited to, potential changes in interest rates, which may affect consumer demand for our products and the valuation of our servicing portfolio; borrowers' refinancing opportunities, which may affect the prepayment assumptions used in our valuation estimates; unanticipated deterioration in the credit quality of our assets; difficulties in selling residual assets as contemplated; difficulties in delivering loans to the secondary market as planned or in funding loans through securitization transactions as planned; difficulties in expanding our business or raising capital and other funding sources as needed; competition from other financial service providers for experienced managers as well as for customers; changes in the value of companies in which we invest; legislative or regulatory changes, including changes in the interpretation of new capital rules; changes in applicable accounting policies or principles or their application to our business; or governmental changes in monetary or fiscal policies. Further, uncertainty in the national economy may negatively impact the financial services industry or cause changes in or exaggerate the effects of the factors described above. We undertake no obligation to update publicly any of these statements in light of future events, except as required in subsequent periodic reports we file with the Securities and Exchange Commission.

Consolidated Overview



|                                 | Three Months Ended June 30, 2002 | Three Months Ended June 30, 2001 | Six Months Ended June 30, 2002 | Six Months Ended June 30, 2001
|-------------------------------- | -------------------------------- | -------------------------------- | ------------------------------ | ------------------------------
|Net income (millions)            | $8.0                             | $12.8                            | $17.9                          | $22.0                         
|Basic earnings per share(1, 2)   | 0.29                             | 0.61                             | 0.69                           | 1.04                          
|Diluted earnings per share(1, 2) | 0.28                             | 0.56                             | 0.67                           | 0.97                          
|Return on average equity         | 9.76%                            | 25.35%                           | 11.98%                         | 22.51%                        
|Return on average assets         | 0.88                             | 1.69                             | 1.00                           | 1.57                          

__________(1)  Earnings per share of common stock before cumulative effect of change in accounting principle related to SFAS 142, "Goodwill and Other Intangible Assets," for the six months ended June 30, 2002 was $0.67 basic and $0.65 diluted.(2)Earnings per share of common stock before cumulative effect of change in accounting principle related to SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," for the six months ended June 30, 2001 was $1.03 basic and $0.96 diluted.

We recorded net income of $8.0 million for the three-month period ended June 30, 2002, down 37.6% from the same period in 2001.  Net income per diluted share was $0.28 during the three-month period ended June 30, 2002, down from $0.56 during the same period a year earlier.  Return on equity for the second quarter totaled 9.76% compared with 25.35% during the same period a year earlier.
For the year to date, we recorded net income of $17.9 million or $0.67 per diluted share.  This represents decreases of 18.4% and 30.9%, respectively, compared to the same period in 2001.  Return on equity for the six-month period ended June 30, 2002 was 11.98% compared with 22.51% during the same period a year earlier.
The decreased earnings per share and return on equity listed above reflect the elimination of the use of gain-on-sale accounting in our home equity line of business and dilution from a first quarter common stock offering.  The accounting change and dilution combined to offset strong performance by our mortgage and commercial banking lines of business.
     Irwin Financial Corporation has five principal lines of business:

- Mortgage banking (includes Irwin Mortgage Corporation and the related activities of Irwin Union Bank and Trust Company)
- Commercial banking (includes Irwin Union Bank and Trust and Irwin Union Bank, F.S.B.)
- Home equity lending (includes Irwin Home Equity Corporation, Irwin Residual Holdings Corporation, Irwin Residual Holdings Corporation II, and the related activities of Irwin Union Bank and Trust)
- Commercial finance (Irwin Capital Holdings)
- Venture capital (includes Irwin Ventures LLC and the related activities of Irwin Union Bank and Trust)
     The following table summarizes our net income (loss) by line of business for the periods indicated:



|                                        | Three Months Ended June 30, | Six Months Ended June 30,
|--------------------------------------- | --------------------------- | -------------------------
|                                        | 2002                        | 2001                     
|Net income (loss):                      | (In thousands)             
|Mortgage Banking                        | $9,184                      | $8,155                   
|Commercial Banking                      | 4,059                       | 1,741                    
|Home Equity Lending                     | (4,531)                     | 6,069                    
|Commercial Finance                      | 128                         | (206)                    
|Venture Capital                         | (4)                         | (1,563)                  
|Other (including consolidating entries) | (850)                       | (1,388)                  
|                                        | $7,986                      | $12,808                  



- Our mortgage banking line of business earned $9.2 million during the second quarter, up 13% from a year ago.  These results were achieved during a period characterized by declining and volatile interest rate changes due to uncertainty in the capital markets. Compared with the same period a year ago, results in the second quarter of 2002 reflect lower loan originations and increased servicing amortization and impairment and increased sale of servicing rights during the quarter.
- Our commercial banking line of business continued to grow its loan portfolio during the second quarter of 2002, while its margin increased to 4.08%, up from 3.82% during the same period a year ago.
- Our home equity lending line of business lost money during the quarter as a result of its transition from gain-on-sale to portfolio treatment for its secured financings as discussed in the following section. The on-balance sheet portion of this portfolio increased to $648 million at June 30, 2002.
- Our commercial finance line of business was profitable during the second quarter of 2002, primarily reflecting portfolio growth.
- Our venture capital line of business operated at breakeven during the second quarter.

Earnings Outlook     Given the current economic and business climate, we expect estimated consolidated net income of at least $36 million in 2002 and approximately $54 million in 2003.1 Changes in federal banking regulations for securitization residual interests have caused us to eliminate the use of securitization structures that require gain-on-sale accounting under SFAS 140 at least as long as credit-enhancing interest-only strips exceed 25% of Tier 1 capital. This will have the effect of delaying income recognition for our home equity line of business when compared to past practice.  Although this change in accounting policy will delay income recognition in 2002 for the home equity line of business, we expect to remain solidly profitable as we transition off gain-on-sale accounting.  In addition, management anticipates that, after 2002, we can again achieve our long-term financial objectives of annual earnings per share growth of at least 12 percent and return on common equity of greater than 15 percent.

|                                                                      | Three Months Ended June 30, | Six Months Ended June 30,
|--------------------------------------------------------------------- | --------------------------- | -------------------------
|                                                                      | 2002                        | 2001                     
|Selected Income Statement Data:                                       | (In thousands)             
|Net interest income                                                   | $7,659                      | $6,380                   
|Provision for loan losses                                             | (52)                        | 99                       
|Loan origination fees                                                 | 14,882                      | 16,088                   
|Gain on sales of loans                                                | 24,737                      | 26,323                   
|Loan servicing fees                                                   | 13,893                      | 12,228                   
|Amortization of servicing assets                                      | (12,491)                    | (7,699)                  
|Impairment of servicing assets                                        | (47,973)                    | (344)                    
|Gain (loss) on derivatives                                            | 45,430                      | (4,062)                  
|Gain on sales of bulk servicing
rights                                | 9,809                       | 3,689                    
|Other income                                                          | 1,301                       | 1,194                    
|Total net revenue                                                     | 57,195                      | 53,896                   
|Operating expense                                                     | (42,132)                    | (40,643)                 
|Income before taxes                                                   | 15,063                      | 13,253                   
|Income taxes                                                          | (5,879)                     | (5,098)                  
|Net income before cumulative effect of change in accounting principle | 9,184                       | 8,155                    
|Cumulative effect of change in
accounting principle                   | 0                           | 0                        
|Net income                                                            | $9,184                      | $8,155                   
|                                                                      |                             |                          

|Selected Operating Data:                      |            |                        |              |           
|--------------------------------------------- | ---------- | ---------------------- | ------------ | ----------
|Mortgage loan originations                    | $1,897,162 | $2,468,737             | $3,846,556   | $4,359,940
|Servicing sold as a % of
production           | 96.6%      | 28.5%                  | 51.4%        | 43.9%     
|                                              |            |                        |              |           
|Selected Balance Sheet Data at End of Period: |            | June 30,               | December 31,
|                                              |            | 2002                   | 2001        
|                                              |            | (Dollars in thousands)
|Total assets                                  |            | $795,162               | $926,946    
|Mortgage loans held for sale                  |            | 437,147                | 503,757     
|Mortgage servicing assets                     |            | 192,455                | 211,201     
|Short-term debt                               |            | 409,947                | 385,640     
|Shareholder's equity                          |            | 41,707                 | 63,150      
|Selected Operating Data:                      |            |                        |             
|Servicing portfolio:                          |            |                        |             
|Balance at end of period                      |            | 13,466,335             | 12,875,532  
|Weighted average coupon rate                  |            | 7.01%                  | 7.23%       
|Weighted average servicing fee                |            | 0.39                   | 0.45        

OverviewIn our mortgage banking line of business, Irwin Mortgage, in combination with Irwin Union Bank and Trust, originates, purchases, sells and services conventional and government agency-backed residential mortgage loans throughout the United States. Because most of our mortgage originations either are insured by an agency of the federal government, such as the FHA or the VA, or, in the case of conventional mortgages, meet requirements for sale to the FNMA or the FHLMC, we are able to remove substantially all of the credit risk of these loans from our balance sheet. We sell mortgage loans to institutional and private investors but may retain servicing rights to the loans we originate or purchase from correspondents. We believe this balance between mortgage loan originations and mortgage loan servicing provides us a partial natural hedge against interest rate changes, which has helped stabilize our revenue stream.
     Our mortgage banking line of business is currently our largest contributor to revenue, comprising 64% of our total revenues in both the three- and six-month periods ended June 30, 2002, compared to 54% and 53%, respectively, in the same periods in 2001. Our mortgage banking line of business contributed 115% and 64% of our net income for the three months ended June 30, 2002 and 2001, respectively, and 109% and 66% of our net income during the six month periods ended June 30, 2002 and 2001, respectively.Net IncomeNet income from mortgage banking for the three months ended June 30, 2002 was $9.2 million, compared to $8.2 million during the same period in 2001, an increase of 12.6%. The second quarter increase primarily relates to gains from the sale of servicing rights offset by lower loan originations and increased servicing amortization and impairment. Year to date, net income was $19.5 million compared to $14.5 million in 2001. The following table shows the composition of our originations by loan categories for the periods indicated:



Three Months ended June 30,
Six Months ended June 30,2002
2001
2002
2001(Dollars in thousands)Total originations
$1,897,162
$2,468,737
$3,846,556
$4,359,940Percent retail loans
33.99%
33.15%
34.79%
33.54%Percent wholesale loans
58.99
62.55
58.50
62.08Percent brokered(1)
7.01
4.30
6.71
4.37Percent refinances
39.23
50.39
46.33
52.88


__________(1)  Brokered loans are loans we originate for which we receive loan origination fees, but which are funded,

|                               | Three Months Ended June 30, | Six Months Ended June 30,
|------------------------------ | --------------------------- | -------------------------
|                               | 2002                        | 2001                     
|                               | (Dollars in thousands)     
|Salaries and employee benefits | $27,271                     | $27,474                  
|Other expenses                 | 14,861                      | 13,169                   
|Total operating expenses       | $42,132                     | $40,643                  
|Number of employees(1)         |                             |                          

_____________
                    

(1)  On a full-time equivalent basis.
     Operating expenses for the three and six months ended June 30, 2002 totaled $42.1 million and $82.9 million, respectively, an increase of 3.7% and 9.7%, respectively, over the same periods in 2001. Salaries and employee benefits during the second quarter of 2002 decreased 0.7% over the same period of 2001. Year to date, salaries and employee benefits increased 6.4% to $53.0 million. This increase is reflective of increased headcount as a result of strong production levels over the past few quarters.Mortgage ServicingThe following table shows information about our mortgage servicing portfolio for the periods indicated:

|                                             | Six Months Ended June 30, | Year Ended December 31,
|-------------------------------------------- | ------------------------- | -----------------------
|                                             | 2002                      | 2001                   
|                                             | (Portfolio in billions)  
|Beginning portfolio                          | $12.9                     | $9.2                   
|Mortgage loan closings (excludes brokered)   | 3.6                       | 8.8                    
|Sales of servicing rights                    | (1.8)                     | (2.3)                  
|Run-off(1)                                   | (1.2)                     | (2.8)                  
|Ending portfolio                             | $13.5                     | $12.9                  
|Number of loans (end of period)              | 118,454                   | 123,291                
|Average loan size                            | $113,684                  | $104,432               
|Percent GNMA and state housing programs      | 49%                       | 60%                    
|Percent conventional insured and other       | 47                        | 33                     
|Percent warehouse                            | 4                         | 7                      
|Delinquency ratio                            | 5.8                       | 7.8                    
|Capitalized servicing to servicing portfolio | 1.4                       | 1.6                    

__________(1)  Run-off is the reduction in principal balance of the servicing portfolio due to regular principal
payments made by
                                       
mortgagees and early repayments of entire loans.
     Our mortgage servicing portfolio totaled $13.5 billion at June 30, 2002, a 4.6% increase from the December 31, 2001 balance of $12.9 billion. The mortgage banking line of business has followed a strategy of managing interest rate risk associated with the servicing portfolio by selling servicing rights on those loans that are most likely to refinance should interest rates decline. 
     We record mortgage servicing assets at the lower of their cost or market value, and we record a valuation allowance for any impairment. At June 30, 2002, the market value of these assets was estimated to be $203.3 million in the aggregate, or $10.8 million greater than the carrying value on the balance sheet. At December 31, 2001, we estimated the market value of these assets to be $239.7 million in the aggregate, or $28.5 million greater than the carrying value on the balance sheet.Commercial BankingThe following table shows selected financial information for our commercial banking line of business:



|                                    | Three Months Ended June 30, | Six Months Ended June 30,
|----------------------------------- | --------------------------- | -------------------------
|                                    | 2002                        | 2001                     
|Selected Income Statement Data:     | (Dollars in thousands)     
|Interest income                     | $27,491                     | $26,632                  
|Interest expense                    | (10,208)                    | (14,609)                 
|Net interest income                 | 17,283                      | 12,023                   
|Provision for loan and lease losses | (2,340)                     | (1,704)                  
|Noninterest income                  | 4,134                       | 3,457                    
|Operating expense                   | (12,442)                    | (10,901)                 
|Income before taxes                 | 6,635                       | 2,875                    
|Income taxes                        | (2,576)                     | (1,134)                  
|Net income                          | $4,059                      | $1,741                   
|                                    |                             |                          
|Selected Balance Sheet Data at      |                             |                          
|End of Period:                      |                             |                          
|                                    |                             | (Dollars in thousands)   
|Total assets                        |                             |                          
|Loans                               |                             |                          
|Allowance for loan and lease losses |                             |                          
|Deposits                            |                             |                          
|Shareholder's equity                |                             |                          
|Daily Averages:                     |                             |                          
|                                    | (Dollars in thousands)     
|Assets                              |                             |                          
|Loans                               |                             |                          
|Allowance for loan and lease losses |                             |                          
|Deposits                            |                             |                          
|Shareholder's equity                |                             |                          
|Shareholder's equity to assets      |                             |                          

OverviewOur commercial banking line of business focuses on providing credit, cash management and personal banking products to small businesses and business owners. We offer commercial banking services through our banking subsidiaries, Irwin Union Bank and Trust, an Indiana state-chartered commercial bank, and Irwin Union Bank, F.S.B., a federal savings bank.  We sell a majority of the commercial loans we originate at Irwin Union Bank, F.S.B. to Irwin Union Bank and Trust.Net IncomeCommercial banking net income increased to $4.1 million during the second quarter of 2002, compared to $1.7 million during the same period in 2001. Year-to-date net income totaled $7.9 million in 2002 compared to net income of $3.1 million for the same period in 2001. Results during the first six months of 2002 reflect year-over-year growth of $9.0 million in net interest income after provision for loan losses and a $1.9 million increase in other revenues, principally service charges on deposit accounts.Net Interest IncomeThe following table provides information about net interest income for our commercial banking line of business:

Three Months Ended June 30,
Six Months Ended June 30,2002
2001
2002
2001(Dollars in thousands)Net interest income on a taxable
equivalent basis(1)
$17,335
$12,081
$33,478
$22,448Average interest earning assets
1,705,806
1,269,338
1,651,217
1,203,821Net interest margin
4.08%
3.82%
4.09%
3.76%


___________

(1)  Reflects what net interest income would be if all interest income were subject to federal and state income
taxes.
     Net interest income on a taxable equivalent basis was $33.5 million for the first half of 2002, an increase of 49.1% over the same period in 2001 of $22.4 million. The 2002 increase relates to an improvement in net interest margin, as discussed below, and a $0.4 billion increase in average interest earning assets compared to the same period in 2001.
     Net interest margin is computed by dividing annualized net interest income by average interest earning assets. Net interest margin for the second quarter of 2002 was 4.08%, compared to 3.82% for the second quarter of 2001. Year-to-date net interest margin for 2002 was 4.09% compared to 3.76% for 2001. The improvement in 2002 reflects reduced reliance on higher-rate wholesale funding sources.  The line of business increased its core deposits to $1.3 billion, an annual increase of 39%, reflecting success in deposit gathering initiatives. Noninterest IncomeThe following table shows the components of noninterest income for our commercial banking line of business:

Three Months Ended June 30,
Six Months Ended June 30,2002
2001
2002
2001(Dollars in thousands)Trust fees
$499
$558
$1,063
$1,151Service charges on deposit accounts
1,178
657
2,354
1,178Insurance commissions, fees and
premiums
449
468
880
921Gain from sales of loans
839
654
1,888
1,033Loan servicing fees, net
21
(45)
(18)
(47)Brokerage fees
361
373
719
809Other
787
792
1,593
1,535Total noninterest income
$4,134
$3,457
$8,479
$6,580Total noninterest income to total net
revenues
21.7%
25.1%
22.7%
24.9%


Noninterest income during the first half of 2002 increased 28.9% over 2001. This increase was due primarily to higher gain from sales of loans related to increased mortgage production and increased fee income on deposit accounts related to new fee structures put into place mid-2001.Operating Expenses
     The following table shows the components of operating expenses for our commercial banking line of business:

Three Months Ended June 30
Six Months Ended June 30,2002
2001
2002
2001(Dollars in thousands)Salaries and employee benefits
$7,572
$6,456
$14,672
$12,422Other expenses
4,870
4,445
9,783
8,793Total operating expenses
$12,442
$10,901
$24,455
$21,215Number of employees at period end(1)


442
430


__________(1)   On a full-time equivalent basis.

Operating expenses during the first half of 2002 were $24.5 million, an increase of 15.3% over the same period of 2001. During the same six-month period, net revenues increased 41.4%, indicative of improved operating efficiency. Balance SheetTotal assets for the quarter ended June 30, 2002 averaged $1.8 billion compared to $1.4 billion as of December 31, 2001. Average earning assets for the quarter ended June 30, 2002 were $1.7 billion compared to $1.3 billion as of December 31, 2001. The most significant component of the increase was an increase in commercial loans as a result of the commercial bank's continued growth and expansion efforts in new markets. Average deposits for the second quarter totaled $1.6 billion, compared to $1.4 billion at year end.Credit QualityThe allowance for loan losses and provision for loan losses have increased in the first six months of 2002 over 2001, reflecting general economic conditions, portfolio growth and increased charge-offs. Nonperforming loans are down from year end but have increased $1.9 million since June 30, 2001. Nonperforming loans are not significantly concentrated in any industry category. The following table shows information about our nonperforming assets in this line of business and our allowance for loan losses:

June 30,
December 31,2002
2001(Dollars in thousands)Nonperforming loans


$4,196
$7,077Other real estate owned


143
100Total nonperforming assets


$4,339
$7,177Nonperforming assets to total assets


0.24%
0.44%Allowance for loan losses


$17,836
$14,643Allowance for loan losses to total loans


1.04%
0.97%Three Months Ended June 30:
Six Months Ended June 30:2002
2001
2002
2001(Dollars in thousands)Provision for loan losses
$2,340
$1,704
$4,510
$2,504Net charge-offs
602
332
1,317
731Net charge-offs to average loans
0.15%
0.11%
0.17%
0.13%


Home Equity Lending

Three Months Ended June 30,
Six Months Ended June 30,2002
2001
2002
2001Selected Income Statement Data:
(Dollars in thousands)Net interest income
$20,457
$14,267
$38,590
$28,876Provision for loan losses
(5,882)
(300)
(12,460)
(300)Gain on sales of loans
363
18,732
7,307
33,308Loan origination fees
0
254
777
351Loan servicing fees
3,482
3,306
7,010
6,287Amortization and impairment of
servicing assets
(1,584)
(611)
(3,242)
(1,167)Trading losses on residual
assets
(5,757)
(2,477)
(13,059)
(2,546)Other income
222
130
576
209Total net revenues
11,301
33,301
25,499
65,018Operating expenses
(18,853)
(23,187)
(37,901)
(49,256)Income (loss) before taxes
(7,552)
10,114
(12,402)
15,762Income taxes
3,021
(4,045)
4,961
(6,305)Net income (loss)
$(4,531)
$6,069
$(7,441)
$9,457Selected Operating Data:Loan volume:Lines of credit
$104,234
$221,172
$205,426
$372,134Loans
163,491
50,233
309,036
80,027Loans sold
0
218,683
180,780
401,975Selected Balance Sheet Data:


June 30,2002
December 31, 2001(Dollars in thousands)Total assets


$894,122
$602,226Home equity loans, net of
allowance for loan losses(2)


634,811
343,972Residual assets -- trading(1)


183,310
199,071Short-term debt


21,500
138,527Long-term debt


434,968
0Shareholders' equity


163,625
135,493Selected Operating Data:Total managed portfolio balance
at end of period


2,098,678
2,064,542Total managed plus subservicing
portfolio balance at end of period


2,409,686
2,317,975Weighted average coupon rate:Lines of credit


10.85%
11.11%Loans


13.57
13.38Net home equity charge-offs to
average managed home equity
portfolio


2.96
1.82Delinquency ratio


4.60
5.07


__________(1)Includes $122 million of residual assets at June 30, 2002 that would be considered credit-enhancing
                            
interest-only strips (CEIOS) under new federal banking regulations.

OverviewIn our home equity lending line of business we originate, purchase, securitize and service home equity loans and lines of credit nationwide. We generally sell the loans through securitization transactions and whole loan sales. We continue to service the loans we securitize and sell. We target creditworthy, homeowning consumers who are active, unsecured credit card debt users. Target customers are underwritten using proprietary models based on several criteria, including the customers' previous use of credit. We market our home equity products through direct mail, telemarketing, mortgage brokers and correspondent lenders nationwide and through Internet-based solicitations. To address the new capital rules discussed later in this section, in 2002 we are using on-balance sheet financing and whole loan sales and eliminating our use of securitization structures requiring gain-on-sale accounting and creation of residual interests. SecuritizationsThe securitization structures we have used prior to 2002 have involved "true sales" of the loans, transferring them off of our balance sheet, and have been accounted for using gain-on-sale treatment in accordance with SFAS 140 or its predecessor SFAS 125. We have recognized gain on the sale of loans in the period in which such loans were sold, although we receive cash (representing the excess spread and servicing fees) over the lives of the loans. Concurrent with recognizing such gain on sale, we have recorded the excess spread as a residual interest, which is indicated on our consolidated balance sheet as part of "trading assets." We recognized gain on the sale of loans in an amount equal to the difference between proceeds and allocated cost basis of the loans sold. Residual interests are recorded at fair value with the subsequent changes in fair value recorded as unrealized gain or loss in our results of operations in the period of the change. We determine fair value on a monthly basis based on a discounted cash flow analysis. These cash flows are projected over the lives of the receivables using prepayment, default, and interest rate assumptions that we believe market participants would use for similar financial instruments.
     Based on changes to our funding practices to adjust to new capital rules discussed later in this section, we have begun using securitization structures that are not accounted for using gain-on-sale treatment but rather as secured borrowings. For these assets funded on-balance sheet, we are now recording interest income over the life of the loan as it is earned, net of interest expense over the life of the bonds and a provision for credit losses inherent in the portfolio. We do not expect this different accounting treatment to affect cash flows related to the loans, nor do we expect that the ultimate total receipt of revenues and profitability derived from our home equity loans will change materially by these different financing structures.Net IncomeOur home equity lending business recorded a net loss of $4.5 million during the three months ended June 30, 2002, compared to net income for the same period in 2001 of $6.1 million.  Year to date a loss of $7.4 million was recorded in 2002 compared to net income of $9.5 million during the same period a year earlier. The decline is reflective of the transition this line of business is making away from securitization structures accounted for under SFAS 140 using gain-on-sale accounting treatment. Net RevenueNet revenue for the three and six months ended June 30, 2002 totaled $11.3 million and $25.5 million, respectively, compared to net revenue for the same periods in 2001 of $33.3 million and $65.0 million.  The reduction in revenues is a result of additional impairment charges (trading losses) against the residual asset reflecting higher anticipated credit losses, increased provision for loan losses as the line of business begins to build an on-balance sheet loan portfolio, and reduced gain-on-sale revenues related to the transition away from gain-on-sale accounting.
     During the second quarter of 2002, our home equity lending business produced $267.7 million of home equity loans, compared to $271.4 million during the same period of 2001, a 1.4% decrease. For the year to date, loan volume was $514.5 million in 2002 and $452.2 million in 2001. Our home equity lending business had $648.1 million of loans in portfolio at June 30, 2002, compared to loans of $346.2 million at December 31, 2001.  Included in the loan balance at June 30, 2002 were $434.0 million of collateralized loans as part of a secured financing.
     Net interest income increased to $20.5 million for the three months ended June 30, 2002, compared to the first quarter of 2001 net interest income of $14.3 million. Net interest income year to date totaled $38.6 million compared to $28.9 million year to date 2001. This line of business earns interest income on loans held on the balance sheet and the accretion of the discount applied to its residual interests.  Interest income on the residual interests totaled $8.8 million and $18.1 million, respectively, during the three- and six-month periods ended June 30, 2002, up 16% and 22%, respectively, from the same periods in 2001, reflecting larger residual balances and a higher discount rate on all residuals.
     Gain on sales of loans for the three months ended June 30, 2002 totaled $0.4 million, compared to $18.7 million during the same period in 2001. Gain on sales of loans totaled $7.3 million for the six-month period ended June 30, 2002, a decrease from $33.3 million during the same period a year earlier.  This significant decline in gains compared to 2001 relates to the transition away from securitization structures requiring gain-on-sale accounting.  We had one securitization accounted for under gain-on-sale accounting during the first quarter of 2002 which involved securitizing $31.7 million of loans as part of a final delivery of a third quarter 2001 securitization transaction.  We also had a securitization of $439 million of loans during the second quarter that we accounted for as a secured financing.  See further discussion of this subject in the section titled, "Securitizations."
     The decrease in loan origination fees in 2002 compared to 2001 relates to the transition the line of business has made to portfolio accounting.  Under this new accounting model, loan origination fees are deferred and accreted into income as an adjustment to net interest income over the life of the underlying loans. Previously, loan origination fees had been recognized as income when the related loans were securitized.
     Amortization and impairment of servicing assets includes amortization expense and valuation adjustments relating to the carrying value of servicing assets. Our home equity lending business recognizes on its balance sheet a servicing asset equal to the discounted cash flows of estimated future servicing income and cost. At June 30, 2002, net servicing assets totaled $17.1 million, compared to a balance of $15.3 million at December 31, 2001. Servicing asset amortization and impairment expense totaled $3.2 million for the first half of 2002, compared to $1.2 million for the same period in 2001.
     Trading losses represent downward adjustments to the carrying values of our residual assets. Trading losses totaled $5.8 million during the second quarter of 2002, compared to losses of $2.5 million during the same period a year earlier.  Trading losses for the first half of 2002 were $13.1 million compared to losses of $2.5 million during the first half of 2001. The higher trading losses in 2002 relate to increased charge-offs we have experienced over the past few quarters reflective of higher occurrence of losses.  Residual interests had a balance of $183.3 million at June 30, 2002 and $199.1 million at December 31, 2001. Included in the market valuation assumptions are estimated lives of the loans, expected losses and discount rates. Management continually evaluates these assumptions to determine the proper carrying values of these items on the balance sheet. Operating ExpensesThe following table shows operating expenses for our home equity lending line of business for the periods indicated:

Three Months Ended June 30,
Six Months Ended June 30,2002
2001
2002
2001(Dollars in thousands)Salaries and employee benefits
$10,701
$13,782
$22,628
$30,394Other
8,152
9,405
15,273
18,862Total operating expenses
$18,853
$23,187
$37,901
$49,256Number of employees at period end


713
663


Operating expenses were $18.9 million and $37.9 million for the three and six months ended June 30, 2002, respectively, compared to $23.2 million and $49.3 million for the same periods in 2001. These decreases relate primarily to decreased salaries and employee benefits related to minority interest compensation.Credit QualityOur home equity lending line of business blends aspects of the credit card and mortgage banking industries. The home equity products are designed to appeal to homeowners who have high levels of unsecured (credit card) debt, who through the use of a debt-consolidating mortgage loan can meaningfully reduce their after-tax monthly cash outflows. We underwrite our loans as if the credit is unsecured, but we believe that the mortgage lien associated with the loan has a meaningful, positive influence on the payment priority of our customers.
     A provision for loan losses of $5.9 million was recorded during the second quarter.  This provision increases the allowance for loan losses to $13.3 million.  This allowance represents our estimate of inherent losses in the $648.1 million on-balance sheet loan portfolio at this line of business.  There was a $0.3 million provision on a small loan portfolio in 2001.  Nearly all of the home equity line of business loans were classified as held for sale at June 30, 2001, and were carried at lower of cost or market.
The following table shows information about our nonperforming assets in this line of business and our allowance for loan losses:

June 30,
December 31,2002
2001(Dollars in thousands)Nonperforming loans


$7,498
$7,210Other real estate owned


1,655
1,904Total nonperforming assets


$9,153
$9,114Nonperforming assets to total assets


1.02%
1.51%Allowance for loan losses


$13,286
$2,220Allowance for loan losses to total loans


2.05%
0.64%For the Three Months Ended June 30:
For the Six Months Ended June 30:2002
2001
2002
2001Provision for loan losses
$5,883
$300
$12,460
$300Net charge-offs
2,682
N/A
5,055
N/ANet charge-offs to average loans
2.1%
N/A
2.1%
N/A


As mentioned earlier, the home equity business began recognizing charge-offs and recording an allowance for loan losses in late 2001 and into 2002 as the line of business moved away from gain-on-sale accounting and began to build a loan portfolio. Included in charge-offs for the three months and six months ended June 30, 2002, were approximately $2.0 million and $3.7 million, respectively, of charge-offs at the home equity lending line of business not charged against the allowance for loan and lease losses account.  Instead, these charge-offs were made directly to a lower of cost or market allowance that was established in late 2001 when we transferred approximately $38 million of home equity loans held for sale to the held for investment category.  This valuation allowance account is expected to be depleted during the third quarter of this year.Servicing MixWe lend nationally in our home equity lending line of business. The following table shows the geographic composition of our home equity servicing portfolio on a percentage basis as of June 30, 2002 and December 31, 2001:

State
June 30,2002
December 31, 2001California
22.7%
23.6%Florida
7.5
7.5Virginia
5.7
5.7Ohio
4.9
5.0Maryland
4.6
4.3All other states
54.6
53.9Total
100%
100%Total servicing portfolio (in thousands)
$2,409,686
$	2,317,975


The following table provides a breakdown of our home equity lending portfolio by product type, outstanding principal balance and weighted average coupon as of June 30, 2002:

Amount
% of Total
Weighted
AverageCoupon(In thousands)Home equity loans < = 100% CLTV
$491,955
20.4%
11.8%Home equity lines of credit < = 100% CLTV
511,228
21.2
9.6Total < = 100% CLTV
1,003,184
41.6
10.7Home equity loans > 100% CLTV
966,383
40.1
14.8Home equity lines of credit > 100% CLTV
306,961
12.7
12.2Total > 100% CLTV
1,273,344
52.8
14.2First mortgages
67,135
2.8
8.8Other (Immediate Credit and Visa Platinum Product)
66,023
2.8
14.0Total
$2,409,686
100%
12.6%


At June 30, 2002, key economic assumptions and the sensitivity of the current fair value of residuals based on projected cash flows to immediate 10% and 25% adverse changes in those assumptions on our owned portfolio are as follows:

June 30, 2002(dollars in thousands)Balance sheet carrying value of residual interests - fair value
$183,310Weighted-average life (in years)
2.67Prepayment speed assumptions (annual rate)
26.19%Impact on fair value of 10% adverse change (28.81%)
$(2,367)Impact on fair value of 25% adverse change (32.74%)
(5,497)Expected credit losses (annual rate)
3.30%Impact on fair value of 10% adverse change (3.63%)
$(8,896)Impact on fair value of 25% adverse change (4.13%)
(22,135)Residual cash flows discount rate (average annual rate)
18.54%Impact on fair value of 10% adverse change (20.39%)
$(6,712)Impact on fair value of 25% adverse change (23.18%)
(15,956)


These sensitivities are hypothetical and should be used with caution.  As the figures indicate, changes in fair value of residuals based on a variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear.  Also in the above table, the effect of a variation in a particular assumption on the fair value of the residual interest is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments but increased credit losses), which might magnify or counteract the sensitivities. Securitization Transactions and AssumptionsThe table below details information with respect to pool sizes and age for the entire portfolio we service, including product for which we no longer retain credit risk. The underlying assumptions included in this table are consistent with the underlying assumptions for the portfolio for which we continue to retain credit risk:

|                                                           | Original Balance
      Sold | Current Balance   | Month Closed | Age of Deal
      (Months) | Actual Annualized
      Loss Rate as a % of Original Balance | Actual Cumulative
      Losses as a % of Original Balance | Original Projected
      Cumulative Losses as a % of Original Balance | Original Projected
      Cumulative Losses (Lifetime)as a % of Original Balance | Remaining
      Projected Cumulative Losses (Lifetime)as a % of Original Balance | Weighted
      Average Future Prepayment Speed Assumption | Weighted
      Average Coupon
|---------------------------------------------------------- | --------------------------- | ----------------- | ------------ | -------------------------- | ------------------------------------------------------------ | --------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | --------------------------------------------------------- | -----------------------------
|Core HELOCs
      (<= 100% CLTV)                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|97-2 HELOCs                                                | $
      69,998              | $
      8,023     | Nov-97       | 56                         | 0.27%                                                        | 1.26%                                                     | 1.30%                                                                 | 1.39%                                                                           | 0.09%                                                                            | 42%                                                       | 11.17%                       
|98-1 HELOCs                                                | $
      124,280             | $
      28,243    | Jun-98       | 49                         | 0.29%                                                        | 1.20%                                                     | 1.38%                                                                 | 1.97%                                                                           | 0.59%                                                                            | 40%                                                       | 9.60%                        
|2000-1 HELOCs                                              | $
      66,803              | $
      31,486    | Sep-00       | 22                         | 0.50%                                                        | 0.91%                                                     | 1.12%                                                                 | 2.16%                                                                           | 1.04%                                                                            | 46%                                                       | 9.75%                        
|2001-1 HELOCs                                              | $
      27,719              | $
      19,094    | Mar-01       | 16                         | 0.46%                                                        | 0.61%                                                     | 0.48%                                                                 | 2.97%                                                                           | 2.49%                                                                            | 34%                                                       | 9.57%                        
|2001-2 HELOCs                                              | $
      64,018              | $
      50,217    | Sep-01       | 10                         | 0.16%                                                        | 0.14%                                                     | 0.63%                                                                 | 4.39%                                                                           | 3.76%                                                                            | 25%                                                       | 9.25%                        
|Total/Weighted
      Average                               | $
      352,818             | $
      137,063   |              | 36                         | 0.31%                                                        | 0.92%                                                     | 1.11%                                                                 | 2.41%                                                                           | 1.30%                                                                            | 35%                                                       | 9.60%                        
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|Core HELs (<=
      100% CLTV)                             |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|97-2 HELs                                                  | $
      60,000              | $
      6,624     | Nov-97       | 56                         | 0.23%                                                        | 1.08%                                                     | 1.21%                                                                 | 1.25%                                                                           | 0.04%                                                                            | 43%                                                       | 13.79%                       
|98-1 HELs                                                  | $
      70,005              | $
      10,660    | Jun-98       | 49                         | 0.15%                                                        | 0.62%                                                     | 1.19%                                                                 | 1.43%                                                                           | 0.24%                                                                            | 50%                                                       | 12.44%                       
|99-1 HELs                                                  | $
      89,999              | $
      18,841    | Feb-99       | 41                         | 0.29%                                                        | 0.99%                                                     | 1.15%                                                                 | 1.39%                                                                           | 0.24%                                                                            | 50%                                                       | 11.68%                       
|99-2 HELs                                                  | $
      45,000              | $
      12,333    | May-99       | 38                         | 0.58%                                                        | 1.84%                                                     | 1.29%                                                                 | 1.86%                                                                           | 0.57%                                                                            | 47%                                                       | 11.36%                       
|99-3 HELs                                                  | $
      107,657             | $
      36,143    | Nov-99       | 32                         | 0.54%                                                        | 1.45%                                                     | 1.26%                                                                 | 1.92%                                                                           | 0.66%                                                                            | 50%                                                       | 12.52%                       
|2000-1 HELs                                                | $
      123,971             | $
      57,110    | Sep-00       | 22                         | 0.53%                                                        | 0.97%                                                     | 0.94%                                                                 | 1.96%                                                                           | 1.02%                                                                            | 47%                                                       | 12.55%                       
|2001-1 HELs                                                | $
      124,951             | $
      68,990    | Mar-01       | 16                         | 0.21%                                                        | 0.28%                                                     | 0.63%                                                                 | 1.97%                                                                           | 1.34%                                                                            | 46%                                                       | 12.38%                       
|2001-2 HELs                                                | $
      227,760             | $
      192,741   | Sep-01       | 10                         | 0.06%                                                        | 0.05%                                                     | 0.11%                                                                 | 4.71%                                                                           | 4.60%                                                                            | 20%                                                       | 11.27%                       
|Total/Weighted
      Average                               | $
      849,343             | $
      403,442   |              | 27                         | 0.32%                                                        | 0.71%                                                     | 0.79%                                                                 | 2.53%                                                                           | 1.74%                                                                            | 35%                                                       | 11.85%                       
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|First Mortgages
      (<= 100% CLTV)                       |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|98-1 First                                                 | $
      7,495               | $
      2,102     | Jun-98       | 49                         | 0.00%                                                        | 0.00%                                                     | 0.77%                                                                 | 0.88%                                                                           | 0.11%                                                                            | 59%                                                       | 8.84%                        
|99-1 First                                                 | $
      60,001              | $
      29,096    | Feb-99       | 41                         | 0.08%                                                        | 0.26%                                                     | 0.70%                                                                 | 0.89%                                                                           | 0.19%                                                                            | 36%                                                       | 8.53%                        
|99-2 First                                                 | $
      15,021              | $
      7,089     | May-99       | 38                         | 0.07%                                                        | 0.24%                                                     | 0.63%                                                                 | 0.84%                                                                           | 0.21%                                                                            | 34%                                                       | 8.54%                        
|99-3 First                                                 | $
      25,246              | $
      15,151    | Nov-99       | 32                         | 0.35%                                                        | 0.95%                                                     | 0.56%                                                                 | 0.86%                                                                           | 0.30%                                                                            | 26%                                                       | 9.21%                        
|2001-1 First                                               | $
      4,058               | $
      3,062     | Mar-01       | 16                         | 0.00%                                                        | 0.00%                                                     | 0.26%                                                                 | 0.75%                                                                           | 0.49%                                                                            | 22%                                                       | 9.64%                        
|Total/Weighted
      Average                               | $
      111,821             | $
      56,500    |              | 38                         | 0.12%                                                        | 0.39%                                                     | 0.65%                                                                 | 0.87%                                                                           | 0.22%                                                                            | 33%                                                       | 8.79%                        
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|125 HELOCs                                                 |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|98-1 HELOC125s                                             | $
      7,499               | $
      1,880     | Jun-98       | 49                         | 1.67%                                                        | 6.84%                                                     | 5.97%                                                                 | 8.65%                                                                           | 2.68%                                                                            | 31%                                                       | 12.29%                       
|99-3 HELOC125s                                             | $
      38,320              | $
      20,080    | Nov-99       | 32                         | 2.39%                                                        | 6.37%                                                     | 5.35%                                                                 | 9.93%                                                                           | 4.57%                                                                            | 26%                                                       | 12.03%                       
|2000-LB1 HELOC125s                                         | $
      29,919              | $
      20,168    | Jun-00       | 25                         | 1.93%                                                        | 4.02%                                                     | 4.60%                                                                 | 10.77%                                                                          | 6.17%                                                                            | 23%                                                       | 12.89%                       
|2001-1 HELOC 125s                                          | $
      30,812              | $
      24,034    | Mar-01       | 16                         | 2.78%                                                        | 3.70%                                                     | 1.84%                                                                 | 11.41%                                                                          | 9.58%                                                                            | 20%                                                       | 13.36%                       
|2001-2 HELOC 125s                                          | $
      70,295              | $
      63,858    | Sep-01       | 10                         | 0.42%                                                        | 0.35%                                                     | 0.77%                                                                 | 15.46%                                                                          | 14.69%                                                                           | 17%                                                       | 11.71%                       
|Total/Weighted
      Average                               | $
      176,845             | $
      130,020   |              | 20                         | 1.88%                                                        | 3.13%                                                     | 2.82%                                                                 | 12.47%                                                                          | 9.65%                                                                            | 20%                                                       | 12.26%                       
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|125 HELs                                                   |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|99-2 HEL125s                                               | $
      119,978             | $
      48,541    | May-99       | 38                         | 1.84%                                                        | 5.83%                                                     | 5.15%                                                                 | 7.57%                                                                           | 2.42%                                                                            | 34%                                                       | 13.70%                       
|99-3 HEL125s                                               | $
      70,658              | $
      33,322    | Nov-99       | 32                         | 2.04%                                                        | 5.43%                                                     | 4.97%                                                                 | 7.82%                                                                           | 2.85%                                                                            | 35%                                                       | 14.84%                       
|2000-A1 HEL125s                                            | $
      123,698             | $
      104,113   | Jun-00       | 25                         | 1.40%                                                        | 2.92%                                                     | 3.35%                                                                 | 5.32%                                                                           | 1.96%                                                                            | 35%                                                       | 13.65%                       
|2000-1 HEL125s                                             | $
      166,330             | $
      62,473    | Sep-00       | 22                         | 1.60%                                                        | 2.94%                                                     | 3.82%                                                                 | 9.06%                                                                           | 5.24%                                                                            | 28%                                                       | 15.25%                       
|2001-1 HEL125s                                             | $
      219,765             | $
      159,235   | Mar-01       | 16                         | 1.04%                                                        | 1.39%                                                     | 2.93%                                                                 | 10.15%                                                                          | 7.22%                                                                            | 24%                                                       | 15.00%                       
|2001-2 HEL125s                                             | $
      313,367             | $
      285,872   | Sep-01       | 10                         | 0.37%                                                        | 0.31%                                                     | 0.38%                                                                 | 15.15%                                                                          | 14.77%                                                                           | 14%                                                       | 14.99%                       
|Total/Weighted
      Average                               | $
      1,013,796           | $
      693,556   |              | 20                         | 1.39%                                                        | 2.30%                                                     | 2.75%                                                                 | 10.46%                                                                          | 7.71%                                                                            | 23%                                                       | 14.81%                       
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|PNB 99-1 HELOCs
      (<= 100% CLTV) Acquired October 2000 |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|PNB 1999-1 HELOC                                           | $
      500,000             | $
      146,380   | May-99       | 38                         | 0.82%                                                        | 2.61%                                                     | 3.01%                                                                 | 4.12%                                                                           | 1.11%                                                                            | 29%                                                       | 10.62%                       
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|Immediate Credit(Program discontinued)                     |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|99-3 HEL
      ImmedCredit                                 | $
      524                 | $
      196       | Nov-99       | 32                         | 5.35%                                                        | 14.28%                                                    | 13.34%                                                                | 24.60%                                                                          | 11.26%                                                                           | 18%                                                       | 14.90%                       
|99-3 HELOC
      ImmedCredit                               | $
      13,903              | $
      4,700     | Nov-99       | 32                         | 7.83%                                                        | 20.89%                                                    | 13.06%                                                                | 24.10%                                                                          | 11.04%                                                                           | 23%                                                       | 13.28%                       
|2000-LB1 HELOC
      ImmedCredit                           | $
      69,267              | $
      32,479    | Jun-00       | 25                         | 6.96%                                                        | 14.51%                                                    | 13.20%                                                                | 27.37%                                                                          | 14.17%                                                                           | 25%                                                       | 13.71%                       
|Total/Weighted
      Average                               | $
      83,694              | $
      37,375    |              | 26                         | 7.13%                                                        | 15.57%                                                    | 13.18%                                                                | 26.81%                                                                          | 13.63%                                                                           | 25%                                                       | 13.66%                       
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              
|Grand
      Total/Weighted Average                         | $
      3,088,317           | $
      1,604,336 |              | 27                         | 0.92%                                                        | 2.09%                                                     | 2.28%                                                                 | 6.54%                                                                           | 4.27%                                                                            | 28%                                                       | 12.78%                       
|                                                           |                             |                   |              |                            |                                                              |                                                           |                                                                       |                                                                                 |                                                                                  |                                                           |                              

Home Equity ServicingOur home equity lending business continues to service loans it has securitized. We earn a servicing fee of approximately 75 to 100 basis points of the outstanding principal balance of the securitized loans treated as sales under generally accepted accounting principles. For loans treated as secured financings, the servicing fee is implicit in the yield of the underlying loans. The following table shows certain information about our home equity servicing portfolio, which includes loans held on the balance sheet as well as securitized loans:

June 30, 2002
December 31, 2001(In thousands)Managed portfolio
including subservicing
$2,409,686
$ 2,317,975Managed portfolio
2,098,678
2,064,542Delinquency ratio
4.60%
5.07%


In our home equity lending business, we retain credit risk on loans we originate, whether funded on- or off-balance sheet. Delinquency rates and losses on our managed portfolio result from a variety of factors, including loan seasoning, portfolio mix and general economic conditions. The 30-day and greater delinquency ratio was 4.60% at June 30, 2002, and 5.07% at December 31, 2001. The credit quality of the home equity loans underlying previous securitizations continues to perform within management's long-term expectations, despite the current economic uncertainty.Impact of Recent Change to Regulatory Capital RulesThe federal banking regulators, including the Federal Reserve, our principal regulator, have adopted revised regulatory capital standards regarding the treatment of certain recourse obligations, direct credit substitutes, residual interests in asset securitizations and other securitized transactions. In general, the new rules require a banking institution that has certain credit-enhancing residual interests ("CEIOS")in an amount that exceeds 25% of its Tier 1 capital to deduct the after-tax excess amount of these CEIOS from Tier 1 capital for purposes of computing risk-based capital ratios.
     The new capital standards became effective on January 1, 2002, for new residual interests related to any transaction covered by the revised rules that settles after December 31, 2001. For transactions settled before January 1, 2002, application of the new capital treatment to the residuals created will be delayed until December 31, 2002. During the first quarter of 2002, our home equity lending line of business completed the collateral delivery required as part of a third quarter 2001 securitization transaction.  For purposes of these new rules, this delivery is considered settled prior to January 1, 2002.
     We believe these new rules apply to many, if not all, of the securitization transactions historically done by our home equity line of business to fund loan production. The residual assets we now own exceed the 25% concentration limit in the new capital treatment rules.  The CEIOS included in our residual assets as of June 30, 2002 comprised 28% of our consolidated Tier 1 capital.  By the end of 2002, we expect our CEIOS to have declined below the 25% concentration limit.
     We have financed the significant growth in our home equity lending line of business to date using transaction structures that create residual interests through "gain-on-sale" accounting -- transactions accounted for as sales under SFAS 140. To mitigate the impact of the new rules, beginning in 2002 we have eliminated our use of these securitization structures that require gain-on-sale accounting treatment at least as long as CEIOS exceed 25% of Tier 1 capital. We believe using on-balance sheet financing or whole loan sale transactions rather than using off-balance sheet gain-on-sale treatment under SFAS 140 will allow continued access to the capital markets for cost-effective, matched funding of our loan assets, while not meaningfully affecting or changing our cash flows, nor changing the longer term profitability of our home equity lending operation.
     Changing our securitization practices has significantly affected the financial results of our home equity line of business in 2002. The key financial impacts have included:

- By using on-balance sheet financing to fund our home equity loan originations, we are required to change the timing of revenue recognition on these assets under generally accepted accounting principles. For assets funded on-balance sheet, we record interest income over the life of the loans, as it is earned, net of interest expense over the life of the bonds and a provision for credit losses inherent in the portfolio. For assets funded through securitization transactions accounted for as a sale under SFAS 140, we have recorded revenue as gain-on-sale at the time of loan sale based on the difference between proceeds and allocated cost basis of the loans sold. We have also recognized residual interests based on the discounted present value of anticipated revenue streams over the expected lives of the loans. This different accounting treatment does not, however, affect cash flows related to the loans, and management expects that the ultimate total receipt of revenues and profitability derived from our home equity loans will be relatively unchanged by these different financing structures.

- Due to the extension of the period during which revenue is recognized under the new financing structures we are pursuing, we are reducing the rate of growth in production and related expenses in the home equity lending line of business to more closely align anticipated revenue recognition and expenses under this new model. This process is now under way. However, while we anticipate continued profitability on a consolidated basis, we currently expect to report a loss in 2002 in our home equity lending line of business as we make this transition.

- After the initial transition period, as the portfolio of on-balance sheet home equity loans continues to grow, we should record increased levels of net interest income sufficient to cover ongoing expenses and credit losses. We would then expect to be in a position to resume profitable growth in this line of business. We may also pursue selective opportunities to sell whole loans in cash sale transactions if attractive terms can be negotiated. We completed one such transaction during the first quarter of 2002.  We currently anticipate that our home equity lending line of business will return to profitability in the third and fourth quarters of 2002, although total results for the year are expected to be a loss.

Commercial FinanceIn our commercial finance line of business, we originate transactions from an established North American network of brokers and vendors and through direct sales to franchisees. The majority of our loans and leases are full payout (i.e., no residual), small-ticket assets secured by commercial equipment. We finance a variety of types of commercial and office equipment and try to limit the industry and geographic concentrations in our loan and lease portfolio.
     The following table shows selected financial information for our commercial finance line of business for the periods indicated:



|                                                                         | Three Months Ended June 30, | Six Months Ended June 30,
|------------------------------------------------------------------------ | --------------------------- | -------------------------
|                                                                         | 2002                        | 2001                     
|Selected Income Statement Data:                                          | (Dollars in thousands)     
|Net interest income                                                      | $3,726                      | $2,144                   
|Provision for loan and lease losses                                      | (1,281)                     | (754)                    
|Noninterest income                                                       | 842                         | 349                      
|Total net revenues                                                       | 3,287                       | 1,739                    
|Salaries, pension, and other employee
expense                            | (2,107)                     | (1,452)                  
|Other expense                                                            | (942)                       | (773)                    
|Income (loss) before taxes and
minority interest                         | 238                         | (486)                    
|Income taxes                                                             | (118)                       | 69                       
|Income (loss) before minority interest                                   | 120                         | (417)                    
|Minority interest                                                        | 8                           | 211                      
|Income (loss) before cumulative effect
of change in accounting principle | 128                         | (206)                    
|Cumulative effect of change in
accounting principle                      | 0                           | 0                        
|Net Income (Loss)                                                        | $128                        | $(206)                   
|Selected Operating Data                                                  |                             |                          
|Net charge-offs                                                          | $1,251                      | $1,034                   
|Total fundings of loans and leases                                       | 46,184                      | 39,705                   
|Selected Balance Sheet Data at End of Period:                            |                             |                          
|                                                                         |                             | (Dollars in thousands)   
|Total assets                                                             |                             |                          
|Leases                                                                   |                             |                          
|Allowance for lease losses                                               |                             |                          
|Shareholders' equity                                                     |                             |                          
|Net interest margin                                                      |                             |                          

OverviewDuring the three and six months ended June 30, 2002, our commercial finance line of business had net income of $0.1 million and $0.5 million, compared to losses of $0.2 million and $0.8 million for the same periods of 2001. Prior to a cumulative effect of accounting change related to the reversal of unamortized negative goodwill related to a 2000 acquisition, the line of business broke-even during the first half of 2002.  The one-time accounting change was required under SFAS 142, "Goodwill and Other Intangible Assets," a new accounting standard effective January 1, 2002.
      Our commercial finance line of business originated $46.2 million in leases during the second quarter of 2002, and $85.9 million year to date, compared to $39.7 million for the second quarter of 2001 and $73.6 million year to date. The line of business portfolio at quarter end was $301.3 million, compared to its portfolio at December 31, 2001 that totaled $264.8 million.Credit QualityWe had nonperforming loans and leases at June 30, 2002 totaling $4.6 million, compared to non-performing loans and leases at December 31, 2001 totaling $3.9 million. Allowance for loan and lease losses at June 30, 2002 was $5.3 million, representing 1.74% of total loans and leases, compared to a balance at December 31, 2001 of $4.6 million, representing 1.73% of total loans and leases. Net charge-offs recorded by the commercial finance line of business during the first half of 2002 were $2.1 million. Net charge-offs for the first half of 2001 were $1.5 million. The increased nonperformings, charge-offs and allowance was principally the result of loan and lease growth. The following table shows information about our nonperforming assets in this line of business and our allowance for loan and lease losses:



June 30,
December 31,2002
2001(Dollars in thousands)Nonperforming loans and leases


$4,551
$3,923Nonperforming assets to total assets


1.52%
1.47%Allowance for loan and lease losses


$5,254
$4,587Allowance for loan and lease losses
to total loans and leases


1.74%
1.73%Three Months Ended June 30:
Six Months Ended June 30:2002
2001
2002
2001(Dollars in thousands)Provision for loan and lease losses
$1,281
$754
$2,715
$1,408Net charge-offs
1,251
1,034
2,129
1,494Net charge-offs to average loans and
leases
1.76%
2.27%
1.54%
1.65%


The following table provides certain information about our loan and lease portfolio at the dates shown:



|                          | June 30,               | December 31,
|------------------------- | ---------------------- | ------------
|                          | 2002                   | 2001        
|                          | (Dollars in thousands)
|Domestic loans and leases | $201,947               | $186,560    
|Weighted average yield    | 10.38%                 | 10.60%      
|Delinquency ratio         | 1.30                   | 2.16        
|Canadian leases(1)        | $99,338                | $78,267     
|Weighted average yield    | 11.26%                 | 11.17%      
|Delinquency ratio         | 1.51                   | 1.69        

__________(1)  In U.S. dollars.

Venture CapitalThe following table shows selected financial information for our venture capital line of business for the periods indicated:



|                                              | Three Months Ended June 30, | Six Months Ended June 30,
|--------------------------------------------- | --------------------------- | -------------------------
|                                              | 2002                        | 2001                     
|Selected Income Statement Data:               | (In thousands)             
|Net interest income (expense)                 | $12                         | $(121)                   
|Mark-to-market adjustment on
investments      | (0)                         | (2,202)                  
|Noninterest income                            | 117                         | 135                      
|Total net revenues                            | 129                         | (2,188)                  
|Operating expense                             | (135)                       | (301)                    
|Loss before taxes                             | (6)                         | (2,489)                  
|Income tax benefit                            | 2                           | 926                      
|Net loss                                      | $(4)                        | $(1,563)                 
|Selected Balance Sheet Data at End of Period: |                             |                          
|                                              |                             |                          
|Investment in portfolio companies (cost)      |                             |                          
|Mark-to-market adjustment                     |                             |                          
|Carrying value of portfolio
companies         |                             |                          



The following tables show our daily average consolidated balance sheet, interest rates and interest differential at the dates indicated:

|                                               | June 30, 2002   | June 30, 2001
|---------------------------------------------- | --------------- | -------------
|                                               | Average Balance | Interest     
|Assets                                         | (In thousands) 
|Interest-earning assets:                       |                 |              
|Interest-bearing deposits with banks           | $20,450         | $159         
|Federal funds sold                             | 2,691           | 30           
|Trading assets                                 | 204,936         | 18,068       
|Taxable investment securities                  | 33,476          | 1,236        
|Tax-exempt investment securities(1)            | 4,296           | 171          
|Loans held for sale                            | 498,117         | 19,096       
|Loans and leases, net of unearned income(1)(2) | 2,365,034       | 99,899       
|Total interest-earning assets                  | 3,129,000       | $138,659     
|Noninterest-earning assets:                    |                 |              
|Cash and due from banks                        | 98,224          |              
|Premises and equipment, net                    | 34,733          |              
|Other assets                                   | 368,880         |              
|Less allowance for loan and lease losses       | (28,658)        |              
|Total assets                                   | $3,602,179      |              



|                                                       | June 30, 2002   | June 30, 2001
|------------------------------------------------------ | --------------- | -------------
|                                                       | Average Balance | Interest     
|Liabilities and Shareholders' Equity                   |                 |              
|Interest-bearing liabilities:                          |                 |              
|Money market checking                                  | $134,318        | $353         
|Money market savings                                   | 567,517         | 4,349        
|Regular savings                                        | 55,196          | 791          
|Time deposits                                          | 1,077,817       | 22,406       
|Short-term borrowings                                  | 573,979         | 7,524        
|Long-term debt                                         | 34,655          | 1,36         
|Trust preferred securities distribution                | 198,500         | 9,638        
|Total interest-bearing liabilities                     | 2,641,982       | $46,424      
|                                                       |                 |              
|Noninterest-bearing liabilities:                       |                 |              
|Demand deposits                                        | 457,834         |              
|Other liabilities                                      | 200,418         |              
|Shareholders' equity                                   | 301,945         |              
|Total liabilities and shareholders' equity             | $3,602,179      |              
|Net interest income                                    |                 | $92,235      
|Net interest income to average interest-earning assets |                 |              
|                                                       |                 |              

__________(1) Interest is reported on a fully taxable equivalent basis using a federal income tax rate of 35%.(2) For purposes of these computations, nonaccrual loans are included in daily average loan amounts outstanding.(3) Annualized for interim periods.Provision for Loan and Lease Losses
     The consolidated provision for loan and lease losses for the second quarter of 2002 was $9.5 million, compared to $2.8 million for the same period in 2001. Year to date, the provision for 2002 was $19.8 million, compared to $4.4 million in 2001. More information on this subject is contained in the section on credit risk.Noninterest IncomeNoninterest income during the three months ended June 30, 2002 totaled $51.1 million, compared to $68.4 million for the second quarter of 2001. Noninterest income of $107.0 million was recorded for the six months ended June 30, 2002 and $130.2 million for the same period in 2001. The decrease was primarily a result of our move away from gain-on-sale accounting at the home equity lending line of business.  For further discussion, see the "Home Equity Lending" section. Noninterest ExpenseNoninterest expenses for the three and six months ended June 30, 2002 totaled $76.3 million and $150.8 million, respectively, down slightly compared to $78.4 million and $153.0 million for the same periods in 2001. Consolidated Balance Sheet AnalysisTotal assets at June 30, 2002 were $3.8 billion, up 11.0% from December 31, 2001. However, we believe that changes in the average balance sheet are a more accurate reflection of the actual changes in the level of activity on the balance sheet. Average assets for the first half of 2002 were $3.6 billion, up 14.8% from December 31, 2001.  The growth in the consolidated balance sheet reflects increases in portfolio loans and leases at the commercial banking, home equity lending and commercial finance lines of business. LoansOur commercial loans are extended primarily to Midwest regional businesses and our leases are originated throughout the United States and Canada. We also extend credit to consumers nationally through mortgages, installment loans and revolving credit arrangements. The majority of the remaining portfolio consists of residential mortgage loans (1-4 family dwellings) and mortgage loans on commercial property. Loans by major category for the periods presented were as follows:

|                                       | June 30,       | December 31,
|-------------------------------------- | -------------- | ------------
|                                       | 2002           | 2001        
|                                       | (In thousands)
|Commercial, financial and agricultural | $1,273,429     | $1,055,307  
|Real estate construction               | 278,369        | 287,228     
|Real estate mortgage                   | 791,636        | 490,111     
|Consumer                               | 29,906         | 38,489      
|Direct lease financing:                |                |             
|Domestic                               | 248,895        | 232,527     
|Canadian                               | 116,689        | 91,816      
|Unearned income:                       |                |             
|Domestic                               | (45,659)       | (44,183)    
|Canadian                               | (17,350)       | (13,548)    
|Total                                  | $2,675,915     | $2,137,747  



Investment Securities
The following table shows the composition of our investment securities at the dates indicated:



|                                                 | June 30,       | December 31,
|------------------------------------------------ | -------------- | ------------
|                                                 | 2002           | 2001        
|                                                 | (In thousands)
|U.S. Treasury and government obligations         | $29,283        | $29,329     
|Obligations of states and political subdivisions | 4,255          | 4,425       
|Mortgage-backed securities                       | 2,504          | 4,224       
|Other                                            | 406            | 818         
|Total                                            | $36,448        | $38,796     

Deposits



|                                       | June 30,       | December 31,
|-------------------------------------- | -------------- | ------------
|                                       | 2002           | 2001        
|                                       | (In thousands)
|Tier 1 capital                         | $423,613       | $295,021    
|Tier 2 capital                         | 158,220        | 173,316     
|Total risk-based capital               | $581,833       | $468,337    
|Risk-weighted assets                   | $4,666,089     | $4,329,973  
|Risk-based ratios:                     |                |             
|Tier 1 capital                         | 9.08%          | 6.81%       
|Total capital                          | 12.47          | 10.82       
|Tier 1 leverage ratio                  | 11.43          | 9.36        
|Ending shareholders' equity to assets  | 8.60           | 6.75        
|Average shareholders' equity to assets | 8.38           | 6.65        

At June 30, 2002, our total risk-adjusted capital ratio was 12.47% compared to 10.0%, which is required to be considered "well-capitalized" by the regulators. At December 31, 2001, our total risk-adjusted capital ratio was 10.8%. Our ending equity to assets ratio at June 30, 2002 was 8.60% compared to 6.75% at December 31, 2001. However, as previously discussed, temporary conditions that existed at year end make the average balance sheet ratio a more accurate measure of capital. Our average equity to assets for the six-month period ended June 30, 2002 was 8.38% compared to 6.65% for the year 2001.  The increase in our capital ratios is primarily the result of our February 2002 common stock offering mentioned above.
     To assist Irwin Union Bank and Trust in generating deposits in new markets, we began a program in 1999 to issue our non-coupon, convertible preferred shares to certain qualified investors thought to be in a position to support deposit growth. Under the program, each preferred share was issued for cash at approximately the market price of one common share and would automatically convert into one common share at a determined future date. If a banking branch reached a specified level of deposits prior to the conversion date, the number of common shares into which a preferred share would convert would be increased by as much as 25%, depending upon the date on which the deposit level was attained. On June 28, 2002, all 96,336 preferred shares under this program converted, at the 25% premium, into 120,441 common shares.InflationSince substantially all of our assets and liabilities are monetary in nature, such as cash, securities, loans and deposits, their values are less sensitive to the effects of inflation than to changes in interest rates. We attempt to control the impact of interest rate fluctuations by managing the relationship between interest rate sensitive assets and liabilities.Risk ManagementWe are engaged in businesses that involve the assumption of risks including:

- Credit risk
- Liquidity risk
- Interest rate risk
- Regulatory risk
- Operational risk

Each line of business that assumes risk uses a formal process to manage these risks. In all cases, the objectives are to ensure that risk is contained within prudent levels and that we are adequately compensated for the level of risk assumed. Our Chairman, President, and Chief Financial Officer participate in each of our subsidiaries' risk management process. We have recently implemented certain steps designed to enhance our consolidated risk management function. We have instituted a company-wide risk management system at the holding company level and have adopted board policies that establish specified growth and residual asset concentration limits. In addition to strengthening our overall operational and financial risk management, these changes are designed to provide independent review and enhancement of our home equity valuation models, ensure consistency in the business modeling methodologies we use relating to our different lines of business, and establish independent control of our risk reporting, surveillance and model parameter changes.Credit Risk.The assumption of credit risk is a key source of earnings for the home equity lending, commercial banking and commercial finance lines of business. In addition, the mortgage banking line of business assumes some credit risk, although its mortgages typically are insured.
     The credit risk in the loan portfolios of the home equity lending line of business and commercial bank have the most potential to have a significant effect on our consolidated financial performance. These lines of business manage credit risk through the use of lending policies, credit analysis and approval procedures, periodic loan reviews, and personal contact with borrowers. Loans over a certain size are reviewed by a loan committee prior to approval.
     The allowance for loan and lease losses is an estimate based on our judgement. The allowance is maintained at a level we believe is adequate to absorb probable losses inherent in the loan and lease portfolio. We compute the allowance based on an analysis that incorporates both a quantitative and qualitative element. The quantitative component of the allowance reflects expected losses resulting from analysis developed through specific credit allocations for individual loans and historical loss experience for each loan category. The specific credit allocations are based on a regular analysis of all loans over a fixed-dollar amount where the internal credit rating is at or below a predetermined classification. The historical loan loss component is applied to all loans that do not have a specific reserve allocated to them. Loans are segregated by major product type, with an estimated loss ratio applied against each. The loss ratio is generally based upon the previous three years' loss experience for each loan type.
     The qualitative portion of the allowance reflects management's estimate of probable inherent but undetected losses within the portfolio. This assessment is performed via the evaluation of eight specific qualitative factors as outlined in regulatory guidance. We perform the quantitative and qualitative assessments on a quarterly basis.
     Loans and leases that are determined by management to be uncollectible are charged against the allowance. The allowance is increased by provisions against income and recoveries of loans and leases previously charged off. The table below analyzes the consolidated allowance for loan and lease losses over the periods presented. Qualitative reserves are allocated to individual loan categories in the table.
     Net charge-offs for the three months ended June 30, 2002 were $4.6 million, or 0.78% of average loans, compared to $1.3 million, or 0.41% of average loans during the second quarter of 2001. Net charge-offs for the six month period ended June 30, 2002, were $8.6 million compared to $2.4 million during the same period in 2001. At June 30, 2002, the allowance for loan and lease losses was 1.39% of outstanding loans and leases, compared to 1.04% at year-end 2001.  The increase in charge-offs and allowance is a result of loan growth, deteriorating credit quality in late 2001 and early 2002, as well as the new balance sheet treatment of home equity loans. As mentioned earlier, the home equity business began recognizing charge-offs and recording an allowance for loan losses in late 2001 and into 2002 as the line of business moved away from gain-on-sale accounting and began to build a loan portfolio. Included in the second quarter charge-offs were approximately $2.0 million of charge-offs at the home equity lending line of business not charged against the allowance for loan and lease losses account.  Instead, these charge-offs were made directly to a lower of cost or market allowance that was established in late 2001 when we transferred approximately $38 million of home equity loans held for sale to the held for investment category.  This valuation allowance account is expected to be depleted during the third quarter of this year.
     Total nonperforming loans and leases at June 30, 2002, were $17.3 million, compared to $19.2 million at December 31, 2001. Nonperforming loans and leases as a percent of total loans and leases at June 30, 2002 were 0.65%, compared to 0.90% at December 31, 2001. The most notable improvement in nonperforming loans compared to year end was at the commercial banking line of business where nonperforming loans declined to $4.2 million, a decrease of 41% compared to year end.   
     Other real estate we owned totaled $4.6 million at June 30, 2002, up from $4.4 million at December 31, 2001. The increase in 2002 was primarily attributable to the mortgage banking lines of business. Total nonperforming assets at June 30, 2002 were $21.8 million, or 0.57% of total assets. Nonperforming assets at December 31, 2001, totaled $23.5 million, or 0.68% of total assets.
     The following table shows information about our nonperforming assets at the dates shown:



June 30,
December 31,2002
2001Accruing loans past due 90 days or more:
(In thousands)Commercial, financial and agricultural loans
$38
$1,146Real estate mortgages
--
--Consumer loans
305
157Lease financing:Domestic
541
1,624Canadian
78
68962
2,995Nonaccrual loans and leases:Commercial, financial and agricultural loans
3,356
5,066Real estate mortgages
8,470
8,115Consumer loans
535
708Lease financing:Domestic
2,690
1,180Canadian
1,259
1,08816,310
16,157Total nonperforming loans and leases
17,272
19,152Other real estate owned:Other real estate owned
4,577
4,388Total nonperforming assets
$21,849
$23,540Nonperforming loans and leases to total loans and leases
0.65%
0.90%Nonperforming assets to total assets
0.57%
0.68%


Loans that are past due 90 days or more are placed on nonaccrual status unless, in management's opinion, there is sufficient collateral value to offset both principal and interest. The $21.8 million of nonperforming assets at June 30, 2002, were concentrated at our lines of business as follows:



|Mortgage banking    | $3.8 million
|------------------- | ------------
|Home equity lending | 9.2 million 
|Commercial banking  | 4.3 million 
|Commercial finance  | 4.5 million 

For the periods presented, the year-end balances of any restructured loans are reflected in the table above either in the amounts shown for "accruing loans past due 90 days or more" or in the amounts shown for "nonaccrual loans and leases."
     No loan concentrations existed of more than 10% of total loans to borrowers engaged in similar activities that would be similarly affected by economic or other conditions.
     Generally, the accrual of income is discontinued when the full collection of principal or interest is in doubt, or when the payment of principal or interest has become contractually 90 days past due unless the obligation is both well secured and in the process of collection.Liquidity Risk.Liquidity is the availability of funds to meet the daily requirements of our business. For financial institutions, demand for funds results principally from extensions of credit and withdrawal of deposits. Liquidity is provided by asset maturities or sales and through deposits and short-term and long-term borrowings.
     The objectives of liquidity management are to ensure that funds will be available to meet current and future demands and that funds are available at a reasonable cost. We manage liquidity via daily interaction with the lines of business and periodic liquidity planning sessions. Since loans are less marketable than securities, the ratio of total loans to total deposits is a traditional measure of liquidity for banks and bank holding companies. At June 30, 2002, the ratio of loans and loans held for sale to total deposits was 137.9%. We are comfortable with this relatively high level due to our position in first mortgage loans held for sale and second mortgage loans financed through matched-term secured financing. The first mortgage loans carry an interest rate at or near current market rates for first mortgage loans. Since we sell a high percentage of these first mortgage loans within a 30-day period, our liquidity is significantly higher than the ratio would suggest by traditional standards. In addition, we have a total of $0.4 billion of matched-term secured funding for our second mortgage loans.  Excluding first mortgage loans held for sale and second mortgage loans funded with secured financing, the loan-to-deposit ratio was 99.3% at June 30, 2002.Interest Rate Risk.Because assets are not perfectly match funded with like-term liabilities, our earnings are affected by interest rate changes. Interest rate risk is measured by the sensitivity of both net interest income and fair market value of net interest sensitive assets to changes in interest rates.
     An asset/liability management committee (ALMC) at each of our lines of business monitors the repricing structure of assets, liabilities and off-balance sheet items and uses a financial simulation model to measure interest rate risk over multiple interest rate scenarios. Our parent company ALMC oversees the interest rate risk profile of all of our lines of business as a whole and is represented on each line of business ALMC. We incorporate many factors into the financial model, including prepayment speeds, net interest margin, fee income and a comprehensive mark-to-market valuation process. We reevaluate risk measures and assumptions regularly and enhance modeling tools as needed.
     Our commercial banking, home equity lending, and commercial finance lines of business assume interest rate risk in the pricing of their loans and leases, and manage this risk by adjusting the duration of their interest sensitive liabilities and through the use of off-balance sheet hedging.
     Our mortgage banking line of business assumes interest rate risk by entering into commitments to extend loans to borrowers at a fixed rate for a limited period of time. We hold closed loans only temporarily until a pool is formed and sold in a securitization or under a flow sale arrangement. To mitigate the risk that interest rates will rise between loan origination and sale, the mortgage bank buys commitments to deliver loans at a fixed price.
     Our mortgage and home equity lending lines of business also are exposed to the risk that interest rates will decline, increasing prepayment speeds on loans and decreasing the value of servicing assets and residual interests. Some offsets to these exposures exist in the form of strong production operations, selective sales of servicing rights, match-funded asset-backed securities sales and the use of financial instruments to hedge the economic performance of the assets.
     The following tables reflect our estimate of the present value of interest sensitive assets, liabilities, and off-balance sheet items at June 30, 2002. In addition to showing the estimated fair market value at current rates, they also provide estimates of the fair market values of interest sensitive items based upon a hypothetical move both up and down 100 and 200 basis points in the entire yield curve.
     The first table is an economic analysis showing the present value impact of changes in interest rates, assuming a comprehensive mark-to-market environment. The second table is an accounting analysis showing the same net present value impact, adjusted for expected GAAP treatment. Neither analysis takes into account the book values of the noninterest sensitive assets and liabilities (such as cash, accounts receivable, and fixed assets), the values of which are not directly determined by interest rates.
     The analyses are based on discounted cash flows over the remaining estimated lives of the financial instruments. The interest rate sensitivities apply only to transactions booked as of June 30, 2002, although certain accounts such as "Official Checks and Due From" are "normalized" whereby the three- or six-month average balance is included rather than the quarter-end balance in order to avoid having the analysis skewed by a significant increase or decrease to an account balance at quarter-end.

The net asset value sensitivities do not necessarily represent the changes in the lines of business' net asset value that would actually occur under the given interest rate scenarios, as sensitivities do not reflect changes in value of the companies as a going concern, nor consider potential rebalancing or other hedging actions that might be taken in the future under asset/liability management.
     Specifically, the volume of derivative contracts entered into to economically hedge mortgage servicing rights, or MSRs, fluctuates from quarter to quarter, depending upon market conditions. We monitor hedge positions frequently and rebalance them as needed. It is unlikely that the volume of hedge positions would remain constant over large fluctuations in interest rates. MSR hedge contracts appear under the category "Interest Sensitive Financial Derivatives" in the tables below.

Also note a categorization change whereby all non-interest bearing escrow deposits related to our first mortgage business are now being classified under the category "Deposits" in the Economic Value table below.  Previously, some of these deposits were excluded from the table since they are non-interest bearing.  While escrow deposits remain non-interest bearing, we believe the reclassification  to be more consistent with our overall approach.  The interest sensitivity of these deposits has been, and will continue to be, reported under the category "Mortgage Servicing Rights."  For the 6/30/02 Economic Value table, approximately $140 million of such escrow deposits, which would have previously been excluded from the table, are included under the category "Deposits."  The change has no impact on the GAAP-Based Value table below.
 Economic Value Change Method

|                                                            | Present Value at June 30, 2002,
Change in Interest Rates of:
|----------------------------------------------------------- | ------------------------------------------------------------
|                                                            | -2%                                                         
|                                                            | (In thousands)                                              
|Interest Sensitive AssetsLoans and other assets             | $2,985,062                                                  
|Loans held for sale                                         | 437,809                                                     
|Mortgage servicing rights                                   | 99,803                                                      
|Residual interests                                          | 160,485                                                     
|Interest sensitive financial  derivatives                   | 107,900                                                     
|Total interest sensitive
assets incl. financial derivatives | 3,791,059                                                   
|Interest SensitiveLiabilitiesDeposits                       | (2,276,714)                                                 
|Short-term borrowings                                       | (358,237)                                                   
|Long-term debt                                              | (698,829)                                                   
|Total interest sensitive
Liabilities                        | (3,333,780)                                                 
|Net market value as of  June 30, 2002                       | $    457,279                                                
|Change from current                                         | $   (21,689)                                                
|Net market value as of December
31, 2001                    | $    363,161                                                
|Potential change                                            | $   (68,614)                                                

GAAP-Based Value Change Method

|                                          | Present Value at June 30, 2002,
Change in Interest Rates of:
|----------------------------------------- | ------------------------------------------------------------
|                                          | -2%                                                         
|Interest Sensitive Assets                 | (In thousands)                                              
|Loans and other assets(1)                 | $              --                                           
|Loans held for sale                       | 437,389                                                     
|Mortgage servicing rights                 | 99,803                                                      
|Residual interests                        | 160,485                                                     
|Interest sensitive financial
Derivatives  | 107,900                                                     
|Total interest sensitive Assets           | 805,577                                                     
|Interest Sensitive LiabilitiesDeposits(1) | --                                                          
|Short-term borrowings(1)                  | --                                                          
|Long-term debt(1)                         | --                                                          
|Total interest sensitive liabilities(1)   | --                                                          
|Net market value as of June 30, 2002      | $    805,577                                                
|Change from current                       | $   (52,111)                                                
|Net market value as of December 31, 2001  | $ 1,085,076                                                 
|Potential change                          | $   (60,902)                                                

__________(1) Value does not change in GAAP presentation.

Regulatory risk.  The financial services business is highly regulated.  Statutes and regulations may change in the future, and we cannot predict what effect these changes, if made, will have on our operations.  It should be noted that the supervision, regulation and examination of banks, thrifts and mortgage companies by regulatory agencies are intended primarily for the protection of depositors and other customers rather than shareholders of these institutions.
We are registered as a "bank holding company" with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended and the related regulations, referred to as the BHC act.  We are subject to regulation, supervision and examination by the Federal Reserve and as part of this process, we must file reports and additional information with the Federal Reserve. The regulation, supervision and examinations occur at the local, state and federal levels and involve, but are not limited to, the following areas:

> -minimum capital requirements
> -consumer protection
> -community reinvestment
> -deposit insurance

Operational risk. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.  Irwin Financial, like other financial services organizations, is exposed to a variety of operational risks.  These risks include the potential for processing errors, internal or external fraud, failure of computer systems, and external events that are beyond the control of the corporation, such as natural disasters.
     The Board of Directors of Irwin Financial Corporation has ultimate accountability for the level of operational risk assumed by the Corporation.  The Board guides management by approving the business strategy and significant policies of the Corporation.  Management and the Board have also established a control environment that encourages a high degree of control consciousness and raising of potential problems to senior management and the Board on a timely basis.
     Pursuant to the direction from the Board, primary responsibility for the management of operational risk rests with the managers of our business units, who are responsible for establishing and maintaining internal control procedures that are appropriate for their operations.  In 2002, we have started implementing a multi-year program to provide a more integrated firm-wide approach for the identification, measurement, monitoring and mitigation of operational risk.  The new operational risk oversight function reports to the Audit Committee of the Board of Directors and to the Executive Risk Management Committee of the Corporation, which is led by the Chairman of the Board of Directors.Derivative Financial InstrumentsWe utilize certain derivative instruments that do not qualify for hedge accounting treatment under SFAS No. 133. These derivatives are accounted for as trading securities and marked to market on the income statement. While we do not seek GAAP hedge accounting treatment for the assets that these instruments are hedging, the economic purpose of these instruments is to hedge existing exposures to either interest rate risk or foreign currency risk.
     We enter into forward contracts to protect against interest rate fluctuations from the date of mortgage loan commitment until the loans are sold. At December 31, 2001, we designated the portion of these transactions hedging the closed mortgage loans as hedges that qualify for hedge accounting treatment under SFAS 133. The basis of the hedged closed loans is adjusted for change in value associated with the risk being hedged. The effect of these hedging activities, which did not have a material impact on our net income, was recorded through earnings as gain from sale of loans. Hedge ineffectiveness recorded in gains from sale of loans related to these hedging activities was immaterial. Additionally, we enter into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitments). Rate lock commitments on loans intended to be sold are considered to be derivatives. At the time interest rate lock commitments are originally recorded on the balance sheet, no gain or loss is recognized. Any subsequent changes in fair value are recorded in earnings. These derivatives are recorded on the balance sheet at fair value at period end.
     We hedge the fixed versus floating component of certain of our residual interests with interest rate caps, which had a fair value of $0.8 million and a notional amount of $62.2 million at June 30, 2002. We classify interest rate caps as other assets on the balance sheet and carry them at their fair values. We record adjustments to fair values as other income on the income statement. For the six months ended June 30, 2002, we recorded a $57,000 loss related to these derivative products.
     We hedged our mortgage servicing rights through the use of Eurodollar futures contracts and interest rate options. For the three- and six-month periods ended June 30, 2002, we recorded gains of $45.4 million and $37.3 million, respectively, on these hedges. Both the futures contracts and options were marked-to-market and included in other assets with changes in value recorded in the income statement as other income. At June 30, 2002, we held $17.2 billion in notional amount of Eurodollar contracts, with expirations ranging from the third quarter of 2002 to the first quarter of 2009. The indices underlying these Eurodollar futures contracts are the current and future three-month LIBOR rates. We also held swaption positions with a notional value totaling $2.0 billion at June 30, 2002, with a final maturity of October 2, 2002.
     Onset Capital Corporation uses two interest rate swaps to reduce repricing risk associated with one of its funding sources. The interest rate risk is created due to a repricing mismatch between the fixed-rate payment stream from leasing assets and floating rate funding. The notional amounts of the swaps were $9.9 million and $8.2 million as of June 30, 2002. The notional values of both interest rate swaps amortize on a schedule designed to approximate the principal pay down of the loan portfolio, and have an average remaining maturity of approximately seven months.
     We own foreign currency forward contracts to protect the value of intercompany loans made to Onset Capital Corporation and denominated in Canadian dollars against changes in the Canadian-U.S. exchange rate. We had a notional amount of $70.7 million in forward contracts outstanding as of June 30, 2002. For the six months ended June 30, 2002, we recognized losses on these contracts of $2.8 million. These contracts are marked-to-market with gains and losses included in other expense on the income statement.  The foreign currency transaction gain, net of these contracts, was $0.4 million during the six-month period ended June 30, 2001.Item 3.  Quantitative and Qualitative Disclosures About Market Risk.     The quantitative and qualitative disclosures about market risk are reported in the Risk Management section of Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, found on pages 43 through 48.PART II - OTHER INFORMATION
Item 1.  Legal Proceedings.Stamper et.al. v. A Home of Your Own, Inc. et.al.

As reported previously, a jury in the Baltimore, Maryland, City Circuit Court in Stamper awarded $1.434 million jointly and severally against the defendants, including our subsidiary Irwin Mortgage Corporation.  Irwin Mortgage filed post-trial motions for judgment notwithstanding the verdict, new trial and/or remittitur, which is a request for the court to reduce the amount of damages awarded by the jury.  In May, 2002, the court denied Irwin Mortgage's post-trial motion.  In June, 2002, Irwin Mortgage filed a notice of appeal with the Maryland Court of Special Appeals.
Item 2.  Changes in Securities and Use of Proceeds.(c) The Corporation issued shares of common stock pursuant to elections made by six out of eight of our outside directors to receive board compensation under the 1999 Outside Director Restricted Stock Compensation Plan in lieu of cash fees as indicated in the table below.  All of these shares were issued in reliance on the private placement exemption from registration provided in Section 4(2) of the Securities Act.



|Date Issued   | Number of Shares
|------------- | ----------------
|              |                 
|June 30, 2002 | 868             



Item 4.  Submission of Matters to a Vote of Security Holders.     (a)  The Annual Meeting of Shareholders of Registrant was held on April 25, 2002.
     (b)  The following directors were elected at the meeting to serve until 2005:



|                  | Affirmative Votes | Abstained
|----------------- | ----------------- | ---------
|William I. Miller | 21,886,423        | 2,910,332
|John A. Nash      | 21,887,531        | 2,909,224
|Timothy Solso     | 24,361,488        | 435,267  

The following directors are currently serving terms that expire as indicated:
Sally A. Dean - 2004
David W. Goodrich - 2003
John T. Hackett - 2003
William H. Kling - 2004
Brenda J. Lauderback - 2003
John C. McGinty - 2003
Lance R. Odden - 2004



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

(a)  Exhibits.



|Exhibit 
 Number | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                            
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1              | Restated Articles of Incorporation of Irwin Financial Corporation.  (Incorporated by reference to Exhibit 3(a) to Form 10-K Report for year ended December 31, 2000, File No. 0-06835.)                                                                                                                                                                                                                                                           
|3.2              | Articles of Amendment to Restated Articles of Incorporation of Irwin Financial Corporation dated March 2, 2001.  (Incorporated by reference to Exhibit 3(b) to Form 10-K Report for year ended December 31, 2000, File No. 0-06835.)                                                                                                                                                                                                              
|3.3              | Code of By-laws of Irwin Financial Corporation.  (Incorporated by reference to Exhibit 3 to Form 10-Q for period ended March 31, 2001, File No. 0-06835.)                                                                                                                                                                                                                                                                                         
|4.1              | Specimen Common Stock Certificate.  (Incorporated by reference to Exhibit 4(a) to Form 10-K report for year ended December 31, 1994, File No. 0-06835.)                                                                                                                                                                                                                                                                                           
|4.2              | Certain instruments defining the rights of the holders of long-term debt of Irwin Financial Corporation and certain of its subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the Corporation and its subsidiaries on a consolidated basis, have not been filed as Exhibits.  The Corporation hereby agrees to furnish a copy of any of these agreements to the Commission upon request.
|4.3              | Rights Agreement, dated as of March 1, 2001, between Irwin Financial Corporation and Irwin Union Bank and Trust.  (Incorporated by reference to Exhibit 4.1 to Form 8-A filed March 2, 2001, File No. 0-06835.)                                                                                                                                                                                                                                   
|4.4              | Appointment of Successor Rights Agent dated as of May 11, 2001 between Irwin Financial Corporation and National City Bank.  (Incorporated by reference to Exhibit 4.5 to Form S-8 filed on September 7, 2001, File No. 333-69156.)                                                                                                                                                                                                                
|10.1             | *Amended 1986 Stock Option Plan.  (Incorporated by reference to Exhibit 10(b) to Form 10-K Report for year ended December 31, 1991, File No. 0-06835.)                                                                                                                                                                                                                                                                                            
|10.2             | *Irwin Financial Corporation 1992 Stock Option Plan.  (Incorporated by reference to Exhibit 10(h) to Form 10-K Report for year ended December 31, 1992, File No. 0-06835.)                                                                                                                                                                                                                                                                        
|10.3             | *Irwin Financial Corporation 1997 Stock Option Plan.  (Incorporated by reference to Exhibit 10 to Form 10-Q Report for period ended June 30, 1994, File No. 0-06835.)                                                                                                                                                                                                                                                                             
|10.4             | *Amendment to Irwin Financial Corporation 1997 Stock Option Plan.  (Incorporated by reference to Exhibit 10(i) to Form 10-Q Report for period ended June 30, 1997, File No. 0-06835.)                                                                                                                                                                                                                                                             
|10.5             | *Irwin Financial Corporation 2001 Stock Plan.  (Incorporated by reference to Exhibit 10.18 to Form S-1/A filed February 14, 2002, File No. 333-69586.)                                                                                                                                                                                                                                                                                            
|10.6             | *Amended Irwin Financial Corporation Outside Directors Restricted Stock Compensation Plan.  (Incorporated by reference to Exhibit 10(g) to Form 10-K Report for year ended December 31, 1991, File No. 0-06835.)                                                                                                                                                                                                                                  
|10.7             | *Irwin Financial Corporation Outside Directors Restricted Stock Compensation Plan.  (Incorporated by reference to Exhibit 10(i) to Form 10-K Report for year ended December 31, 1995, File No. 0-06835.)                                                                                                                                                                                                                                          
|10.8             | *1999 Outside Director Restricted Stock Compensation Plan.  (Incorporated by reference to Exhibit 10(b) to Form 10-Q Report for period ended June 30, 1999, File No. 0-06835.)                                                                                                                                                                                                                                                                    
|10.9             | *Irwin Financial Corporation Employees' Stock Purchase Plan.  (Incorporated by reference to Exhibit 10(d) to Form 10-K Report for year ended December 31, 1991, File No. 0-06835.)                                                                                                                                                                                                                                                                
|10.10            | *Employee Stock Purchase Plan II.  (Incorporated by reference to Exhibit 10(f) to Form 10-K Report for year ended December 31, 1994, File No. 0-06835.)                                                                                                                                                                                                                                                                                           
|10.11            | *Employee Stock Purchase Plan III.  (Incorporated by reference to Exhibit 10(a) to Form 10-Q Report for period ended June 30, 1999, File No. 0-06835.)                                                                                                                                                                                                                                                                                            
|10.12            | *Long-Term Management Performance Plan.  (Incorporated by reference to Exhibit 10(a) to Form 10-K Report for year ended December 31, 1986, File No. 0-06835.)                                                                                                                                                                                                                                                                                     
|10.13            | *Long-Term Incentive Plan-Summary of Terms.  (Incorporated by reference to Exhibit 10(a) to Form 10-K Report for year ended December 31, 1986, File No. 0-06835.)                                                                                                                                                                                                                                                                                 
|10.14            | *Inland Mortgage Corporation Long-Term Incentive Plan.  (Incorporated by reference to Exhibit 10(j) to Form 10-K Report for year ended December 31, 1995, File No. 0-06835.)                                                                                                                                                                                                                                                                      
|10.15            | *Amended and Restated Management Bonus Plan.  (Incorporated by reference to Exhibit 10(a) to Form 10-K Report for year ended December 31, 1986, File No. 0-06835.)                                                                                                                                                                                                                                                                                
|10.16            | *Limited Liability Company Agreement of Irwin Ventures LLC.  (Incorporated by reference to Exhibit 10(a) to Form 10-Q/A Report for period ended March 31, 2001, File No. 0-06835.)                                                                                                                                                                                                                                                                
|10.17            | *Limited Liability Company Agreement of Irwin Ventures Co-Investment Fund LLC, effective as of April 20, 2001.  (Incorporated by reference to Exhibit 10.17 to Form S-1/A filed February 14, 2002, File No. 333-69586.)                                                                                                                                                                                                                           
|10.18            | *Irwin Home Equity Corporation Shareholder Agreement and Amendments.  (Incorporated by reference to Exhibit 10(b) to Form 10-Q/A Report for period ended March 31, 2001, File No. 0-06835.)                                                                                                                                                                                                                                                       
|10.19            | *Promissory Note dated January 30, 2002 from Elena Delgado to Irwin Financial Corporation.  (Incorporated by reference to Exhibit 10.19 to Form S-1/A filed February 14, 2002, File No. 333-69586.)                                                                                                                                                                                                                                               
|10.20            | *Consumer Pledge Agreement dated January 30, 2002 between Elena Delgado and Irwin Financial Corporation. (Incorporated by reference to Exhibit 10.20 to Form S-1/A filed February 14, 2002, File No. 333-69586.)                                                                                                                                                                                                                                  
|10.21            | *Irwin Financial Corporation Short Term Incentive Plan effective January 1, 2002.  (Incorporated by reference to Exhibit 10.21 to Form 10-Q Report for period ended March 31, 2002, File No. 0-06835).                                                                                                                                                                                                                                            
|10.22            | *Irwin Union Bank Short Term Incentive Plan effective January 1, 2002. (Incorporated by reference to Exhibit 10.22 to Form 10-Q Report for period ended March 31, 2002, File No. 0-06835).                                                                                                                                                                                                                                                        
|10.23            | *Irwin Home Equity Short Term Incentive Plan effective January 1, 2002. (Incorporated by reference to Exhibit 10.23 to Form 10-Q Report for period ended March 31, 2002, File No. 0-06835).                                                                                                                                                                                                                                                       
|10.24            | *Irwin Mortgage Corporation Short Term Incentive Plan effective January 1, 2002. (Incorporated by reference to Exhibit 10.24 to Form 10-Q Report for period ended March 31, 2002, File No. 0-06835).                                                                                                                                                                                                                                              
|10.25            | *Irwin Capital Holdings Short Term Incentive Plan effective January 1, 2002. (Incorporated by reference to Exhibit 10.25 to Form 10-Q Report for period ended March 31, 2002, File No. 0-06835).                                                                                                                                                                                                                                                  
|10.26            | *Onset Capital Corporation Employment Agreement.                                                                                                                                                                                                                                                                                                                                                                                                  
|10.27            | *Irwin Financial Corporation Restated Supplemental Executive Retirement Plan for Named Executives                                                                                                                                                                                                                                                                                                                                                 
|10.28            | *Irwin Financial Corporation Supplemental Executive Retirement Plan for Named Executives                                                                                                                                                                                                                                                                                                                                                          
|11.1             | Computation of Earnings Per Share is included in the footnotes to the financial statements.                                                                                                                                                                                                                                                                                                                                                       
|99.1             | Certification of the Chairman and the President Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                          
|99.2             | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                 

*  Indicates management contract or compensatory plan or arrangement.

(b)  Reports on Form 8-K



8-K
April 19, 2002
Attaching news release announcing first quarter earnings conference call8-K
April 23, 2002
Attaching news release announcing first quarter earnings.8-K
April 25, 2002
Attaching news release announcing second quarter dividend.




SIGNATURES

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

|IRWIN FINANCIAL CORPORATION                
|-------------------------------------------
|Date:  August 13, 2002                     
|Gregory F. Ehlinger                        
|Chief Financial Officer                    
|                                           
|                                           
|                                           
|                                           
|By:__________/s/___________________________
|Jody A. Littrell                           
|Corporate Controller                       
|(Chief Accounting Officer)