COLUMBUS, Ind., Oct. 31 /PRNewswire-FirstCall/ -- Irwin Financial Corp. (NYSE:IFC) , a bank holding company focusing on small business and consumer mortgage lending, today announced a loss of $0.8 million from Continuing Operations for the third quarter of 2007, or $0.05 per diluted share, after preferred dividends. This compares with earnings of $5.5 million or $0.17 per diluted share in the second quarter. Inclusive of a loss of $17.2 million from Discontinued Operations, the Corporation had a consolidated net loss of $18.0 million or $0.64 per share in the quarter.
"This was a very difficult quarter as the mortgage crisis continued to take a heavy toll on our results," said Will Miller, Chairman and CEO of Irwin Financial. "The collapse of liquidity in the secondary mortgage market during the quarter caused us to make significant changes in our home equity product set which in turn reduced production and loan sales. In addition, we saw an increase in delinquencies in our home equity portfolio which caused us to increase our provision for future loan losses meaningfully.
"In our Discontinued Operations, we experienced a significant increase in repurchase requests during July and August. We have assembled an experienced team to respond to and defend against those requests and to seek recovery of certain of our losses. In light of the significant departure in recent months of repurchase requests from historic norms and the challenging housing market environment, we increased our forecasts of future repurchase requests and losses. As a result, we added materially to our reserves for these risks. We have not estimated any recoveries in those models, but expect to recover some of our losses over time.
"On the commercial side, we are seeing mixed results. Our commercial finance channel produced record quarterly income, with strong production and good credit quality. However, loan growth in our commercial banking segment, while stronger than earlier in the year, continues to be behind our targets. We also saw some slippage in credit quality in the commercial banking segment, although we do not expect our ultimate loss experience from these loans to be significant. Core deposit growth slowed during the quarter as we focused on improving margin.
"We are in the midst of taking significant steps, particularly in the home equity segment but also elsewhere in the Corporation where our results have been disappointing, to align staffing with the current environment. We have not completed our plans, but expect future restructuring charges in the range of $10 to $15 million pre-tax, with the expectation that the bulk of this will be reflected in the fourth quarter. Assuming external conditions do not deteriorate further and prior to the anticipated restructuring charges noted above, we expect a return to modest Continuing Operations profitability during the fourth quarter and good earnings in 2008," Miller concluded.