!/2'          )   d 1 \P _5 PRINT_AREA ! PRINT_AREA_MI !$&%( 02 010' \015\0270)'*-(b`30( o&  o5p'Distribution on company-obligated mandatorily  p<q' redeemable preferred securities of subsidiary trust q q  q2r'Net income available to common shareholders r# r r"  r s s s  sEt' Earnings per share of common stock available to shareholders: t t t  tu' Basic - Note 10 uQ? u u= ףp=?  uv' Diluted - Note 10 vQ? v v?  v+@w' Dividends per share of common stock wQ? w w?  w x x x  x\y'The accompanying notes are an integral part of the consolidated financial statements. y y y  y z z z  z { { {  {3|'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES | |  |3}'CONSOLIDATED STATEMENT OF INCOME (Unaudited)  }$~' Nine Months Ended  ~$' September 30,  +@'(In thousands, except for per share)    'Interest income:    ' Loans and leases ;@  @@  ' Investment securities:  ' Taxable  v  ' Tax-exempt    ' Loans held for sale  v@ <@  ' Trading account !   ' Federal funds sold s    ' Total interest income @ @  'Interest expense:'  ' Deposits @ wD  ' Short-term borrowings d S  ' Long-term debt  '  !' Total interest expense f@ `D@  ' Net interest income  0@ }@  4' Provision for loan and lease losses - Note 5  7  /' Net interest income after provision for   ' loan and lease losses l@ @  'Other income:'  ' Loan origination fees @0@ X@  ' Gain from sale of loans ``@  O@   ' Loan servicing fees @ g@  7' Amortization and impairment of servicing assets Z 0  *' Net loan administration income T K@  1' Gain on sale of mortgage servicing assets `8   ' Trading gains (losses) '   &' Brokerage fees and commissions  \  ' Trust fees    +' Service charges on deposit accounts     0' Insurance commissions, fees and premiums     ' Other  ,    A A  'Other expense:'  ' Salaries `m@ P@  +' Pension and other employee benefits = 8  ' Office expense %' &  ' Premises and equipment N C  !' Marketing and development +0     ' Other o _   TA rA  !'Income before income taxes @@ `y@  !'Provision for income taxes   C 8C  s p  5'Distribution on company-obligated mandatorily  <' redeemable preferred securities of subsidiary trust    2'Net income available to common shareholders f  b      E' Earnings per share of common stock available to shareholders:     ' Basic - Note 10 ףp= ?  Q?  ' Diluted - Note 10 Gz?  ffffff?  +@' Dividends per share of common stock  ףp= ?  333333?      \'The accompanying notes are an integral part of the consolidated financial statements.         3'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES@'CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY='FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999'(Unaudited)^Accumulated ^Other ^Additional^Retained^Comprehensive ^Common^Paid in^Treasury ^Preferred ^Total^Earnings ^Income ^Stock^Capital ^Stock ^Stock'(In thousands)'Balance at July 1, 2000 A A   u     j'Comprehensive income: ' Net income # #9' Unrealized gains/losses on investment securities - -$' Foreign currency adjustment  ' Total q#'Cash dividends  !'Purchase of treasury stock  'Sales of treasury stock   'Preferred stock issued !'Balance September 30, 2000 HA A `  u   `  j         'Balance at July 1, 1999 pA xA   u   F  'Comprehensive income: ' Net income " "9' Unrealized gains/losses on investment securities  ' Total "'Cash dividends  !'Purchase of treasury stock  'Sales of treasury stock   !'Balance September 30, 1999 aA (A   u   Q       \'The accompanying notes are an integral part of the consolidated financial statements.<'FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999'(Unaudited)^ Accumulated ^Other ^Additional^Retained^Comprehensive ^Common^Paid in^Treasury ^Preferred ^Total^Earnings ^Income ^Stock^Capital ^Stock ^Stock'(In thousands)!'Balance at January 1, 2000 rA A   u   o  'Comprehensive income:' Net income f f9' Unrealized gains/losses on investment securities   $' Foreign currency adjustment  ' Total e'Cash dividends A A!'Purchase of treasury stock  'Sales of treasury stock   = 'Preferred stock issued j  j!'Balance September 31, 2000 HA A `  u   `  j         !'Balance at January 1, 1999 A \A U  u  # 4  'Comprehensive income:' Net income b b9' Unrealized gains/losses on investment securities  ' Total nb'Cash dividends ] ]!'Purchase of treasury stock ) )'Sales of treasury stock   !'Balance September 30, 1999 aA (A   u   Q       \'The accompanying notes are an integral part of the consolidated financial statements.3'IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES7'CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited).'For the nine months ended September 30,  '(In thousands)  'Net income  f   b;'Adjustments to reconcile net income to cash provided     "' by operating activities:$'Depreciation and amortization @ @6'Amortization and impairment of servicing assets @Z @0*'Provision for loan and lease losses @ @7<'Amortization of premiums, less accretion of discounts @ @=&'Decrease in loans held for sale @G @A0'Gain on sale of mortgage servicing assets  %'Net increase in trading assets @ 'Other, net _ !%3 ' Net cash provided by operating activities  {5   7A( 'Lending and investing activities:? 'Proceeds from maturities/calls of investment securities: ' Held-to-Maturity     /!' Available-for-Sale  @ )'Purchase of investment securities: @' Held-to-Maturity  ' Available-for-Sale  ('Net increase in interest-bearing .' deposits with financial institutions @Q @-'Net increase in loans, excluding sales @D @( 'Sale of loans @I @Y-'Additions to mortgage servicing assets  Б6'Proceeds from sale of mortgage servicing assets z @E'Acquisition of Onset Capital Corporation, net of cash acquired  'Other, net @` @;' Net cash used by lending and investing activities Ԋ 0 'Financing activities:*'Net increase (decrease) in deposits @tA @D,'Net decrease in short-term borrowings @e @0#'Prodeeds from long-term debt @ @0u# 'Repayments of long-term debt @ ! @ "!'Issuance of preferred stock @!j @! ! ! !!"'Purchase of treasury stock @" @")=#'Proceeds from sale of stock for employee benefit plans @#  @# $'Dividends paid @$A @$];%' Net cash provided (used) by financing activities %xA %A.&'Effect of exchange rate changes on cash & &;''Net increase (decrease) in cash and cash equivalents 'H '7b7('Cash and cash equivalents at beginning of period @( @ @( @1)'Cash and cash equivalents at end of period )@ ) )@ * * *9+'Supplemental disclosures of cash flow information: + + +#,'Cash paid during the period: , , ,-' Interest -@ - -@.' Income taxes .  .  . / /  /\0'The accompanying notes are an integral part of the consolidated financial statements.52'NOTES TO THE FINANCIAL STATEMENTS (Unaudited)/5'NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES7'Basis of Presentation: The interim financial data as of September 30, 2000 and for the three and nine month periods ended September 30, 2000 and September 30, 1999 is unaudited; however, in the opinion of Management, the interim data inclu8'Reclassifications: Certain amounts in the 1999 consolidated financial statements have been reclassified to conform to the 2000 presentation.9'Derivatives: On June 15, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133). FAS 133 requires that all 3:'financial position or results of operations.<'Derivative instruments on the Corporation's balance sheet are currently classified as trading assets and carried at market value. Changes in market value are recorded as trading gains or losses on the income statement.>'Trading Assets: Trading assets are stated at fair value. Unrealized gains and losses are included in earnings. Included in trading assets are interest-only strips. Market values for interest-only strips are determined using assumptions @'Foreign Currency: Assets and liabilities of foreign entities, where the local currency is the functional currency, have been translated at quarter-end exchange rates, and income and expenses have been translated to U.S. dollars at average-%A'NOTE 2 - INVESTMENT SECURITIESC'The carrying amounts of investment securities, including net unrealized losses of $100 thousand and $117 thousand on available-for-sale securities at September 30, 2000 and December 31, 1999, respectively, are summarized as follows:E^September 30,E^December 31,F'(In thousands) F FH'Held-to-Maturity1I' US Treasury and Government obligations I R I IR;J' Obligations of states and political subdivisions J Jb%K' Mortgage-backed securities K K  L' Corporate Obligations L L"--M'Total Held-to-Maturity Mm MpP'Available-for-Sale1Q' US Treasury and Government obligations QM QF%R' Mortgage-backed securities R R S' Other S SCT'Total Available-for-Sale T! T!V'Total Investments V@ V VP@Y'Securities which the Corporation has the positive intent and ability to hold until maturity are classified as "held-to-maturity" and are stated at cost adjusted for amortization of premium and accretion of discount. Securities that might b#\'NOTE 3 - LOANS HELD FOR SALE \c^'Loans held for sale are stated at the lower of cost or market as of the balance sheet date. a a a b'NOTE 4 - LOANS AND LEASES2d'Loans and leases are summarized as follows:e^September 30,e^December 31,f'(In thousands) f f-h'Commercial, financial and agricultural h#A h hDAi'Real estate-construction iA i@j'Real estate-mortgage j@A j$@k'Consumer k@@ k@l'Direct financing leases @l4A @l2m'Unearned income m m9 o21A o oa&Ap' q3r'NOTE 5 - ALLOWANCE FOR LOAN AND LEASE LOSSESTt'Changes in the allowance for loan and lease losses are summarized as follows:v^September 30,v^December 31,w'(In thousands) w w%y'Balance at beginning of period yk! y y&z' #{'Acquisition of Onset Capital {t {+|'Provision for loan and lease losses | |[%}'Reduction due to sale of loans } }B~'Reduction due to reclassification of loans to held for sale ~ ~f'Recoveries U 'Charge-offs 1 I 'Other  'Balance at end of period U1  k!'NOTE 6- SERVICING ASSETS'Included on the consolidated balance sheet at September 30, 2000 and December 31, 1999 are $141.0 million and $138.5 million, respectively, of servicing assets. These amounts relate to the principal balances of loans serviced by the Corpor  'Mortgage Servicing Asset:^September 30,^December 31,'(In thousands)  'Beginning Balance  A  @'Additions @ Ъ@"'Amortization and impairment  $'Reduction for servicing sales q ; 05A   A  $'NOTE 7- SHORT-TERM BORROWINGS 7'Short-term borrowings are summarized as follows:^September 30,^December 31,'(In thousands)  :'Federal funds and Federal Home Loan Bank borrowings A  @A 'Lines of Credit and Other FA ? A;'Repurchase agreements and drafts payable related to "' mortgage loan closings @@ @'Commercial paper 8 U 'Total A  <A@'Repurchase agreements at December 31, 1999, include $0.7 million in mortgage loans sold under agreements to repurchase which are used to fund mortgage loans sold prior to sale in the secondary market. These repurchase agreements are collat @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @'Drafts payable related to mortgage loan closings totaled $73.6 million and $46.1 million at September 30, 2000 and December 31, 1999, respectively. These borrowings are related to mortgage closings at the end of the period which have not b'The Corporation has lines of credit available to fund mortgage loans held for sale. Interest on the lines of credit is payable monthly at variable rates ranging from 7.13% to the lender's prime rate at September 30, 2000.''NOTE 8 -- LONG-TERM DEBT 'Long-term debt at September 30, 2000 consists of a note payable of $30.0 million with an interest rate of 7.58% that will mature on July 7, 2014. The note is shown on the balance sheet net of capitalized issuance costs. N'NOTE 9 -- COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES'OF SUBSIDIARY TRUST'In January 1997, the Corporation issued $50 million of trust preferred securities through IFC Capital Trust I, a trust created and controlled by the Corporation. The securities were issued at $25 per share with a cumulative dividend rate o'The sole assets of IFC Capital Trust I are subordinated debentures of the Corporation with a principal balance of $51.5 million, an interest rate of 9.25% and an initial maturity of 30 years with a 19-year extension option.$'NOTE 10 -- EARNINGS PER SHARE  A'Earnings per share calculations are summarized as follows:^Effects of Stock^Basic Earnings^Options and^Diluted Earnings('(In thousands, except share data)^Per Share^Preferred shares^Per Share-'Three months ended September 30, 20002'Net income available to common shareholders #   # 'Shares Q  R8'Per-Share Amount available to common shareholders (u]T?   2rf?+'Nine months ended September 30, 20002'Net income available to common shareholders f   f 'Shares  R  R8'Per-Share Amount available to common shareholders Z";? {Gz  7rN?^Basic Earnings^Effects of ^Diluted Earnings^Per Share^Stock Options^Per Share-'Three months ended September 30, 19992'Net income available to common shareholders "   " 'Shares S Y SU8'Per-Share Amount available to common shareholders F? {Gz  r?    +'Six months ended September 30, 19992'Net income available to common shareholders b   b 'Shares eT j U8'Per-Share Amount available to common shareholders B»? {Gz  Pcjl?             'NOTE 11 -- CONTINGENCIES        'In the normal course of business, Irwin Financial Corporation and its subsidiaries are subject to various claims and other pending and possible legal actions.'Irwin Mortgage Corporation (IMC) is a defendant in a class action lawsuit relating to IMCs payment of broker fees to mortgage brokers. The litigation is pending on appeal before the U. S. Court of Appeals for the 11th Circuit for review o.'NOTE 12 -- INDUSTRY SEGMENT INFORMATION'The Corporation has five principal segments that provide a broad range of financial services throughout the United States. The Mortgage Banking line of business originates, sells and services residential first mortgage loans. The Home Equi'The accounting policies of each segment are the same as those described in the "Summary of Significant Accounting Policies". Below is a summary of each segment's revenues, net income, and assets for 2000 and 1999:^Mortgage^Home Equity^Commercial^Equipment^Venture'(In thousands)^Banking^Lending^Banking^Leasing^Capital ^Other ^Consolidated4'For the three months ended September 30, 2000,'Net interest income, net of provision v   ~   8  P  'Intersegment interest   C     'Other revenue R N g   }5 @@'Intersegment revenues /  +  d   ' Total net revenues  @ k |1 i c W T@'Other expense /u  O  u y  @'Intersegment expenses   C      ' Net income before taxes s C Y   9  $@'Income taxes ^            Z   >(+'Distribution on Preferred Securities        -' Net income available to shareholders o y    Z   #  #'Assets at September 30, 2000