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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2002

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

For the transition period from ________________ to _____________

Commission File Number: 0-6835

IRWIN FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

INDIANA

35-1286807

(State or other jurisdiction of Incorporation or organization)

(IRS Employer Identification No.)

 

500 Washington Street, Columbus, IN 47201

(Address or principal executive offices)

(Zip Code)

(812) 376-1909

(Registrant's telephone number, including area code)

____________________________________________________________________

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

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

Yes __X__ No _____



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

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

(In thousands, except for shares)

June 30,

December 31,

Assets:

2002

2001

Cash and cash equivalents

$110,865

$158,291

Interest-bearing deposits with financial institutions

19,527

14,247

Trading assets

183,539

199,071

Investment securities (Market value: $36,641 in 2002 and $38,937 in 2001) - Note 2

36,448

38,796

Loans held for sale

437,147

502,086

  Loans and leases, net of unearned income - Note 3

2,675,915

2,137,747

  Less: Allowance for loan and lease losses - Note 4

(37,286)

(22,283)
 

2,638,629

2,115,464

Servicing assets - Note 5

212,453

228,624

Accounts receivable

42,008

41,996

Accrued interest receivable

15,562

14,063

Premises and equipment

33,589

34,988

Other assets

97,815

100,067

Total assets

$3,827,582

$3,447,693

Liabilities and Shareholders' Equity:

    

Deposits

    

  Noninterest-bearing

$428,840

$533,983

  Interest-bearing

1,026,038

889,448

  Certificates of deposit over $100,000

802,428

885,587
 

2,257,306

2,309,018

Short-term borrowings - Note 6

380,612

487,963

Long-term debt - Note 7

464,968

30,000

Company-obligated mandatorily redeemable preferred securities of subsidiary trust

198,500

198,500

Other liabilities

196,075

189,889

Total liabilities

3,497,461

3,215,370
     

Commitments and contingencies - Note 8

    

Minority interest

846

658
     

Shareholders' equity

 Preferred stock, no par value - authorized 4,000,000 shares; issued none as of June 30, 2002 and 96,336 shares as of December 31, 2001


-


1,386

 Common stock, no par value - authorized 40,000,000 shares; issued 29,612,080 and 23,402,080 shares as of June 30, 2002 and December 31, 2001, respectively; including 1,879,658 and 2,096,947 shares in treasury as of June 30, 2002 and December 31, 2001, respectively




112,159




29,965

Additional paid-in capital

3,794

4,426

Deferred compensation

(359)

(449)

Accumulated other comprehensive loss, net of deferred income tax benefit of $83 and $216 in 2002 and 2001, respectively


(125)


(325)

Retained earnings

255,932

241,725
 

371,401

276,728

Less treasury stock, at cost

(42,126)

(45,063)

Total shareholders' equity

329,275

231,665

Total liabilities and shareholders' equity

$3,827,582

$3,447,693

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

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

(In thousands, except for per share)

For the Three Months Ended

June 30,
 

2002

2001

Interest income:

    

Loans and leases

$52,663

$31,263

Loans held for sale

9,159

24,748

Trading account

8,789

7,593

Investment securities:

    

Taxable

340

1,363

Tax-exempt

57

65

Federal funds sold

11

56

Total interest income

71,019

65,088

Interest expense:

  

Deposits

13,894

18,853

Short-term borrowings

3,796

8,100

Long-term debt

794

580

Preferred securities distribution

4,818

3,704

Total interest expense

23,302

31,237

Net interest income

47,717

33,851

Provision for loan and lease losses

9,500

2,804

Net interest income after provision for loan and lease losses

38,217

31,047

Other income:

  

Loan origination fees

15,072

16,536

Gain from sales of loans

26,202

45,905

Loan servicing fees

17,809

15,812

Amortization and impairment of servicing assets

(62,257)

(8,869)

Net loan administration income

(44,448)

6,943

Gain on sale of mortgage servicing assets

9,809

3,689

Trading losses

(5,757)

(2,477)

Other

50,221

(2,180)
 

51,099

68,416

Other expense:

  

Salaries

40,326

43,123

Pension and other employee benefits

7,979

7,386

Office expense

4,395

4,035

Premises and equipment

8,523

7,430

Marketing and development

1,024

1,445

Professional Fees

2,098

1,684

Other

11,924

13,289
 

76,269

78,392

Income before income taxes

13,047

21,071

Provision for income taxes

5,069

8,474

Income before minority interest

7,978

12,597

Minority interest in losses of subsidiaries

(8)

(211)

Net income

$7,986

$12,808
     

Earnings per share: - Note 9

    

Basic

$0.29

$0.61

Diluted

$0.28

$0.56

Dividends per share

$0.0675

$0.0650

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

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

 

For the Six Months Ended June 30,
 

(In thousands, except for per share)

2002

2001

Interest income:

    

Loans and leases

$99,854

$60,514

Loans held for sale

19,096

47,603

Trading account

18,068

14,738

Investment securities:

    

Taxable

1,395

2,607

Tax-exempt

113

128

Federal funds sold

30

89

Total interest income

138,556

125,679

Interest expense:

    

Deposits

28,028

37,907

Short-term borrowings

7,395

16,251

Long-term debt

1,363

1,160

Preferred securities distribution

9,638

7,408

Total interest expense

46,424

62,726

Net interest income

92,132

62,953

Provision for loan and lease losses

19,832

4,357

Net interest income after provision for loan and lease losses

72,300

58,596

Other income:

Loan origination fees

30,611

28,214

Gain from sales of loans

62,698

81,061

Loan servicing fees

36,466

31,627

Amortization and impairment of servicing assets

(65,550)

(16,405)

Net loan administration income

(29,084)

15,222

Gain on sale of mortgage servicing assets

9,716

5,781

Trading losses

(13,059)

(2,546)

Other

46,125

2,494
 

107,007

130,226

Other expense:

    

Salaries

79,133

84,406

Pension and other employee benefits

16,693

14,121

Office expense

8,604

7,677

Premises and equipment

16,741

14,858

Marketing and development

1,626

2,975

Professional Fees

5,245

3,702

Other

22,787

25,236
 

150,829

152,975

Income before income taxes

28,478

35,847

Provision for income taxes

11,075

14,254

Income before minority interest

17,403

21,593

Minority interest in losses of subsidiaries

(34)

(211)

Income before cumulative effect of change in accounting principle

17,437

21,804

Cumulative effect of change in accounting principle, net of tax

495

175

Net income

$17,932

$21,979
     

Earnings per share before cumulative effect of change in accounting principle:

    

Basic

$0.67

$1.03

Diluted

$0.65

$0.96

Earnings per share: - Note 9

    

Basic

$0.69

$1.04

Diluted

$0.67

$0.97

Dividends per share

$0.1350

$0.1300

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

IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
 
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
  (Dollars in thousands) 

  Total

   Retained Earnings Accumulated Other Comprehensive Income (Loss)   Deferred Compensation  Additional Paid in Capital   Common Stock   Preferred Stock  Treasury Stock
Balance at April 1, 2002 $ 322,505 $ 249,812 $ (360) $ (419) $ 4,444 $ 112,336 $ 1,386 $ (44,694)
Net income 7,986 7,986            
Unrealized loss on investment securities net of $13 tax benefit  

(19)

  

 

  

(19)

          
         
Foreign currency adjustment net of $170 tax liability 254    254          
         
Total comprehensive income 8,221              
Deferred compensation 60     60        
Cash dividends (1,866) (1,866)            
Additional costs for equity offering  (177)         (177)    
Tax benefit on stock option exercises 504       504      
Treasury stock:                
Purchase of 54,732 shares (1,101)             (1,101)
Sales of 245,054 shares 2,515 -     (1,154)     3,669
Conversion of preferred stock to common stock (1,386)           (1,386)  
Balance June 30, 2002 $ 329,275 $ 255,932 $ (125) $ (359) $ 3,794 $ 112,159 $ - $ (42,126)
                 
Balance at April 1, 2001 $ 197,294 $ 209,524 $ (677) $ (499) $ 4,065 $ 29,965 $ 1,386 $ (46,470)
Net income 12,808 12,808            
Unrealized loss on investment securities net of $17 tax liability  

26

  

 

  

26

  

 

  

 

  

 

  

 

  

 
Foreign currency adjustment net of $144 tax benefit 216    216          
         
Total comprehensive income 13,050              
Deferred compensation 44     44        
Cash dividends (1,377) (1,377)            
Tax benefit on stock option exercises 39       39      
Treasury stock:                
Purchase of 3,640 shares (81)             (81)
Sales of 28,520 shares 483 -     102     381
Balance June 30, 2001 $ 209,452 $ 220,955 $ (435) $ (455) $ 4,206 $ 29,965 $ 1,386 $ (46,170)
 

FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
 (Dollars in thousands)   Total

 

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

  Deferred Compensation

 Additional Paid in Capital

   Common Stock   Preferred Stock   Treasury Stock
Balance at January 1, 2002 $ 231,665 $ 241,725 $ (325) $ (449) $ 4,426 $ 29,965 $ 1,386 $ (45,063)
Net income 17,932 17,932            
Unrealized gain on investment securities net of $32 tax benefit  

(48)

  

 

  (48)          
         
Foreign currency adjustment net of $166 tax liability 248     248          
         
Total comprehensive income 18,132              
Deferred compensation 90