Minnesota Attorney General Keith Ellison said Monday that he is investigating the circumstances of the proposed sale of Bremer Bank and has asked for a delay in litigation surrounding the deal.
The move adds yet another player to the battle over the future of the state's fourth-largest bank and comes just days after a group of Bremer shareholding employees filed suit to intervene. The charitable trust that controls a majority of the bank's shares argues that a sale would provide more money to fulfill its philanthropic mission.
The dispute became public last fall after directors of Bremer Bank, which includes the three trustees of the Bremer Trust, for several months privately discussed future ownership of the bank.
The bank in November sued the trust, saying the trustees were no longer acting in the bank's financial interest by pushing for a sale. The trustees later countersued, saying they have the ultimate authority to decide whether the trust should continue to own the bank, which operates in Minnesota, Wisconsin and North Dakota.
It's an unusual disagreement that stems from Bremer Bank's status as the only bank in the U.S. owned by a charity.
The bank contributes about half of its profits annually to the Otto Bremer Trust, which is one of the largest foundations in the Upper Midwest and gives away about $50 million each year. Ellison said his office will examine whether the three trustees are "self-interested" and whether they have honored the directive from the founder of both the bank and the trust, Otto Bremer, that the charity can sell the bank only due to "unforeseen circumstances."
"My office is using the broad authority we have under the law to make sure that charitable trust assets are used for the public good," Ellison said in a statement. "This includes by representing the public in making sure that trustees fulfill their fiduciary duties and remain faithful to the charitable purpose of the trust."
Ellison's office on Monday confirmed its request, which it first made in a letter sent to the parties and court on Friday.
Both the trust and the bank's executives issued statements welcoming a review by the attorney general's office.
"We appreciate the attorney general's thorough review of the current situation and particularly for clarifying the role his office plays in terms of oversight and as the only party with standing to represent the beneficial interests of OBT," the trustees said, using an acronym for Otto Bremer Trust.
In his statement, Ellison said his office had taken no position on the dispute itself, which centers on who ultimately should control a prospective sale of Bremer Bank. "I am continuing to evaluate my options for safeguarding the public interest and protecting Otto Bremer's vision for furthering the greater good in our communities," Ellison said. Initially, the bank's management informed the trustees and other board members that a potential buyer approached executives last spring but walked away without making an offer.
That overture triggered reviews of the bank's valuation that led trustees to begin seeking other prospective buyers and urging management and other directors to do the same.
After they resisted, trustees sold shares in Bremer to other investors who they hoped would go along with their efforts to sell the bank.
The bank's executives and other directors say the trustees are seeking to enrich themselves by increasing the size of the trust with the proceeds of a sale. The trustees say that selling the bank will double the assets of the trust to around $2 billion and allow it to double its annual outlay to charities to around $100 million.