Old National to acquire Bremer Financial, bulk up in Twin Cities

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Bremer Financial, long rumored as an acquisition target, finally pulled the trigger on Monday.

The St. Paul, Minnesota-based Bremer said it agreed to sell to Old National Bancorp for $1.4 billion in cash and stock. The deal, targeted to close in mid-2025, is the fourth largest announced this year by value and the fifth of 2024 that topped the $1 billion threshold.

The $54 billion-asset Old National in Evansville, Indiana, said in a press release announcing the deal early Monday that it would gain $16.2 billion of assets, $11.5 billion of loans and $13.2 billion of deposits. It would acquire 70 branches, including 48 in Minnesota, 14 in North Dakota and eight in Wisconsin.

Old National would become the third largest bank in the Minneapolis-St. Paul metropolitan area by market share.

Old National Chairman and CEO Jim Ryan highlighted in a release Bremer's "strong deposit franchise" and a "diversified loan portfolio accentuated by exceptional credit quality."

"I am incredibly confident that, through this partnership, Bremer and Old National will be even better together," Ryan added.

Old National has bulked up across the Midwest with large deals over the past several years, including its nearly $2.5 billion buyout of First Midwest Bancorp in Chicago in 2022. In 2018, it bought the $2 billion-asset KleinBank in suburban Minneapolis for more than $400 million in stock.

It also is expanding into the Southeast. Earlier this year, Old National acquired the $3 billion-asset CapStar Financial Holdings in Nashville. When announced, the all stock deal was valued at $344.4 million.

Just last month, during the company's earnings call, Ryan told analysts that he was open to more acquisitions but "any future M&A opportunities really have a high hurdle."

However, he added, "to the extent that there are opportunities that come along and exceed those very high hurdles we have in place" — larger, high-performing targets in growth markets — "I think all of our shareholders will want us to look at those things opportunistically."

Bremer has at various points over the past five years considered a sale. In 2019, the bank considered a merger of equals with Great Western Bancshares, but that did not materialize amid objections from Bremer's largest shareholder. Great Western in Sioux Falls, South Dakota, later sold to First Interstate BancSystem in Billings, Montana, for $2 billion.

Bremer is profitable and has strong credit quality, but it is unique in that it is mostly owned by the Otto Bremer Trust, named after the bank's late founder. The trust, which had reportedly for years sought to sell and focus its work on philanthropy, opposed the Great Western combination, preferring instead an outright sale. That sparked a years-long legal battle between the trust and the bank. But the two sides reached a settlement this year and, earlier this month, Bloomberg reported Bremer was seeking a buyer.

"When our majority shareholder, the Otto Bremer Trust, reaffirmed its interest in selling Bremer Bank, we appreciated the opportunity to identify a partner through a collaborative process to ensure the best possible outcome for our customers, employees, and our communities," Jeanne Crain, president and CEO of Bremer, said in the release. "With Old National, we have confidence we found a great fit."

Upon closing, the Trust would have an approximately 11% ownership stake in Old National. A trustee of the Otto Bremer Trust would join the combined bank's board.

"This partnership expands the scope of what can be accomplished for and within our communities — civically, socially and economically," the trust said in a statement.

In connection with the acquisition, Old National announced a public offering of its stock on Monday. It projected net proceeds of $384 million.

The Bremer deal not only marked one of the largest of the year but added to recent M&A momentum overall.

There were 108 deals worth an aggregate deal value of $13.1 billion through Oct. 31. Volume this year surpassed the 98 transactions inked in 2023 and value more than tripled the $4.15 billion total for last year, according to S&P Global Market Intelligence data.

Winter Haven, Florida-based SouthState Corp.'s May announcement that it would pay $2 billion in stock to acquire Independent Bank Group in McKinney, Texas, was the biggest deal to date in 2024. Kansas City-based UMB Financial's April plan to purchase Heartland Financial USA in Denver in an all-stock transaction valued at just under $2 billion followed closely.

Atlantic Union Bankshares' planned acquisition of Olney, Maryland-based Sandy Spring Bancorp was the No. 3 deal of the year so far. The Richmond, Virginia-based Atlantic agreed to pay Sandy Spring $1.6 billion in stock.

That deal was followed by Renasant Corp. in Tupelo, Mississippi, decision in July to acquire in-state peer The First Bancshares in Hattiesburg for $1.2 billion in stock.