UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



x
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934



For the quarterly period ended June 30, 2006.



Commission file number0-18342







|Bremer Financial Corporation                          
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)





|Minnesota                                                      |  | 41-0715583                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)





445 Minnesota St., Suite 2000, St. Paul, MN  55101-2107

(Address of principal executive offices)  (Zip Code)



(651) 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.
YesxNoo



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelreated filer in Rule 12b-2 of the Exchange Act. (Check one):



|Large accelerated filero | Accelerated filero | Non-accelerated filerx
|------------------------ | ------------------ | ----------------------



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesoNox



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 August 9, 2006, 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 AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share amounts)

|                                                    | Three months ended June 30, |  | Six months ended June 30,
|--------------------------------------------------- | --------------------------- |  | -------------------------
|                                                    |                             |  |                          
|
|                                                    |                             |  |                          
|Operating Results:                                  |                             |  |                          
|Total interest income                               |                             |  | $                        
|Total interest expense                              |                             |  |                          
|                                                    |                             |  |                          
|Net interest income                                 |                             |  |                          
|Provision for loan losses                           |                             |  |                          
|                                                    |                             |  |                          
|Net interest income after provision for loan losses |                             |  |                          
|Noninterest income                                  |                             |  |                          
|Noninterest expense                                 |                             |  |                          
|                                                    |                             |  |                          
|Income before income tax expense                    |                             |  |                          
|Income tax expense                                  |                             |  |                          
|                                                    |                             |  |                          
|Net income                                          |                             |  | $                        
|                                                    |                             |  |                          
|                                                   
|Net income per share  basic and diluted            |                             |  | $                        
|Dividends paid per share                            |                             |  |                          
|                                                   
|Tax equivalent net interest income                  |                             |  | $                        
|Net charge-offs (recoveries)                        |                             |  |                          
|                                                   
|Selected Financial Ratios:                          |                             | 
|Return on average assets                            |                             |  |                          
|Return on average equity (1)                        |                             |  |                          
|Average equity to average assets (1)                |                             |  |                          
|Net interest margin (2)                             |                             |  |                          
|Operating efficiency ratio (3)                      |                             |  |                          
|Net charge-offs to average loans and leases         |                             |  |                          
|                                                   
|                                                    | June 30,
2006               |  | June 30,
2005            
|                                                    |                             |  |                          
|Balance Sheet Data:                                 |                             |  |                          
|Total assets                                        |                             |  | $                        
|Securities (4)                                      |                             |  |                          
|Loans and leases (5)                                |                             |  |                          
|Total deposits                                      |                             |  |                          
|Short-term borrowings                               |                             |  |                          
|Long-term debt                                      |                             |  |                          
|Redeemable class A common stock                     |                             |  |                          
|Shareholders equity                                |                             |  |                          
|Per share book value of common stock                |                             |  |                          
|                                                   
|Asset Quality:                                      |                             | 
|Reserve for loan losses                             |                             |  | $                        
|Nonperforming assets                                |                             |  |                          
|Nonperforming assets to total loans, leases         |                             | 
|and OREO                                            |                             |  |                          
|Reserve for loan losses to total loans and leases   |                             |  |                          

_________________ 
(1)     Calculation includes shareholders equity and redeemable class A common
          stock.
(2)     Tax-equivalent basis (TEB).
(3)    
          Noninterest expense as a percentage of tax-equivalent net interest income and
          noninterest income.
(4)    
          Includes securities held-to-maturity and securities available-for-sale.
(5)    
          Net of unearned discount and includes nonaccrual loans and leases.

---

BREMER FINANCIAL
CORPORATION AND SUBSIDIARIES
SUMMARY BALANCE SHEET AND INCOME STATEMENT
(dollars in thousands)

|                                                    | Three months ended June 30, |  | Six months ended June 30,
|--------------------------------------------------- | --------------------------- |  | -------------------------
|                                                    |                             |  |                          
|
|                                                    |                             |  |                          
|
|                                                    |                             |  |                          
|Summary Average Balance Sheet:                      |                             |  |                          
|Total loans and leases (2)                          |                             |  | $                        
|Total securities (3)                                |                             |  |                          
|Total other earning assets                          |                             |  |                          
|                                                    |                             |  |                          
|Total interest earning assets (4)                   |                             |  | $                        
|Total noninterest earning assets                    |                             |  |                          
|                                                    |                             |  |                          
|Total assets                                        |                             |  | $                        
|                                                    |                             |  |                          
|Noninterest bearing deposits                        |                             |  | $                        
|Interest bearing deposits                           |                             |  |                          
|Short-term borrowings                               |                             |  |                          
|Long-term debt                                      |                             |  |                          
|                                                    |                             |  |                          
|Total interest bearing liabilities                  |                             |  | $                        
|Other noninterest bearing liabilities               |                             |  |                          
|Minority interest                                   |                             |  |                          
|Redeemable class A common stock                     |                             |  |                          
|Shareholders equity                                |                             |  |                          
|                                                    |                             |  |                          
|Total liabilities and equity                        |                             |  | $                        
|                                                    |                             |  |                          
|                                                   
|                                                    | Three months ended June 30, |  | Six months ended June 30,
|                                                    |                             |  |                          
|                                                    | 2006                        |  | 2005                     
|                                                    |                             |  |                          
|Summary Income Statement:                           |                             |  |                          
|Total interest income                               |                             |  | $                        
|Total interest expense                              |                             |  |                          
|                                                    |                             |  |                          
|Net interest income                                 |                             |  |                          
|Provision for loan losses                           |                             |  |                          
|                                                    |                             |  |                          
|Net interest income after provision for loan losses |                             |  |                          
|Service charges                                     |                             |  |                          
|Insurance                                           |                             |  |                          
|Investment management and trust fees                |                             |  |                          
|Brokerage                                           |                             |  |                          
|Gain on sale of loans                               |                             |  |                          
|Loss on sale of securities                          |                             |  |                          
|Other                                               |                             |  |                          
|                                                    |                             |  |                          
|Total noninterest income                            |                             |  |                          
|Salaries and wages                                  |                             |  |                          
|Employee benefits                                   |                             |  |                          
|Occupancy                                           |                             |  |                          
|Furniture and equipment                             |                             |  |                          
|Data processing fees                                |                             |  |                          
|FDIC premiums and examination fees                  |                             |  |                          
|Amortization of intangibles                         |                             |  |                          
|Other                                               |                             |  |                          
|                                                    |                             |  |                          
|Total noninterest expense                           |                             |  |                          
|                                                    |                             |  |                          
|Income before income tax expense                    |                             |  |                          
|Income tax expense                                  |                             |  |                          
|                                                    |                             |  |                          
|Net income                                          |                             |  | $                        
|                                                    |                             |  |                          

|_________________
|-----------------
|(1)              

|(2) | Net of unearned discount and includes nonaccrual loans and leases.
|--- | ------------------------------------------------------------------

|(3) | Excluding net unrealized gain (loss) on securities available-for-sale.
|--- | ----------------------------------------------------------------------

|(4) | Before deducting the reserve for loan losses.
|--- | ---------------------------------------------

---

BREMER FINANCIAL CORPORATION



FORM 10-Q

QUARTER ENDED JUNE 30, 2006



INDEX





|          |  |                       |    |                                                                                        | Page
|--------- |  | --------------------- | -- | -------------------------------------------------------------------------------------- | ----
|          |  |                       |    |                                                                                        |     
|PART I   |  | FINANCIAL INFORMATION |   
|          |  |                       |    |                                                                                        |     
|          |  | Item 1.               |    | Financial Statements.                                                                  | 3   
|          |  |                       |    |                                                                                        |     
|          |  | Item 2.               |    | Managements Discussion and Analysis of Financial Condition and Results of Operations. | 15  
|          |  |                       |    |                                                                                        |     
|          |  | Item 3.               |    | Quantitative and Qualitative Disclosures About Market Risk.                            | 29  
|          |  |                       |    |                                                                                        |     
|          |  | Item 4.               |    | Controls and Procedures.                                                               | 29  
|          |  |                       |    |                                                                                        |     
|PART II  |  | OTHER INFORMATION     |   
|          |  |                       |    |                                                                                        |     
|          |  | Item 4.               |    | Submission of Matters to a Vote of Security Holders.                                   | 30  
|          |  |                       |    |                                                                                        |     
|          |  | Item 6.               |    | Exhibits.                                                                              | 30  
|          |  |                       |    |                                                                                        |     
|          |  | Signatures            | 31
|          |  |                       |    |                                                                                        |     
|          |  | Exhibit 31.1          |    | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).         |     
|          |  |                       |    |                                                                                        |     
|          |  | Exhibit 31.2          |    | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).         |     
|          |  |                       |    |                                                                                        |     
|          |  | Exhibit 32.1          |    | Section 1350 Certification of Chief Executive Officer.                                 |     
|          |  | Exhibit 32.2          |    | Section 1350 Certification of Chief Financial Officer.                                 |     
|          |  |                       |    |                                                                                        |     

1

---

Forward-Looking Statements



Certain statements in this Form 10-Q constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended (Exchange Act). For this purpose, any statements contained herein or incorporated herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, intends, expects and similar expressions are intended to identify forward-looking statements. Because these forward-looking statements involve risk and uncertainties, there are important factors, including the factors discussed in Risk Factors included as Item 1A. to the Annual Report on Form 10-K for the year ended December 31, 2005 filed on March 23,
2006, that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.

2

---

PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

BREMER FINANCIAL
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except share data)

|                                                        | June 30,
2006 |  | December 31,
2005
|------------------------------------------------------- | ------------- |  | -----------------
|                                                        |               |  |                  
|Assets                                                  |               |  |                  
|Cash and due from banks                                 |               |  | $                
|Investment securities available-for-sale                |               | 
|(cost: 06/30/06 - $1,166,343; 12/31/05 - $1,138,538)    |               |  |                  
|Investment securities held-to-maturity                  |               | 
|(fair value:  06/30/06 - $247,597; 12/31/05 - $251,628) |               |  |                  
|Loans and leases                                        |               |  |                  
|Reserve for loan losses                                 |               |  |                  
|                                                        |               |  |                  
|Net loans and leases                                    |               |  |                  
|Interest receivable                                     |               |  |                  
|Premises and equipment, net                             |               |  |                  
|Other intangibles                                       |               |  |                  
|Other assets                                            |               |  |                  
|Goodwill                                                |               |  |                  
|                                                        |               |  |                  
|Total assets                                            |               |  | $                
|                                                        |               |  |                  
|                                                       
|Liabilities and Shareholders Equity                    |               | 
|Noninterest bearing deposits                            |               |  | $                
|Interest bearing deposits                               |               |  |                  
|                                                        |               |  |                  
|Total deposits                                          |               |  |                  
|Federal funds purchased and repurchase agreements       |               |  |                  
|Other short-term borrowings                             |               |  |                  
|Long-term debt                                          |               |  |                  
|Accrued expenses and other liabilities                  |               |  |                  
|                                                        |               |  |                  
|Total liabilities                                       |               |  |                  
|Minority interests                                      |               |  |                  
|Redeemable class A common stock, 960,000 shares         |               | 
|issued and outstanding                                  |               |  |                  
|Shareholders equity                                    |               | 
|Common stock                                            |               | 
|Class A, no par, 12,000,000 shares authorized;          |               | 
|240,000 shares issued and outstanding                   |               |  |                  
|Class B, no par, 10,800,000 shares authorized,          |               | 
|issued and outstanding                                  |               |  |                  
|Retained earnings                                       |               |  |                  
|Accumulated other comprehensive loss                    |               |  |                  
|                                                        |               |  |                  
|Total shareholders equity                              |               |  |                  
|                                                        |               |  |                  
|Total liabilities and shareholders equity              |               |  | $                
|                                                        |               |  |                  

See notes to condensed
consolidated financial statements.

3

---

BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)

|                                                    | For the Three Months Ended
June 30, |  | For the Six Months Ended
June 30,
|--------------------------------------------------- | ----------------------------------- |  | ---------------------------------
|                                                    |                                     |  |                                  
|
|                                                    |                                     |  |                                  
|Interest income                                     |                                     |  |                                  
|Loans and leases, including fees                    |                                     |  | $                                
|Securities                                          |                                     |  |                                  
|Federal funds sold                                  |                                     |  |                                  
|Other                                               |                                     |  |                                  
|                                                    |                                     |  |                                  
|Total interest income                               |                                     |  |                                  
|Interest expense                                    |                                     | 
|Deposits                                            |                                     |  |                                  
|Federal funds purchased and repurchase agreements   |                                     |  |                                  
|Other short-term borrowings                         |                                     |  |                                  
|Long-term debt                                      |                                     |  |                                  
|                                                    |                                     |  |                                  
|Total interest expense                              |                                     |  |                                  
|                                                    |                                     |  |                                  
|Net interest income                                 |                                     |  |                                  
|Provision for loan losses                           |                                     |  |                                  
|                                                    |                                     |  |                                  
|Net interest income after provision for loan losses |                                     |  |                                  
|Noninterest income                                  |                                     | 
|Service charges                                     |                                     |  |                                  
|Insurance                                           |                                     |  |                                  
|Investment management and trust fees                |                                     |  |                                  
|Brokerage                                           |                                     |  |                                  
|Gain on sale of loans                               |                                     |  |                                  
|Loss on sale of securities                          |                                     |  |                                  
|Other                                               |                                     |  |                                  
|                                                    |                                     |  |                                  
|Total noninterest income                            |                                     |  |                                  
|Noninterest expense                                 |                                     | 
|Salaries and wages                                  |                                     |  |                                  
|Employee benefits                                   |                                     |  |                                  
|Occupancy                                           |                                     |  |                                  
|Furniture and equipment                             |                                     |  |                                  
|Data processing fees                                |                                     |  |                                  
|FDIC premiums and examination fees                  |                                     |  |                                  
|Amortization of intangibles                         |                                     |  |                                  
|Other                                               |                                     |  |                                  
|                                                    |                                     |  |                                  
|Total noninterest expense                           |                                     |  |                                  
|                                                    |                                     |  |                                  
|Income before income tax expense                    |                                     |  |                                  
|Income tax expense                                  |                                     |  |                                  
|                                                    |                                     |  |                                  
|Net income                                          |                                     |  | $                                
|                                                    |                                     |  |                                  
|Per common share amounts:                           |                                     | 
|Net income-basic and diluted                        |                                     |  | $                                
|Dividends paid                                      |                                     |  |                                  

See notes to
condensed consolidated financial statements.

4

---

BREMER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(unaudited)
(in thousands, except per share amounts)

|                                                                          | 
|------------------------------------------------------------------------- | 
|
|
|                                                                          | 
|                                                                         
|For the Six Months ended June 30, 2005                                    | 
|                                                                         
|Balance, December 31, 2004                                                | 
|                                                                         
|Comprehensive income                                                      | 
|Net income                                                                | 
|Other comprehensive income, net of tax:                                   | 
|Net unrealized gains on securities available for sale:                    | 
|Unrealized holding gains arising during the period, net of tax of $555    | 
|Net unrealized losses on derivatives and hedging activities:              | 
|Unrealized holding losses arising during the period, net of tax of $670   | 
|                                                                          | 
|Other comprehensive loss                                                  | 
|                                                                          | 
|Comprehensive income                                                      | 
|                                                                          | 
|Dividends, $1.00 per share                                                | 
|Allocation of net income and other comprehensive income in excess of      | 
|dividends to redeemable class A common stock                              | 
|                                                                          | 
|Balance, June 30, 2005                                                    | 
|                                                                          | 
|                                                                         
|For the Six Months ended June 30, 2006                                    | 
|                                                                         
|Balance, December 31, 2005                                                | 
|Comprehensive income                                                      | 
|Net income                                                                | 
|Other comprehensive income, net of tax:                                   | 
|Net unrealized losses on securities available for sale and other          | 
|retained interests:                                                       | 
|Unrealized holding losses arising during the period, net of tax of $8,047 | 
|Less:  Reclassified adjustment for losses included in income              | 
|net of tax of $(202)                                                      | 
|Net unrealized gains on derivatives and hedging activities:               | 
|Unrealized holding gains arising during the period, net of tax of $1,499  | 
|                                                                          | 
|Other comprehensive loss                                                  | 
|                                                                          | 
|Comprehensive income                                                      | 
|                                                                          | 
|Dividends, $1.16 per share                                                | 
|Allocation of net income and other comprehensive income in excess of      | 
|dividends to redeemable class A common stock                              | 
|                                                                          | 
|Balance, June 30, 2006                                                    | 
|                                                                          | 

See notes to condensed consolidated financial statements.

5

---

BREMER FINANCIAL
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

|                                                                     | For the Six Months
Ended June 30,
|-------------------------------------------------------------------- | ---------------------------------
|                                                                     |                                  
|
|                                                                     |                                  
|Cash flows from operating activities                                 |                                  
|Net income                                                           |                                  
|Adjustments to reconcile net income to net cash                      |                                  
|provided by operating activities:                                    |                                  
|Provision for loan losses                                            |                                  
|Depreciation and amortization                                        |                                  
|Loss on sale of securities                                           |                                  
|Other assets and liabilities, net                                    |                                  
|Gain on sale of loans                                                |                                  
|Proceeds from sales of loans originated for sale                     |                                  
|Loans originated for sale                                            |                                  
|                                                                     |                                  
|Net cash provided by operating activities                            |                                  
|Cash flows from investing activities                                 |                                  
|Purchases of available-for-sale investment securities                |                                  
|Purchases of held-to-maturity securities                             |                                  
|Proceeds from maturities of available-for-sale investment securities |                                  
|Proceeds from maturities of held-to-maturity securities              |                                  
|Proceeds from sales of available-for-sale investment securities      |                                  
|Proceeds from sales of other real estate owned                       |                                  
|Loans and leases, net                                                |                                  
|Purchase of premises and equipment                                   |                                  
|                                                                     |                                  
|Net cash used in investing activities                                |                                  
|Cash flows from financing activities                                 |                                  
|Noninterest bearing deposits, net                                    |                                  
|Savings, NOW and money market accounts, net                          |                                  
|Certificates of deposits, net                                        |                                  
|Federal funds purchased and repurchase agreements,net                |                                  
|Other short-term borrowings, net                                     |                                  
|Proceeds from issuance of long-term debt                             |                                  
|Repayments of long-term debt                                         |                                  
|Common stock dividends paid                                          |                                  
|                                                                     |                                  
|Net cash provided by financing activities                            |                                  
|                                                                     |                                  
|Net decrease in cash and due from banks                              |                                  
|Cash and due from banks at beginning of period                       |                                  
|                                                                     |                                  
|Cash and due from banks at end of period                             |                                  
|                                                                     |                                  
|Supplemental disclosures of cash flow information                    |                                  
|Cash paid for interest                                               |                                  
|Cash paid for income taxes                                           |                                  

See notes to condensed consolidated financial statements.

6

---

BREMER FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended June 30, 2006 and 2005 (unaudited)



Note A:Financial Statements

The condensed consolidated financial statements
included herein have been prepared by Bremer Financial Corporation (the Company) pursuant to the rules and regulations
of the Securities and Exchange Commission and have not been audited by independent auditors. Certain information and footnote
disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the
United States of America 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.

Note B:General

The condensed 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, 2005 included in its Annual Report on Form 10-K for that year filed on
March 23, 2006.

Recent Accounting Pronouncements

On July 13, 2006, Financial Accounting Standards Board (FASB) Interpretation
(FIN) No. 48, Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109, was
issued. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. The new FASB standard also provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December
15, 2006. The Company is currently evaluating the effect that the adoption of FIN 48 will have on its consolidated results of
operations and financial condition.

Note C:   Interim Period Adjustments

The condensed consolidated financial statements
contained herein reflect all adjustments which are, in the opinion of management, of a normal recurring nature and which 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.

Note D:   Earnings Per Share Calculations

Basic and diluted 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.

Note E:   Securities

Investment securities classified as held-to-maturity are valued at amortized historical cost. Investment securities classified as available-for-sale are valued at fair value. Unrealized holding gains and losses are excluded from earnings and reported, net of tax, as a separate component of shareholders equity until realized. A portion of the unrealized holding gains and losses is allocated to redeemable class A common stock. Gains or losses on available-for-sale investment securities are computed based on the amortized cost of the specific securities when sold. Management periodically evaluates investment securities for other-than-temporary declines in fair value. There were no investment securities which management identified to be other-than-temporarily impaired for the period ended June 30, 2006.

7

---

The following table provides the gross unrealized losses and fair value, aggregated by investment category, and the length of time the individual securities have been in a continuous unrealized loss position at June 30:

|                                        | 2006
|--------------------------------------- | ----
|                                        |     
|
|                                        |     
|
|                                        |     
|
|U.S. Treasury securities                |     
|Obligations of U.S. government agencies |     
|Obligations of state                    |     
|and political subdivisions              |     
|Mortgage-backed securities              |     
|Other securities                        |     
|                                        |     
|Total                                   |     
|                                        |     

The Company believes that the unrealized losses in the investment portfolio
are the result of increases in market interest rates and not from the deterioration in the creditworthiness of the issuer. The
majority of the investments have contractual terms which do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. U.S. Treasury securities and obligations of U.S. government agencies are direct and indirect
obligations of the U.S. government, respectively. Obligations of state and political subdivisions are general obligations of
public entities. The contractual cash flows of the mortgage-backed securities are guaranteed by an agency of the U.S. government.
The Company has the ability and intent to hold these investments until a recovery of fair value, which may be at maturity.

The Company pledges certain investment securities as collateral
to secure public deposits and for other purposes.



Note F.   Loan Securitizations



In September 2005, the Company transferred home equity
loans with principal balances of $229.9 million to a special interest trust in a securitization transaction. In September 2005,
$200 million of the sellers interest in these loans was subsequently sold to a commercial paper conduit, and the Company
sells additional amounts of the sellers interest to the commercial paper conduit each month under the terms of a revolving
securitization facility agreement. Under the terms of this agreement, which matures on August 23, 2006, the Company may sell on a
revolving basis up to $200 million in eligible loans, subject to the maintenance of certain covenants regarding the performance of
the loan pool. The Company is presently negotiating the extension of this facility for an additional one year term and expects to
reduce the maximum level of loans that may be sold on a revolving basis from $200 million to $175 million upon renewal. At June
30, 2006, the Company was in compliance with all applicable covenants. In January 2006, the Company transferred additional home
equity loans with principal balances of $35.0 million to the special interest trust in connection with the use of this facility.
The Company continues to service all of the loans transferred to the special interest trust. These transactions have been
accounted for as sales under Statement of Financial Accounting Standards (SFAS) No. 140, and a gain on sale of loans
of $1.8 million was recognized during the three months ended June 30, 2006. On a year to date basis in 2006, $1.9 million was
recognized in connection with these transactions. At June 30, 2006, the Company had retained interests from securitizations of
$16.8 million, including a $3.7 million sellers interest in loans, a $7.5 million interest-only strip, and a $5.6 million
cash reserve account.

8

---

Key economic assumptions used in measuring the retained interests were as follows (rate per annum):

|                                  | At June 30, 2006
valuation date
|--------------------------------- | -------------------------------
|                                  |                                
|Prepayment speed (CPR)            |                                
|Expected credit losses            |                                
|Weighted average life (in months) |                                
|Discount rates:                   |                                
|Interest-only strip               |                                
|Cash reserve account              |                                



Cash flows received during the first six months of 2006 from securitization activities were as follows:

|                                                                        | Six Months Ended
June 30, 2006
|----------------------------------------------------------------------- | ------------------------------
|                                                                        |                               
|
|Proceeds from collections reinvested in revolving-period securitization |                               
|Servicing fees received                                                 |                               
|Other cash flows received on retained interests                         |                               



There were no cash flows from securitization activities during the comparable six month period in 2005.



The following table presents information with respect to securitized loans and other loans that are managed with them.

|                                    | Balance |  | Loans Past Due
90 Days |         | Loan Losses,
Net |   | 2006 Average
Balances
|----------------------------------- | ------- |  | ---------------------- | ------- | ---------------- | - | ---------------------
|                                    |         |  |                        |         |                  |   |                      
|
|Total Residential Real Estate Loans |         |  |                        |         |                  |   |                      
|Managed or Securitized              |         |  | $                      | 944,968 |                  | $ | 9,417                
|Less:  Loans Securitized            |         |  |                        | 195,276 |                  |   | 1,190                
|                                    |         |  |                        |         |                  |   |                      
|Loans Held in Portfolio             |         |  | $                      | 749,692 |                  | $ | 8,227                
|                                    |         |  |                        |         |                  |   |                      

9

---

Note G:Reserve for Loan
Losses

At June 30, 2006, the reserve for loan losses was $59.7 million, an increase of $4.1 million or 7.3% from the balance of $55.6 million at December 31, 2005. The changes in the loan reserve are as follows:

|                                                       |  | Three Months Ended June 30, |   | Six Months Ended June 30,
|------------------------------------------------------ |  | --------------------------- | - | -------------------------
|                                                       |  |                             |  
|
|                                                       |  |                             |   |                          
|
|                                                      
|Balance at beginning of period                         |  |                             | $ | 57,584                   
|Charge-offs:                                           |  |                            
|Commercial                                             |  |                             |   | 261                      
|Commercial real estate                                 |  |                             |   | 590                      
|Agricultural                                           |  |                             |   | 79                       
|Residential real estate                                |  |                             |   | 150                      
|Consumer                                               |  |                             |   | 451                      
|                                                       |  |                             |   |                          
|Total charge-offs                                      |  |                             |   | 1,531                    
|Recoveries:                                            |  |                            
|Commercial                                             |  |                             |   | 871                      
|Commercial real estate                                 |  |                             |   | 4                        
|Agricultural                                           |  |                             |   | 21                       
|Residential real estate                                |  |                             |   | 85                       
|Consumer                                               |  |                             |   | 140                      
|                                                       |  |                             |   |                          
|Total recoveries                                       |  |                             |   | 1,121                    
|                                                       |  |                             |   |                          
|Net charge-offs                                        |  |                             |   | 410                      
|Provision for loan losses                              |  |                             |   | 2,530                    
|                                                       |  |                             |   |                          
|Balance at end of period                               |  |                             | $ | 59,704                   
|                                                       |  |                             |   |                          
|Average loans and leases                               |  |                             | $ | 4,735,695                
|                                                      
|Annualized net charge-offs to average loans and leases |  |                             |   | 0.03                     
|                                                      
|Reserve for loan losses as a percentage of:            |  |                            
|Period-end loans and leases                            |  |                             |   | 1.24                     

Note H:Redeemable Class A
Common Stock

At June 30, 2006, 960,000 shares of redeemable class A stock were issued and outstanding, which were subject to redemption at a
price of $46.46 per share, approximating book value. These shares are owned by employees and directors of the Company and its
subsidiaries and the employee benefit plans of the Company. The employee holders of class A common stock have the right to require
the Company to purchase their shares upon their deaths, permanent disabilities or retirements, while the Company has the option to
purchase the shares from holders upon the occurrence of certain events, which include death, retirement or termination of the
employees employment. It is the Companys intent that these 960,000 shares will continue to be held by employees,
directors, and employee benefit plans of the Company and its subsidiaries and not be directly purchased by the Company or the
Foundation. During the period from January 1, 2006 through June 30, 2006, the Company did not directly purchase any shares of
class A common stock but assigned to various parties its options that arose during that period to purchase a total of 76,107.8609
shares. These options were assigned to the Bremer Financial Corporation Employee Stock Ownership Plan (ESOP)
(5,552.4499 shares), the Bremer Banks 401(k) Plan (401(k)) (60,580.4110 shares), and executives and directors under
the Executive Stock Purchase Plan (9,975.0000 shares). To the Companys knowledge, shares purchased by these parties upon
exercise of these assigned options were the only transfers of shares of class A common stock effected during the period from
January 1, 2006 through June 30, 2006.

10

---

Note I:Goodwill and
Intangible Assets

Intangible assets consist of goodwill, core deposit intangibles, and other intangibles. The remaining unamortized balances at June 30, 2006 and December 31, 2005 were $94.9 million and $96.4 million. The core deposit and other intangibles have remaining amortization lives of four to six years. Goodwill is not amortized but is tested regularly for impairment. Management performed its annual impairment test on its goodwill assets in December 2005. No impairment loss was recorded as a result of that test, and no events or changes in circumstances have occurred since that test that would indicate that assets might be impaired.



The following table presents relevant information about the Companys amortized intangible assets:

|                              |  | As of June 30, 2006 |   | As of December 31, 2005
|----------------------------- |  | ------------------- | - | -----------------------
|                              |  |                     |  
|
|
|                              |  |                     |   |                        
|                             
|Core deposit premium          |  |                     | $ | 21,313                 
|Mortgage servicing rights (1) |  |                     |   | 2,897                  
|Other                         |  |                     |   | 4,294                  
|                              |  |                     |   |                        
|Total                         |  |                     | $ | 28,504                 
|                              |  |                     |   |                        

______________________

(1)   Accumulated amortization of
mortgage servicing rights includes the related valuation allowance of $90 thousand in
2005.

The Company recorded aggregate intangible amortization expense of $1.2 million for the six-month period ended June 30, 2006 and $1.3 million for the six-month period ended June 30, 2005. The estimated amortization expense for each of the next five years is approximately $2.1 million.



Goodwill was $84.2 million at June 30, 2006 and December 31, 2005.

Note J:Employee Benefit
Plans

Pension benefit plans- The Company maintains the Bremer Retirement Plan (Pension Plan), which is a qualified defined benefit pension plan designed to provide retirement benefits to substantially all of the employees of the Company and its subsidiaries. In addition, the Company has a Supplemental Executive Retirement Plan (SERP). The Pension Plan and the SERP constitute the Companys Pension Benefit Plans.

11

---

Other postretirement benefits -The Company provides certain retiree health care benefits relating primarily to medical insurance co-payments to retired employees between the ages of 55 and 65. The Company accrues the cost of these benefits during the employees active service.



Net benefit plan expense for the above plans as actuarially determined for the six months ended June 30, 2006 and 2005 included the following components:

|                                |  | For the Three Months Ended |   | For the Six Months Ended
|------------------------------- |  | -------------------------- | - | ------------------------
|                                |  |                            |  
|
|                                |  |                            |  
|
|                                |  |                            |   |                         
|
|                                |  |                            |   |                         
|
|Service cost                    |  |                            | $ | 1,070                   
|Interest cost                   |  |                            |   | 1,095                   
|Expected return on assets       |  |                            |   | (1,615                  
|Prior service cost amortization |  |                            |   | (35                     
|Net loss/(gain) amortization    |  |                            |   | 256                     
|                                |  |                            |   |                         
|Net periodic benefit cost       |  |                            | $ | 771                     
|                                |  |                            |   |                         

The Company expects to contribute approximately $4.6 million to the retirement and postretirement plans in 2006. No contributions were made to these plans during the six months ended June 30, 2006.



Note K:Off-Balance Sheet
Commitments, Contingencies and Contractual Obligations

The Company utilizes various off-balance sheet instruments to satisfy the financing needs of customers. These instruments represent contractual obligations of the Company to provide funding, within a specified time period, to a customer. The following table represents the outstanding obligations:

|                             |  | June 30,
2006 |   | December 31,
2005
|---------------------------- |  | ------------- | - | -----------------
|                             |  |               |   |                  
|
|                            
|Standby letters of credit    |  |               | $ | 47,930           
|Commercial letters of credit |  |               |   | 65,642           
|Loan commitments             |  |               |   | 1,699,890        



Standby letters of credit represent a conditional commitment to satisfy an obligation to a third party, generally to support public and private borrowing arrangements, on behalf of the customer. Commercial letters of credit facilitate trade or commerce. Under the terms of a commercial letter of credit, as a general rule, drafts will be drawn when the underlying transaction is consummated as intended. Loan commitments represent contractual agreements to provide funding to customers over a specified time period as long as there is no violation of any condition of the contract. These loans generally will take the form of operating lines.

12

---

The Companys potential exposure to credit loss in the event of nonperformance by the other party is represented by the contractual amount of those instruments. The credit risk associated with letters of credit and loan commitments is substantially the same as extending credit in the form of a loan; therefore, the same credit policies apply in evaluating potential letters of credit or loan commitments. The amount of collateral obtained, if deemed necessary upon the extension of credit, is based on managements credit evaluation. The type of collateral held varies, but includes real estate, accounts receivable, inventory, and productive assets.



The Company is routinely involved in legal actions which are incidental to the business of the Company. Although it is difficult to predict the ultimate outcome of these cases, management believes, based on discussions with counsel, that any ultimate liability will not materially affect the Companys consolidated financial position or operations.



The Company enters into contractual obligations in the ordinary course of business, including long-term debt issuance for the funding of operations and leases for premises and equipment. There have been no significant changes to the contractual obligations reported in the Companys Annual Report on Form 10-K for the year ended December 31, 2005 except for the debt issuance as described in Note M of the Notes to Condensed Consolidated Financial Statements and the subsequent events as described in Note N of the Notes to Condensed Consolidated Financial Statements.

Note L:Derivative
Instruments

The Company occasionally enters into derivative transactions to manage its interest rate risk. The Company has entered into an interest rate swap in the notional amount of $60 million in connection with the issuance on June 1, 2006 of a like amount of floating rate junior subordinated debentures. The interest rate swap converted the floating rate interest payments on the debentures to a fixed rate for 10 years. This derivative instrument qualifies for hedge accounting as a cash flow hedge, which is a hedge of the variability of the cash flows to be received or paid related to a recognized asset or liability or a forecasted transaction. Changes in the fair value of a derivative that is highly effective and designated as a cash flow hedge are recognized in other comprehensive income until income or expense from the cash flows of the hedged item is recognized. At June 30, 2006, the estimated fair
value of the interest rate swap was $4.1 million. This unrealized gain, which is recorded on the balance sheet in other assets, has been excluded from earnings and reported, net of tax, as a separate component of shareholders equity until realized.

Note M:Long-term debt

In June 2006, the Company issued $60.0 million of mandatorily redeemable preferred securities in a private placement transaction
through Bremer Statutory Trust II (BSTII). The proceeds of this offering, combined with the proceeds from the sale by
BSTII to the parent of its common securities, were invested by BSTII in $61.9 million in debentures of the parent company. These
capital securities and the related debentures bear interest at a floating rate of three-month LIBOR plus 1.60%, or 6.83% at June
30, 2006. The Company has entered into an interest rate swap in the notional amount of $60 million that effectively converts this
obligation to a fixed rate of 6.44% for ten years. These debentures mature no earlier than June 1, 2011 and no later than
June 1, 2036. The proceeds from this issue were used to retire $60 million of 9.0% Cumulative Capital Securities issued through
Bremer Capital Trust I (BCT) in 2001.

13

---

Note N:Subsequent Events

On July 17, 2006, the Company called for redemption $60.0 million of 9.0% Cumulative Capital Securities and the debentures related to them which were issued in May 2001 through BCT. The Company recorded a one-time charge of approximately $1.9 million, before-tax, in the third quarter of 2006 to write off unamortized issuance costs in connection with the early redemption of these Cumulative Capital Securities.



Subsequent to the call for redemption of the 9.0% Cumulative Capital Securities in July 2006, the Company is no longer required to be registered under the Securities Exchange Act of 1934 (Exchange Act). The Company plans to file a Form 15 with the SEC on or about August 15, 2006, terminating its registration under the Securities Exchange Act of 1934. Upon filing the Form 15, the Company will no longer be required to file periodic and other reports under the Exchange Act.

14

---

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Application of Critical Accounting Policies



In preparing the financial statements, we follow accounting principles generally accepted in the United States of America, which in many cases require us to make assumptions, estimates and judgments that affect the amounts reported. Many of these policies are relatively straightforward; however, management has identified the accounting policies described below as those that are critical to an understanding of our consolidated financial statements and managements discussion and analysis due to the judgments, estimates and assumptions inherent in those policies.



The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated. We base our assumptions, estimates and judgments on a combination of historical experiences and other relevant factors.



Reserves for Loan Losses. In general, determining the amount of the reserve for loan losses requires the use of significant judgment and estimates by management. We maintain an allowance for loan losses to absorb probable losses in the loan and lease portfolio based on a quarterly analysis of the portfolio and expected future losses. Reserves for loan losses include charges to reduce the recorded balances of loans receivable and real estate to their estimated net realizable value or fair value, as applicable.



Loan securitizations. We transfer loans through special interest trusts to independent third parties under the terms of a revolving securitization facility agreement. These transfers are accounted for as sales if the requirements of Statement of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, are met.



When the requirements for sale accounting are met, the carrying amount of the assets transferred to the special interest trust is
allocated between assets sold and retained interests based on relative fair values at the date of sale. A gain or loss on the sale
of loans is recorded for the difference between the carrying amount and the fair value of the assets sold. The retained interests
include the sellers interest in loans which have not yet been sold to a third party, retained interest-only strips, and
reserve accounts. Because quoted market prices are not available, we estimate the fair value of the retained interests by
determining the present value of the future expected cash flows using modeling techniques that incorporate managements best
estimates of key variables, including credit losses, prepayment speeds, weighted average life, interest rates on variable rate
contracts, and discount rates commensurate with the risks involved. Credit loss assumptions are based upon historical experience
and the characteristics of the loans securitized. Prepayment speed estimates are determined utilizing data obtained from market
participants, where available, or based on historical prepayment rates on similar assets. Discount rate assumptions are determined
using data obtained from market participants. Estimates of interest rates on variable rate contracts are based on spreads over the
applicable benchmark interest rate using market-based yield curves. The sellers interest in loans is recorded on the balance
sheet in loans at the allocated carrying amount. Interest-only strips and reserve accounts are included in other assets and are
recorded at fair value, with any differences between fair value and carrying value which are deemed to be temporary, reported net
of tax, as a separate component of shareholders equity. Any differences between fair value and carrying value which are
deemed to be other than temporary are recorded in earnings.

15

---

There are many assumptions and estimates underlying the determination of the fair value of retained interests in securitization transactions. The use of different but still reasonable assumptions could significantly impact the amount recorded on the balance sheet for retained interests and the amount of gain or loss recorded on the sale of loans in securitization transactions.



Investment Securities. Investments in marketable equity and debt securities are classified into three categories  held-to-maturity, available-for-sale, or trading  pursuant to SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. As of June 30, 2006, no investments were classified as trading securities. Held-to-maturity securities, which are valued at amortized historical cost, represent investments for which we have the ability and intent to hold to maturity and that may be sold under only very limited circumstances. We currently classify our investments in certain municipal bond obligations and certain U.S. government agency obligations as held-to-maturity securities. Available-for-sale securities consist of debt and equity securities that will be held for indefinite periods of time, including securities that may be sold in response
to changes in market interest or prepayment rates, needs for liquidity, or changes in the availability or yield of alternative investments. These securities 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 shareholders equity until realized. A portion of the unrealized holding gains and losses is allocated to redeemable class A common stock. Gains or losses on these securities are computed based on the amortized cost of the specific securities when sold.



Management periodically evaluates investment securities for other than temporary declines in fair value. Declines in fair value of
individual investment securities below their amortized cost that are deemed to be other than temporary are written down to current
market value and included in earnings as realized losses in the period the securities are deemed to be impaired. The initial
indicator of impairment is a sustained decline in market price below the amount recorded for the investment. We consider the
length of time and the extent to which market value has been less than cost, the cause of the price decline, the extent to which
the price decline is due to the general level of interest rates or other issuer specific factors, the issuers financial
condition and ability to make future payments in a timely manner, and our investment horizon. Our analysis as of June 30, 2006
indicates that our unrealized losses were caused by market interest rate increases. We intend to hold these investments until a
recovery of fair value, which may be at maturity, and, as a result, there were no investment securities which management
identified to be other-than-temporarily impaired for the period ended June 30, 2006. If the financial markets experience
deterioration and investments decline in fair value, charges to income could occur in future periods.

16

---

Goodwill and Other Intangible Assets. SFAS No. 142, Accounting for Goodwill and Other Intangible Assets, establishes standards for the amortization of acquired intangible assets and the non-amortization and impairment assessment of goodwill. In addition, SFAS No. 147, Acquisitions of Certain Financial Institutions, establishes standards for unidentifiable intangible assets acquired specifically in branch purchases that qualify as business combinations. At June 30, 2006, we had $84.2 million of goodwill, which is not subject to periodic amortization, and $10.7 million in other intangible assets, which is subject to periodic amortization. The largest component of our other intangible assets at June 30, 2006 was core deposit premiums at $8.4 million. The core deposit premiums are being amortized over an estimated deposit life of 10 years from the date of
acquisition. Other intangibles are being amortized on the basis of estimated remaining life.



We performed the annual impairment tests on our goodwill and other intangible assets, excluding mortgage-servicing rights (MSRs), in December 2005. No events or changes in circumstances have occurred since those tests that would indicate that such assets might be impaired, and we have concluded that the recorded values of goodwill and the other intangible assets were not impaired as of June 30, 2006. We evaluate our MSRs on a quarterly basis for possible impairment based on the difference between the carrying amount and current estimated fair value under SFAS No. 140. At June 30, 2006, we determined that no impairment existed as a result of this valuation.



There are many assumptions and estimates underlying the determination of impairment. Impairment testing is based on a determination of the value of each reporting unit, using readily available market and earnings data for comparable publicly-traded organizations within the same time period, and comparing that calculation of value to the current book value of the unit. Another estimate using different, but still reasonable, assumptions could produce a significantly different result. Additionally, future events could cause management to conclude impairment indicators exist and our goodwill is impaired, which would result in us recording an impairment loss. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.



Retirement Plan Accounting. We provide pension benefits to substantially all employees. We account for these plans in accordance with SFAS No. 87, Employers Accounting for Pensions, which requires us to make a number of economic and other assumptions that can have a significant impact on amounts recorded in our income statement and statement of financial position. Assumptions regarding long-term discount rates and the expected return on pension plan assets can have the most material impact on our financial results and funding requirements.



Income Taxes.The determination of our current and deferred income taxes is a critical accounting estimate requiring significant management
judgment. We make these estimates based on a complex analysis of many factors, including our interpretation of existing federal
and state income tax laws as they relate to our activities, the differences between the tax and financial reporting bases of
assets and liabilities (temporary differences), the expected timing of the reversal of these temporary differences, and current
financial accounting standards. Such interpretations could differ from those of the various federal and state tax authorities that
examine us periodically. If managements estimates and assumptions vary from the views of the taxing authorities, adjustments
to the periodic tax accruals may be necessary.

17

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Our accounting policies for the reserve for loan losses, loan securitizations, investment securities, goodwill and other intangible assets, retirement plan accounting and income taxes are described in the Companys Annual Report on Form 10-K for the year ended December 31, 2005. We believe that there have been no significant changes to the methods described in that Annual Report for making the estimates and judgments necessary to apply these policies.



Overview



Earnings. We reported net income of $18.0 million, or $1.50 in basic and diluted earnings per share, for the second quarter of 2006. This compares to $16.8 million, or $1.40 in basic and diluted earnings per share, in the second quarter of 2005. On a year-to-date basis through June 30, 2006, net income was $34.4 million, compared to $33.0 million earned in the first six months of 2004. Return on average equity was 13.0% for both the second quarter of 2006 and the second quarter of 2005. On a year-to-date basis, through June 30, 2006, we reported a return on average equity of 12.6%, compared to 12.9% in the first six months of 2005. Return on average assets increased to 1.11% for the quarter ended June 30, 2006 from 1.07% for the quarter ended June 30, 2005 and remained at 1.07% for the two six-month periods ended June 30, 2006 and June 30, 2005.



Results of Operations



Net Interest Income.Net interest income for the second quarter of 2006 was $56.5 million, an increase of $1.4 million or 2.5% from the $55.1 million reported for the same period a year ago. Our net interest margin was 3.86% for the quarters ended June 30, 2006 and June 30, 2005. On a year-to-date basis, our net interest income increased $3.8 million or 3.5% to $112.3 million in 2006 from $108.5 million in 2005, while our net interest margin was 3.88% for the six-month periods ended June 30, 2006 and June 30, 2005. Our net interest margin has remained relatively flat as short-term interest rates have risen during the past year and higher yields on earning assets have been offset by higher interest costs for deposits and borrowings.

18

---

The following tables set forth, for the periods indicated, information
regarding average balances of assets and liabilities and the total dollar amounts of interest income from interest-bearing assets
and interest expense on interest-bearing liabilities. In addition, the tables show resultant yields or costs, net interest income,
net interest spread, and net interest margin:

|                                      | For the Three Months Ended June 30,
|------------------------------------- | -----------------------------------
|
|
|
|
|Assets                                |                                    
|Loans and Leases (2)                  |                                    
|Commercial and other                  |                                    
|Commercial real estate                |                                    
|Agricultural                          |                                    
|Residential real estate               |                                    
|Consumer                              |                                    
|Tax-exempt                            |                                    
|                                      |                                    
|Total Loans and Leases                |                                    
|Reserve for loan losses               |                                    
|                                      |                                    
|Net Loans and Leases                  |                                    
|Securities (3)                        |                                    
|Taxable                               |                                    
|Tax-exempt                            |                                    
|                                      |                                    
|Total Securities                      |                                    
|Federal funds sold                    |                                    
|Other earning assets                  |                                    
|                                      |                                    
|Total Earning Assets(4)               |                                    
|Cash and due from banks               |                                    
|Other non interest earning assets     |                                    
|                                      |                                    
|Total Assets                          |                                    
|                                      |                                    
|                                     
|Liabilities and Shareholders Equity  |                                    
|Noninterest bearing deposits          |                                    
|Interest bearing deposits             |                                    
|Savings and NOW accounts              |                                    
|Other interest bearing checking       |                                    
|Money market savings                  |                                    
|Savings certificates                  |                                    
|Certificates over $100,000            |                                    
|                                      |                                    
|Total Interest Bearing Deposits       |                                    
|                                      |                                    
|Total Deposits                        |                                    
|Short-term borrowings                 |                                    
|Long-term debt                        |                                    
|                                      |                                    
|Total Interest Bearing Liabilities    |                                    
|Other noninterest bearing liabilities |                                    
|                                      |                                    
|Total Liabilities                     |                                    
|Minority Interest                     |                                    
|Redeemable Class A Common Stock       |                                    
|Shareholders equity                  |                                    
|                                      |                                    
|Total Liabilities and Equity          |                                    
|                                      |                                    
|Net interest income                   |                                    
|                                      |                                    
|Net interest spread                   |                                    
|Net interest margin                   |                                    

|_________________
|-----------------
|(1)              
|(2)              
|(3)              
|(4)              

19

---

|                                      | For the Six Months Ended June 30,
|------------------------------------- | ---------------------------------
|
|
|
|
|Assets                                |                                  
|Loans and Leases (2)                  |                                  
|Commercial and other                  |                                  
|Commercial real estate                |                                  
|Agricultural                          |                                  
|Residential real estate               |                                  
|Consumer                              |                                  
|Tax-exempt                            |                                  
|                                      |                                  
|Total Loans and Leases                |                                  
|Reserve for loan losses               |                                  
|                                      |                                  
|Net Loans and Leases                  |                                  
|Securities (3)                        |                                  
|Taxable                               |                                  
|Tax-exempt                            |                                  
|                                      |                                  
|Total Securities                      |                                  
|Federal funds sold                    |                                  
|Other earning assets                  |                                  
|                                      |                                  
|Total Earning Assets(4)               |                                  
|Cash and due from banks               |                                  
|Other non interest earning assets     |                                  
|                                      |                                  
|Total Assets                          |                                  
|                                      |                                  
|                                     
|Liabilities and Shareholders Equity  |                                  
|Noninterest bearing deposits          |                                  
|Interest bearing deposits             |                                  
|Savings and NOW accounts              |                                  
|Other interest bearing checking       |                                  
|Money market savings                  |                                  
|Savings certificates                  |                                  
|Certificates over $100,000            |                                  
|                                      |                                  
|Total Interest Bearing Deposits       |                                  
|                                      |                                  
|Total Deposits                        |                                  
|Short-term borrowings                 |                                  
|Long-term debt                        |                                  
|                                      |                                  
|Total Interest Bearing Liabilities    |                                  
|Other noninterest bearing liabilities |                                  
|                                      |                                  
|Total Liabilities                     |                                  
|Minority Interest                     |                                  
|Redeemable Class A Common Stock       |                                  
|Shareholders equity                  |                                  
|                                      |                                  
|Total Liabilities and Equity          |                                  
|                                      |                                  
|Net interest income                   |                                  
|                                      |                                  
|Net interest spread                   |                                  
|Net interest margin                   |                                  

|_________________
|-----------------
|(1)              
|(2)              
|(3)              
|(4)              

20

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The following table illustrates, on a tax-equivalent basis, for the periods indicated, the changes in our net interest income due
to changes in volume and changes in interest rates. Changes in net interest income other than those due to volume have been
included in changes due to rate:

|                                                 | Three Months Ended June 30, |  | Six Months Ended June 30,
|------------------------------------------------ | --------------------------- |  | -------------------------
|
|
|
|
|Interest earning assets:                         |                             |  |                          
|Loans and leases (1)                             |                             |  | $                        
|Taxable securities                               |                             |  |                          
|Tax-exempt securities (1)                        |                             |  |                          
|Federal funds sold                               |                             |  |                          
|Other interest earning assets                    |                             |  |                          
|                                                 |                             |  |                          
|Total interest earning assets                    |                             |  | $                        
|                                                 |                             |  |                          
|                                                
|Interest bearing liabilities:                    |                             | 
|Savings and NOW accounts                         |                             |  | $                        
|Money market and other interest-bearing checking |                             |  |                          
|Savings certificates                             |                             |  |                          
|Short-term borrowings                            |                             |  |                          
|Long-term debt                                   |                             |  |                          
|                                                 |                             |  |                          
|Total interest-bearing liabilities               |                             |  |                          
|                                                 |                             |  |                          
|                                                
|Change in net interest income                    |                             |  | $                        
|                                                 |                             |  |                          

|_________________
|-----------------
|(1)              

Provision for Loan Losses.
The provision for loan losses is charged against earnings to maintain the reserve for loan losses to cover losses inherent in the
portfolio as of the reporting date. We recorded net charge-offs of $410.0 thousand during the second quarter of 2006 compared to
net recoveries of $133.0 thousand for the same period in 2005. We recorded a provision for loan losses of $2.5 million in the
second quarter of 2006 compared to $2.4 million for the same quarter in 2005. On a year-to-date basis, net charge-offs increased
to $993.0 thousand for the first six months of 2006 compared to $206.0 thousand for the same period in 2005. The provision for
loan losses decreased to $5.1 million in the first six months of 2006 from $5.7 million in the first six months of 2005. Our ratio
of reserve for loan losses to total loans and leases decreased to 1.24% at June 30, 2006 from 1.31% at June 30, 2005. For further
discussion related to the allowance for loan losses, see the later section entitled  Financial Condition 
Reserve for Loan Losses.

21

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Noninterest Income.Noninterest
income increased $3.5 million or 17.9% to $22.9 million in the second quarter of 2006 from $19.4 million for the second quarter of
2005. On a year-to-date basis, noninterest income increased $3.7 million or 9.6% to $41.9 million in 2006 from $38.2 million in
2005. These increases were largely due to increases in gain on sale of loans including gains related to securitization activity
and service charges.



The following table summarizes the components of noninterest income:

|                                     | Three Months Ended June 30, |  | Six Months Ended June 30,
|------------------------------------ | --------------------------- |  | -------------------------
|
|
|                                    
|Service charges                      |                             |  | $                        
|Insurance                            |                             |  |                          
|Investment management and trust fees |                             |  |                          
|Brokerage                            |                             |  |                          
|Gain on sale of loans                |                             |  |                          
|Loss on sale of securities           |                             |  |                          
|Other  noninterest income            |                             |  |                          
|                                     |                             |  |                          
|Total noninterest income             |                             |  | $                        
|                                     |                             |  |                          

Noninterest Expense.Noninterest expense increased $3.0 million or 6.5% to $49.4 million in the second quarter of 2006 from $46.4 million in the second quarter of 2005. On a year-to-date basis, noninterest expense increased $6.4 million or 7.1% to $96.8 million in 2006 from $90.4 million in 2005. Increases in personnel costs accounted for approximately 70.0% of the increase in noninterest expense when comparing the two quarterly periods as well as the year-to-date periods. Exclusive of personnel costs, total noninterest expense increased $861.0 thousand or 4.7% when comparing the second quarter of 2006 with the second quarter of 2005.

22

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The following table summarizes the components of noninterest expense:

|                                   | Three Months Ended June 30, |  | Six Months Ended June 30,
|---------------------------------- | --------------------------- |  | -------------------------
|
|
|                                  
|Salaries and wages                 |                             |  | $                        
|Employee benefits                  |                             |  |                          
|Occupancy                          |                             |  |                          
|Furniture and equipment            |                             |  |                          
|Printing, postage and telephone    |                             |  |                          
|Marketing                          |                             |  |                          
|Data processing fees               |                             |  |                          
|Professional fees                  |                             |  |                          
|Other real estate owned            |                             |  |                          
|FDIC premiums and examination fees |                             |  |                          
|Amortization of intangibles        |                             |  |                          
|Other noninterest expense          |                             |  |                          
|                                   |                             |  |                          
|Total noninterest expense          |                             |  | $                        
|                                   |                             |  |                          

A common industry statistic used to measure the productivity of banking organizations is the operating efficiency ratio. The operating efficiency ratio measures the cost required to generate each dollar of revenue and is calculated by dividing noninterest expense by tax-equivalent net interest income and noninterest income. Our operating efficiency ratio was 60.2% for the second quarter of 2006 compared to 60.3% for the second quarter of 2005 and 60.7% for the first six months of 2006 compared to 59.8% for the same period in 2005.



Income Taxes. The provision for income taxes was $9.5 million for the quarter ended June 30, 2006 compared to $9.0 million for the same period in 2005. On a year-to-date basis, the provision for income taxes increased to $17.9 million for the six months ended June 30, 2006 from $17.6 million for the same period in 2005. Comparing the second quarter of 2006 to the same period in 2005, our overall effective tax rate decreased to 34.4% from 34.9%, while on a year-to-date basis, our effective tax rate decreased to 34.3% from 34.8%.

23

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Financial Condition



Loan and Lease Portfolio.The following table presents the components of our gross loan and lease portfolio:

|                        | At June 30, 2006 |  | At December 31, 2005
|----------------------- | ---------------- |  | --------------------
|
|
|                       
|Commercial              |                  |  | $                   
|Commercial real estate  |                  |  |                     
|- Construction          |                  |  |                     
|Agricultural            |                  |  |                     
|Residential real estate |                  |  |                     
|- Construction          |                  |  |                     
|Consumer                |                  |  |                     
|Tax-exempt              |                  |  |                     
|                        |                  |  |                     
|Total                   |                  |  | $                   
|                        |                  |  |                     

Our total loan and lease portfolio increased to $4.8 billion at June 30, 2006 from $4.6 billion at December 31, 2005. Commercial loans increased by $84.0 million, or 8.0%, during the first six months of 2006, commercial real estate loans increased by $67.1 million, or 3.9%, and agricultural loans increased by $31.5 million, or 6.1%, during the same period. These gains were partially offset by a decrease in residential real estate loans of $3.9 million, or 0.5%, as well as a decrease in consumer loans of $19.6 million, or 5.6%, during the same six-month period. Tax-exempt loans increased $4.5 million, or 2.4%, during the first six months of 2006.



Nonperforming Assets.Nonperforming assets include nonaccrual loans, restructured loans and other real estate owned (OREO). Nonperforming assets were $19.7 million at June 30, 2006, an increase of $5.6 million, or 39.9%, from the $14.1 million level at December 31, 2005. Nonperforming assets as a percentage of total loans, leases and OREO increased to 0.41% at June 30, 2006 from 0.30% at December 31, 2005. Accruing loans and leases 90 days or more past due totaled $6.1 million at June 30, 2006 compared to $2.2 million at December 31, 2005.

24

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Our nonperforming assets are summarized in the following table:

|                                                         | June 30,2006 |  | December 31,2005
|-------------------------------------------------------- | ------------ |  | ----------------
|
|Nonaccrual loans and leases                              |              |  | $               
|Restructured loans and leases                            |              |  |                 
|                                                         |              |  |                 
|Total nonperforming loans and leases                     |              |  |                 
|Other real estate owned (OREO)                           |              |  |                 
|                                                         |              |  |                 
|Total nonperforming assets                               |              |  | $               
|                                                         |              |  |                 
|                                                        
|Accruing loans and leases 90 days or more past due       |              |  | $               
|                                                         |              |  |                 
|                                                        
|Nonperforming loans and leases to total loans and leases |              |  |                 
|Nonperforming assets to total loans, leases and OREO     |              |  |                 
|Nonperforming assets and accruing loans and leases 90   
|days or more past due to total loans, leases and OREO    |              |  |                 



Reserve for Loan Losses.At June 30, 2006, the reserve for loan losses was $59.7 million, an increase of $4.1 million, or 7.3%, from the balance of $55.6 million at December 31, 2005. The reserve for loan losses as a percentage of total loans and leases was 1.24% at June 30, 2006 compared to 1.20% at December 31, 2005.

25

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Activity in the reserve for loan and
lease losses for the following periods is shown in the following table:

|                                                       | Three Months Ended June 30, |  | Six Months Ended June 30,
|------------------------------------------------------ | --------------------------- |  | -------------------------
|
|
|                                                      
|Balance at beginning of period                         |                             |  | $                        
|Charge-offs:                                           |                             | 
|Commercial                                             |                             |  |                          
|Commercial real estate                                 |                             |  |                          
|Agricultural                                           |                             |  |                          
|Residential real estate                                |                             |  |                          
|Consumer                                               |                             |  |                          
|                                                       |                             |  |                          
|Total charge-offs                                      |                             |  |                          
|Recoveries:                                           
|Commercial                                             |                             |  |                          
|Commercial real estate                                 |                             |  |                          
|Agricultural                                           |                             |  |                          
|Residential real estate                                |                             |  |                          
|Consumer                                               |                             |  |                          
|                                                       |                             |  |                          
|Total recoveries                                       |                             |  |                          
|                                                       |                             |  |                          
|Net charge-offs                                        |                             |  |                          
|Provision for loan losses                              |                             |  |                          
|                                                       |                             |  |                          
|Balance at end of period                               |                             |  | $                        
|                                                       |                             |  |                          
|                                                      
|Average loans and leases                               |                             |  | $                        
|                                                      
|Annualized net charge-offs to average loans and leases |                             |  |                          
|                                                      
|Reserve for loan losses as a percentage of            
|period-end loans and leases                            |                             |  |                          

Securities.Our investment portfolio, including available-for-sale securities and held-to-maturity securities, was $1.4 billion at June 30, 2006 and December 31, 2005. During the first six months of 2006, we reinvested the majority of the $202.9 million in proceeds from matured and sold securities in obligations of state and political subdivisions and mortgage-backed securities. The remainder of the proceeds was used to fund loan growth.



Deposits.Total deposits decreased to $4.7 billion at June 30, 2006 from $4.9 billion at December 31, 2005. Noninterest bearing deposits decreased $103.8 million or 11.6% to $788.9 million at June 30, 2006 from $892.6 million at December 31, 2005. This decrease is an annual seasonal occurrence. Interest bearing deposits decreased slightly and remained at $4.0 billion at June 30, 2006 and December 31, 2005. An increase in our time certificates of deposit of $18.6 million during the first six months of 2006 from December 31, 2005 was offset by a decrease of $47.8 million in savings, NOW, money market and other interest-bearing checking deposits.

26

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Short-Term Borrowings.Short-term borrowings, which include federal funds and repurchase agreements (which generally mature within one to 60 days of the transaction date), treasury tax and loan notes (which generally mature within one to 30 days), Federal Home Loan Bank (FHLB) advances (which mature within one year), and advances under an unsecured revolving credit facility agreement, increased $142.1 million, or 19.3%, to $878.6 billion at June 30, 2006 from $736.6 million at December 31, 2005. The increased use of short-term borrowings as a funding source was the result of our seasonal decrease in deposits in the first six months of 2006.



Long-term debt.At June 30, 2006, long-term debt consisted of senior notes, junior subordinated deferrable interest debentures, FHLB advances and installment promissory notes. The $19.0 million in senior notes are unsecured, bear interest at an annual rate of 8.47% and mature on November 1, 2006.



At June 30, 2006, we had outstanding $140.7 million of junior subordinated deferrable interest debentures
(debentures) which were issued in connection with the issuance by the company of mandatorily redeemable preferred
securities in three separate transactions. In February 2001, the company issued $16.5 million of 10.2% Capital Securities through
Bremer Statutory Trust I (BST). The proceeds of this offering, combined with the proceeds from the sale of BSTs
common securities to the parent, were invested by BST in $17.1 million of debentures of the parent company. These debentures
mature no earlier than February 22, 2011 and no later than February 22, 2031.



In May 2001, the company issued $60.0 million of 9.0% Cumulative Capital Securities through Bremer Capital Trust I (BCT). The proceeds of this offering, combined with the proceeds from the sale of BCTs common securities to the parent, were invested by BCT in $61.9 million in debentures of the parent company. These 9.0% Cumulative Capital Securities and the debentures related to them were called for redemption on July 17, 2006. We recorded a one-time charge of approximately $1.9 million, before-tax, in the third quarter of 2006 to write off unamortized issuance costs in connection with the early redemption of these Cumulative Capital Securities.



In June 2006, the company issued $60.0 million of mandatorily redeemable preferred securities in a private placement transaction through Bremer Statutory Trust II (BSTII). The proceeds of this offering, combined with the proceeds from the sale by BSTII to the parent of its common securities, were invested by BSTII in $61.9 million in debentures of the parent company. These capital securities and the related debentures bear interest at a floating rate of three-month LIBOR plus 1.60%, or 6.83% at June 30, 2006. The Company has entered into an interest rate swap in the notional amount of $60 million that effectively converts this obligation to a fixed rate of 6.44% for ten years. These debentures mature no earlier than June 1, 2011 and no later than June 1, 2036. The proceeds from this issue were used to retire the aforementioned $60 million of 9.0% Cumulative Capital Securities issued through BCT in
2001. At June 30, 2006, $76.5 million in Capital Securities were included in Tier I capital under guidelines of the Federal Reserve Board.



FHLB advances decreased $13.0 million to $210.5 million at June 30, 2006 from $223.5 million at December 31, 2005. The installment promissory notes mature in 2007.



SEC Registration.Subsequent to the call for redemption of the 9.0% Cumulative Capital Securities in July 2006, the Company is no longer required to
be registered under the Securities Exchange Act of 1934 (Exchange Act). The Company plans to file a Form 15 with the
SEC on or about August 15, 2006, terminating its registration under the Securities Exchange Act of 1934. Upon filing the Form 15, the
Company will no longer be required to file periodic and other reports under the Exchange Act.

27

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Capital Management. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) required the establishment of a capital-based supervisory system of prompt corrective action for all depository institutions. The Federal Reserve Boards implementation of FDICIA defines well-capitalized institutions as those whose Tier I capital ratio equals or exceeds 6%, total risk-based capital ratio equals or exceeds 10%, and leverage ratio equals or exceeds 5%. We have maintained our capital at the well-capitalized level in each of these categories in the past and expect to do so in the future. The capital ratios of the Subsidiary Banks in each of these categories met or exceeded the well-capitalized ratios as of June 30, 2006.



The following table compares our consolidated capital ratios with the minimum requirements for well-capitalized and adequately capitalized banks as of June 30, 2006:

|                                          |  |  | Minimum Requirements
|----------------------------------------- |  |  | --------------------
|
|                                         
|Tier I capital to risk-weighted assets    |  |  |                     
|Total capital to risk-weighted assets     |  |  |                     
|Tier I capital to average tangible assets |  |  |                     

Payment of dividends to us by the subsidiary banks is subject to various limitations by bank regulators, which includes maintenance of certain minimum capital ratios.



Liquidity Management. The objective of liquidity management is to assure the continuous availability of funds to meet our financial commitments. We use an asset liability management committee (ALCO) as part of our risk management process. ALCO is responsible for managing balance sheet and off-balance sheet commitments to meet the needs of customers while achieving our financial objectives. ALCO meets regularly to review funding capacity, current and forecasted loan demand, investment opportunities, and liquidity positions as outlined in our asset liability policy. With this information, ALCO guides changes in the balance sheet structure to provide for adequate ongoing liquidity.



Our primary source of funding is through the acquisition and retention of funds in the local markets we serve. This in-market
funding provides a historically stable source of funding. The combination of in-market funding and capital funded 86% of average
total assets during the first six months of 2006. Although we prefer to fund the balance sheet with in-market funding sources,
another source of liquidity is our ready access to regional and national wholesale funding markets, including FHLB advances,
brokered deposits, and federal funds purchased. As of June 30, 2006, we had short term and long term borrowings from the FHLB in
the total amount of $535.6 million. In order to secure those borrowings, we had pledged $2.0 billion in loan assets to the FHLB.
In addition to the amounts borrowed as of June 30, 2006, we had the capacity to borrow an additional $462.8 million from the FHLB
without the need to provide additional collateral. In the brokered deposit market, we maintain relationships with six major
securities dealers that function as intermediaries between investors and banks in the national market for FDIC-insured time
savings certificates. Our deposit balances at June 30, 2006 include $227.3 million acquired through these broker sources, and we
have the capacity to add significant additional funding from these sources as needed. Our liquidity management program includes
the use of a revolving securitization facility under which we are able to sell up to $200 million of eligible home equity loans to
a commercial paper conduit. This facility had $5 million of unused capacity at June 30, 2006. The terms of the revolving
securitization facility agreement allow the company to sell additional loans to the commercial paper conduit each month to replace
paid-off loans up to the maximum limit of $200 million. We sold an additional $69.6 million of loans to the conduit during the
first half of 2006. As of June 30, 2006, we also had available $15.0 million of borrowing capacity under an unsecured credit
facility. As of June 30, 2006, there were no advances outstanding under this facility. This credit facility is used primarily for
contingency purposes.

28

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Commitments and Contingencies. There have been no material changes in our outstanding commitments and contingencies since those reported at December 31, 2005 in our Annual Report on Form 10-K for 2005.



Item 3. Quantitative and Qualitative Disclosures About Market Risk



There have been no material changes in market risk exposures that affect the quantitative and qualitative disclosures presented as of December 31, 2005 in the Annual Report on Form 10-K for 2005.



Item 4. Controls and Procedures



The Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness, as of June 30, 2006, of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that the Companys disclosure controls and procedures were effective as of June 30, 2006 to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the Securities and Exchange Commission.



There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2006 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

29

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PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.



|(a) | The Company held its annual meeting of shareholders on April 25, 2006. At the meeting, 74.2% of the outstanding shares of the Companys class A common stock was represented in person or by proxy.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | The Company solicited proxies for the annual meeting pursuant to Regulation 14A under the Securities Exchange Act of 1934. There was no solicitation in opposition to managements solicitation.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The nominees for the Board of Directors consisted of all directors serving as such at the time of the annual meeting, and all such nominees were re-elected as directors. The directors elected were Terry M. Cummings, Stan K. Dardis, William H. Lipschultz, Charlotte S. Johnson, Daniel C. Reardon, Ronald James and Terrence W. Glarner.



|(c) | The first matter to be voted upon was a proposal to fix the number of directors at not less than four (4) nor more than ten (10). This proposal was passed as follows:  889,317.9998 votes for, 116.9724 votes against and 1,029.9490 votes abstained.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The second matter voted upon was the election of directors. The votes cast were as follows: 886,596.4014 votes for all nominees; 108.1957 votes for all nominees except Stan K. Dardis; 1,063.0000 votes for all nominees except Charlotte S. Johnson and William H. Lipschultz; 2,026.9407 votes for all nominees except Charlotte S. Johnson, William H. Lipschultz and Daniel C. Reardon; 378.6972 votes for all nominees except William H. Lipschultz and Daniel C. Reardon; and 291.6862 votes to withhold authority for all nominees.



The final matter voted upon was the ratification of the appointment of Deloitte & Touche LLP as the registered public accounting firm to audit the consolidated financial statements of the Company for the year ended December 31, 2006. The appointment was ratified as follows:  885,550.9842 votes for, 2,486.6224 votes against and 2,427.3146 votes abstained.



As to each matter, there were no broker non-votes.



There were no other matters submitted for a vote or voted upon at the annual meeting.



Item 6. Exhibits



The Company is filing the following exhibits with this Quarterly Report on Form 10-Q:



| | 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
| | ---- | ------------------------------------------------------------------------------



| | 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
| | ---- | ------------------------------------------------------------------------------



| | 32.1 | Section 1350 Certification of Chief Executive Officer.
| | ---- | ------------------------------------------------------



| | 32.2 | Section 1350 Certification of Chief Financial Officer.
| | ---- | ------------------------------------------------------

30

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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 11, 2006 |  | BREMER FINANCIAL CORPORATION
|---------------------- |  | ----------------------------
|                       |  | By:                         
|                       |  |                             





| |  |    
| |  | ---
| |  | By:
| |  |    

31

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INDEX TO EXHIBITS



| | Description of Exhibits
| | -----------------------



| | 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
| | ---- | ------------------------------------------------------------------------------



| | 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
| | ---- | ------------------------------------------------------------------------------



| | 32.1 | Section 1350 Certification of Chief Executive Officer.
| | ---- | ------------------------------------------------------



| | 32.2 | Section 1350 Certification of Chief Financial Officer.
| | ---- | ------------------------------------------------------

---