Old National Acquires Bremer Financial and Grows Volume in Twin Cities

UPDATE: This article includes information from the banks’ conference call and analyst comments.

Bremer Financial is rumored to purpose of acquisitionfinally pulled the trigger on Monday.

The St. Paul, Minnesota-based bank has agreed to sell Old National Bancorp for $1.4 billion in cash and stock. The deal, scheduled to close in mid-2025, is the fourth-largest bank merger announced this year and the fifth in 2024 to cross the $1 billion threshold.

Evansville, Ind.-based Old National, with $54 billion in assets, said in a news release it will receive $16.2 billion in assets, $11.5 billion in loans and $13.2 billion in deposits. It will acquire 70 branches, including 48 in Minnesota, 14 in North Dakota and eight in Wisconsin.

Old National will become the third largest bank in the Minneapolis-St. Gender of agglomeration by market share.

Old National Chairman and CEO Jim Ryan highlighted Bremer’s “strong deposit franchise” and “diversified loan portfolio underscored by exceptional credit quality” in a press release.

For Old National, bigger is better, Ryan said on a conference call with analysts. “We think the benefits of scale in this banking industry are quite clear,” he said. “We see an accretive transaction like this as an excellent way to build scale in a shareholder-friendly way.”

Old National has grown throughout the Midwest over the past few years, securing several major deals, including almost Buyout of First Midwest Bancorp for $2.5 billion in Chicago in 2022. In 2018, he bought assets worth $2 billion. KleinBank in suburban Minneapolis worth more than 400 million US dollars.

Old National entered the Twin Cities market in 2017 with its acquisition of Anchor Bancorp. Ryan called Bremer the “crown jewel” of Old National’s expansion strategy in Minneapolis and St. Louis. Floor.

Old National is also expanding to the southeast. Earlier this year Old National acquired CapStar Financial with $3 billion in assets Holdings in Nashville. When announced, the all-share deal was estimated at $344.4 million..

Just last month, during the company’s earnings conference call, Ryan told analysts that he was open to new acquisitions, but “any future M&A opportunities I really have a high barrier“

However, he added, “to the extent that opportunities arise that exceed the very high headwinds that we have”—larger, higher-impact targets in emerging markets—“I think all of our shareholders will want us to look these things opportunistically.”

On Monday’s conference call, Ryan said Old National “will continue to be ready if the opportunity arises” but added that he plans to focus on integrating Bremer “over the next few years.”

“We have to implement integration,” Ryan said. “We have to keep all the great people and great customers here.”

Hovde analyst Brendan Nosal said Monday’s deal is “a little unusual” given the company’s recent acquisition of CapStar Financial Holdings. Nosal, however, said the Bremer purchase was Old National’s only way to scale in the Twin Cities, “so it’s hard to be too critical of the opportunity to be top three in the Midwest metro market.”

Over the past five years, Bremer has repeatedly considered selling. The bank considered an all-equal merger with Great Western Bancshares in 2019, but this did not materialize due to 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 good credit profile, but it is unique in that Mainly owned by Otto Bremer Trustnamed after the bank’s late founder. The trust, which for years had reportedly been keen to sell and focus its work on charity, opposed the Great Western merger, preferring instead an outright sale. This caused multi-year legal battle between the trust and the bank. But the two sides reached an agreement this year, and Bloomberg reported earlier this month that Bremer was seeking a buyer.

“When our majority shareholder, Otto Bremer Trust, confirmed its interest in selling Bremer Bank, we appreciated the opportunity to find a partner through a collaborative process to ensure the best possible outcome for our clients, employees and our community,” Bremer President. and CEO Jean Crane said in a press release. “We are confident that Old National is a perfect fit for us.”

Bremer’s internal legal disputes have had little impact on his competitive position, Ryan said. “When you talk to our commercial relationship managers here and they’re trying to get an account at Bremer Bank, it’s very difficult to do,” Ryan said on the conference call. “We believe the franchise is still strong.”

Although Bremer interviewed other potential buyers, Old National’s offer, which did not include any premium to Bremer’s tangible book value, did not change significantly during negotiations. “We just know there was a lot of outreach and we felt there was competition along the way,” Ryan said. “At the end of the day, we were only going to do what made sense for Old National and its shareholders.

Upon closing, the trust will own about 11% of Old National. The trustee of the Otto Bremer Trust will join the board of the merged bank.

“This partnership expands the scope of what can be done for and within our communities – civically, socially and economically,” the foundation said in a statement.

Old National estimates the deal will boost earnings per share in 2026 by 22%. Cost savings are projected to be 30% of Bremer’s cost base. The company expects to return a 10% dilution to its tangible book value in approximately two years.

Piper Sandler analyst Scott Cifers said the overall financial results appeared strong.

In connection with the acquisition, Old National announced a public offering of its shares on Monday. Projected net revenue is $384 million.

Bremer’s deal was not only one of the largest of the year, but also added momentum to recent mergers and acquisitions in general.

There were 108 deals totaling $13.1 billion as of Oct. 31, according to S&P Global Market Intelligence. This year’s volume exceeded the 98 deals completed in 2023, and their value was more than three times the $4 total. .15 billion last year.

Winter Haven, Florida Southstate CorporationMay Statement. that it will pay $2 billion in shares acquire Independent Banking Group in McKinney, Texas, became the largest transaction in 2024. Kansas City-headquartered UMB Financial’s April plan to buy Denver-based Heartland Financial USA in an all-stock deal valued at just under $2 billion followed closely.

It is planned that Atlantic Union Bankshares acquisition of Sandy Spring Bancorp, located in Olney, Maryland it was the No. 3 deal of the year so far. Atlantic, headquartered in Richmond, Virginia, agreed to pay Sandy Spring $1.6 billion in stock.

This deal was followed by Renasant Corp. to TupeloMississippi’s decision in July to acquire The First Bancshares in Hattiesburg for $1.2 billion available.