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 September 30, 2000.
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
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Bremer Financial Corporation
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(Exact name of registrant as specified in its charter)
Minnesota 41-0715583
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
445 Minnesota St., Suite 2000, St. Paul, MN 55101-2107
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(Address of principal executive offices) (Zip Code)
(651) 227-7621
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(Registrant's telephone number, including area code)
Not applicable.
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(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 September 30, 2000, there were 1,200,000 shares of class A common
stock and 10,800,000 shares of class B common stock outstanding.
<PAGE>
BREMER FINANCIAL CORPORATION
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2000
INDEX
PART I -- FINANCIAL INFORMATION Page
----
Item 1 -- Financial Statements 2
Item 2 -- Management's Discussion and Analysis 9
of Financial Condition and Results
of Operations
PART II -- OTHER INFORMATION
Item 5 -- Other Information 25
Item 6 -- Exhibits and Reports on Form 8-K 25
Signatures 26
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2000 1999 1999
------------ ------------ ------------
(UNAUDITED) (Unaudited)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 127,964 $ 145,407 $ 135,392
Interest bearing deposits 5,782 4,886 2,812
Federal funds sold 12,450 -- --
Investment securities available for sale (amortized cost of
$180,517, $188,683 and $188,387 respectively) 180,006 187,857 188,928
Mortgage-backed securities available for sale (amortized cost of
$597,911, $688,649 and $682,580 respectively) 586,974 671,985 673,880
------------ ------------ ------------
TOTAL SECURITIES AVAILABLE FOR SALE 766,980 859,842 862,808
Investment securities held to maturity (fair value of
$172,608, $170,788, and $168,347 respectively) 171,940 171,720 167,806
Mortgage-backed securities held to maturity (fair value of
$545, $6,769 and $10,839 respectively) 548 6,810 10,880
------------ ------------ ------------
TOTAL SECURITIES HELD TO MATURITY 172,488 178,530 178,686
Loans and leases 2,893,434 2,550,156 2,505,171
Reserve for credit losses (45,071) (41,895) (40,801)
Unearned discount (4,854) (7,259) (5,929)
------------ ------------ ------------
NET LOANS AND LEASES 2,843,509 2,501,002 2,458,441
Interest receivable 43,330 34,148 37,724
Premises and equipment, net 58,672 59,821 60,867
Other assets 69,562 67,849 68,518
------------ ------------ ------------
TOTAL ASSETS $ 4,100,737 $ 3,851,485 $ 3,805,248
============ ============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Noninterest bearing deposits $ 425,074 $ 406,478 $ 381,281
Interest bearing deposits 2,668,004 2,444,214 2,435,291
------------ ------------ ------------
TOTAL DEPOSITS 3,093,078 2,850,692 2,816,572
Federal funds purchased and repurchase agreements 275,604 300,737 256,242
Other short-term borrowings 102,092 125,948 202,800
Long-term debt 233,168 215,832 169,579
Accrued expenses and other liabilities 58,257 44,486 46,171
------------ ------------ ------------
TOTAL LIABILITIES 3,762,199 3,537,695 3,491,364
Minority interests 150 914 976
Redeemable preferred stock -- -- 1,615
Redeemable class A common stock, 960,000 shares
issued and outstanding 27,071 25,029 24,904
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 315,017 294,892 288,291
Accumulated other comprehensive income (6,319) (9,664) (4,521)
------------ ------------ ------------
TOTAL SHAREHOLDER'S EQUITY 311,317 287,847 286,389
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 4,100,737 $ 3,851,485 $ 3,805,248
============ ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------------------
2000 1999 1998
------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases, including fees $ 183,552 $ 145,852 $ 138,740
Securities
Taxable 40,390 38,390 35,387
Tax-exempt ` 8,309 7,796 8,261
Federal funds sold 442 387 567
Other 182 84 93
------------- ------------- -------------
Total interest income 232,875 192,509 183,048
------------- ------------- -------------
INTEREST EXPENSE
Deposits 89,948 70,841 73,585
Federal funds purchased and repurchase agreements 11,735 7,931 7,135
Other short term borrowings 7,468 6,353 7,734
Long term debt 10,277 6,105 2,773
------------- ------------- -------------
Total interest expense 119,428 91,230 91,227
------------- ------------- -------------
Net interest income 113,447 101,279 91,821
Provision for credit losses 6,310 6,504 3,769
------------- ------------- -------------
Net interest income after provision for credit losses 107,137 94,775 88,052
------------- ------------- -------------
NONINTEREST INCOME
Service charges 16,527 14,071 12,631
Insurance 6,472 6,474 5,239
Trust 6,766 5,804 5,145
Brokerage 4,169 3,547 2,826
Gain on sale of loans 1,886 2,788 3,491
Gain (loss) on sale of securities 267 1,851 1,292
Other 3,169 3,844 4,670
------------- ------------- -------------
Total noninterest income 39,256 38,379 35,294
------------- ------------- -------------
NONINTEREST EXPENSE
Salaries and wages 43,679 40,649 36,469
Employee benefits 10,642 10,451 9,191
Occupancy 5,796 4,976 4,585
Furniture and equipment 7,155 6,733 5,584
Data processing fees 5,387 5,167 4,516
FDIC premiums and examination fees 1,252 953 888
Goodwill and other intangibles 2,779 1,971 1,292
Other 17,827 18,576 15,532
------------- ------------- -------------
Total noninterest expense 94,517 89,476 78,057
------------- ------------- -------------
INCOME BEFORE INCOME TAX EXPENSE 51,876 43,678 45,289
Income tax expense 18,122 14,701 15,516
------------- ------------- -------------
NET INCOME $ 33,754 $ 28,977 $ 29,773
============= ============= =============
Per common share amounts:
Net income-basic $ 2.81 $ 2.41 $ 2.48
Dividends paid 0.99 0.99 0.99
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
------------------------------------------
2000 1999 1998
------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases, including fees $ 65,665 $ 53,286 $ 48,599
Securities
Taxable 12,934 13,783 11,038
Tax-exempt 2,777 2,611 2,782
Federal funds sold 190 158 245
Other 76 32 36
------------- ------------- -------------
Total interest income 81,642 69,870 62,700
------------- ------------- -------------
INTEREST EXPENSE
Deposits 33,182 25,194 24,851
Federal funds purchased and repurchase agreements 4,322 2,857 2,776
Other short term borrowings 2,487 2,664 2,363
Long term debt 3,407 2,616 1,361
------------- ------------- -------------
Total interest expense 43,398 33,331 31,351
------------- ------------- -------------
Net interest income 38,244 36,539 31,349
Provision for credit losses 2,524 1,799 1,307
------------- ------------- -------------
Net interest income after provision for credit losses 35,720 34,740 30,042
------------- ------------- -------------
NONINTEREST INCOME
Service charges 5,701 5,156 4,373
Insurance 2,310 2,448 2,047
Trust 2,314 2,072 1,701
Brokerage 1,254 1,232 1,025
Gain on sale of loans 820 776 1,147
Gain (loss) on sale of securities 351 4 154
Other 1,067 1,005 1,009
------------- ------------- -------------
Total noninterest income 13,817 12,693 11,456
------------- ------------- -------------
NONINTEREST EXPENSE
Salaries and wages 14,849 14,262 12,395
Employee benefits 3,380 3,509 3,054
Occupancy 1,957 1,654 1,510
Furniture and equipment 2,370 2,343 1,934
Data processing fees 1,835 1,759 1,532
FDIC premiums and examination fees 458 319 295
Goodwill and other intangibles 949 884 447
Other 5,862 6,647 5,283
------------- ------------- -------------
Total noninterest expense 31,660 31,377 26,450
------------- ------------- -------------
INCOME BEFORE INCOME TAX EXPENSE 17,877 16,056 15,048
Income tax expense 6,201 5,701 5,135
------------- ------------- -------------
NET INCOME $ 11,676 $ 10,355 $ 9,913
============= ============= =============
Per common share amounts:
Net income-basic $ 0.97 $ 0.86 $ 0.84
Dividends paid 0.33 0.33 0.33
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON STOCK COMPREHENSIVE COMPREHENSIVE RETAINED
CLASS A CLASS B INCOME INCOME EARNINGS TOTAL
-------- -------- -------- -------- -------- --------
( IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 $ 57 $ 2,562 $ 4,977 $248,945 $256,541
Comprehensive income
Net income $ 41,511 41,511 41,511
Other comprehensive income
Change in net unrealized gain (loss) on securities
available for sale, net of $761 tax benefit (1,141) (1,141) (1,141)
--------
Comprehensive income $ 40,370
========
Dividends, $1.32 per share (15,840) (15,840)
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 91 (2,054) (1,963)
-------- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1998 57 2,562 3,927 272,562 279,108
Comprehensive income
Net income 40,111 40,111 40,111
Other comprehensive income
Change in net unrealized gain (loss) on securities
available for sale, net of $9,849 tax benefit - (14,774) (14,774) (14,774)
--------
Comprehensive income $ 25,337
========
Dividends, $1.32 per share (15,840) (15,840)
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 1,183 (1,941) (758)
-------- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1999 57 2,562 (9,664) 294,892 287,847
Comprehensive income
Net income 33,754 33,754 33,754
Other comprehensive income
Change in net unrealized gain (loss) on securities
available for sale, net of $2521 tax benefit 3,636 3,636 3,636
--------
Comprehensive income $ 37,390
========
Dividends, $.99 per share (11,880) (11,880)
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 (291) (1,749) (2,040)
-------- -------- -------- --------------------
BALANCE, SEPTEMBER 30, 2000 $ 57 $ 2,562 $ (6,319) $315,017 $311,317
======== ======== ======== ======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
INFORMATION SUBSEQUENT TO DECEMBER 31, 1999 IS UNAUDITED.
<PAGE>
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30
-----------------------------------------
2000 1999 1998
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 33,754 $ 28,977 $ 29,773
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for credit losses 6,310 6,504 3,769
Depreciation and amortization 8,675 8,185 6,564
Minority interests in earnings of subsidiaries 21 26 703
Loss (gain) on sale of securities (267) (1,851) (1,292)
Gain on sale of other real estate owned, net (17) (91) (26)
Other assets and liabilities, net 15,312 2,124 2,196
Proceeds from sales of other real estate owned 485 519 543
Cash receipts related to loans originated specifically for resale 94,944 156,647 188,677
Cash payments related to loans originated specifically for resale (95,281) (157,457) (189,451)
--------- --------- ---------
Net cash provided by operating activities 63,936 43,583 41,456
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposits in other banks, net (896) (1,100) (439)
Purchases of securities available for sale (25,313) (351,651) (234,000)
Purchases of securities held to maturity (8,502) (35,041) (7,425)
Proceeds from maturities of securities available for sale 78,877 182,625 165,340
Proceeds from maturities of securities held to maturity 14,570 56,500 86,918
Proceeds from sales of securities available for sale 45,582 92,302 67,179
Loans and leases, net (348,480) (328,520) (217,805)
Acquisition of minority interests (458) -- --
Acquisitions, net of cash acquired (18,416) (47,789) --
Acquisition of premises and equipment (4,746) (12,092) (7,430)
--------- --------- ---------
Net cash used in investing activities (267,782) (444,766) (147,662)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Noninterest bearing deposits, net 18,596 12,066 (28,664)
Interest bearing deposits (excluding certificates of deposit), net 145,328 149,798 73,565
Certificates of deposits, net 78,462 84,058 (10,812)
Federal funds purchased and sold and repurchase agreements,net (37,583) 34,823 60,108
Other short-term borrowings, net (23,856) 71,006 (61,100)
Proceeds from issuance of long-term debt 33,099 72,721 81,846
Repayments of long-term debt (15,763) (19,429) (17,086)
Dividends paid to minority interests -- 45 (7,021)
Redeemable preferred stock -- (464) (60)
Dividends paid (11,880) (11,880) (11,880)
--------- --------- ---------
Net cash provided by financing activities 186,403 392,744 78,896
--------- --------- ---------
Net decrease in cash and due from banks (17,443) (8,439) (27,310)
Cash and due from banks
Beginning of period 145,407 143,831 135,966
--------- --------- ---------
End of period $ 127,964 135,392 $ 108,656
========= ========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
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, 1999 and included in its Annual Report
on Form 10-K for the year ended December 31, 1999 filed on March 13,
2000.
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. Basic earnings per common share have
been computed using 12,000,000 common shares outstanding for all
periods. The Company does not have any dilutive securities.
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 September 30, 2000, the 960,000
class A shares were generally redeemable at $28.20 per share. Since
January 1, 2000 and through September 30, 2000, options to call
70,251.5094 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 2,676 shares changed
hands directly between individuals.
G. ESTIMATES. The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reported period. Actual results may differ from those estimates.
<PAGE>
H. COMPREHENSIVE INCOME. The Company reported comprehensive income for the
third quarter of 2000 of $15.8 million, up from the $12.8 million
reported for the third quarter of 1999. On a year-to-date basis,
comprehensive income was $37.4 million, as compared to the $19.8
million earned in the first nine months of 1999. Comprehensive income
is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances from
nonowner sources. It includes all changes in equity during a period
except those resulting from investments by owners and distributions to
owners. For the Company, comprehensive income consists of net income,
as reported in the financial statements, and other comprehensive
income, which consists of the change in unrealized gains and losses on
securities available for sale.
<PAGE>
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 $11.7
million for the third quarter of 2000, a 12.8% increase from the $10.4 million
earned in the third quarter of 1999. On a year-to-date basis, earnings were
$33.8 million, up 16.5% from the $29.0 million earned in the first nine months
of 1999. Contributing positively to earnings in the first nine months of 2000
were a 12.0% or $12.1 million increase in net interest income, a 2.3% or $877
thousand increase in noninterest income, and a decrease in the provision for
loan losses of 3.0% or $194 thousand. Partially offsetting these increases to
income was a 5.6% or $5.0 million increase in noninterest expense.
Return on average assets ("ROA") was 1.14% for the third quarter of 2000,
compared to 1.09% reported for the same period in 1999. For the first nine
months of 2000, ROA increased to 1.13% from 1.10% reported in 1999. Return on
average realized equity ("RORE") was 13.61% for the third quarter of 2000,
compared to 13.12% for the same quarter of 1999. On a year-to-date basis, RORE
was 13.48%, compared to 12.59% recorded for the first nine months of 1999. Table
I presents a summary of the components affecting the change in year-to-date
return on assets from September 30, 1999 to September 30, 2000.
Shareholder's Equity and Dividends
Shareholder's equity and redeemable class A common stock totaled $338.4 million
at September 30, 2000, representing a book value per share of $28.20, an 8.7%
increase from $25.94 at September 30, 1999. A dividend of $.33 per share was
paid during the third quarter of 2000, remaining unchanged since the first
quarter of 1998. Table II presents various regulatory capital ratios.
Securities classified as available for sale are recorded at market value on the
Company's balance sheet, with unrealized gains or losses, net of tax, included
in shareholder's equity. The net unrealized gain or loss in shareholder's equity
had the effect of decreasing the book value per share by $.57 as of September
30, 2000 and by $.41 as of September 30, 1999.
Net Interest Income
Tax-equivalent net interest income for the third quarter of 2000 was $40.3
million, an increase of $1.9 million or 5.0% from the third quarter of 1999. The
net interest margin dropped eleven basis points to 4.18% in the third quarter of
2000 from 4.29% reported in the third quarter of 1999. On a year-to-date basis,
tax-equivalent net interest income was $119.4 million, an increase of $12.7
million or 11.9% over the $106.7 million realized in the first nine months of
1999. Table III presents the quarter-to-quarter comparison of tax-equivalent net
interest income and net interest margins.
The Company uses various tools to assess its current interest rate sensitivity
position, such as gap analysis, simulation of future net interest income, and a
valuation model which measures the sensitivity of balance sheet valuations to
changes in interest rates. In the valuation model, the market value of each
asset and liability as of the reporting date is calculated by computing the
present value of all cash flows generated. The impact on valuations is then
calculated for a 200 basis point rate shock. At September 30, 2000, the
valuation model indicates that the value of assets would decline 3.5% with a 200
basis point increase in interest rates. After considering the impact on
liabilities and
<PAGE>
tax effects, the market value of equity would decrease by 10.5% from a 200 basis
point increase in interest rates.
Nonperforming Assets
Table VI shows the details of nonperforming assets at September 30, 2000,
December 31, 1999 and September 30, 1999. Nonperforming assets, which include
nonperforming loans and leases and other real estate owned ("OREO"), were $15.5
million at September 30, 2000. This total represents a decrease of $1.7 million
from December 31, 1999 and a decrease of $1.5 million from September 30, 1999.
Nonperforming assets as a percentage of total loans, leases and OREO decreased
to .54% as of September 30, 2000 from .68% as of December 31, 1999, and from
.68% as of September 30, 1999, while the level of at-risk performing loans and
leases (with an internal loan review rating of either substandard, doubtful or
loss) decreased $11.6 million or 11.7% to $87.9 million at September 30, 2000
from $99.5 million at September 30, 1999.
Nonperforming loans and leases, which include nonaccrual and restructured loans
and leases, were $14.5 million at September 30, 2000, representing decreases of
$2.2 million and $2.0 million from December 31, 1999 and September 30, 1999,
respectively. The ratio of nonperforming loans and leases to total loans and
leases decreased to .50% at September 30, 2000 from .65% as of December 31,
1999, and .66% at September 30, 1999. The ratio of nonperforming assets and past
due loans and leases to total loans, leases and OREO increased to .90% at
September 30, 2000 from .86% at December 31, 1999, and from .77% reported at
September 30, 1999. The ratio of classified loans and leases to total loans and
leases declined to 3.5% as of September 30, 2000 from 4.6% as of September 30,
1999.
OREO, which includes real estate acquired in loan settlements, increased to $964
thousand at September 30, 2000 from $527 thousand at December 31, 1999 and from
the $525 thousand reported at September 30, 1999.
Reserve for Credit Losses
The reserve for credit losses increased by $4.3 million from the $40.8 million
reported on September 30, 1999, while the reserve to outstanding loans and
leases ratio decreased to 1.56% on September 30, 2000 from 1.63% reported on
September 30, 1999. Net charge-offs were $3.4 million during the first nine
months of 2000 as compared to $4.9 million for the same period in 1999. Table
VII presents the activity in the reserve for credit losses.
The Company's reserve for credit losses was 310.7% of nonperforming loans and
leases at September 30, 2000 compared to 251.5% at December 31, 1999 and 247.0%
at September 30, 1999. Management believes the current reserve is adequate to
cover the risks inherent in the portfolio, including the risk of nonperforming
loans and leases that have been identified for careful monitoring.
Noninterest Income
As presented in Table VIII, noninterest income was $13.8 million during the
third quarter of 2000 compared to $12.7 million for the third quarter of 1999,
representing a $1.1 million or 8.9% increase. On a year-to-date basis,
noninterest income was $39.3 million compared to $38.4 million in 1999, an
increase of $877 thousand or 2.3%. Excluding a $1.9 million gain on sale of
securities recognized in the first nine months of 1999, noninterest income
increased by $2.5 million or 6.7% when comparing the first nine months of 1999
and 2000.
<PAGE>
Noninterest Expense
As presented in Table IX, noninterest expense increased $283 thousand or .9% in
the third quarter of 2000 compared to the third quarter of 1999. On a
year-to-date basis, noninterest expense was $94.5 million compared to $89.5
million in 1999, an increase of $5.0 million or 5.6%.
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 was 57.80% for the
first nine months of 2000 compared to 61.08% for the same period in 1999.
Increases in tax-equivalent net interest income and recurring noninterest income
of 11.9% and 8.8%, respectively, more than offset the 5.2% increase in recurring
noninterest expense.
Taxes
Comparing the first nine months of 2000 to the first six months of 1999, the
Company's effective tax rate increased from 33.7% to 34.9%.
Balance Sheet Growth
Assets
Average total assets increased $460.4 million or 13.1% from the first nine
months of 1999 to the first nine months of 2000, while average earning assets
increased by $430.1 million or 13.0% when comparing the same two periods.
Acquired entities accounted for a significant portion of this increase.
Loans and Leases
In the first nine months of 2000, average loans and leases increased $454.3
million or 20.1% when compared to the first nine months of 1999. Average loans
and leases in the third quarter of 2000 increased $402.7 million or 16.5% from
the third quarter of 1999.
Average loan volume during 2000 compared to 1999 was driven by commercial real
estate, commercial, and residential real estate loans, which increased $160.6
million, $132.5 million, and $132.9 million, respectively. Consumer and tax
exempt loans increased $38.9 million and $14.0 million, respectively, while
agricultural loans decreased by $24.7 million. The Company is not involved in
highly-leveraged transaction lending or lending to foreign countries.
Securities
Average securities, excluding any unrealized gains or losses, decreased $25.6
million or 2.5% during the first nine months of 2000 from the first nine months
of 1999. During this same period, average taxable and average tax-exempt
securities decreased by $36.0 million and increased by $10.4 million,
respectively. The average maturity of the portfolio was 69 months at September
30, 2000, with an average yield to maturity on the $939.5 million portfolio of
7.1%. The held to maturity securities had unrealized gains of $1.9 million and
unrealized losses of $1.2 million as of September
<PAGE>
30, 2000. In accordance with FAS No. 115, the available for sale investments are
recorded inclusive of any unrealized gains or losses.
Liabilities
Comparing the first nine months of 2000 to the first nine months of 1999,
average interest bearing liabilities increased $394.1 million or 13.9%, while
average deposits increased $331.8 million or 12.6%. Average short-term
borrowings, which include federal funds purchased, securities sold under
agreements to repurchase, treasury tax and loan notes, Federal Home Loan Bank
advances, and an unsecured revolving credit facility, increased $46.0 million or
11.9%. Average long-term debt, which consists primarily of Federal Home Loan
Bank advances and $65 million of privately-placed senior debt, increased $63.8
million or 43.7% due mostly to the issuance of senior debt.
The senior debt, which consists of $46 million of five year notes with an 8.27%
coupon and $19 million of seven year notes with an 8.47% coupon, was incurred in
November 1999, and the debt proceeds were used primarily to fund acquisition
activity.
<PAGE>
BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30 THREE MONTHS ENDED SEPTEMBER 30
2000 1999 CHANGE 2000 1999 CHANGE
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total interest income $ 232,875 $ 192,509 21.0% $ 81,642 $ 69,870 16.8%
Net interest income 113,447 101,279 12.0 38,244 36,539 4.7
Net interest income (1) 119,430 106,683 11.9 40,308 38,373 5.0
Provision for credit losses 6,310 6,504 (3.0) 2,524 1,799 40.3
Noninterest income 39,256 38,379 2.3 13,817 12,693 8.9
Noninterest expense 94,517 89,476 5.6 31,660 31,377 0.9
Net income 33,754 28,977 16.5 11,676 10,355 12.8
Dividends 11,880 11,880 -- 3,960 3,960 --
AVERAGE BALANCES
Assets 3,979,955 3,519,603 13.1 4,081,373 3,768,024 8.3
Loans and leases 2,713,783 2,259,484 20.1 2,845,194 2,442,483 16.5
Securities 1,016,897 1,042,534 (2.5) 975,060 1,091,852 (10.7)
Deposits 2,960,177 2,628,400 12.6 3,048,945 2,809,266 8.5
Redeemable class A common stock 26,051 24,587 6.0 26,598 24,551 8.3
Shareholder's equity 299,582 282,734 6.0 305,883 282,357 8.3
PERIOD-END BALANCES
Assets 4,100,737 3,805,248 7.8
Loans and leases 2,888,580 2,499,242 15.6
Securities 939,468 1,041,494 (9.8)
Deposits 3,093,078 2,816,572 9.8
Redeemable class A common stock 27,071 24,903 8.7
Shareholder's equity 311,317 286,389 8.7
FINANCIAL RATIOS
Return on assets (2) 1.13% 1.10% -- 1.14% 1.09% --
Return on realized equity (3)(4) 13.48 12.59 -- 13.61 13.12 --
Average equity/assets (3)(4) 8.40 8.74 -- 8.36 8.31 --
Tangible equity to assets (3)(4) 7.30 8.24 -- 7.23 7.67 --
Dividend payout 35.20 41.00 -- 33.92 38.24 --
Net interest margin (1) 4.26 4.30 -- 4.18 4.29 --
Efficiency ratio 57.80 61.08 -- 57.10 59.64 --
Net charge-offs/average loans and leases 0.17 0.29 -- 0.33 0.21 --
Reserve/period-end loans and leases 1.56 1.63 -- 1.56 1.63 --
PER SHARE OF COMMON STOCK (3)
Net income-basic $ 2.81 $ 2.41 16.5% $ 0.97 $ 0.86 12.8%
Dividends paid 0.99 0.99 -- 0.33 0.33 --
Book value 28.20 25.94 8.7 28.20 25.94 8.7
Realized book value (4) 28.77 26.35 9.2 28.77 26.35 9.2
</TABLE>
(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.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
TABLE I
CHANGES IN RETURN ON ASSETS
Year-to-Date
September 30
2000 vs 1999
------------
Return on assets, prior year 1.10%
----
Increases
Salaries and wages 0.08
Provision for credit losses 0.04
Employee benefits 0.04
Data processing fees 0.02
Printing, postage, and office supplies 0.02
Service charges 0.02
Furniture and equipment 0.02
----
Total increases 0.24
----
Decreases
Security gains/losses 0.06
Fees on loans/leases 0.05
Goodwill amortization 0.03
Insurance commissions 0.03
Gain on sale of other assets 0.02
Other items (net) 0.02
----
Total decreases 0.21
----
Return on assets, current period 1.13%
====
<PAGE>
TABLE II
CAPITAL RATIOS (1)
September 30 December 31 September 30 Regulatory
2000 1999 1999 Minimums
------------ ----------- ------------ ----------
Equity to assets(2) 8.42% 8.40% 8.31% - %
Tangible equity to assets(2) 7.31 7.40 7.29 -
Tier I capital(3) 9.94 10.42 10.40 4.00
Tier I and tier II capital(3) 11.19 11.67 11.65 8.00
Leverage ratio(3) 7.31 7.48 7.33 3.00
(1) Calculations include redeemable class A common stock.
(2) Computed in accordance with generally accepted accounting principles,
excluding the unrealized market value adjustment of securities available for
sale.
(3) Computed exclusive of the unrealized market value adjustment of securities
available for sale.
<PAGE>
TABLE III
NET INTEREST INCOME / MARGINS (TEB)
================================================================================
Net Net
Interest Interest
(DOLLARS IN THOUSANDS) Income Margin
--------------------------------------------------------------------------------
Quarter
-------
2000
Third $ 40,308 4.18 %
Second 40,259 4.27
First 38,863 4.32
1999
Fourth 39,687 4.43
Third 38,373 4.29
Second 34,779 4.30
First 33,531 4.33
1998
Fourth 34,196 4.34
Third 33,270 4.27
Second 32,686 4.31
First 31,527 4.32
1997
Fourth 32,790 4.47
Third 31,974 4.40
Second 30,570 4.45
First 28,835 4.41
<PAGE>
TABLE IV
CHANGES IN NET INTEREST INCOME (TEB)
<TABLE>
<CAPTION>
======================== =======================
Nine Months Ended Three Months Ended
September 30 September 30
2000 vs 1999 2000 vs 1999
======================== =======================
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
Net Net Net Net
Interest Interest Interest Interest
Income Margin Income Margin
--------- --------- --------- --------
<S> <C> <C> <C> <C>
CHANGE IN VOLUME
Earning assets $ 25,673 $ 5,811
Interest bearing liabilities (12,716) (2,780)
--------- ---------
12,957 3,031
CHANGE IN INTEREST RATE SPREAD
Earning assets 11,843 0.42% 4,854 0.50%
Interest bearing liabilities (14,834) (0.53) (7,041) (0.73)
--------- --------- --------- --------
(2,991) (0.11) (2,187) (0.23)
CHANGE IN PRODUCT MIX
Earning assets 2,903 0.10 1,309 0.14
Interest bearing liabilities (314) (0.01) (245) (0.03)
--------- --------- --------- --------
2,589 0.09 1,064 0.11
CHANGE DUE TO NUMBER OF DAYS
Earning assets 725 0.03 -- --
Interest bearing liabilities (334) (0.01) -- --
--------- --------- --------- --------
391 0.02 -- --
OTHER CHANGES
Nonaccruing loans 21 0.00 69 0.01
Yield-related loan fees (92) 0.00 (42) --
30/360 investment adjustment (128) (0.01) -- --
Free funds -- (0.03) -- --
--------- --------- --------- --------
(199) (0.04) 27 0.01
CHANGE IN NET INTEREST INCOME 12,747 (0.04) 1,935 (0.11)
Net interest income, prior period 106,683 4.30 38,373 4.29
--------- --------- --------- --------
Net interest income, current period $ 119,430 4.26% $ 40,308 4.18%
========= ========= ========= =========
</TABLE>
<PAGE>
TABLE V
CHANGES IN NET INTEREST INCOME (TEB)
Nine Months Ended September 30
2000 vs 1999
-----------------------------------
(IN THOUSANDS)
Volume Yield/Rate(1) Total
-------- -------- --------
INCREASE (DECREASE) IN:
INTEREST INCOME
Loans and leases $ 19,097 $ 18,934 $ 38,031
Taxable securities 4,980 (2,980) 2,000
Tax-exempt securities 1,535 (772) 763
Interest bearing deposits -- -- --
Federal funds sold 50 5 55
Other earning assets 11 85 96
-------- -------- --------
Total 25,673 15,272 40,945
INTEREST EXPENSE
Savings deposits 2,277 5,879 8,156
Other time deposits 7,597 3,354 10,951
Short-term borrowings 1,991 2,928 4,919
Long-term debt 851 3,321 4,172
-------- -------- --------
Total 12,716 15,482 28,198
-------- -------- --------
NET INTEREST INCOME $ 12,957 $ (210) $ 12,747
======== ======== ========
(1) ALL CHANGES IN NET INTEREST INCOME, OTHER THAN THOSE DUE TO VOLUME, HAVE
BEEN ALLOCATED TO YIELD/RATE.
<PAGE>
TABLE VI
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
2000 1999 1999
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual loans and leases $14,455 $16,608 $16,476
Restructured loans and leases 50 48 45
------- ------- -------
Total nonperforming loans and leases 14,505 16,656 16,521
Other real estate owned (OREO) 964 527 525
------- ------- -------
Total nonperforming assets $15,469 $17,183 $17,046
======= ======= =======
Past due loans and leases * $10,513 $ 4,753 $ 2,120
======= ======= =======
Nonperforming loans and leases to total loans and leases 0.50% 0.65% 0.66%
Nonperforming assets to total loans, leases and OREO 0.54 0.68 0.68
Nonperforming assets and past due loans and leases* to
total loans, leases and OREO 0.90 0.86 0.77
Reserve to nonperforming loans and leases 310.73 251.53 246.96
Reserve to total loans and leases 1.56 1.65 1.63
</TABLE>
* PAST DUE LOANS AND LEASES INCLUDE ACCRUING LOANS AND LEASES 90 DAYS OR MORE
PAST DUE.
<PAGE>
TABLE VII
RESERVE FOR CREDIT LOSSES
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
2000 1999
------------- -------------
(IN THOUSANDS)
Beginning of period $ 41,895 $ 37,019
Charge-offs (4,465) (5,758)
Recoveries 1,037 829
------------- -------------
Net charge-offs (3,428) (4,929)
Provision for credit losses 6,310 6,504
Reserve related to acquired assets 294 2,207
------------- -------------
End of period $ 45,071 $ 40,801
============= =============
<PAGE>
TABLE VIII
NONINTEREST INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 INCREASE/(DECREASE)
-------------------- -----------------------
2000 1999 DOLLAR PERCENT
------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Service charges $16,527 $14,071 $ 2,456 17.45%
Insurance 6,472 6,474 (2) (0.03)
Trust 6,766 5,804 962 16.57
Brokerage 4,169 3,547 622 17.54
Gain on sale of loans 1,886 2,788 (902) (32.35)
Gain on sale of other assets 102 769 (667) (86.74)
Other 3,067 3,075 (8) (0.26)
------- ------- -------
Operating noninterest income 38,989 36,528 2,461 6.74
Gain (loss) on sale of securities 267 1,851 (1,584) NM
------- ------- -------
Total $39,256 $38,379 $ 877 2.29%
======= ======= =======
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30 INCREASE/(DECREASE)
-------------------- ----------------------
2000 1999 DOLLAR PERCENT
------- ------- ------ -------
(IN THOUSANDS)
Service charges $ 5,701 $ 5,156 $ 545 10.57%
Insurance 2,310 2,448 (138) (5.64)
Trust 2,314 2,072 242 11.68
Brokerage 1,254 1,232 22 1.79
Gain on sale of loans 820 776 44 5.67
Gain on sale of other assets 30 76 (46) (60.53)
Other 1,037 929 108 11.63
------- ------- -------
Operating noninterest income 13,466 12,689 777 6.12
Gain (loss) on sale of securities 351 4 347 NM
------- ------- -------
Total $13,817 $12,693 $ 1,124 8.86%
======= ======= =======
</TABLE>
<PAGE>
TABLE IX
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 INCREASE/(DECREASE
-------------------- -----------------------
2000 1999 DOLLAR PERCENT
------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and wages $43,679 $40,649 $ 3,030 7.45%
Employee benefits 10,642 10,451 191 1.83
Occupancy 5,796 4,976 820 16.48
Furniture and equipment 7,155 6,733 422 6.27
Printing, postage and office supplies 4,266 4,333 (67) (1.55)
Marketing 3,499 3,393 106 3.12
Data processing fees 5,387 5,167 220 4.26
Professional fees 2,142 2,073 69 3.33
Other real estate owned 71 79 (8) (10.13)
Minority interest in earnings 21 26 (5) (19.23)
FDIC premiums and examination fees 1,252 953 299 31.37
Goodwill and other intangibles 2,779 1,971 808 40.99
Other 7,828 8,672 (844) (9.73)
------- ------- -------
Total $94,517 $89,476 $ 5,041 5.63%
======= ======= =======
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30 INCREASE/(DECREASE)
-------------------- -----------------------
2000 1999 DOLLAR PERCENT
------- ------- ------- --------
(IN THOUSANDS)
Salaries and wages $14,849 $14,262 $ 587 4.12%
Employee benefits 3,380 3,509 (129) (3.68)
Occupancy 1,957 1,654 303 18.32
Furniture and equipment 2,370 2,343 27 1.15
Printing, postage and office supplies 1,359 1,507 (148) (9.82)
Marketing 1,204 1,132 72 6.36
Data processing fees 1,835 1,759 76 4.32
Professional fees 672 716 (44) (6.15)
Other real estate owned 28 31 (3) (9.68)
Minority interest in earnings -- 11 (11) (100.00)
FDIC premiums and examination fees 458 319 139 43.57
Goodwill and other intangibles 949 884 65 7.35
Other 2,599 3,250 (651) (20.03)
------- ------- -------
Total $31,660 $31,377 $ 283 0.90%
======= ======= =======
</TABLE>
<PAGE>
BFC CORP - EXTERNAL
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
FOR NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
TAX EQUIVALENT BASIS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
September 2000 Actual - YTD September 1999 Actual - YTD
----------------------------------------- ---------------------------------------- --------
Average Rate/ Average Rate/ % Change
Balance Interest Yield Balance Interest Yield Avg Bal
----------- ----------- ----- ----------- ----------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans and Leases (net of unearned
discount)
Commercial $ 657,821 $ 46,301 9.40% $ 525,302 $ 34,146 8.69% 25.23%
Commercial Real Estate 744,565 50,065 8.98 583,989 37,636 8.62 27.50
Agricultural 422,088 29,401 9.30 446,782 29,076 8.70 (5.53)
Residential Real Estate 533,048 35,173 8.81 400,129 25,756 8.61 33.22
Consumer 286,141 19,350 9.03 247,177 16,602 8.98 15.76
Tax Exempt 70,120 4,959 9.45 56,105 4,002 9.54 24.98
----------- ----------- ----------- -----------
TOTAL LOANS AND LEASES 2,713,783 185,249 9.12 2,259,484 147,218 8.71 20.11
Reserve for Credit Losses (44,228) (38,861) 13.81
----------- -----------
NET LOANS AND LEASES 2,669,555 2,220,623 20.22
Mortgage Backed Securities 656,198 32,651 6.65 757,582 34,545 6.10 (13.38)
Taxable Other 150,498 7,739 6.87 85,110 3,845 6.04 76.83
Tax Exempt 210,201 12,595 8.00 199,842 11,832 7.92 5.18
----------- ----------- ----------- -----------
TOTAL SECURITIES 1,016,897 52,985 6.96 1,042,534 50,222 6.44 (2.46)
Total Fed Funds Sold 9,221 442 6.40 11,251 387 4.60 (18.04)
Other earning assets 5,655 182 4.30 2,197 86 5.23 157.40
----------- ----------- ----------- -----------
TOTAL EARNING ASSETS 3,745,556 238,858 8.52 3,315,466 197,913 7.98 12.97
Total Cash & Due from Banks 119,497 115,717 3.27
Nonearning assets 159,130 127,281 25.02
----------- -----------
TOTAL ASSETS $ 3,979,955 $ 3,519,603 13.08
=========== ============
LIABILITIES AND STOCKHOLDERS EQUITY
Non-Interest Bearing Deposits $ 380,707 $ 333,235 14.25
Interest Bearing Deposits
Savings and NOW accounts 315,134 2,984 1.26 294,655 2,603 1.18 6.95
Money Market Checking 165,066 1,172 0.95 160,830 1,104 0.92 2.63
Money Market Savings 566,028 20,338 4.80 458,473 12,631 3.68 23.46
Savings Certificates 1,292,325 54,869 5.67 1,169,257 46,097 5.27 10.53
Certificates over $100K 240,917 10,585 5.87 211,950 8,406 5.30 13.67
----------- ----------- ----------- -----------
TOTAL INTEREST BEARING DEPOSITS 2,579,470 89,948 4.66 2,295,165 70,841 4.13 12.39
TOTAL DEPOSITS 2,960,177 2,628,400 12.62
Total Short Term Borrowings 432,633 19,203 5.93 386,646 14,284 4.94 11.89
Total Long Term Debt 209,931 10,277 6.54 146,056 6,105 5.59 43.73
----------- ----------- ----------- -----------
TOTAL INTEREST BEARING
LIABILITIES 3,222,034 119,428 4.95 2,827,867 91,230 4.31 13.94
Other liabilities 51,050 48,324 5.64
TOTAL LIABILITIES 3,653,791 3,209,426 13.85
Minority Interest 532 940 (43.40)
Redeemable Preferred Stock 0 1,916 (100.00)
Redeemable Class A Common Stock 26,051 24,587 5.95
Shareholder's equity 299,582 282,734 5.96
----------- -----------
TOTAL LIABILITIES AND EQUITY $ 3,979,955 $ 3,519,603 13.08
=========== ============
Net Interest Income $ 119,430 $ 106,683
=========== ============
Gross Spread 3.57% 3.67%
Percent of earning assets
Interest Income 8.52 7.98
Interest Cost 4.26 3.68
----- -----
NET INTEREST MARGIN 4.26% 4.30%
Interest bearing liabilities to
earning assets 86.02% 85.29%
</TABLE>
<PAGE>
BFC CORP - EXTERNAL
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
FOR THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
TAX EQUIVALENT BASIS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
September 2000 Actual - QTD September 1999 Actual - QTD
----------------------------------------- ---------------------------------------- --------
Average Rate/ Average Rate/ % Change
Balance Interest Yield Balance Interest Yield Avg Bal
----------- ----------- ----- ----------- ----------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans and Leases (net of unearned
discount)
Commercial $ 688,814 $ 16,473 9.51% $ 589,466 $ 13,036 8.77% 16.85%
Commercial Real Estate 760,154 17,503 9.16 615,651 13,414 8.64 23.47
Agricultural 444,192 10,663 9.55 476,563 10,486 8.73 (6.79)
Residential Real Estate 576,665 12,961 8.94 442,538 9,610 8.62 30.31
Consumer 297,217 6,848 9.17 258,097 5,814 8.94 15.16
Tax Exempt 78,152 1,848 9.41 60,168 1,408 9.28 29.89
----------- ----------- ----------- -----------
TOTAL LOANS AND LEASES 2,845,194 66,296 9.27 2,442,483 53,768 8.73 16.49
Reserve for Credit Losses (45,637) (40,732) 12.04
----------- -----------
NET LOANS AND LEASES 2,799,557 2,401,751 16.56
Mortgage Backed Securities 618,212 10,372 6.67 757,081 11,724 6.14 (18.34)
Taxable Other 146,422 2,562 6.96 134,298 2,059 6.08 9.03
Tax Exempt 210,426 4,209 7.96 200,473 3,964 7.84 4.96
----------- ----------- ----------- -----------
TOTAL SECURITIES 975,060 17,143 6.99 1,091,852 17,747 6.45 (10.70)
Total Fed Funds Sold 11,097 190 6.81 12,790 158 4.90 (13.24)
Other earning assets 5,706 77 5.37 2,370 32 5.36 140.76
----------- ----------- ----------- -----------
TOTAL EARNING ASSETS 3,837,057 83,706 8.68 3,549,495 71,705 8.01 8.10
Total Cash & Due from Banks 124,609 126,660 (1.62)
Nonearning assets 165,344 132,601 24.69
----------- -----------
TOTAL ASSETS $ 4,081,373 $ 3,768,024 8.32
=========== ============
LIABILITIES AND STOCKHOLDERS EQUITY
Non-Interest Bearing Deposits $ 393,613 $ 371,302 6.01
Interest Bearing Deposits
Savings and NOW accounts 306,621 954 1.24 318,563 988 1.23 (3.75)
Money Market Checking 157,910 388 0.98 165,836 384 0.92 (4.78)
Money Market Savings 599,279 7,783 5.17 494,378 4,628 3.71 21.22
Savings Certificates 1,351,427 20,303 5.98 1,235,592 16,165 5.19 9.37
Certificates over $100K 240,095 3,753 6.22 223,595 3,030 5.38 7.38
----------- ----------- ----------- -----------
TOTAL INTEREST BEARING
DEPOSITS 2,655,332 33,181 4.97 2,437,964 25,195 4.10 8.92
TOTAL DEPOSITS 3,048,945 2,809,266 8.53
Total Short Term Borrowings 432,975 6,810 6.26 437,497 5,521 5.01 (1.03)
Total Long Term Debt 206,708 3,407 6.56 165,878 2,616 6.26 24.61
----------- ----------- ----------- -----------
TOTAL INTEREST BEARING
LIABILITIE 3,295,015 43,398 5.24 3,041,338 33,332 4.35 8.34
Other liabilities 60,114 45,859 31.08
TOTAL LIABILITIES 3,748,742 3,458,499 8.39
Minority Interest 150 934 (83.94)
Redeemable Preferred Stock 0 1,683 (100.00)
Redeemable Class A Common Stock 26,598 24,551 8.34
Shareholder's equity 305,883 282,357 8.33
----------- -----------
TOTAL LIABILITIES AND EQUITY $ 4,081,373 $ 3,768,024 8.32
=========== ============
Net Interest Income $ 40,308 $ 38,373
=========== ============
Gross Spread 3.44% 3.67%
Percent of earning assets
Interest Income 8.68 8.01
Interest Cost 4.50 3.73
----- -----
NET INTEREST MARGIN 4.18% 4.29%
Interest bearing liabilities to
earning assets 85.87% 85.68%
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
(a) This Quarterly Report on Form 10-Q contains forward-looking statements
that involve inherent risks and uncertainties. Bremer Financial
Corporation cautions readers that a number of important factors could
cause actual results to differ materially from those in the
forward-looking statements. Those factors included fluctuations in
interest rates, inflation, government regulations, technology changes,
and economic conditions and competition in the geographic and business
areas in which the Company conducts its operations.
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
September 30, 2000 or during the period from September 30, 2000 to the
date of this Quarterly Report on Form 10-Q.
<PAGE>
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: November 10, 2000 BREMER FINANCIAL CORPORATION
By: /s/ Stan K. Dardis
-------------------------------------
Stan K. Dardis
President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Stuart F. Bradt
-------------------------------------
Stuart F. Bradt
Controller
(Chief Accounting Officer)
