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Old National, NCRC Announce Addendum to Increase Community Growth Plan to $9.5 Billion

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Old National Bancorp announces a $1.2 billion addendum to its $8.3 billion Community Growth Plan, expanding its commitment to historically underserved and economically-disadvantaged individuals, families, and communities. The addendum, developed in collaboration with the National Community Reinvestment Coalition (NCRC), is subject to the closing of the partnership with CapStar Financial Holdings, Inc. The commitments include goals for mortgage lending, small business lending, community development lending and investments, philanthropic activities, and racial equity commitments.
Positive
  • Old National's commitment to support historically underserved and economically disadvantaged individuals and communities is a strategic priority and a defining characteristic of its culture.
  • The addendum to the Community Growth Plan demonstrates a clear understanding of how collaboration with community leaders is in the best interest of everyone.
  • Specific highlights of the Plan include providing $815 million in loan originations for mortgage lending, more than $332 million in loans for small businesses, over $107 million in investments for community development, approximately $1.7 million in funding for philanthropic activities, and a $4 million commitment to support opportunities for individuals and communities of color.
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  • None.

Old National Bancorp's expansion of its Community Growth Plan by $1.2 billion, in anticipation of its merger with CapStar Financial Holdings, represents a strategic move to bolster its community engagement and corporate social responsibility profile. This initiative is likely to enhance Old National's brand image and customer loyalty in the region, which can translate into a stronger competitive position. Given that the addendum includes quantitative goals for mortgage, small business and community development lending, this can lead to an uptick in loan origination revenue. However, the long-term impact on profitability will depend on the quality of the underwriting and the performance of these loans over time.

Moreover, the focus on racial equity and the establishment of banking centers in majority-minority communities is a significant step towards financial inclusion. This can potentially open up new market segments for the bank, fostering growth and diversification of the customer base. The commitment to philanthropic activities aligns with the Community Reinvestment Act, potentially improving regulatory relations and community support, which are critical factors for the success of the merger. Stakeholders should monitor the execution of these commitments and their effect on operating costs and risk profile.

The announcement by Old National Bancorp involves significant financial commitments that are poised to impact its balance sheet and income statement. The additional $1.2 billion in community investments will likely be financed through a combination of debt and deposits. Investors should evaluate the costs associated with raising this capital and the expected return on investment. The focus on small business and community development lending could lead to higher interest income, but it also comes with increased credit risk, especially in economically disadvantaged areas.

From a financial perspective, the effectiveness of these investments in generating sustainable revenue streams will be critical in determining the long-term impact on shareholder value. The increased philanthropic spending, while beneficial for community relations, will need to be balanced with cost management to maintain profitability. The financial performance post-merger, including synergies and cost savings, will be crucial for investors to assess the success of the integration and the realization of the Plan's financial objectives.

Old National's enhanced Community Growth Plan is indicative of a broader economic trend where banks are increasingly recognizing the importance of social capital and community investment. The additional funding toward mortgage lending, small business support and community development can have a multiplier effect on local economies, potentially stimulating job creation, entrepreneurship and property value appreciation in underserved areas.

However, the economic benefits will largely depend on the effective deployment of capital and the ability of these communities to absorb and utilize the funds efficiently. The initiative could also influence regional economic indicators such as home ownership rates, small business growth and income levels, contributing to economic diversification and resilience. As Old National expands its footprint post-merger, the bank's role in economic development will be more pronounced, potentially influencing regional economic policy and planning.

EVANSVILLE, Ind., Jan. 18, 2024 (GLOBE NEWSWIRE) -- (NASDAQ: ONB) Old National Bancorp (“Old National”) today announced an addendum to its $8.3 billion Community Growth Plan (“the Plan”), originally unveiled in 2022, adding approximately $1.2 billion to a long-standing commitment that continues to support historically underserved and economically-disadvantaged individuals, families and communities throughout its Midwest and Southeast footprint.

The Plan and addendum were developed in collaboration with the National Community Reinvestment Coalition (NCRC) and its members. The addendum is subject to the closing of Old National’s previously announced partnership with Nashville-based CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ: CSTR), the holding company for CapStar Bank.

These new commitments expand on Old National’s long-standing pledge to support historically underserved and economically disadvantaged individuals, families and communities throughout our footprint by extending these services into CapStar-served communities in Tennessee. These commitments include additional quantitative goals for mortgage lending, small business lending, community development lending and investments, philanthropic activities, and racial equity commitments.

“Supporting and strengthening the communities that Old National serves is a strategic priority and a defining characteristic of our Old National culture,” said Old National CEO Jim Ryan. “We are excited for this opportunity to expand on our existing partnership with NCRC and increase the positive impact of our Community Growth Plan.”

“Old National’s commitments to under-resourced communities in this addendum are a great example of how the Community Reinvestment Act should work,” said NCRC President and CEO Jesse Van Tol. “Every single bank merger should come with clearly defined goals like these. Old National understands how such collaboration with community leaders is in the best interest of everyone.”

Specific highlights of the Plan include:

  • Mortgage Lending: Provide approximately $815 million in loan originations to promote increased home ownership and home improvement. 
  • Small Business Lending: Originate more than $332 million in loans to businesses with annual revenues of $1 million or less, and to small businesses located within low-to-moderate income areas.
  • Community Development Lending and Investments: Invest more than $107 million in loans and investments in support of projects that provide affordable housing, revitalize distressed neighborhoods, and promote economic development initiatives in the communities Old National serves.
  • Philanthropic Activities: Provide approximately $1.7 million in funding to organizations and for causes that provide community benefits as defined under the federal Community Reinvestment Act. In addition, Old National will designate approximately $850,000 of this amount to newly established relationships.
  • Racial Equity Commitment:  Provide $4 million toward supporting opportunities for individuals and communities of color. This includes establishing two new banking centers within majority-minority communities and support for other impactful programs and activities.

Old National is one of the largest banks headquartered in the Midwest, with strong commercial banking capabilities, a robust retail footprint, a significant wealth platform, and, upon the closing of the CapStar partnership, nearly $55 billion of total assets and a presence in seven of the largest Midwestern MSAs.

Old National retains an ongoing commitment to work with the NCRC and other local community groups to identify additional opportunities to support the financially disadvantaged and communities of color, including through its supplier diversity and apprenticeship programs, as well as its talent acquisition and retention efforts.

ABOUT OLD NATIONAL
Old National Bancorp is the holding company of Old National Bank, which is the sixth largest commercial bank headquartered in the Midwest. With approximately $49 billion of assets and $28 billion of assets under management, Old National ranks among the top 30 banking companies headquartered in the U.S. Tracing our roots to 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment, and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

ABOUT THE NATIONAL COMMUNITY REINVESTMENT COALITION
The National Community Reinvestment Coalition and its grassroots member organizations create opportunities for people to build wealth. NCRC works with community leaders, policymakers, and financial institutions to champion fairness in banking, housing, and business. NCRC was formed in 1990 by national, regional, and local organizations to increase the flow of private capital into traditionally underserved communities. NCRC has grown into an association of more than 600 community-based organizations in 42 states that promote access to basic banking services, affordable housing, entrepreneurship, job creation, and vibrant communities for America's working families. More can be found at ncrc.org.

Cautionary Note Regarding Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Old National’s beliefs, goals, intentions and expectations regarding the pending merger between Old National and CapStar, the Plan and proposed actions under the Plan as well as other statements that are not historical facts.

Forward-looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “scheduled,” “outlook,” “estimate,” “forecast,” “project,” “should,” “will” and other similar words and expressions, and are subject to numerous assumptions, risks and uncertainties, which change over time.

Additionally, forward-looking statements speak only as of the date they are made; Old National does not assume any duty, and does not undertake, to update such forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.

Furthermore, because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of Old National. Such statements are based upon the current beliefs and expectations of the management of Old National and are subject to significant risks and uncertainties outside of the control of the Old National. Caution should be exercised against placing undue reliance on forward-looking statements. Further information regarding additional factors that could affect the forward-looking statements can be found in the cautionary language included under the headings “Forward-Looking Statements” and “Risk Factors” in Old National’s Annual Report on Form 10-K for the year ended December 31, 2022, and other documents subsequently filed by Old National with the Securities and Exchange Commission (“SEC”).

Investor Relations:
Lynell Durchholz
(812) 464-1366
lynell.durchholz@oldnational.com

Media Relations:
Rick Vach
(904) 535-9489
rick.vach@oldnational.com


FAQ

What is the amount added to Old National's Community Growth Plan through the addendum?

The addendum adds approximately $1.2 billion to the original $8.3 billion Community Growth Plan.

Who was the addendum developed in collaboration with?

The addendum was developed in collaboration with the National Community Reinvestment Coalition (NCRC) and its members.

What is the ticker symbol for Old National Bancorp?

The ticker symbol for Old National Bancorp is ONB.

What are some specific highlights of the Plan?

Specific highlights of the Plan include providing $815 million in loan originations for mortgage lending, more than $332 million in loans for small businesses, over $107 million in investments for community development, approximately $1.7 million in funding for philanthropic activities, and a $4 million commitment to support opportunities for individuals and communities of color.

What is the total assets of Old National Bancorp?

Upon the closing of the CapStar partnership, Old National will have nearly $55 billion of total assets.

Old National Bancorp

NASDAQ:ONB

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About ONB

old national bancorp (nasdaq: onb) is the largest financial services holding company headquartered in indiana and, with $12.1 billion in assets, ranks among the top 100 banking companies in the u.s. since its founding in evansville in 1834, old national bank has focused on community banking by building long-term, highly valued partnerships with clients in its primary footprint of indiana, east central illinois, kentucky and michigan. in addition to providing extensive services in retail and commercial banking, wealth management, investments and brokerage, old national also owns old national insurance, one of the 100 largest brokers in the u.s. for more information and financial data, please visit investor relations at oldnational.com. https://www.linkedin.com/company/old-national-bank