Minnesota charities face a significant financial setback as Bremer Financial’s sale at a reduced value converts to at least $500 million forfeiture in potential funding. The St.Paul-based bank, initially valued at almost $2 billion in 2019, has been sold for $1.4 billion, heralding a significant decrease caused by legal battles, economic decline, and market shifts.
Minnesota charities could have benefited from an enormous windfall if Bremer Financial had accepted buyout offers in 2019. But now, a five-year court battle and a weakened banking market have resulted in a lower-than-expected sale price, directly impacting Otto Bremer Trust, one of the state’s most philanthropic entities.
Minnesota charities: A costly legal battle
“It felt like relationships between bank management and the trustees were irreparable,” said John Sjaastad, Bremer’s corporate treasurer from mid-2019 to September 2024. Bremer hit the sales block in September after the bank lost the legal work.Â
However, interest was low this time, and only Evansville, Ind.-based Old National Bank placed a bid. The court battle saw Minnesota Attorney General Keith Ellison rally to Bremer Financial’s cause and siphon tens of millions of dollars in legal fees from the bank and the trust.
While the feud intensified, US interest rates increased, eating away bank profits and deflating the acquisition market.
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Why Bremer’s value dropped
Nathan Stovall, Director of Financial Institutions Research at S&P Global Market Intelligence, said there had been an absolute cratering of bank deals and that 2023 and 2024 were two of the slowest years in bank mergers and acquisitions since the Great Recession.
Regulatory reports and Standard & Poor’s data show that Bremer Financial didn’t manage rising interest rates as well as its competitors did and that its financial performance trailed that of its peers over the past few years, contributing to its woes. Announced in 2024 and according to S&P, Bremer sold at a discount when measured against other bank deals
Bremer Financial declined to comment beyond referencing a statement it issued in November.Â
“When our majority shareholder, the Otto Bremer Trust, reaffirmed its interest in selling Bremer Bank, we appreciated the opportunity to identify a partner through a collaborative process to ensure the best possible outcome.”
With the sale marking the end of a protracted battle, it is sobering to learn that Minnesota charities now have fewer resources than they would have had if the circumstances had been different. This means a decline in charities’ positive impact on people’s lives.