The struggling Irwin Financial Corp. is selling branches and loans to buy time as it negotiates with the government to come to its rescue.
The $4 billion-asset Columbus, Ind., company, which desperately needs capital, said last week that it had sold $190 million of commercial loans and three branches near Indianapolis.
Will Miller, the company's chairman and chief executive officer, said in a press release that the intent was to ensure its bank and thrift units were adequately capitalized at the end of the second quarter, so that it could avoid a liquidity crunch while awaiting a capital injection.
Irwin has proposed that the Treasury Department create a program for companies that are too weak to qualify for a government capital infusion under existing rules. In what it termed a "public-private partnership," the company suggested that struggling companies able to secure capital from private investors — as is the case with Irwin — be eligible for funding from the Troubled Asset Relief Program if they are deemed to be viable upon receipt of the money.
"These transactions are designed to give us the time necessary to complete our work with the Treasury and private investors who have committed to make equity investments as part of our recapitalization plan," Miller said.
First Financial Bancorp in Cincinnati said it would take $150 million of the loans and all three branches at no premium.
It is the second such deal in recent months for the $3.8 billion-asset First Financial, which also has agreed to buy 17 branches from the critically undercapitalized Peoples Community Bancorp Inc. in West Chester, Ohio.
First Financial said the Irwin branches would come with deposits of $143 million and select performing commercial and consumer loans totaling $50 million.
It said the loan purchase closed June 30 and the branch purchase was expected to close in the third quarter.