St. Paul-based Bremer Bank could be sold amid an internal split between its board and the philanthropic foundation that controls it.
The Otto Bremer Trust (OBT) announced it would "explore strategic options" for Bremer Financial Corp. after its trustees failed to agree on the company's strategic direction with the bank's board.
The trust is calling for the removal of non-OBT board members so it can facilitate the sale or merger of the bank.
"We have tried for months to work with BFC’s other board members on a collaborative path forward, but this has not proved possible," the trust said on Monday.
"To resolve this impasse, we have sold approximately seven percent of BFC’s common stock to a number of investors in separate, independent transactions. In addition, we have called for a special meeting of BFC’s shareholders to seat a new board to begin a meaningful exploration of BFC’s strategic options, including a potential sale or merger."
The Star Tribune notes that the bank's 10-member Bremer Financial board of directors includes three people from the Otto Bremer Trust, but the trust controls 92 percent of the shares.
In a message sent to employees, Bremer Financial Corporation CEO and President Jeanne Craine said that the objection from the bank's board came after the three OBT trustees who are on the board "put forth a proposal which called for the exploration of a sale of BFC."
"The other BFC board members unanimously voted against a sale of BFC (with one board member not present) and the board rejected the proposal," she wrote.
"Rest assured, I and the rest of the leadership team are keenly focused on doing what is in BFC’s best interests while continuing to serve our customers and communities.
"The bank is strong, and the financial resources we have provided to OBT for the last 75 years are unparalleled. The character, culture and financial strength of the organization will always serve as our guiding principles."
Brian Lipschultz, the Co-CEO and trustee of the Otto Bremer Trust, says that the bank is struggling to keep up with the changing face of the banking industry, with customers increasingly doing their banking digitally, and thinks it could benefit under new ownership.
The sale of the bank meanwhile would provide a significant boost to the trust's philanthropic mission, which since its inception has provided $700 million in grants and investments across the Midwest.
Bremer Bank has dozens of retail locations across the Twin Cities and in Greater Minnesota.
"This is not a decision we made lightly or without exploring every other approach,” said Daniel Reardon, Co-CEO and trustee, said in Monday's statement, “but we believe it is necessary to fulfill our legal obligations and is in the best interests of the individuals and communities that OBT serves.
"A successful transaction would enable an incredibly significant increase in OBT’s philanthropy and allow us to expand our work in Minnesota, North Dakota, Wisconsin and Montana. We also believe a strategic combination with a larger financial institution will strengthen BFC’s ability to serve its customers and will provide good jobs and careers."