Bremer Bank, one of Minnesota's largest banks by deposits, will be acquired by Old National Bank, a publicly traded bank based in Chicago and Evansville, Indiana, for $1.4 billion.
Bremer is a privately held agricultural finance company headquartered in St. Paul and serving Minnesota, North Dakota and Wisconsin, founded more than 80 years ago by Otto Bremer, a German immigrant, banker and philanthropist. Bremer established a charitable trust as the largest shareholder and parent company. company. Three trustees of the St. Paul-based Otto Bremer Trust have been closely involved in helping Bremer Financial Corp.'s board court Old National for a takeover, bankers said. was involved.
In an open letter posted on Bremer Bank's website on Monday, Bank President Jeanne Klein said, “We are now writing a new chapter,” and that her board and the Otto Bremer Trust It noted that the trustees “worked collaboratively to identify an acquirer with a commitment to our customers and customers.” Connecting with communities like ours. ”
The acquisition has not yet been finalized and is subject to regulatory approval. The merger agreement has been unanimously approved by the boards of directors of both Bremer and Old National and could be completed by mid-2025, the banks said.
Upon completion of the merger, Old National will become the third largest bank in the Twin Cities, according to a joint statement released by the banks. Once combined, the new organization will maintain more than $70 billion in assets and a “significantly larger footprint,” according to the statement. Bremer, one of the largest agricultural lenders in the United States, has 70 branches in Minnesota, North Dakota, and Wisconsin.
The Otto Bremer Trust will maintain an 11% stake in Old National, and the philanthropic trustee will join Old National's board of directors.
“While our name will change, we are excited to expand our banking capabilities and enhance our resources to serve our customers once the transaction closes,” Crain wrote.
Crane said the transition to Old National's name, brand and service will take several months, but customers shouldn't expect any immediate changes. Her letter did not indicate whether Bremer's office or charitable trust would eventually relocate from downtown St. Paul, and a Bremer Bank spokeswoman referred all questions to Old National and Otto. Toward the Bremer Trust.
“In the coming months, we will determine specific offices and facilities that will most effectively serve our customer base in St. Paul and other areas,” Old National spokesman Rick Wach said in an email. He mentioned the company's plans. To continue “Bremer Bank's strong tradition as an agricultural (agricultural) lender.”
Five-year legal battle to block sales
Old National Bank was founded in Evansville in 1834 and maintains total deposits of approximately $40 billion, compared to Bremer Bank's total deposits of approximately $13 billion. The charitable trust is a 92% shareholder in the bank, with the remainder owned by employees.
Banking experts say that with the acquisition, Old National (which merged with Anchor Bank in 2017 and Kleinbank in 2018) maintains about $3.5 billion in deposits in Minnesota, while Bremer Bank has about 10 billion dollars, he said, allowing him to build a solid foothold.
“What Old National has gained is really expanding its presence here,” said Andrew Winton, a professor of finance at the University of Minnesota's Carlson School of Management. “This will quadruple our deposits here. Old National says Minnesota is a good market and is performing better than other states in the Midwest. Historically, there has been such a trend, with lower unemployment rates and more corporate headquarters.”
The sale marks a bit of a U-turn for Bremer Financial, which has been embroiled in multiple legal disputes between its trustees and the bank's board over a potential hostile takeover of the board through the sale of voting stock. . The trustees' efforts, the first step toward selling the bank, have been frozen in a years-long legal battle involving Minnesota Attorney General Keith Ellison's office, which regulates charities and sought the removal of all three trustees. It was done.
In 2019, the Trustees announced that the Bank Sale could double the Trust's charitable assets, allowing them to increase their charitable giving by up to $50 million annually and further boosting the Trust's philanthropic efforts. he pointed out. The claims raised questions about the bank's market value and how much money the sale of the bank would actually generate for charities.
The charity operates under a federal requirement to distribute 5% of its fair market value to charities each year. A revaluation of the Otto Bremer Trust in 2018 and 2019 found that the trust's value had increased to $2 billion, double its book value. The trustees argued at the time that distributing 5% of their assets would reduce their principal and force them to sell some assets unless they take steps to increase cash through sales.
The attorney general's office said the trustees' sale of the bank to the highest bidder could enrich the trustees through management fees while leaving regional farm lenders in the hands of East Coast hedge funds. He tried to prove in court that he was guilty of self-dealing.
“It sounded to me like charities didn't want to sell banks for charitable purposes,” Winton said.
A Ramsey County District Court judge ultimately removed one of the three trustees from his appointed seat, but did not block the sale of the bank, and the two sides reached a legal settlement this year. The second trustee, Charlotte Johnson, stepped down in August after leading the Otto Bremer Trust for 30 years, appointing her daughter, Caroline S. Johnson, to take her place. Of the three trustees involved in the legal battle, only Daniel Reardon remains.
A change in corporate culture?
The final sale price, announced Monday, was $1.4 billion, significantly lower than the bank's 2018-2019 valuation of $2 billion, and resulted in more charitable giving than originally expected. It may be less, but it could still be a significant boost.
In 2023, the Otto Bremer Trust donated more than $105 million to more than 1,000 organizations in Minnesota, Montana, North Dakota, and Wisconsin through more than 1,100 grants and low-interest loans. Of that amount, $61 million was spent in Minnesota and $24 million was spent in Wisconsin.
As of Monday, it was unclear what impact the sale would have on Bremer Bank's inner workings and culture, including Mr. Crane's position and the fate of other bank executives. The emergence of a publicly traded alternative to charity-owned local banks has already sparked debate on social media, with observers noting Bremer Bank's long history of supporting nonprofits.
Vaha said Old National committed nearly $12 million in corporate giving last year and is funding a five-year, $9.5 billion “community growth initiative” focused on serving the needs of low-income individuals, families and family members. He said he is implementing a plan. community.
“We envision a strong and lasting partnership between Old National and the Otto Bremer Trust, built on the values and legacy of Otto Bremer,” Wacha said in a written statement. mentioned in.
Like the trust, Bremer Bank is deeply involved in Twin Cities philanthropy, including helping Twin Cities Habitat for Humanity launch a mortgage product for low-to-moderate income homebuyers and supporting St. Paul Mayor Melvin Carters. An office that creates college savings accounts for every newborn in the city.
Mr. Crane joined the mayor Saturday at the Bremer Bank branch on Snelling Street and said the CollegeBound St. Paul program will soon be extended to pre-K students enrolled in St. Paul Public Schools, regardless of whether they are attending school or not. announced that it would offer university savings accounts. Born in St. Paul.
Chris Coleman, a former St. Paul mayor, former Royal Canada Bank investment manager and current president of Twin Cities Habitat, said Monday that the banks are “great community partners and it's a great fit. I think so,” he said.
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