EXHIBIT 10.3

                          BREMER FINANCIAL CORPORATION

                1997 EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN

                             Chief Operating Officer

Contained herein is a detailed outline of the Executive Annual Incentive
Compensation Plan which has been designed for the Chief Operating Officer.

A.       Purpose

         1)       To provide an annual incentive award to the Chief Operating
                  Officer for the achievement of Bremer Financial Corporation's
                  goals and objectives.

         2)       To focus attention on those activities which will positively
                  affect the Corporation's financial well-being.

B.       Eligibility

         1)       The Chief Operating Officer of Bremer Financial Corporation is
                  the participant in this plan.

C.       Plan Year

         1)       The Executive Annual Incentive Compensation program will begin
                  on January 1 and will end on December 31.

D.       Payment of Award

         1)       At year end, formal reviews will be conducted by the President
                  of Bremer Financial Corporation to determine and measure
                  performance. Upon completion of the measurement of the
                  participant's goals and objectives, an award will be approved.

         2)       Award payments will be made in the first quarter, following
                  the end of defined incentive plan year.

E.       Potential Awards

         1)       The maximum potential award, stated as a percentage of base
                  salary, will be 50%.

F.       Performance Measures and Determination of Award

         1)       100% of the incentive award will be based upon Corporate
                  RORE*. The following table will be utilized to determine the
                  actual percentage of salary to be granted. When performance
                  falls between the RORE percentages shown, interpolation will
                  be utilized to determine the actual percentage of salary to be
                  awarded.

      Corporate RORE                                          Percentage Award

           Below 12.70                                             0%

           12.70                     THRESHOLD                   16.67%

           13.30                     2/3 OF MAXIMUM              33.34%

           13.71                     PLAN                        39.13%

           14.50 and over            MAXIMUM                     50.0%

G.       Administration

         1)       The plan shall be subject to the approval of the Board of
                  Directors of Bremer Financial Corporation which shall have
                  sole authority to establish the terms and conditions under
                  which the plan will be administered.

         2)       The Executive Incentive Compensation Plan and awards are not
                  transferable or assignable.

         3)       Award may be deferred.

H.       Administrative Procedures

         1)       Addition to Plan -- Eligible individuals will be added to the
                  plan at any time upon the approval of the Board of Directors
                  of Bremer Financial Corporation. However, the size of their
                  awards will be prorated by the number of months they were
                  eligible to receive an award. An example would be:

                  - Employee "A" is added to plan in mid-year so s/he has six
                    (6) months of eligible service.
                  - Calculated incentive award is $15,000
                  - $15,000 X 6/12 = $7,500

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*        Corporate RORE will be calculated by reducing corporate net income by
         the after-tax effect of 50% of the restructuring charges recorded by
         the Company in 1994. No adjustments should be made to equity as a
         result of the restructuring adjustment.

         2)       Terminations -- Eligible employees who terminate during the
                  plan year will be handled as follows:

                  - Voluntary resignations -- no incentive award.
                  - Involuntary terminations for cause -- no incentive award.
                  - Involuntary termination without cause -- incentive award
                    prorated by number of months service during current
                    incentive plan year, based on approval by President of BFC.
                  - Retirement/disability -- incentive award prorated by number
                    of months of service during current incentive plan year.

         3)       Change in Position -- Eligible employees who have a change in
                  position during a plan year will have their incentive award
                  calculated under both plan award levels and prorated by the
                  months of service at each level.

         4)       Interpolation -- When actual performance falls between cells
                  on the appropriate element, the individual completing the
                  formula should interpolate to the actual percentage to be
                  awarded.

         5)       Performance -- If a participant's performance rating for the
                  plan year is less than fully competent and/or certain
                  performance goals are not met, the President of Bremer
                  Financial Corporation has the authority to reduce partially or
                  totally the incentive payout that would normally be due the
                  participant.

         6)       Exceptions -- Upon occasion, there may be specific reasons for
                  exceptions to the incentive compensation program for events
                  beyond the control of the participant in the plan. The
                  President of Bremer Financial Corporation has the authority to
                  determine and approve all such exceptions.

I.       Amendment and termination

         1)       The Board of Directors of Bremer Financial Corporation may at
                  any time amend the plan for the purposes of satisfying the
                  requirements of any changes in applicable laws or for any
                  purpose which may be permitted by law. The Board of Bremer
                  Financial Corporation may also terminate the plan at any time.
                  No such amendment or termination shall, however, adversely
                  affect the rights of any participant (without his/her prior
                  consent) to any award previously approved.

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-----------------------------------          -----------------------------------
NAME                                         TITLE

                    CALCULATION OF EXECUTIVE INCENTIVE AWARD

                                 Plan Year 1997

                                                            Percentage of Salary
                                                                To Be Awarded
F-1 - Corporate RORE

         Corporate RORE                           %                       %
                                          --------               ---------



Total Award Earned as % of Salary                                            %
                                                                     --------

X 1997 Salary                                                        $
                                                                      --------

= 1997 INCENTIVE AWARD                                               $
                                                                      --------





Approved:

-----------------------                  ---------------------------------------
DATE                                     President, Bremer Financial Corporation