Old National Bancorp in Evansville, Ind., has agreed to buy Bremer Financial in St. Paul, Minn.
The $54 billion-asset Old National said in a press release that it will pay $1.4 billion in cash and stock for the $16.2 billion-asset Bremer. The deal, which is expected to close in the middle of 2025, priced Bremer at 100% of its tangible book value.
Old National plans to raise $400 million in capital by selling common stock. The plan is to sell about $2.4 billion of commercial real estate loans after the deal closes to keep the ratio of CRE to total risk-based capital below 250%.
Bremer has $11.5 billion of loans and $13.2 billion of deposits.
“This partnership represents an outstanding fit between two highly compatible, relationship- and community-focused banks,” Jim Ryan, Old National’s chairman and CEO, said in the release.
“When you look at what has made Bremer … a leading institution since 1943, what you quickly find are the same strategic priorities and cultural principles that have guided Old National’s success for 190 years: a strong deposit franchise, a diversified loan portfolio accentuated by exceptional credit quality, and a passion for investing in and strengthening communities,” Ryan added.
A trustee of the Otto Bremer Trust will join the Old National board.
Old National plans to cut about 30% of Bremer’s annual operating expenses, or $111 million. It expects to incur $194 million of merger-related charges.
The deal is expected to be 22% accretive to Old National’s 2026 earnings per share. It should take about two years to earn back an estimated 10% dilution to Old National’s tangible book value.
Citi and Squire Patton Boggs advised Old National. J.P. Morgan and Wachtell, Lipton, Rosen & Katz advised Bremer. Keefe, Bruyette & Woods and Sullivan & Cromwell advised the Otto Bremer Trust.