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Home Equity Strong Despite Rise in Overdues at Irwin

Irwin Financial Corp. saw improved fourth-quarter results for its home-equity segment from the previous quarter, although a slight deterioration in consumer mortgage credit quality.

The home-equity segment earned $1.2 million during 4Q06, compared to a loss of $300,000 during 3Q06. Net income for the year totaled $1.5 million, compared to $2.3 million in 2005.

Mortgage loan originations totaled $254 million, unchanged from the third quarter. Production continues to increase in the broker and correspondent channels, helping to offset declines in direct to consumer and other channels, which have been de-emphasized due to margin compression.

Irwin listed net income from continuing operations for the fourth quarter of 2006 of $10.6 million, or $0.35 per diluted share. This compares with diluted earnings per share from continuing operations of $0.30 per share and $0.32 per share, in the third quarter of 2006 and the fourth quarter of 2005, respectively.

For the year, net income from continuing operations totaled $37 million, or $1.25 per share, a $1.2 million dollar increase but a 1% year-over-year decline on a per-share basis. Return-on-average equity for continuing operations was 8.1% and 7.1% for the quarter and the year, respectively. The commercial finance and commercial banking segments both had record annual net income in 2006, offsetting a modest decline in the home-equity segment and significant increases in parent and other expenses.

Reflecting the sale of Irwin's conforming, conventional first mortgage business during 2006, that segment is now reported as discontinued operations. When the 2006 operations and disposal costs of the discontinued operations are combined with continuing operations, Irwin had consolidated net income of $4.9 million, or $0.16 per share, in 4Q06, and net income of $1.7 million, or $0.05 per share, for 2006.

"Irwin Financial made significant progress in the reorganization of our consumer mortgage business in 2006. These changes included the sale of our largest segment, Irwin Mortgage and a significant channel and managerial reorganization at Irwin Home Equity. While these changes contributed to the second straight year of earnings well below our goals, we believe the bulk of these costs are behind us," said Will Miller, CEO of Irwin.

"In 2006, our commercial banking and finance businesses continued to thrive despite a difficult environment. Irwin Union Bank and Irwin Commercial Finance both achieved record net income by expanding market share, while maintaining excellent credit quality. With continued growth in these two segments and our expectation of rebuilding in our consumer mortgage segment, we expect results in 2007 to be much improved." (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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