The acquisition is in line with Old National’s strategy to focus on the expansion of its franchise in demographically attractive and economically vibrant markets.

With this investment, Old National would become the seventh largest deposit holder in the state of Wisconsin and the fifth largest in the Madison MSA.

Under the agreed terms, Anchor BanCorp shareholders would receive either 3.5505 shares of Old National common stock or $48.50 in cash for each share of Anchor.

As of 30 September 2015, Anchor has total assets worth $2.2bn, $1.5bn in total loans, $1.8bn in deposits, and $360m in common shareholders’ equity.

Anchor provides commercial, retail, mortgage, consumer finance and investment services to businesses and individuals from 46 banking centers.

Old National president and CEO Bob Jones said: "This partnership, which marks Old National’s entry into the great state of Wisconsin, is a natural extension of our franchise and our growth strategy.

"Not only does it position Old National in strong, vibrant markets with proven growth potential, it also represents an exceptional cultural fit and an opportunity to continue the strong legacy of service that distinguishes AnchorBank."

Subject to regulatory approval and consent of Anchor shareholders, the acquisition is expected to be completed in the second quarter of 2016.

Founded in in 1834, Old National has $11.9bn in total assets and 160 banking centers.

Old National owns multiple financial services operations in Indiana, Illinois, Kentucky and Michigan. It provides a range of financial services including commercial and retail banking, trust, brokerage, correspondent banking, and insurance.