By Boris Ladwig, The Republic
bladwig@therepublic.com
Irwin Financial Corp. has withdrawn its request with federal regulators to raise capital through a stock offering, but a spokesman said the move was a mere formality.
Last October, IFC, a Columbus-based financial services corporation and parent company of Irwin Union Bank & Trust Co., filed with the Securities and Exchange Commission a proposal to raise $50 million by selling more shares.
Standby private investors had committed a large portion of that sum. Cummins Inc. had committed $25 million.
IFC has lost more than $450 million in the last six quarters, partially because people have struggled to pay back loans, particularly high-risk home equity loans and mortgage loans in western markets that were heavily affected by the recession.
In the last annual report, external auditors raised "substantial doubt" about the company's ability to survive.
Executives have taken steps to reduce the corporation's size and focus on serving individual and small-business customers.
One last step, raising capital, remains in the restructuring process, executives have said.
On Aug. 31, IFC, in a filing with the SEC, withdrew the proposal to sell more shares "at this time due to adverse market conditions for almost all financial institutions and its inability to date to participate in the government's capital assistance programs."
Chief Information Officer Matt Souza said Friday that the withdrawal "is a technical filing.
The SEC's procedures effectively require that, if a registration statement has not been used or declared effective for use by the SEC within nine months after its filing, an issuer must withdraw the registration statement or have it declared abandoned by the SEC.
"Due to the passage of time, our registration statement has grown stale, so we withdrew it," Souza said.
The corporation has not publicly stated how it now expects to raise funds, though leaders have said that they do not expect to receive any government bailout funds.
In the withdrawal statement, Chief Financial Officer Greg Ehlinger wrote that IFC "may undertake a subsequent private offering."
A Cummins spokeswoman said Friday that the engine maker's commitment of $25 million "remains in place."
In early August, when IFC reported a $57 million second-quarter loss, Chairman and Chief Executive Officer Will Miller said, "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."
When a stakeholder asked Miller in late May how much longer IFC could operate without receiving an answer from regulators, Miller answered, "That's up to the regulators."
Losses have eaten away at shareholders' equity, which fell to negative $42.5 million after the second quarter, down from nearly $111 million at the beginning of the year. Shareholder equity is the difference between assets and liabilities.
This month, IFC's shares have fallen about 8 percent, closing at 91 cents on Friday. The Dow Jones Industrial Average this month has gained about 1.15 percent