Old National to acquire Minnesota bank in $1.4B deal

Old National Bank (IBJ photo/Eric Learned)

Evansville-based Old National Bank plans to acquire St. Paul, Minnesota-based Bremer Bank in a cash-and-stock transaction valued at $1.4 billion, the banks announced Monday.

Bremer is a privately held bank in which the Otto Bremer Trust, a charitable organization, owns an 86% stake. The bank has $16.2 billion in total assets and operates 70 branch locations in Minnesota, North Dakota and Wisconsin.

Under the terms of the deal, Bremer shareholders will receive 4.182 shares of Old National stock plus $26.22 for each share of Bremer’s common stock. Based on Old National’s stock closing price of $21.65 on Friday, the deal is valued at $1.4 billion, or $116.76 per Bremer share.

Wall Street appeared to welcome the deal. Shares of Old National were trading at $23.30 shortly after 11 a.m. Monday, up 7.6% from Friday’s closing price.

Old National is the 11th-largest bank in the Indianapolis area, with $2.1 billion in deposits, 246 full-time employees and 24 area locations, according to IBJ research.

In connection with the deal, Otto Bremer Trust will appoint one trustee to Old National’s board, and the trust will continue to own about 11% of Old National’s shares.

Pending regulatory approvals, the deal is expected to close in mid-2025.

Old National, which is publicly traded, has $54 billion in assets and operates 289 branches in Indiana, Illinois, Kentucky, Michigan, Minnesota, Tennessee and Wisconsin. The bank first entered the Minneapolis/St. Paul market in 2017 when it acquired St. Paul-based Anchor Bank.

Based on deposits, Old National is currently the ninth-largest bank in the Minneapolis/St. Paul market, and Bremer is the sixth-largest. Post acquisition, Old National would become that market’s third-largest bank.

“Moving to number three in the Twin Cities is a big deal,” Old National Chief Financial Officer John Moran told analysts during a Monday morning call.

The Old National announcement comes just months after Otto Bremer Trust and the bank’s holding company, Bremer Financial Corp., agreed to settle a long-standing legal battle between them.

According to the Minnesota Star Tribune, that dispute began in 2019 when the bank began exploring a merger with South Dakota-based Great Western Bank. Otto Bremer trustees objected, saying that selling the bank would be more profitable, and announced that the trust’s shares of the bank were for sale.

The bank sued the trustees, and the Minnesota Attorney General’s Office also got involved, investigating the trust and asking the court to have three of the trustees removed.

On July 24, the Otto Bremer Trust and Bremer Financial Corp. announced that they had reached an agreement to end the litigation between them.

An analyst on Monday’s Old National call asked about the litigation and whether it had caused any damage to Bremer Bank such as customer or employee attrition.

Old National CEO Jim Ryan said he doesn’t believe so, adding that the two banks know each other well from having operated in the same market.

“We think very much the [Bremer] franchise is still running strong and feel really good about our ability to continue to build on all that great strength,” Ryan said.

In its presentation to investors, Old National noted that it had conducted “extensive” due diligence on Bremer, including review of its loan portfolio, credit  philosophy, compliance culture and other factors.