Bremer Financial Corp. executives in early 2019 held preliminary merger talks with South Dakota-based Great Western Bank on a deal that would have kept the Bremer name and put its CEO in charge of the combined firm, documents and testimony in a court hearing revealed Tuesday.
But trustees of Otto Bremer Trust, which held a 92% stake in the bank at the time, objected to the deal structure, one trustee, Brian Lipschultz, said at the hearing.
"It was an existential question of the trustees," Lipschultz said. He added, "We had an absolute crisis on our hands."
The trustees feared that the trust's stake in the ongoing company, at around 45%, might constrain its annual dividend so much that it wouldn't be able to meet federal distribution requirements for a charitable trust.
The Minnesota Attorney General's office wants a Ramsey County judge to remove Lipschultz and the two other trustees of St. Paul-based Otto Bremer Trust, alleging mismanagement.
The state's pursuit of the trustees began after they continued seeking a buyer for Bremer Financial in 2019 when no deal came together with Great Western and the bank's executives and board resisted looking for another.
Appearing for a second day in St. Paul at a hearing on the state's dismissal request, Lipschultz provided more details about the disintegration of the relationship between the trustees and Bremer Financial executives and board members through 2019.
Under questioning from Assistant Attorney General Carol Washington, Lipschultz acknowledged the relationship turned so acrimonious that, by early 2020, he and trustee Dan Reardon were texting allegations of criminal suspicions about Bremer Financial executives.