State and federal regulators late this afternoon shut down the two banking subsidiaries of ailing Irwin Financial Corp. of Columbus.
The action makes Irwin Union Bank and Irwin Union Bank FSB the first financial institution failures in Indiana since steep losses hit the industry last year. Irwin Union Bank, founded in 1871, was one of the state’s oldest banks.
The Federal Deposit Insurance Corp. has brokered the sale of Irwin’s banking operations to First Financial Corp. of Cincinnati, First Financial said in a statement late this afternoon.
“Since all deposits are being assumed by First Financial Bank, there will be no losses to any depositor,” First Financial CEO Claude Davis said in the statement.
Irwin Financial operated about two dozen bank branches, many of them in central Indiana.
Earlier this week, Irwin Financial disclosed in a Securities and Exchange Commission filing that regulators ordered it to bolster its capital by the end of the month to levels it had “no realistic prospect of achieving.”
Irwin has been under special regulatory oversight since last fall, in part because of steep losses on home equity loans. It has lost $450 million over the last six quarters.
The company has tried for months to raise additional capital, to no avail. Last fall, it announced plans for a $50 million stock offering, with Cummins Inc. committing to buy up to $25 million of the shares.
But Irwin canceled that offering Aug. 31. In a filing with the SEC, the company said it had been unable to move forward “due to adverse market conditions for almost all financial institutions and its inability to date to participate” in any of the government programs aiding the ailing industry.
Irwin traces its roots the Civil War era. It helped fund the launch of Cummins and the auto parts company that became Arvin Industries. Arvin was acquired by a Michigan competitor in 2000, but not before growing to become a Columbus powerhouse in its own right.
Irwin’s banking units were shut down by the Indiana Department of Financial Institutions and the federal Office of Thrift Supervision. The two regulatory agencies appointed the FDIC as receiver.