New Century Agrees to Acquire Irwin's Platform
Irwin Financial Corp., a bank holding company with a focus on small business and consumer mortgage lending, saw its third-quarter earnings drop from the year-earlier period as it exited the conforming mortgage business.
Irwin's net income totaled $9.2 million in the second quarter, or $0.31 per diluted share, compared with $0.46 per share in the third quarter of 2005.
During the third quarter, Irwin completed the sale of its conforming, conventional mortgage business and related mortgage servicing rights. MSN previously reported that Citigroup purchased most of the servicing portfolio.
In its third quarter earnings release, Irwin said it has also reached an agreement to sell its mortgage servicing operations to New Century Financial Corp. Irwin said New Century will offer to retain "a significant portion" of the employees associated with the mortgage servicing operation.
Irwin said it plans to deepen its emphasis on the small business and nonconforming consumer mortgage businesses.
The sale of the mortgage business resulted in a loss of $13.4 million in the third quarter. The company also recorded a $6.1 million net loss from its now discontinued mortgage operations in the second quarter.
Will Miller, chairman and CEO of Irwin Financial, said the company's commercial finance and banking segments recorded "solid earnings" in the most recent quarter.
He said the bank has seen tight competitive conditions across the board, but it has taken steps to broaden its geographic reach and add new product lines. During the third and fourth quarters, Irwin's commercial banking business has opened new offices in Phoenix, Reno and Albuquerque.
But the company said consolidated revenue from continuing operations declined slightly from the second quarter because of a decline in home-equity incentive servicing revenue and losses on pipeline hedges that are marked-to-market through the income statement.
"In the home-equity segment, our results were well below our expectations earlier in the quarter, largely due to the effects of cleanup calls on the last of the pre-2003 securitizations and the accounting for certain economic hedges," Mr. Miller said in a news release. "However, there were also positive signs. Net interest revenue increased 10% over the second quarter, reflecting improved margins despite the fact that the portfolio declined slightly."
Snapshot: Irwin's Mortgage Servicing Sale
% of Total MSR Asset Sold: 90%
Volume of MSRs Sold $17 Billion
Gross Loss $16 Million
Offsetting Hedge Gains $11 Million
Source: Irwin Financial Corp. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com