Irwin Financial Corp (IFC)

BrewDood (69.54) Submitted: 2/12/07 9:42 AM : Start Price: $20.76 IFC Score: -51.86

Irwin is a play on a successful strategic repositioning. Irwin's earnings are financing its recent start-up growth. The sale of Irwin Mortgage, the volatile piece, allows the company to grow the commercial banking segment. Cash received from these sales is being deployed to the lending arms of the other business where there is a strong earnings history. Earnings in the third quarter of 2006 at ICF were higher than for all of 2004.

The stock sits pretty close to where it was nine years ago, before ICF existed, before the monetization of the mortgage banking business, and before the commercial banking business turned in a decade of strong growth and double-digit ROE.

The strength of the core businesses has been obscured by the volatile mortgage business. Strong management has refocused the company, discarding the mortgage business and deploying capital in its niche strengths, and returned more to shareholders.

Now, can they successfully execute the strategy?

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