The banks, in a joint statement Thursday, said they expect the deal to be complete by March 1, with systems conversion anticipated by July.
“With nearly 270 combined years of service and a shared commitment to Midwestern values, Old National and First Midwest are both driven by a customer-centric approach to banking and an unwavering commitment to community,” Old National CEO Jim Ryan said in a statement Thursday. “Receiving Federal Reserve approval paves the way for us to create a premier Midwestern bank that will provide significant benefits for our clients, team members, communities and shareholders.”
The Fair Housing Center of Central Indiana (FHCCI), an Indianapolis-based fair-housing advocacy group, sued Old National in October, alleging the bank discriminated against Black borrowers trying to obtain mortgages. That lawsuit was dropped in December when the sides reached an agreement, an Old National spokesperson told American Banker.
The deal would create a $45.8 billion-asset financial entity and give Old National — the surviving brand — a presence in Chicago, the nation’s third-largest city.
“This partnership is, at its core, a growth strategy, and as a combined organization, we will be in an even stronger position to invest, grow and innovate in talent, capabilities and services that will further set us apart as a market leader across the Midwest,” First Midwest CEO Mike Scudder said Thursday.
The combined entity will have dual headquarters — Evansville for the holding company and bank, and Chicago for commercial lending and community banking operations. The board of directors will be split evenly — eight members from Old National and eight from First Midwest, but the former’s investors will own 56% of the company after the merger.
The FHCCI met with representatives of Old National in October and November 2019, and again in July 2021, the month after the bank announced its deal with First Midwest. The bank did not dispute its lending record among Black borrowers, telling the fair-housing group in 2019 it was "working to improve," the FHCCI said in its complaint.
Only 1.6% of the more than 2,250 mortgage loans the bank made in the Indianapolis metropolitan area in 2019 and 2020 were to Black borrowers, the FHCCI said in the court filing, adding that bank data identifies the borrower's race on more than 91% of the loans.
The FHCCI and two dozen other housing advocacy groups wrote the Fed and the Office of the Comptroller of the Currency (OCC) in late July, asking the regulators to hold public hearings, according to American Banker.
The OCC signed off on the Old National-First Midwest merger in August. The FHCCI invited Old National to meet with it and federal regulators in September, but Old National did not respond, the complaint said.
"We are calling on the Federal Reserve to do what it is required to do," Amy Nelson, the FHCCI’s executive director, told The Indianapolis Star in October, "and conduct a thorough analysis and to address any disparities ... to make sure that Old National’s lending practices are fair to everybody."
The Old National-First Midwest deal is not the only one in recent months held up by a delay in sign-off by the Fed. The central bank in December gave the green light to a $2.2 billion merger between First Citizens BancShares and CIT Group.
When First Citizens and CIT announced their proposed tie-up in October 2020, the banks estimated it would be complete in the first half of 2021. The Fed and the Federal Deposit Insurance Corp. (FDIC) in January 2021 each extended their public comment period on the merger "in light of the ongoing challenges from the coronavirus." That, in turn, pushed the expected completion time frame to Oct. 15.
As September ended, First Citizens and CIT extended until March 1, 2022, the timeline to complete the transaction, noting that the FDIC and the Office of the North Carolina Commissioner of Banks had each approved the deal.