Old National Bancorp's profit shrank 12 percent in the first quarter mostly because a former loan officer, accused of falsifying loan documents, forced the bank to set money aside to cover bad loans, the company said Monday.
Old National earned $19.3 million, or 29 cents per share, in the first quarter, compared with profit of $22 million, or 34 cents per share, in the first quarter last year. Analysts polled by Thomson Financial forecast profit of 14 cents per share.
Profit from lending grew 15 percent to $64.2 million. The profit margin from lending strengthened to 3.68 percent from 3 percent as the bank paid lower interest rates on deposits at its branches, which are in Indiana, Illinois and Kentucky.
Old National's profit was pinched by a $21.9 million reserve set aside to cover bad loans, mainly from a former loan officer in Indianapolis accused of falsifying loan applications. The provision is greater than the provisions from all the quarters in 2006 and 2007 combined.
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