“They didn`t want the bank to be sold,” Ciresi told Crain. “They spent $20 million. get involved in this fight. Bremer Trust trustees – led by Lipschultz – continued to unload the control shares of 19 East Coast hedge funds in October 2019, on the stated premise that a bank sale could fund a huge expansion of philanthropy`s charitable work. The judge did not make a final decision on the legality of a bank sale, but he alluded to it while pointing out that the issue would arise at a later date. While we cannot speak to the motivations behind BFC`s filing – a decision made without input from the three OBT directors who sit on the bank`s board of directors – the submissions in the case are public documents and are available to any interested party to read and draw their own conclusions. “The court ruled in favor of (Otto Bremer Trust) on all other issues except the removal of Mr. Lipschultz, for which we are extremely disappointed and are considering our options,” the directors` statement said. Lawyers for Brian Lipschultz, Charlotte Johnson and Daniel Reardon argued that their entrepreneurial approach to sowing charity is still consistent with Otto Bremer`s intent. Otto Bremer was a German immigrant who founded philanthropy in 1944 and had already used his personal fortune to support banks and farming communities in the Midwest during the Great Depression. According to an OBT press release, “the organization believes that it is necessary to comply with our legal obligations and that it is in the best interests of the individuals and communities obt serves. A successful transaction would allow an incredibly significant increase in OBT`s philanthropy and allow us to expand our operations in Minnesota, North Dakota, Wisconsin and Montana.
[12] The evidence at trial showed that the trust had spent $16 million and Bremer Financial $20 million in legal fees since 2019 as a result of the dispute. At the same time, however, trends for BFC and similar financial institutions cannot be ignored: core yields and growth are becoming increasingly difficult to maintain and can ultimately affect the bank`s ability to increase capital and provide dividends. We believe that, as good as the BFC has been, the bank will not be able to pay appropriate dividends to meet our increased future distribution needs. These analytical documents reflected an implied value for BFC that was greater than any value that OBT had ever classified as fair market value for its BFC shares. It is important to note that, as indicated by BFC`s lawsuit, the investment bank claimed that this higher value was “almost exactly the same,” regardless of whether BFC was sold or not. A spokesman for the three trustees issued a written statement supporting the judge`s position on the sale of the bank. We believe that we are committed to evaluating strategic options for BFC in order to comply with our legal obligations and to act in accordance with Otto Bremer`s instructions as expressed in the Instrument of Trust. We would prefer to explore these options in partnership with the CFB, but the CFB Board of Directors has prevented us from doing so. After months of trying to find a common path forward, we found ourselves with this option to live up to our responsibilities. The sale to external investors could replace BFC`s current Board of Directors with individuals willing to objectively consider strategic options and improve outcomes for all shareholders. Bremer serves communities across Minnesota, North Dakota and Wisconsin, including many rural locations founded decades ago by Otto Bremer.
Bremer Bank is the fourth largest bank in Minnesota and the 11th largest bank in Minnesota. the largest agricultural lenders in the country. For more than 75 years, Bremer has been a high-performing financial driver for OBT, enabling OBT to achieve its stated philanthropic goals. In the last 30 years alone, Bremer has paid more than $750 million in dividends to OBT. The Trust accepts applications for funding from organisations based in municipalities where there are banks in Bremen. Top priority is given to opportunities that have the potential to advance a community in a meaningful, powerful and broad way. This foresight aims to promote innovative responses to community opportunities and challenges. [6] It is unusual for a charity to own a bank, and in particular the efforts of two trustees – Lipschultz and Reardon – to sell majority stakes in Bremer Bank to East Coast hedge funds and position the bank for sale had been rigorously tested and challenged in court. Among those who filed a lawsuit were the bank`s board of directors, partly employee-owned bank employees, the Attorney General`s Office and several hedge funds. Bremen`s relationship survived through several legal compromises and remained friendly for decades.
But in 2019, trustees and bank executives began to argue bitterly over who should control Bremer Financial`s future — and whether the trust could sell its 90 percent stake in the bank. This prompted Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, “to detail his organization`s findings in a letter to Tamera Ripperda, IRS director of released organizations. Another investigation into IRS tax records by the NCRP showed that this deportation was just the latest in a series of troubling decisions that led the watchdog group to request an investigation by the Minnesota attorney general. Dorfman also speculated about the increase in legal fees resulting from the foundation`s tax forms, writing, “Given the millions involved, another question needs to be answered: Do trustees redirect other foundation assets for personal enrichment?” [22] [23] According to the National Committee for Responsive Philanthropy, “In 2013 alone, trustees received more than $1.2 million from the foundation, compared to the average trustee compensation of $24,000 among the largest foundations in the country. [20] In addition, total trustee salaries have increased rapidly over the past decade, from $124,500 in 2004[24] to more than $1.2 million in 2013 alone, an increase of 1,000%. A decision in the estate case could have far-reaching implications for Bremer Bank, a major agricultural lender in the Midwest. Trustees sought to sell the bank`s voting rights — a $16 billion financial institution considered at least the state`s fourth-largest bank — to position it for sale. Lawyers for the trustees argued that the legal structures surrounding philanthropy require it to spend a certain percentage of its assets on charitable donations, and the bank`s growing value in 2019 left little choice but to sell the institution to comply.
The Attorney General`s Office claimed that even though a bank sale was legal, the rushed transfer of shares was carried out hastily and recklessly, with as much appropriate assurance in place, allowing two trustees to pocket asset management fees. “These are the misdeeds they discovered,” Crain said. Founded at the beginning of the war after the Great Depression by German philanthropist Otto Bremer, the St. Paul-based bank is the charity`s largest financial asset and one of the largest agricultural lenders in the Midwest. But the trustees acted as part of their duties to consider the sale of Bremer Financial, Minnesota`s fourth-largest bank, Ramsey County District Judge Robert Awsumb said. He also suggested that the two St. Paul`s institutions end their decades-long relationship. Bremer founded the trust to perpetuate Bremen`s banks and support the communities in which they are based.
Oct. 20 – Bremer Bank`s CEO has taken the witness stand for a third day, acknowledging that legal fees related to a dispute with parent company and nonprofit Otto Bremer Trust totaled $20 million for the St. Paul-based bank alone. In addition, OBT cannot require SFB to pay a certain amount of dividends; The bank, which is governed by its board of directors and led by its management team, has no obligation to increase its dividend to meet OBT`s needs. The bank and its employees filed separate lawsuits to stop the sale, trustees filed counterclaims, and several hedge funds filed their own lawsuits. The transfers of shares were suspended by the court until the disputes were resolved. At a Board meeting in June, SFB management continued to investigate the merger, including analytical documents prepared by investment banking firm BFC. We concluded at the end of this meeting that SFB management and several members of the Board of Directors, all of whom would have maintained or improved their current position in this merger scenario, are firmly committed to this transaction. Beginning in April, FB held a series of discussions – including face-to-face meetings – with the management and directors of a publicly traded bank about a merger.
SFB management told us at two separate meetings that they were very interested in this growth opportunity.