The federal Pension Benefit Guaranty Corp. will cover nearly all of a $20.5 million shortfall in the pension plan covering more than 1,000 former workers and retirees of Irwin Financial Corp., the failed Columbus, Ind., banking company.
Irwin is the parent of Irwin Union Bank, the only Indiana bank to be seized by government regulators since the financial crisis began in 2008. The Federal Deposit Insurance Corp. in September shut down Irwin and sold most of its operations to Cincinnati-based First Financial Corp.
The PBGC estimates that Irwin’s pension plan is 56 percent funded, with assets of $26.7 million to cover $47.2 million in benefit liabilities. The agency expects to be responsible for $19.1 million of the $20.5 million shortfall.
Banking experts say Irwin was unable to recover from massive losses spurred by a nationwide expansion of its home equity loan business over the past decade. Irwin Union Bank was founded in 1871 and was one of the state’s oldest financial institutions.
Its parent, Irwin Financial, is being liquididated in Indianapolis bankruptcy court.