A heated dispute over the future of Bremer Financial could hinge on figuring out who controls a majority of the voting shares.

It is not as simple a question as you might think.

A foundation that bank founder Otto Bremer set up in the 1940s controls most of the stock of Minnesota's fourth-largest banking company, and the trustees have an offer for the firm that they believe could bring twice its book value of about $1.1 billion. Last week they announced plans to sell, arguing that this would dramatically boost the trust's philanthropic resources.

But many of the Bremer Trust's shares do not have voting rights, potentially complicating the plan. The St. Paul bank's 10-member board opposes it, on the grounds that the profitable company can continue to grow and prosper on its own.

To move forward, the trust has called for a special meeting of Bremer Financial shareholders to replace opposing board members.

That's where the math could come into play. In recent years the trust has controlled only 20% of the bank's voting shares, a fact that was underscored in a 2011 court ruling that found that the trustees "do not control the board of directors" of the bank.

But the trust believes the situation has changed because it sold some of its nonvoting shares, which converts them into voting stock.

On Oct. 23, Bremer Trust, which owned 100% of the Class B nonvoting shares and 20% of Class A voting shares, sold nearly 7% of its nonvoting stock to institutional investors, who the trust says had the right to convert those shares to voting shares.

That leaves the trust with 13% of voting shares and the third-party buyers with 38% of the voting shares. Or a commanding 51% of control.

Since 1989, Ramsey County District Court has overseen Bremer Trust under an agreement with the IRS and the Minnesota attorney general. Federal law changed in 1969 to stem financial chicanery with charitable trusts that were formed to benefit corporate owners and shield them from taxes. Most, if not all, corporate foundations were walled off from corporate parents.

Bremer Trust was allowed to maintain kind of a hybrid status. But it had to give up voting control of Bremer Financial.

But now the three trustees, descendants of three associates of founder Otto Bremer who helped him establish the charitable foundation in 1944, believe they have a strong offer that gives them essentially no choice but to sell. They noted last week that the costs of keeping up with technology in an increasingly digital industry are tough for regional banks like Bremer.

The trustees expect the sale of Bremer Financial would essentially double the value of the foundation's assets to $2 billion or more. They said that would enable them to give away double the $50 million they do now in the Upper Midwest, under IRS guidelines that require foundations to donate at least 5% of assets annually.

Further, the value of the 8% of Bremer shares held by nearly 1,800 employees in their retirement accounts, also will double.

"We have tried for months to work with [Bremer Financial's] other board members on a collaborative path forward, but this has not proved possible," trustee Brian Lipschultz said in a prepared statement last week.

Bremer Financial said in a statement last week that, other than the three trustees of the foundation, the board members were unanimous in opposing a sale. The board said that the bank is in a strong position and has made critical investments in technology, customer service and marketing that will continue to help it prosper in a competitive business.

Bremer has $13 billion in assets and last year posted net income of $145.9 million, an above-average 13% return on equity and 1.2% return on average assets. The bank has paid $750 million-plus in rising dividends to the Bremer Trust over the last 30 years, including $70 million in 2018 and an expected $80.6 million for 2019.

"The bank is strong," CEO Jeanne Crain said in a statement to shareholders last week. "The financial resources we have provided to Otto Bremer Trust for 75 years are unparalleled."

This fight likely will end up in court, the two sides imply.

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.