Magazine article American Banker

Irwin of Indiana Wants to Unload Its Mortgage Unit

Magazine article American Banker

Irwin of Indiana Wants to Unload Its Mortgage Unit

Article excerpt

Irwin Financial Corp., a Columbus, Ind., small-business lender and mortgage banking company, issued a profit warning and said it is mulling the sale of its mortgage subsidiary.

Will Miller, Irwin's chairman, said Wednesday in a conference call with analysts that it is speaking with several parties about a possible sale. Though it would give "an edge" to a buyer interested in all of Irwin Mortgage Corp., the company is also talking to parties interested in just portions of the unit, he said.

Irwin has hired JPMorgan Chase & Co. to advise it on the sale.

In the past year shrinking gain-on-sale spreads and impairments to its servicing rights have hit the mortgage unit hard, but Mr. Miller said the decision to pursue a sale was driven by market changes over the past five years.

In particular, he said, the increased emphasis on price over product and service has required lenders and servicers to add scale, and Irwin would rather devote future resources to its growing commercial segment, which is made up of Irwin Union Bank and Irwin Commercial Finance, and its home equity lending business.

"Our conventional mortgage operations, particularly our servicing activities, have grown to a size where we believe they can be managed and grown more effectively within another organization," Mr. Miller said in a press release.

Irwin said it would report fourth-quarter earnings "substantially less" than its earlier guidance of 48 cents a share, because of reduced mortgage spreads and servicing impairment. …

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