Regulators Shutter Banking Units Of Irwin Financial, One-Time Mortgage Lender To CUs

WASHINGTON – The FDIC on Friday seized the two banking subsidiaries of Irwin Financial Corp., the Columbus , Ind. holding company that once operated more than 75 mortgage subsidiaries inside of credit unions.

The seizures of the company’s Irwin Union Bank in Louisville and Irwin Union Bank & Trust in Columbus , Ind. , make a total of 94 bank failures so far this year.

Irwin Financial traces its roots to 1863 when it began providing credit to Indiana merchants. Its two banks were hit hard by the exposure to real estate loans and received a cease and desist order just last week from the Federal Reserve directing it to raise capital. Irwin said the same day “there is no realistic prospect” of meeting that directive.

As part of the resolution of the failed banking unit, the FDIC transferred control of the two banks’ deposits, branches and “essentially all of their assets” to First Financial Bank and entered into a so-called loss sharing arrangement with the Hamilton , Ohio bank.

The company was a popular mortgage lender for credit unions until 2005 when it sold most of that business to U.S. Mortgage Corp., which used the operations for the basis of its CU National Mortgage subsidiary. U.S. Mortgage itself filed for bankruptcy earlier this year and was liquidated after its owner pleaded guilty to a massive fraud that siphoned as much as $140 million from its credit union customers.