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Commitments, Contingencies, and Financial Guarantees | 3 Months Ended
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Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingencies, and Financial Guarantees | COMMITMENTS, CONTINGENCIES, AND FINANCIAL GUARANTEES Litigation In the normal course of business, Old National Bancorp and its subsidiaries are subject to pending and threatened litigation, claims, investigations, and legal and administrative cases and proceedings. Certain of the actual or threatened legal actions may include claims for compensatory damages or claims for indeterminate amounts of damages. Old National contests liability and/or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek indeterminate damages or where investigations and proceedings are in the early stages, Old National cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, or other relief, if any, might be. Subject to the foregoing, Old National believes, based on current knowledge and after consultation with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated financial condition of Old National, although the outcome of such matters could be material to Old National’s operating results and cash flows for a particular future period, depending on, among other things, the level of Old National’s revenues or income for such period. Old National will accrue for a loss contingency if (1) it is probable that a future event will occur and confirm the loss and (2) the amount of the loss can be reasonably estimated. Credit-Related Financial Instruments Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees and are recorded at fair value. Standby letters of credit guarantees are issued in connection with agreements made by clients to counterparties. Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract. Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies. The term of these standby letters of credit is typically one year or less. These commitments are not recorded in the consolidated financial statements. The following table summarizes Old National Bank’s unfunded loan commitments and standby letters of credit:
(dollars in thousands) | March 31, 2023 |  | December 31, 2022
Unfunded loan commitments | $ | 9,386,866 |  |  | $ | 8,979,334 |
Standby letters of credit (1) | 181,476 |  |  | 174,070 |
(1)Notional amount, which represents the maximum amount of future funding requirements. The carrying value was $0.9 million at March 31, 2023 and $0.8 million at December 31, 2022. At March 31, 2023, approximately 6% of the unfunded loan commitments had fixed rates, with the remainder having floating rates ranging from 0% to 22%. The allowance for unfunded loan commitments totaled $34.2 million at March 31, 2023 and $32.2 million at December 31, 2022. Old National is a party in risk participation transactions of interest rate swaps, which had total notional amounts of $381.8 million at March 31, 2023 and $398.9 million at December 31, 2022. Visa Class B Restricted Shares In 2008, Old National received Visa Class B restricted shares as part of Visa’s initial public offering. These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares. This conversion will not occur until the final settlement of certain litigation for which Visa is indemnified by the holders of Visa’s Class B shares, including Old National. Visa funded an escrow account from its initial public offering to settle these litigation claims. Increases in litigation claims requiring Visa to fund the escrow account due to insufficient funds will result in a reduction of the conversion ratio of each Visa Class B share to unrestricted Class A shares. As of March 31, 2023, the conversion ratio was 1.5991. Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the 65,466 Class B shares that Old National owns at March 31, 2023 are carried at a zero cost basis and are included in other assets with our equity securities that have no readily determinable fair value.

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