Moody's lowers Old National view to negative

Moody's Investors Service said it affirmed the ratings of Old National Bancorp and its bank subsidiary, Old National Bank, and changed the outlook to negative from stable.

Old National Bancorp has long-term issuer and senior unsecured ratings of A3, Moody's said.

Old National Bank also has long- and short-term bank deposit ratings of Aa3 and prime-1 and a standalone baseline credit assessment of A2, the agency said.

Its issuer rating is A3 and its counterparty risk assessments are A1(cr)/prime-1(cr), Moody's said.

The actions follow news that Old National intends to acquire Anchor Bancorp, Inc. in a stock- and cash-transaction expected to close in the first quarter of 2018, the agency said.

The ratings reflect Old National's strong asset quality, which reflects the company's prudent underwriting and its sustainable market position in Indiana, Moody's said.

This supports its solid core deposit base and earnings generation, the agency added.

The negative outlook considers Old National's second significant out-of-market acquisition within the past two years, which increases both credit and operational risks, Moody's explained.

The acquisition may put pressure on the company's capital and liquid resources, although it will also add low-cost core deposits and geographic diversification to Old National's earnings base, the agency said.

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