Old National reaches deal with advocates as merger nears finish line

Old National Bancorp in Evansville, Indiana, has reached an agreement with community advocates to provide financing for underserved and lower-income neighborhoods in connection with its pending acquisition of First Midwest Bancorp.

Old National and the National Community Reinvestment Coalition said Thursday that the five-year, $8.3 billion plan includes close to $5 billion in community lending and affordable housing commitments, plus $3.3 billion in community development initiatives and philanthropic programs.

Last month, the Federal Reserve approved Old National’s $2.5 billion deal for First Midwest in Chicago. Once the deal is completed, the combined bank will have $45.8 billion of assets — making it one of the largest banks based in the Midwest, and nearly twice as large as Old National is today.

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Some community advocates had objected to the proposed merger and pressed regulators to take a closer look at the underlying businesses. Last October, the Fair Housing Center of Central Indiana sued Old National, alleging that only a small percentage of its home loans across the Indianapolis market went to Black borrowers.

The lawsuit was dropped in December as the bank reached a deal with the Fair Housing Center of Central Indiana, according to an Old National spokesperson.

Under that agreement, Old National agreed to open loan offices in key parts of Indianapolis, which are expected to become full-time banking centers and provide down payment assistance and financing for multifamily projects.

As part of the deal with the National Community Reinvestment Coalition, Old National agreed to provide $2 billion in loans to promote homeownership and home improvements in less wealthy communities, particularly in areas where Black and Hispanic borrowers predominantly live.

The bank also agreed to make some of its specialized credit and housing products, like down payment assistance, available in more neighborhoods. And Old National said that it will create a $2.5 million loan subsidy fund to help borrowers qualify for home loans.

Another $24 million is earmarked for donations to local groups that work on causes under the Community Reinvestment Act.

In the small-business realm, Old National agreed to provide $3 billion in loans to eligible businesses in lower-income communities. And the bank said that it will partner with other groups to help provide financing to rural and agricultural businesses.

Also under the plan announced Thursday, $3 billion in loans and investments is expected to go toward rehabilitating historic buildings, supporting affordable housing projects and helping lower-income neighborhoods access alternative energy.

“We recognize the important role that our banks play in helping to shape a better financial future, and we are proud to partner with NCRC to build on our strong legacy of service and make a lasting impact on the hundreds of communities we serve today, as well as in the future,” Old National Chairman and CEO Jim Ryan said in a press release.