Old National Bancorp moves to acquire Twin Cities-based Klein Financial for $434 million

Old National could become a familiar name in the Twin Cities with its $433.8 million acquisition of Klein Financial Inc., a pending deal that was announced Thursday.

Family-owned Klein Financial Inc., one of Minnesota's largest community-banking organizations, owns KleinBank. It has $2 billion in total assets, $1.1 billion in total loans and $1.7 billion in deposits.

The Evansville, Ind.-based Old National Bancorp bought St. Paul-based Anchor Bank last year. Anchor locations have been rebranded to Old National, and KleinBank branches will as well.

After the Klein deal closes, Old National said it will rank fifth in market share for the Twin Cities and Minnesota market.

Old National Chairman and CEO Bob Jones didn't rule out more acquisitions, either.

"We love the market," Jones said. "If the right opportunity and right market becomes available, we'd love to continue to invest in this market."

With the acquisition, Old National Bancorp will pick up 18 full-service locations of KleinBank. Earlier this year, Klein agreed to sell three of its 21 locations to Wings Financial Credit Union.

Chaska-based Klein Financial, which has about 400 employees, was founded in 1907 by C.H. Klein and is in its fourth generation of family ownership.

Under the terms of the merger agreement, Klein shareholders will receive 7.92 shares of Old National common stock for each share of Klein common stock. The final value of the deal will change based on Old National's share price and other provisions in the merger agreement.

Old National paid $303 million in November to acquire Anchor Bank, which at that time had about 300 employees and 17 locations in the Twin Cities and one in Mankato.

Being acquired by Old National also means that Klein will join forces with its longtime St. Paul rival.

Jones said adding KleinBank to the company's holdings was like connecting two puzzle pieces.

After the Klein deal closes, Old National said, on a pro forma basis based on March 31, 2018 balances, it will have total deposits in Minnesota of about $3.5 billion.

Minnesota will also become Old National's largest market; the company also has operations in Indiana, Kentucky, Michigan and Wisconsin.

Minneapolis-based U.S. Bancorp and San Francisco-based Wells Fargo dominate the Twin Cities market followed in deposit size by Wayzata-based TCF Financial and St. Paul-based Bremer Financial Corp.

The acquisition of Klein will be Old National's second-largest deal, smaller only than the $465 million it paid for Wisconsin-based Anchor Bancorp in January 2016.

The proposed deal for Klein Financial is subject to customary closing conditions and regulatory approvals. The deal is expected to close in the fourth quarter of 2018.