No one wants to say it, but Fishersbased Irwin Mortgage Corp., one of the area's biggest financial-services companies, is almost sure to lose hundreds of jobs, and may disappear.
Parent company Irwin Financial Corp. last month put Irwin Mortgage on the selling block, a move that imperils many of the unit's 450 local jobs.
Hoosier bankers have been through enough sales to know that out-of-state buyers almost always trim jobs. But this could be something else entirely-a wholesale gutting of the mortgage headquarters, with its operations folded into a larger company.
That's the modus operandi these days in the once-high-flying mortgage business. Companies are consolidating as they confront a double-whammy-mortgage originations are slowing at the same time stiff competition is driving down profit margins.
As Irwin Financial CEO William Miller said in a conference call Jan. 25, "The environment has required ever-larger scale to be more price-competitive and to afford the increased investments and support systems."
If employees want a road map for what might happen here, they need only travel up Interstate 69 to Fort Wayne, headquarters of Waterfield Mortgage.
In January, Waterfield announced it was selling its loan-origination business to Long Island-based American Home Mortgage, a move that will wipe out 650 Fort Wayne jobs.
Both Waterfield and Irwin have seen their mortgage operations sputter the past year. Through the first half of 2005, Irwin originated $5.1 billion in residential mortgages, down 15 percent from the same period a year earlier. Waterfield originated $3.5 billion, down 23 percent, according to American Banker.
The newspaper ranked Irwin as the nation's 39thbiggest mortgage lender, and Waterfield the 48th.
Irwin has every reason to want to sell. The mortgage business is inherently volatile. Shifts in interest rates cause the value of the company's $18 billion servicing portfolio-the loans on which it bills and collects payments-to zig and zag.
When interest rates fall, borrowers often refinance, paying off existing loans early, reducing the portfolio's value. When rates rise, borrowers hang tight, boosting the portfolio's value.
Irwin these days is stuck somewere in between, weathering a downturn in originations but without a sharp rise in mortgage rates that typically would help offset that slowdown.
The mortgage business in 2005 lost $16.2 million, in part because of failed efforts to hedge against interest-rate fluctuations. That compared with a profit of $20.3 million a year earlier.
The 2005 results took the glow off Columbus-based Irwin Financial's profit report, masking a good year for its biggest division, Irwin Union Bank. The bank earned $27.4 million, up 17 percent from 2004.
The disappointing mortgage results have contributed to the swoon in Irwin Financial shares. They were trading late last week at about $20, down from $35 in January 2004.
Selling Irwin Mortgage "will help our stakeholders better understand the significant value we have created" in other parts of Irwin Financial, Miller said on last month's conference call.
So where does that leave mortgage employees? Irwin Financial Senior Vice President Matt Souza declined to speculate, saying "that would be up to a potential buyer."
Fishers Town Manager Gary Huff is hopeful a buyer would retain local jobs. He said Fishers has a lot to offer, including good quality of life and low property taxes.
But larger forces are at work here. If the mortgage business is becoming all about scale, a relatively small outpost in Indiana would appear ripe for consolidation into a larger operation someplace else.
In TV design, thin is in
Sales of flat-panel TVs are so good, it's bad.
H.H. Gregg this month reported a 1.7-percent increase in same-store sales for the quarter ended Dec. 31 but projected they'd tumble 3 percent to 5 percent this quarter.
That's because demand for large-screen plasma and LCD flat panel TVs is out of whack with supply, and manufacturers are not expected to roll out new products to correct the imbalance until late spring, Gregg officials said Feb. 14 in a conference call with analysts.
CEO Jerry Throgmartin said consumers used to gravitate toward larger screen size-no matter what. But during the holiday shopping season, they chose flatscreen TVs over bigger-screen projection TVs, which now are in decline.
"People became infatuated with the flatpaneled televisions," he said. "They wanted the new set, they wanted it right now, and they loved the flat-panel form."