Columbus-based Irwin Financial Corp. said this morning that auditors have raised doubt about the bank’s ability to remain in business while it restructures operations.
The company, which operates Irwin Union banking branches in Indianapolis, Carmel, Avon, Franklin and Shelbyville, said it lost $104 million, or $3.54 per diluted share, in the fourth quarter and $340 million, or $11.60 per diluted share, last year.
Irwin shares fell 14.6 percent this morning, to $1.66 each.
In the company’s latest annual report, outside auditor Ernst & Young “stated that certain matters raise substantial doubt about [Irwin’s] ability to continue as a going concern. [The company has] been significantly and negatively impacted by the events and conditions impacting the banking industry.”
The report also said the company was being pulled down by “rising unemployment, declining real estate and financial asset prices, and rising delinquency and loss rates on loans. These in turn have caused significant losses, reduced our capital materially, and had other follow-on consequences.”
The company, also reported that a sale of its home-equity business to St. Paul, Minn.-based Green Tree Servicing LLC erased $690 million of home-equity loans from its balance sheets.
The bank continues to make progress on its restructuring to exit the national mortgage and home-equity lending sectors to instead focus on small-business loans and community banking, a strategy it undertook last April, the company said.
“We are diligently continuing down the path of our strategic restructuring,” Irwin Chairman and CEO Will Miller said in a written statement. “The significant progress we made recently better positions us to deliver core small-business lending and community-banking services.”
Irwin said it continues to pursue a plan to raise $50 million in additional capital to strengthen its balance sheet. The company has agreements with a group of investors, led by Cummins Inc., to receive $34 million in financial help, it said.
Cummins, also based in Columbus, agreed in October to buy $25 million of Irwin stock to support the bank’s restructuring plan.
Irwin Union Bank dates to the mid-19th century and has long-standing ties to Cummins. Deceased Irwin chairman J. Irwin Miller, a great-grandson of bank founder Joseph Ireland Irwin, also was chairman of Cummins.
Miller, who died in 2004, was the father of Irwin’s current chairman and CEO, Will Miller.