Indiana 35-1286807
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
|
Delaware Applied for
(State of Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
IFC CAPITAL TRUST III
Delaware Applied for
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
500 Washington Street
Columbus, IN 47201
(812) 376-1020
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Copies to:
Jennifer R. Evans, Esq. Thomas C. Erb, Esq.
Jennifer D. King, Esq. Tom W. Zook, Esq.
Vedder, Price, Kaufman & Kammholz Lewis, Rice & Fingersh, L.C.
222 North LaSalle Street, Suite 2600 500 N. Broadway, Suite 2000
Chicago, Illinois 60601 St. Louis, Missouri 63102-2147
(312) 609-7500 (314) 444-7600
|
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Aggregate Registration
Registered Registered Price Per Unit Offering Price Fee
-----------------------------------------------------------------------------------
% Cumulative
Convertible Trust
Preferred Securities of
IFC Capital Trust III 2,070,000(/1/) $25.00 $51,750,000 $ (/6/)
% Convertible Junior
Subordinated Debentures
due 2030 of Irwin
Financial
Corporation(/4/)(/5/)
Guarantee of Convertible
Preferred
Securities(/4/)(/3/)
Common stock, no par
value, of Irwin
Financial Corporation (/7/)
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(1) Includes 270,000 of Convertible Preferred Securities which may be sold by IFC Capital Trust III, to cover over-allotments.
(2) The registration fee is calculated in accordance with Rule 4578(i) and (n).
(3) No separate consideration will be received for the Guarantees.
(4) This Registration Statement is deemed to cover the % Convertible Junior Subordinated Debentures due 2030 of Irwin Financial Corporation, the rights of holders thereof under the related Indenture, and the rights of holders of the Convertible Preferred Securities under the related Trust Agreement, the Guarantee and the Expense Agreement entered into by Irwin Financial Corporation.
(5) The % Convertible Junior Subordinated Debentures due 2030 will be purchased by IFC Capital Trust III with the proceeds of the sale of the Convertible Preferred Securities. Such securities may later be distributed for no additional consideration to the holders of the Convertible Preferred Securities of IFC Capital Trust III upon its dissolution and the distribution of its assets.
(6) Total amount of registration fee is $13,662, of which $6,072 has been previously paid.
(7) Such indeterminate number of shares of common stock as may be issuable upon conversion of the Convertible Preferred Securities registered hereunder. Shares of common stock issued upon conversion of the Convertible Preferred Securities will be issued without the payment of additional consideration. This registration statement also covers such shares as may be issuable upon such conversion pursuant to anti-dilution adjustments.
The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities, and it is not soliciting an offer to buy + +these securities in any state where the offer or sale is not permitted. + |
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
1,800,000
Preferred Securities 1,800,000
Convertible Preferred
Securities
IFC CAPITAL TRUST II
IFC CAPITAL TRUST III
% Cumulative Trust
Preferred Securities % Cumulative
(Liquidation Amount $25 Convertible Trust
Per Preferred Security) Preferred Securities
(Liquidation Amount $25
Fully, irrevocably and
unconditionally
guaranteed on a Per Convertible Preferred
subordinated basis, Security)
as described in this Fully, irrevocably and
prospectus, by unconditionally
guaranteed on a
subordinated basis,
|
IFC Capital Trust II is offering 1,800,000 preferred securities at $25 per security and IFC Capital Trust III is offering 1,800,000 convertible preferred securities at $25 per security. The preferred securities and the convertible preferred securities are being offered and sold separately and not as units.
The preferred securities represent an indirect interest in our % junior subordinated debentures. The debentures have the same payment terms as the preferred securities and will be purchased by IFC Capital Trust II using the proceeds from its offering of preferred securities. The preferred securities are not convertible into shares of our common stock.
The convertible preferred securities represent an indirect interest in our % convertible junior subordinated debentures. The convertible debentures have the same payment terms as the convertible preferred securities and will be purchased by IFC Capital Trust III using the proceeds from its offering of the convertible preferred securities. The convertible preferred securities are convertible into shares of our common stock as described in this prospectus.
Our common stock trades on the Nasdaq National Market under the symbol "IRWN." The closing price as reported on Nasdaq on September 25, 2000, was $16.6875. The preferred securities and convertible preferred securities are expected to be approved for inclusion on the Nasdaq National Market under the symbols "IRWNO" and "IRWNN", respectively. Trading is expected to commence on or before delivery of the securities.
Investing in the securities involves risks. See "Risk Factors" beginning on page 16.
The securities offered by this prospectus are not savings accounts, deposits or obligations of any bank and are not insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation or any other governmental agency.
Per Convertible
Per Preferred Preferred
Security Total Security Total
------------- ----------- --------------- -----------
Public offering price..... $25.00 $45,000,000 $25.00 $45,000,000
Proceeds to the trust..... $25.00 $45,000,000 $25.00 $45,000,000
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This is a firm commitment underwriting. We will pay underwriting commissions of $ per preferred security, or a total of $ , for arranging the investment in our junior subordinated debentures and $ per convertible preferred security, or a total of $ , for arranging the investment in our convertible junior subordinated debentures. The underwriters have been granted a 30-day option to purchase up to an additional 270,000 preferred securities and an additional 270,000 convertible preferred securities to cover over- allotments, if any.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Stifel, Nicolaus & Company
Incorporated
Legg Mason Wood Walker Incorporated
, 2000 McDonald Investments Inc.
. Founded in . 1981 . 1994 Start- . 1999 Start- . 1999 Start-
1871 Acquisition up up up
. Focuses on . Originates, . Originates . Funding
commercial sells and and source for . Investor in
and private services services leasing early stage
banking conforming prime- companies, companies
needs of first quality, brokers and in
small mortgage high loan- vendors financial
businesses loans to-value services or
and home equity financial
business loans services-
owners related
technology
. Locations . National . National . North . National
in Indiana, scope, scope, American focus
Michigan, emphasis on emphasis on focus
Missouri, borrowers debt
Nevada, with consoli-
Utah and special dation
Kentucky needs products
. Acquired
78%
ownership
interest in
Onset
Capital
Corporation,
a Canadian
equipment
leasing
company, in
July 2000
. $2.0 . $408
billion in million in
originations originations
in the and
first half acquisitions
of 2000 in the
first half
of 2000
. Loan . $10.3 . $1.1 . Three
portfolio billion billion . Lease portfolio
of $0.9 servicing owned portfolio investments
billion as portfolio portfolio of $113.2 as of June
of June 30, as of June as of June million as 30, 2000
2000 30, 2000 30, 2000 of June 30,
2000
(includes
Onset
acquisition)
. Headquarters . Headquarters . Headquarters . Headquarters . Headquarters
in in in San in in
Columbus, Indianapolis, Ramon, CA Bellevue, Columbus,
IN IN WA IN
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SUMMARY
This summary highlights information contained in, or incorporated by reference into, this prospectus. Because this is a summary, it may not contain all of the information that is important to you. Therefore, you should also read the more detailed information set forth in this prospectus, our financial statements and the other information that is incorporated by reference into this prospectus. Unless otherwise indicated, the information in this prospectus assumes that the underwriters will not exercise their option to purchase additional preferred securities and convertible preferred securities to cover over-allotments.
Irwin Financial Corporation, headquartered in Columbus, Indiana, is a diversified financial services company organized as an Indiana bank holding company in May of 1972. Our major subsidiaries are Irwin Union Bank and Trust Company, a commercial bank; Irwin Mortgage Corporation, a mortgage banking company; Irwin Home Equity Corporation, a consumer home equity lending company; Irwin Business Finance Corporation, an equipment leasing subsidiary; and Irwin Ventures Incorporated, a venture capital company. Our strategy encourages a diverse revenue stream and we focus on niches in financial services where we believe we can optimize the productivity of our capital and where our experience can provide a competitive advantage.
At June 30, 2000, Irwin had total assets of $2 billion and shareholders' equity of $173 million. While continuing to grow our franchise, over the five- and ten-year periods ending December 31, 1999, respectively:
. our return on average equity has averaged 21.47% and 21.31%;
. our earnings per share has compounded at an average annual growth rate of 14.45% and 24.48%;
. our book value per share has compounded at an average annual growth rate of 14.58% and 18.55%;
. our annual net charge offs to average loans and leases averaged 0.40% and
0.44%; and
. our ratio of year-end allowance for loan and lease losses to total average loans and leases averaged 1.46% and 1.44%.
We attribute the strong profitability reflected in these results primarily to the following:
. We pursue complementary consumer and commercial finance niches through our bank holding company structure;
. Our significant insider ownership, approximately 57% as of June 30, 2000, aligns management's interests with those of both creditors and shareholders. While this concentrated ownership enables management to control the outcome of all shareholder votes, we believe it also heightens management's emphasis on creditworthy, profitable growth;
. Our management teams, both at the parent company and in each line of business, have substantial tenure with Irwin and within the financial services industry. Our financial performance over the past 10 years reflects the success of strategies pursued by this core management team. Many of the strategies we initiate have been innovative and progressive in the financial services industry; and
. Our product and geographic market diversification has allowed us to be opportunistic in new ventures and has resulted in a relatively stable revenue and earnings stream throughout various economic environments and cycles.
At or For
Six Months Ended At or For
June 30, Year Ended December 31,
---------------------- ----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands except per share data)
Net income.............. $ 16,987 $ 16,585 $ 33,156 $ 30,503 $ 24,444 $ 22,428 $ 20,083
Earnings per share
(diluted).............. 0.80 0.76 1.51 1.38 1.08 0.98 0.88
Total assets............ 1,993,011 1,620,873 1,680,847 1,946,179 1,496,794 1,300,122 1,037,541
Total deposits.......... 1,230,499 908,103 870,318 1,009,211 719,596 640,153 563,999
Loans held for sale..... 543,673 579,728 508,997 936,788 528,739 446,898 378,658
Loans and leases, net... 928,971 598,694 724,869 547,103 602,281 526,175 407,904
Total shareholders'
equity................. 172,817 152,750 159,296 145,233 127,983 118,903 99,216
Return on average
assets................. 1.88% 2.01% 2.01% 1.85% 1.94% 1.95% 2.28%
Return on average
equity................. 20.64% 22.06% 21.51% 22.84% 19.80% 20.58% 22.60%
Net interest margin..... 5.57% 5.39% 5.36% 4.41% 4.95% 5.12% 4.93%
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Business Strategy
Our business strategy is to operate as an interrelated group of specialized financial services companies which focus on selected markets where competitive advantages are perceived and optimize the productivity of our capital base.
. Interrelated Group of Specialized Financial Services Companies. We are organized into five principal lines of business: commercial banking, mortgage banking, home equity lending, equipment leasing, and venture capital. Each line of business has a separate management team who operate their niche as a separate business unit responsible for performance goals specific to that particular line of business. Our structure allows the senior management team of each line of business to focus their efforts on understanding their customers and meeting the needs of the markets they serve. This structure also promotes accountability among managers of each enterprise. At the same time, Irwin at the parent level works actively to add value to our lines of business through interaction with the management teams, capitalizing on interrelationships and providing centralized services, and overall organizational decisions. In addition, diversification among business lines makes our consolidated earnings less susceptible to economic and interest rate fluctuations than more traditional commercial banks. The following table shows our net income by line of business for the past five and a half years.
Net Income by Line of Business
Six Months
Ended
June 30, Year Ended December 31,
---------------- -------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- ------- -------
(in thousands)
Commercial banking...... $ 3,553 $ 3,516 $ 7,345 $ 6,509 $ 5,587 $ 4,254 $ 3,639
Mortgage banking........ 6,249 11,570 23,063 28,853 21,300 20,422 19,331
Home equity lending..... 6,554 6,332 12,606 (6,668) 1,710 (816) (3,220)
Equipment leasing....... (1,799) -- (843) -- -- -- --
Venture capital......... 4,243 -- 656 -- -- -- --
Other (including parent,
medical equipment
leasing and
consolidating entries). (1,813) (4,833) (9,671) 1,809 (4,153) (1,432) 333
------- ------- ------- ------- ------- ------- -------
Total consolidated net
income................. $16,987 $16,585 $33,156 $30,503 $24,444 $22,428 $20,083
======= ======= ======= ======= ======= ======= =======
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. Focus on Selected Markets Where Competitive Advantages Are Perceived.
When selecting markets to enter, we choose ones where we believe we have or
can establish a sustainable competitive advantage based upon a dedication to
customer service, responsive decision making and product innovation. We seek
to operate in businesses where our skills are compatible with requirements for
success and where we believe the parent company can add value.
. Optimize the Productivity of Our Capital Base. We are highly regulated as to the amount of assets to equity we can have on a consolidated holding company basis and at Irwin Union Bank on a stand-alone basis. The amount of our regulatory capital affects the amount of assets that can be carried on our balance sheet. For this reason, our strategy is to balance growth between:
. businesses that require us to carry assets on our balance sheet (and are, therefore, capital-intensive such as Irwin Union Bank), and
. businesses that produce additional revenues and profits for us without adding proportionately to our asset size (less capital-intensive opportunities such as Irwin Mortgage).
We believe that, by optimizing the productivity of our capital, we can produce a larger stream of revenues and profits from our capital base than if we focused principally on asset growth.
The result of this strategy is that we derive a larger proportion of our revenue from fee income than from net interest income. For the six months ended June 30, 2000, 71.12% of our total revenues were derived from non- interest income compared to 75.16% for the first six months of 1999, and 28.88% of our total revenues were derived from net interest income during the first half of 2000 compared to 24.84% during the first half of 1999. Historically, we have also optimized our capital and enhanced our net interest margin by using Irwin Union Bank's ability to generate funding through deposits to provide a lower cost of funding than we could otherwise obtain through borrowings.
Major Lines of Business
Irwin Financial Corporation is a regulated bank holding company. We conduct our commercial and consumer finance businesses through separate operating subsidiaries. Under this ownership structure, our separate businesses hold and fund the majority of their assets through the bank. This provides additional liquidity and results in regulatory oversight of each of our lines of business.
. Commercial Banking. Irwin Union Bank is a full service commercial bank offering a wide variety of services to individuals, businesses, and institutional and governmental customers in selected markets. The bank focuses on credit and credit-related products for small businesses and business owners. In recent years, the bank has grown by selectively opening new offices in markets outside of the bank's historical markets in south-central Indiana. Irwin Union Bank currently has 20 banking facilities in Indiana, located throughout nine counties, primarily in the central and south-central portion of the state. The bank also has four banking branches outside Indiana: three branches in Michigan--located in Kalamazoo, established in June 1999; Grandville (near Grand Rapids), established in October 1999; and Traverse City, established in May 2000-- and one branch in Carson City, Nevada, established in December 1999. Irwin Union Bank also has loan production offices in Brentwood, Missouri (near St. Louis), established in 1999, and Louisville, Kentucky and Salt Lake City, Utah established in 2000. Offices in Las Vegas, Nevada and Phoenix, Arizona, are expected to open in the fourth quarter, 2000. Under its growth plan, Irwin Union Bank has targeted and expects to continue to target economically strong metropolitan markets where we believe customers have been negatively impacted by recent bank consolidation. In markets management identifies as attractive opportunities, the bank works to hire experienced bank officers who have strong local ties and who can focus on providing personalized lending services to small businesses in that market. The bank's strategy is to enter a new market only after recruiting a qualified leader. To facilitate our banking expansion plans, we have applied to the Office of Thrift Supervision to establish a federal savings bank subsidiary. The federal savings bank charter would enable us to expand into markets beyond where Irwin Union Bank is currently permitted to branch. The following table shows selected financial data of our commercial banking line of business.
Selected Financial Data--Commercial Banking Line of Business
At or For
Six Months Ended At or For
June 30, Year Ended December 31,
------------------ ------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(dollars in thousands)
Net income.............. $ 3,553 $ 3,516 $ 7,345 $ 6,509 $ 5,587 $ 4,254 $ 3,639
Total assets............ 950,887 656,443 789,560 607,992 539,233 503,507 440,035
Total loans............. 873,339 586,729 720,493 514,950 410,272 336,580 310,083
Total deposits.......... 825,408 574,202 710,899 567,526 486,481 453,879 400,149
Nonperforming assets as
a percentage of total
assets................. 0.21% 0.20% 0.15% 0.31% 0.60% 0.76% 0.45%
Net charge-offs as a
percentage of loans.... 0.06% 0.06% 0.13% 0.11% 0.31% 0.33% 0.52%
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. Mortgage Banking. Irwin Mortgage originates, purchases and services conventional and government agency backed (i.e., FHA and VA) residential mortgage loans nationwide. Irwin Mortgage utilizes a niche strategy, focusing on first-time homeowners. The majority of its mortgage originations are either insured by an agency of the federal government or, in the case of conventional mortgages, meet requirements for resale to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. This niche has provided Irwin Mortgage with an acceptable return on investment while focusing on loans with low credit risk attributes. Irwin Mortgage sells mortgage loans to institutional and private investors but may retain servicing rights to the loans that it originates or purchases from correspondents. This balance between mortgage loan originations and mortgage loan servicing provides an economic hedge against interest rate changes. In rising interest rate environments, the value of our mortgage servicing portfolio generally increases as prepayment expectations decline, and in declining interest rate environments, the value of our mortgage production franchise generally increases.
In addition to the mortgage servicing portfolio shown on the balance sheet, Irwin Mortgage has servicing assets valued at $89.0 million as of June 30, 2000. These assets are not recorded on the balance sheet because of provisions in generally accepted accounting principles in effect at the time the assets were originated which have since changed.
As a complement to its primary niche, Irwin Mortgage also originates, to a limited degree, non-prime first mortgage loans. This market is comprised of borrowers who do not qualify for first mortgages that conform to secondary market standards. These loans are sold on a non-recourse, service-released basis to private investors.
Irwin Mortgage utilizes retail, wholesale, direct, and Internet channels to originate and purchase mortgage loans. At June 30, 2000, Irwin Mortgage operated 80 production and satellite offices in 28 states. Irwin Mortgage is currently our largest contributor to revenue, comprising 48.96% of total revenues for the six months ended June 30, 2000. The mortgage banking line of business accounted for 69.48% of total revenues for the same period in 1999. The following table shows selected financial data of our mortgage banking line of business.
At or For
Six Months Ended At or For Year
June 30, Ended December 31,
----------------------- -----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(dollars in thousands)
Net income.............. $ 6,249 $ 11,570 $ 23,063 $ 28,853 $ 21,300 $ 20,422 $ 19,331
Total mortgage
originations........... 1,942,990 3,386,794 5,876,750 8,944,615 5,397,338 5,085,625 3,559,310
Owned first mortgage
servicing portfolio.... 10,261,375 10,714,259 10,488,112 11,242,470 10,713,549 10,810,988 10,301,914
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. Home Equity Lending. Irwin Home Equity, in conjunction with the bank, originates and services home equity loans and lines of credit nationwide. We either hold the loans in portfolio at the bank or sell them through securitization transactions, and Irwin Home Equity continues to service them. We generally recognize gain when we sell our loans through securitization. The loans are marketed through direct mail and telemarketing in 25 states and through Internet-based solicitations. We target creditworthy, homeowning consumers who are active unsecured credit card debt users. Target customers are pre-selected using proprietary models based on several criteria including the customer's previous use of credit. In 1997 and 1998, we significantly redesigned our product offerings to better position Irwin Home Equity in the future. We introduced new products with origination and prepayment fees and home equity loans with 125% loan-to-value ratios. Over 60% of our current home equity lending portfolio is protected with prepayment penalties. For the six months ended June 30, 2000, home equity loans with loan-to-value ratios greater than 100% made up 57.9% of our loan originations (including 37.5% from an acquired pool). We plan to continue in the near term to originate a high level of loans in this line of business that have high loan-to-value ratios. We also expect to continue to expand our home equity lending line of business through the development of new products, the extension of existing products to newly eligible customers, and by the addition of brokers, correspondents and Internet sites.
The following table shows selected financial data of our home equity line of business.
Selected Financial Data--Home Equity Lending Line of Business
At or For
Six Months Ended At or For
June 30, Year Ended December 31,
-------------------- -----------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- -------- -------- -------- -------- -------- -------
(dollars in thousands)
Net interest income..... $ 13,483 $ 9,334 $ 18,852 $ 5,495 $ 7,129 $ 7,755 $ 1,828
Gain on sale of loans... 19,110 10,508 23,998 18,610 15,908 7,798 2,985
Fees.................... 3,113 2,245 4,907 3,323 2,145 710 13
Total net revenues...... 43,506 22,878 50,566 23,941 21,777 15,420 4,473
Total net income........ 6,554 6,332 12,606 (6,668) 1,710 (816) (3,220)
Loans and line of credit
volume................. 408,073 194,240 439,507 389,673 214,518 169,120 87,420
Total servicing
portfolio.............. 1,154,009 685,003 842,403 581,241 358,166 230,450 86,691
Weighted average yield
on lines of credit..... 13.72% 11.87% 12.72% 11.89% 12.96% 12.80% 13.61%
Weighted average yield
on loans............... 12.67% 11.84% 12.33% 11.86% 13.97% 14.08% -- %
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. Equipment Leasing. Irwin Business Finance originates and services small to medium-sized equipment leases and loans that to date have been held in portfolio at the bank. The leasing company began operations in January 2000. We source equipment leasing transactions from an established national network of brokers and vendors. We use a web-based e-commerce system that provides for automated credit scoring, documentation and portfolio management services. We recently acquired a 78% interest in Onset Capital Corporation, a Canadian small ticket leasing company. Onset's focus on vendor-based relationships should complement our existing U.S.-based leasing business.
. Venture Capital. Irwin Ventures makes investments in early stage companies in the financial services industry and related fields. In August 1999, Irwin Ventures established Irwin Ventures Incorporated-- SBIC, which has received a Small Business Investment Company license. We expect to provide Irwin Ventures' portfolio companies the benefit of our management experience in the developing strategies and plans in the financial services marketplace. In addition, contacts made through venture activities are expected to benefit management of our other lines of business through the sharing of technologies and market opportunities.
Our principal executive offices are located at 500 Washington Street, P.O. Box 929, Columbus, Indiana 47202-0929. Our telephone number is (812) 376-1020.
Each trust is a newly formed financing subsidiary of Irwin. Upon issuance of the preferred securities and convertible preferred securities offered by this prospectus, the purchasers in this offering will own all of the issued and outstanding preferred securities of IFC Capital Trust II, and all of the issued and outstanding convertible preferred securities of IFC Capital Trust III. In exchange for our capital contribution to each of the trusts, we will own all of the common securities of each trust. Each trust exists exclusively for the following purposes:
. issuing the preferred securities or convertible preferred securities, as the case may be, to the public for cash;
. issuing the common securities to us;
. investing the proceeds from the sale of its preferred and common securities in an equivalent amount of junior subordinated debentures for IFC Capital Trust II and convertible junior subordinated debentures for IFC Capital Trust III, to be issued by us; and
. engaging in activities that are incidental to those listed above, such as receiving payments on the debentures and making distributions to security holders, furnishing notices and other administrative tasks.
Each trust's address is 500 Washington Street, P.O. Box 929, Columbus, Indiana 47202-0929, and the telephone number is (812) 376-1020.
The Offering
Preferred Securities Convertible Preferred
Securities
IFC Capital Trust II. IFC Capital Trust III.
The issuer..
Securities
being
offered.....
1,800,000 preferred 1,800,000 convertible
securities, which represent preferred securities, which
preferred undivided interests represent preferred undivided
in the assets of the trust. interests in the assets of
Those assets will the trust. Those
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
consist solely of the assets will consist solely of
debentures and payments the convertible debentures
received on the debentures. and payments received on the
convertible debentures.
The trust will sell the The trust will sell the
preferred securities to the convertible preferred
public for cash. The trust securities to the public for
will use that cash to buy the cash. The trust will use that
debentures from us. cash to buy the convertible
debentures from us.
$25 per preferred security.
Offering $25 per convertible preferred
price.. security.
When
distributions
will be
paid to
you....
If you purchase the preferred If you purchase the
securities, you are entitled convertible preferred
to receive cumulative cash securities, you are entitled
distributions at a % annual to receive cumulative cash
rate. Distributions will distributions at a % annual
accumulate from the date the rate. Distributions will
trust issues the preferred accumulate from the date the
securities and will be paid trust issues the convertible
quarterly on March 31, preferred securities and will
June 30, September 30 and be paid quarterly on March
December 31 of each year, 31, June 30, September 30 and
beginning December 31, 2000. December 31 of each year,
As long as the preferred beginning December 31, 2000.
securities are represented by As long as the convertible
a global security, the record preferred securities are
date for distributions on the represented by a global
preferred securities will be security, the record date for
the business day prior to the distributions on the
distribution date. We may convertible preferred
defer the payment of cash securities will be the
distributions, as described business day prior to the
below. distribution date. We may
defer the payment of cash
distributions, as described
below.
When the
securities
must be
redeemed.... The debentures will mature The convertible debentures
and the preferred securities will mature and the
must be redeemed on September convertible preferred
30, 2030. We have the option, securities must be redeemed
however, to shorten the on September 30, 2030. We
maturity date to a date not have the option, however, to
earlier than September 30, shorten the maturity date to
2005. We will not shorten the a date not earlier than
maturity date unless we have September 30, 2005 without
received the prior approval the payment of any premium
of the Board of Governors of amount, and to certain dates
the Federal Reserve, if between September 30, 2003
required. and September 30, 2005 with
the payment of specific
premium amounts. We will not
shorten the maturity date
unless we have received the
prior approval of the Board
of Governors of the Federal
Reserve, if required.
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
Redemption
before
September
30, 2030 is
possible....
The trust must redeem the The trust must redeem the
preferred securities when the convertible preferred
debentures are paid at securities when the
maturity, or upon any earlier convertible debentures are
redemption of the debentures paid at maturity, or upon any
to the extent the debentures earlier redemption of the
are redeemed. We may redeem convertible debentures to the
all or part of the debentures extent the debentures are
at any time on or after redeemed. We may redeem all
September 30, 2005. or part of the convertible
debentures at any time on or
after September 30, 2005
without the payment of any
premium amounts.
In addition, we may redeem,
at any time, all of the
debentures if:
. there is a change in We may redeem all or part of
existing laws or the convertible debentures
regulations, or new prior to September 30, 2005,
interpretation or if we pay the following
application of these redemption premium:
laws and regulations,
that causes the
interest we pay on the
debentures to no longer
be deductible by us for
federal income tax
purposes; or the trust
becomes subject to
federal income tax; or
the trust becomes or
will become subject to
other taxes or
governmental charges;
. on or after September
30, 2003 but before
September 30, 2004, we
pay a % premium
over the principal
amount to be redeemed;
and
. on or after September
30, 2004 but before
September 30, 2005, we
pay a % premium
over the principal
amount to be redeemed.
. there is a change in
existing laws or
regulations that
requires the trust to
register as an
investment company; or
However, we may only use
these early redemption rights
when the fair market value of
our common stock is at least
125% of the conversion price
of the convertible preferred
securities for a period of 20
consecutive trading days
ending within five business
days of the date of notice of
redemption.
. there is a change in
the capital adequacy
guidelines of the
Federal Reserve that
results in the
preferred securities
not being counted as
Tier 1 capital.
In addition, we may redeem
all of the convertible
debentures, at any time,
without premium, if:
We may also redeem the
debentures at any time, and
from time to time, in an
amount equal to the
liquidation amount of any
preferred securities we
purchase, plus a
proportionate amount of
common securities, but only
in exchange for a like amount
of the preferred securities
and common securities then
owned by us.
. there is a change in
existing laws or
regulations, or new
interpretation or
application of these
laws and regulations,
that causes the
interest we pay on the
convertible debentures
to no longer be
deductible by us for
federal income
Redemption of the debentures
prior to maturity will be
subject to the prior approval
of the Federal Reserve, if
approval
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
is then required. If your tax purposes; or the
preferred securities are trust becomes subject to
redeemed by the trust, you federal income tax; or
will receive the liquidation the trust becomes or
amount of $25 per preferred will become subject to
security, plus any accrued certain other taxes or
and unpaid distributions to governmental charges;
the date of redemption.
. there is a change in
existing laws or
regulations that
requires the trust to
register as an
investment company; or
. there is a change in
the capital adequacy
guidelines of the
Federal Reserve that
results in the
convertible preferred
securities not being
counted as Tier 1
capital.
We may also redeem the
convertible debentures at any
time, and from time to time,
without premium, in an amount
equal to the liquidation
amount of any convertible
preferred securities we
purchase, plus a
proportionate amount of
common securities, but only
in exchange for a like amount
of the convertible preferred
securities and common
securities then owned by us.
Redemption of the convertible
debentures prior to maturity
will be subject to the prior
approval of the Federal
Reserve, if approval is then
required. If your convertible
preferred securities are
redeemed by the trust, you
will receive the liquidation
amount of $25 per convertible
preferred security, plus any
accrued and unpaid
distributions to the date of
redemption, plus the
applicable premium, if any.
We have the
option to
extend the
interest
payment
period......
The trust will rely solely on The trust will rely solely on
payments made by us under the payments made by us under the
debentures to pay convertible debentures to pay
distributions on the distributions on the
preferred securities. As long convertible preferred
as we are not in default securities. As long as we are
under the indenture relating not in default under the
to the debentures, we may, at indenture relating to the
one or more times, defer convertible debentures, we
interest payments on the may, at one or more times,
debentures for up to 20 defer interest payments on
the
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
consecutive quarters, but not convertible debentures for up
beyond September 30, 2030. If to 20 consecutive quarters,
we defer interest payments on but not beyond September 30,
the debentures: 2030. If we defer interest
payments on the convertible
debentures:
. the trust will also
defer distributions on
the preferred
securities;
. the trust will also
defer distributions on
the convertible
preferred securities;
. the distributions you
are entitled to will
accumulate; and
. the distributions you
are entitled to will
accumulate; and
. these accumulated
distributions will earn
interest at an annual
rate of %,
compounded quarterly,
until paid.
. these accumulated
distributions will earn
interest at an annual
rate of %,
compounded quarterly,
until paid.
At the end of any deferral
period, we will pay to the
trust all accrued and unpaid
interest under the
debentures. The trust will
then pay all accumulated and
unpaid distributions to you.
At the end of any deferral
period, we will pay to the
trust all accrued and unpaid
interest under the
convertible debentures. The
trust will then pay all
accumulated and unpaid
distributions to you.
You will
still be
taxed if
distributions
are
deferred....
If a deferral of payment If a deferral of payment
occurs, you will still be occurs, you will still be
required to recognize the required to recognize the
deferred amounts as income deferred amounts as income
for federal income tax for federal income tax
purposes in advance of purposes in advance of
receiving these amounts, even receiving these amounts, even
if you are a cash basis if you are a cash basis
taxpayer. taxpayer.
Our
guarantee
of payment.. Our obligations described in Our obligations described in
this prospectus, in the this prospectus, in the
aggregate, constitute a full, aggregate, constitute a full,
irrevocable and unconditional irrevocable and unconditional
guarantee on a subordinated guarantee on a subordinated
basis by us of the basis by us of the
obligations of the trust obligations of the trust
under the preferred under the convertible
securities. Under the preferred securities. Under
guarantee agreement, we the guarantee agreement, we
guarantee the trust will use guarantee the trust will use
its assets to pay the its assets to pay the
distributions on the distributions on the
preferred securities and the convertible preferred
liquidation amount upon securities and the
liquidation of the trust. liquidation amount upon
However, the guarantee does liquidation of the trust.
not apply when the trust does However, the guarantee does
not have sufficient funds to not apply when the trust does
make the payments. If we do not have sufficient funds to
not make payments on the make the payments. If we do
debentures, the trust not make payments on the
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
will not have sufficient convertible debentures, the
funds to make payments on the trust will not have
preferred securities. In this sufficient funds to make
event, your remedy is to payments on the convertible
institute a legal proceeding preferred securities. In this
directly against us for event, your remedy is to
enforcement of payments under institute a legal proceeding
the debentures. directly against us for
enforcement of payments under
the convertible debentures.
We may
distribute
the
debentures
directly to
you....
We may, at any time, dissolve We may, at any time, dissolve the
the trust and distribute the trust and distribute the
debentures to you, subject to convertible debentures to you,
the prior approval of the subject to the prior approval of
Federal Reserve, if required. the Federal Reserve, if required.
If we distribute the If we distribute the convertible
debentures, we will use our debentures, we will use our best
best efforts to list them on efforts to list them on a
a national securities national securities exchange or
exchange or comparable comparable automated quotation
automated quotation system. system.
How the
securities
will rank
in right of
payment.....
Our obligations under the
Our obligations under the convertible preferred securities,
preferred securities, convertible debentures and
debentures and guarantee are guarantee are unsecured and will
unsecured and will rank as rank as follows with regard to
follows with regard to right right of payment:
of payment:
. the convertible preferred
. the preferred securities will rank
securities will rank equally with the common
equally with the common securities of the trust.
securities of the The trust will pay
trust. The trust will distributions on the
pay distributions on convertible preferred
the preferred securities and the common
securities and the securities pro rata.
common securities pro However, if we default with
rata. However, if we respect to the convertible
default with respect to debentures, then no
the debentures, then no distributions on the common
distributions on the securities of the trust or
common securities of our common stock will be
the trust or our common paid until all accumulated
stock will be paid and unpaid distributions on
until all accumulated the convertible preferred
and unpaid securities have been paid;
distributions on the
preferred securities
have been paid;
. our obligations under the
convertible debentures and
the guarantee are unsecured
and generally will rank:
. our obligations under
the debentures and the
guarantee are unsecured
and generally will
rank:
. junior in priority to our
existing and future senior
and subordinated
indebtedness;
. junior in priority to
our existing and
future senior and
subordinated
indebtedness;
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
. equal to our . junior in priority to our
subordinated subordinated debentures
debentures associated associated with the $50
with the $50 million million of trust preferred
of trust preferred securities that an
securities that an affiliated trust of ours
affiliated trust of currently has outstanding;
ours currently has and
outstanding; and
. junior in priority to the
. senior to the debentures that we will be
convertible debentures issuing to IFC Capital
that we will be Trust II; and
issuing to IFC Capital
Trust III; and
. because we are a holding
company, the convertible
debentures and the guarantee
will effectively be
subordinated to all
depositors' claims, as well
as existing and future
liabilities of our
subsidiaries.
. because we are a
holding company, the
debentures and the
guarantee will
effectively be
subordinated to all
depositors' claims, as
well as existing and
future liabilities of
our subsidiaries.
Voting
rights of
the
preferred
securities.. Except in limited Except in limited
circumstances, holders of the circumstances, holders of the
preferred securities will convertible preferred
have no voting rights. securities will have no
voting rights.
Proposed
Nasdaq
National
Market
symbol...... IRWNO. IRWNN.
You will
not receive
certificates.
The preferred securities will The convertible preferred
be represented by a global securities will be
security that will be represented by a global
deposited with and registered security that will be
in the name of The Depository deposited with and registered
Trust Company, New York, New in the name of The Depository
York, or its nominee. This Trust Company, New York, New
means that you will not York, or its nominee. This
receive a certificate for the means that you will not
preferred securities, and receive a certificate for the
your ownership interests will convertible preferred
be recorded through the DTC securities, and your
book-entry system. ownership interests will be
recorded through the DTC
book-entry system.
How the
proceeds of
this
offering
will be
used...
The trust will invest all of The trust will invest all of
the proceeds from the sale of the proceeds from the sale of
the preferred securities in the convertible preferred
the debentures. We estimate securities in the convertible
that the net proceeds to us debentures. We estimate that
from the sale of the the net proceeds to us from
debentures to the trust, the sale of the convertible
after deducting debentures to the
|
Preferred Securities Convertible Preferred
(continued) Securities
(continued)
offering expenses and trust, after deducting
underwriting commissions, offering expenses and
will be approximately underwriting commissions,
$ million. The will be approximately $
purpose of the offering is to million. The purpose of the
increase our regulatory offering is to increase our
capital and support the regulatory capital and
growth and operations of our support the growth and
subsidiaries. operations of our
subsidiaries.
Conversion
into common
stock.. The preferred securities are
not convertible into our Each convertible preferred
common stock. security is convertible on or
after November 30, 2000, at
the option of the holder into
shares of our common stock,
at the initial conversion
ratio of shares of common
stock for each convertible
preferred security
(equivalent to an initial
conversion price of $ per
share of common stock),
subject to adjustment under
certain circumstances. The
last reported sales price of
our common stock on the
Nasdaq National Market on
September 25, 2000, was
$16.6875. If you want to
convert a convertible
preferred security, the
conversion agent will
exchange your convertible
preferred security for the
appropriate principal amount
of convertible debentures
held by the trust and
immediately convert the
convertible debentures into
shares of our common stock.
You will receive cash in lieu
of fractional shares.
However, you will not receive
cash or additional shares of
our common stock to
compensate you for any
accrued but unpaid
distributions on the
convertible preferred
security through the time of
conversion. These accrued
amounts will be forfeited.
|
Before purchasing the preferred securities or the convertible preferred securities being offered, you should carefully consider the "Risk Factors" beginning on page 16.
The selected consolidated financial data presented below for, and as of the end of, each of the years in the five-year period ended December 31, 1999, are derived from our historical financial statements. Our consolidated financial statements for the five years ended December 31, 1999 have been audited by PricewaterhouseCoopers LLP, independent accountants. The summary data presented below for the six-month periods ended June 30, 2000 and 1999, are derived from our unaudited financial statements. In our opinion, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of results as of or for the six-month periods indicated have been included. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the notes thereto incorporated by reference into this prospectus from our Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and our Quarterly Report on Form 10-Q for the period ended June 30, 2000. Results for past periods are not necessarily indicative of results that may be expected for any future period, and results for the six- month period ended June 30, 2000, are not necessarily indicative of results that may be expected for the entire year ending December 31, 2000.
Six Months Ended
June 30, Year Ended December 31,
---------------------- ----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(dollars in thousands, except per share data)
Statements of Income
Data:
Net interest income.... $ 41,823 $ 35,708 $ 71,819 $ 63,898 $ 54,859 $ 50,020 $ 37,320
Provision for loan and
lease losses.......... (2,254) (3,531) (4,443) (5,995) (6,238) (4,553) (3,198)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan and lease
losses................ 39,569 32,177 67,376 57,903 48,621 45,467 34,122
---------- ---------- ---------- ---------- ---------- ---------- ----------
Non-interest income:
Loan origination
fees................ 16,566 26,028 47,007 60,013 41,370 43,779 32,133
Gain on sales of
loans............... 40,320 57,416 68,851 75,201 39,210 34,248 21,006
Loan servicing fees.. 29,923 31,375 60,581 57,284 53,257 46,877 36,156
Amortization and
impairment of
servicing assets.... (12,809) (5,902) (15,702) (35,388) (16,355) (14,331) (4,865)
Gain on sale of
servicing assets.... 5,723 2,829 37,801 43,308 32,631 16,378 15,271
Trading gains
(losses)............ 8,291 (10,386) (8,296) 1,366 (1,961) -- --
Gain from sale of
leasing assets...... -- -- -- 5,241 -- -- --
Other................ 15,003 6,701 13,827 11,832 8,696 8,699 9,551
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total non-interest
income.............. 103,017 108,061 204,069 218,857 156,848 135,650 109,252
Non-interest expense... 111,972 109,829 214,111 221,206 158,818 143,829 110,925
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes................. 30,614 30,409 57,334 55,554 46,651 37,288 32,449
Provision for income
taxes................. 11,279 11,476 19,481 20,354 17,734 14,860 12,366
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income before
distributions on
securities............ 19,335 18,933 37,853 35,200 28,917 22,428 20,083
Distribution on trust
preferred securities.. 2,348 2,348 4,697 4,697 4,473 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income available
to common
shareholders.......... $ 16,987 $ 16,585 $ 33,156 $ 30,503 $ 24,444 $ 22,428 $ 20,083
========== ========== ========== ========== ========== ========== ==========
Mortgage loan
originations.......... $1,942,990 $3,386,794 $5,876,750 $8,944,615 $5,397,338 $5,085,625 $3,559,310
Home equity loan
originations.......... 408,073 194,240 439,507 389,673 214,518 169,120 87,420
Common Share Data:
Net income per common
share:
Basic................ $ 0.81 $ 0.77 $ 1.54 $ 1.40 $ 1.10 $ 0.99 $ 0.89
Diluted.............. 0.80 0.76 1.51 1.38 1.08 0.98 0.88
Cash dividends per
common share.......... 0.12 0.10 0.20 0.16 0.14 0.12 0.11
Equity available to
common shareholders
(at end of period).... 8.17 7.09 7.55 6.70 5.82 5.23 4.38
Dividend payout ratio.. 14.82% 13.04% 12.93% 11.39% 12.74% 12.15% 12.36%
|
Six Months Ended
June 30, Year Ended December 31,
------------------------ ---------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(dollars in thousands, except per share data)
Selected Consolidated
Financial Condition
Data (at end of
period):
Assets................ $ 1,993,011 $ 1,620,873 $ 1,680,847 $ 1,946,179 $ 1,496,794 $ 1,300,122 $ 1,037,541
Deposits.............. 1,230,499 908,103 870,318 1,009,211 719,596 640,153 563,999
Loans held for sale... 543,673 579,728 508,997 936,788 528,739 446,898 378,658
Loans and leases...... 939,025 608,506 733,424 556,991 611,093 533,050 412,524
Allowance for loan and
lease losses......... 10,054 9,812 8,555 9,888 8,812 6,875 5,033
Shareholders' equity.. 172,817 152,750 159,296 145,233 127,983 118,903 99,216
Owned first mortgage
servicing portfolio.. 10,261,375 10,714,259 10,488,112 11,242,470 10,713,549 10,810,988 10,301,914
Managed home equity
portfolio............ 1,154,009 685,003 842,403 581,241 358,166 230,450 86,691
Selected Financial
Ratios:
Performance Ratios:
Net interest
margin(/1/)(/2/)(/3/). 5.57% 5.39% 5.36% 4.41% 4.95% 5.12% 4.93%
Non-interest income to
revenues(/4/)......... 71.12 75.16 73.97 77.40 74.09 73.06 74.54
Efficiency ratio(/5/).. 77.31 76.39 77.61 78.23 75.02 77.46 75.68
Return on average
assets(/1/)........... 1.88 2.01 2.01 1.85 1.94 1.95 2.28
Return on average
equity(/1/)........... 20.64 22.06 21.51 22.84 19.80 20.58 22.60
Average loan-to-average
deposit ratio......... 0.83 0.60 0.68 0.67 0.82 0.79 0.70
Average interest-
earning assets to
average interest-
bearing liabilities... 1.18 1.32 1.33 1.35 1.38 1.30 1.22
Asset Quality Ratios:
Non-performing loans
and leases to total
loans and leases...... 0.43% 1.31% 0.59% 2.13% 1.26% 1.35% 0.62%
Allowance for possible
loan and lease losses
to:
Total loans and leases. 1.07 1.60 1.17 1.78 1.45 1.29 1.22
Non-performing loans
and leases............ 247.21 122.25 198.72 84.28 114.72 95.81 197.14
Net charge-offs to
average loans and
leases(/1/)........... 0.18 0.24 0.27 0.33 0.46 0.36 0.57
Net home equity charge-
offs to managed home
equity portfolio(/1/). 0.51 0.42 0.36 0.37 0.29 0.02 --
Net mortgage charge-
offs to owned first
mortgage servicing
portfolio(/1/)........ -- -- -- -- -- -- --
Non-performing assets
to total assets (at
end of period)........ 0.33 0.59 0.48 0.78 0.64 0.72 0.27
Capital Ratios:
Average shareholders'
equity to average
assets................ 9.10% 9.11% 9.33% 8.09% 9.78% 9.46% 10.07%
Tier 1 capital ratio... 9.50 12.11 11.39 11.56 13.56 12.20 12.99
Tier 1 leverage ratio.. 12.06 12.34 12.77 10.51 12.06 9.84 10.57
Total risk-based
capital ratio......... 11.24 12.70 13.50 12.25 14.85 12.88 13.64
Ratio of earnings to
fixed charges(/6/):
Including deposit
interest.............. 1.72x 1.98x 1.88x 1.79x 1.86x 1.90x 2.14x
Excluding deposit
interest.............. 2.49 2.62 2.54 2.25 2.45 2.56 3.37
|
An investment in the preferred securities and the convertible preferred securities involves a number of risks. We urge you to read all of the information contained in this prospectus. In addition, we urge you to consider carefully the following factors in evaluating an investment in Irwin and the trusts before you purchase any of the preferred securities or the convertible preferred securities offered by this prospectus.
Because each trust will rely on the payments it receives on the debentures it owns to fund all payments on the preferred securities or the convertible preferred securities, and because each trust may distribute the debentures it owns in exchange for the preferred securities that it issues, you are making an investment decision that relates to the debentures being issued by us as well as the preferred securities or the convertible preferred securities. You should carefully review the information in this prospectus about the preferred securities, the convertible preferred securities, the debentures, the convertible debentures and the guarantees.
Because the convertible preferred securities are convertible into our common stock as described in this prospectus, prospective purchasers of convertible preferred securities are also making an investment decision with regard to our common stock. For this reason, you should also carefully review the information in this prospectus and in the documents incorporated by reference about our business and our common stock.
Our overall financial performance will likely depend more significantly on the results of our different specialized financial services businesses than on our commercial banking business.
We operate in diversified financial services businesses, and in recent years the performance of our mortgage banking and home equity lending businesses have had a larger effect on our consolidated results than our commercial banking line of business. Our future earnings will also be affected by the performance of our two newer businesses, Irwin Business Finance, which we started operating at the beginning of 2000 and recently expanded, and Irwin Ventures which we started in August 1999. We may reduce or exit current lines of business and pursue other lines of business if we believe other financial service niches offer us more attractive opportunities. We could be adversely affected by costs associated with implementing this strategy and uncertainties involved in new lines of business. There can be no assurance that we will be successful in evaluating the risk/reward attributes of the financial service or product niches we choose to pursue.
We may be adversely affected by interest rate changes.
We and our subsidiaries are subject to interest rate risk in all aspects of our finance business, although interest rate sensitivity impacts our various lines of business differently. Changes in interest rates will likely affect the pricing of loans and deposits and the value that we can recognize on the sale of mortgage and home equity loan originations or servicing portfolios. Interest rates tend to have opposite effects on the loan production aspect and the servicing aspect of these two lines of business. Changes in interest rates may also expose us to write-downs in the carrying value of servicing assets and to trading losses related to interest-only instruments that we often retain when selling or securitizing home equity loans.
Like other banks and financial institutions, Irwin Union Bank and Irwin Business Finance are principally dependent on earnings derived from net interest income. Net interest income is the difference between interest earned on loans and investments and the interest expense paid on other borrowings, including deposits in the case of the bank. Our interest income and interest expense are affected by general economic conditions and by the policies of regulatory authorities, including the monetary policies of the Federal Reserve.
Although we have taken measures intended to manage the risks of operating in a changing interest rate environment, we may not be able to effectively mitigate interest rate sensitivity. In addition, there are costs associated with our risk management techniques, and these costs could be substantial. Our strategies include, but are not limited to, modeling interest rate scenarios, using financial hedging instruments, match-funding certain loan assets, selling selected servicing rights and maintaining a strong loan production operation to offset interest rate risk.
Our operations may be adversely affected if we are unable to secure adequate funding; our reliance on wholesale funding sources exposes us to potential liquidity risk.
Due to balance sheet growth and increased competition for deposits in Irwin Union Bank's markets, we have in recent months increased our reliance on wholesale funding, including short-term credit facilities, Federal Home Loan Bank borrowings and brokered deposits. Wholesale funding sources have in the past proven to be somewhat volatile in our industry depending on the varying levels of confidence these investors have in commercial and consumer finance businesses. For this reason, the continued availability to us of these funding sources is uncertain, and we could be adversely impacted if our specialized financial services niches fall out of favor with wholesale lenders. Our financial flexibility will be severely constrained if we are unable to renew our wholesale funding or if adequate financing is not available in the future at acceptable rates of interest. We may not have sufficient liquidity to continue to fund new loan or lease originations, and we could need to liquidate loans or other assets unexpectedly in order to repay obligations as they mature. We regularly resell the majority of our mortgage loan originations into the secondary market, and Irwin Home Equity and Irwin Business Finance also seek to sell loans into the secondary market in the regular course of business as a source of liquidity. At times, some of our financial assets, such as nontraditional, nonprime mortgage and high loan-to-value home equity loans, may not be readily marketable, and we may not be able to sell assets when required at favorable prices. This could adversely affect our earnings and our ability to pay interest on the debentures.
We have credit risk inherent in the asset portfolios that we own as well as in certain assets that we have sold but continue to service.
Some borrowers may not repay loans that we make to them. This risk is inherent in our finance businesses. Like all financial institutions, we maintain an allowance for loan and lease losses to absorb the level of losses that we think is probable in the portfolios that we own, but our allowance for loan and lease losses may not be sufficient to cover the loan and lease losses that we may actually incur. While we maintain a reserve at a level management believes is adequate, our charge-offs could exceed these reserves. In particular, at June 30, 2000, approximately 42.48% of our total managed home equity portfolio consisted of high loan-to-value loans that are not fully collateralized by interests in real estate. If we experience defaults in these loans to a greater extent than we anticipated, this could adversely affect our ability to pay interest on the debentures.
In our home equity lending line of business, some assets are reflected on our balance sheet at the net present value of the future revenue stream of the instruments measured at the time we sell the underlying portfolio of loans. These assets are interest-only instruments and generally represent residual interests in loans that we have sold or securitized. From time to time we may also purchase interest-only instruments that relate to portfolios of loans securitized by others. Payment defaults by borrowers on the related loans will cause deterioration in the value of these assets. If we do not collect the interest we expect, our future earnings will be adversely affected because we are required to record a trading loss equal to the amount the asset is impaired.
Our business may be adversely affected by the highly regulated environment in which we operate.
Irwin and our subsidiaries are subject to extensive federal and state regulation and supervision. Recently enacted, proposed and future legislation and regulations have had, will continue to have or may have significant impact on the financial services industry. Recent and proposed state legislative action to limit the use of fees, points, and interest rates on consumer loans may adversely affect the market for some of our residential mortgage loan products. In addition, the principal banking regulators have recently issued a proposal to change the capital treatment of residual interests from loans securitized by the banking institution. The rules being proposed are intended to limit the use of residual interests including interest-only strips which are often retained by lenders like us when securitizing a pool of loans. If these rules are adopted, we are likely to reduce our use of securitization structures that create interest-only strips, principally in our home equity line of business, which, in turn, could change the revenue recognition pattern in that line of our business as well as others. These and other potential changes in regulation or government policies could increase our costs of doing business and could adversely affect our operations.
Ownership of our common stock is concentrated in persons affiliated with us.
Our chairman, William I. Miller, has voting control over more than 50% of our common stock. Together with Mr. Miller, directors and executive officers of Irwin beneficially own approximately 57% of our common stock. These persons have the ability to control the outcome of all shareholder votes and to direct our affairs and business. This voting power would enable them to cause actions to be taken that may prove to be inconsistent with the interests of non- affiliated shareholders.
Our future success is dependent on our ability to compete effectively in various highly competitive industries.
The financial services business, including commercial banking, mortgage banking, home equity lending and leasing, is highly competitive, and we and our operating subsidiaries encounter strong direct competition for deposits, loans and other financial services in all of our market areas in each of our lines of business. Our principal competitors include other commercial banks, savings banks, savings and loan associations, mutual funds, money market funds, finance companies, trust companies, insurers, leasing companies, credit unions, mortgage companies, private issuers of debt obligations, venture capital firms, and suppliers of other investment alternatives, such as securities firms. Many of our non-bank competitors are not subject to the same degree of regulation as that imposed on bank holding companies, federally insured Indiana chartered banks or federal savings banks. As a result, such non-bank competitors have advantages over us in providing certain services. Many of these financial institutions, lending and leasing companies and other businesses are significantly larger than Irwin and have greater access to capital and other resources. In addition, our ability to compete effectively in our lines of business is also dependent on our ability to adapt successfully to technological changes within the banking and financial services industries generally.
Risks Related to an Investment in the Preferred Securities and the Convertible Preferred Securities
If we do not make interest payments under the debentures or the convertible debentures, the related trust will be unable to pay distributions and liquidation amounts. The guarantee would not apply because the guarantee covers payments only if the trust has funds available.
Each trust will depend solely on our payments on the debentures or the convertible debentures to pay amounts due to you on the preferred securities or the convertible preferred securities, as the case may be. If we default on our obligation to pay the principal or interest on the debentures or the convertible debentures, the applicable trust will not have sufficient funds to pay distributions or the liquidation amount on the related preferred securities. In that case, you will not be able to rely on the applicable guarantee for payment of these amounts because the guarantee only applies if the applicable trust has sufficient funds to make distributions or to pay the liquidation amount. Instead, you or the applicable property trustee will have to institute a direct action against us to enforce the property trustee's rights under the indenture relating to the debentures or the convertible debentures, as the case may be.
We are a holding company and substantially all of our assets are held by our subsidiaries, principally at Irwin Union Bank. Our ability to make payments on the debentures and the convertible debentures when due will depend primarily on available cash resources at the bank holding company and dividends from our subsidiaries. Dividend payments or extensions of credit from the bank are subject to regulatory limitations, generally based on capital levels and current and retained earnings, imposed by the various regulatory agencies with authority over our banking subsidiary. The ability of our subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements. Our subsidiaries may not be able to pay dividends in the future.
The debentures, the convertible debentures and the guarantees rank lower than most of our other indebtedness and our holding company structure effectively subordinates any claims against us to those of our subsidiaries' creditors.
Our obligations under the debentures, the convertible debentures and the guarantees are unsecured and will rank junior in priority of payment to our existing and future senior and subordinated indebtedness, which totaled $92.6 million of outstanding principal amount at June 30, 2000. The issuance of the debentures, the convertible debentures, the preferred securities and the convertible preferred securities does not limit our ability or the ability of our subsidiaries to incur additional indebtedness, guarantees or other liabilities.
Because we are a holding company, the creditors of our subsidiaries, including depositors, also will have priority over you in any distribution of our subsidiaries' assets in liquidation, reorganization or otherwise. Accordingly, the debentures, the convertible debentures and the guarantees will be effectively subordinated to all existing and future liabilities of our subsidiaries, and you should look only to our assets for payments on the preferred securities, the convertible preferred securities, the debentures and the convertible debentures.
We have the option to defer interest payments on the debentures and the convertible debentures for substantial periods.
We may, at one or more times, defer interest payments on the debentures and the convertible debentures for up to 20 consecutive quarters. If we defer interest payments on the debentures or the convertible debentures, the applicable trust will defer distributions on the preferred securities or the convertible preferred securities, as the case may be, during any deferral period. During a deferral period, you will be required to recognize as income for federal income tax purposes the amount approximately equal to the interest that accrues on your proportionate share of the debentures or the convertible debentures, held by the applicable trust in the tax year in which that interest accrues, even though you will not receive these amounts until a later date.
You will also not receive the cash related to any accrued and unpaid interest from the applicable trust if you sell the preferred securities or the convertible preferred securities, as the case may be, before the end of any deferral period. During a deferral period, accrued but unpaid distributions will increase your tax basis in the preferred securities or the convertible preferred securities, as the case may be. If you sell the preferred securities or the convertible preferred securities during a deferral period, your increased tax basis will decrease the amount of any capital gain or increase the amount of any capital loss that you may have otherwise realized on the sale. A capital loss, except in certain limited circumstances, cannot be applied to offset ordinary income. As a result, deferral of distributions could result in ordinary income, and a related tax liability for the holder, and a capital loss that may only be used to offset a capital gain.
We do not currently intend to exercise our rights to defer interest payments on the debentures or the convertible debentures. However, if we do defer interest payments, the market price of the preferred securities or the convertible preferred securities, as the case may be, would likely be adversely affected. The preferred securities or the convertible preferred securities may trade at a price that does not fully reflect the value of accrued but unpaid interest on the debentures or the convertible debentures. If you sell the preferred securities or the convertible preferred securities during a deferral period, you may not receive the same return on investment as someone who continues to hold the preferred securities or the convertible preferred securities. Because of our right to defer interest payments, the market price of the preferred securities and the convertible preferred securities may be more volatile than the market prices of other securities without the deferral feature.
We have made only limited covenants in the indenture and the trust agreement.
The indentures governing the debentures and the convertible debentures and the trust agreements governing the trusts do not require us to maintain any financial ratios or specified levels of net worth, revenues, income, cash flow or liquidity. The instruments do not protect holders of the debentures, the convertible debentures, the preferred securities or the convertible preferred securities in the event we experience significant adverse changes in our financial condition or results of operations. In addition, neither the indentures nor the trust agreements limit our ability or the ability of any subsidiary to incur additional indebtedness. Therefore, you should not consider the provisions of these governing instruments as a significant factor in evaluating whether we will be able to comply with our obligations under the debentures, the convertible debentures, or the guarantees.
We may redeem the debentures and the convertible debentures before September 30, 2030.
Under the following circumstances, we may redeem the debentures or the convertible debentures or both before their stated maturity without payment of premium:
. We may redeem the debentures and the convertible debentures, in whole or in part, at any time on or after September 30, 2005.
. We may redeem the debentures and the convertible debentures in whole, but not in part, within 180 days after certain occurrences at any time during the life of the trust. These occurrences may include adverse tax, investment company or bank regulatory developments.
We have additional rights to redeem the convertible debentures early under certain conditions. See the discussion under "--Additional Risks Related to the Convertible Preferred Securities" on page 22.
You should assume that an early redemption may be attractive to us if we are able to obtain capital at a lower cost than we must pay on the debentures or the convertible debentures or if it is otherwise in our interest to redeem the debentures or the convertible debentures. If the debentures or the convertible debentures are redeemed, the applicable trust must redeem preferred securities or convertible preferred securities, as the case may be, having an aggregate liquidation amount equal to the aggregate principal amount of debentures or the convertible debentures redeemed, and you may be required to reinvest your principal at a time when you may not be able to earn a return that is as high as you were earning on the preferred securities or convertible preferred securities, as the case may be.
We can distribute the debentures and the convertible debentures to you, which may have adverse tax consequences for you; this right could also adversely affect the market price of the preferred securities and the convertible preferred securities.
Each trust may be dissolved at any time before maturity of the debentures or the convertible debentures, as the case may be. If this happens, the trustees may distribute the debentures or the convertible debentures, as the case may be, to you under the terms of the related trust agreement.
Under current interpretations of federal income tax laws supporting classification of each of the trusts as a grantor trust for tax purposes, a distribution of the debentures or the convertible debentures to you upon the dissolution of the applicable trust would not be a taxable event to you. Nevertheless, if the applicable trust is classified for federal income tax purposes as an association taxable as a corporation at the time it is dissolved, the distribution of the debentures or the convertible debentures, as the case may be, would be a taxable event to you. In addition, if there is a change in law, a distribution of the debentures or the convertible debentures upon the dissolution of the applicable trust could be a taxable event to you.
There is no current public market for the preferred securities or the convertible preferred securities and their market prices may be subject to significant fluctuations.
There is currently no public market for the preferred securities or the convertible preferred securities. Although we have applied to have the preferred securities and the convertible preferred securities included on the Nasdaq National Market, there is no guarantee that an active or liquid trading market will develop for the preferred securities or the convertible preferred securities or that the quotation of the preferred securities or the convertible preferred securities will continue on the Nasdaq National Market. If an active trading market does not develop, the market price and liquidity of the preferred securities or the convertible preferred securities, as the case may be, will be adversely affected. Even if an active public market does develop, there is no guarantee that the market price for the preferred securities or the convertible preferred securities will equal or exceed the price you pay for the preferred securities or the convertible preferred securities.
Future trading prices of the preferred securities and the convertible preferred securities may be subject to significant fluctuations in response to prevailing interest rates, our future operating results and financial condition, the market for similar securities and general economic and market conditions. The initial public offering price of the preferred securities and the convertible preferred securities has been set at the applicable liquidation amount of the preferred securities or the convertible preferred securities, as the case may be, and may be greater than the market price of the applicable security following the offering.
The market price for the preferred securities or the convertible preferred securities and the debentures or the convertible debentures, as the case may be, that you may receive in a distribution, is also likely to decline during any period that we are deferring interest payments on the debentures or the convertible debentures, as the case may be.
You must rely on the applicable property trustee to enforce your rights if there is an event of default under either indenture.
You may not be able to directly enforce your rights against us if an event of default under the applicable indenture occurs. If an event of default under the applicable indenture occurs and is continuing, this event will also be an event of default under the applicable trust agreement. In that case, you must rely on the enforcement by the applicable property trustee of its rights as holder of the debentures or the convertible debentures, as the case may be, against us. The holders of a majority in liquidation amount of the preferred securities or convertible preferred securities, as the case may be, will have the right to direct the applicable property trustee to enforce its rights. If the property trustee does not enforce its rights following an event of default and a request by the record holders to do so, any record holder may, to the extent permitted by applicable law, take action directly against us to enforce the applicable property trustee's rights. If an event of default occurs under the applicable trust agreement that is attributable to our failure to pay interest or principal on the debentures or the convertible debentures, as the case may be, or if we default under the applicable guarantee, you may proceed directly against us. You will not be able to exercise directly any other remedies available to the holders of the debentures or the convertible debentures, as the case may be, unless the applicable property trustee fails to do so.
As a holder of preferred securities or convertible preferred securities you have limited voting rights.
Holders of preferred securities and convertible preferred securities have limited voting rights. Your voting rights pertain primarily to amendments to the applicable trust agreement. In general, only we can replace or remove any of the trustees. However, if an event of default under the applicable trust agreement occurs and is continuing, the holders of at least a majority in aggregate liquidation amount of the preferred securities or convertible preferred securities, as the case may be, may replace the applicable property trustee and the applicable Delaware trustee.
We may redeem the convertible debentures earlier than September 30, 2005 in certain circumstances.
As long as the fair market value of our common stock has been at least 125% of the conversion price of the convertible preferred securities for a period of 20 consecutive trading days ending within five business days of the date of notice of redemption, we have the option to redeem any or all of the outstanding convertible debentures prior to maturity in the following circumstances:
. on or after September 30, 2003 but before September 30, 2004, upon payment of a redemption premium equal to % of the principal amount to be redeemed, plus any accrued and unpaid interest on the convertible debentures to the date of redemption; and
. on or after September 30, 2004 but before September 30, 2005, upon payment of a redemption premium equal to % of the principal amount to be redeemed, plus any accrued and unpaid interest on the convertible debentures to the date of redemption.
The convertible debentures are more deeply subordinated and will rank lower than debentures issued in connection with our other trust preferred financings.
The convertible debentures will be unsecured and will rank junior to all of our senior and subordinated debt, including indebtedness we may incur in the future, and will be further subordinated to any debt issued in connection with trust preferred securities intended to qualify for "Tier 1" capital treatment unless those debt securities are also convertible into our common stock. Therefore, the $50 million of subordinated debentures we issued to IFC Capital Trust I and the debentures that we will be issuing to IFC Capital Trust II will rank senior to the convertible debentures that we will be issuing to IFC Capital Trust III.
Certain statements contained in or incorporated by reference into this prospectus constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Irwin intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. You can identify these statements from our use of the words "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. These forward-looking statements may include, among other things:
. statements relating to projected growth; anticipated improvements in earnings, earnings per share, and other financial performance measures; and management's long term performance goals;
. statements relating to the anticipated effects on results of operations or financial condition from expected developments or events;
. statements relating to our business and growth strategies, including potential acquisitions; and
. any other statements which are not historical facts.
Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from our expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. We discuss these and other uncertainties in the "Risk Factors" section of this prospectus beginning on page 16.
The trusts will invest all of the proceeds from the sale of the preferred securities and the convertible preferred securities in the corresponding debentures and convertible debentures. We anticipate that the net proceeds to Irwin from the sale of the debentures and convertible debentures will be approximately $ million after deduction of offering expenses, estimated to be $550,000, and deduction of underwriting commissions.
The purpose of the offering is to provide capital to fund continued growth at our subsidiaries and for general corporate purposes. We expect to contribute the majority of the net proceeds to Irwin Union Bank to fund loans, including commercial loans, home equity loans and leases from our various lines of business, including but not limited to, a possible $87 million asset acquisition of seasoned home equity lines of credit and related interest-only strips resulting from a previous securitization of the underlying loans by the seller.
Our common stock is quoted on the Nasdaq National Market under the symbol "IRWN." The following table sets forth the high and low sales prices and cash dividends declared per share of common stock for the periods indicated. All information has been adjusted for stock splits.
Price Range
--------------- Dividends
High Low Declared
------- ------- --------- ---
Year Ended December 31, 1998
First quarter................................... $28.25 $19.50 $0.04
Second quarter.................................. 30.00 25.125 0.04
Third quarter................................... 37.00 20.50 0.04
Fourth quarter.................................. 31.00 20.125 0.04
Year Ended December 31, 1999
First quarter................................... $28.875 $20.00 $0.05
Second quarter.................................. 25.50 17.50 0.05
Third quarter................................... 25.00 19.33 0.05
Fourth quarter.................................. 22.875 17.00 0.05
Year Ending December 31, 2000
First quarter................................... $18.313 $13.563 $0.06
Second quarter.................................. 18.50 14.375 0.06
Third quarter (through September 25)............ 17.00 13.438 0.06
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As of August 22, 2000, there were approximately 1,715 holders of record of our common stock. The last reported sales price of the common stock on Nasdaq on September 25, 2000, was $16.6875.
Holders of our common stock will be entitled to receive any cash dividends as may be declared by our board of directors. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon our earnings and financial condition, the capital requirements of our subsidiaries, regulatory conditions and considerations and such other factors as our board of directors may deem relevant.
As a holding company, Irwin is ultimately dependent upon its subsidiaries to provide funding for its operating expenses, debt service and dividends. Various banking laws applicable to our banking subsidiary limit the payment of dividends, management fees and other distributions by the bank to us and may therefore limit our ability to make dividend payments.
The following table sets forth our capitalization at June 30, 2000, on a historical basis and as adjusted for the offering of the preferred securities and the convertible preferred securities (assuming no exercise of the underwriters' over-allotment options) and the application of the estimated net proceeds from the corresponding sale of the debentures and the convertible debentures to the applicable trust as if such sale had been consummated on June 30, 2000. This data should be read in conjunction with the consolidated financial statements and notes thereto incorporated by reference into this prospectus from our Annual Report on Form 10-K for the fiscal year ended December 31, 1999, and from our Quarterly Report on Form 10-Q for the period ended June 30, 2000. See "Documents Incorporated by Reference" on page 94.
June 30, 2000
------------------
As
Actual Adjusted
-------- --------
(dollars in
thousands)
Long-term debt(/1/)........................................ $ 30,000 $ 30,000
======== ========
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust(/2/)....................... $ 50,000 $ 95,000
======== ========
Company-obligated mandatorily redeemable convertible
preferred securities of subsidiary trust(/2/)............. $ -- $ 45,000
======== ========
Shareholders' Equity:
Preferred stock, no par value; 4,000,000 shares
authorized; an aggregate of 333,330 shares designated
Convertible Preferred Stock, Series A, B, C or D and
an aggregate of 96,336 shares issued and outstanding of
Series A, B and C....................................... $ 1,386 $ 1,386
Common stock, no par value; 40,000,000 shares authorized;
23,402,080 shares issued, including 2,430,488 shares in
treasury................................................ 29,965 29,965
Additional paid-in capital............................... 4,334 4,334
Net unrealized losses on investment securities........... (105) (105)
Retained earnings........................................ 185,570 185,570
Less treasury stock, at cost............................. (48,333) (48,333)
-------- --------
Total shareholders' equity.............................. $172,817 $172,817
======== ========
Capital Ratios(/3/):
Leverage ratio(/4/)...................................... 12.06% 12.48%
Tier 1 capital ratio(/5/)................................ 9.50% 9.83%
Total risk based capital ratio(/5/)...................... 11.24% 14.98%
Average shareholders' equity to average assets........... 8.67% 8.67%
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(2) Our outstanding preferred securities are shown on our balance sheet as of
June 30, 2000 net of capitalized issuance costs of $1,893,000; as adjusted,
the preferred securities and convertible preferred securities to be issued
in this offering are shown net of issuance costs, estimated to be
$3,925,000 in total.
(3) The capital ratios, as adjusted, are computed including the estimated net
proceeds from the sale of the preferred securities, in a manner consistent
with Federal Reserve regulations.
(4) The leverage ratio is core capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
(5) The preferred securities and the convertible preferred securities have been structured to qualify as Tier 1 capital. However, in calculating the amount of Tier 1 qualifying capital, the preferred securities and the convertible preferred securities, together with any other trust preferred securities or cumulative preferred stock of Irwin that may be outstanding in the future, can only be included up to the amount constituting 25% of total Tier 1 capital. As adjusted for this offering, Irwin's Tier 1 capital as of June 30, 2000, would have been approximately $226 million, of which $8 million would have been attributable to the preferred securities and the convertible preferred securities offered by this prospectus.
The trusts will be treated, for financial reporting purposes, as our subsidiaries and, accordingly, the accounts of each trust will be included in our consolidated financial statements. The preferred securities and the convertible preferred securities will be presente