Relman Colfax has filed a lawsuit in federal court alleging that Old National Bank has engaged in lending discrimination in the Indianapolis area. The lawsuit—filed on behalf of the Fair Housing Center of Central Indiana—alleges that Old National engages in “redlining,” which is the practice of not making mortgage loans to Black borrowers and those living in majority Black neighborhoods.

Old National is headquartered in Evansville, Indiana with 166 branches in Indiana, Kentucky, Illinois, Michigan, Wisconsin, and Minnesota. Its application to merge with First Midwest Bank is currently pending before the Federal Reserve Bank of St. Louis.  

The suit claims as follows: Old National avoids providing access to mortgage credit to Black residents and deliberately seeks to limit its residential lending business to predominantly white areas and white customers. Of all the banks in the country, Old National should be attuned to the country’s fair lending laws and the need to make loans available in communities of color. In 2018, Old National acquired Minnesota-based KleinBank which had just entered into a settlement agreement with the United States Department of Justice to resolve the government’s redlining claims against KleinBank.

As alleged in the complaint, Old National made over 2250 loans in the Indianapolis Metropolitan Statistical Area (MSA) during 2019-2020, but only 37 were to Black borrowers, and just 23 of those were in Marion County (nearly coextensive with the city of Indianapolis) where there are over 263,000 Black residents. The bank made 91.4% of its loans in the MSA to white borrowers and only 1.78% to Black borrowers.

Old National’s peers do far better at serving Black customers. Its closest peers made 14.7% of their Marion County mortgage loans to Black customers compared to only 3.86% for Old National, a nearly four-to-one disparity.  Old National also lags far behind its peers in applications from Black customers.

Over the past decade, Old National has reduced the number of its branches serving Black neighborhoods. In 2010, it had six branches in Census tracts that were at least 25% black, including two in tracts that were over half Black. Today it has only two in areas that are 25% black and none in areas that are more than 50% Black. None of Old National’s Mortgage Loan Officers is located in a branch in a Black neighborhood, actively discouraging prospective Black customers from applying for loans or banking with Old National. All of its Mortgage Loan Officers in Marion County work out of the bank’s “Wealth Management” location, in a Census tract where only 2% of the residents are Black.

The Relman Colfax team consists of John Relman, Glenn Schlactus, Sara Pratt, and Alexa Milton with paralegal support from Sonali Durham and Mariana Boully Perez. Our co-counsel are Russell Cate and Matthew Keyes of RileyCate, LLC of Fishers, Indiana.

A copy of the Complaint is available here.

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