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 achieved cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions, which enabled 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. Through December 31, 2018, transaction and integration costs of $19.2 million associated with this acquisition have been expensed and remaining integration costs will be expensed in future periods as incurred. We do not anticipate additional expenses related to this acquisition.

As of June 30, 2018, Old National finalized its valuation of all assets acquired and liabilities assumed, resulting in immaterial changes 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.

(in thousands)

Fair Value

of Acquired Loans

at Acquisition Date

Gross Contractual

Amounts Receivable

at Acquisition Date

Best Estimate at

Acquisition Date of

Contractual Cash

Flows Not Expected

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

Effective November 1, 2018, Old National completed the acquisition of Minnesota-based Klein through a 100% stock merger. Klein was 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 was the largest family-owned community bank serving the Twin Cities and its western communities. 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 Klein common stock received 7.92 shares of Old National Common Stock per share of Klein common stock such holder owned. The total fair value of consideration for Klein was $406.5 million, consisting of 22.8 million shares of Old National Common Stock valued at $406.5 million. Through December 31, 2018, transaction and integration costs of $14.3 million associated with this acquisition have been expensed and remaining integration costs will be expensed in future periods as incurred.

The following table reflects management’s preliminary valuation of the assets acquired and liabilities assumed (in thousands):

Cash and cash equivalents	$	60,759
Investment securities		697,951
FHLB/Federal Reserve Bank stock		2,637
Loans held for sale		3,371
Loans		1,049,073
Premises and equipment		33,391
Accrued interest receivable		7,896
Company-owned life insurance		36,380
Net deferred tax assets		6,500
Other real estate owned		954
Other assets		10,299
Deposits		(1,713,086	)
Securities sold under agreements to repurchase		(19,481	)
Accrued expenses and other liabilities		(17,506	)
Net tangible assets acquired		159,138
Definite-lived intangible assets acquired		39,017
Loan servicing rights		285
Goodwill		208,034
Total consideration	$	406,474

Old National is in the process of finalizing Klein’s 2018 short-period tax return; thus, provisional measurements of goodwill, deferred income tax assets, and contingent consideration are subject to change during the measurement period. In addition, certain loan, intangible assets, and premises and equipment measurements have not been finalized and are subject to change. As Old National receives the information related to facts and circumstances that existed as of the acquisition date, we will finalize the provisional measurements recorded as of December 31, 2018. Such adjustments will be included in the allocation in the reporting period in which the final amounts are determined, not to exceed one year from the acquisition date.

The estimated fair value of the core deposit intangible was $39.0 million and is being amortized over an estimated useful life of 12 years.

(in thousands)

Fair Value

of Acquired Loans

at Acquisition Date

Gross Contractual

Amounts Receivable

at Acquisition Date

Best Estimate at

Acquisition Date of

Contractual Cash

Flows Not Expected

to be Collected

Acquired receivables subject

to ASC 310-30

11,663

18,568

4,521

Acquired receivables not subject

to ASC 310-30

1,037,410

1,252,954

76,534

The unaudited pro-forma information below for 2018 and 2017 gives effect to the Klein acquisition as if it had occurred on January 1, 2017. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date.

(dollars in thousands)	2018		2017
Revenue (1)	$	819,777	$	708,422
Income before income taxes	$	273,125	$	183,494

Supplemental pro-forma earnings for 2018 were adjusted to exclude $14.3 million of acquisition-related costs incurred during 2018. Supplemental pro-forma earnings for 2017 were adjusted to include these charges.

On October 26, 2018, Old National divested ten branches in Wisconsin to Marine Credit Union of La Crosse, Wisconsin. At closing, the purchasers assumed $230.6 million in deposits and no loans. Old National recorded a net pre-tax gain of $14.0 million in the fourth quarter of 2018, which included a deposit premium of $15.0 million, goodwill allocation of $0.6 million, and $0.4 million of other transaction expenses.

Based on an ongoing assessment of our service and delivery network, Old National consolidated 5 branches during 2016, 29 in 2017, and an additional 10 branches in 2018.