Unsealed court documents add new twists to Bremer suit

Recently unsealed court documents are shedding new light on the legal dispute over ownership of Bremer Bank, an acrimonious battle that pits members of the Otto Bremer Trust against seven directors of the Bremer Financial Corp.

The dispute dates to November, when the Bremer Financial Corp. and seven of its directors sued three other directors — who are also trustees of the Otto Bremer Trust — to stop a planned sale of the bank.

Otto Bremer Trust owns more than 90% of the bank’s economic shares, but it controls only three of the 10 board seats and 20% of the voting shares. Bremer employees and directors own the remaining voting shares.

In the lawsuit, the seven directors claimed among other things that the sale would violate terms of the trust’s founding documents, which required the trust to hold Bremer shares “in perpetuity” except in the case of “unforeseen circumstances.”

On Monday, the trust cited newly unsealed court documents as evidence that the trust had a “clear right” to sell its Bremer Financial Corp. holdings, and that Bremer Financial management and directors were “informed of this right” as long ago as 1988.

For example, the trust cited a 1988 presentation from Bremer Financial Corp. senior management. The presentation states that an offer to buy or merge “could be received” at some point and that trustees “have a responsibility to consider any valid offer.”

The trust argues that if the sale of the bank had gone through as planned last fall, the trust could have doubled its charitable giving to everything ranging from low-income housing to rebuilding efforts in the wake of the George Floyd protests.

A spokesman for the Otto Bremer Trust said in an email Tuesday that the trust made charitable investments totaling $56.8 million in 2019 to 650 organizations in Minnesota, Montana, North Dakota and Wisconsin.

Assets for Otto Bremer Trust were $1.03 billion last year. Various sources reported that the bank could have been sold last year for $2 billion, and if that had happened the trust’s assets would have doubled, the spokesman said.

In a statement, the trust said the unsealed court documents show that the bank “has known for decades that [Otto Bremer Trust] trustees have the right, in fact the responsibility, to sell if they believe a sale enhances the trust’s charitable purposes.”

“BFC’s seven non-Trustee directors have not only wasted millions of dollars in needless legal fees at the expense of the trust and its beneficiaries, their improper tactics have deprived OBT of the opportunity to substantially increase its charitable assets by selling the bank before recent events severely disrupted the marketplace. Those wasted and lost assets could have — should have — been better spent to help those in need across our service area: individuals and families struggling against daily challenges, against a pandemic, a severe economic downturn and, as we’ve been painfully and tragically reminded by the killing of George Floyd, against the corrosive effects of persistent racism. It is long past the point at which the bank’s obstruction should have ended,” the statement continues.

In addition, the trust has argued that the sale is necessary to keep the trust in compliance with federal tax law, and that the deal would benefit shareholders, employees and customers, as well as the charities it supports.

A spokesperson for Bremer Bank said in a statement that the trustees’ allegations “are false and legally improper, and cannot change the pattern of self-interested transactions at issue in the lawsuit.”

“It is abhorrent that the trustees now appear to be relying on the pandemic and the devastating loss of George Floyd’s life to support their baseless claims, and it is unfortunate that they continue to rely on intimidation to further their arguments,” the statement continued. “The trustees’ claims are inconsistent with the evidence in the lawsuit and will not withstand scrutiny. Bremer Bank was not for sale last October, and it is not for sale today.

“Bremer was founded in 1943 and the trust was established the next year for the express purpose of ensuring that as long as the bank existed, the communities it served would benefit from its success. We are proud of that success and the impact Bremer Financial Corporation has had on our communities for more than 75 years through the trust’s charitable works. Since 1989, Bremer has distributed over $800 million to the trust, including over $80 million in 2019 alone.

“Bremer’s financial results and market position remain strong. We remain focused on serving our customers and communities throughout the Upper Midwest through these extraordinary and challenging times, including making nearly $1.5 billion in Paycheck Protection Program loans to organizations throughout our footprint, helping to protect the paychecks of more than 170,000 people.”