A forced takeover of Bremer Bank appears to have ended on an amicable note between the financial institution and the St. Paul-based philanthropy that owns it and its parent corporation.

Officials with the Bremer Financial Corp., the parent company of Bremer Bank, said Wednesday they have put to bed their five-year legal dispute with the three trustees behind the Otto Bremer Trust, which had previously attempted to oust the bank board and position the bank for sale.

Most terms of the legal settlement were not disclosed, but the philanthropy’s three trustees will rejoin the board of Bremer Financial, giving them voting rights in the future of the bank. The agreement ends “all existing litigation” between the two entities, according to a joint announcement.

Based in downtown St. Paul and established in 1943, Bremer Bank has grown to become one of the Midwest’s largest farm lenders. As a subsidiary of a charity, it maintains an unusual relationship with the Otto Bremer Trust, which backs nonprofit and civic efforts throughout Minnesota, Wisconsin, North Dakota and Montana.

In April, the trust announced a new “two-prong approach” toward grant making, separating its grants into two categories: “strategic grants,” initiated and distributed directly by the trust, and “Community Responsive Fund” grants, to be distributed through designated community partners.

Hostile takeover averted?

It was not immediately clear Wednesday whether the settlement also resolves legal action enacted by a series of hostile investors. A spokesperson for the bank declined comment, noting the terms of the settlement were confidential.

Trustees of the Otto Bremer Trust sold more than 725,000 “Class B” shares in Bremer Bank, the charity’s largest asset, to 19 East Coast hedge funds in October 2019, positioning the bank board for takeover and the bank itself for a possible sale.

Bank officials and bank employees responded by filing separate lawsuits against the three trustees, who filed counter suits, and individual hedge funds then filed legal action of their own against the bank when the stock sale was frozen.

The result was at least six separate lawsuits and the legal involvement of the Minnesota Attorney General’s office, which regulates charities and accused the trustees of self-dealing. Those legal fights have gone on for five years.

In April 2022, responding to the attorney general’s complaint, U.S. District Senior Judge Robert Awsumb removed Brian Lipschultz as a trustee of the Otto Bremer Trust, finding his conduct — which included berating the charity’s grant recipients and running a side business using the philanthropy’s resources — constituted a serious breach of trust. Frank Miley, a former school teacher and attorney who was then the president of Cretin-Derham Hall High School, replaced Lipschultz in early 2023.

The judge, however, left the question of the actual stock sale unresolved for consideration at a later date. The Minnesota Attorney General’s office did not appeal Awsumb’s ruling. In April, Ramsey County District Judge Mark Ireland ordered the bank board and trustees to schedule mediation in advance of an evidentiary hearing on the stock sale dispute.

The newly announced settlement appears to have averted further legal action, though few details were made public on Wednesday.

Since its inception, “Bremer Bank is proud to have provided over $1 billion in dividends to the Otto Bremer Trust,” said Jeanne Crain, president and chief executive officer of Bremer Bank, in the joint written statement. “Bremer Bank has gone above and beyond for its customers and communities for over 80 years, and we look forward to continuing that commitment.”

The three trustees were quoted in the statement as saying they are “pleased to put this litigation behind us and work with BFC to ensure that Otto Bremer’s vision of a perpetual charitable trust continues.”

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