Otto Bremer’s trustee courted Huntington Bank sale, but disliked CEO’s attention to community, legal documents at hearing say – Twin Cities
When Brian Lipschultz, a director of one of Minnesota’s oldest and most visible philanthropic organizations, spoke to the “extremely sympathetic” CEO of Huntington Bank to woo the possible sale of Bremer Bank, he noted that Stephen Steinour had spoken of his institution’s emphasis on community and giving back. Lipschultz left disappointed.
“He’s spent far too much time serenading us with all the good Huntington does for the communities,” Lipschultz wrote, in an Aug. 26, 2019 text message to Otto Bremer administrator Daniel Reardon and advisor. Joe Gulash Sales Manager of KBW Investments. “For me, it’s a little distracting.”
Lipschultz went on to outline his priorities – finding a bank buyer ‘the hard way’ who would ignore calls from Bremer Bank officials and engage in an acquisition of the St. Paul-based agricultural lender, even a takeover. hostile, in the interest of making a big profit.
The trust, which owns Bremer Bank, would continue to distribute community grants on its own, he said, according to legal documents presented to Ramsey County District Court on Monday.
“We are here to talk shop, as for money. We will take care of doing good. And a lot, ”Lipschultz wrote. “We want a demanding partner who is focused on money. Not a tree hug. … Then (Steinour) said ‘We are not making a hostile deal.’ … It was quite uncomfortable. I don’t blame him for being honest if that’s his clear line, but it certainly left Dan and I feeling like if we told them what’s really going on, they’d come out so fast that there was no would have no other convo (conversation). “
SALE OF BANQUE BREMER
What “was really going on”, apparently, was an attempt to overthrow the bank’s board of directors by selling bank stocks to 11 banks and 19 hedge funds on the east coast, in an attempt to get the banks to convert their shares into voting rights. This would likely overthrow the bank’s board and pave the way for Bremer Bank to be sold to an interested buyer.
The Minnesota attorney general’s office has sought to overthrow and replace the three trustees of the St. Paul-based Otto Bremer Trust on the basis of alleged “fraudulent acts”, with allegations unfolding in a room. Ramsey County District hearing. Monday marked the sixth day of testimony in a case that laid bare the little-known cogs of philanthropy for 77 years.
The allegations include the breach of basic financial guarantees and the hasty sale of bank shares in late 2019, with limited insurance in place. This sale, frozen by litigation, sparked at least five lawsuits by the bank against the trustees, the trustees against the bank as well as bank employees against the trustees and hedge funds against the bank.
Assistant Attorney General Carol Washington, director of the office’s charitable regulation division, on Monday exposed some $ 16 million in legal fees incurred by the trust and the trustees since the start of 2020. To date, about 2 million millions of dollars have been clawed back from travelers’ insurance.
SALE COULD REACH $ 1.8 BILLION
Reardon, who took a stand on Friday and Monday, said directors have altruism at heart because a bank sale that could total $ 1.8 billion would inject the trust with unprecedented amounts of money, allowing the philanthropy to fund even more charitable causes throughout Minnesota. , Wisconsin, North Dakota and Montana.
The trust already distributes more than $ 50 million per year in nonprofit grants and charitable investments.
Reardon also defended the grants he and other trustees have given in recent years with limited staff oversight, noting that a large grant listed in court documents as benefiting the Smithsonian in Washington, DC – well outside the traditional coverage area of philanthropy – actually supported a Smithsonian exhibit at the Minnesota Science Museum devoted to understanding race and racism.
Instead of acquiring Bremer Bank in 2019, Columbus, Ohio-based Huntington Bank quickly entered into talks with TCF Bank, a long-time Twin Cities financial institution, and announced a friendly merger in December 2020. .
The TCF branch website and logos are set to be renamed to Huntington logos on October 12.
OTTO BREMER TRUST
Based in Saint-Paul. 46 employees.
Founded in 1944 by the philanthropist Otto Bremer.
Issuing over $ 50 million annually in grants and charitable loans in Minnesota, Wisconsin, North Dakota and Montana.
Owns 92 percent of Bremer Bank.
Aggregate assets of $ 1 billion to $ 2 billion.
Led by Trustees S. Brian Lipschultz, Charlotte Johnson and Daniel Reardon.
Based in Saint-Paul. 83 branches. 2000 employees.
Minnesota’s third-largest bank in terms of assets, with $ 15.7 billion.
Earned a net income of $ 155 million in 2020 and distributed $ 73.4 million to the Otto Bremer Trust that year.
General Manager Jeanne Crain.