UPDATE 2-Irwin Financial gets going concern doubt, posts Q4 loss

* Q4 loss $3.54/shr

* External auditors raise going concern doubt

* To remove $690 mln home equity loans from balance sheet

* Restates Q3 loss to $107 mln

* Shares fall 22 pct (Adds details, updates share movement)

BANGALORE, April 1 (Reuters) - Bank holding company Irwin Financial Corp IFC.N said its external auditors raised doubt about its ability to continue as a going concern and that it posted a loss for the fourth quarter.

Shares of the company fell as much as 22 percent to $1.52 but recovered some losses and were down 29 cents at $1.66 in midday trade on the New York Stock Exchange.

The company sold its mortgage servicing rights and certain platform assets related to securitized home equity loans at its indirect unit Irwin Home Equity Corp to Green Tree Servicing LLC for $2 million, it said in a regulatory filing.

The sale will remove $690 million of home equity loans from its balance sheet as at March 31, Irwin said, adding that it sees an improvement in its capital ratios.

Irwin, a company struggling to maintain regulatory capital requirements and address credit exposure, is currently classified as "undercapitalized" under applicable regulatory capital standards.

The Columbus, Indiana-based company also restated its third-quarter results to correct an error in accounting, reclassifying certain home equity loans which had been treated as collateral for secured borrowings to held-for-sale.

The reclassification and valuation of these loans at lower of cost or fair value resulted in its commercial banking unit Irwin Union Bank and Trust and its commercial finance unit Irwin Financial Corp falling below "well capitalized" standards as of Dec. 31, 2008.

Irwin said it continues to pursue plans to enhance capital levels and has submitted a proposal for public-private partnership to the regulators and the U.S. Treasury.

The company said it has agreements with a group of investors, led by U.S. manufacturer Cummins Inc (CMI.N), to invest $34 million in the form of standby commitments for its planned rights offering to shareholders.

Core deposits at the company, which ceased loan originations last year, fell to $1.9 billion at Dec. 31, 2008, from $2.3 billion a year earlier.

Irwin posted a loss of $104 million for the fourth quarter.

For related alerts, double click [ID:nWNAB9590] (Reporting by Amiteshwar Singh in Bangalore; Editing by Gopakumar Warrier and Deepak Kannan)