Irwin Bank shutdown shocks Columbus

COLUMBUS, Ind. (WISH) - There are big changes in Columbus; Irwin Union Bank is now First Financial Bank. Federal Regulators spent the day in the city explaining the transition to customers.

"It's still kind of shocking that it really went on the way and this happened," bank customer Debbie White said.

Irwin Union Bank has been part of Columbus for 138 years.

"We moved here 30 years ago and we liked Irwin Union because it was a small bank and we felt like it was a hometown bank. Its been very comfortable dealing with them," said White.

But the bank that stood solvent through the great depression and through two world wars just could not make it through this latest downturn in the economy

"Federal regulators closed the bank on Friday. It reopened Saturday morning as First Financial. But First Financial was already in Columbus, in fact there is a branch less than a block away.

As we talked with customers, an employee of the Federal Deposit Insurance Corporation walked out the door. The FDIC sent Roberta Valdez to help with the transition.

What are they telling people as they come in the door?

"That it's business as usual under a new name. You can use your same checks, ATM cards, debit cards, all direct deposits continue, social security deposits continue," Valdez explained.

But changes will impact customers within the next 180 days, when First Financial converts its computers.

"They'll provide customers with plenty of advance notice to make sure they have time to make other arrangements for direct deposits, order new checks, ATM cards, debit cards," said Valdez.

Tom Dell owns a clothing store that has been a part of Columbus since 1916. He said the change was a shock to him, "It's sad to see something of that nature end but we're just hoping that from this point on we can be positive and be pro-active saying that better things are to come."

First Financial Bank's home base is Cincinnati, Ohio. Irwin Financial had banks in both Indiana and Kentucky.

This was the first bank failure in Indiana and Kentucky. The last bank failure in Indiana was back in 1992, when the Rushville National Bank closed.

But how did this happen? What actually led to the failure of Irwin Union Bank? News 8 asked Personal Finance Expert Peter Dunn that very question.

"They were a community bank that had been around for 130 something years. They kept growing, kept growing, kept diversifying their portfolio and ultimately it was their downfall. Their investments in California and Nevada, the mortgage market out there really led to some losses and if they had kept it more local, some people feel the losses wouldn't have stacked up as quickly," Dunn said.

In short, Dunn says Irwin Union ignored one of the first rules of investing which is invest in what you know. He says the bank veered away from its core customer base.

Local experts say the FDIC had been watching Irwin Union since April 2008.