The trust that controls St. Paul-based Bremer Financial Corp., the fourth-largest bank in Minnesota, said Monday it may sell the company.

The announcement from the Otto Bremer Trust (OBT) indicated a split with the board of Bremer Financial Corp. (BFC), which is responsible for day-to-day operation of Bremer Bank and related entities.

The move comes at a moment when Bremer Financial is financially healthy but contending with costs of keeping up with new technology.

“Because of the changes in the financial services industry, it can be daunting for a stand-alone regional bank to succeed,” Brian Lipschultz, a trustee, said in a statement. “Through this initiative, BFC can be part of a stronger banking organization.”

The board of Bremer Financial on Monday rejected the plan of the trustees. That sets up a shareholder vote and possible legal fight over whether a foundation can control the future of a regulated financial services firm overseen by an independent board.

Three foundation trustees are a minority on the 10-person Bremer Financial board, but the foundation controls 92% of the shares.

Bremer Financial has approximately $12 billion in assets. That’s about half of the size of the next-larger bank in Minnesota, TCF Financial, before it merged with a similarly sized bank in Michigan earlier this year. TCF Financial executives attributed its sale to rising technology costs and competitive pressures.

“This is not a decision we made lightly or without exploring every other approach,” Daniel Reardon, another Bremer trustee, said in a statement. “We believe it is necessary to fulfill our legal obligations and in the best interests of the individuals and communities that OBT serves.”

The trust could reap more than $1 billion in a sale, doubling its size. The trust currently has assets of about $1.15 billion and contributed about $50 million in 2018 to charities in states served by Bremer Financial.

“A successful transaction would enable an incredibly significant increase in OBT’s philanthropy and allow us to expand our work in Minnesota, North Dakota, Wisconsin and Montana,” Reardon said. “We also believe a strategic combination with a larger financial institution will strengthen BFC’s ability to serve its customers and will provide good jobs and careers.”

Lipschultz signaled conflict between trustees and other members of Bremer Financial’s board. He said the trust has called for a special meeting of Bremer Financial shareholders to replace opposing board members. The trust owns a 92% stake in Bremer Financial, with the rest owned by employees through an employee stock option program.

Bremer Financial CEO Jeanne Crain said in a prepared statement to employee-shareholders Monday: “The other Bremer Financial board members unanimously voted against a sale of Bremer Financial … and the board rejected the proposal.

“The bank’s executive team has great confidence in you and is in full support of the work all of you are doing to fulfill the financial services needs of the communities and people we serve … across the Upper Midwest. The bank is strong. The financial resources we have provided to Otto Bremer Trust for 75 years are unparalleled.”

Bremer Financial — under Crain and her predecessor, Patrick Donovan — has been a solid performer.

Last year, Bremer Financial reported net income of $145.9 million, a 13% return on average equity and a 1.2% return on average assets. The bank rolled out a new marketing campaign and look for its branches earlier this year.

The foundation was established by founder Otto Bremer, an immigrant, who wanted the profits of Bremer Financial to benefit the community and employees.

The trust drew some criticism in recent years after the salaries of trustees shot skyward. Lipschultz, who joined the trust in 2012, was paid $524,567 last year, Reardon got $531,663 and Charlotte Johnson got $346,704. By contrast, each Bremer trustee in 2004 was paid $41,500.

The National Committee for Responsive Philanthropy in 2014 sent a letter to then-Minnesota Attorney General Lori Swanson saying the three trustees violated “many principles of good governance” by removing an executive director, taking control themselves and raising their compensation by large amounts in a short time.

“I don’t think ‘Mr. Bremer’ would envision this level of compensation,” Aaron Dorfman, the committee’s executive director, said in 2014.

Swanson took no public action on the complaint.