--  Second quarter loss declines to $57 million from losses of $94 million       in the first quarter of 2009 and $107 million in the second quarter of       2008.   --  Improvement in credit quality trends leads the performance       improvement.    --  The Corporation's depository subsidiaries remain adequately       capitalized   

Irwin Financial Corporation , today announced a loss of $57 million for the second quarter of 2009, or $1.92 per diluted share, principally due to credit provisions and costs related to its strategic restructuring. This loss is an improvement over the loss of $94 million in the first quarter of 2009 and reflects a materially improved reduction in the rate of credit portfolio deterioration. Irwin Union Bank and Trust and Irwin Union Bank, FSB remained adequately capitalized at June 30.

"In the second quarter, we saw a meaningful slow-down in new problem credits. This encouraging sign suggests that our focus on credit management is having a positive effect. Our consolidated loan loss provision has fallen from $158 million in the second quarter of 2008 to $64 million in the first quarter of 2009 to $45 million this quarter," said Will Miller, Chairman and CEO of Irwin Financial.

"Both of our banking subsidiaries remain adequately capitalized. This was accomplished through the sale of approximately $190 million of commercial loans and derecognition of another $110 million of home equity loans during the second quarter," Miller continued.

"We continue to pursue the only remaining step in our restructuring - raising additional capital. We have been advised that Treasury is working on what they call 'Plan C,' which includes discussions with other banking agencies of a new application of the TARP capital program to assist community banks that have the ability to raise private capital. We continue to have private capital lined up and under contract to enable us to participate in such a program. Our private sector commitments to invest $34 million in such a partnership have been extended to year-end," Miller concluded.

   Financial highlights are presented in the table below:    $in millions, except EPS    2Q 2009  1Q 2009  Percent  2Q 2008   Percent                                                  Change             Change   ------------------------    -------  -------  -------  -------   -------   Net Interest Income            $14     $30      (53)%     $62      (77)%   ------------------------    -------  -------  -------  -------   -------    Provision for Losses          (45)    (64)       29%   (158)        71%   ------------------------    -------  -------  -------  -------   -------   Non-Interest Income             21     (11)      N/M        7       223%   ------------------------    -------  -------  -------  -------   -------   Total Consolidated Net    Revenues                      (10)    (44)       77%    (89)        89%   ------------------------    -------  -------  -------  -------   -------   Non-Interest Expense            48      44       (8)%      44       (9)%   ------------------------    -------  -------  -------  -------   -------   Net Loss                       (57)    (94)       39%   (107)        46%   ------------------------    -------  -------  -------  -------   -------   Loss per Share               (1.92)  (3.17)       39%  (3.64)        47%   ------------------------    -------  -------  -------  -------   -------   Loan and Lease Portfolio      3,002   3,480      (14)%  5,455      (45)%   ------------------------    -------  -------  -------  -------   -------   Deposits                      2,716   3,106      (13)%  3,505      (23)%   ------------------------    -------  -------  -------  -------   -------   Shareholders' Equity           (42)      17       N/M     330        N/M   ------------------------    -------  -------  -------  -------   -------   Total Risk-Based Capital    Ratio                        (1.2)%   1.5%             10.7%   ------------------------    -------  -------  -------  -------   -------   

Net interest income for the three months ended June 30, 2009, totaled $14 million, down 53 percent from the first quarter 2009. This decline was driven by lower portfolio balances and reduced net interest margins. Net interest margin during the second quarter of 2009 was 2.28 percent down from 2.76 percent in the first quarter. The decline in margin in the second quarter principally reflected derecognition of approximately $110 million of home equity loans and associated secured borrowings.

Noninterest income during the second quarter of 2009 totaled $21 million, compared to a loss of $11 million during the first quarter. The second quarter improvement reflects increases in SFAS 159 fair value adjustments that lowered the carrying value of certain liabilities in the current quarter compared with negative marks-to-market on home equity loans and servicing rights during the first quarter.

Noninterest expenses for the three months ended June 30, 2009, totaled $48 million, up from $44 million in the first quarter due primarily to higher FDIC premiums.

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. The loan portfolio totaled $3.0 billion as of June 30, 2009, compared to $3.5 billion at March 31.

The allowance for loan and lease losses (ALLL) totaled $148 million as of June 30, 2009, down in total dollars from $155 million at the end of the first quarter due to the decrease in loans on our balance sheet, but up as a percentage of the loan portfolio to 5.44 percent as of June 30, compared with 4.65 percent at March 31,. Credit quality deterioration, particularly the pace of loans entering delinquency and non-performance status, showed signs of slowing during the second quarter. The decrease in ALLL dollars was reflective of portfolio seasoning, an increase in charge-offs of loans more than 180 days past due, and the reclassification of approximately $200 million of commercial loans to held-for-sale status.

The relative improvement in credit quality trends was reflected in the consolidated provision for loan and lease losses which totaled $45 million during the second quarter of 2009, compared to $64 million during the first quarter and $158 million in the second quarter of 2008. Thirty-day and greater delinquencies totaled 3.96 percent as of June 30, 2009, down from 4.82 percent as of March 31.

                         2Q 2009                         1Q 2009              -----------------------------   -------------------------------              30+  ALLL to  ALLL to  LLP to    30+   ALLL to  ALLL to  LLP to              DPD   Loans    NPLs    C/Os      DPD    Loans    NPLs    C/Os              ---  ------   ------   ------    ---   ------   ------   ------    Commercial    Banking   3.57%  4.15%   47%      95%      4.46%   3.57%     51%    159%   --------  ------ ------  ----     ----     ------  ------    ----    ----   Commercial    Finance   1.45%  2.27%   48%     390%      3.79%   1.79%     68%    208%   --------  ------ ------  ----     ----     ------  ------    ----    ----   Home    Equity   13.74% 22.04%  338%      79%     10.08%  21.53%    261%    108%   --------  ------ ------  ----     ----     ------  ------    ----    ----   Total      3.96%  5.44%   68%      98%      4.82%   4.65%     75%    140%   --------  ------ ------  ----     ----     ------  ------    ----    ----   

Deposits totaled $2.7 billion at June 30, down $390 million from March 31, principally reflecting run-off of brokered CDs and the reduction in the use of public funds (down $287 million).

Although each of its banking subsidiaries was adequately capitalized, the Corporation had negative $42 million in shareholders' equity as of June 30.