Leasing News

July 27, 2001

Headlines---

Economy Slowest, Weakest Performance in Eight Years

Look Out for “Code Red” Next Week

Irwin Financial Corporation Announces Second Quarter Earnings

Small Businesses Flourish in Nevada

Orix Financial Hires New CFO

Friday Odds and Ends:

Ron Caruso/Not Enough Time//Listserve/Enough is Enough/Not Manifest

The Leasing News List to be up-dated --- Monday

### denotes press release

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The economy slowed to 0.7 percent rate in spring; weakest performance in eight years

WASHINGTON The U.S. economy slowed to a barely discernible 0.7 percent growth rate in the spring, the weakest performance in eight years, as businesses cut investment spending by the largest amount in nearly two decades.

The meager advance in the gross domestic product the country's total output of goods and services in the April-June quarter followed an anemic 1.3 percent growth rate in the first quarter and was the poorest showing in the country's yearlong economic slowdown, the Commerce Department reported Friday.

( As predicted in Menkin’s Today’s Economy yesterday. What I don’t like hearing are all the experts now saying the recovery will not begin the

third quarter, or even the fourth quarter, or even the First Quarter of next

years. They are saying it is over a year away----that is not good for the

economy as it scares people> It is not good for the leasing business, either. editor )

Look Out for “Code Red” Next Week

By PAMELA HESS

WASHINGTON, (UPI) -- Computer security experts on Friday warned

that the "Code Red" virus that forced the Pentagon to block public access to

its Web sites will reawaken next Wednesday and begin attacking tens of

thousands of computers.

The Computer Emergency Response Team at Carnegie Mellon University said

the virus spreads rapidly. It infected more than 250,000 computers in nine

hours on July 19.

"Because the worm propagates very quickly, it is likely that nearly all

vulnerable systems will be compromised by Aug. 2, 2001," the CERT said.

The virus is programmed to replicate itself for 19 days, in some cases

defacing hosts' Web sites, and then to flood a single Web server -- the

White House's -- with messages, clogging all its lines.

The White House changed its Internet protocol address last month to foil

the bug, but Carnegie Mellon warns the real problem is posed during the

infection stage. The virus, or worm, automatically scans computers over

Internet lines for a particular software vulnerability that would allow it

to take up residence. That scanning threatens to overwhelm Internet lines.

The CERT also warned that in some cases, Code Red can assume control of

computers by overriding security features on local networks.

"This level of privilege effectively gives an attacker complete control of

the infected system," the CERT stated Friday in a warning advisory.

The Pentagon shut down nearly all of its public Web sites on July 20 for

five days while network administrators worked to patch the software

vulnerability that allowed Code Red into a number of military computers. The

worm hit U.S. European Command particularly hard, according to military

sources.

The CERT issued a warning on June 19 about the software vulnerability

resident in some Microsoft systems. A day later the military issued an alert

to patch the problem, giving administrators 30 days to do so, a defense

official told United Press International. However, the Code Red virus had

completed its attack the day before that deadline was met.

The military has nearly 10,000 networks and 2.5 million computers. Last

year around 1,000 computer security advisories were issued; the military

issued about 10 "alerts" with 30-day repair deadlines off that list.

"It's a case of risk assessment. With so many computers we can't respond

to every advisory," the official told UPI.

( see Leasingnews.org virus info center on line at bottom of web site )

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Small Businesses Flourish in Nevada/Arizona Shows Biggest Receipts

.c The Associated Press

WASHINGTON (AP) - Small businesses are flourishing in Nevada, the state that grew fastest in population in the country, the Census Bureau reports.

The number of businesses without paid workers in Nevada rose 5.9 percent between 1997 and 1998 to 99,953, the bureau said in a study released Thursday.

Nationwide, the number of such firms grew 1.7 percent to 15.7 million in the same time span, with receipts rising 9.8 percent to $643.7 billion.

After Nevada, states with the biggest gains in the number of businesses without paid workers were Delaware, Georgia, New York and Mississippi.

The Nevada growth makes sense considering the population explosion the past decade, state demographer Jeff Hardcastle said. The 2000 census found that nearly 2 million people called Nevada home last year, up 66 percent from a decade ago.

Much of Nevada's growth came as people opened real estate, insurance and financing businesses out of their home, trying to take advantage of a booming housing market, Hardcastle said.

``There is a gold-rush mentality for opportunity,'' he said.

But since the data is three years old, a lot of those firms may not be open anymore, considering the recent economic slowdown, Hardcastle added.

Nationally, individual proprietorships, numbering 13.6 million, made up the bulk of the businesses without paid employees. The rest were partnerships or corporations.

Those businesses tied to real estate, renting and leasing made $132 billion overall, while construction firms made $94 billion.

By state, Arizona firms without employees saw the biggest gain in receipts, rising 17 percent to $10.2 billion. It was followed by Delaware, Utah, Florida and Colorado.

On the Net:

Census: http://www.census.gov

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Irwin Financial Corporation Announces Second Quarter Earnings

Revenues Increase 38 Percent, Earnings Per Share Up 40 Percent On Strong Loan

Originations; Credit Performance in Line with Expectations ( except for:

he Corporation's small-ticket leasing line of business, (www.irwinbf.com), incurred a pre-tax loss of $0.3 million in the second quarter, compared with a pre-tax loss of $0.9 million a year earlier. Lease and loan originations totaled $39.7 million in the second quarter and the portfolio totaled $196 million at quarter-end.

Irwin Ventures (www.irwinventures.com) lost $1.6 million during the second quarter, compared with a loss of $0.1 million a year earlier. The loss in the second quarter of 2001 principally reflects a $2.2 million pre-tax valuation adjustment in its portfolio. )

COLUMBUS, Ind., -- Irwin Financial Corporation (Nasdaq-NMS: IRWN), an interrelated group of specialized financial services companies focusing on mortgage banking, home equity lending and small business lending, today announced net income in the second quarter of 2001 of $12.8 million or $0.56 per share, compared with net income of $8.5 million or $0.40 per share during the same period in 2000, an increase in earnings per share of 40.0 percent. Second quarter 2001 revenues totaled $99.5 million, an increase of $27.3 million or 37.9 percent compared with a year earlier. Return on average equity during the second quarter was 25.35% and has been 22.51% year-to-date.

Lines of Business

Net income at the company's mortgage banking subsidiary (www.irwinmortgage.com) totaled $8.2 million in the second quarter, an increase of $4.4 million or 116.5 percent compared with the year earlier period.

Refinanced loans accounted for 50.4 percent of second quarter production of $2.5 billion, compared with 12.7 percent in the year earlier period. The company's mortgage servicing portfolio totaled $10.5 billion as of June 30, 2001, a year-over-year increase of 2.1 percent, but a quarterly increase of $1.1 billion or 12.3 percent, reflecting an increased servicing retention rate in the second quarter of 2001. The market value of the company's servicing portfolio totaled $208.7 million as of June 30, 2001, compared with the balance sheet carrying value of $170.7 million, reflecting balance sheet valuation at the lower of cost or market.

The Corporation's home equity lending business (www.ihe.com) earned $6.1 million during the second quarter of 2001, a $2.1 million or 54.2 percent increase over the second quarter of 2000. The increase in net income reflects growth of the company's production capabilities and improvements in secondary market funding. Home equity loan and line of credit originations totaled $271.4 million in the second quarter, compared with $211.5 million a year earlier, an increase of 28.3 percent. The home equity portfolio totaled $2.0 billion at quarter-end, compared with $1.2 billion a year earlier, a 72.2 percent increase.

The credit quality of the home equity portfolio continues to perform within expectations. The reserve for all owned and managed loans as of quarter-end totaled 5.79 percent of principal balance, compared to annualized charge-offs in the second quarter of 2001 of 1.54 percent of total average managed loans, up from 0.63 percent of total average managed loans a year earlier.

The commercial banking line of business (www.irwinunion.com) earned $1.7 million in the second quarter of 2001, an increase of $0.1 million or 5.7 percent compared with a year earlier. The increase in net income largely reflects year-over-year growth of $1.9 million or 22.0 percent in net interest income after provision for loan losses. The commercial banking loan portfolio of $1.3 billion has increased $0.4 billion, or 46.3 percent year-over-year. The net interest margin for the line of business in the second quarter was 3.82 percent, compared with 4.31 percent during the second quarter of 2000, but up from 3.70 percent during the first quarter of 2001. Net interest margin improved during the quarter in large part due to an increase in core deposits (total deposits less institutional and jumbo CDs) of 13.3 percent during the quarter and 38.0 percent year-to-date. The line of business's net charge-offs totaled $0.3 million during the second quarter or 0.11 percent of average loans on an annualized basis, compared with $0.3 million or 0.16 percent of average loans a year earlier.

The Corporation's small-ticket leasing line of business, (www.irwinbf.com), incurred a pre-tax loss of $0.3 million in the second quarter, compared with a pre-tax loss of $0.9 million a year earlier. Lease and loan originations totaled $39.7 million in the second quarter and the portfolio totaled $196 million at quarter-end.

Balance Sheet

The Corporation's assets totaled $3.3 billion as of June 30, 2001, a $1.3 billion increase from a year earlier, reflecting increases in portfolio loans at the commercial banking and equipment leasing lines of business and increases in loans held for sale at the mortgage banking and home equity lending lines of business. The Corporation's loan and lease portfolio totaled $1.5 billion as of June 30, 2001, an increase of $0.5 billion or 58.3 percent from a year earlier. Loans held for sale increased 87.0 percent year-over-year to $1.0 billion. Risk-based assets totaled $3.5 billion, a 54.2 percent year-over-year increase, largely reflecting portfolio loan growth and growth of the home equity line of business.

Nonperforming assets (including other real estate owned of $6.0 million) were $15.8 million or 0.48 percent of total assets as of June 30, 2001, up from $7.4 million or 0.37 percent of total assets a year earlier. Charge-offs for the quarter totaled $1.3 million, compared to $0.5 million a year earlier. The increased charge-offs relate primarily to activities at Onset Capital, which the Corporation acquired in July 2000. The Corporation's allowance for loan losses totaled $15.2 million as of June 30, 2001, compared with $10.1 million a year earlier. As of June 30, 2001, the consolidated ratio of allowance for loan losses to total loans was 1.02 percent, compared with 1.07 percent a year earlier. The ratio of allowance for loan losses to nonperforming loans totaled 156 percent, compared with 205 percent a year earlier.

On July 16, 2001, the Corporation sold $15 million of 10.25 percent trust preferred stock. These securities will immediately qualify as Tier 2 regulatory capital and are eligible for inclusion in Tier 1 capital. The privately placed securities are callable beginning in July 2006 and mature in July 2031.

The Corporation had $210.3 million or $9.86 per share in common shareholders' equity as of June 30, 2001, a year-over-year per share increase of 20.7 percent. The Corporation's Tier 1 Leverage Ratio and Total Risk-based Capital Ratio were 9.84 percent and 11.43 percent, respectively as of June 30, 2001, compared with 12.06 percent and 11.24 percent a year earlier.

About Irwin Financial

Irwin Financial Corporation (www.irwinfinancial.com) is an interrelated group of specialized financial services companies. The Corporation, through its five major subsidiaries -- Irwin Mortgage Corporation, Irwin Home Equity Corporation, Irwin Union Bank, Irwin Business Finance, and Irwin Ventures -- provides a broad range of consumer and commercial financial services in selected markets in North America.

This press release contains forward-looking statements and estimates that are based on management's expectations, estimates, projections and assumptions. These statements and estimates include but are not limited to projections of business strategies and future activities, but are not guarantees of future performance and involve uncertainties that are difficult to predict. Words such as "expectations" and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of business strategies and future activities. Actual future results may differ materially from what is projected due to a variety of factors including potential changes in interest rates, which may affect consumer demand for our products and the valuation of our servicing portfolio; refinancing opportunities, which may affect the prepayment assumptions used in the Corporation's valuation estimates; competition from other financial service providers for experienced managers as well as for customers; changes in the proposed regulatory treatment of purchased residual interests; unanticipated difficulties in expanding the Corporation's businesses; changes in the value of technology-related companies; legislative or regulatory changes; or governmental changes in monetary or fiscal policies. For additional explanation of various factors that may affect our future results, refer to the Management Discussion and Analysis in the Corporation's 10-K which is on file with the SEC.

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J.P. Morgan Chase Unit Sues Advanta

A mortgage unit of J.P. Morgan Chase & Co. sued Advanta Corp. and alleged that the financial services company misrepresented the value of mortgage assets for which Chase paid more than $1 billion in cash, court papers say.

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Odds and Ends

Ron Caruso, Premier Recruiter and Owner of the

The Equipment Financing Journal (The EFJ)

“On the recruiting side, personnel demand is picking up and is

significantly greater than the first quarter of this year.

However, this increased demand tends to be quite selective, rather

than across the board. Additionally, it tends to be focused on

operations and credit, more than sales. Historically, demand for

equipment financing sales personnel has far outstripped the demand

for operations and credit. Interestingly too, this demand is not

for workout or collection type positions, usually signifying

trouble. Is this a temporary need or a more permanent shift in

organizational structure? Stay tuned.”

http://www.efj.com/

~~~

Not Enough Time

Thanks for quoting me in your message yesterday. But, just to clarify...

It's not that I am not concerned with ethics (double negative). I see a lot

of problems with not only small players but the big guns too. My problem is

time, not the ethics issues or Sunday sermons. There just is not enough

hours in the day to remarket the portfolio that I have and I can't spend a

lot of time reading eMails and getting involved. Maybe in the future with

another company.

Keep up your good work -- newsletter and chat forum. I know its helping a

lot of others out there.

( Name Withheld )

~~~

Thank you for adding me to the list for email distribution. I've been

reading the newsletter for a little less than a year on the web site, and

for some reason didn't realize it was available in an email format until

today. I enjoy reviewing the various perspectives on issues, and appreciate

you adding me to your list.

Thanks!

- Jeff

Jeffery Viviano

Leasing Manager

CNH Capital, Inc.

National Operations Manager

Soris Financial, a division of Case Credit

233 Lake Avenue, Racine, Wisconsin 53403

Telephone 262-636-5074 Facsimile 262-636-5225

Email - jeffery.viviano@cnh.com

( Usually it is the other way around. Let me also take this time to point out

the new Virus Info Center is on our web site, www.leasing news.org ,

it is not attached to our “text format” e-mail report. We post the

the newsletter as soon as we can, which is normally anywhere from fifteen

minutes to an hour after sent, either by Maria Martinez or Carl Moberg

of our office. editor )

~~~

National Association of Leasing Brokers Listseve

We were not affected by the recent onslaught of viruses - thankfully we have

NORTON AV and that stops them. However, the listserv has, in my opinion,

gotten seriously out of hand. I am well aware that I could have gotten sent

a virus from anyone - however, in all the years of being an 'internet nerd',

and with all the international clients we have (LJR Leasing is my business

as you know, and my husband Tommy and I also own Cabo Magic) we have never, not once, received an infected email from any source except for since I have

been on the NAELB listserv.

I have NEVER opened an attachment - Worms can get in within the body of an

email. If you don’t believe that, let me know and I'll send you a copy of an

article via regular mail from The Bottom Line.

I absolutely do think the NAELB listserv is an excellent avenue for industry

professionals to exchange ideas and to keep one another current on events of

the industry.

I also think however, that aside from the occasional abuse by one or more

members who see it as an opportunity to 'fight' and use words to attack

others, it needs 'cleaning'. Somewhere along the way there was, perhaps

early last year, the ability to become part of the listserv without being an

NAELB member. I for one had sent an email message to 'the serve'

complaining because I have been solicited by folks wanting to sell me

insurance & advertising, ALL of whom candidly replied to my query that they

had gotten my name and other info from the NAELB member directory on the

internet.

As I said previously to another member who questioned my reasons for leaving

listserv, I can read the issues and current events on Kits newsletter at

leasingnews.org w/out fear or concern for virus and/or worm infestation or

annoyances. This is not a plug for Kit, it is simply a matter of fact for

me.

Again, I thank you for your kindness and concern, and I wish you, yours, and

everyone, their definition of success and happiness.

Cordially and sincerely,

Lori Reicheg-Garcia

Tommy&Lori@cabomagic.com

9430 Del Webb Blvd #111

Las Vegas, NV 89134

Tel 702-838-0564 Fax 702-838-0565

( Thank you for your compliments, your sincerity, and especially your concern.

Both the National Association of Equipment Leasing Brokers and Equipment

Leasing Association Listserve are excellent for those that use them, from finding

funding sources for particular transactions, answers to specific tax or business

questions. etc. ELA has very little, if any, “chatter.” The NAELB is getting

better with less “chatter.” Leasing News is a completely different forum and

rarely do they have our “stories” and rarely do we fulfill immediately and completely what these listserves can do. They are both very valuable to their