Anchor Bank, the second largest community bank in the Twin Cities, will be acquired by Old National Bancorp in a deal worth $303.2 million, the banks announced Tuesday morning.

Anchor Bank has 17 branches in the Twin Cities and one in Mankato. The company has $2.1 billion in assets, second only to Bremer Bank in the Twin Cities. The deal must still be approved by federal regulators and Anchor Bank stockholders.

“It’s bittersweet,” said Anchor CEO Carl Jones, whose father Winton Jones founded the bank in 1967. “Our family started looking for new ways to help Anchor support our growth, and the growth of our customers. We decided that partnering with a larger organization would be the best option for our employees and customers.”

Analysts said the transaction is likely to be the first of several in Minnesota for the rapidly expanding Old National, which is headquartered in Evansville, Ind.

Since 2011, Old National has snapped up nine banking companies as part of an aggressive Midwestern expansion that cost more than $900 million and allowed the bank to push into Michigan and Wisconsin. The deals added more than 180 branches and assets of more than $9 billion, according to the company’s filings with the federal Securities and Exchange Commission.

Bob Jones, president and CEO of Old National, said the company would be interested in pursuing other acquisitions in Minnesota.

“We love the state — we love the market,” said Jones, who is unrelated to the family that owns Anchor Bank. “Any time there is another opportunity here, we’d look at it.”

Local bank observers said there are plenty of local acquisition targets, even after the run of deals that took place when the economy began recovering a few years ago.

“Our market is fairly heavy in smaller targets,” said David Stieber of Oak Ridge Financial, who advises community banks on mergers and acquisitions.

Stieber said he thinks Old National will attempt to bolster its share of the Twin Cities market by pursuing smaller companies with operations in underserved areas.

“This is a great entry vehicle for them in this marketplace,” Stieber said of the Anchor deal. “It gives them a nice footprint. Now they can be strategic and decide where they want to add more staff or locations.”

If the Anchor deal is approved as expected, the company’s local branches will switch to Old National, probably in the second quarter of 2018, an Anchor spokeswoman said.

In a conference call with analysts Tuesday, Old National executives repeatedly compared the Anchor deal to the company’s recent push in Wisconsin, where Old National acquired the similarly named AnchorBank for $459.8 million in 2016. That remains Old National’s largest acquisition to date.

“The demographics within the Minneapolis market are actually stronger than we saw in Wisconsin,” Bob Jones said in the call.

Though Carl Jones will be leaving the bank once the acquisition is complete, other senior executives are expected to remain with the company, according to Bob Jones, who praised the bank’s leadership. Jones said he does not expect to close any of Anchor’s branches in Minnesota, though some jobs are likely to be trimmed as the bank seeks to shave some $20 million off annual operating costs. Anchor has about 300 employees.

“We are going to do all we can to minimize any job losses because they have such great people at this bank,” Bob Jones said.

For customers, the deal will mean higher limits on business loans and expanded mortgage lending opportunities, plus new services in the area of trusts and private banking, Bob Jones said. He noted that Anchor has done a better job at providing credit to midsize companies, offering Old National a chance to improve in that area.

Anchor shareholders will receive 1.35 shares of Old National common stock and $2.625 in cash for each share of common stock they hold in Anchor Bank. Based on the most recent closing price of Old National’s stock, the deal is worth $303.2 million to Anchor shareholders, the banks said in a statement.

Boards of both banks have approved the transaction. The deal is expected to close in the first quarter of 2018.