(Source: PRNewswire-FirstCall)
COLUMBUS, Ind., May 11 /PRNewswire-FirstCall/ -- Irwin Financial Corporation , today announced a loss of $94 million for the first quarter of 2009, or $3.17 per diluted share principally due to credit provisions and costs related to its strategic restructuring. The Corporation's first quarter loss compares to a loss of $104 million in the fourth quarter of 2008. In neither period is the Corporation applying the potential benefits of losses for federal or state tax purposes.
"In the first quarter, we completed another step in our restructuring plan to re-focus our bank on small business and community banking with the sale of our home equity servicing assets. Our restructuring started two years ago with the sale of our conforming mortgage business. Since that time we have completed our exit from the national mortgage, equipment leasing, and home equity segments, except for a liquidating portfolio of home equity loans. With the transactions in March, we removed approximately $700 million of these home equity loans and other assets. We increased our deposits in the first quarter and both of our banking subsidiaries remain adequately capitalized," said Will Miller, Chairman and CEO of Irwin Financial.
"We believe the home equity sale is a very positive development for Irwin. We continue to pursue the only remaining step in our restructuring--raising additional capital," Miller continued. We have presented our regulators with a proposal for a public-private partnership approach to raising capital for banks with assets of less than $100 billion under the authority of the EESA (Emergency Economic Stabilization Act of 2008). If accepted, we have capital lined up to participate in such a program. Our private sector commitments to invest $34 million in such a partnership remain in place," Miller concluded.
Financial highlights are presented in the table below: Percent Percent $ in millions, except EPS 1Q 2009 4Q 2008 Change 1Q 2008 Change Net Interest Income $30 $32 (6)% $64 (53)% Provision for Losses (64) (41) (56)% (45) (44)% Non-Interest Income (11) (5) (133)% (4) (138)% Total Consolidated Net Revenues (44) (14) (229)% 15 (388)% Non-Interest Expense 44 48 (8)% 52 (14)% Net Loss (94) (104) 10% (22) (323)% Earning (Loss) per Share from Continuing Operations (diluted) (3.17) (3.54) 10% (0.77) (312)% Loan and Lease Portfolio 3,480 4,353 (20)% 5,586 (38)% Deposits 3,106 3,018 3% 3,399 (9)% Shareholders' Equity 17 111 (85)% 436 (96)% Total Risk-Based Capital Ratio 1.5% 6.6% (77)% 12.5% (88)%
Net interest income for the three months ended March 31, 2009, totaled $30 million, down 53 percent from the first quarter 2008 net interest income of $64 million. This decline was driven by lower portfolio balances and reduced net interest margins. Net interest margin for the three months ended March 31, 2009, was 2.76 percent down from 4.44 percent for the same period in 2008. The decline in margin in the first quarter of 2009 principally relates to slower repricing of liability rates in the declining interest rate environment and the cost of funds resulting from securitizing the majority of the remainder of our home equity portfolio in the third quarter of 2008. In addition, we have been holding a larger-than-normal amount of liquid assets during our restructuring.
Noninterest loss during the first quarter of 2009 totaled $11 million, compared to a loss of $4 million for the first three months of 2008. The 2009 decline is primarily a result of a mark-to-market on home equity loans and a loss on the sale of home equity servicing rights.
Noninterest expenses for the three months ended March 31, 2009, totaled $44 million, down from $52 million for the same period in 2008 due primarily to reduction in personnel costs related to our restructuring initiatives.
Consolidated loans and loans held for sale declined both on a sequential quarter and year over year basis due primarily to restructuring and decisions to reduce the Corporation's assets to enhance capital ratios and liquidity during the restructuring. Loans held for sale declined from $841 million at year-end to $149 million at March 31, principally reflecting the derecognition of the home equity assets noted above. The loan portfolio declined during the first quarter by $181 million, to $3.3 billion. Most of this decline was in the commercial banking line of business.
The allowance for loan and lease losses (ALLL) totaled $155 million as of March 31, 2009, up from $137 million at the end of 2008. This increase was necessitated by an increase in watch and non-performing credits, principally at the commercial bank. Consolidated ALLL to Loans totaled 4.65 percent as of March 31, compared with 3.90 percent at year end.
Nonperforming assets increased 8 percent on a sequential quarter basis, totaling $237 million or 5.9 percent of total assets as of March 31, 2009, up from $220 million at December 31, 2008, primarily reflecting increases in non-performing commercial real estate loans.
The consolidated provision for loan and lease losses during the first quarter of 2009 was $64 million, compared to $45 million for the same period in 2008. The increase in our provision reflects continued deterioration in our portfolios due to softening in the economy and real estate markets.
Deposits totaled $3.1 billion at March 31, up $88 million or 2.9 percent from $3.0 billion at the end of 2008. This week, the Corporation will file for a federal tax refund, which it expects to add approximately $75 million to liquidity in the second quarter.
The Corporation had $17 million in shareholders' equity as of March 31, compared to $111 million or $3.26 per share at December 31, 2008. The Corporation has agreements with a group of investors to invest $34 million in the form of standby commitments in connection with its planned rights offering to shareholders or outright in a private placement under certain conditions. All of these investors have extended their commitments to July 31 while the Corporation awaits a response to its proposal to receive an equity investment from the US Treasury.
The Corporation has two depositories which hold the majority of its assets and which hold the Corporation's deposits. The Corporation's lead bank subsidiary, Irwin Union Bank and Trust (the "Bank"), had $285 million of regulatory capital at March 31 and had a total risk based capital ratio of 8.7 percent, a Tier 1 capital ratio of 6.5 percent, and a Tier 1 leverage ratio of 5.0 percent and remains classified as "adequately capitalized" at March 31.
