FBI Probes Old National Loan Officer

When the bank found out about the misconduct, it reviewed the officer's portfolio and realized the credit quality of some of the loans were not as strong as the company thought. The bank expects to be unable to collect $17 million in loans the officer administered.

The company is cooperating with an FBI investigation and intends to "vigorously pursue all legal remedies," including criminal action and submitting an insurance claim.

Old National said this incident was isolated and does not reflect any systemic problems with the bank's underwriting.

The bank said it would be premature to forecast what effect this will have on the company's profit for the year because of the possibility of recovering money through insurance.

Aside from the reserve to cover the loan officer's bad loans, the bank expects to reserve $4.9 million to cover unpaid loans in other portfolios for the first quarter.

The bank also said it plans to free up a $6.6 million tax liability because the Internal Revenue Service did not appeal a tax court ruling allowing the company to deduct certain interest expenses from its taxes.

Old National's stock slipped 44 cents, or 2.4 percent, to $17.76 in morning trading.