National Old purchases CapStar in $344 million accord

Old National Bancorp, an Indiana-based financial institution, has announced an all-stock transaction worth approximately $344.4 million to acquire CapStar Financial Holdings. This deal is not the only instance of Old National expanding its presence, as it also recently added a commercial banking and lending team in Nashville, Tennessee.

The acquisition of CapStar Financial Holdings aims to help Old National achieve faster growth than possible organically. If approved by regulators and CapStar shareholders, the deal is expected to close in the second quarter of 2024.

The deal is significant, as it is expected to give Old National an added $3.3 billion in assets, $2.3 billion in loans, and $2.8 billion in deposits. This expansion will provide Old National with a top-10 deposit market share presence in the Nashville metropolitan area and expand its footprint in Asheville, North Carolina.

Old National's CEO, Jim Ryan, stated that the partnership with CapStar is a cultural fit and a natural extension of their growth strategy. Ryan added that the deal would help Old National better serve its customers in the Southeast and Midwest regions, where the bank is open to future deals.

The acquisition of CapStar Financial Holdings is not the first for Old National. Since 2011, the bank has been involved in 13 acquisitions, including the recent $2.5 billion acquisition of Chicago-based First Midwest. The Federal Reserve approved Old National's acquisition of First Midwest in January 2022, despite a lawsuit filed by the Fair Housing Center of Central Indiana alleging discrimination against Black borrowers.

Bank merger and acquisition activity has been moderate in 2023 due to economic uncertainty and regulatory scrutiny under Biden administration directives. S&P Global reported 79 announced bank deals in the first nine months of 2023, a significant decrease from 122 in the same period last year. However, deals rebounded to 34 in the third quarter, an increase from 20 and 25 in the first and second quarters, respectively.

Nashville, the city where CapStar Financial Holdings is based, is a growing market for Old National. The city's population is projected to expand by 6% through 2028, which is three times the national pace. Old National entered Tennessee last year by establishing a high-net-worth arm in Nashville.

The lawsuit against Old National was settled in December 2021. Despite this, Old National remains committed to its growth strategy, as evidenced by the acquisition of CapStar Financial Holdings.

It is worth noting that the name of the president of CapStar Financial Holdings, which is being acquired by Old National Bancorp, was not disclosed in the search results.

In conclusion, Old National Bancorp's acquisition of CapStar Financial Holdings is a strategic move to expand its presence in the Southeast and Midwest regions. The deal is expected to provide Old National with significant assets, loans, and deposits, as well as a top-10 deposit market share presence in the Nashville metropolitan area. The deal is subject to regulatory approval and the vote of CapStar shareholders, and it is expected to close in the second quarter of 2024.