Old National: Rogue Loan Officer Drove $17 Million Loss
Old National Bancorp (ONB) said Monday that it would take a $21.9 million hit to its loan loss reserves when it reports first quarter earnings on April 28 -- and said that it had pegged $17 million of the expected charges to loans administered by one single loan officer, who (not surprisingly) is no longer with the company. The company said it was investigating for misconduct, but did not identify the former employee by name. "Because the condition of several loans in the former officer's portfolio deteriorated in the first quarter, the company conducted an investigation pertaining to certain activities of the former officer," Old National said in a press statement. "The findings included falsified documentation, misconduct and other violations of the company's lending policies by the former officer that contributed to downgrades of several credits." Old National said it had turned the case over to the Federal Bureau of Investigation, and that it believed the actions of the former employee in questions did not "represent systemic issues within the company's commercial loan portfolio or a breakdown of internal controls over financial reporting." "This is a very frustrating situation," said president and CEO Bob Jones. "We attained a solid 2007 performance in a challenging environment and were one of a few banks who actually saw an improvement in nonperforming loans over the last three quarters. Obviously, the current situation alters that trend due to circumstances not related to the subprime and mortgage crisis that many banks face today, and we remain confident that the operating fundamentals of the company remain strong." The bank said it could not forecast the impact of the loss provision on its 2008 earnings guidance, citing "remediation avenues available to the company." For more information, visit http://www.oldnational.com.