---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________.
Commission File Number:   0-6835

IRWIN FINANCIAL CORPORATION

(Exact Name of Corporation as Specified in its Charter)



Indiana
35-1286807(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)500 Washington Street Columbus, Indiana
47201(Address of Principal Executive Offices)
(Zip Code)(812) 376-1909
www.irwinfinancial.com(Corporation's Telephone Number, Including Area Code)
(Web Site)


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.[ X ]  Yes                          [    ]  No
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act[ X ]  Yes                          [    ]  No
As of November 7, 2003, there were outstanding 28,052,570 common shares, no par value, of the Registrant.

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FORM 10-Q
TABLE OF CONTENTS



|        |                                                                                       | PAGE NO.
|------- | ------------------------------------------------------------------------------------- | --------
|PART I  | FINANCIAL INFORMATION                                                                 |         
|        |                                                                                       |         
|Item 1  | Financial Statements                                                                  | 3       
|        |                                                                                       |         
|Item 2  | Management's Discussion and Analysis of Financial Condition and Results of Operations | 18      
|        |                                                                                       |         
|Item 3  | Quantitative and Qualitative Disclosures About Market Risk                            | 48      
|        |                                                                                       |         
|Item 4  | Controls and Procedures                                                               | 48      
|        |                                                                                       |         
|PART II | OTHER INFORMATION                                                                     |         
|        |                                                                                       |         
|Item 1  | Legal Proceedings                                                                     | 49      
|        |                                                                                       |         
|Item 2  | Changes in Securities and Use of Proceeds                                             | 50      
|        |                                                                                       |         
|Item 6  | Exhibits and Reports on Form 8-K                                                      | 51      
|        |                                                                                       |         
|        | Signatures                                                                            | 54      
|        |                                                                                       |         
|        |                                                                                       |         
|        |                                                                                       |         
|        |                                                                                       |         
|        |                                                                                       |         

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PART 1.  FINANCIAL INFORMATION.
Item 1.  Financial Statements.

IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)



September 30,
December 31,2003
2002(In thousands except for shares)Assets:Cash and cash equivalents
$      163,272
$    157,771Interest-bearing deposits with financial institutions
62,728
34,951Residual interests
79,146
157,514Investment securities - held-to-maturity (Market value:$4,966 in 2003 and $5,644 in 2002)
4,942
5,349Investment securities - available-for-sale
107,115
62,599Loans held for sale
1,020,082
1,314,849Loans and leases, net of unearned income - Note 2
3,139,335
2,815,276Less: Allowance for loan and lease losses - Note 3
(64,145)
(50,936)3,075,190
2,764,340Servicing assets - Note 4
327,422
174,935Accounts receivable
39,374
55,928Accrued interest receivable
17,234
15,264Premises and equipment, net
32,712
32,398Other assets
129,966
135,028Total assets
$   5,059,183
$  4,910,926Liabilities and Shareholders' Equity:Deposits
Noninterest-bearing
$      957,480
$     821,814Interest-bearing
1,302,319
1,170,660Certificates of deposit over $100,000
759,476
701,8703,019,275
2,694,344Short-term borrowings - Note 5
442,400
993,124Long-term debt
30,062
30,070Collateralized debt - Note 6
588,731
391,425Company-obligated mandatorily redeemable preferred
  securities of subsidiary trusts
181,250
181,250Convertible securities of subsidiary trusts
51,708
51,750Other liabilities
329,671
207,552Total liabilities
4,643,097
4,549,515Commitments and contingencies - Note 9Minority interest
1,632
856Shareholders' equity
  Preferred stock, no par value - authorized 4,000,000 shares;
     none issued as of September 30, 2003 and December 31, 2002
--
--Common stock, no par value - authorized 40,000,000 shares; issued 
     29,612,080 shares as of September 30, 2003 and December 31, 2002,
     respectively; including 1,630,279 and 1,840,623 shares in treasury
     as of September 30, 2003 and December 31, 2002, respectively
112,000
112,000Additional paid-in capital
2,413
3,606Deferred compensation
(421)
(240)Accumulated other comprehensive loss, net of deferred income tax
     benefit of $94 and $336 as of September 30, 2003 and December 31, 
     2002, respectively
(140)
(1,142)Retained earnings
337,919
287,662451,771
401,886Less treasury stock, at cost
(37,317)
(41,331)Total shareholders' equity
414,454
360,555Total liabilities and shareholders' equity
$   5,059,183
$   4,910,926




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



|                                                              | For the Three Months
Ended September 30,
|------------------------------------------------------------- | ----------------------------------------
|                                                              | 2003                                    
|                                                              | (In thousands, except per share)        
|Interest income:                                              |                                         
|Loans and leases                                              | $    59,626                             
|Loans held for sale                                           | 33,978                                  
|Residual interests                                            | 4,131                                   
|Investment securities                                         | 1,125                                   
|Federal funds sold                                            | 20                                      
|Total interest income                                         | 98,880                                  
|Interest expense:                                             |                                         
|Deposits                                                      | 9,873                                   
|Short-term borrowings                                         | 3,383                                   
|Long-term debt                                                | 419                                     
|Collateralized debt                                           | 4,045                                   
|Preferred securities distribution                             | 5,527                                   
|Total interest expense                                        | 23,247                                  
|Net interest income                                           | 75,633                                  
|Provision for loan and lease losses                           | 14,778                                  
|Net interest income after provision for loan and lease losses | 60,855                                  
|Other income:                                                 |                                         
|Loan servicing fees                                           | 28,523                                  
|Amortization of servicing assets - Note 4                     | (34,064)                                
|Recovery (impairment) of servicing assets - Note 4            | 41,665                                  
|Net loan administration income (loss)                         | 36,124                                  
|Gain from sales of loans                                      | 91,569                                  
|Gain on sale of mortgage servicing assets                     | 7                                       
|Trading losses                                                | (1,403)                                 
|Derivative gains (losses), net                                | (27,685)                                
|Other                                                         | 6,412                                   
|                                                              | 105,024                                 
|Other expense:                                                |                                         
|Salaries                                                      | 62,220                                  
|Pension and other employee benefits                           | 9,696                                   
|Office expense                                                | 5,330                                   
|Premises and equipment                                        | 9,533                                   
|Marketing and development                                     | 3,400                                   
|Professional fees                                             | 2,980                                   
|Other                                                         | 21,608                                  
|                                                              | 114,767                                 
|Income before income taxes                                    | 51,112                                  
|Provision for income taxes                                    | 19,994                                  
|Net income                                                    | $    31,118                             
|Earnings per share: - Note 7
  Basic                          | $        1.11                           
|Diluted                                                       | $        1.03                           
|Dividends per share                                           | $    0.0700                             

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

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



For the Nine Months
Ended September 30,2003
2002(In thousands, except per share)Interest income:Loans and leases
$     179,460
$      160,065Loans held for sale
86,800
33,295Residual interests
17,100
26,561Investment securities
3,134
2,203Federal funds sold
119
44Total interest income
286,613
222,168Interest expense:Deposits
32,679
41,940Short-term borrowings
12,053
11,226Long-term debt
1,745
1,709Collateralized debt
11,569
3,224Preferred securities distribution
16,581
14,457Total interest expense
74,627
72,556Net interest income
211,986
149,612Provision for loan and lease losses
37,655
35,409Net interest income after provision for loan and lease losses
174,331
114,203Other income:Loan servicing fees
75,231
54,622Amortization of servicing assets - Note 4
(102,112)
(43,957)Impairment of servicing assets - Note 4
(1,966)
(125,959)Net loan administration loss
(28,847)
(115,294)Gain from sales of loans
311,081
145,615Gain on sale of mortgage servicing assets
7
9,939Trading losses
(52,323)
(22,634)Derivative gains, net
1,993
118,362Other
16,981
11,600248,892
147,588Other expense:Salaries
176,851
112,285Pension and other employee benefits
31,803
24,758Office expense
16,200
13,005Premises and equipment
28,751
25,392Marketing and development
11,157
9,042Professional fees
8,664
6,918Other
58,170
28,648331,596
220,048Income before income taxes
91,627
41,743Provision for income taxes
35,505
16,113Income before cumulative effect of change in accounting principle
56,122
25,630Cumulative effect of change in accounting principle, net of tax
--
495Net income
$    56,122
$     26,125Earnings per share before cumulative effect of change in accounting principle: - Note 7
  Basic
$        2.01
$         0.97Diluted
$        1.89
$         0.94Earnings per share: - Note 7
  Basic
$        2.01
$         0.99Diluted
$        1.89
$         0.96Dividends per share
$    0.2100
$     0.2025


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

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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

For the Three Months Ended September 30, 2003, and 2002

|                                                                          | Total                         | Retained
Earnings | Accumulated
Other
Comprehensive
Income
(Loss) | Deferred
Compensation | Additional
Paid in
Capital | Common
Stock | Preferred
Stock | Treasury
Stock
|------------------------------------------------------------------------- | ----------------------------- | ----------------- | --------------------------------------------- | --------------------- | -------------------------- | ------------ | --------------- | --------------
|                                                                          | (In thousands, except shares)
|Balance July 1, 2003                                                      | $    384,835                  | $  308,760        | $              (58)                           | $           (489)     | $        2,422             | $  112,000   | $          --   | $  (37,800)   
|Net income                                                                | 31,118                        | 31,118            |                                               |                       |                            |              |                 |               
|Unrealized loss on investment
     securities net of $57 tax
     benefit | (84)                          |                   | (84)                                          |                       |                            |              |                 |               
|Unrealized gain on interest rate
     cap net of $17 tax liability        | 26                            |                   | 26                                            |                       |                            |              |                 |               
|Foreign currency adjustment net
     of $16 tax benefit                   | (24)                          |                   | (24)                                          |                       |                            |              |                 |               
|Total comprehensive
            income                                    | 31,036                        |                   |                                               |                       |                            |              |                 |               
|Deferred compensation                                                     | 68                            |                   |                                               | 68                    |                            |              |                 |               
|Cash dividends                                                            | (1,959)                       | (1,959)           |                                               |                       |                            |              |                 |               
|Tax benefit on stock option
  exercises                                   | 22                            |                   |                                               |                       | 22                         |              |                 |               
|Treasury stock:                                                           |                               |                   |                                               |                       |                            |              |                 |               
|Purchase of 1,321 shares                                                  | (33)                          |                   |                                               |                       |                            |              |                 | (33)          
|Sales of 24,766 shares                                                    | 485                           |                   |                                               |                       | (31)                       |              |                 | 516           
|Balance September 30, 2003                                                | $   414,454                   | $  337,919        | $             (140)                           | $           (421)     | $      2,413               | $  112,000   | $          --   | $  (37,317)   
|                                                                          |                               |                   |                                               |                       |                            |              |                 |               
|                                                                          |                               |                   |                                               |                       |                            |              |                 |               
|Balance July 1, 2002                                                      | $  329,275                    | $  255,932        | $             (125)                           | $           (359)     | $      3,794               | $  112,159   | $          --   | $  (42,126)   
|Net income                                                                | 8,193                         | 8,193             |                                               |                       |                            |              |                 |               
|Unrealized loss on investment
     securities net of $12 tax
     benefit | (18)                          |                   | (18)                                          |                       |                            |              |                 |               
|Unrealized loss on interest rate 
     cap net of $59 tax benefit         | (89)                          |                   | (89)                                          |                       |                            |              |                 |               
|Foreign currency adjustment net
     of $136 tax benefit                  | (204)                         |                   | (204)                                         |                       |                            |              |                 |               
|Total comprehensive
             income                                   | 7,882                         |                   |                                               |                       |                            |              |                 |               
|Deferred compensation                                                     | 60                            |                   |                                               | 60                    |                            |              |                 |               
|Cash dividends                                                            | (1,870)                       | (1,870)           |                                               |                       |                            |              |                 |               
|Additional costs for equity   offering                                    | (158)                         |                   |                                               |                       |                            | (158)        |                 |               
|Treasury stock:                                                           |                               |                   |                                               |                       |                            |              |                 |               
|Purchase of 1,393 shares                                                  | (28)                          |                   |                                               |                       |                            |              |                 | (28)          
|Sales of 17,522 shares                                                    | 315                           |                   |                                               |                       | (41)                       |              |                 | 356           
|Balance September 30, 2002                                                | $  335,476                    | $  262,255        | $             (436)                           | $           (299)     | $        3,753             | $ 112,001    | $          --   | $  (41,798)   
|                                                                          |                               |                   |                                               |                       |                            |              |                 |               

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

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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

For the Nine Months Ended September 30, 2003, and 2002

Total
Retained
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Deferred
Compensation
Additional
Paid in
Capital
Common
Stock
Preferred
Stock
Treasury
Stock(In thousands, except shares)Balance January 1, 2003
$  360,555
$  287,662
$          (1,142)
$           (240)
$          3,606
$ 112,000
$          --
$  (41,331)Net income
56,122
56,122Unrealized loss on investment
     securities net of $45 tax
     benefit
(72)

(72)Unrealized loss on interest rate
     cap net of $31 tax benefit
(47)

(47)Foreign currency adjustment net
     of $576 tax liability
865

865Minimum SERP liability net
     of $170 tax liability
256

256Total comprehensive
            income
57,124Deferred compensation
(181)


(181)Cash dividends
(5,865)
(5,865)Tax benefit on stock option
  exercises
1,031



1,031Conversion of 1,700 trust 
  preferred shares to 2,142
  common shares
43



(1)


44Treasury stock:Purchase of 122,464 shares
(2,822)






(2,822)Sales of 330,666 shares
4,569



(2,223)


6,792Balance September 30, 2003
$  414,454
$  337,919
$             (140)
$           (421)
$           2,413
$ 112,000
$          --
$  (37,317)Balance January 1, 2002
$  231,665
$  241,725
$             (325)
$           (449)
$           4,426
$   29,965
$   1,386
$  (45,063)Net income
26,125
26,125Unrealized loss on investment
     securities net of $45 tax
     benefit
(67)

(67)Unrealized loss on interest rate
     cap net of $59 tax benefit
(89)

(89)Foreign currency adjustment net
     of $30 tax liability
45

45Total comprehensive
             income
26,014Deferred compensation
150


150Cash dividends
(5,595)
(5,595)Sales of 6,210,000 shares of
  common stock
82,036




82,036Conversion of preferred stock to
  120,441   common shares
--





(1,386)
1,386Tax benefit on stock option
  exercises
516



516Treasury stock:Purchase of 56,738 shares
(1,139)






(1,139)Sales of 290,157 shares
1,829



(1,189)


3,018Balance September 30, 2002
$  335,476
$  262,255
$             (436)
$            (299)
$            3,753
$ 112,001
$         --
$  (41,798)


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

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IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

|                                                                      | For the Nine Months Ended September 30,
|--------------------------------------------------------------------- | ---------------------------------------
|                                                                      | 2003                                   
|                                                                      | (In thousands)                         
|Net income                                                            | $           56,122                     
|Adjustments to reconcile net income to cash                           |                                        
|(used) provided by operating activities:                              |                                        
|Depreciation, amortization, and accretion, net                        | 8,747                                  
|Amortization and impairment of servicing assets                       | 104,078                                
|Provision for loan and lease losses                                   | 37,655                                 
|Gain on sale of mortgage servicing assets                             | (7)                                    
|Gain from sale of loans                                               | (311,081)                              
|Originations of loans held for sale                                   | (21,131,799)                           
|Proceeds from the sale of mortgage servicing assets                   | --                                     
|Proceeds from sales and repayments of loans held for sale             | 21,590,397                             
|Net decrease in residual interests                                    | 78,368                                 
|Net decrease in accounts receivable                                   | 16,554                                 
|Other, net                                                            | 12,694                                 
|Net cash provided by (used in) operating activities                   | 461,728                                
|Lending and investing activities:                                     |                                        
|Proceeds from maturities/calls of investment securities:              |                                        
|Held-to-maturity                                                      | 495                                    
|Available-for-sale                                                    | 38,682                                 
|Purchase of investment securities:                                    |                                        
|Held-to-maturity                                                      | (99)                                   
|Available-for-sale                                                    | (83,253)                               
|Net increase in interest-bearing deposits with financial institutions | (27,777)                               
|Net increase in loans, excluding sales                                | (379,606)                              
|Sales of loans                                                        | 33,182                                 
|Other, net                                                            | (6,125)                                
|Net cash used by lending and investing activities                     | (424,501)                              
|Financing activities:                                                 |                                        
|Net increase in deposits                                              | 324,931                                
|Net increase (decrease) in short-term borrowings                      | (550,724)                              
|Repayments of long-term debt                                          | (8)                                    
|Proceeds from issuance of collateralized borrowings                   | 373,658                                
|Repayments of collateralized borrowings                               | (176,352)                              
|Proceeds from sale of stock for equity offering                       | -                                      
|Purchase of treasury stock for employee benefit plans                 | (2,822)                                
|Proceeds from sale of stock for employee benefit plans                | 5,600                                  
|Dividends paid                                                        | (5,865)                                
|Net cash provided (used) by financing activities                      | (31,582)                               
|Effect of exchange rate changes on cash                               | (144)                                  
|Net increase (decrease) in cash and cash equivalents                  | 5,501                                  
|Cash and cash equivalents at beginning of period                      | 157,771                                
|Cash and cash equivalents at end of period                            | $       163,272                        
|Supplemental disclosures of cash flow information:                    |                                        
|Cash paid during the period:                                          |                                        
|Interest                                                              | $         78,052                       
|Income taxes                                                          | $         42,928                       
|Noncash transactions:                                                 |                                        
|Conversion of trust preferred stock to common stock                   | $                43                    
|Liability for loans held for sale eligible for repurchase             | $       111,390                        
|Conversion of preferred stock to common stock                         | $                 --                   

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting PoliciesConsolidation: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, commercial finance, 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.Residual Interests:Residual interests are stated at fair value.  Unrealized gains and losses are included in earnings.  In the past, when we sold receivables in securitizations of home equity loans and lines of credit, we retained residual interests, a servicing asset, one or more subordinated tranches, and in some cases a cash reserve account, all of which are retained interests in the securitized receivables.  Gain or loss on the sale of the receivables depends in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair value at the date of transfer.
     To obtain fair value of residual interests, quoted market prices are used if available.  However, quotes are generally not available for residual interests, so we generally estimate fair value based on the present value of expected cash flows using estimates of the key assumptions -- prepayment speeds, credit losses, and discount rates commensurate with the risks involved -- that management believes market participants would use to value similar assets.  Adjustments to carrying values are recorded as trading gains or losses.  An adjustment of $1.4 million was recorded in the third quarter  of 2003 to write down the residual interests due primarily to shifts in the LIBOR curve and enhancements to our valuation model. The total adjustment for the first nine months of 2003 was $52.3 million.
     Servicing Assets:  In determining servicing value impairment we stratify the servicing portfolio into its predominant risk characteristics, principally by interest rate and product type.  Effective as of June 30, 2003 we lowered our lowest interest rate stratum from 7% to 5% and split our interest strata by government and conventional loans.  We made these changes in interest rate and product type stratums in response to significant changes in economic facts and circumstances and in our portfolio that caused a change in predominant risk characteristics.  Because our strata changes were prompted by changes in economic facts and circumstances, they were accounted for prospectively as a change in estimate.  We made no changes in our interest strata in the three-month period ended September 30, 2003.Cash and Cash Equivalents Defined:For purposes of the consolidated statement of cash flows, we consider cash and due from banks to be cash equivalents.Stock-Based Employee Compensation:  We have two stock-based employee compensation plans.  We use the intrinsic value method to account for our plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations.  No stock-based employee compensation cost is reflected in net income for any of the periods presented, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant.  To date, the Board of Directors has not chosen to expense stock options.  The Board wishes to analyze new guidance from the FASB, SEC or other relevant authority regarding the standardization of valuation methods, should such guidance be forthcoming.  In the absence of a uniform valuation method for public companies, we will continue to disclose in this footnote the impact of expensing stock options, using our valuation method, which is based on a Black-Scholes model using several assumptions management believes to be reasonable.  The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation," using our valuation method to stock-based employee compensation:

|                                                                                                                                                | For the three months ended September 30, | For the nine months ended September 30,
|----------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ---------------------------------------
|                                                                                                                                                | 2003                                     | 2002                                   
|                                                                                                                                                | (In thousands)                          
|Net income as reported                                                                                                                          | $    31,118                              | $      8,193                           
|Deduct: Total stock-based employee compensation expense
  determined under fair value based method for all awards,
  net of related tax effects | (699)                                    | (662)                                  
|Pro forma net income                                                                                                                            | $    30,419                              | $      7,531                           
|Basic earnings per share
  As reported                                                                                                          | $        1.09                            | $        0.30                          
|Pro forma                                                                                                                                       | $        1.03                            | $        0.27                          
|Diluted earnings per share
  As reported                                                                                                        | $        1.03                            | $        0.29                          
|Pro forma                                                                                                                                       | $        1.01                            | $        0.26                          

Recent Accounting Developments
     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" which requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved.  The primary beneficiary is the party that absorbs a majority of expected losses, receives a majority of expected residual returns, or both, as a result of holding variable interests, which are the ownership, contractual, or other beneficiary interests in the entity.  The primary beneficiary is required to disclose the (a) nature, purpose, size, and activities of the variable interest entity, (b) the carrying amount and classification of assets that are collateral, and (c) any lack of recourse by creditors to the primary beneficiary.  If a primary interest is not held, but a significant variable interest is held, disclosure requirements include (1) the nature, purpose, size and activities of the variable interest entity, (2) exposure to loss, (3) the date and nature of involvement with the entity.  This interpretation applies immediately to variable interests created or obtained after January 31, 2003.  For variable interest entities created prior to February 1, 2003, the interpretation application begins in fiscal years beginning after December 15, 2003.  Prior to 2002, we used securitization structures involving qualified special purpose entities (QSPEs) which are exempt from the requirements of this interpretation.  As a result, management does not believe the implementation of Interpretation No. 46 will have a material effect on our earnings or financial position.
      In addition, we have six special purpose trusts used for the issuance of our trust preferred securities.  These trusts are currently consolidated on our balance sheet and, as such, under banking regulation meet one of the criteria for creating eligibility under bank regulatory capital rules to be eligible as Tier 1 capital.  We understand that the consolidation of these types of trusts under FIN 46 is under review by accounting rule making bodies and the Federal Reserve has issued interim guidance (SR 03-9) on the appropriate inclusion of these securities in regulatory capital ratios.  If GAAP guidance changes and requires deconsolidation of these trusts, it is possible that the securities issued by the trust will no longer meet the requirements to be classified as Tier 1 capital elements, although we expect that they would continue to meet the requirement to be classified as Tier 2 capital.  If this change were to occur, we do not believe this would have a meaningful effect on our total capital ratios, although the allocation of capital between Tier 1 and Tier 2 capital would shift.
     Reclassifications:Certain amounts in the 2002 consolidated financial statements have been reclassified to conform to the 2003 presentation.  These changes had no impact on previously reported net income or shareholders' equity.  Note 2 - Loans and LeasesLoans and leases are summarized as follows:

|                                       | September 30,  | December 31,    
|-------------------------------------- | -------------- | ----------------
|                                       | 2003           | 2002            
|                                       | (In thousands)
|Commercial, financial and agricultural | $    1,453,305 | $      1,347,962
|Real estate-construction               | 343,323        | 314,851         
|Real estate-mortgage                   | 891,011        | 777,865         
|Consumer                               | 28,259         | 27,857          
|Direct financing leases
     Domestic  | 327,965        | 291,711         
|Foreign                                | 189,344        | 133,784         
|Unearned income
     Domestic          | (66,927)       | (59,287)        
|Foreign                                | (26,945)       | (19,467)        
|Total                                  | $    3,139,335 | $      2,815,276

Note 3 - Allowance for Loan and Lease Losses

|                                    | As of and for the 
nine months ended | As of and for the 
year ended
|----------------------------------- | ------------------------------------ | -----------------------------
|                                    | September 30,
2003                   | December 31, 
2002           
|                                    | (In thousands)                      
|Balance at beginning of period      | $            50,936                  | $              22,283        
|Provision for loan and lease losses | 37,655                               | 43,996                       
|Other adjustments                   | (99)                                 | 17                           
|Recoveries                          | 2,100                                | 2,870                        
|Charge-offs                         | (26,447)                             | (18,230)                     
|Balance at end of period            | $            64,145                  | $              50,936        

Note 4 - Servicing Assets
     Included in the consolidated balance sheet at September 30, 2003 and December 31, 2002 are $327.4 million and $174.9 million, respectively, of capitalized servicing assets.  These amounts relate primarily to the principal balances of mortgage and home equity loans serviced by us for investors.  Changes in our capitalized servicing assets, net of valuation allowance, are shown below:

|                              | As of and for the 
nine months ended | As of and for the 
year ended
|----------------------------- | ------------------------------------ | -----------------------------
|                              | September 30,
2003                   | December 31, 
2002           
|                              | (In thousands)                      
|Beginning balance             | $           174,935                  | $            228,624         
|Additions                     | 256,565                              | 180,627                      
|Amortization                  | (102,112)                            | (62,191)                     
|Impairment                    | (1,966)                              | (146,370)                    
|Reduction for servicing sales | --                                   | (25,755)                     
|                              | $           327,422                  | $            174,935         

We have established a valuation allowance to record servicing assets at their lower of cost or fair value.  Changes in the allowance are summarized below:

|                               | As of and for the 
nine months ended | As of and for the year ended
|------------------------------ | ------------------------------------ | ----------------------------
|                               | September 30,                        | December 31,                
|                               | 2003                                 | 2002                        
|                               | (In thousands)                      
|Balance at beginning of period | $   159,865                          | $           13,495          
|Provision for impairment       | 1,966                                | 146,370                     
|Balance at end of period       | $   161,831                          | $         159,865           

Note 5 - Short-term Borrowings

|                                                 | September 30,  | December 31, 
|------------------------------------------------ | -------------- | -------------
|                                                 | 2003           | 2002         
|                                                 | (In thousands)
|Drafts payable related to mortgage loan closings | $    118,939   | $     200,701
|Commercial paper                                 | 15,169         | 14,121       
|Federal Home Loan Bank borrowings                | 248,000        | 527,000      
|Federal funds                                    | 54,000         | 30,000       
|Lines of credit and other borrowings             | 6,292          | 221,302      
|                                                 | $    442,400   | $     993,124

Drafts payable relate to mortgage loan closings that have not been presented to the banks for payment.  When presented for payment, these borrowings will be funded internally or by borrowing from the lines of credit.
     The majority of our commercial paper is payable to a company controlled by a significant shareholder and director of the Corporation.
     Federal Home Loan Bank borrowings are collateralized by loans and loans held for sale.
     We also have lines of credit available to fund loan originations and operations.  Interest on the lines of credit is payable monthly or quarterly with variable rates ranging from 1.37% to 3.00% at September 30, 2003.Note 6 - Collateralized Debt
     We securitize loans and leases using secured financing structures at our home equity lending  and commercial finance lines of business.  Sale treatment was precluded on these transactions as we maintained effective control over the loans and leases securitized.  This type of securitization structure results in cash being received, debt being recorded, and the establishment of an allowance for credit losses.  The notes associated with these transactions are collateralized by $0.6 billion in home equity loans and home equity lines of credit and leases classified on the balance sheet as loans and leases.  The principal and interest on these debt securities are paid using the cash flows from the underlying loans and leases.  Accordingly, the timing of the principal payments on these debt securities is dependent on the payments received on the underlying collateral.  The interest rates on the bonds are at a floating rate.  We have an interest only senior note on both securitizations at the home lending line of business which as of September 30, 2003 had a combined notional balance of $61.7 million.  These senior notes pay interest at 10%, and mature on December 25, 2004 and September 25, 2005. 
     Collateralized debt is summarized as follows:

|                                        | Contractual
Maturity | Weighted 
Average
Interest Rate 
at 
September 30, 
2003 | September 30,
2003 | December 31,
2002 
|--------------------------------------- | -------------------- | -------------------------------------------------------- | ------------------ | ------------------
|                                        | (In thousands)      
|Commercial finance line of business     |                      |                                                          |                    |                   
|2003 asset backed note                  | 7/4/2010             | 2.10                                                     | $       58,270     | $               --
|                                        |                      |                                                          |                    |                   
|Home equity lending line of business    |                      |                                                          |                    |                   
|2003-1 asset backed notes:              |                      |                                                          |                    |                   
|Combined variable rate senior note      | 2/28/2028            | 1.65                                                     | 190,578            | --                
|Combined variable rate subordinate note | 2/28/2028            | 3.17                                                     | 61,763             | --                
|Unamortized premium                     |                      |                                                          | 5,095              | --                
|2002-1 asset backed notes:              |                      |                                                          |                    |                   
|Combined variable rate senior note      | 7/25/2023-
6/25/2029 | 1.39                                                     | 195,715            | 312,997           
|Combined variable rate subordinate note | 2/25/2029            | 2.68                                                     | 72,551             | 72,551            
|Unamortized premium                     |                      |                                                          | 4,759              | 5,877             
|Total                                   |                      |                                                          | $     588,731      | $      391,425    

Note 7 - Earnings per ShareEarnings per share calculations are summarized as follow:

|                                                | Basic
Earnings
Per Share                 | Effect of
Stock
Options | Effect of
Preferred
Shares | Effect of
Convertible
Shares | Diluted
Earnings
Per Share
|----------------------------------------------- | ---------------------------------------- | ----------------------- | -------------------------- | ---------------------------- | --------------------------
|                                                | (In thousands, except per share amounts)
|Three Months Ended September 30, 2003Net income | $      31,118                            | $            --         | $            --            | $           679              | $   31,797                
|Shares                                          | 27,949                                   | 306                     | --                         | 2,609                        | 30,864                    
|Per-Share Amount                                | $          1.11                          | $     (0.01)            | $            --            | $         (0.07)             | $       1.03              
|                                                |                                          |                         |                            |                              |                           
|Three Months Ended September 30, 2002Net income | $        8,193                           | $            --         | $            --            | $           700              | $     8,893               
|Shares                                          | 27,719                                   | 265                     | --                         | 2,610                        | 30,594                    
|Per-Share Amount                                | $          0.30                          | $            --         | $            --            | $         (0.01)             | $       0.29              



|                                                                                                              | Basic
Earnings
Per Share                 | Effect of
Stock
Options | Effect of
Preferred
Shares | Effect of
Convertible
Shares | Diluted
Earnings
Per Share
|------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ----------------------- | -------------------------- | ---------------------------- | --------------------------
|                                                                                                              | (In thousands, except per share amounts)
|Nine Months Ended September 30, 2003Net income                                                                | $       56,122                           | $           --          | $              --          | $         2,037              | $   58,159                
|Shares                                                                                                        | 27,877                                   | 272                     | --                         | 2,609                        | 30,758                    
|Per-Share Amount                                                                                              | $           2.01                         | $     (0.01)            | $              --          | $          (0.11)            | $       1.89              
|                                                                                                              |                                          |                         |                            |                              |                           
|Nine Months Ended September 30, 2002Net income before cumulative effect of
    change in accounting principle | $       25,630                           | $          --           | $              --          | $          2,101             | $   27,731                
|Shares                                                                                                        | 26,514                                   | 173                     | 75                         | 2,610                        | 29,372                    
|Per-Share Amount                                                                                              | $           0.97                         | $    (0.01)             | $              --          | $          (0.02)            | $       0.94              
|Cumulative effect of change in
    accounting principle                                                       | 495                                      |                         |                            |                              | 495                       
|Per-Share Amount                                                                                              | $           0.02                         |                         |                            |                              | $       0.02              
|Net income                                                                                                    | 26,125                                   |                         |                            |                              | 28,226                    
|Per-Share Amount                                                                                              | $           0.99                         |                         |                            |                              | $       0.96              

At September 30, 2003 and 2002, 705,482 and 753,176 shares, respectively, related to stock options, were not included in the dilutive earnings per share calculation because the options' exercise price was greater than the market price of the common stock.Note 8 - Industry Segment InformationWe have five principal segments that provide a broad range of financial services.  The mortgage banking line of business originates, sells, and services residential first mortgage loans throughout the United States.  The commercial banking line of business provides commercial banking services in seven Midwestern and Rocky Mountain states.  The home equity lending line of business originates and services home equity loans and lines of credit throughout the United States.  The commercial finance line of business originates leases and loans against commercial equipment and real estate throughout the United States (U.S.) and Canada.  The venture capital line of business invests in early-stage U.S. technology companies focusing on financial services.  Our other segment primarily 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 the three months and nine months ended September 30, 2003, and 2002:

|                                                                 | Mortgage
Banking | Commercial
Banking | Home Equity
Lending | Commercial
Finance | Venture
Capital | Other      | Consolidated 
|---------------------------------------------------------------- | ---------------- | ------------------ | ------------------- | ------------------ | --------------- | ---------- | -------------
|                                                                 | (In thousands)  
|For the Three Months Ended September 30, 2003Net interest income | $       27,614   | $       21,011     | $       28,765      | $      5,822       | $         (2)   | $  (7,577) | $      75,633
|Intersegment interest                                            | (3,288)          | (895)              | (2,110)             | (137)              | --              | 6,430      | --           
|Provision for loan and lease losses                              | (191)            | (1,500)            | (10,728)            | (2,388)            | --              | 29         | (14,778)     
|Other revenue                                                    | 90,758           | 5,744              | 8,091               | 1,181              | 294             | (1,044)    | 105,024      
|Intersegment revenues                                            | --               | --                 | --                  | --                 | 150             | (150)      | --           
|Total net revenues                                               | 114,893          | 24,360             | 24,018              | 4,478              | 442             | (2,312)    | 165,879      
|Other expense                                                    | 73,519           | 13,902             | 18,965              | 3,708              | 329             | 4,344      | 114,767      
|Intersegment expenses                                            | 691              | 414                | 691                 | 121                | --              | (1,917)    | --           
|Net income (loss) before taxes                                   | 40,683           | 10,044             | 4,362               | 649                | 113             | (4,739)    | 51,112       
|Income taxes                                                     | 15,648           | 4,071              | 1,745               | 603                | 48              | (2,121)    | 19,994       
|Net income (loss)                                                | $      25,035    | $         5,973    | $          2,617    | $           46     | $          65   | $  (2,618) | $      31,118

Mortgage
Banking
Commercial
Banking
Home Equity
Lending
Commercial
Finance
Venture
Capital
Other
Consolidated(In thousands)For the Three Months Ended September 30, 2002Net interest income
$    10,217
$      17,325
$       27,107
$        3,838
$          11
$    (1,017)
$      57,481Intersegment interest
--
557
--
--
--
(557)
--Provision for loan and lease losses
(16)
(2,630)
(9,221)
(3,804)
--
94
(15,577)Other revenue
45,829
2,554
1,983
1,631
(2,860)
34
49,171Intersegment revenues
--
54
--
--
125
(179)
--Total net revenues
56,030
17,860
19,869
1,665
(2,724)
(1,625)
91,075Other expense
42,347
11,785
18,575
2,911
63
2,186
77,867Intersegment expenses
527
343
589
--
--
(1,459)
--Net income (loss) before taxes
13,156
5,732
705
(1,246)
(2,787)
(2,352)
13,208Income taxes
5,115
2,238
282
(583)
(1,115)
(922)
5,015Net income (loss)
$      8,041
$         3,494
$             423
$         (663)
$   (1,672)
$    (1,430)
$         8,193




|                                                                | Mortgage
Banking | Commercial
Banking | Home Equity
Lending | Commercial
Finance | Venture
Capital | Other        | Consolidated  
|--------------------------------------------------------------- | ---------------- | ------------------ | ------------------- | ------------------ | --------------- | ------------ | --------------
|                                                                | (In thousands)  
|For the Nine Months Ended September 30, 2003Net interest income | $       69,285   | $     63,346       | $        86,967     | $     16,413       | $          7    | $  (24,032)  | $     211,986 
|Intersegment interest                                           | (7,991)          | (4,764)            | (5,678)             | (523)              | --              | 18,956       | --            
|Provision for loan and lease losses                             | (221)            | (4,413)            | (23,578)            | (9,321)            | (215)           | 93           | (37,655)      
|Other revenue                                                   | 260,566          | 16,517             | (29,383)            | 4,678              | (2,133)         | (1,353)      | 248,892       
|Intersegment revenues                                           | --               | --                 | --                  | --                 | 450             | (450)        | --            
|Total net revenues                                              | 321,639          | 70,686             | 28,328              | 11,247             | (1,891)         | (6,786)      | 423,223       
|Other expense                                                   | 209,224          | 40,982             | 61,730              | 10,811             | 440             | 8,409        | 331,596       
|Intersegment expenses                                           | 2,072            | 1,205              | 2,116               | 400                | --              | (5,793)      | --            
|Net income (loss) before taxes                                  | 110,343          | 28,499             | (35,518)            | 36                 | (2,331)         | (9,402)      | 91,627        
|Income taxes                                                    | 42,427           | 11,435             | (14,207)            | 251                | (932)           | (3,469)      | 35,505        
|Net income (loss)                                               | $        67,916  | $       17,064     | $      (21,311)     | $        (215)     | $  (1,399)      | $    (5,933) | $       56,122
|Assets at September 30, 2003                                    | $   1,443,531    | $  2,195,135       | $      989,479      | $   425,483        | $     7,803     | $    (2,248) | $  5,059,183  



Mortgage
Banking
Commercial
Banking
Home Equity
Lending
Commercial
Finance
Venture
Capital
Other
Consolidated(In thousands)For the Nine Months Ended September 30, 2002Net interest income
$      26,050
$        49,250
$       65,697
$       10,959
$          33
$    (2,377)
$     149,612Intersegment interest
--
2,006
--
(2)
--
(2,004)
--Provision for loan and lease losses
(218)
(7,140)
(21,681)
(6,519)
--
149
(35,409)Other revenue
136,659
10,944
1,180
3,260
(4,341)
(114)
147,588Intersegment revenues
--
163
--
--
451
(614)
--Total net revenues
162,491
55,223
45,196
7,698
(3,857)
(4,960)
261,791Other expense
115,604
35,722
55,118
8,800
363
4,441
220,048Intersegment expenses
1,588
881
1,775
--
--
(4,244)
--Net income (loss) before taxes
45,299
18,620
(11,697)
(1,102)
(4,220)
(5,157)
41,743Income taxes
17,736
7,238
(4,679)
(452)
(1,688)
(2,042)
16,113Income (loss) before cumulative effect of
     change in accounting principle
27,563
11,382
(7,018)
(650)
(2,532)
(3,115)
25,630Cumulative effect of change in accounting principle
--
--
--
495
--
--
495Net income (loss)
$       27,563
$       11,382
$       (7,018)
$           (155)
$   (2,532)
$    (3,115)
26,125Assets at September 30, 2002
$  1,043,100
$  1,921,706
$     960,327
$      315,011
$     3,990
$    19,781
$  4,263,915


Note 9 - Contingencies

- statements and assumptions relating to projected growth in our revenues, earnings or earnings per share as well as management's short-term and long-term performance goals;
- statements and assumptions relating to projected trends or potential changes in our asset quality, loan delinquencies, asset valuations, capital ratios or financial performance measures;
- statements relating to our plans and strategies, including the expected results or impact of implementing such plans and strategies;
- statements relating to potential litigation developments and the anticipated impact of potential outcomes of pending legal matters; and
- any other statements 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:  potential changes in and volatility of interest rates, which may affect consumer demand for our products and the success of our interest rate risk management strategies; staffing fluctuations in response to product demand; the relative profitability of our lending operations; the valuation and management of our servicing portfolios, including short-term swings in valuation of such portfolios due to quarter-end movements in secondary market interest rates which are inherently volatile; the valuation of our residual interests, which is subject to prepayment speeds, delinquencies and defaults that may fluctuate with the economy; refinancing opportunities, which may affect the prepayment assumptions used in our valuation estimates and which may affect loan demand; unanticipated deterioration in the credit quality of our loan assets; deterioration in the carrying value of our other assets, including securities and other
assets; difficulties in delivering loans to the secondary market 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; changes in variable compensation plans related to the performance and valuation of lines of business where we have compensation systems tied to line of business performance; legislative or regulatory changes, including changes in the interpretation of regulatory capital rules, changes in consumer or commercial lending rules or rules affecting corporate governance, or the availability of resources to address these rules; changes in applicable accounting policies or principles or their application to our businesses; or governmental changes in monetary or fiscal policies.  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 (SEC).

|                               | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------------ | -------------------------------- | -------------------------------
|                               | 2003                             | 2002                           
|Net income (millions)          | $      31.1                      | $      8.2                     
|Basic earnings per share (1)   | 1.11                             | 0.30                           
|Diluted earnings per share (1) | 1.03                             | 0.29                           
|Return on average equity       | 30.42%                           | 9.89%                          
|Return on average assets       | 2.16                             | 0.79                           

> _________

Consolidated Income Statement Analysis

|                                                             | Nine Months Ended September 30,
|------------------------------------------------------------ | -------------------------------
|                                                             | 2003                           
|                                                             | Average Balance                
|                                                             | (Dollars in thousands)         
|Assets                                                       |                                
|Interest-earning assets                                      |                                
|Interest-bearing deposits with banks                         | $      70,927                  
|Federal funds sold                                           | 26,697                         
|Residual interests                                           | 118,424                        
|Investment securities                                        | 65,855                         
|Loans held for sale                                          | 1,366,826                      
|Loans and leases, net of unearned income (1)                 | 3,082,603                      
|Total interest earning assets                                | $  4,731,332                   
|Noninterest-earning assets                                   |                                
|Cash and due from banks                                      | $     106,205                  
|Premises and equipment, net                                  | 32,408                         
|Other assets                                                 | 405,184                        
|Less allowance for loan and lease losses                     | (55,066)                       
|Total assets                                                 | $  5,220,063                   
|Liabilities and Shareholders' Equity                         |                                
|Interest-bearing liabilities                                 |                                
|Money market checking                                        | $      162,789                 
|Money market savings                                         | 840,509                        
|Regular savings                                              | 63,384                         
|Time deposits                                                | 1,009,339                      
|Short-term borrowings                                        | 635,265                        
|Long-term                                                    | 30,066                         
|Collateralized debt                                          | 585,861                        
|Trust preferred securities                                   | 232,983                        
|Total interest-bearing liabilities                           | $   3,560,196                  
|Noninterest-bearing liabilities                              |                                
|Demand deposits                                              | $   1,089,719                  
|Other liabilities                                            | 187,695                        
|Shareholders' equity                                         | 382,453                        
|Total liabilities and shareholders' equity                   | $  5,220,063                   
|Net interest income                                          |                                
|Net interest income to average interest-
     earning assets |                                

> __________

Provision for Loan and Lease Losses
     The consolidated provision for loan and lease losses for the three months ended September 30, 2003 was $14.8 million, compared to $15.6 million for the same period in 2002.  Year to date, the provision for 2003 was $37.7 million, compared to $35.4 million in 2002.  More information on this subject is contained in the section on credit risk.Noninterest IncomeNoninterest income during the three months ended September 30, 2003 totaled $105.0 million, compared to $49.2 million for the same period in 2002.  Non-interest income of $248.9 million was recorded for the nine months ended September 30, 2003 and $147.6 million for the same period in 2002.  The increase in 2003 versus 2002 year-to-date noninterest income was primarily a result of a 114% increase in gain from sale of loans primarily at the mortgage banking line of business as a result of market conditions and increased production resulting in increased secondary market deliveries.  Partially offsetting this increase was higher amortization expense related to mortgage servicing rights as a result of a higher balance outstanding and lower interest rates as well as higher trading losses related to our residual assets due to higher expected credit losses in the first six months of the year.Noninterest ExpenseNoninterest expenses for the three and nine months ended September 30, 2003 totaled $114.8 million and $331.6 million, respectively, compared to $77.9 million and $220.0 million for the same periods in 2002.  The increase in consolidated noninterest expense in 2003 is primarily related to higher personnel costs, especially commissions, associated with our increased production at the mortgage banking line of business.Consolidated Balance Sheet AnalysisTotal assets at September 30, 2003 were $5.1 billion, up 4% from December 31, 2002.  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 for purposes of evaluating income statement effects of changes in balance sheet accounts.  Year to date average assets for 2003 were $5.2 billion, up 30% from the year to date average assets at December 31, 2002.  The growth in the consolidated average balance sheet reflects significant growth in loans held for sale at the mortgage banking line of business during the first nine months of 2003, although the balance sheet at September 30, 2003, does reflect a slowing of mortgage loan production and a commensurate decline in mortgage loans-held-for-sale.  Also, there were increases in portfolio loans and leases at the commercial banking, home equity lending and commercial finance lines of business. Loans and LeasesOur commercial loans and leases are originated throughout the United States and Canada.  At September 30, 2003, 95% of our loan and lease portfolio was associated with our U.S. operations.  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:

|                                       | September 30,  | December 31, 
|-------------------------------------- | -------------- | -------------
|                                       | 2003           | 2002         
|                                       | (In thousands)
|Commercial, financial and agricultural | $   1,476,305  | $   1,347,962
|Real estate construction               | 320,323        | 314,851      
|Real estate mortgage                   | 891,011        | 777,865      
|Consumer                               | 28,259         | 27,857       
|Direct lease financing:                |                |              
|Domestic                               | 327,965        | 291,711      
|Canadian                               | 189,344        | 133,784      
|Unearned income:                       |                |              
|Domestic                               | (66,927)       | (59,287)     
|Canadian                               | (26,945)       | (19,467)     
|Total                                  | $    3,139,335 | $   2,815,276

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

|                                                 | September 30,  | December 31,
|------------------------------------------------ | -------------- | ------------
|                                                 | 2003           | 2002        
|                                                 | (In thousands)
|U.S. Treasury and government obligations         | $    40,985    | $    14,992 
|Obligations of states and political subdivisions | 4,035          | 4,210       
|Mortgage-backed securities                       | 2,152          | 1,738       
|Other                                            | 64,885         | 47,008      
|Total                                            | $   112,057    | $    67,948 

At September 30, 2003, 97% of our investment in Other were investments in the stock of the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis.  The amount of our investment is determined by formula and relates to the size or amount of activities undertaken by us with those organizations.Servicing Assets     Our gross mortgage servicing assets totaled $489.3 million at September 30, 2003, compared to $334.8 million at December 31, 2002.  We have established a valuation reserve to record servicing assets at their lower of cost or fair value.  The valuation allowance was $161.8 million at September 30, 2003, and $160.0 million at December 31, 2002.  The increase in the gross servicing asset relates to the growth in the underlying servicing portfolio which is reflective of our desire to build this portfolio in anticipation of rising interest rates. DepositsTotal deposits as of September 30, 2003 averaged $3.2 billion compared to deposits for the year 2002 that averaged $2.4 billion.  Demand deposits at September 30, 2003 averaged $1.1 million, an 89% increase over the average balance for the year 2002.  A significant portion of demand deposits is related to deposits at Irwin Union Bank and Trust, which are associated with escrow accounts held on loans in the servicing portfolio at the mortgage banking line of business.  These escrow accounts averaged $878.3 million year to date 2003 compared to an average of $409.4 million for the year 2002. Escrow balances totaled $691.2 million as of September 30, 2003, down from $1.0 billion at June 30, 2003, reflecting a slowing of mortgage refinancing activity.
     We utilize institutional broker-sourced deposits as funding from time to time to supplement deposits solicited through branches and other wholesale funding sources.  At September 30, 2003, institutional broker-sourced deposits totaled $353.7 million compared to a balance of $337.4 million at December 31, 2002.  The increase in brokered deposits in 2003 relates to the increased funding needed to support the balance sheet growth in loans, coupled with a desire to maintain a laddering of the maturities of longer term wholesale funding.Short-Term BorrowingsShort-term borrowings year to date for 2003 averaged $635.3 million compared to an average of $600.8 million for the year 2002.  The increase in 2003 was a result of strong growth in loans.

|                                       | September 30,   | December 31,    
|-------------------------------------- | --------------- | ----------------
|                                       | 2003            | 2002            
|                                       | (In thousands) 
|Tier 1 capital                         | $       534,729 | $        462,064
|Tier 2 capital                         | 189,177         | 196,092         
|Total risk-based capital               | $       723,906 | $        658,156
|Risk-weighted assets                   | $    4,888,471  | $     4,996,891 
|Risk-based ratios:                     |                 |                 
|Tier 1 capital                         | 10.9%           | 9.2%            
|Total capital                          | 14.8            | 13.2            
|Tier 1 leverage ratio                  | 9.3             | 9.7             
|Ending shareholders' equity to assets  | 8.2             | 7.4             
|Average shareholders' equity to assets | 7.3             | 8.0             

At September 30, 2003, our total risk-adjusted capital ratio was 14.8% compared to the 10.0% required to be considered "well-capitalized" by banking regulation and our internal minimum target of 11.0%.  At December 31, 2002, our total risk-adjusted capital ratio was 13.2%.  Our ending equity to assets ratio at September 30, 2003 was 8.2% compared to 7.4% at December 31, 2002.  Our Tier 1 capital totaled $534.7 million as of September 30, 2003, or 10.9% of risk-weighted assets. 
     Our January 1997 trust preferred issuance of $50 million (IFC Capital Trust I) is eligible for redemption at par at our option.  We are pursuing a rate-reduction refinancing for this security.  In addition, assuming a threshold 20-day consecutive closing price of our common stock at or above $24.78 per share, our November 2000 convertible trust preferred issuance (IFC Capital Trust III) is eligible for redemption at a 15% premium, at our option.  This premium will decline to 10% in one year and zero in two years.  At this point, we are considering, but have not elected to exercise this option.  If we do decide to call all or part of the securities related to this issuance, we will ensure that we remain in compliance with regulatory capital requirements.
     In connection with an analysis of the capital needed to support certain of our home equity lending activities in accordance with regulatory guidance set forth in SR 01-4 and in consultation with our banking regulators, we made a risk-weighting adjustment in our regulatory Consolidated Report of Condition and Income, beginning with the third quarter of 2003.  This adjustment will reflect a risk-weighting of 200 percent for certain assets that are described in the guidance as "subprime."  These assets totaled $235.6 million as of September 30, 2003.  The effect of this change in risk-weighting is included in the capital ratios as of September 30, 2003 set forth above. We have curtailed the origination of loan and line products that require this risk capital treatment and intend to sell our limited amount of new originations of these products on a whole loan basis.  Therefore, we expect the portfolio balance to decline over time.  Cash Flow AnalysisOur cash and cash equivalents increased $5.5 million year to date for 2003 compared to a decrease of $12.8 million during the same period in 2002.  Cash flows from operating activities generated $461.7 million in cash and cash equivalents in the nine months of 2003 compared to the same period in 2002 when our operations used $127.9 million in cash and cash equivalents.  Changes in loans held for sale impact cash flows from operations.  Year to date for 2003, our loans held for sale decreased $294.8 million, thus decreasing the cash used by operating activities.  During the same period in 2002, loans held for sale increased $271.0 million.Earnings Outlook 
     Due to our recent mortgage origination activity, the potential for reversal in mortgage servicing asset impairment should interest rates increase meaningfully as compared to the end of September 2003, and our assumption that we will be successful in the execution of the other elements of our diversified revenue strategy, we expect at the time of this filing that we will have consolidated earnings per share (diluted) in 2003 of at least $2.25 per share.  This estimate is based on various factors and current assumptions management believes are reasonable, including current industry forecasts of a variety of economic and competitive factors.  However, projections are inherently uncertain, and our actual earnings may differ significantly from this estimate due to uncertainties and risks related to our business.  Our transition off securitization gain-on-sale accounting in our home equity line of business will have had a two-year history at the end of 2003.  We believe that this transition, coupled with the continued growth of our other lines of business, will enable us over time to produce earnings growth and return on equity aligned with our long-term targets of 12% or better growth in earnings per share and 15% or better return on equity on an annualized basis over economic cycles, although interim results may differ meaningfully due to market conditions.
     A meaningful amount of our earnings comes from activities and mark-to-market accounting requirements tied directly or indirectly to market activities, particularly movements in the bond market (e.g., the valuation of our mortgage servicing portfolio).  We attempt to manage the impact of short-term movements in interest rates on the valuation of our mortgage servicing rights through use of a combination of financial derivatives and the changes in income from production of new mortgages likely to be driven by those same movements in interest rates.  However, the correlation within short periods of time (such as a single quarter) between interest rate movements that impact the reported value of our mortgage servicing rights at quarter end and the production effects of those interest rate movements -- which may not be reflected until the following quarter -- can be low.  It is possible, therefore, that our balanced revenue strategy may be successful as measured over several quarters or years, but may have market-driven variances if measured over short periods.  We also have a large amount of income that is subject to assumptions and pricing for credit risks.  We use a variety of methods for estimating the effects of and accounting for credit losses, but ultimately, we need to make estimates based on imperfect knowledge of future events.  For example, if the pace of economic recovery in the U.S. is slower during the last quarter of 2003 than currently anticipated by consensus estimates, our credit related costs may increase beyond our current estimates. Conversely, should the economic environment be stronger than estimated at September 30, certain credit costs may be lower than we had previously estimated. Earnings by Line of BusinessIrwin Financial Corporation is composed of five principal lines of business:

- Mortgage Banking
- Commercial Banking
- Home Equity Lending
- Commercial Finance
- Venture Capital

The following table summarizes our net income (loss) by line of business for the periods indicated:

|                                        | Three Months Ended September 30, | Nine Months Ended September 30,
|--------------------------------------- | -------------------------------- | -------------------------------
|                                        | 2003                             | 2002                           
|                                        | (In thousands)                  
|Net income (loss):                      |                                  |                                
|Mortgage Banking                        | $      25,035                    | $     8,041                    
|Commercial Banking                      | 5,973                            | 3,494                          
|Home Equity Lending                     | 2,617                            | 423                            
|Commercial Finance                      | 46                               | (663)                          
|Venture Capital                         | 65                               | (1,672)                        
|Other (including consolidating entries) | (2,618)                          | (1,430)                        
|                                        | $      31,118                    | $     8,193                    

Mortgage Banking
     The following table shows selected financial information for our mortgage banking line of business:

|                                           | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------------------------ | -------------------------------- | -------------------------------
|                                           | 2003                             | 2002                           
|                                           | (In thousands)                  
|Selected Income Statement Data:            |                                  |                                
|Net interest income                        | $     24,326                     | $       10,217                 
|Provision for loan losses                  | (191)                            | (16)                           
|Gain on sales of loans                     | 80,775                           | 49,603                         
|Loan servicing fees                        | 22,008                           | 14,524                         
|Amortization of servicing assets           | (29,291)                         | (14,522)                       
|Recovery (impairment) of servicing  assets | 41,838                           | (86,773)                       
|Gain (loss) on derivatives                 | (27,613)                         | 81,162                         
|Gain on sales of mortgage servicing assets | 7                                | 223                            
|Other income                               | 3,034                            | 1,612                          
|Total net revenue                          | 114,893                          | 56,030                         
|Operating expense                          | (74,210)                         | (42,874)                       
|Income before taxes                        | 40,683                           | 13,156                         
|Income taxes                               | (15,648)                         | (5,115)                        
|Net income                                 | $     25,035                     | $         8,041                
|Selected Operating Data:                   |                                  |                                
|Mortgage loan originations                 | $7,049,363                       | $  3,011,673                   



|Selected Balance Sheet Data at End of Period: | September 30,      | December 31,    
|--------------------------------------------- | ------------------ | ----------------
|                                              | 2003               | 2002            
|                                              | (In thousands)    
|Total assets                                  | $        1,443,531 | $      1,631,406
|Mortgage loans held for sale                  | 922,874            | 1,239,309       
|Mortgage servicing assets                     | 295,102            | 146,398         
|Shareholder's equity                          | 146,344            | 100,069         
|Selected Operating Data:                      |                    |                 
|Servicing portfolio:                          | 28,497,923         | 16,792,669      
|Balance at end of period                      |                    |                 
|Weighted average coupon rate                  | 5.86 %             | 6.59 %          
|Weighted average servicing fee                | 0.33               | 0.37            
|Selected Balance Sheet Data at End of Period: | September 30,      | December 31,    
|                                              | 2003               | 2002            
|                                              | (In thousands)     |                 
|Total assets                                  | $        1,443,531 | $      1,631,406
|Mortgage loans held for sale                  | 922,874            | 1,239,309       
|Mortgage servicing assets                     | 295,102            | 146,398         
|Shareholder's equity                          | 146,344            | 100,069         
|Selected Operating Data:                      |                    |                 
|Servicing portfolio:                          | 28,497,923         | 16,792,669      
|Balance at end of period                      |                    |                 
|                                              |                    |                 

Overview



|                        | Three Months Ended September 30, | Nine Months Ended September 30,
|----------------------- | -------------------------------- | -------------------------------
|                        | 2003                             | 2002                           
|                        | (Dollars in thousands)          
|Total originations      | $      7,049,363                 | $    3,011,673                 
|Percent retail loans    | 24.9%                            | 33.1%                          
|Percent wholesale loans | 37.9                             | 61.2                           
|Percent correspondent   | 34.0                             | --                             
|Percent brokered (1)    | 3.2                              | 5.7                            
|Percent refinances      | 72.9                             | 62.4                           

> __________

Mortgage loan originations for the three months ended September 30, 2003 totaled $7.0 billion, up 134% from the same period in 2002.  For the year to date, originations totaled $19.8 billion, up 188% from 2002.  Refinanced loans accounted for 73% of loan production for the third quarter and year to date, 2003 compared to 62% and 53% for the same periods in 2002.  The increased originations and refinances as a percent of production in 2003 are a result of the favorable interest rate conditions as well as distribution channel expansions. Net RevenueNet revenue for the three and nine months ended September 30, 2003 totaled $114.9 million and $321.6 million, compared to $56.0 million and $162.5 million for the three and nine months ended September 30, 2002. 
     Net interest income is generated from the interest earned on mortgage loans before they are sold to investors, less the interest expense incurred on borrowings to fund the loans.  Net interest income for the third quarter in 2003 totaled $24.3 million compared to $10.2 million for the third quarter in 2002.  Net interest income year to date increased 135% to $61.3 million.  The increase in net interest income in 2003 is a result of increased production related to the favorable interest rate environment as well as an increase in spread between short-term warehouse interest rates we pay and longer-term interest rates paid to us by our borrowers while the mortgage loans are on our balance sheet.  Another contributor to the increase is the development of our correspondent channel where the bulk of net revenues come from the warehousing process and where production fees are of lesser importance to profitability as compared to the retail and wholesale channels.
     Gain on sale of loans includes the valuation of newly created mortgage servicing rights and net loan origination fees and is recognized when loans are pooled and sold into the secondary mortgage market.  Also included in gain on sale of loans are fair value adjustments to forward contracts and interest rate lock commitments.  Gain on sale of loans during the third quarter increased 63% compared to the same period in 2002.  Gain on sale of loans for the nine months ended September 30, 2003 totaled $283.5 million, compared to $123.5 million for the same period in 2002, an increase of 130%.  This increase is attributable to increased production, improved market conditions and increased secondary market activity as a result of the favorable interest rate environment.
     Servicing fee income is recognized by collecting fees, which normally range between 25 and 44 basis points annually on the principal amount of the underlying mortgages.  Servicing fee income totaled $22.0 million and $57.9 million for the three and nine months ended September 30, 2003, an increase of 52% and 34% from the same periods in 2002, primarily reflecting the growth in the servicing portfolio.
     Amortization expense relates to mortgage servicing rights and is based on the proportion of current net servicing cash flows to the total expected for the estimated lives of the underlying loans.  Amortization expense totaled $29.3 million for the three months ended September 30, 2003, compared to $14.5 million during the third quarter of 2002.  Year-to-date amortization expense totaled $89.8 million and $39.1 million for 2003 and 2002, respectively.  This increase relates to the increase in the underlying servicing portfolio, the shortening of estimated lives due to decreases in interest rates, and an enhancement we made to our mortgage asset amortization methodology commencing at the beginning of 2003.  The methodology enhancement better aligns the amortization with current prepayment speeds.  This change will likely result in a commensurate offset (positive or negative depending on the then current interest rate environment) to our quarterly servicing asset impairment.
     Impairment expense is recorded when the book value of the mortgage servicing rights exceeds the fair value on a strata by strata basis.  Impairment recovery totaled $41.8 million during the third quarter and impairment expense totaled $0.8 million for the nine months ended September 30, 2003, compared to expense of $86.8 million and $124.0 million during the same periods of 2002.  The impairment reversal recorded in 2003 was somewhat offset by derivative losses of $27.6 million during the third quarter and gains of $1.6 million year to date in 2003.  Derivative gains of $81.2 million and $118.5 million were recorded during the third quarter and year to date in 2002, respectively.  As a result, impairment recovery net of derivative losses totaled $14.2 million in the third quarter of 2003 compared to an impairment expense net of derivative gains of $5.6 million during the same period in 2002.  At September 30, 2003, the mortgage line of business held $5 billion notional amount in interest rate swaptions and $12 billion notional amount of Eurodollar future contracts to manage the risk of our servicing assets.  Notional amounts do not represent the amount at risk.  The swaptions we owned on September 30, 2003, had expiration dates of October 1, 2003, and were replaced on that date by new swaption contracts. We closed our Eurodollar futures positions on October 1, 2003. The current risk management activities of the mortgage bank related to servicing assets do not satisfy the criteria for "hedge accounting" under SFAS 133.  As a result, these derivatives are accounted for as "other assets" and "other liabilities," and changes in fair value are adjusted through earnings as "derivative gains," while the underlying servicing asset is accounted for on a strata-by-strata basis at the lower of cost or market.
     Our mortgage banking business maintains the flexibility to either sell servicing for current cash flow through bulk sales or to retain servicing for future cash flow through the retention of ongoing servicing fees.  The decision to sell or retain servicing is based on current market conditions for servicing assets, loan origination levels and production expenses, servicing portfolio management considerations, consolidated capital constraints, and the general level of risk tolerance of the mortgage banking line of business and the Corporation.  Over the past few years, we have built our servicing portfolio in anticipation of rising interest rates that would result in lower mortgage loan production.Operating ExpensesThe following table sets forth operating expenses for our mortgage banking line of business for the periods indicated:



|                               | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------------ | -------------------------------- | -------------------------------
|                               | 2003                             | 2002                           
|                               | (Dollars in thousands)          
|Salaries and employee benefits | $    21,569                      | $    15,343                    
|Incentive and commission pay   | 23,794                           | 12,354                         
|Other expenses                 | 28,847                           | 15,177                         
|Total operating expenses       | $    74,210                      | $    42,874                    
|Number of employees(1)         |                                  |                                

> __________(1)

Operating expenses for the three and nine months ended September 30, 2003 totaled $74.2 million and $211.3 million, a 73% and 80% increase over the same periods in 2002.  Salaries and employee benefits including incentive and commission pay increased 64% during the third quarter of 2003 compared to the same period in 2002.  These fluctuations reflect significant increases in production activities in 2003.Mortgage ServicingThe following table shows information about our managed mortgage servicing portfolio, including mortgage loans held for sale, for the periods indicated:



|                                                                                     | Nine Months Ended 
September 30, | Year Ended 
December 31,
|------------------------------------------------------------------------------------ | -------------------------------- | ------------------------
|                                                                                     | 2003                             | 2002                    
|                                                                                     | (Portfolio in billions)         
|Beginning servicing portfolio                                                        | $         16.8                   | $          12.9         
|Mortgage loan closings                                                               | 19.2                             | 10.8                    
|Sales                                                                                | (0.5)                            | (2.9)                   
|Run-off(1)                                                                           | (7.0)                            | (4.0)                   
|Ending servicing portfolio                                                           | $         28.5                   | $         16.8          
|Number of loans (end of period)                                                      | 220,553                          | 137,738                 
|Average loan size                                                                    | $   129,211                      | $   121,917             
|Percent Government National Mortgage Association
  (GNMA) and state housing programs | 26%                              | 37%                     
|Percent conventional and other                                                       | 74                               | 63                      
|Delinquency ratio                                                                    | 4.1                              | 5.3                     
|Mortgage servicing assets to related servicing portfolio(2)                          | 1.0                              | 0.9                     

> __________

Our mortgage servicing portfolio, including mortgage loans held for sale, totaled $28.5 billion at September 30, 2003, a 70% increase from the December 31, 2002 balance of $16.8 billion.  The increase in 2003 reflects the strong mortgage production we have experienced along with greater retention of servicing on loans sold over the past year.  We believe that the relative growth of the conventional portion of the portfolio is the result of heavy refinance activity in 2003 where conventional loans made up a higher than normal portion of our originations. 
     We record originated mortgage-servicing assets at allocated cost basis when the loans are sold and record purchased servicing assets at fair value.  Thereafter servicing assets are accounted for at the lower of their cost or fair value.  We record a valuation allowance for any impairment on a strata-by-strata basis.  We determine fair value on a monthly basis based on a discounted cash flow analysis.  These cash flows are projected over the life of the servicing using prepayment, default, discount rate and cost to service assumptions that we believe market participants would use to value similar assets.  We then assess these modeled assumptions for reasonableness through independent, third-party valuations and through the use of industry surveys.  At September 30, 2003, we estimated the fair value of these assets to be $300.0 million in the aggregate, or $4.9 million greater than the carrying value on the balance sheet.  At December 31, 2002, we estimated the fair value of these assets to be $150.8 million in the aggregate, or $4.4 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 September 30, | Nine Months Ended September 30,
|----------------------------------- | -------------------------------- | -------------------------------
|                                    | 2003                             | 2002                           
|                                    | (Dollars in thousands)          
|Selected Income Statement Data:     |                                  |                                
|Interest income                     | $       28,359                   | $       28,325                 
|Interest expense                    | (8,243)                          | (10,443)                       
|Net interest income                 | 20,116                           | 17,882                         
|Provision for loan and lease losses | (1,500)                          | (2,630)                        
|Noninterest income                  | 5,744                            | 2,608                          
|Operating expense                   | (14,316)                         | (12,128)                       
|Income before taxes                 | 10,044                           | 5,732                          
|Income taxes                        | (4,071)                          | (2,238)                        
|Net income                          | $         5,973                  | $         3,494                
|                                    |                                  |                                



|                                             | September 30,       | December 31,    
|-------------------------------------------- | ------------------- | ----------------
|Selected Balance Sheet Data at End of Period | 2003                | 2002            
|Total assets                                 | $         2,195,135 | $      1,969,956
|Loans                                        | 1,968,078           | 1,823,304       
|Allowance for loan and lease losses          | 22,031              | 20,725          
|Deposits                                     | 1,952,238           | 1,733,864       
|Shareholder's equity                         | 159,489             | 154,423         
|                                             |                     |                 
|                                             | September 30,       | December 31,    
|Daily Averages Year to Date:                 | 2003                | 2002            
|Assets                                       | $       2,078,090   | $      1,802,896
|Loans                                        | 1,893,736           | 1,693,426       
|Allowance for loan and lease losses          | 21,061              | 17,823          
|Deposits                                     | 1,861,775           | 1,583,926       
|Shareholder's equity                         | 146,225             | 140,249         
|Shareholder's equity to assets               | 7.04%               | 7.78%           

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.Net IncomeCommercial banking net income increased to $6.0 million during the third quarter of 2003, compared to $3.5 million for the same period in 2002.  Year-to-date net income totaled $17.1 million in 2003 compared to net income of $11.4 million in 2002. Results during 2003 reflect growth in net interest income, noninterest income and a reduction in provisions for loan losses compared to the same periods of 2002.Net Interest IncomeThe following table shows information about net interest income for our commercial banking line of business:

|                                | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------------- | -------------------------------- | -------------------------------
|                                | 2003                             | 2002                           
|                                | (Dollars in thousands)          
|Net interest income             | $       20,116                   | $       17,882                 
|Average interest earning assets | 2,086,725                        | 1,787,092                      
|Net interest margin             | 3.82%                            | 3.97%                          

Net interest income was $20.1 million for the third quarter of 2003, an increase of 12% over third quarter of 2002.  Net interest income year to date for 2003 improved 14% over the same period in 2002.  The 2003 improvement in net interest income resulted primarily from an increase in our commercial banking loan portfolio as a result of growth and expansion efforts.  Net interest margin is computed by dividing net interest income by average interest earning assets.  Net interest margin for the three months ended September 30, 2003 was 3.82%, compared to 3.97% for the same period in 2002.  Year-to-date net interest margin for 2003 was 3.90% compared to 4.04% for 2002.  The line of business increased its core deposits to $1.7 billion, an increase of 13% since year-end. Noninterest IncomeThe following table shows the components of noninterest income for our commercial banking line of business:

|                                               | Three Months Ended September 30, | Nine Months Ended September 30,
|---------------------------------------------- | -------------------------------- | -------------------------------
|                                               | 2003                             | 2002                           
|                                               | (Dollars in thousands)          
|Trust fees                                     | $        463                     | $       433                    
|Service charges on deposit accounts            | 1,299                            | 1,178                          
|Insurance commissions, fees and premiums       | 446                              | 383                            
|Gain from sales of loans                       | 2,454                            | 1,199                          
|Loan servicing fees                            | 321                              | 242                            
|Amortization of servicing assets               | (964)                            | (418)                          
|Recovery (impairment) of servicing assets      | 326                              | (1,300)                        
|Brokerage fees                                 | 336                              | 261                            
|Other                                          | 1,063                            | 630                            
|Total noninterest income                       | $     5,744                      | $    2,608                     
|Total noninterest income to total net revenues | 24%                              | 15%                            

Noninterest income year to date for 2003 increased 49% over 2002.  This increase was due primarily to higher gains from sales of loans related to increased mortgage production and reversal of impairment on mortgage servicing assets.  These increases were partially offset by increased amortization charges recorded against mortgage servicing assets in this line of business.  The commercial banking line of business has a first mortgage servicing portfolio totaling $440.8 million, principally a result of mortgage loan production in its south-central Indiana markets.  Those servicing rights are carried on the balance sheet at the lower of cost or market, estimated at September 30, 2003 to be $3.2 million.Operating ExpensesThe following table shows the components of operating expenses for our commercial banking line of business:

|                                     | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------------------ | -------------------------------- | -------------------------------
|                                     | 2003                             | 2002                           
|                                     | (Dollars in thousands)          
|Salaries and employee benefits       | $      8,498                     | $       7,363                  
|Other expenses                       | 5,818                            | 4,765                          
|Total operating expenses             | $    14,316                      | $     12,128                   
|Number of employees at period end(1) |                                  |                                

> __________

Operating expenses for the nine months ended September 30, 2003 totaled $42.2 million, an increase of 15% over the same period in 2002.  While operating expenses increased 15% net revenues increased 28% year to date for 2003 compared to 2002, indicative of improved operating efficiency.
Balance SheetYear-to-date total assets as of September 30, 2003 averaged $2.1 billion compared to $1.8 billion for the year ended December 31, 2002.  Year-to-date average earning assets as of September 30, 2003 averaged $2.1 billion compared to $1.7 billion for the year 2002.  The most significant component of the increase in 2003 was an increase in commercial loans as a result of the commercial bank's continued growth and expansion efforts into new markets.  Average core deposits for the third quarter of 2003 totaled $1.7 billion, an increase of 12% over average core deposits in the fourth quarter 2002.Credit QualityAs of September 30, nonperforming loans and the allowance for loan losses have increased in 2003 over 2002 reflecting general economic conditions and portfolio growth.  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:

|                                         | September 30,          | December 31,  
|---------------------------------------- | ---------------------- | --------------
|                                         | 2003                   | 2002          
|                                         | (Dollars in thousands)
|Nonperforming loans                      | $     19,316           | $       14,970
|Other real estate owned                  | 995                    | 96            
|Total nonperforming assets               | $     20,311           | $       15,066
|Nonperforming assets to total assets     | 0.93%                  | 0.76%         
|Allowance for loan losses                | $     22,031           | $       20,725
|Allowance for loan losses to total loans | 1.12%                  | 1.14%         
|                                         |                        |               



|                                            | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------------------------- | -------------------------------- | -------------------------------
|                                            | 2003                             | 2002                           
|Provision for loan losses                   | $      1,500                     | $       2,630                  
|Net charge-offs                             | $         994                    | $       1,452                  
|Annualized net charge-offs to average loans | 0.20%                            | 0.33%                          

Home Equity Lending
     The following table shows selected financial information for the home equity lending line of business:

|                                                | Three Months Ended September 30, | Nine Months Ended September 30,
|----------------------------------------------- | -------------------------------- | -------------------------------
|                                                | 2003                             | 2002                           
|                                                | (Dollars in thousands)          
|Selected Income Statement Data                  |                                  |                                
|Net interest income                             | $      26,655                    | $      27,107                  
|Provision for loan losses                       | (10,728)                         | (9,221)                        
|Gain on sales of loans                          | 8,108                            | 9,200                          
|Loan servicing fees                             | 6,001                            | 3,174                          
|Amortization of servicing assets                | (3,808)                          | (1,294)                        
|Impairment of servicing assets                  | (499)                            | (59)                           
|Trading losses                                  | (1,376)                          | (9,574)                        
|Other income                                    | (335)                            | 536                            
|Total net revenues                              | 24,018                           | 19,869                         
|Operating expenses                              | (19,656)                         | (19,164)                       
|Income before taxes                             | 4,362                            | 705                            
|Income tax benefit (expense)                    | (1,745)                          | (282)                          
|Net income (loss)                               | $       2,617                    | $          423                 
|Selected Operating Data:                        |                                  |                                
|Loan volume                                     |                                  |                                
|Lines of credit                                 | $    72,400                      | $    138,883                   
|Loans                                           | 195,215                          | 151,884                        
|Secured by second mortgage                      | 87%                              | 99%                            
|Secured by first mortgage                       | 13%                              | 1%                             
|Gain on sale of loans to whole 
     loans sold | 3.7%                             | 4.9%                           
|                                                |                                  |                                



|Selected Balance Sheet Data:                                                   | September 30,
2003 | December 31,
2002
|------------------------------------------------------------------------------ | ------------------ | -----------------
|Home equity loans and lines of credit (1)                                      | $       728,220    | $      626,355   
|Allowance for loan losses                                                      | (30,370)           | (21,689)         
|Home equity loans held for sale                                                | 94,280             | 75,540           
|Residual assets -- trading (2)                                                 | 78,208             | 157,065          
|Short-term debt                                                                | 196,948            | 201,328          
|Collateralized borrowings                                                      | 530,461            | 391,425          
|Shareholders' equity                                                           | 141,115            | 155,831          
|Selected Operating Data:                                                       |                    |                  
|Total managed portfolio balance at end of period (3)                           | 1,539,623          | 1,830,339        
|Delinquency ratio (30+ days) on managed portfolio                              | 6.19%              | 6.01%            
|Total managed portfolio including credit risk sold(4) balance at end of period | $    2,548,600     | $   2,502,685    
|Weighted average coupon rate:                                                  |                    |                  
|Lines of credit                                                                | 9.91%              | 10.79%           
|Loans                                                                          | 12.31              | 13.50            

> __________

Overview
     Our home equity lending line of business originates, purchases, sells and services a variety of home equity lines of credit and fixed-rate home equity loan products nationwide.  We market our home equity products through a combination of direct mail, Internet, and wholesale channels.  We target creditworthy homeowners who are active credit users.  Customers are underwritten using proprietary models based on several criteria, including the customers' previous use of credit. 
     We offer home equity loans with combined loan-to-value (CLTV) ratios of up to 125% of their collateral value.  Home equity loans are priced taking into account, among other factors, the relative loan-to-value (LTV) ratio of the loan at origination.  For example, everything being equal, those loans with loan-to-value ratios greater than 100% (high LTV or HLTVs) are priced with higher coupons than home equity loans with loan-to-value ratios less than 100% to compensate for increased expected losses through default.  Year to date through September 30, 2003, HLTV home equity loans made up 51% of our loan originations and 60% of our managed portfolio.  In an effort to manage portfolio concentration risk and to comply with existing banking regulations, we have in place policies governing the size of our investment in loans secured by real estate where the LTV is greater than 90%. As discussed earlier in the Capital section, in accordance with regulatory guidance set forth in SR 01-4 and in consultation with our banking regulators, we made a risk-weighting adjustment in our regulatory Consolidated Report of Condition and Income, beginning with the third quarter of 2003.  This adjustment will reflect a risk-weighting of 200 percent for certain assets that are described in the guidance as "subprime."
     For most of our home equity product offerings, we offer customers the choice to accept an early repayment fee in exchange for a lower interest rate.  A typical early repayment option provides for a fee equal to up to six months' interest that is payable if the borrower chooses to repay the loan during the first three to five years of its term.  Approximately 82%, or $1.3 billion, of our home equity managed portfolio at September 30, 2003 has early repayment fee provisions.
     Generally we either sell loans through whole loan sales or we fund these loans on balance sheet through warehouse lines or secured, term financings.  We balance a desire to build portfolio with cash flow, profit targets, and current production expense levels as well as a desire to turn the balance sheet.  Our long-term targets for whole loan sales are in the 50-75% range. We retain the servicing rights for the loans we sell.  To address new capital rules, in 2002 we began using securitizations accounted for as on-balance sheet financing and whole loan sales, while eliminating our use of securitization structures requiring gain-on-sale accounting and the creation of residual interests.
     As we discussed in our 2002 annual report on Form 10-K, we responded to economic weakness and rising consumer delinquencies and defaults by implementing a new origination and underwriting strategy in late 2002.  Our objective was to increase focus on customers whose credit history would suggest lower risk of default on loans we extended.  It is our expectation that over time, our loss rates on this new production will be lower than that for our production up to that point and our overall risk-adjusted profitability will improve.  While our originations during the first nine months of 2003 still reflect a transition from previous to revised underwriting guidelines and, as such, current originations may not reflect the impact of these changes, the table below is illustrative of the changes we see in customer profile.

|                                                     | For the Three Months Ended
|---------------------------------------------------- | --------------------------
|                                                     | September 30,
2003        
|Total Originations (in thousands)                    | $    267,615              
|Weighted Average Coupon                              | 9.53%                     
|Loans up to 100% CLTV                                | 8.63                      
|Lines of credit up to 100% CLTV                      | 7.20                      
|Loans up to 125% CLTV                                | 11.33                     
|Lines of credit up to 125% CLTV                      | 11.22                     
|First mortgage loans to 100% LTV                     | 7.20                      
|Weighted Average FICO score                          | 685                       
|Loans up to 100% CLTV                                | 689                       
|Lines of credit up to 100% CLTV                      | 678                       
|Loans up to 125% CLTV                                | 683                       
|Lines of credit up to 125% CLTV                      | 695                       
|First mortgage loans to 100% LTV                     | 690                       
|Weighted Average Disposable Income  (in dollars) (1) | $       4,902             
|Loans up to 100% CLTV                                | 4,630                     
|Lines of credit up to 100% CLTV                      | 7,054                     
|Loans up to 125% CLTV                                | 4,233                     
|Lines of credit up to 125% CLTV                      | 4,279                     
|First mortgage loans up to 100% LTV                  | 4,562                     

_____________

Portfolio Mix

|State                        | September 30,
2003 | December 31,
2002
|---------------------------- | ------------------ | -----------------
|California                   | 17.9%              | 20.1%            
|Florida                      | 7.5                | 7.4              
|Maryland                     | 5.7                | 5.2              
|Arizona                      | 5.7                | 4.9              
|Ohio                         | 5.5                | 5.3              
|All other states             | 57.7               | 57.1             
|Total                        | 100.0%             | 100.0%           
|Total managed (in thousands) | $    1,539,623     | $ 1,830,339      
|                             |                    |                  

The following table provides a breakdown of our home equity lending managed portfolio by product type, outstanding principal balance and weighted average coupon as of September 30, 2003:

|                                          | Amount         | % of Total | Weighted
Average
Coupon
|----------------------------------------- | -------------- | ---------- | -----------------------
|                                          | (In thousands)
|Home equity loans < = 100% CLTV           | $   180,346    | 11.71 %    | 10.92 %                
|Home equity lines of credit < = 100% CLTV | 373,071        | 24.23      | 8.63                   
|Total <= 100% CLTV                        | 553,417        | 35.94      | 9.38                   
|Home equity loans > 100% CLTV             | 557,428        | 36.21      | 14.17                  
|Home equity lines of credit > 100% CLTV   | 366,113        | 23.78      | 11.60                  
|Total > 100% CLTV                         | 923,541        | 59.99      | 13.15                  
|First mortgages                           | 26,980         | 1.75       | 8.20                   
|Other                                     | 35,685         | 2.32       | 13.91                  
|Total                                     | $1,539,623     | 100.00 %   | 11.73 %                

At September 30, 2003, key economic assumptions and the sensitivity of the current fair value of residuals based on projected cash flows to immediate 10% and 25% increases in those assumptions are as follows:

|                                                                            | September 30,
2003     | December 31,
2002
|--------------------------------------------------------------------------- | ---------------------- | -----------------
|                                                                            | (dollars in thousands)
|Balance sheet carrying value of residual interests - fair value             | $       78,208         | $    157,065     
|Weighted-average life (in years)                                            | 1.36                   | 1.91             
|                                                                            |                        |                  
|Prepayment speed assumptions (annual rate assuming base case credit losses) | 41.30 %                | 32.37 %          
|Impact on fair value of 10% increase (45.43%)                               | $            (30)      |                  
|Impact on fair value of 25% increase (51.63%)                               | 454                    |                  
|                                                                            |                        |                  
|Expected credit losses (annual rate over expected weighted average life)    | 7.86 %                 | 3.57 %           
|Impact on fair value of 10% increase (8.65%)                                | $        (6,050)       |                  
|Impact on fair value of 25% increase (9.83%)                                | (14,877)               |                  
|                                                                            |                        |                  
|Residual cash flows discount rate (average annual rate)                     | 18.73 %                | 18.69 %          
|Impact on fair value of 10% increase (20.60%)                               | $        (1,792)       |                  
|Impact on fair value of 25% increase (23.41%)                               | (4,349)                |                  

These sensitivities 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. SecuritizationsUnder our past securitization program, home equity loans were sold to limited purpose, bankruptcy-remote fully owned subsidiaries.  In turn, these subsidiaries established separate trusts to which they transferred the home equity loans in exchange for the proceeds from the sale of asset-backed securities issued by the trust.  The trusts' activities are generally limited to acquiring the home equity loans, issuing asset-backed securities and making payments on the securities.  Due to the nature of the assets held by the trusts and the limited nature of each trust's activities, they are classified as Qualified Special Purpose Entities (QSPEs) under SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
     The securitization structures we used prior to 2002 qualified as 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.  Although we recognized gains on the sale of loans in the period in which such loans were sold, we expect to receive cash (representing the excess spread, overcollateralization if applicable, and servicing fees) over the lives of the loans.  Concurrent with recognizing such gains on sale, we recorded the future expected receipt of discounted cash flow as a residual interest, which is currently included on our consolidated balance sheet as part of "trading assets." We recognized gains 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 residuals using prepayment, default, and discount rate assumptions that we believe market participants would use for similar financial instruments.
     Based on changes to our funding practices to adjust to new regulatory capital rules, in 2002 we began using securitization structures that do not qualify as loan sales and therefore are not accounted for using gain-on-sale treatment under generally accepted accounting principles, 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.
     Our secured financing and securitization deals have triggers that, when exceeded, provide trustees and/or bond insurers with the ability, but not the obligation, of removing us as servicer of the deals whose triggers have been exceeded.  Trigger levels are typically in the form of cumulative or periodic losses and/or delinquencies for a pool of loans over a stated period of time.  At September 30, 2003, we had $78.7 million in loans that we serviced and for which certain triggers had been exceeded.  The mortgage servicing rights related to the loans for which a trigger had been exceeded totaled $1.1 million at September 30, 2003.  Based on our evaluation of industry practice by trustees and bond insurers and in our estimation of the steps which would be in the best interests of the trusts, we believe it is unlikely given current performance of the company that the trustee will remove servicing from us and, therefore, we have not provided for an allowance for this contingency. Home Equity ServicingOur home equity lending business continues to service the majority of the loans it has securitized and sold.  We earn annually a servicing fee of approximately 50 to 100 basis points of the outstanding principal balance of the loans we service treated as sales under generally accepted accounting principles.  For whole loans sold with servicing retained, we capitalize servicing fees including rights to future early repayment fees.  These loans are included below in managed portfolio including credit risk sold.  In addition, where applicable, we have the opportunity to earn additional future servicing incentive fees, although we are not currently recognizing any revenue or balance sheet asset to reflect this potential given the uncertainty surrounding our ability to earn and estimate such incentive fees. 
     Our managed portfolio is separated into $0.7 billion of loans and lines of credit originated, securitized, and treated as sold loans under SFAS 140 and $0.8 billion of loans originated, generally since 2002, and held on balance sheet either as loans held for investment or loans held for sale.  Generally, loans originated prior to 2002 and treated as sold under SFAS 140 have a reserve methodology embedded in the associated residual valuations that reflects life of account loss expectations, whereas our policy for on-balance sheet loans requires that we hold, at a minimum at least twelve months coverage in sufficient reserves for potential losses inherent in the portfolio at the balance sheet date.  The following table sets forth certain information for each of these portfolios.



|Managed Portfolio Including Credit Risk Sold | September 30,
2003 | December 31,
2002 
|-------------------------------------------- | ------------------ | ------------------
|Total Loans                                  | $     2,548,600    | $       2,502,685 
|30 days past due                             | 4.74 %             | 5.12 %            
|90 days past due                             | 2.06               | 2.40              
|Annualized QTD Net Chargeoff Rate            | 3.30               | 2.42              
|Loan Loss Reserve                            | $          30,370  | $           21,689
|                                             |                    |                   
|Managed Portfolio                            |                    |                   
|Total Loans                                  | $     1,539,623    | $      1,830,339  
|30 days past due                             | 6.19 %             | 6.01 %            
|90 days past due                             | 2.68               | 2.80              
|Annualized QTD Net Chargeoff Rate            | 4.24               | 2.78              
|Loan Loss Reserve                            | $          30,370  | $          21,689 
|Residual Undiscounted Losses                 | 79,794             | 79,746            
|                                             |                    |                   
|Unsold Loans                                 |                    |                   
|Total Loans (1)                              | $        826,162   | $         706,899 
|30 days past due                             | 3.29 %             | 3.01 %            
|90 days past due                             | 1.50               | 1.38              
|Annualized QTD Net Chargeoff Rate            | 2.45               | 1.34              
|Loan Loss Reserve                            | $          30,370  | $           21,689
|                                             |                    |                   
|Owned Residual                               |                    |                   
|Total Loans                                  | $     713,461      | $      1,123,440  
|30 days past due                             | 9.55 %             | 7.89 %            
|90 days past due                             | 4.06               | 3.69              
|Annualized QTD Net Chargeoff Rate            | 6.27               | 3.70              
|Residual Undiscounted Losses                 | $           79,794 | $           79,746
|                                             |                    |                   
|Credit Risk Sold                             |                    |                   
|Total Loans                                  | $      1,008,978   | $         672,346 
|30 days past due                             | 2.53 %             | 2.71 %            
|90 days past due                             | 1.11               | 1.32              
|                                             |                    |                   
|Whole Loan Sales                             |                    |                   
|Total Loans                                  | $       935,352    | $         552,660 
|30 days past due                             | 1.68 %             | 0.89 %            
|90 days past due                             | 0.63               | 0.31              
|                                             |                    |                   
|Sold Residuals                               |                    |                   
|Total Loans                                  | $           73,626 | $         119,686 
|30 days past due                             | 13.31 %            | 11.12 %           
|90 days past due                             | 7.22               | 5.97              



In our managed portfolio, we retain credit risk on loans we originate, whether funded on- or off-balance sheet.  The managed portfolio amounts listed above include those loans we service with credit risk retained.  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 on our managed portfolio was 6.2% at September 30, 2003, and 6.0% at December 31, 2002.  Current economic conditions have caused us to increase near-term expectations for increases in losses.  Given widely varying third-party expectations for the domestic economy and job growth,  it is difficult for us to predict with accuracy what long-term losses are expected to be.  In our residual asset valuations, we have assumed a slow economic recovery with elevated levels of losses in our portfolio through the end of 2004.Net IncomeOur home equity lending business recorded net income of $2.6 million during the three months ended September 30, 2003, compared to a net gain for the same period in 2002 of $0.4 million.  Year to date a loss of $21.3 million was recorded through September 30, 2003 compared to a net loss of $7.0 million during the same period a year earlier.  The increased losses in 2003 relate primarily to unrealized trading losses recorded during the first half of the year to write down our residual assets to fair value.Net RevenueNet revenue for the three and nine months ended September 30, 2003 totaled $24.0 million and $28.3 million, respectively, compared to net revenue for the same periods in 2002 of $19.9 million and $45.2 million.  The reduction in year to date revenues is primarily a result of increased trading losses related to marking the residual assets to fair value to reflect our view that the effects of the economic weakness in 2001 and 2002 on our home equity portfolios will continue throughout 2003 and 2004.  Trading losses during the nine months ended September 30, 2003 totaled $52.3 million compared to losses of $22.6 million during the same period in 2002. Partially offsetting the increased trading losses was increased net interest income resulting from a buildup in our on-balance sheet loan portfolio.
     During the third quarter of 2003, our home equity lending business produced $267.6 million of home equity loans, compared to $290.8 million during the same period in 2002.  Our home equity lending business had $792.1 million of net loans and loans held for sale at September 30, 2003, compared to $680.2 million at December 31, 2002.  The increase in 2003 relates to the buildup of the on-balance sheet loan portfolio as part of the transition away from gain-on-sale securitizations.  Included in the loan balance at September 30, 2003 were $542.7 million of collateralized loans as part of secured financings.
     The following table sets forth certain information regarding net revenue for the periods indicated:



|                                 | Three Months Ended September 30, | Nine Months Ended September 30,
|-------------------------------- | -------------------------------- | -------------------------------
|                                 | 2003                             | 2002                           
|                                 | (Dollars in thousands)          
|Net interest income              | $      26,655                    | $        27,107                
|Provision for loan losses        | (10,728)                         | (9,221)                        
|Gain on sales of loans           | 8,108                            | 9,200                          
|Loan servicing fees              | 6,001                            | 3,174                          
|Amortization of servicing assets | (3,808)                          | (1,294)                        
|Impairment of servicing assets   | (499)                            | (59)                           
|Trading losses                   | (1,376)                          | (9,574)                        
|Other income                     | (335)                            | 536                            
|Total net revenue                | $      24,018                    | $       19,869                 

Net interest income decreased to $26.7 million for the three months ended September 30, 2003, compared to $27.1 million for the same period in 2002.  Year-to-date net interest income for 2003 was $81.3 million compared to $65.7 million for 2002.  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, which accretion totaled $4.1 million and $17.1 million during the three and nine months of 2003, respectively, versus $8.5 million and $26.6 million in 2002 for the same periods.  As previously mentioned, the increase in year to date 2003 net interest income is a result of the buildup of our on-balance sheet loan portfolio.
     Gains on sales of loans for the three months ended September 30, 2003 totaled $8.1 million, compared to $9.2 million during the same period in 2002.  Gains on sales of loans for the nine months ended September 30, 2003 totaled $18.4 million, compared to $17.3 million during the same period in 2002.  These gains relate to the sale of whole loans for which we do not record a residual interest.  These are cash sales for which we receive a premium, record a servicing asset, and monetize any points and fees at the time of sale.  We do, however, retain the rights to an incentive servicing fee which will provide cash payments to us in the event certain loan credit performance metrics are met.  We have not received any such payments to date and have not recorded potential revenues due to uncertainty of collecting such fees.  On a quarterly basis, we evaluate the likelihood of receiving such payments and at that time evaluate whether an associated potential asset is likely to accrue to us.
     Amortization and impairment of servicing assets includes amortization expenses and valuation adjustments relating to the carrying value of servicing assets.  Our home equity lending business determines fair value of its servicing asset using discounted cash flows and assumptions as to estimated future servicing income and cost that we believe market participants would use to value similar assets.  At September 30, 2003, net servicing assets totaled $29.1 million, compared to a balance of $26.4 million at December 31, 2002.  Servicing asset amortization and impairment expense totaled $11.6 million year to date for 2003, compared to $4.6 million for the nine months ended September 30, 2002.
     Trading losses represent unrealized losses as a result of adjustments to the carrying values of our residual interests.  Trading losses totaled $1.4 million in the third quarter of 2003 compared to $9.6 million for the same period in 2002.  Year-to-date trading losses totaled $52.3 million for 2003 compared to $22.6 million for the same period in 2002.  Residual interests had a balance of $78.2 million at September 30, 2003 and $157.1 million at December 31, 2002.  The $78.2 million valuation reflects approximately $101 million of anticipated undiscounted cash flows of which $81 million represents existing securitization overcollateralization and the remaining $20 million represents expected future net spread and prepayment penalties.  Included in the valuation are assumptions for estimated prepayments, expected losses, and discount rates that we believe market participants would use to value similar assets.  Management continually evaluates these assumptions to determine the proper carrying values of these items on the balance sheet.  To the extent our expectations of future loss rates, prepayment speeds and other factors change as we gather additional data over time, these residual valuations may be subject to additional adjustments in the future, up or down.  These adjustments could have a material effect on our earnings.  The increased unrealized trading losses year to date for 2003 principally reflect higher expected loss rates.  These higher expected loss rates are reflective of the continued weakness in the economy and a slower rate of recovery in the delinquency of the portfolio than we had anticipated.  Our forward loss assumptions are reevaluated monthly and, as such, our residual asset valuations will be adjusted continuously to reflect changes in actual and expected loss rates in our portfolio.Operating ExpensesThe following table shows operating expenses for our home equity lending line of business for the periods indicated:

|                                  | Three Months Ended September 30, | Nine Months Ended September 30,
|--------------------------------- | -------------------------------- | -------------------------------
|                                  | 2003                             | 2002                           
|                                  | (Dollars in thousands)          
|Salaries and employee benefits    | $  12,593                        | $     11,079                   
|Other                             | 7,063                            | 8,085                          
|Total operating expenses          | $  19,656                        | $     19,164                   
|Number of employees at period end |                                  |                                

Operating expenses were $19.7 million and $63.8 million for the three and nine months ended September 30, 2003, respectively, compared to $19.2 million and $56.9 million for the same periods in 2002.  Salaries expense for the nine months ending September 30, 2002 included the reversal of approximately $5.1 million due to the decline in the value of the minority ownership interest during that period.   Commercial FinanceThe following table shows selected financial information for our commercial finance line of business for the periods indicated:

|                                                                                   | Three Months Ended September 30, | Nine Months Ended September 30,
|---------------------------------------------------------------------------------- | -------------------------------- | -------------------------------
|                                                                                   | 2003                             | 2002                           
|                                                                                   | (Dollars in thousands)          
|Selected Income Statement Data:                                                    |                                  |                                
|Net interest income                                                                | $       5,685                    | $     3,838                    
|Provision for loan and lease losses                                                | (2,388)                          | (3,804)                        
|Noninterest income                                                                 | 1,181                            | 1,631                          
|Total net revenues                                                                 | 4,478                            | 1,665                          
|Salaries, pension, and other employee expense                                      | (2,808)                          | (2,373)                        
|Other expense                                                                      | (1,021)                          | (538)                          
|Income (loss) before taxes and cumulative effect of change in accounting principle | 649                              | (1,246)                        
|Income tax benefit (expense)                                                       | 603                              | 583                            
|Income (loss) before cumulative effect of change in 
    accounting principle      | 46                               | (663)                          
|Cumulative effect of change in accounting principle                                | --                               | --                             
|Net income (loss)                                                                  | $           46                   | $       (663)                  
|Selected Operating Data:                                                           |                                  |                                
|Net charge-offs                                                                    | $      2,034                     | $      1,938                   
|Net interest margin                                                                | 5.44%                            | 4.91 %                         
|Total fundings of loans and leases                                                 | $    61,679                      | $    58,399                    



|Selected Balance Sheet Data at End of Period: | September 30,
2003 | December 31, 
2002
|--------------------------------------------- | ------------------ | ------------------
|Total assets                                  | $    425,483       | $     343,384     
|Loans and leases                              | 422,932            | 345,844           
|Allowance for loan and lease losses           | (10,635)           | (7,657)           
|Shareholders' equity                          | 33,911             | 29,236            

Overview

|                       | September 30,          | December 31,
|---------------------- | ---------------------- | ------------
|                       | 2003                   | 2002        
|                       | (Dollars in thousands)
|Franchise loans        | $  130,860             | $   95,753  
|Weighted average yield | 8.50%                  | 9.01 %      
|Delinquency ratio      | 0.69                   | 0.30        
|Domestic leases        | $  129,674             | $ 135,775   
|Weighted average yield | 9.92%                  | 10.37 %     
|Delinquency ratio      | 1.36                   | 1.41        
|Canadian leases (1)    | $  162,398             | $ 114,316   
|Weighted average yield | 10.54%                 | 10.95 %     
|Delinquency ratio      | 1.23                   | 1.03        

__________

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

|                                         | Three Months Ended September 30, | Nine Months Ended September 30,
|---------------------------------------- | -------------------------------- | -------------------------------
|                                         | 2003                             | 2002                           
|                                         | (In thousands)                  
|Selected Income Statement Data:          |                                  |                                
|Net interest income                      | $          (2)                   | $           11                 
|Mark-to-market adjustment on investments | --                               | (2,851)                        
|Noninterest income                       | 444                              | 116                            
|Total net revenues                       | 442                              | (2,724)                        
|Operating expense                        | (329)                            | (63)                           
|Loss before taxes                        | 113                              | (2,787)                        
|Income tax benefit (expense)             | (48)                             | 1,115                          
|Net loss                                 | $           65                   | $   (1,672)                    



|Selected Balance Sheet Data at End of Period: | September 30,
2003 | December 31,
2002
|--------------------------------------------- | ------------------ | -----------------
|Investment in portfolio companies (cost)      | $     14,571       | $     12,620     
|Mark-to-market adjustment                     | (10,543)           | (8,123)          
|Carrying value of portfolio companies         | $       4,028      | $       4,497    

OverviewIn our venture capital line of business, we make minority investments in early stage companies in the financial services industry and related fields that intend to use technology as a key component of their competitive strategy.  We provide Irwin Ventures' portfolio companies the benefit of our management experience in the financial services industry.  In addition, we expect that contacts made through venture activities may benefit management of our other lines of business through the sharing of technologies and market opportunities.  Our venture capital line of business had investments in seven private companies as of September 30, 2003, with an aggregate investment cost of $14.6 million and a carrying value of $4.0 million.
     During the three and nine months ended September 30, 2003, the venture capital line of business recorded net income of $0.1 million and a net loss of $1.4 million, respectively, compared to net losses of $1.7 million and  $2.5 million for the same periods in 2002.  These net income fluctuations primarily relate to valuation adjustments to reflect the company's portfolio investments at market value.Parent and OtherResults at the parent company and other businesses totaled net losses of $2.6 million and $5.9 million for the three and nine months ended September 30, 2003, compared to net losses of $1.4 million and $3.1 million during the same periods in 2002.  These losses at the parent company primarily relate to operating expenses in excess of management fees charged to the lines of business and interest income earned on intracompany loans.  Included in the year to date loss at the parent was a $1.7 million benefit related to the reversal of a portion of a liability associated with key employee retention initiatives at the home equity lending line of business, compared with a $2.0 million benefit for the same period in 2002.Risk ManagementWe are engaged in businesses that involve the assumption of financial risks including:

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

Each line of business that assumes financial risk uses a formal process to manage this risk.  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, Executive Vice President, Senior Vice President, Chief Financial Officer, Vice President Financial Risk Management, and Vice President Operational Risk Management meet on a monthly basis (or more frequently as appropriate) as an Enterprise-Wide Risk Management Committee (ERMC), reporting to the Board of Directors' Audit and Risk Management Committee.  The ERMC and its subcommittees oversee all aspects of our financial, credit, and operational risks, although these risks are typically managed at the line of business level.  The ERMC provides independent review and enhancement of those lines of business' risk management processes and establishes independent oversight 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, commercial finance and commercial banking lines of business have the most potential to have a significant effect on our consolidated financial performance.  These lines of business manage credit risk through various combinations of the use of lending policies, credit analysis and approval procedures, periodic loan reviews, servicing activities, 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 judgment applying the principles of SFAS 5, "Accounting for Contingencies," SFAS 114, "Accounting by Creditors for Impairment of a Loan," and SFAS 118, "Accounting by Creditors for Impairment of a Loan -- Income Recognition and Disclosures." 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 component.  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, and in some instances, by aging, with an estimated loss ratio applied against each product type and aging category.  The loss ratio is generally based upon historic loss experience for each loan type. 
     The qualitative component 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. 
     Net charge-offs for the three months ended September 30, 2003 were $8.5 million, or 1.01% of average loans, compared to $5.8 million, or 0.82% of average loans during the same period in 2002.  Year-to-date net charge-offs were $24.3 million compared to $14.4 million during the same period in 2002.  At September 30, 2003, the allowance for loan and lease losses was $64.1 million or 2.04% of outstanding loans and leases, compared to $50.9 million or 1.81% at year-end 2002.  The increase in charge-offs and allowance is a result of loan growth, deteriorating credit quality, as well as the new balance sheet retention of home equity loans.
     Total nonperforming loans and leases at September 30, 2003, were $37.4 million, compared to $31.1 million at December 31, 2002.  Nonperforming loans and leases as a percent of total loans and leases at September 30, 2003 were 1.19%, compared to 1.11% at December 31, 2002.  The 2003 increase occurred primarily at the commercial banking line of business where nonperforming loans increased to $19.3 million at September 30, 2003, compared to $15.0 million at the end of 2002. 
     Other real estate we owned totaled $6.3 million at September 30, 2003, down from $5.3 million at December 31, 2002.  Total nonperforming assets at September 30, 2003 were $43.6 million, or 0.86% of total assets compared to nonperforming assets at December 31, 2002, of $36.4 million, or 0.75% of total assets.
     The following table shows information about our nonperforming assets at the dates shown:

|                                                         | September 30,  | December 31,  
|-------------------------------------------------------- | -------------- | --------------
|                                                         | 2003           | 2002          
|                                                         | (In thousands)
|Accruing loans past due 90 days or more:                 |                |               
|Commercial, financial and agricultural loans             | $         137  | $           30
|Real estate mortgages                                    | --             | --            
|Consumer loans                                           | 498            | 688           
|Lease financing:                                         |                |               
|Domestic                                                 | 9              | 220           
|Canadian                                                 | 24             | 143           
|                                                         | 668            | 1,081         
|Nonaccrual loans and leases:                             |                |               
|Commercial, financial and agricultural loans             | 17,872         | 13,798        
|Real estate mortgages                                    | 14,710         | 11,308        
|Consumer loans                                           | 809            | 454           
|Lease financing:                                         |                |               
|Domestic                                                 | 1,212          | 3,415         
|Canadian                                                 | 2,111          | 1,077         
|                                                         | 36,714         | 30,052        
|Total nonperforming loans and leases                     | 37,382         | 31,133        
|Other real estate owned:                                 |                |               
|Other real estate owned                                  | 6,252          | 5,272         
|Total nonperforming assets                               | $    43,634    | $    36,405   
|Nonperforming loans and leases to total loans and leases | 1.19%          | 1.11%         
|Nonperforming assets to total assets                     | 0.86%          | 0.75%         



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 $43.6 million of nonperforming assets at September 30, 2003, were distributed by line of business as follows (in millions):

|Mortgage banking    | $   4.1
|------------------- | -------
|Commercial banking  | 20.3   
|Home equity lending | 15.8   
|Commercial finance  | 3.4    

For the periods presented, the 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 through deposits and short-term and long-term borrowings, by asset maturities or sales, and through equity capital.
     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 September 30, 2003, the ratio of loans and loans held for sale to total deposits was 138%.  We are comfortable with this relatively high level due to our position in first mortgage loans held for sale ($0.9 billion) and second mortgage loans and leases financed through matched-term secured financing ($0.6 billion).  The first mortgage loans carry an interest rate at or near current market rates for first mortgage loans and are generally sold within a short period.  Excluding these two items, our loans to deposit ratio at September 30, 2003 was 87%.
     The mortgage banking line of business sells virtually all of its mortgage loan originations within 30 days of funding, taking them off our balance sheet.  Therefore, the on-balance sheet funding of first mortgage loans is for the brief period of time from origination to sale/securitization.  In the nine months ended September 30, 2003, the home equity lending line of business produced $0.8 billion and the sum of home equity loan sales and secured financings totaled $0.5 billion.
     Deposits consist of three primary types: non-maturity transaction account deposits, certificates of deposit and escrow account deposits.  Non-maturity transaction account deposits are generated by our commercial banking line of business and include deposits made into checking, savings, money market and other types of deposit accounts by our customers.  These types of deposits have no contractual maturity date and may be withdrawn at any time.  While these balances fluctuate daily, a large percentage typically remain for much longer.  At September 30, 2003, these deposit types totaled $0.7 billion, an increase of $0.1 billion from December 31, 2002.
     Certificates of deposit (CDs) differ from non-contractual maturity accounts in that they do have contractual maturity dates.  We issue CDs both directly to customers and through brokers.  As of September 30, 2003, CDs issued directly to customers totaled $0.9 billion, which was level with December 31, 2002.  Brokered CDs are typically considered to have higher liquidity risk than CDs issued directly to customers since brokered CDs are often done in large blocks and since a direct relationship does not exist with the depositor.  In recognition of this, we manage the size and maturity structure of brokered CDs closely.  For example, the maturities of brokered CDs are laddered to mitigate liquidity risk. CDs issued through brokers totaled $0.4 billion at September 30, 2003, and had an average remaining life of 19 months as compared to $0.3 billion outstanding with a 22 month average remaining life at December 31, 2002.
     Escrow account deposits are related to the servicing of our originated first mortgage loans.  When a first mortgage borrower makes a monthly mortgage payment, consisting of interest and principal due on the loan and often a real estate tax and insurance portion, we hold the payment on a non-interest earning basis, except where otherwise required by law, until the payment is remitted to the current owner of the loan or the proper tax authority and insurance carrier.  Escrow deposits may also include proceeds from the payoff of loans in our servicing portfolio prior to the transmission of those proceeds to investors. At September 30, 2003, these escrow balances totaled $0.7 billion, which was a $0.1 billion increase from December 31, 2002.
     Short-term borrowings consist of borrowings from several sources.  Our largest borrowing source is the Federal Home Loan Bank of Indianapolis (FHLBI), of which we are an active member.  We utilize their collateralized borrowing programs to help fund qualifying first mortgage, home equity and commercial real estate loans.  As of September 30, 2003, FHLBI borrowings outstanding totaled $0.2 billion, a $0.3 billion decrease from December 31, 2002.  We had sufficient collateral pledged to FHLBI at September 30, 2003 to borrow an additional $0.6 billion, if needed.
     In addition to borrowings from the FHLBI, we use other lines of credit as needed.  At September 30, 2003, the amount of short-term borrowings outstanding on our major credit lines and the total amount of the borrowing lines were as follows:

- Warehouse lines of credit to fund first mortgages and home equity loans: none outstanding on a $300 million borrowing facility
- Warehouse borrowing facilities to fund first mortgage loans: none outstanding on a $150 million committed borrowing facility
- Lines of credit with correspondent banks, including fed funds lines:  $54 million outstanding out of $205 million available

In addition to short term borrowings from the aforementioned credit lines, sale facilities are used to effect sale of Government Sponsored Enterprise (GSE) -conforming first mortgage loans before scheduled GSE settlement dates.  The first two of these sale facilities listed below have specific dollar limits as noted.  The size of the third facility is limited only by the amount of mortgage-backed securities we can package for purchase by the facility provider.  At September 30, 2003, the amount unsettled by the GSE on these facilities and the total facility amount were as follows:

- Committed warehouse sale facility:  $330 million unsettled on a $600 million facility
- Uncommitted warehouse sale facility:  $0 unsettled on a $150 million facility
- Investor warehouse sale facility:  $150 million unsettled

Interest Rate Risk.  Because all of our 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 of the line of business ALMCs.  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 structure of their loans and leases, and manage this risk by adjusting the duration of their interest sensitive liabilities and through the use of 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 the time we lock a loan rate to the customer and the time we sell the loan, the mortgage banking line of business enters into commitments to deliver loans at a fixed price.  Since not all rate-locks result in loans, we only hedge the percentage of rate locks that we believe will result in loan originations.  Our home equity business originates a much smaller volume of first mortgage loans than our mortgage banking line of business, but has begun to hedge its funded first mortgage originations from the time of origination until a price to sell the loan is locked-in.  
     Our mortgage, commercial banking 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 manage the economic performance of the assets.  Since there are accounting timing differences between the recognition of gains or losses on financial derivatives and the realization of economic gains or losses on certain offsetting exposures (e.g., strong production operations), our decisions on the degree to which we manage risk with derivative instruments to insulate against short-term price volatility depends on a variety of factors, including:

- the type of risk we are trying to mitigate;
- offsetting factors elsewhere in the Corporation;
- the level of current capital above our target minimums;
- time remaining in the quarter (i.e., days until quarter-end);
- current level of derivative gain or loss relative to accounting and economic basis;
- basis risk: the degree to which the interest rates underlying our derivative instruments might not move parallel to the interest rate driving our asset valuation; and
- convexity: the degree to which asset values, or risk management derivative instrument values, do not change in a linear fashion as interest rates change.

This strategy may, at times, result in variability in inter-quarter results that are not reflective of underlying trends for the Corporation.
     The following tables reflect our estimate of the present value of interest sensitive assets, liabilities, and off-balance sheet items at September 30, 2003.  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 instantaneous and permanent 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 September 30, 2003, 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 held to manage the risk of mortgage servicing assets (MSAs) fluctuates, depending upon market conditions, the size of our MSA portfolio and various additional factors.  We monitor derivative positions frequently and rebalance them as needed.  It is unlikely that the volume of derivative positions would remain constant over large fluctuations in interest rates, although the tables below assume they do.  MSA risk management derivative contracts appear under the category "Interest Sensitive Financial Derivatives" in the tables below.  As can be seen in the tables, the interest sensitivity of MSAs, net of the impact of Financial Derivatives, dominates the Corporation's interest rate risk profile.  Therefore, it is important to reiterate that our MSA hedging strategy is dynamic in that we adjust our hedges as we deem appropriate when conditions change, whereas the tables below reflect hedges as if they will remain static over all interest rate scenarios (for example, our past experience indicates that if rates rose or declined by the amounts shown in the sensitivity analysis, we would buy or sell additional interest sensitive off balance sheet items).
     Modeling the change in equity value based upon interest rate changes requires many other assumptions and modeling choices as well.  For the tables below, which use the 9/30/03 balance sheet, we have implemented changes in several aspects of our modeling as compared to prior quarters..  The major changes are as follows:

1. Expected cash flows for commercial loans and unsold, unsecuritized home equity loans are now valued assuming no defaults occur and utilize a discount factor which approximates a full credit spread over the Swap/LIBOR curve.  Previously, these loans were modeled with default assumptions, but with cash flows discounted at lower rates.  We believe the new methodology more accurately reflects our interest rate risk.
2. In order to model non-maturity transaction deposit accounts such as Checking, Savings and Money Market accounts, we are required to forecast the rates which will be paid on these accounts as interest rates rise and fall.  We have refocused our rate forecasting methodology with an increased emphasis on the current market environment and expected spread relationships between short-term benchmark rates, such as the Fed Funds rate, Treasury Bills or LIBOR, and our deposit rates.  The current methodology reflects larger changes in deposit values as interest rates rise and fall as compared to our prior methodology.
3. In addition to the changes discussed in item 1 above, we have implemented other improvements to our valuation model for home equity loans.  We now utilize prepayment speed estimates provided by an outside vendor that we believe better estimate expected prepayment speeds at various interest rate levels.  Also related to improved prepayment speed forecasting is an improved ability to capture prepayment premium income that we collect when loans that have prepayment premiums in effect prepay.

Economic Value Change Method

|                                          | Present Value at September 30, 2003,
Change in Interest Rates of:
|----------------------------------------- | -----------------------------------------------------------------
|                                          | -2%                                                              
|                                          | (In thousands)                                                   
|Interest Sensitive Assets                 |                                                                  
|Loans and other assets                    | $   3,228,780                                                    
|Loans held for sale                       | 1,022,044                                                        
|Mortgage servicing assets                 | 162,050                                                          
|Residual interests                        | 83,691                                                           
|Interest sensitive financial derivatives  | 85,030                                                           
|Total interest sensitive assets           | $  4,581,595                                                     
|Interest Sensitive Liabilities            |                                                                  
|Deposits                                  | (3,040,243)                                                      
|Short-term borrowings                     | (452,669)                                                        
|Long-term debt (including TPS)            | (700,641)                                                        
|Total interest sensitive liabilities      | (4,193,553)                                                      
|Net market value as of September 30, 2003 | $      388,042                                                   
|Change from current                       | $      (98,704)                                                  
|Net market value as of December 31, 2002  | $      449,493                                                   
|Potential change                          | $         (7,017)                                                

GAAP-Based Value Change Method



Present Value at September 30, 2003,
Change in Interest Rates of:-2%
-1%
Current
+1%
+2%(In thousands)Interest Sensitive AssetsLoans and other assets (1)
$              --
$              --
$                --
$               --
$               --Loans held for sale
1,020,082
1,020,082
1,020,082
1,018,278
1,016,381Mortgage servicing assets
158,992
205,592
327,422
409,725
432,376Residual interests
83,691
81,657
79,146
76,489
73,711Interest sensitive financial derivatives
85,030
55,176
4,739
(77,064)
(176,686)Total interest sensitive assets
1,347,795
1,362,507
1,431,389
1,427,428
1,345,782Interest Sensitive LiabilitiesDeposits (1)
--
--
--
--
--Short-term borrowings (1)
--
--
--
--
--Long-term debt (including TPS) (1)
--
--
--
--

--Total interest sensitive liabilities (1)
--
--
--
--
--Net market value as of September 30, 2003
$  1,347,795
$  1,362,507
$  1,431,389
$  1,427,428
$  1,345,782Potential change
$     (83,594)
$     (68,882)
$               --
$      (3,961)
$     (85,607)Net market value as of December 31, 2002
$  1,618,460
$  1,629,506
$  1,656,461
$  1,722,027
$  1,715,012Potential change
$     (38,001)
$     (26,955)
$               --
$       65,566
$       58,551


__________

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

The quantitative and qualitative disclosures about market risk are reported in the Interest Rate Risk section of Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations found on pages 44 through 46.Item 4.  Controls and Procedures.As of September 30, 2003, we performed an evaluation under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c)).  Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2003 to provide reasonable assurance that material information relating to the Corporation would be made known to them by others within the Corporation, particularly during the period in which the Form 10-Q was being prepared.  There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to our most recent evaluation of these controls, nor any significant deficiencies or material weaknesses in such controls requiring corrective actions.  As a result, no corrective actions were required or taken.

PART II.  Other Information.

Item 1.  Legal Proceedings.Culpepper and related cases.
     As described in our Annual Report on Form 10-K for the Year Ended 2002 and our Report on Form 10-Q for the Quarterly Period Ended March 31, 2003 and June 30, 2003, our indirect subsidiary, Irwin Mortgage Corporation, is a defendant in Culpepper v. Inland Mortgage Corporation, a class action lawsuit in the United States District Court for the Northern District of Alabama.  The suit alleges that Irwin Mortgage violated the federal Real Estate Settlement Procedures Act (RESPA) in connection with certain payments Irwin Mortgage made to mortgage brokers.  We reported that in September 2001, a second suit, Beggs v. Irwin Mortgage Corporation, sought class status and consolidation with Culpepper and that subsequently, the court permitted another suit, Gorman v. Irwin Mortgage, to intervene in the Beggs suit.  We also reported that three other lawsuits were filed against Irwin Mortgage in 2002 in the Circuit Court of Calhoun County, Alabama seeking class action status and alleging claims based on payments similar to those at issue in Culpepper (Cook v. Irwin Mortgage, Ford v. Irwin Mortgageand Hill v. Irwin Mortgage).  The parties settled Cook, Ford and Hill for a nonmaterial amount, and the court dismissed those actions on August 18, 2003.  The parties settled Beggs, along with Gorman, for a nonmaterial amount, and the court dismissed those actions on August 22, 2003.  On October 2, 2003 Culpepper was reassigned to U.S. District Judge, R. David Proctor, who ordered the parties to meet and submit a joint status report on or before October 31, 2003.United States ex rel. Paranich v. Sorgnard et al.

In January 2001, we and Irwin Leasing Corporation (formerly Affiliated Capital Corp.), our indirect subsidiary, and Irwin Equipment Finance Corporation, our direct subsidiary (together, the Irwin companies), were served as defendants in an action filed in the United States District Court for the Middle District of Pennsylvania.  The suit alleges that a manufacturer/importer of certain medical devices (Matrix Biokinetics, Inc. and others) made misrepresentations to health care professionals and to government officials to improperly obtain Medicare reimbursement for treatments 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 Irwin Financial and Irwin Equipment Finance as defendants in the suit.  In June 2003, Irwin Leasing filed a motion for summary judgment.  Oral argument on the motion was held on August 27, 2003.  On October 8, 2003, the court granted Irwin Leasing's motion for summary judgment, dismissing the plaintiff's complaint.  On October 22, 2003, the plaintiff filed a notice of appeal.  We have not established any reserves for this case.  Although we believe the trial court's decision is well-reasoned, we cannot predict at this time whether we will prevail on appeal.McIntosh v. Irwin Home Equity Corporation     Our subsidiary, Irwin Union Bank and Trust company, is a defendant in a purported class action lawsuit filed in the U.S. District Court in Massachusetts in July 2001.  The case involves loans purchased by Irwin Union Bank from FirstPlus, an unaffiliated third-party lender, and alleges a failure to comply with certain truth in lending disclosure requirements in making second mortgage home equity loans to the plaintiff borrowers.  The complaint seeks rescission of the loans and other damages.
     On September 30, 2002, the court granted plaintiffs' motion for certification of a class subject to certain limitations.  On October 15, 2002, we filed a motion for reconsideration with the district court and a petition for permission to appeal the class certification decision with the Court of Appeals for the 1st Circuit.  In May, 2003, the district court denied our motion for summary judgment and denied in part our motion for reconsideration of class decertification.  However, the court further limited membership in the plaintiff class.  On October 21, 2003, the court of appeals denied our application for appellate review of the district court's certification of the class.
     Discovery has not yet commenced.  The actual number of plaintiff borrowers will be determined only after a review of loan files.  As originally specified, the plaintiff class was limited to those borrowers who obtained a mortgage loan originated with prepayment penalty provisions by FirstPlus during the three-year period prior to the filing of the suit.  As more recently defined by the court, the class has been further restricted to those borrowers who refinanced their loans and paid a prepayment penalty.  Only high-rate loans that are subject to the provisions of the Home Ownership and Equity Protection Act of 1994 would be included in the class.  We believe that out of approximately 200 loans acquired directly from FirstPlus



|Date Issued        | Number of Shares
|------------------ | ----------------
|September 30, 2003 | 605             

Item 6.  Exhibits and Reports on Form 8-K.
     (a)  Exhibits.

|ExhibitNumber | 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, as amended August 27, 2003                                                                                                                                                                                                                                                                                                                                                                       
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|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.)                                                                                                                                                                                                                
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|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.)                                                                                                                                                                                                                                                                                            
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|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.)                                                                                                                                                                                                                                                                       
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|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.)                                                                                                                                                                                                                                                                             
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|10.4          | *Amendment to Irwin Financial Corporation 1997 Stock Option Plan. (Incorporated by reference to Exhibit 10(i) to Form10-Q Report for period ended June 30, 1997, File No. 0-06835.)                                                                                                                                                                                                                                                              
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|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.)                                                                                                                                                                                                                                                                                            
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|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.)                                                                                                                                                                                                                                  
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|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 December31, 1995, File No. 0-06835.)                                                                                                                                                                                                                                           
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|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.)                                                                                                                                                                                                                                                                    
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|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.)                                                                                                                                                                                                                                                                
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|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.)                                                                                                                                                                                                                                                                                           
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|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.)                                                                                                                                                                                                                                                                                            
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|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.)                                                                                                                                                                                                                                                                                     
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|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.)                                                                                                                                                                                                                                                                                 
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|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.)                                                                                                                                                                                                                                                                      
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|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.)                                                                                                                                                                                                                                                                                
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|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.)                                                                                                                                                                                                                                                                
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|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.)                                                                                                                                                                                                                           
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|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.)                                                                                                                                                                                                                                                       
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|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.)                                                                                                                                                                                                                                               
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|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.)                                                                                                                                                                                                                                 
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|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.)                                                                                                                                                                                                                                            
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|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.)                                                                                                                                                                                                                                                       
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|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.)                                                                                                                                                                                                                                                      
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|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.)                                                                                                                                                                                                                                             
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|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.)                                                                                                                                                                                                                                                 
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|10.26         | *Onset Capital Corporation Employment Agreement. (Incorporated by reference to Exhibit 10.26 to Form 10-Q Report for period ended June 30, 2002, File No. 0-06835.)                                                                                                                                                                                                                                                                              
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|10.27         | *Irwin Financial Corporation Restated Supplemental Executive Retirement Plan for Named Executives. (Incorporated by reference to Exhibit 10.27 to Form 10-Q Report for period ended June 30, 2002, File No. 0-06835.)                                                                                                                                                                                                                            
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|10.28         | *Irwin Financial Corporation Supplemental Executive Retirement Plan for Named Executives. (Incorporated by reference to Exhibit 10.28 to Form 10-Q Report for period ended June 30, 2002, File No. 0-06835.)                                                                                                                                                                                                                                     
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|10.29         | *Onset Capital Corporation Shareholders Agreement (Incorporated by reference to Exhibit 10.29 to Form 10-K Report for year ended December 31, 2002, File No. 0-06835.)                                                                                                                                                                                                                                                                           
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|11.1          | Computation of earnings per share is included in the footnotes to the financial statements.                                                                                                                                                                                                                                                                                                                                                      
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|31.1          | Certification of the Chief Executive Officer under Section 302 of the Sarbanes - Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                              
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|31.2          | Certification of the Chief Financial Officer under Section 302 of the Sarbanes - Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                              
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|32.1          | Certification of the Chief Executive Officer under Section 906 of the Sarbanes - Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                              
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|32.2          | Certification of the Chief Financial Officer under Section 906 of the Sarbanes - Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                              

> __________
> * Indicates management contract or compensatory plan or arrangement.

(b)  Reports on Form 8-K.

|8-K | July 3, 2003       | Attaching news release providing guidance on second quarter and Year 2003 earnings.                                                                                                                                               
|--- | ------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8-K | July 18, 2003      | Attaching news release announcing second quarter earnings conference call.                                                                                                                                                        
|8-K | July 23, 2003      | Attaching news release announcing Second Quarter 2003 earnings, and making Item 9 - Reg FD Disclosure and Item 12 - Results of Operations and Financial Condition (pursuant to SEC Release Nos. 33-8216 and 34-47583) disclosures.
|8-K | August 27, 2003    | Attaching news release announcing third quarter dividend.                                                                                                                                                                         
|8-K | September 18, 2003 | Making Reg FD Disclosure on presentation to be made to RBC Capital Markets Financial Institutions Conference on 9-18-03.                                                                                                          



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 CORPORATIONDATE:November 13, 2003

BY:  /s/ Gregory F. Ehlinger__________________GREGORY F. EHLINGER                            CHIEF FINANCIAL OFFICERBY:  /s/ Jody A. Littrell______________________JODY A. LITTRELL                                       
CORPORATE CONTROLLER                      
(Chief Accounting Officer)