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Tuesday, October 19, 2021

Otto Bremer trustee sold Huntington Bank, according to legal demonstrations at hearing, but disliked CEO’s community focus

When Brian Lipschultz, a trustee with one of Minnesota’s oldest and most visible philanthropists, sat down with the “extremely likable” chief executive officer of Huntington Bank to court a potential sale of Bremer Bank, He noted that Stephen Steinor spoke at the focus of his organization on community and giving back. Lipschultz returned disappointed.

“He’s given us a lot more time with all the good Huntington has done for communities,” wrote Lipschultz in a text message on August 26, 2019 to fellow Otto Bremer trustee Daniel Reardon and KBW Investments sales advisor Joe Goulash. “It’s distracting to me.”

Lipschultz described his priorities as finding a “hard-charging” bank buyer who would ignore the pleas of Bremer Bank officials and in the interest of making the St. Paul-based agricultural lender, even in the face of a hostile takeover. committed to the acquisition. a big advantage.

The trust, which owns Bremer Bank itself, will continue to distribute community grants, he said, according to legal demonstrations presented Monday in Ramsey County District Court.

“We’re here to talk shop — like money. We’ll take care of doing well. And a lot of it,” Lipschultz wrote. “We want a hard-charging partner focused on making money. Not a tree planter. … then (Steinour) said ‘We don’t make a hostile deal.’ …It was quite uncomfortable. I don’t blame him to be honest if that’s his bright line, but it definitely left Dan and me with the impression that if we told them what was really going on, they would be out so fast That there will be no more convo (negotiations).”

Bremer Bank sales

What was “really going on,” apparently, was an attempt to oust the bank’s board by selling the bank’s shares to 11 banks and 19 East Coast hedge funds, aiming to get the banks to convert their stock to voting powers. . This would likely oust the bank board and pave the way for the sale of Bremer Bank to an interested buyer.

The Minnesota Attorney General’s Office is seeking the removal and replacement of three trustees of the St. Paul-based Otto Bremer Trust on the grounds of alleged “self-deprecating” charges in Ramsey County District Court. Monday marked the sixth day of testimony in a case that has exposed the little-known inner workings of the 77-year-old philanthropist.

The charges include ignoring basic financial safeguards and hastened the sale of bank shares with limited insurance in late 2019. The sale, halted by litigation, set in motion at least five lawsuits filed by the bank against the trustees, as well as trustees against bank employees and hedge funds against the bank.

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Assistant Attorney General Carol Washington, director of the Office of Charity Regulatory Division, on Monday set aside some $16 million in legal fees incurred by trusts and trustees since the beginning of 2020. To date, approximately $2 million has been recovered from Travelers Insurance.

Sales could reach $1.8 billion

Reardon, who took the stand on Friday and Monday, said philanthropy was at the heart of the trustees, as a bank sale that could total $1.8 billion would hit the trust with an unprecedented amount, sweeping philanthropy across Minnesota. Will allow even more charitable causes to be funded. , Wisconsin, North Dakota and Montana.

The trust already distributes upwards of $50 million annually in nonprofit grants and charitable investments.

Reardon also defended grants that he and his fellow trustees have awarded with limited staff oversight in recent years, listing a large grant in court documents as benefiting the Smithsonian in Washington, D.C.—a traditional form of philanthropy. Really supported the Smithsonian performance – outside the coverage area. The Science Museum of Minnesota is dedicated to understanding race and racism.

Rather than acquire Bremer Bank in 2019, Columbus, Ohio-based Huntington Bank, a long-standing Twin Cities financial institution, went ahead with discussions with TCF Bank, and announced a friendly merger in December 2020 .

TCF’s website and branch logo are scheduled to be rebranded as the Huntington logo on October 12.

Otto Bremer Trust

Based in St. Paul. 46 employees.

Founded in 1944 by philanthropist Otto Bremer.

Issues more than $50 million annually in charitable grants and loans to Minnesota, Wisconsin, North Dakota and Montana.

92 percent stake in Bremer Bank.

Net worth of $1 billion to $2 billion.

Trustee S. Led by Brian Lipschultz, Charlotte Johnson and Danielle Reardon.

bremer bank

Based in St. Paul. 83 branch locations. 2,000 employees.

The third largest bank in Minnesota by assets, with $15.7 billion.

Earned net income of $155 million in 2020, and distributed $73.4 million to the Otto Bremer Trust that year.

Chief Executive Officer Gene Crane.

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