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Greg Hilding

Brady Willette, Star Tribune

The Bremer location in Owatonna held its grand opening last week and is one of four branches opened since 2010.

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Bremer to make a deposit in La Crosse

  • Article by: JENNIFER BJORHUS
  • Star Tribune
  • November 20, 2012 - 10:46 PM

Bremer Bank is prowling for a spot to build a new branch in La Crosse, Wis., as the St. Paul bank continues pushing its boundaries and grabbing market share.

The new branch is slated to open late next year, but will start making loans by the end of this year. The regional bank, which already has a dozen locations in Wisconsin, also is planning a branch in Eau Claire.

Bremer's branching out bucks general industry trends. Nationally, the number of bank branches has been shrinking for three years, according to SNL Financial. Bremer, however, began an effort in 2010 to "push out the edges of our reach," according to Bremer group president Greg Hilding, who is leading Bremer's expansion in Minnesota, North Dakota and Wisconsin.

"We think there is a changing landscape going on in community banking," Hilding said.

Bremer is one of Minnesota's largest banks, with assets of $8.1 billion, and is owned by employees and the nonprofit Otto Bremer Foundation. It's enjoyed a solid rebound from the financial crisis in recent years as many smaller community banks continue to struggle and has opened four branches since 2010 including two in North Dakota, in Bismarck and Wahpeton, and two in Minnesota, in Mankato and Owatonna. The Owatonna branch held its grand opening last Thursday.

The bank has also been shoring up its Twin Cities operations, mostly at the expense of its much larger rival BMO Harris, the Chicago-based bank that bought Twin Cities player M&I Bank last year. In June, Bremer named veteran banker Jeanne Crain from BMO Harris as its new president and CEO, responsible for Bremer's Twin Cities banking group. Crain has since brought over a well-regarded team of business bankers from BMO that includes Todd Olson.

Bremer's business loan sweet spot ranges from $100,000 to $25 million.

Stephen Geyen, a bank analyst at Stifel, Nicolaus & Co. Inc. in Minneapolis, said he's surprised to see the new branches in this environment. The profitability of retail branches has diminished, primarily due to low interest rates, he said, and acquisitions are generally regarded as a more efficient use of capital. But since Bremer is privately held, it may have more freedom to focus on the long term, he said.

Acquisitions are clearly on Bremer's horizon.

In an interview Tuesday, Hilding said Bremer has been taking market share from community banks and big rivals alike, and he expects consolidation as small banks struggle with higher capital requirements and regulatory change.

"Over the coming years, our expansion may have as much to do with strategic acquisition as it does with opening new markets," he said.

As for its branching strategy, Bremer has been targeting smaller metro areas with populations around 100,000 that are hubs for health care, retail or government operations and have a fairly diverse business base and agricultural influence in the surrounding area, Hilding said. Many are college towns.

"We really look at these communities as being regional hubs," Hilding said.

The strategy makes good sense and puts the bank in a better position to pick up smaller banks in Wisconsin, given that many of the traditional acquirers are no longer around, said David Saber, senior manager in bank strategy at Wipfli in Minneapolis.

"They're being very selective in where they're going," Saber said. "It's a well thought-out long-term strategy."

Bank analyst Ben Crabtree, senior adviser to Oak Ridge Financial, said that when you're primarily a business bank, as Bremer is, you have to physically be in the market to develop relationships with small business owners.

"It's old-fashioned banking," he said.

Jennifer Bjorhus • 612-673-4683

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