Having lost money in six consecutive quarters, Irwin Financial Corp. of Columbus, Ind., has a simple plan for becoming profitable again: Exit the national home equity lending and small-ticket leasing businesses, and focus on small-business and consumer banking in its local communities.
On Thursday, Irwin announced that it lost $107 million, or $3.64 a share, in the second quarter, compared with a profit of $5.5 million, or 17 cents a share, in the same quarter last year.
It attributed the loss largely to a $94 million restructuring charge associated with its planned sale of the home equity and leasing units. It expects to take a similar charge in the third quarter.
Including the restructuring charges, its loss provision for the quarter more than tripled from the first quarter and climbed roughly eightfold from a year earlier, to $158 million.
However, Will Miller, Irwin's chairman and chief executive officer, said that the losses would be "counterbalanced" by the $325 million gained on the sale of the business lines.
"The costs" of the restructuring "are large, but we are big enough to absorb them," Mr. Miller said during his company's second-quarter conference call Thursday. "We are looking forward to returning to a much simpler, cleaner, and more profitable business."
Last month Irwin sold $1 billion of its home equity residual interests to the New York mortgage servicing and investment firm Roosevelt Management Co. LLC.
In addition, Irwin has agreed to deliver nearly all its remaining $316 million of home equity loans to Roosevelt for securitization — a transaction that would cap Irwin's remaining exposure at $150 million.
Irwin also announced Thursday that it closed deals to sell its small-ticket leasing assets to Bank of Nova Scotia in Canada and to Equilease Financial Services Inc. in the United States.
The four transactions combined would reduce Irwin's assets by about 27%, to $4.4 billion.
Matt Souza, its chief administrative officer, said in an interview Thursday that his company plans to rededicate itself to small-business banking and traditional consumer banking services.
Nevertheless, he also said that it would remain in the franchisee lending business, which has been lucrative for Irwin.
In the conference call, the company said that business line is diversified in terms of both restaurant type — Dunkin' Donuts franchisees account for the largest share of its loans, at 11% — and geography.
Irwin's shares declined 1.1% Thursday, to close at $4.29.
