/2H@  d 1$&%*%'PART I - FINANCIAL INFORMATION$'Item 1. Financial Statements.3'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES-'CONSOLIDATED BALANCE SHEET (Unaudited)('(In thousands, except for shares)^March 31,^December 31, ^2002 ^2001'Assets: 'Cash and cash equivalents"$ 122,857"$ 158,291<'Interest-bearing deposits with financial institutions "17,011 "14,247 'Trading assets "191,124 "199,071Y 'Investment securities (Market value: $37,590 in 2002 and $38,937 in 2001) - Note 2  "37,519  "38,796 'Loans held for sale "487,472 "502,0878 'Loans and leases, net of unearned income - Note 3 "2,277,846 "2,137,7479 'Less: Allowance for loan and lease losses - Note 4 "(30,335) "(22,283)"2,247,511"2,115,464 'Servicing assets - Note 5"260,615"228,624'Accounts receivable "33,693 "41,996"'Accrued interest receivable "13,855 "14,063'Premises and equipment "34,493 "34,988'Other assets "97,119"100,066'Total assets"$ 3,543,269"$ 3,447,693,'Liabilities and Shareholders' Equity:'Deposits'Noninterest-bearing"$ 456,126"$ 533,983'Interest-bearing"902,788"889,448,'Certificates of deposit over $100,000"899,083"885,587"2,257,997"2,309,018%'Short-term borrowings - Note 6"540,251"487,963'Long-term debt "30,000 "30,000X'Company-obligated mandatorily redeemable preferred securities of subsidiary trust"198,500"198,500'Other liabilities"193,281"189,889'Total liabilities"3,220,029"3,215,370- 'Commitments and contingencies - Note 7!'Minority interest !"735 !"658"'Shareholders' equityJ#'Preferred stock, no par value - authorized 4,000,000 shares; issued?$'96,336 shares as of March 31, 2002 and December 31, 2001 $"1,386 $"1,386A%'Common stock, no par value - authorized 40,000,000 shares;Z&'issued 29,612,080 and 23,402,080 shares as of March 31, 2002 and December 31, 2001,Y''respectively; including 2,069,980 and 2,096,947 shares in treasury as of March 31,/('2002 and December 31, 2001, respectively("112,336 ("29,965!)'Additional paid-in capital )"4,444 )"4,426*'Deferred compensation *"(360) *"(449)G+'Accumulated other comprehensive loss, net of deferred income tax>,'benefit of $279 and $130 in 2002 and 2001, respectively ,"(419) ,"(325)-'Retained earnings-"249,812-"241,725."367,199."276,728#/'Less treasury stock, at cost/"(44,694)/"(45,063)!0'Total shareholders' equity0"322,5050"231,66511'Total liabilities and shareholders' equity1"$ 3,543,2691"$ 3,447,693\2'The accompanying notes are an integral part of the consolidated financial statements.34'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES35'CONSOLIDATED STATEMENT OF INCOME (Unaudited)+6'(In thousands, except for per share)!6^For the Three Months Ended!6^For the Three Months Ended7^March 31,7^March 31, 8^2002 8^20019'Interest income::'Loans and leases:"$ 47,191:"$ 29,251;'Loans held for sale ;"9,936 ;"22,855<'Trading account <"9,279 <"7,160='Investment securities:>'Taxable >"1,055 >"1,243?'Tax-exempt ?"57 ?"62@'Federal funds sold @"19 @"33A'Total interest income A"67,537 A"60,604B'Interest expense:C'Deposits C"14,134 C"19,053D'Short-term borrowings D"3,599 D"8,151E'Long-term debt E"569 E"580(F'Preferred securities distribution F"4,820 F"3,646G'Total interest expense G"23,122 G"31,430H'Net interest income H"44,415 H"29,174*I'Provision for loan and lease losses I"10,332 I"1,553.J'Net interest income after provision forK'loan and lease losses K"34,083 K"27,621L'Other income:M'Loan origination fees M"15,539 M"11,678N'Gain from sales of loans N"36,496 N"34,917O'Loan servicing fees O"18,657 O"16,0526P'Amortization and impairment of servicing assetsP"(3,293)P"(7,535)%Q'Net loan administration income Q"15,364 Q"8,5177R'Gain (loss) on sale of mortgage servicing assets R"(93) R"2,092S'Trading lossesS"(7,303) S"(10) T'OtherT"(4,095) T"4,842 U"55,908 U"62,036V'Other expense:W'Salaries W"38,807 W"41,283*X'Pension and other employee benefits X"8,714 X"6,736Y'Office expense Y"4,210 Y"3,642Z'Premises and equipment Z"8,218 Z"7,428 ['Marketing and development ["601 ["1,529\'Professional Fees \"3,146 \"2,125 ]'Other ]"10,863 ]"12,139 ^"74,559 ^"74,882!_'Income before income taxes _"15,432 _"14,775!`'Provision for income taxes `"6,006 `"5,779&a'Income before minority interest a"9,426 a"8,9962b'Minority interest in losses of subsidiaries b"(25)b"-Hc'Income before cumulative effect of change in accounting principle c"9,451 c"8,996Fd'Cumulative effect of change in accounting principle, net of tax d"495 d"175e'Net incomee"$ 9,946e"$ 9,171Uf'Earnings per share before cumulative effect of change in accounting principle: g'Basic g"$ 0.39 g"$ 0.43h'Diluted h"$ 0.37 h"$ 0.40"i'Earnings per share - Note 8 j'Basic j"$ 0.41 j"$ 0.44k'Diluted k"$ 0.39 k"$ 0.41l'Dividends per sharel"$ 0.0675l"$ 0.0650\m'The accompanying notes are an integral part of the consolidated financial statements.3o'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIESLp'CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)9q'FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001r^Accumulated s^Others^Additionalt'(Dollars in thousands)t^Retainedt^Comprehensivet^Deferredt^Paid in t^Commont^Preferredt^Treasury u^Totalu^Earningsu^Income (Loss)u^Compensationu^Capital u^Stock u^Stock u^Stock!v'Balance at January 1, 2002v"$ 231,665v"$ 241,725v"$ (325)v"$ (449)v"$ 4,426v"$ 29,965v"$ 1,386v"(45,063)w'Net income w"9,946 w"9,946$x'Unrealized gain on investment(y'securities net of $20 tax benefit y"(29) y"(29)&z'Foreign currency adjustment net {'of|'$4 tax benefit |"(6) |"(6)!}'Total comprehensive income }"9,911~'Deferred compensation ~"30 ~"30'Cash dividends"(1,859)"(1,859)"'Sale of 6,210,000 shares of'common stock "82,371 "82,371"'Tax benefit on stock option'exercises "12 "12'Treasury stock:'Purchase of 613 shares "(10) "(10)'Sales of 27,580 shares "385"-"6 "379'Balance March 31, 2002"$ 322,505"$ 249,812"$ (360)"$ (419)"$ 4,444"112,336"$ 1,386"(44,694)!'Balance at January 1, 2001"$ 188,870"$ 201,729"$ (459)"$ (503)"$ 4,331"$ 29,965"$ 1,386"(47,579)'Net income "9,171 "9,171$'Unrealized gain on investment 'securities net of $43 tax'liability "63 "63&'Foreign currency adjustment net 'of'$187 tax benefit "(281) "(281)!'Total comprehensive income "8,953'Deferred compensation"4"4'Cash dividends"(1,376)"(1,376)"'Tax benefit on stock option'exercises "1,590 "1,590'Treasury stock: 'Purchase of 90,120 shares"(2,138)"(2,138)'Sales of 230,873 shares "1,391"-"(1,856) "3,247'Balance March 31, 2001"$ 197,294"$ 209,524"$ (677)"$ (499)"$ 4,065"$ 29,965"$ 1,386"(46,470)\'The accompanying notes are an integral part of the consolidated financial statements.3'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES7'CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)!^For the three months ended!^For the three months ended^March 31,^March 31, ^2002 ^2001'(In thousands)'Net income"$ 9,946"$ 9,171;'Adjustments to reconcile net income to cash provided'by operating activities:5'Depreciation, amortization, and accretion, net "3,123 "2,5496'Amortization and impairment of servicing assets "3,293 "7,535*'Provision for loan and lease losses "10,332 "1,553'Deferred income tax "26,245 "21,7027'Loss (gain) on sale of mortgage servicing assets "93"(2,092)*'Gain on sale of loans held for sale"(28,234)"(30,664)+'Originated mortgage servicing assets"(35,284)"(19,903)8'Originations and purchases of loans held for sale"(1,949,394)"(2,071,960)6'Proceeds from sale of mortgage servicing assets"- "2,343D'Proceeds from the sales and repayments of loans held for sale"1,992,243"1,830,9280'Net decrease (increase) in trading assets "7,947"(17,819)&'Decrease in accounts receivable "8,303 "1,627'Other, net"(20,884)"(9,461)7'Net cash provided (used) by operating activities "27,729"(274,491)('Lending and investing activities:?'Proceeds from maturities/calls of investment securities:'Held-to-maturity "286 "3,270'Available-for-sale "975 "2,000)'Purchase of investment securities:'Held-to-maturity"- "(143)'Available-for-sale "(39)"-''Net increase in interest-bearing+'deposits with financial institutions"(2,764)"(25,383)-'Net increase in loans, excluding sales"(376,881)"(101,577)'Sale of loans"234,502 "18,278'Other, net"(1,361)"(3,132)8'Net cash used by lending and investing activities"(145,282)"(106,687)'Financing activities:*'Net (decrease) increase in deposits"(51,021)"376,674,'Net increase in short-term borrowings "52,288 "41,020<'Purchase of treasury stock for employee benefit plans "(10)"(2,138)Q'Proceeds from sale of stock for employee benefit plans and equity offering "82,768 "2,981'Dividends paid"(1,859)"(1,376)0'Net cash provided by financing activities "82,166"417,161.'Effect of exchange rate changes on cash "(47) "(88);'Net (decrease) increase in cash and cash equivalents"(35,434) "35,8957'Cash and cash equivalents at beginning of period"158,291 "83,4931'Cash and cash equivalents at end of period"$ 122,857"$ 119,3889'Supplemental disclosures of cash flow information:#'Cash paid during the period:'Interest"$ 23,796"$ 25,945'Income taxes "$ 865 "$ 740'Noncash transactions:C'Mortgage loans held for sale transferred to loans and leases "$ - "$ -\'The accompanying notes are an integral part of the consolidated financial statements.