Old National Bancorp in Evansville, Ind., said Tuesday that it expects to report its fourth-quarter earnings fell well short of its estimates, as a result of a spike in problem loans and losses related to a check fraud scheme.
The $7.5 billion-asset company now expect to report that its earnings fell at least 64% from the same period in 2007, to a range of 8 to 12 cents a share. Previous guidance called for fourth-quarter earnings of 25 to 30 cents a share.
Old National also said that it would record a 900% increase in its provision for loan losses, to $17 million, and that its nonperforming loans rose 57% from a year earlier but declined 6% from the third quarter, to $64 million.
"The increase in loan loss reserves is a prudent action at this time to address both the growth we are seeing in our loan portfolio and the effects of the difficult economy on certain borrowers and subsequent decreasing collateral valuations," president and chief executive officer Bob Jones said in a news release.
Additionally, Old National said it would record a $6.3 million loss from a check scheme orchestrated by a commercial customer. The company disclosed the problem in November in a filing with the Securities and Exchange Commission.
The company plans to release its fourth-quarter and full-year results Jan. 26.
Shares of Old National closed at $15.41 Tuesday, down 3.4%.