Irwin Financial Raises Loss for 4Q

Irwin Financial Corp. said Friday the bank lost more money than it thought in the fourth quarter because more home-equity loan borrowers are missing payments on their loans.

Irwin Financial, which initially reported a loss of $16.4 million for the fourth quarter, on Friday revised the loss to $26 million.

The bank socked away more cash preparing for unpaid loans, especially in the home-equity portfolio. Irwin Financial originally maintained a $129 million reserve to cover bad credit. The bank boosted the reserve to $144.9 million.

"In the first two months of this year, general market conditions have continued to deteriorate and certain credit metrics in our portfolios have worsened," Chief Executive Will Miller said in a statement.

About $1.6 billion of the bank's $5.5 billion loan portfolio is in home-equity loans, or loans issued to a homeowner against the value of the house. The bank focuses on issuing high "loan-to-value ratio" loans, meaning loans nearing or even exceeding the value of the house that serves as collateral for the mortgage.

The allowance for losses in the home-equity portfolio swelled to $91.7 million from the initial estimate of $79.7 million.

Because of the bigger reserve for credit losses, the bank's loss for 2007 was $55 million, compared with the original reported loss of $44.9 million.