/2H= d 1$&%*3'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES-'CONSOLIDATED BALANCE SHEET (Unaudited)('(In thousands, except for shares)^June 30,^December 31, ^2001 ^2000'Assets: 'Cash and cash equivalents"$ 128,853"$ 83,493<'Interest-bearing deposits with financial institutions "84,446 "36,400'Trading assets"191,947"154,921Y 'Investment securities (Market value: $32,855 in 2001 and $37,163 in 2000) - Note 2  "32,648  "37,095 'Loans held for sale "1,016,792 "579,7888 'Loans and leases, net of unearned income - Note 3 "1,486,386 "1,234,9229 'Less: Allowance for loan and lease losses - Note 4 "(15,218) "(13,129) "1,471,168 "1,221,793 'Servicing assets - Note 5"181,329"130,522'Accounts receivable "46,681 "69,224"'Accrued interest receivable "16,003 "12,979'Premises and equipment "31,977 "29,409'Other assets "59,813 "66,805'Total assets"$ 3,261,657"$ 2,422,429,'Liabilities and Shareholders' Equity:'Deposits'Noninterest-bearing"$ 398,186"$ 263,159'Interest-bearing"747,183"517,127,'Certificates of deposit over $100,000"783,517"663,044"1,928,886"1,443,330$'Short-term borrowings- Note 6"776,926"475,502'Long-term debt- Note 7 "29,631 "29,608'Other liabilities"168,756"136,897/'Company-obligated mandatorily redeemable7'preferred securities of subsidiary trust- Note 8"147,193"147,167'Total liabilities"3,051,392"2,232,504- 'Commitments and contingencies - Note 9!'Shareholders' equity1"'Preferred stock, no par value - authorizedE#'4,000,000 shares; issued 96,336 shares as of June 30, 2001 and$'December 31, 2000 $"1,386 $"1,386A%'Common stock; no par value - authorized 40,000,000 shares;J&'issued 23,402,080 shares as of June 30, 2001 and December 31, 2000;J''including 2,210,486 and 2,376,119 shares in treasury as of June 30,/('2001 and December 31, 2000, respectively ("29,965 ("29,965!)'Additional paid-in capital )"4,206 )"4,331*'Minority interest *"813 *"1,055H+'Accumulated other comprehensive income net of deferred income tax@,'asset of ($290) and ($305) in 2001 and 2000, respectively ,"(890) ,"(962)-'Retained earnings-"220,955-"201,729."256,435."237,504#/'Less treasury stock, at cost/"(46,170)/"(47,579)!0'Total shareholders' equity0"210,2650"189,92511'Total liabilities and shareholders' equity1"$ 3,261,6571"$ 2,422,429\3'The accompanying notes are an integral part of the consolidated financial statements.35'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES36'CONSOLIDATED STATEMENT OF INCOME (Unaudited)8^Three Months Ended8^Three Months Ended9^June 30,9^June 30,+:'(In thousands, except for per share) :^2001 :^2000;'Interest income:<'Loans and leases<"$ 31,263<"$ 19,614='Investment securities:>'Taxable >"1,362 >"999?'Tax-exempt ?"65 ?"64@'Loans held for sale @"24,748 @"19,509A'Trading account A"7,592 A"2,682B'Federal funds sold B"56 B"46C'Total interest income C"65,086 C"42,914D'Interest expense:E'Deposits E"18,851 E"11,550F'Short-term borrowings F"8,100 F"8,949G'Long-term debt G"580 G"580(H'Preferred securities distribution H"3,704 H"1,174I'Total interest expense I"31,235 I"22,253J'Net interest income J"33,851 J"20,661*K'Provision for loan and lease losses K"2,804 K"1,119.L'Net interest income after provision forM'loan and lease losses M"31,047 M"19,542N'Other income:O'Loan origination fees O"16,536 O"9,329P'Gain from sales of loans P"46,143 P"21,441Q'Loan servicing fees Q"15,574 Q"14,8026R'Amortization and impairment of servicing assets R"8,870 R"6,708%S'Net loan administration income S"6,704 S"8,0940T'Gain on sale of mortgage servicing assets T"3,689 T"5,471U'Trading gains (losses)U"(6,539) U"4,902 V'Other V"1,883 V"3,351W'Total other income W"68,416 W"52,588X'Other expense:Y'Salaries Y"43,123 Y"29,527*Z'Pension and other employee benefits Z"7,386 Z"5,256['Office expense ["4,035 ["3,244\'Premises and equipment \"7,430 \"7,048 ]'Marketing and development ]"1,445 ]"3,934 ^'Other ^"14,973 ^"9,026_'Total other expense _"78,392 _"58,035!`'Income before income taxes `"21,071 `"14,095!a'Provision for income taxes a"8,474 a"5,590&b'Income before minority interest b"12,597 b"8,505c'Minority interest c"(211)d'Net incomed"$ 12,808d"$ 8,505De'Earnings per share of common stock available to shareholders:f'Basic - Note 10 f"$ 0.61 f"$ 0.41g'Diluted - Note 10 g"$ 0.56 g"$ 0.40*h'Dividends per share of common stockh"$ 0.065 h"$ 0.06\j'The accompanying notes are an integral part of the consolidated financial statements.3l'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES3m'CONSOLIDATED STATEMENT OF INCOME (Unaudited)o^Six Months Endedo^Six Months Endedp^June 30,p^June 30,+q'(In thousands, except for per share) q^2001 q^2000r'Interest income:s'Loans and leasess"$ 60,514s"$ 40,088t'Investment securities:u'Taxable u"2,604 u"1,928v'Tax-exempt v"128 v"127w'Loans held for sale w"47,603 w"31,648x'Trading account x"14,738 x"5,166y'Federal funds sold y"89 y"93z'Total interest incomez"125,676 z"79,050{'Interest expense:|'Deposits |"37,904 |"20,010}'Short-term borrowings }"16,251 }"15,499~'Long-term debt ~"1,160 ~"1,163('Preferred securities distribution "7,408 "2,348'Total interest expense "62,723 "39,020'Net interest income "62,953 "40,0303'Provision for loan and lease losses - Note 4 "4,356 "2,254.'Net interest income after provision for'loan and lease losses "58,597 "37,776'Other income:'Loan origination fees "28,214 "16,875'Gain from sales of loans "81,061 "40,011'Loan servicing fees "31,627 "29,9236'Amortization and impairment of servicing assets "16,405 "12,809%'Net loan administration income "15,222 "17,1140'Gain on sale of mortgage servicing assets "5,781 "5,722'Trading gains (losses)"(3,300) "8,291 'Other "3,248 "14,448"130,226"102,461'Other expense:'Salaries "84,406 "55,482*'Pension and other employee benefits "14,121 "10,923'Office expense "7,678 "6,513'Premises and equipment "14,858 "13,105 'Marketing and development "2,975 "8,713 'Other "28,938 "17,235"152,976"111,971!'Income before income taxes "35,847 "28,266!'Provision for income taxes "14,254 "11,279&'Income before minority interest "21,593 "16,987'Minority interest "(211)H'Income before cumulative effect of change in accounting principle "21,804 "16,987F'Cumulative effect of change in accounting principle, net of tax "175 "-'Net income"$ 21,979"$ 16,987D'Earnings per share of common stock available to shareholders:'Basic - Note 10 "$ 1.04 "$ 0.81'Diluted - Note 10 "$ 0.97 "$ 0.80*'Dividends per share of common stock "$ 0.13 "$ 0.123'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIESL'CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)8'FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000^Accumulated ^Other^Compre-^Additional^Retained^hensive^Preferred ^Common^Paid in^Treasury^Minority ^Total^Earnings ^Income ^Stock ^Stock^Capital ^Stock^Interest'Balance at April 1, 2001"$ 198,216"$ 209,524"$ (1,176)"$ 1,386 "29,965"$ 4,065"(46,470) "$ 922'Net income "12,808 "12,808$'Unrealized gain on investment*'securities net of $17 tax liability "26 "26)'Foreign currency adjustment net of'$144 tax credit "216 "216'Deferred compensation "44 "44!'Total comprehensive income "13,094'Cash dividends"(1,377)"(1,377),'Tax benefit on stock option exercises "39 "39'Treasury stock:'Purchase of 3,640 shares "(81) "(81)'Sales of 28,520 shares "483 "- "102 "381'Minority Interest "(109) "(109)'Balance June 30, 2001"$ 210,265"$ 220,955"$ (890)"$ 1,386 "29,965"$ 4,206"(46,170) "$ 813'Balance at April 1, 2000"$ 165,256"$ 178,324"$ (112)"$ 1,386 "29,965"$ 4,387"(48,694) "$ -'Net income "8,505 "8,505$'Unrealized loss on investment)'securities net of $5 tax liability "7 "7!'Total comprehensive income "8,512'Cash dividends"(1,259)"(1,259)'Treasury stock: 'Purchase of 20,661 shares "(333) "(333)'Sales of 56,554 shares "641 "(53) "694-'Issuance of 96,336 shares of preferred 'stock "-'Balance June 30, 2000"$ 172,817"$ 185,570"$ (105)"$ 1,386 "29,965"$ 4,334"(48,333) "$ -6'FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000'(Unaudited)^Accumulated ^Other^Compre-^Additional^Retained^hensive^Preferred ^Common^Paid in^Treasury^Minority ^Total^Earnings ^Income ^Stock ^Stock^Capital ^Stock^Interest!'Balance at January 1, 2001"$ 189,925"$ 201,729"$ (962)"$ 1,386 "29,965"$ 4,331"(47,579)"$ 1,055'Net income "21,979 "21,979$'Unrealized gain on investment*'securities net of $59 tax liability "89 "89)'Foreign currency adjustment net of'$43 tax credit "(65) "(65)'Deferred compensation "48 "48!'Total comprehensive income "22,051'Cash dividends"(2,753)"(2,753),'Tax benefit on stock option exercises "1,631 "1,631'Treasury stock: 'Purchase of 93,760 shares"(2,220)"(2,220)'Sales of 259,393 shares "1,873 "-"(1,756) "3,629'Minority Interest "(242) "(242)'Balance June 30, 2001"$ 210,265"$ 220,955"$ (890)"$ 1,386 "29,965"$ 4,206"(46,170) "$ 813!'Balance at January 1, 2000"$ 159,296"$ 171,101 "$ (70) "$ - "29,965"$ 4,250"(45,950) "$ -'Net income "16,987 "16,987$'Unrealized loss on investment''securities net of $23 tax credit "(35) "(35)!'Total comprehensive income "16,952'Cash dividends"(2,518)"(2,518)'Treasury stock:!'Purchase of 218,914 shares"(3,384)"(3,384)'Sales of 85,723 shares "1,085 "84 "1,001-'Issuance of 96,336 shares of preferred 'stock "1,386 "1,386'Balance June 30, 2000"$ 172,817"$ 185,570"$ (105)"$ 1,386 "29,965"$ 4,334"(48,333) "$ -3'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES7'CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)('For the six months ended June 30, ^2001 ^2000'(In thousands)'Net income"$ 21,979"$ 16,987;'Adjustments to reconcile net income to cash provided'by operating activities:$'Depreciation and amortization "4,922 "4,0316'Amortization and impairment of servicing assets "16,405 "12,809*'Provision for loan and lease losses "4,356 "2,254&'Increase in loans held for sale"(437,004)"(34,676)0'Gain on sale of mortgage servicing assets"(5,781)"(5,722)%'Net increase in trading assets"(37,026)"(37,069)0'Decrease (increase)in accounts receivable "22,543"(4,601)'Other, net "33,621"(4,819),'Net cash used by operating activities"(375,985)"(50,806)('Lending and investing activities:?'Proceeds from maturities/calls of investment securities:'Held-to-maturity "3,270 "802'Available-for-sale "2,000 "17)'Purchase of investment securities:'Held-to-maturity "(83) "(51)'Available-for-sale "(595) "-''Net increase in interest-bearing+'deposits with financial institutions"(48,046)"(7,810)-'Net increase in loans, excluding sales"(306,892)"(213,609)'Sale of loans "53,160 "7,253- 'Additions to mortgage servicing assets "(67,983) "(27,655)6 'Proceeds from sale of mortgage servicing assets  "6,553  "19,193 'Other, net "(5,532) "(6,969)8 'Net cash used by lending and investing activities "(364,148) "(228,829) 'Financing activities:'Net increase in deposits"485,556"360,1817'Net increase (decrease) in short-term borrowings"301,424"(62,132)#'Repayments of long-term debt "- "(199)"'Issuance of preferred stock "- "1,386<'Purchase of treasury stock for employee benefit plans"(2,220)"(3,384)='Proceeds from sale of stock for employee benefit plans "3,504 "1,085'Dividends paid"(2,753)"(2,518)0'Net cash provided by financing activities"785,511"294,419.'Effect of exchange rate changes on cash "(18) "-0'Net increase in cash and cash equivalents "45,360 "14,7847'Cash and cash equivalents at beginning of period "83,493 "47,2151'Cash and cash equivalents at end of period"$ 128,853"$ 61,9999'Supplemental disclosures of cash flow information:#'Cash paid during the period:'Interest"$ 63,486"$ 34,208'Income taxes"$ 1,789"$ 4,239\'The accompanying notes are an integral part of the consolidated financial statements.