Irwin Financial Corp. today announced transactions that, when completed in the third quarter, will accomplish a strategic restructuring of Irwin and Irwin Union Bank.

As the institution returns to its core businesses, the restructuring will enable Irwin to re-focus on core banking services to small businesses and branch-based customers, according to a release from the firm.

The restructuring will cap Irwin's remaining exposure to the national home equity lending business, which has been a principal driver of recent losses.

The subprime company announced the execution of an agreement to sell its home equity residual interests to Roosevelt Management Co., a New York-based financial services firm focused on investments in, and servicing of, seasoned residential mortgage loans and RMBS. 

According to Irwin, this transaction will remove $1billion of home equity loans from its balance sheet. Additionally, Irwin reached an agreement with Roosevelt to deliver mostly all of the remaining loans in its home equity business into a securitization structure that will cap its remaining exposure at less than $100 million.

To further strengthen the firm's liquidity, Irwin also entered into agreements to sell its small-ticket leasing business in Canada to RoyNat, a subsidiary of Scotiabank Group, and in the U.S. to Equilease Financial Services for $600 million prior to associated costs.

The firm will keep its profitable franchise financing business.

"We believe these transactions will enhance Irwin Financial's capital and liquidity to support our focus on our traditional strengths in serving the banking needs of small businesses and our local communities. These transactions and the strategic restructuring actions they entail will return our core operations to profitability," said Will Miller, chairman and CEO of Irwin Financial.

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