FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 0-18342
Bremer Financial Corporation
(Exact name of registrant as specified in its charter)
Minnesota 41-0715583
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
445 Minnesota St., Suite 2000, St. Paul, MN 55101-2107
(Address of principal executive offices)
(Zip Code)
(612) 227-7621
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of June 30, 1996, there were 1,200,000 shares of class A common
stock and 10,800,000 shares of class B common stock outstanding.
BREMER FINANCIAL CORPORATION
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
INDEX
PART I -- FINANCIAL INFORMATION Page
Item 1 -- Financial Statements 2
Item 2 -- Management's Discussion and Analysis 8
of Financial Condition and Results
of Operations
PART II -- OTHER INFORMATION
Item 5 -- Other information 24
Item 6 -- Exhibits and Reports on Form 8-K 24
Signatures 25
ITEM 1. FINANCIAL STATEMENTS
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
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June 30 December 31 June 30
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(in thousands) 1996 1995 1995
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<S> <C> <C> <C>
Assets
Cash and due from banks $123,145 127,786 97,221
Interest bearing deposits 1,805 3,008 2,948
Investment securities held to maturity (market value of $182,502,
$203,607 and $216,569 respectively) 181,595 198,515 213,416
Mortgage-backed securities held to maturity (market value of $114,298,
$116,772 and $159,962 respectively) 117,343 118,390 164,291
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Total securities held to maturity 298,938 316,905 377,707
Investment securities available for sale (book value of $195,247,
$209,978 and $201,009 respectively) 195,389 213,520 201,201
Mortgage-backed securities available for sale (book value of $466,578,
$450,551 and $351,955 respectively) 463,506 454,343 354,496
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Total securities available for sale 658,895 667,863 555,697
Loans 1,726,321 1,630,100 1,597,937
Reserve for loan losses (29,999) (28,253) (28,173)
Unearned discount (3,817) (3,484) (3,544)
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Net loans 1,692,505 1,598,363 1,566,220
Premises and equipment, net 45,668 44,252 41,890
Interest receivable and other assets 55,755 54,055 55,649
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Total assets $2,876,711 2,812,232 2,697,332
===================================================================================================================================
Liabilities and Shareholder's Equity
Noninterest bearing deposits $296,937 326,531 259,968
Interest bearing deposits 1,930,755 1,915,776 1,860,148
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Total deposits 2,227,692 2,242,307 2,120,116
Federal funds purchased and repurchase agreements 206,125 187,100 193,777
Other short-term borrowings 136,082 69,427 83,514
Long-term debt 16,477 25,568 27,260
Accrued expenses and other liabilities 37,759 38,633 36,103
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Total liabilities 2,624,135 2,563,035 2,460,770
Minority interests 9,014 9,112 8,768
Redeemable preferred stock, $100 par, 80,000 shares authorized;
71,594 shares issued and 21,437 shares outstanding 2,185 2,144 2,185
Redeemable class A common stock, 960,000 shares
issued and outstanding 19,310 19,035 18,049
Shareholder's equity
Common stock
Class A, no par, 12,000,000 shares authorized;
240,000 shares issued and outstanding 57 57 57
Class B, no par, 10,800,000 shares authorized,
issued and outstanding 2,562 2,562 2,562
Retained earnings 221,002 212,392 203,479
Net unrealized (loss)gain on securities available for sale (1,554) 3,895 1,462
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Total shareholder's equity 222,067 218,906 207,560
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Total liabilities and shareholder's equity $2,876,711 2,812,232 2,697,332
===================================================================================================================================
</TABLE>
See notes to consolidated financial statements.
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
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Six Months Ended June 30
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(in thousands, except per share amounts) 1996 1995 1994
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<S> <C> <C> <C>
Interest income
Loans, including fees $73,704 66,844 51,742
Securities
Taxable 23,899 23,232 18,740
Tax-exempt 5,571 5,295 4,827
Federal funds sold -- -- --
Other 84 86 37
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Total interest income 103,258 95,457 75,346
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Interest expense
Deposits 42,739 40,246 27,084
Federal funds purchased and repurchase agreements 4,207 4,432 3,049
Other short term borrowings 2,497 1,948 206
Long term debt 889 541 27
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Total interest expense 50,332 47,167 30,366
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Net interest income 52,926 48,290 44,980
Provision for loan losses 1,304 520 --
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Net interest income after provision for loan losses 51,622 47,770 44,980
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Noninterest income
Service charges 6,239 5,249 4,647
Insurance 2,848 2,242 1,984
Trust 2,608 2,306 2,279
Gain on sale of loans 1,108 440 1,126
Gain on sale of securities 189 106 1,362
Other 3,038 2,680 4,057
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Total noninterest income 16,030 13,023 15,455
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Noninterest expense
Salaries and wages 19,577 18,043 17,556
Employee benefits 5,467 5,172 4,899
Occupancy 2,949 2,682 2,461
Furniture and equipment 2,876 2,409 2,116
Data processing fees 3,792 3,551 3,471
FDIC premiums and examination fees 891 2,474 2,352
Other 9,368 8,275 7,619
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Total noninterest expense 44,920 42,606 40,474
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Income before income tax expense 22,732 18,187 19,961
Income tax expense 7,373 5,539 6,250
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Net income $15,359 12,648 13,711
=============================================================================================================
Per common share amounts
Net income $1.28 1.05 1.14
Dividends paid 0.50 0.40 0.38
=============================================================================================================
</TABLE>
See notes to consolidated financial statements.
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
=============================================================================================================
Three Months Ended June 30
-------------------------------------------
(in thousands, except per share amounts) 1996 1995 1994
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<S> <C> <C> <C>
Interest income
Loans, including fees $37,303 34,846 26,823
Securities
Taxable 11,897 11,710 9,502
Tax-exempt 2,815 2,685 2,370
Federal funds sold -- -- --
Other 39 53 25
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Total interest income 52,054 49,294 38,720
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Interest expense
Deposits 21,139 21,014 13,533
Federal funds purchased and repurchase agreements 2,255 2,256 1,819
Other short term borrowings 1,396 1,152 149
Long term debt 458 308 22
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Total interest expense 25,248 24,730 15,523
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Net interest income 26,806 24,564 23,197
Provision for loan losses 693 520 --
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Net interest income after provision for loan losses 26,113 24,044 23,197
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Noninterest income
Service charges 3,214 2,773 2,395
Insurance 1,396 1,258 1,160
Trust 1,297 1,184 1,155
Gain on sale of loans 638 286 447
Gain on sale of securities 31 140 317
Other 1,461 1,320 2,408
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Total noninterest income 8,037 6,961 7,882
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Noninterest expense
Salaries and wages 10,032 9,320 8,887
Employee benefits 2,705 2,681 2,420
Occupancy 1,428 1,372 1,203
Furniture and equipment 1,414 1,265 1,062
Data processing fees 1,873 1,784 1,740
FDIC premiums and examination fees 456 1,242 1,174
Other 5,321 4,614 4,164
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Total noninterest expense 23,229 22,278 20,650
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Income before income tax expense 10,921 8,727 10,429
Income tax expense 3,578 2,637 3,306
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Net income $7,343 6,090 7,123
=============================================================================================================
Per common share amounts
Net income $0.61 0.51 0.59
Dividends paid 0.25 0.20 0.20
=============================================================================================================
</TABLE>
See notes to consolidated financial statements.
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
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Net Unrealized
Gain (Loss) on
Common Stock Securities
-------------------------- Available Retained
(in thousands, except per share amounts) Class A Class B for Sale Earnings Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $57 2,562 4,678 181,137 188,434
Net income 25,797 25,797
Dividends, $.78 per share (9,360) (9,360)
Allocation of net income in excess of dividends and change
in net unrealized gain (loss) on securities available
for sale to redeemable class A common stock 1,393 (1,315) 78
Change in net unrealized gain (loss) on securities available for sale (17,411) (17,411)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 57 2,562 (11,340) 196,259 187,538
Net income 27,136 27,136
Dividends, $.80 per share (9,600) (9,600)
Allocation of net income in excess of dividends and change
in net unrealized gain (loss) on securities available
for sale to redeemable class A common stock (1,324) (1,403) (2,727)
Change in net unrealized gain (loss) on securities available for sale 16,559 16,559
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 57 2,562 3,895 212,392 218,906
Net income 15,359 15,359
Dividends, $.50 per share (6,000) (6,000)
Allocation of net income in excess of dividends and change
in net unrealized gain (loss) on securities available
for sale to redeemable class A common stock 474 (749) (275)
Change in net unrealized gain (loss) on securities available for sale (5,923) (5,923)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1996 $57 2,562 (1,554) 221,002 222,067
============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
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Six Months Ended June 30
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(in thousands) 1996 1995 1994
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<S> <C> <C> <C>
Cash flows from operating activities
Net income $15,359 12,648 13,711
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan losses 1,304 520 --
Depreciation and amortization 3,460 3,254 5,098
Minority interests in earnings of subsidiaries 683 609 653
Gain on sale of securities (189) (106) (1,362)
Valuation writedown on other real estate owned -- 10 --
Gains on sale of other real estate owned, net (7) (94) (806)
Other assets and liabilities, net 639 2,908 (602)
Proceeds from sales of other real estate owned 273 993 3,002
Cash receipts related to loans originated specifically for resale 59,059 16,075 53,312
Cash payments related to loans originated specifically for resale (58,722) (15,635) (52,186)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 21,859 21,182 20,820
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Cash flows from investing activities
Deposits in other banks, net 1,203 (1,336) (399)
Federal funds sold, net -- -- 16,787
Purchases of securities available for sale (116,494) (110,054) (187,122)
Purchases of securities held to maturity (15,491) (18,983) (29,278)
Proceeds from maturities of securities available for sale 64,712 40,963 61,339
Proceeds from maturities of securities held to maturity 34,777 35,524 48,836
Proceeds from sales of securities avaialable for sale 49,378 65,356 85,563
Loans, net (95,783) (115,620) (113,145)
Acquisitions, net of cash acquired -- (1,469) --
Acquisition of premises and equipment (4,263) (6,518) (1,882)
- ------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (81,961) (112,137) (119,301)
- ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Noninterest bearing deposits, net (29,594) (30,403) (32,071)
Interest bearing deposits (excluding certificates of deposit), net (15,490) (24,862) (14,279)
Certificates of deposits, net 30,469 105,046 (8,018)
Federal funds purchased and repurchase agreements, net 19,025 (10,284) 87,473
Other short-term borrowings, net 66,655 39,699 31,481
Long-term debt, net (9,091) 3,472 12,925
Minority interests acquired and dividends paid (554) (666) (572)
Redeemable preferred stock 41 (5,067) --
Dividends paid (6,000) (4,800) (4,560)
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Net cash provided by financing activities 55,461 72,135 72,379
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Net increase in cash and due from banks (4,641) (18,820) (26,102)
Cash and due from banks
Beginning of year 127,786 116,041 100,304
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End of year $123,145 97,221 74,202
==================================================================================================================
</TABLE>
See notes to consolidated financial statements.
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. FINANCIAL STATEMENTS. The condensed financial statements included
herein have been prepared by Bremer Financial Corporation (the
"Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading.
B. GENERAL. The consolidated financial statements include the accounts of
Bremer Financial Corporation and Subsidiaries. All material
intercompany transactions and balances are eliminated in consolidation.
The Company has not changed its accounting policies from those stated
for the year ended December 31, 1995 and included in its Annual Report
on Form 10-K for the year ended December 31, 1995 filed on March 29,
1996.
C. INTERIM PERIOD ADJUSTMENTS. The consolidated financial statements
contained herein reflect all adjustments which are, in the opinion of
management, of a normal recurring nature and are necessary for a fair
statement of the financial position, results of operations, and cash
flows for the unaudited interim periods. The results of operations for
the interim periods are not necessarily indicative of the results to be
expected for the entire year.
D. EARNINGS PER SHARE CALCULATIONS. Earnings per common share have been
computed using 12,000,000 common shares outstanding for all periods.
E. MORTGAGE-BACKED SECURITIES. Mortgage-backed securities classified as
held to maturity are valued at amortized historical cost, increased for
accretion of discounts and reduced by amortization of premiums,
computed by the constant yield method. Mortgage-backed securities
classified as available for sale are valued at current market value
with the resulting unrealized holding gains and losses excluded from
earnings and reported, net of tax, as a separate component of
shareholder's equity. Gains and losses on these securities are computed
based on the adjusted cost of the specific securities sold.
F. REDEEMABLE CLASS A COMMON STOCK. At June 30, 1996, the 960,000 class A
shares were generally redeemable at $20.11 per share. Since January 1,
1996 and through June 30, 1996, options to call 35,862.8910 shares had
been exercised and the shares subsequently purchased by the Company's
ESOP and profit sharing plan from employees and non-employee directors
of the Company and the Company's Subsidiaries. During the same period,
a total of 1,250 shares changed hands directly between individuals.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Earnings Summary
Bremer Financial Corporation (the "Company") recorded net income of $7.3 million
for the second quarter of 1996, a 20.6% increase from the $6.1 million earned in
the second quarter of 1995. On a year-to-date basis, earnings were $15.4
million, up 21.4% or $2.7 million from the $12.6 million earned in the first six
months of 1995. Contributing positively to earnings in the first six months of
1996 were a 9.6% or $4.6 million increase in net interest income coupled with an
increase in noninterest income of 23.1% or $3.0 million. Partially offsetting
these positive increases were a 5.4% or $2.3 million increase in noninterest
expense and a $784 thousand increase in the provision for loan losses.
Return on average assets (ROA) was 1.10% for the second quarter of 1996,
compared to 0.98% for the same period in 1995. For the first six months of 1996,
ROA improved to 1.16% from 1.05% for the first six months of 1995. Return on
average realized equity (RORE) was 12.23% for the second quarter of 1996
compared to 10.99% for the same period in 1995. On a year-to-date basis, RORE
was 12.96%, compared to 11.59% recorded for the first six months of 1995. Table
I presents a summary of the components affecting the change in year-to-date
return on assets from June 30, 1995 to June 30, 1996.
Shareholder's Equity and Dividends
Shareholder's equity and redeemable class A common stock totaled $241.4 million
at June 30, 1996, representing a book value per share of $20.11, a 7.0% increase
from $18.80 at June 30, 1995. Dividends paid per share remained unchanged from
the $.25 paid in the first quarter of 1996, and are up from the $.20 dividend
paid quarterly throughout 1995. The Company maintains a very strong capital
position compared to industry standards. Table II presents various regulatory
capital ratios.
Statement of Financial Accounting Standards No.115, "Accounting for Certain
Investments in Debt and Equity Securities" (FAS No. 115), requires the market
value of securities available for sale to be recorded on the Company's balance
sheet, with unrealized gains or losses, net of tax, included in equity. The
application of this accounting standard, which has been reflected on the
Company's balance sheet since December 31, 1993, had the effect of decreasing
the book value per share by $.15 as of June 30, 1996 and increasing book value
per share by $.12 as of June 30, 1995.
Net Interest Income
Tax-equivalent net interest income for the second quarter of 1996 was $28.7
million, an increase of $2.4 million or 9.0% from the second quarter of 1995.
This increase in net interest income resulted from a 7.4% increase in average
earning assets (enhanced by acquisitions) combined with an improvement in the
net interest margin from 4.31% to 4.38% for the second quarter of 1996. On a
year-to-date basis, tax-equivalent net interest income was $56.7 million, an
increase of $4.9 million or 9.4% over the $51.9 million realized in the first
six months of 1995. Table III presents the quarter-to-quarter comparison of
tax-equivalent net interest income and net interest margins.
For both the second quarter and year-to-date 1996, the net interest margin
improved, as presented in Table IV, primarily due to significant reductions in
nonaccrual loans from 1995 and greater interest recoveries on problem loans.
Also contributing positively to the net interest margin were an increase in the
spread between yields on earning assets and costs on interest bearing
liabilities, more free funds supporting earning assets, and increases in
yield-related loan fees.
The Company uses gap reports to assess its current interest rate sensitivity
position, but relies more heavily on simulation modeling to measure projected
interest rate risk over time. While the Company's traditional gap report
indicated a liability sensitive position at June 30, 1996, simulation modeling
results indicated the amount of net interest income at risk as a result of any
substantial change in market interest rates was within the Company's acceptable
policy limits.
Nonperforming Assets
Table VI shows the details of nonperforming assets at June 30, 1996, December
31, 1995 and June 30, 1995. Nonperforming assets, which include nonperforming
loans and other real estate owned (OREO), were $9.2 million at June 30, 1996.
This total represents decreases of $194 thousand from December 31, 1995 and $3.7
million from June 30, 1995. Nonperforming assets as a percentage of total loans
and OREO declined steadily over the past three years, as follows: 1.06% at June
30, 1994; .81% at June 30, 1995; and .53% at June 30, 1996.
Nonperforming loans, which include nonaccrual and restructured loans, were $8.9
million at June 30, 1996, a decrease of $83 thousand from December 31, 1995 and
a decrease of $3.6 million from June 30, 1995. The ratio of nonperforming loans
to total loans improved from .79% at June 30, 1995 to .52% at June 30, 1996, and
the ratio of nonperforming assets and past due loans to total loans and OREO
improved from .98% to .70% between the same two periods. The level of at-risk
performing loans (with an internal loan review rating of either substandard,
doubtful or loss) increased $13.9 million or 18.4% from $75.7 million at June
30, 1995 to $89.6 million at June 30, 1996. Accordingly, the ratio of classified
loans to total loans has increased from 4.7% at June 30, 1995 to 5.2% at June
30, 1996. Net recoveries were $442 thousand for the first six months of 1996 as
compared to net charge-offs of $44 thousand in the same period of 1995.
Other real estate owned, which includes real estate acquired in loan
settlements, decreased $111 thousand from December 31, 1995 and $65 thousand
from June 30, 1995.
Reserve for Loan Losses
The Company's reserve for loan losses was 335.5% of nonperforming loans at June
30, 1996 compared to 313.0% at December 31, 1995 and 224.6% at June 30, 1995.
Management believes the current reserve is adequate to cover the risks inherent
in the portfolio, including the risk of nonperforming loans and other loans that
have been identified for careful monitoring.
The reserve for loan losses increased from $28.2 million at June 30, 1995 to
$30.0 million at June 30, 1996. While the reserve for loan losses increased $1.8
million or 6.5% from June 30, 1995 to June 30, 1996, the loan portfolio
increased 11.0% causing the reserve to outstanding loans ratio to decline from
1.77% to 1.74%. Table VII presents the activity in the reserve for loan losses.
Noninterest Income
Noninterest income was $8.0 million for the second quarter of 1996 compared to
$7.0 million for the second quarter of 1995, representing a $1.0 million or
15.5% improvement. On a year-to-date basis, noninterest income was $16.0 million
compared to $13.0 million in 1995, an increase of $3.0 million or 23.1%.
Operating noninterest income, which excludes investment securities gains and
losses, increased 22.6% over 1995, with most categories posting increases.
Service charge fees, gains on sale of loans, and insurance commissions were the
major contributors to the increase in operating noninterest income, with the
$606 thousand or 27.0% increase in insurance commissions resulting primarily
from two agency acquisitions since the first quarter of 1995. Table VIII
presents a comparison of significant noninterest income components.
Noninterest Expense
As presented in Table IX, noninterest expense increased $951 thousand or 4.3%
compared to the second quarter of 1995. On a year-to-date basis, noninterest
expense increased $2.3 million or 5.4% compared to the first six months of 1995.
Acquisitions completed during 1995 and early 1996 had an impact on the
comparison of expenditures between periods. Excluding the $1.4 million in
noninterest expenses attributed to these acquired entities, noninterest expense
would have increased only $900 thousand or 2.1%. Offsetting the impact of
acquisitions on noninterest expenses was a $1.6 million decline in FDIC
premiums, a situation that was experienced industry-wide.
A common industry statistic used to measure the productivity of banking
organizations is the efficiency ratio. The efficiency ratio measures the cost
required to generate each dollar of revenue and is calculated by dividing
recurring noninterest expense by tax-equivalent net interest income and
recurring noninterest income. The Company's efficiency ratio improved
significantly from 64.45% at June 30, 1995 to 60.02% at June 30, 1996.
Contributing to this improvement were significant increases in the
tax-equivalent net interest income of 9.4% coupled with strong growth in
recurring noninterest income of 27.7% and modest growth in recurring noninterest
expense of 5.1%.
Taxes
Comparing the first six months of 1996 to the first six months of 1995, the
Company's effective tax rate increased from 30.5% to 32.4%. This results from
proportionately more taxable than tax-exempt income during the first six months
of 1996 compared to the same period in 1995.
Balance Sheet Growth
When comparing year-to-date 1996 average balances to year-to-date 1995 average
balances, acquisitions added approximately $50.6 million to average total
assets, increasing gross loans by $22.1 million, securities by $23.1 million,
and core deposits by $45.2 million.
Assets
Average total assets increased $218.6 million or 8.6% from the first six months
of 1995 to the first six months of 1996, while average earning assets increased
$196.6 million or 8.2% when comparing the same two periods.
Loans
From the first six months of 1995 to the first six months of 1996, average loans
increased $162.0 million or 11.0%, driven by increases in all loan categories.
Average loans in the second quarter of 1996 increased $57.2 million from the
first quarter of 1996, resulting from seasonal activity.
On a year-to-date basis, the increase in average loan volume in 1996 over 1995
was driven by agricultural, commercial, commercial real estate, consumer, and
residential real estate loans which increased $40.5 million, $35.7 million,
$29.8 million, $29.1 million, and $26.9 million, respectively. The Company is
not involved in highly leveraged transaction lending or lending to foreign
countries.
Securities
Average securities increased $34.3 million or 3.7% from the first six months of
1995 to the first six months of 1996. Taxable securities increased $22.1 million
or 3.0%, while tax-exempt securities increased $12.2 million or 6.3%. The
continued increase in tax-exempt investment securities is attributed to the
Company's strong earnings in recent years and its ability to utilize tax-exempt
income. The average maturity of the portfolio was 51.5 months at June 30, 1996,
with an average yield to maturity on the $957.8 million portfolio of 6.7%,
unrealized gains of $2.7 million and unrealized losses of $4.8 million for held
to maturity securities. In accordance with FAS No. 115, the available for sale
investments are recorded inclusive of any unrealized gain or loss.
Liabilities
Comparing year-to-date 1996 to year-to-date 1995, average interest bearing
liabilities increased $163.6 million or 8.0%, while average deposits increased
$145.7 million or 7.1%. Average short-term borrowings, which include federal
funds purchased, securities sold under agreements to repurchase, treasury tax
and loan notes, and Federal Home Loan Bank (FHLB) advances, increased $35.0
million or 15.8%. Average long-term debt, which includes long-term FHLB advances
and installment promissory notes issued in connection with acquisitions,
increased $7.0 million. Most of the increase in short-term borrowings can be
attributed to an increase in the Company's FHLB advances over the first six
months of 1995. Continued strong asset growth, coupled with slower growth in
deposits, has created the need for this funding source. The associated interest
rate risk was monitored closely and steps were taken to match repricability of
assets and liabilities prior to any funding decisions.
Core deposits, which generally include all deposits and repurchase agreements
except for those greater than $100 thousand of nonpersonal and public entities,
and certain other public funds, historically have provided a stable source of
funding. Between the first six months of 1995 and the first six months of 1996,
average core deposits increased $118.5 million or 5.9%. The growth in core
deposits can be attributed to the aforementioned acquisitions and the Company's
focused effort to redefine the pricing of its core deposits, emphasizing
customer relationships and responsiveness to national market rates, in an effort
to consistently provide customers with fair returns on their deposits.
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
===================================================================================================================================
Six Months Ended June 30 Three Months Ended June 30
------------------------------------------------------------------------------------
(in thousands, except per share amounts) 1996 1995 Change 1996 1995 Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total interest income $103,258 95,457 8.2% $52,054 49,294 5.6%
Net interest income 52,926 48,290 9.6 26,806 24,564 9.1
Net interest income (1) 56,711 51,856 9.4 28,734 26,369 9.0
Provision for loan losses 1,304 520 150.8 693 520 33.3
Noninterest income 16,030 13,023 23.1 8,037 6,961 15.5
Noninterest expense 44,920 42,606 5.4 23,229 22,278 4.3
Net income 15,359 12,648 21.4 7,343 6,090 20.6
Dividends 6,000 4,800 25.0 3,000 2,400 25.0
AVERAGE BALANCES
Assets 2,774,540 2,555,972 8.6 2,796,451 2,604,405 7.4
Loans 1,638,130 1,476,115 11.0 1,666,677 1,519,206 9.7
Securities 966,558 932,254 3.7 964,174 929,255 3.8
Deposits 2,193,666 2,047,917 7.1 2,194,732 2,080,410 5.5
Redeemable class A common stock 19,173 17,178 11.6 19,237 17,659 8.9
Shareholder's equity 220,486 197,550 11.6 221,224 203,074 8.9
PERIOD-END BALANCES
Assets 2,876,711 2,697,332 6.7
Loans 1,722,504 1,594,393 8.0
Securities 957,834 933,404 2.6
Deposits 2,227,692 2,120,116 5.1
Redeemable class A common stock 19,310 18,049 7.0
Shareholder's equity 222,067 207,560 7.0
FINANCIAL RATIOS
Return on assets (2) 1.16% 1.05 10.5 1.10% 0.98 12.2
Return on realized equity (3)(4) 12.96 11.59 11.8 12.23 10.99 11.3
Average equity/assets (3) 8.64 8.40 2.9 8.60 8.48 1.4
Dividend payout 39.07 37.95 2.9 40.86 39.41 3.7
Net interest margin (1) 4.37 4.34 0.7 4.38 4.31 1.6
Net charge-offs/average loans (0.05) 0.01 -- (0.12) 0.09 --
Reserve/period-end loans 1.74 1.77 (1.6) 1.74 1.77 (1.6)
PER SHARE OF COMMON STOCK (3)
Net income $1.28 1.05 21.4 $0.61 0.51 20.6
Dividends paid 0.50 0.40 25.0 0.25 0.20 25.0
Period-end book value 20.11 18.80 7.0 20.11 18.80 7.0
Period-end realized book value (4) 20.26 18.68 8.4 20.26 18.68 8.4
(1) Tax-equivalent basis (TEB).
(2) Calculation is based on income before minority interests.
(3) Calculation is based on 12,000,000 shares, including redeemable class A
common stock.
(4) Excluding net unrealized gain (loss) on securities available for sale.
================================================================================
</TABLE>
See notes to consolidated financial statements.
TABLE I
CHANGES IN RETURN ON ASSETS
===============================================================================
Year-To-Date
June 30
1996 vs 1995
- -------------------------------------------------------------------------------
Return on assets, prior year 1.05%
- -------------------------------------------------------------------------------
Increases
Net interest income (TEB) 0.02
Service charges 0.04
Insurance 0.03
Trust fees 0.01
Brokerage 0.02
Gain on sale of loans 0.05
Gain on sale of securities 0.01
Employee benefits 0.01
Data processing fees 0.01
FDIC premiums and examination fees 0.13
- -------------------------------------------------------------------------------
Total increases 0.33
- -------------------------------------------------------------------------------
Decreases
Provision for loan loss 0.05
Gain on sale of other assets 0.01
Furniture and equipment 0.02
Marketing 0.01
Provision for income taxes 0.09
Other noninterest expense, net 0.04
- -------------------------------------------------------------------------------
Total decreases 0.22
- -------------------------------------------------------------------------------
Return on assets, current year 1.16%
===============================================================================
TABLE II
CAPITAL RATIOS (1)
<TABLE>
<CAPTION>
====================================================================================================
June 30 December 31 June 30 Regulatory
1996 1995 1995 Minimums
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Equity to assets (2) 8.39% 8.46 8.36 --
Equity to tangible assets (2) 8.30 8.40 8.26 --
Tier I capital (3) 12.68 12.75 12.67 4.00
Tier I and tier II capital (3) 13.94 14.01 13.93 8.00
Leverage ratio (3) 8.60 8.41 8.65 3.00
</TABLE>
(1) Calculations include redeemable class A common stock.
(2) Computed in accordance with generally accepted accounting principles,
including the unrealized market value adjustment of securities available
for sale.
(3) Computed exclusive of the unrealized market value adjustment of securities
available for sale.
TABLE III
NET INTEREST INCOME / MARGINS (TEB)
========================================================================
Net Net
Interest Interest
(dollars in thousands) Income Margin
- ------------------------------------------------------------------------
Quarter
- ----------
1996
Second $28,734 4.38%
First 27,977 4.35
1995
Fourth 28,405 4.37
Third 27,637 4.31
Second 26,369 4.31
First 25,487 4.36
1994
Fourth 26,532 4.51
Third 25,911 4.53
Second 24,820 4.56
First 23,435 4.48
1993
Fourth 24,095 4.52
Third 22,797 4.47
Second 23,762 4.78
First 23,011 4.77
========================================================================
TABLE IV
CHANGES IN NET INTEREST INCOME (TEB)
<TABLE>
<CAPTION>
1996 vs 1995
=====================================================================================================================
Six Months Ended Three Months Ended
(in thousands) June 30 June 30
- ---------------------------------------------------------------------------------------------------------------------
Net Net Net Net
Interest Interest Interest Interest
Income Margin Income Margin
-------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
CHANGE IN VOLUME
Earning assets $8,073 $3,792
Interest bearing liabilities (3,791) (1,733)
------------- -------------
4,282 2,059
CHANGE IN INTEREST RATE SPREAD
Earning assets (1,396) (0.11%) (1,498) (0.23%)
Interest bearing liabilities 1,564 0.12 1,560 0.24
------------- -------------- ------------- --------------
168 0.01 62 0.01
CHANGE IN PRODUCT MIX
Earning assets 579 0.04 227 0.03
Interest bearing liabilities (679) (0.05) (347) (0.05)
------------- -------------- ------------- --------------
(100) (0.01) (120) (0.02)
CHANGE DUE TO NUMBER OF DAYS
Earning assets 545 -- -- --
Interest bearing liabilities (260) -- -- --
------------- -------------- ------------- --------------
285 -- -- --
OTHER CHANGES
Nonaccruing loans 173 0.01 257 0.04
Yield-related loan fees 154 0.01 107 0.02
30/360 investment adjustment (107) (0.01) -- --
Free funds -- 0.02 -- 0.02
------------- -------------- ------------- --------------
220 0.03 364 0.08
CHANGE IN NET INTEREST INCOME 4,855 0.03 2,365 0.07
Net interest income, prior period 51,856 4.34 26,369 4.31
------------- -------------- ------------- --------------
Net interest income, current period $56,711 4.37% $28,734 4.38%
============= ============== ============= ==============
</TABLE>
TABLE V
CHANGES IN NET INTEREST INCOME (TEB)
<TABLE>
<CAPTION>
==================================================================================================
Six Months Ended June 30
------------------------------------------------------
(in thousands) 1996 vs 1995
- --------------------------------------------------------------------------------------------------
Volume Yield/Rate (1) Total
--------------- ---------------- ----------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN:
INTEREST INCOME
Loans $5,517 $1,424 $6,941
Taxable securities 1,894 (1,228) 666
Tax-exempt securities 655 (238) 417
Interest bearing deposits -- -- --
Federal funds sold -- -- --
Other earning assets 7 (10) (3)
--------------- ---------------- ----------------
Total 8,073 (52) 8,021
INTEREST EXPENSE
Savings deposits 692 (1,769) (1,077)
Other time deposits 2,543 1,027 3,570
Short-term borrowings 513 (187) 326
Long-term debt 43 304 347
--------------- ---------------- ----------------
Total 3,791 (625) 3,166
--------------- ---------------- ----------------
NET INTEREST INCOME $4,282 $573 $4,855
==================================================================================================
</TABLE>
(1) All changes in net interest income, other than those due to volume, have
been allocated to yield/rate.
TABLE VI
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
==================================================================================================
June 30 December 31 June 30
(dollars in thousands) 1996 1995 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $8,388 8,392 11,883
Restructured loans 555 634 661
- --------------------------------------------------------------------------------------------------
Total nonperforming loans 8,943 9,026 12,544
Other real estate owned (OREO) 269 380 334
- --------------------------------------------------------------------------------------------------
Total nonperforming assets $9,212 9,406 12,878
==================================================================================================
Past due loans * $2,928 2,504 2,748
==================================================================================================
Nonperforming loans to total loans 0.52% 0.55 0.79
Nonperforming assets to total loans and OREO 0.53 0.58 0.81
Nonperforming assets and past due loans* to
total loans and OREO 0.70 0.73 0.98
Reserve to nonperforming loans 335.45 313.02 224.59
Reserve to total loans 1.74 1.74 1.77
==================================================================================================
</TABLE>
* Past due loans include accruing loans 90 days or more past due.
TABLE VII
RESERVE FOR LOAN LOSSES
==================================================================
Six Months Ended
June 30
--------------------------
(in thousands) 1996 1995
- ------------------------------------------------------------------
Beginning of period $28,253 26,946
Charge-offs (738) (849)
Recoveries 1,180 805
- ------------------------------------------------------------------
Net charge-offs 442 (44)
Provision for loan losses 1,304 520
Reserve related to acquired assets -- 751
- ------------------------------------------------------------------
End of period $29,999 28,173
==================================================================
TABLE VIII
NONINTEREST INCOME
<TABLE>
<CAPTION>
=============================================================================================
Six Months Ended
June 30 Increase/(Decrease)
- ---------------------------------------------------------------------------------------------
(in thousands) 1996 1995 Dollar Percent
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service charges $6,239 5,249 990 18.86%
Insurance 2,848 2,242 606 27.03
Trust 2,608 2,306 302 13.10
Brokerage 1,171 806 365 45.29
Gain on sale of loans 1,108 440 668 151.82
Gain on sale of other assets 38 219 (181) (82.65)
Other 1,829 1,655 174 10.51
- ---------------------------------------------------------------------------------------------
Operating noninterest income 15,841 12,917 2,924 22.64
Gain on sale of securities 189 106 83 78.30
- ---------------------------------------------------------------------------------------------
Total $16,030 13,023 3,007 23.09%
=============================================================================================
=============================================================================================
Three Months Ended
June 30 Increase/(Decrease)
- ---------------------------------------------------------------------------------------------
(in thousands) 1996 1995 Dollar Percent
- ---------------------------------------------------------------------------------------------
Service charges $3,214 2,773 441 15.90%
Insurance 1,396 1,258 138 10.97
Trust 1,297 1,184 113 9.54
Brokerage 658 423 235 55.56
Gain on sale of loans 638 286 352 123.08
Gain on sale of other assets 14 117 (103) (88.03)
Other 789 780 9 1.15
- ---------------------------------------------------------------------------------------------
Operating noninterest income 8,006 6,821 1,185 17.37
Gain on sale of securities 31 140 (109) (77.86)
- ---------------------------------------------------------------------------------------------
Total $8,037 6,961 1,076 15.47%
=============================================================================================
</TABLE>
TABLE IX
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
=============================================================================================
Six Months Ended
June 30 Increase/(Decrease)
- ---------------------------------------------------------------------------------------------
(in thousands) 1996 1995 Dollar Percent
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and wages $19,577 18,043 1,534 8.50%
Employee benefits 5,467 5,172 295 5.70
Occupancy 2,949 2,682 267 9.96
Furniture and equipment 2,876 2,409 467 19.39
Printing, postage and office supplies 2,398 2,127 271 12.74
Marketing 1,579 1,342 237 17.66
Data processing fees 3,792 3,551 241 6.79
Professional fees 339 364 (25) (6.87)
Other real estate owned 19 41 (22) (53.66)
Minority interest in earnings 683 609 74 12.15
FDIC premiums and examination fees 891 2,474 (1,583) (63.99)
Other 4,350 3,792 558 14.72
- ---------------------------------------------------------------------------------------------
Total $44,920 42,606 2,314 5.43%
=============================================================================================
=============================================================================================
Three Months Ended
June 30 Increase/(Decrease)
- ---------------------------------------------------------------------------------------------
(in thousands) 1996 1995 Dollar Percent
- ---------------------------------------------------------------------------------------------
Salaries and wages $10,032 9,320 712 7.64%
Employee benefits 2,705 2,681 24 0.90
Occupancy 1,428 1,372 56 4.08
Furniture and equipment 1,414 1,265 149 11.78
Printing, postage and office supplies 1,239 1,097 142 12.94
Marketing 1,162 883 279 31.60
Data processing fees 1,873 1,784 89 4.99
Professional fees 199 166 33 19.88
Other real estate owned 8 19 (11) (57.89)
Minority interest in earnings 337 302 35 11.59
FDIC premiums and examination fees 456 1,242 (786) (63.29)
Other 2,376 2,147 229 10.67
- ---------------------------------------------------------------------------------------------
Total $23,229 22,278 951 4.27%
=============================================================================================
</TABLE>
CONSOLIDATED AVERAGE BALANCE SHEET
AND RELATED YIELDS AND RATES
FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND 1995
(Tax Equivalent Basis-In Thousands)
<TABLE>
<CAPTION>
JUNE YTD 1996 JUNE YTD 1995 % CHANGE
--------------------------------------- -------------------------------------
ASSETS AVG BAL INTEREST RATE/YIELD AVG BAL INTEREST RATE/YIELD AVG BAL
------------- ----------- ------------ ------------ ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
LOANS (NET OF UNEARNED DISCOUNT)
COMMERCIAL AND OTHER $340,791 $15,648 9.23% $305,045 $14,524 9.60% 11.72%
COMMERCIAL REAL ESTATE 347,825 15,805 9.14 318,059 14,603 9.26 9.36
AGRICULTURAL 339,907 15,747 9.32 299,447 14,202 9.56 13.51
RESIDENTIAL REAL ESTATE 336,449 14,555 8.70 309,568 13,210 8.61 8.68
CONSUMER 224,467 10,208 9.15 195,375 8,720 9.00 14.89
TAX-EXEMPT 48,691 2,645 10.92 48,621 2,408 9.99 0.14
------------- ----------- ------------ ----------
TOTAL LOANS 1,638,130 74,608 9.16 1,476,115 67,667 9.24 10.98
RESERVE FOR LOAN LOSSES (28,968) (27,729) 4.47
------------- ------------
NET LOANS 1,609,162 1,448,386 11.10
SECURITIES
MORTGAGE BACKED 233,183 8,194 7.07 247,581 8,610 7.01 (5.82)
OTHER TAXABLE 527,193 15,705 5.99 490,718 14,623 6.01 7.43
TAX EXEMPT 206,182 8,449 8.24 193,955 8,032 8.35 6.30
------------- ----------- ------------ ----------
TOTAL SECURITIES 966,558 32,348 6.73 932,254 31,265 6.76 3.68
FEDERAL FUNDS SOLD 0 0 0.00 0 0 0.00 --
OTHER EARNING ASSETS 2,905 87 6.02 2,604 90 6.97 11.56
------------- ----------- ------------ ----------
TOTAL EARNING ASSETS 2,607,593 107,043 8.26 2,410,973 99,022 8.28 8.16
CASH & DUE FROM BANKS 94,709 68,003 39.27
NONEARNING ASSETS 101,206 104,725 (3.36)
------------- ------------
$2,774,540 $2,555,972 8.55
============= ============
LIABILITIES & SHAREHOLDER'S EQUITY
NONINTEREST BEARING DEPOSITS $266,771 $242,568 9.98
INTEREST BEARING DEPOSITS
SAVINGS AND NOW ACCOUNTS 254,475 2,167 1.71 249,381 2,565 2.07 2.04
MONEY MARKET CHECKING 180,551 1,539 1.71 173,122 1,783 2.08 4.29
MONEY MARKET SAVINGS 245,216 3,824 3.14 249,394 4,259 3.44 (1.68)
SAVINGS CERTIFICATES 1,093,358 31,012 5.70 1,009,468 28,196 5.63 8.31
CERTIFICATES OVER $100,000 153,295 4,197 5.51 123,984 3,443 5.60 23.64
------------- ----------- ------------ ----------
TOTAL TIME DEPOSITS 1,926,895 42,739 4.46 1,805,349 40,246 4.50 6.73
------------- ------------
TOTAL DEPOSITS 2,193,666 2,047,917 7.12
CORE DEPOSITS 2,110,412 1,991,933 5.95
SHORT-TERM BORROWINGS 256,419 6,705 5.26 221,405 6,379 5.81 15.81
LONG-TERM DEBT 28,098 888 6.36 21,075 541 5.18 33.32
------------- ----------- ------------ ----------
TOTAL INTEREST BEARING LIABILITIES 2,211,412 50,332 4.58 2,047,829 47,166 4.64 7.99
OTHER LIABILITIES 45,470 37,578 21.00
------------- ------------
TOTAL LIABILITIES 2,523,653 2,327,975 8.41
MINORITY INTEREST 9,063 8,504 6.57
REDEEMABLE PREFERRED STOCK 2,165 4,765 (54.56)
REDEEMABLE CLASS A COMMON STOCK 19,173 17,178 11.61
SHAREHOLDER'S EQUITY 220,486 197,550 11.61
------------- ------------
$2,774,540 $2,555,972 8.55
============= ============
NET INTEREST INCOME $56,711 $51,856
=========== ==========
NET INTEREST MARGIN 4.37% 4.34%
GROSS SPREAD 3.68 3.64
</TABLE>
CONSOLIDATED AVERAGE BALANCE SHEET
AND RELATED YIELDS AND RATES
FOR THE THREE MONTHS ENDED JUNE 30, 1996, AND 1995
(Tax Equivalent Basis-In Thousands)
<TABLE>
<CAPTION>
SECOND QUARTER 1996 SECOND QUARTER 1995 % CHANGE
--------------------------------------- -------------------------------------
ASSETS AVG BAL INTEREST RATE/YIELD AVG BAL INTEREST RATE/YIELD AVG BAL
------------- ----------- ------------ ------------ ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
LOANS (NET OF UNEARNED DISCOUNT)
COMMERCIAL AND OTHER $352,475 $7,980 9.08% $317,339 $7,655 9.68% 11.07%
COMMERCIAL REAL ESTATE 349,394 7,875 9.04 323,020 7,372 9.15 8.16
AGRICULTURAL 346,452 8,008 9.27 313,141 7,543 9.66 10.64
RESIDENTIAL REAL ESTATE 339,424 7,368 8.71 316,506 6,873 8.71 7.24
CONSUMER 228,404 5,158 9.06 200,411 4,607 9.22 13.97
TAX-EXEMPT 50,528 1,388 11.02 48,789 1,210 9.95 3.56
------------- ----------- ------------ ----------
TOTAL LOANS 1,666,677 37,777 9.09 1,519,206 35,260 9.31 9.71
RESERVE FOR LOAN LOSSES (29,340) (28,130) 4.30
------------- ------------
NET LOANS 1,637,337 1,491,076 9.81
SECURITIES
MORTGAGE BACKED 233,394 4,105 7.05 243,251 4,257 7.02 (4.05)
OTHER TAXABLE 523,891 7,792 5.97 492,847 7,454 6.07 6.30
TAX EXEMPT 206,889 4,267 8.27 193,157 4,072 8.46 7.11
------------- ----------- ------------ ----------
TOTAL SECURITIES 964,174 16,164 6.72 929,255 15,783 6.81 3.76
FEDERAL FUNDS SOLD 0 0 0.00 0 0 0.00 --
OTHER EARNING ASSETS 2,770 41 5.94 3,122 54 6.94 (11.27)
------------- ----------- ------------ ----------
TOTAL EARNING ASSETS 2,633,621 53,982 8.22 2,451,583 51,097 8.36 7.43
CASH & DUE FROM BANKS 94,851 70,020 35.46
NONEARNING ASSETS 97,319 110,932 (12.27)
------------- ------------
$2,796,451 $2,604,405 7.37
============= ============
LIABILITIES & SHAREHOLDER'S EQUITY
NONINTEREST BEARING DEPOSITS $270,712 $246,541 9.80
INTEREST BEARING DEPOSITS
SAVINGS AND NOW ACCOUNTS 251,997 1,049 1.67 250,369 1,279 2.05 0.65
MONEY MARKET CHECKING 180,707 752 1.67 173,795 876 2.02 3.98
MONEY MARKET SAVINGS 242,966 1,885 3.11 246,742 2,100 3.41 (1.53)
SAVINGS CERTIFICATES 1,093,640 15,357 5.63 1,037,520 14,965 5.79 5.41
CERTIFICATES OVER $100,000 154,710 2,096 5.43 125,443 1,793 5.73 23.33
------------- ----------- ------------ ----------
TOTAL TIME DEPOSITS 1,924,020 21,139 4.41 1,833,869 21,013 4.60 4.92
------------- ------------
TOTAL DEPOSITS 2,194,732 2,080,410 5.50
CORE DEPOSITS 2,112,471 2,023,846 4.38
SHORT-TERM BORROWINGS 277,038 3,652 5.29 228,749 3,407 5.97 21.11
LONG-TERM DEBT 30,130 457 6.08 22,550 308 5.48 33.61
------------- ----------- ------------ ----------
TOTAL INTEREST BEARING LIABILITIES 2,231,188 25,248 4.54 2,085,168 24,728 4.76 7.00
OTHER LIABILITIES 42,884 38,542 11.27
------------- ------------
TOTAL LIABILITIES 2,544,784 2,370,251 7.36
MINORITY INTEREST 9,031 8,723 3.53
REDEEMABLE PREFERRED STOCK 2,175 4,698 (53.70)
REDEEMABLE CLASS A COMMON STOCK 19,237 17,659 8.94
SHAREHOLDER'S EQUITY 221,224 203,074 8.94
------------- ------------
$2,796,451 $2,604,405 7.37
============= ============
NET INTEREST INCOME $28,734 $26,369
=========== ==========
NET INTEREST MARGIN 4.38% 4.31%
GROSS SPREAD 3.68 3.60
</TABLE>
PART II - OTHER INFORMATION
Item 5. Other information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits are being filed as part of this Quarterly Report
on Form 10-Q.
(b) No Current Reports on Form 8-K were filed during the quarter
ended June 30, 1996 or during the period from June 30, 1996 to
the date of this Quarterly Report on Form 10-Q.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated:August 14, 1996 BREMER FINANCIAL CORPORATION
By: /s/ Terry M. Cummings
Terry M. Cummings
President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Stuart F. Bradt
Stuart F. Bradt
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 123,145
<INT-BEARING-DEPOSITS> 1,805
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 658,895
<INVESTMENTS-CARRYING> 298,938
<INVESTMENTS-MARKET> 296,800
<LOANS> 1,722,504
<ALLOWANCE> 29,999
<TOTAL-ASSETS> 2,876,711
<DEPOSITS> 2,227,692
<SHORT-TERM> 342,207
<LIABILITIES-OTHER> 37,759
<LONG-TERM> 16,477
2,185
0
<COMMON> 21,929
<OTHER-SE> 228,462
<TOTAL-LIABILITIES-AND-EQUITY> 2,876,711
<INTEREST-LOAN> 73,704
<INTEREST-INVEST> 29,470
<INTEREST-OTHER> 84
<INTEREST-TOTAL> 103,258
<INTEREST-DEPOSIT> 42,739
<INTEREST-EXPENSE> 50,332
<INTEREST-INCOME-NET> 52,926
<LOAN-LOSSES> 1,304
<SECURITIES-GAINS> 189
<EXPENSE-OTHER> 44,920
<INCOME-PRETAX> 22,732
<INCOME-PRE-EXTRAORDINARY> 15,359
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,359
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.28
<YIELD-ACTUAL> 4.10
<LOANS-NON> 8,388
<LOANS-PAST> 2,852
<LOANS-TROUBLED> 555
<LOANS-PROBLEM> 89,602
<ALLOWANCE-OPEN> 28,253
<CHARGE-OFFS> 738
<RECOVERIES> 1,180
<ALLOWANCE-CLOSE> 29,999
<ALLOWANCE-DOMESTIC> 24,715
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 5,284
</TABLE>
