Shareholders in Bremer Financial Corp. on Thursday elected a new board of directors that for the first time did not include leaders of the charitable trust that holds majority stake in the company, which runs Minnesota's fourth-largest bank.

The vote came at the company's annual meeting, held a day after the St. Paul judge presiding over the legal dispute between Bremer Financial and the Otto Bremer Trust ruled that the company had the right to put forth whatever slate of director candidates it wanted.

In a statement, Bremer Financial said it "appreciates the court's care and attention to this important issue and its decision upholding the longstanding right of BFC's shareholders to elect the board of directors at the annual meeting."

For about two years, leaders of the trust and executives of the bank company have been fighting over the future of the company, with the trust seeking to sell it to another bank.

Bremer Financial is the only bank in the U.S. that is owned by a charity and most of its profits are funneled to the trust, which distributes them to charities and causes in the states where Bremer Bank has a presence.

While the trust owns about a 90% stake in Bremer Financial, it controls only about 20% of the voting shares of the company, under an agreement reached in 1989 to bring it into compliance with a 1969 federal law meant to thwart charitable trusts that were formed to benefit corporate owners and shield them from taxes.

Aaron Lavinsky - Star Tribune, Star Tribune

In February, directors of the Bremer Financial board decided to narrow the board's size and leave the leaders of the trust, Brian Lipschultz and Daniel Reardon, off the slate of candidates. With enough other shareholders going along at Thursday's annual meeting, the move leaves the two trustees out of the roles that gave them insight into the company's finances and operations.

Separately Thursday, Bremer Financial reported that its first-quarter profit was $49.2 million, up 40% from $33 million a year ago. It distributed $17.5 million in dividends to shareholders, $16.1 million of which went to the trust.

Following the vote, Lipschultz and Reardon said they were focused on the upcoming trial between the trust and the Minnesota Attorney General's Office, which has oversight into the relationship between the two entities since the 1989 arrangement.

The Attorney General's Office stepped into the fight between the bank company and the trust early last year and asked Ramsey County Judge Robert Awsumb to remove the trustees from their jobs. Awsumb last November said they could keep their jobs with some restrictions pending the trial that's now set for late September.

In a statement, the trustees said that as the dispute wears on they are getting more confident "that the common sense idea that the trust, which owns the vast majority of BFC's stock, can manage its asset to better serve our beneficiaries will be upheld."

The trustees had asked Awsumb to freeze the shareholder vote, but he ruled on Wednesday that Bremer Financial isn't legally required to have a member of the trust on its board.

A third trustee of the Otto Bremer Trust, Charlotte Johnson, left the Bremer Financial board voluntarily last spring.

Bremer Financial shareholders reelected Chief Executive Jeanne Crain to the board.

They also elected Ronald James, an adjunct professor of business ethics at the University of St. Thomas; Mary Brainerd, former chief executive of HealthPartners; Glenn McCoy, former chief financial officer of First Citizens BancShares; Kevin Rhein, former chief information officer at Wells Fargo & Co.; Wendy Schoppert, former chief financial officer of Sleep Number; and Charles B. Westling, former chief executive of Computype Inc.

Evan Ramstad • 612-673-4241