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As part of Mayor Melvin Carter’s Medical Debt Reset Initiative, the city relieved over $40 million in medical debt.

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St. Paul announced they are relieving over $40 million in medical debt for around 32,000 residents as part of Mayor Melvin Carter’s Medical Debt Reset Initiative.

The city is partnering with Fairview Health and Undue Medical Debt, a non-profit that works to erase medical debt, to use $1.1 million from the American Rescue Plan to eventually relieve around $110 million in medical debt over the next few years, according to a statement from Carter’s office.

Under Undue Medical Debt’s model where they work alongside the hospitals, $1 gets rid of $100 of medical debt, the organization’s CEO Allison Sesso said.

“That’s why we’re able to, for very low amounts of money, get rid of medical debt,” Sesso said.

The average amount of debt erased was $268 with the highest totaling $104,972, according to the city’s statement.

Residents who qualify will receive letters in the mail notifying them that their debt was erased, the statement said.

In the partnership, St. Paul provides the funds for Undue Medical Debt to work with healthcare providers to get the data necessary to analyze and relieve patient medical debt, Sesso said. They give that information to the mayor and city to write and sign off on the letters.

“What it does is it creates an opportunity to talk about the issue of medical debt and its impact on people,” Sesso said.

Fairview Health President James Hereford said in the statement that through this partnership with the city and Undue Medical Debt, the community can become stronger and healthier.

“Health is not only about buildings, hospitals, or clinics – health care is about meeting the needs of patients where they are and doing whatever we can to improve health outcomes and decrease cost,” Hereford said in the statement. “Our partnership with the City of Saint Paul and Mayor Carter reflects our longstanding dedication to seek innovative solutions that have long challenged the health care sector.”

Even among people with insurance, around 54% of adults have medical debt, Carter said in the statement, which can impact all areas of someone’s life.

“Medical debt is a major barrier holding our neighbors back from prioritizing their health,” Carter said. “By removing the burden of debt, we invest in the long-term health of our entire community.”

Sesso said there are many problems in the healthcare system. Someone may have to go to a doctor or hospital that is not covered by their insurance, making it hard to avoid debt.

“Medical debt is a unique kind of debt because you don’t really control if you get into it,” Sesso said. “The number one predictor of whether or not you end up in medical debt is whether or not you get sick.”

An important part of Undue Medical Debt’s work is to encourage policymakers, hospitals and insurance companies to do more to solve the issue fundamentally, Sesso said.

“By doing this work, we’re talking about this issue in a way that we hope that there’s bigger solutions that we can’t put forward,” Sesso said. “We have a public policy department that really thinks about solutions that are bigger than us as an organization.”

Bremer, a privately held bank that’s majority-owned by the Otto Bremer Trust, a charitable organization, had been seeking a buyer, Bloomberg reported this month. The trust and the bank’s holding company, Bremer Financial, reached an agreement in July to end a five-year legal battle.

Bremer Financial in 2019 was considering a merger of equals with Great Western Bancshares. Trustees, however, felt a sale would offer greater profit, the Star Tribune reported. The holding company sued trust members to stop the trust from selling a stake in the bank to a hedge fund group, according to Bloomberg. Great Western agreed to sell to First Interstate in 2021.

“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,” Bremer CEO Jeanne Crain said in Monday’s news release.

During a conference call Monday to discuss the deal, Piper Sandler analyst Scott Siefers expressed surprise that Old National was able to purchase Bremer for tangible book value and asked about the competitive process. Old National CEO Jim Ryan said he thought Bremer “reached out to all of the usual suspects” that might have had an interest in the purchase.

“I think some things changed along the way,” he said, although “our bid didn’t materially change throughout this entire process.”

Ryan said he didn’t know exactly which banks participated, but said there was a lot of outreach and Old National felt the process was competitive.

Following the deal, the trust will have about an 11% ownership stake in Old National, and a trustee will join Old National’s board.

The combined bank would have $70 billion in assets, and the acquisition would make Old National the third-largest bank in the Twin Cities.

Old National has been a frequent acquirer in recent years, scooping up First Midwest Bank in Chicago in 2022 for $2.5 billion, and Nashville-based CapStar this year.

The Indiana lender entered the Twin Cities market in 2017 with its acquisition of St. Paul-based Anchor Bank, and has had “long-standing interest in growing our market position here,” Ryan said during the call. Old National bought Minnesota’s KleinBank for $400 million in 2018.

Old National executives noted growth opportunities in areas such as St. Cloud, Minnesota and Grand Forks, North Dakota, including with small businesses and the agriculture sector.

For Old National, “[h]owever, another big deal takes away from what had been a good organic growth focus/story,” Siefers wrote in a Monday note. “Plus, Bremer has had some highly-publicized multi-year issues, begging the question of whether it will need to be fixed before it can be grown.”

Old National said it will sell about $2.4 billion in commercial real estate loans after the deal closes, resulting in a $34.6 million earnings impact, according to an investor presentation.

“We wanted to kind of reset our own balance sheet,” and be in a position to play offense following the transaction, Old National CFO John Moran said during the call.

Old National also projects cost savings of about 30% of Bremer’s 2025 expected non-interest expense, or about $111 million pre-tax, with 25% realized in 2025 and 100% in 2026 and beyond, according to the presentation.

Old National also expects to log about $194 million in pre-tax, one-time merger expenses, which is reflected in the pro-forma tangible book value estimate at closing.

When asked by an analyst how much the presidential election’s outcome affected Old National’s comfort and ability to pursue the deal, Ryan said it wasn’t much of a factor, but noted the bank met with regulators at the Federal Reserve and the Office of the Comptroller of the Currency multiple times throughout the process, to preview combined balance sheets and resulting capital ratios.

“Everybody feels like things could ease a little bit into the future, but we’re not planning on it,” Ryan said of regulatory attitudes toward bank M&A.

The deal’s price tag puts it among the biggest bank transactions announced this year. Others include SouthState’s pending $2 billion acquisition of Independent Bank Group; UMB’s nearly $2 billion acquisition of Heartland Financial; Atlantic Union’s $1.6 billion bid to buy Sandy Spring; and Renasant’s $1.2 billion purchase of The First Bancshares.