UPDATE 1-Irwin Financial Q1 loss widens; may sell some assets

(Recasts; adds details, share movement)

May 7 (Reuters) - Bank holding company Irwin Financial Corp (IFC.N) posted a wider-than-expected quarterly loss, partly due a jump in provision for bad loans and higher losses at its home equity segment, for which it is exploring alternatives, including recapitalization and asset spin-off.

Shares of the company fell as much as 12 percent to $5.33, before recovering some losses to trade at $5.51 Wednesday morning on the New York Stock Exchange.

The company, which suspended dividend during the quarter, said it stopped originations of loans, including second mortgages, in its home equity segment and was moving to government-insured and conventional loans.

Irwin said it is exploring strategic alternatives for its home equity portfolio to reduce its exposure to risk in the segment and aims to complete this process in the third quarter or before.

Irwin posted a first-quarter loss of $22.2 million, or 77 cents a share, compared with a loss of $10.0 million, or 22 cents a share, a year-ago. Two analysts, on average, expected a loss of 9 cents a share for the quarter.

The net loss includes a non-cash mark-to-market impairment of $8 million in the company's securities portfolio.

First-quarter loss provisions rose 92 percent to $45 million.

Of the three operating segments, the commercial banking and commercial finance segments posted profits but the home equity segment posted a loss of $16 million. (Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Amitha Rajan)