Irwin Financial admits outlook dire

Shares of Irwin Financial Corp. plummeted this morning after the banking company disclosed that regulators have ordered it to bolster its capital by the end of the month to levels “it has no realistic prospect of achieving.”

The acknowledgement raises the prospect that Columbus-based Irwin will become the first Hoosier bank to be seized by regulators since the banking industry tanked last year. Nationally, more than 100 banks have failed since the start of 2008.

The development, disclosed in a Securities and Exchange Commission filing, caused Irwin shares to lose 37 percent of their value today. The stock was trading late this morning at 56 cents per share, down 33 cents on the day.

Irwin Chief Financial Officer Greg Ehlinger did not return a call seeking comment.

Irwin, which got into trouble expanding into California and other western markets, has been under special regulatory oversight since last fall. The board of governors of the Federal Reserve System and the Indiana Department of Financial Institutions imposed the new capital requirements yesterday.

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.

The bank’s woes could spell opportunity for another Indiana financial institution. When regulators take over banks, they often broker deals with other institutions to assume their deposits and most of their assets.

Irwin also might be able to avoid government intervention by negotiating its own sale to another bank.

Irwin has $3.4 billion in assets. Its principal banking subsidiary, 138-year-old Irwin Union Bank, has about two dozen locations, many of them in central Indiana.