Effective November 1, 2017, Old National completed the acquisition of St. Paul, Minnesota-based Anchor (MN) through a stock and cash merger. Anchor (MN) was a bank holding company with Anchor Bank (MN) as its wholly-owned subsidiary. Founded in 1967 and with 17 total branches, Anchor Bank (MN) was one of the largest community banks headquartered in the Twin Cities, and also served Mankato, Minnesota. Anchor Bank (MN) has no affiliation with the former AnchorBank (WI) in Madison, Wisconsin, which Old National acquired in 2016. Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions, which will enable Old National to achieve economies of scale in these areas.

Pursuant to the merger agreement, each holder of Anchor (MN) common stock received $2.625 in cash and 1.350 shares of Old National Common Stock per share of Anchor (MN) common stock such holder owned. The total fair value of consideration for Anchor (MN) was $332.8 million, consisting of $31.9 million of cash and the issuance of 16.5 million shares of Old National Common Stock valued at $300.8 million. This acquisition was accounted for under the acquisition method of accounting. Accordingly, Old National recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Through September 30, 2018, transaction and integration costs of $18.1 million associated with this acquisition have been expensed and remaining integration costs will be expensed in future periods as incurred.

During the six months ended June 30, 2018, immaterial adjustments were made to the preliminary valuation of the assets acquired and liabilities assumed. These adjustments affected goodwill, definite lived intangible assets, premises and equipment, other assets, and deposits. As of June 30, 2018, Old National finalized its valuation of all assets acquired and liabilities assumed, resulting in no material change to acquisition accounting adjustments. A summary of the fair values of the acquired assets, liabilities assumed, and resulting goodwill follows (in thousands):

Cash and cash equivalents	$	34,501
Investment securities		302,195
FHLB/Federal Reserve Bank stock		6,585
Loans held for sale		1,407
Loans		1,593,991
Premises and equipment		33,433
Accrued interest receivable		5,872
Other real estate owned		1,058
Company-owned life insurance		44,490
Other assets		30,036
Deposits		(1,777,588	)
Federal funds purchased and interbank borrowings		(45,600	)
Securities sold under agreements to repurchase		(22,965	)
Other borrowings		(49,257	)
Accrued expenses and other liabilities		(25,784	)
Net tangible assets acquired		132,374
Definite-lived intangible assets acquired		26,606
Goodwill		173,785
Total consideration	$	332,765

The estimated fair value of the core deposit intangible was $26.6 million and is being amortized over an estimated useful life of 10 years.

					Best Estimate at
					Acquisition Date of
	Fair Value		Gross Contractual		Contractual Cash
	of Acquired Loans		Cash Flows at		Flows Not Expected
(in thousands)	at Acquisition Date		Acquisition Date		to be Collected
Acquired receivables subject to ASC 310-30	$	10,555	$	16,898	$	4,787
Acquired receivables not subject to ASC 310-30	$	1,583,436	$	1,879,449	$	87,767

Based on an ongoing assessment of our service and delivery network, Old National consolidated 29 branches during 2017 and 10 branches during the nine months ended September 30, 2018.

Old National has entered into a branch purchase and assumption agreement for the sale of ten Old National branches in Wisconsin to Marine Credit Union of La Crosse, Wisconsin. Assets associated with this divestiture are included in assets held for sale on the balance sheet. The transaction includes the sale of approximately $231 million in deposits and no loans. The sale closed on October 26, 2018 and Old National expects to record a net gain of approximately $14 million in the fourth quarter of 2018.

On June 20, 2018, Old National entered into an agreement to acquire Minnesota-based Klein through a 100% stock merger. Klein is a bank holding company with KleinBank as its wholly-owned subsidiary. Founded in 1907 and headquartered in Chaska, Minnesota with 18 full-service branches, KleinBank is the largest family-owned community bank serving the Twin Cities and its western communities. At June 30, 2018, Klein had total assets of $2.0 billion and $1.7 billion of deposit liabilities. Pursuant to the merger agreement, each holder of Klein common stock will receive 7.92 shares of Old National common stock per share of Klein common stock such holder owns. Based on Old National’s September 28, 2018 closing price of $19.30 per share, this represents a total transaction value of approximately $439.5 million. The transaction value is likely to change until closing due to fluctuations in the price of Old National common stock and is also subject to adjustment under certain circumstances as provided in the merger agreement. The transaction has received regulatory and shareholder approval and is anticipated to close effective November 1, 2018, subject to customary closing conditions.