Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $5.2 million for the third quarter of 2024, or $0.26 per diluted common share, compared to net income of $6.2 million, or $0.31 per diluted common share, for the second quarter of 2024, and net income of $9.2 million, or $0.45 per diluted common share, for the third quarter of 2023.

CEO Comments

President and Chief Executive Officer Katie Lorenson said, “Earlier this month we closed on our 26th and largest acquisition in company history. In the transaction, we acquired a strong core deposit base and strategically expanded into the vibrant Rochester and Southern Minnesota markets. Throughout the quarter and ahead of this closing, we continued to make long term investments to support and grow our uniquely diversified business model and revenue streams. We continued to demonstrate our position as an employer of choice, with the addition of a specialized equipment leasing team and key hires to drive growth and efficiencies throughout our organization, especially in our retirement and benefit services segment.

We have continued to see market share gains and growth of our client base both in adding new business and deepening relationships with current clients. This year, our retirement and benefits business has grown over 19%, our wealth management business has grown 18%, and we have grown loans nearly 10% and deposits over 7% in a very challenging and competitive environment.

Credit quality remains a key area of focus. Early identification of problem loans coupled with proactive and decisive actions are part of our credit culture. We continue to closely monitor and proactively downgrade loans where we see potential or emerging weaknesses. Normalization of credit continued during the quarter, as two large relationships drove the increase in nonaccrual loans. Charge-offs to average loans for the quarter were 0.04% and reserves to loans was stable at 1.29%.

We are focused on efficient headcount management, and balancing investments in talent, technology and infrastructure, while remaining committed to a strong balance sheet, capital levels, and improving performance as a bigger and better combined entity.

Thank you to the team members both new and long tenured for your hard work, dedication and invaluable contributions supporting our company, our clients and our communities, and helping us on our journey to achieving new milestones and our return to high-performance and top tier financial results.”

Third Quarter Highlights

  • Total loans were $3.0 billion as of September 30, 2024, an increase of $272.8 million, or 9.9%, from December 31, 2023.
  • Total deposits were $3.3 billion as of September 30, 2024, an increase of $227.9 million, or 7.4%, from December 31, 2023; brokered deposits remained at $0.
  • The loan to deposit ratio as of September 30, 2024 was 91.2%, compared to 89.1% as of December 31, 2023.
  • Noninterest income, which represented 55.7% of total revenues, was $28.4 million in the third quarter of 2024, an increase of 3.6% from $27.4 million in the second quarter of 2024.
  • Total assets under administration/management at September 30, 2024 were $45.6 billion, a 4.8% increase from June 30, 2024.
  • Net charge-offs to average loans were 0.04% in the third quarter of 2024, a decrease of 32 basis points from 0.36% in the second quarter of 2024.
  • Tangible book value per common share (non-GAAP) was $16.50 as of September 30, 2024, a 6.7% increase from December 31, 2023.
  • Tangible common equity to tangible assets (non-GAAP) was 8.11% at September 30, 2024, an increase of 85 basis points from 7.26% in the second quarter of 2024.
  • Common equity tier 1 capital to risk weighted assets as of September 30, 2024 was 11.12% and continues to be well above the minimum threshold to be “well capitalized” of 6.50%.
  • Repaid Bank Term Funding Program (“BTFP”) borrowings, resulting in risk-free net interest income of $1.2 million earned during the course of the year to date.
  • $400.0 million of interest rate swaps matured during the third quarter of 2024, which drove increased liability sensitivity as the Federal Reserve began to cut interest rates. Of the remaining $400.0 million of interest rate swaps, $200.0 million will mature in January 2025.

HMN Financial Acquisition

On October 9, 2024, the Company completed its previously announced acquisition of HMN Financial, Inc. and its subsidiary, Home Federal Savings Bank (together, "HMNF"). The transaction expands the Company's franchise into Rochester, Minnesota and represents the largest bank acquisition in its history. With the addition of HMNF, the Company now has over $5.5 billion in total assets, $3.8 billion in total loans, $4.3 billion in total deposits, and asset under administration and management of approximately $43.6 billion, with 29 locations across the Midwest, as well as Arizona.

Selected Financial Data (unaudited)

 

 

As of and for the

 

 

Three months ended

 

Nine months ended

(dollars and shares in thousands, except per share data)

 

September 30, 2024

 

June 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average total assets

 

 

0.48

%

 

 

0.58

%

 

 

0.95

%

 

 

0.56

%

 

 

0.93

%

Adjusted return on average total assets (1)

 

 

0.57

%

 

 

0.65

%

 

 

0.75

%

 

 

0.62

%

 

 

0.85

%

Return on average common equity

 

 

5.52

%

 

 

6.76

%

 

 

10.05

%

 

 

6.43

%

 

 

9.79

%

Return on average tangible common equity (1)

 

 

7.83

%

 

 

9.40

%

 

 

13.51

%

 

 

8.98

%

 

 

13.27

%

Adjusted return on average tangible common equity (1)

 

 

9.04

%

 

 

10.30

%

 

 

10.97

%

 

 

9.80

%

 

 

12.27

%

Noninterest income as a % of revenue

 

 

55.72

%

 

 

53.28

%

 

 

58.21

%

 

 

54.10

%

 

 

54.51

%

Net interest margin (tax-equivalent)

 

 

2.23

%

 

 

2.39

%

 

 

2.27

%

 

 

2.31

%

 

 

2.50

%

Adjusted net interest margin (tax-equivalent) (1)

 

 

2.35

%

 

 

2.47

%

 

 

2.24

%

 

 

2.41

%

 

 

2.46

%

Efficiency ratio (1)

 

 

80.29

%

 

 

72.50

%

 

 

73.37

%

 

 

77.17

%

 

 

73.57

%

Adjusted efficiency ratio (1)

 

 

77.71

%

 

 

70.80

%

 

 

77.03

%

 

 

75.50

%

 

 

74.58

%

Net charge-offs/(recoveries) to average loans

 

 

0.04

%

 

 

0.36

%

 

 

(0.09

)%

 

 

0.14

%

 

 

(0.04

)%

Dividend payout ratio

 

 

76.92

%

 

 

64.52

%

 

 

42.22

%

 

 

66.29

%

 

 

43.08

%

Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

 

$

0.26

 

 

$

0.31

 

 

$

0.46

 

 

$

0.90

 

 

$

1.31

 

Earnings per common share - diluted

 

$

0.26

 

 

$

0.31

 

 

$

0.45

 

 

$

0.89

 

 

$

1.30

 

Adjusted earnings per common share - diluted (1)

 

$

0.31

 

 

$

0.34

 

 

$

0.36

 

 

$

0.98

 

 

$

1.19

 

Dividends declared per common share

 

$

0.20

 

 

$

0.20

 

 

$

0.19

 

 

$

0.59

 

 

$

0.56

 

Book value per common share

 

$

19.53

 

 

$

18.87

 

 

$

17.60

 

 

 

 

 

 

 

 

 

Tangible book value per common share (1)

 

$

16.50

 

 

$

15.77

 

 

$

14.32

 

 

 

 

 

 

 

 

 

Average common shares outstanding - basic

 

 

19,788

 

 

 

19,777

 

 

 

19,872

 

 

 

19,768

 

 

 

19,977

 

Average common shares outstanding - diluted

 

 

20,075

 

 

 

20,050

 

 

 

20,095

 

 

 

20,037

 

 

 

20,193

 

Other Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement and benefit services assets under administration/management

 

$

41,249,280

 

 

$

39,389,533

 

 

$

34,552,569

 

 

 

 

 

 

 

 

 

Wealth management assets under administration/management

 

$

4,397,505

 

 

$

4,172,290

 

 

$

3,724,091

 

 

 

 

 

 

 

 

 

Mortgage originations

 

$

82,388

 

 

$

109,254

 

 

$

109,637

 

 

$

245,743

 

 

$

298,626

 

______________

(1) Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

Results of Operations

Net Interest Income

Net interest income for the third quarter of 2024 was $22.5 million, a $1.5 million, or 6.1%, decrease from the second quarter of 2024. The decrease was primarily due to a decrease in interest income on lower cash balances, lower purchase accounting accretion from the Metro Phoenix Bank acquisition, and increased interest expense on higher deposit balances. These pressures were partially offset by an increase in interest income on higher average loan balances.

Net interest income increased $2.1 million, or 10.5%, from $20.4 million for the third quarter of 2023. Interest income increased $10.2 million, or 24.2%, from the third quarter of 2023, primarily driven by strong organic loan growth at higher yields, in addition to higher cash balances due to the BTFP. The increase in interest income was partially offset by an $8.0 million, or 37.1%, increase in interest expense, due to both an increase in rates paid on interest-bearing deposits and higher deposit and short-term borrowing balances.

Net interest margin (on a tax-equivalent basis) was 2.23% for the third quarter of 2024, a 16 basis point decrease from 2.39% for the second quarter of 2024, and a 4 basis point decrease from 2.27% for the third quarter of 2023. The decrease in net interest margin (on a tax-equivalent basis) was mainly attributable to less purchase accounting accretion, the impact of nonaccrual loans, and higher cost of funds from growth in average interest-bearing deposit balances. This was partially offset by strong loan growth. Adjusted net interest margin (on a tax-equivalent basis) (non-GAAP), which excludes BTFP borrowings and purchase accounting accretion, was 2.35% for the third quarter of 2024, an 11 basis point decrease from 2.47% for the second quarter of 2024, and an 11 basis point increase from 2.24% for the third quarter of 2023.

Noninterest Income

Noninterest income for the third quarter of 2024 was $28.4 million, a $1.0 million increase from the second quarter of 2024. The quarter over quarter increase was primarily driven by improvement across all fee-based businesses. Wealth revenues increased $0.3 million during the third quarter of 2024, a 5.1% increase from the second quarter of 2024. Retirement and benefit services revenue increased $0.1 million for the third quarter of 2024, a 0.4% increase from the second quarter of 2024 results. Combined assets under administration/management in wealth and retirement and benefit services increased 4.8% from June 30, 2024. The increase in wealth, retirement and benefit services revenue, and assets under administration/management was primarily due to improved equity and bond markets. Additionally, other noninterest income increased $0.6 million during the third quarter of 2024, a 28.7% increase from the second quarter of 2024, primarily due to a gain on the sale of fixed assets related to the sale of the Shorewood, Minnesota office in the western suburbs of the Twin Cities.

Noninterest income for the third quarter of 2024 decreased by $44 thousand, or 0.2%, from the third quarter of 2023. Wealth revenues increased $1.4 million, or 26.8%, in the third quarter of 2024, due to an increase in assets under administration/management of 5.4% during that same period. Other noninterest income increased $0.8 million, or 46.1% in the third quarter of 2024 compared to the third quarter of 2023, primarily due to a gain on the sale of fixed assets related to the sale of the Shorewood, Minnesota office and increased client swap fees. Offsetting these increases, retirement and benefit services revenue decreased $2.5 million, or 13.2%, from $18.6 million in the third quarter of 2023, driven by the divestiture of the ESOP trustee business in the third quarter of 2023 which resulted in a one-time recognized gain of $2.8 million.

Noninterest Expense

Noninterest expense for the third quarter of 2024 was $42.4 million, a $3.7 million, or 9.5%, increase from the second quarter of 2024. Professional fees and assessments increased $1.9 million, or 79.8%, from the second quarter of 2024, primarily driven by increased merger-related expenses of $1.1 million in connection with the acquisition of HMNF. Compensation expenses increased $0.8 million, or 3.9%, from the second quarter of 2024, primarily driven by experienced talent acquisitions in commercial lending and increased labor costs. Business services, software and technology expense increased $0.3 million, or 6.1%, from the second quarter of 2024, primarily driven by increased data processing expenses and custodian fees. Occupancy and equipment expense increased $0.3 million, or 14.7%, from the second quarter of 2024, primarily driven by increased rent and depreciation expense driven by the opening of the Shoreview, Minnesota office in the northern suburbs of the Twin Cities in July 2024.

Noninterest expense for the third quarter of 2024 increased $5.2 million, or 13.9%, from $37.3 million in the third quarter of 2023. The increase was primarily driven by professional fees and assessments, compensation and employee taxes and benefits. Professional fees and assessments increased primarily due to increased merger-related expenses of $1.7 million in connection with the acquisition of HMNF and an increase in Federal Deposit Insurance Corporation (“FDIC”) assessments. Compensation expense increased $2.0 million, or 10.4%, in the third quarter of 2024, primarily due to increased labor costs. Employee taxes and benefits expense increased $0.5 million, or 10.3%, primarily due to increased costs related to group insurance.

Financial Condition

Total assets were $4.1 billion as of September 30, 2024, an increase of $176.9 million, or 4.5%, from December 31, 2023. The increase was primarily due to a $272.8 million increase in loans, partially offset by a decrease of $63.9 million in cash and cash equivalents and a decrease of $35.6 million in investment securities.

Loans

Total loans were $3.0 billion as of September 30, 2024, an increase of $272.8 million, or 9.9%, from December 31, 2023. The increase was primarily driven by a $116.7 million increase in non-owner occupied commercial real estate (“CRE”) loans, a $49.6 million increase in construction, land and development CRE loans, a $44.1 million increase in commercial and industrial loans, a $30.3 million increase in multifamily CRE loans and a $24.7 million increase in owner occupied CRE loans, partially offset by $7.4 million and $17.2 million decreases in residential real estate first lien and construction loans, respectively.

The following table presents the composition of our loan portfolio as of the dates indicated:

 

 

September 30,

 

June 30,

 

March 30,

 

December 31,

 

September 30,

 

(dollars in thousands)

 

2024

 

2024

 

2024

 

2023

 

2023

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

606,245

 

$

591,779

 

$

575,259

 

$

562,180

 

$

547,644

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land and development

 

 

173,629

 

 

161,751

 

 

125,966

 

 

124,034

 

 

97,742

 

Multifamily

 

 

275,377

 

 

242,041

 

 

260,609

 

 

245,103

 

 

214,148

 

Non-owner occupied

 

 

686,071

 

 

647,776

 

 

565,979

 

 

569,354

 

 

504,827

 

Owner occupied

 

 

296,366

 

 

283,356

 

 

285,211

 

 

271,623

 

 

264,458

 

Total commercial real estate

 

 

1,431,443

 

 

1,334,924

 

 

1,237,765

 

 

1,210,114

 

 

1,081,175

 

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

45,821

 

 

41,410

 

 

41,149

 

 

40,832

 

 

41,581

 

Production

 

 

39,436

 

 

40,549

 

 

36,436

 

 

36,141

 

 

34,743

 

Total agricultural

 

 

85,257

 

 

81,959

 

 

77,585

 

 

76,973

 

 

76,324

 

Total commercial

 

 

2,122,945

 

 

2,008,662

 

 

1,890,609

 

 

1,849,267

 

 

1,705,143

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien

 

 

690,451

 

 

686,286

 

 

703,726

 

 

697,900

 

 

680,634

 

Construction

 

 

11,808

 

 

22,573

 

 

18,425

 

 

28,979

 

 

37,159

 

HELOC

 

 

134,301

 

 

126,211

 

 

120,501

 

 

118,315

 

 

116,296

 

Junior lien

 

 

36,445

 

 

36,323

 

 

36,381

 

 

35,819

 

 

36,381

 

Total residential real estate

 

 

873,005

 

 

871,393

 

 

879,033

 

 

881,013

 

 

870,470

 

Other consumer

 

 

36,393

 

 

35,737

 

 

29,833

 

 

29,303

 

 

30,817

 

Total consumer

 

 

909,398

 

 

907,130

 

 

908,866

 

 

910,316

 

 

901,287

 

Total loans

 

$

3,032,343

 

$

2,915,792

 

$

2,799,475

 

$

2,759,583

 

$

2,606,430

 

Deposits

Total deposits were $3.3 billion as of September 30, 2024, an increase of $227.9 million, or 7.4%, from December 31, 2023. Interest-bearing deposits increased $298.5 million, while noninterest-bearing deposits decreased $70.5 million, from December 31, 2023. The increase in total deposits was due to both expanded and new commercial deposit relationships and synergistic deposit growth. Synergistic deposits were $920.6 million as of September 30, 2024, an increase of $69.1 million, or 8.1%, from December 31, 2023. The Company continued to have $0 of brokered deposits as of September 30, 2024.

The following table presents the composition of the Company’s deposit portfolio as of the dates indicated:

 

 

September 30,

 

June 30,

 

March 30,

 

December 31,

 

September 30,

(dollars in thousands)

 

2024

 

2024

 

2024

 

2023

 

2023

Noninterest-bearing demand

 

$

657,547

 

 

$

701,428

 

 

$

692,500

 

 

$

728,082

 

 

$

717,990

 

Interest-bearing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

 

1,034,694

 

 

 

1,003,585

 

 

 

938,751

 

 

 

840,711

 

 

 

759,812

 

Savings accounts

 

 

75,675

 

 

 

79,747

 

 

 

82,727

 

 

 

82,485

 

 

 

88,341

 

Money market savings

 

 

1,067,187

 

 

 

1,022,470

 

 

 

1,114,262

 

 

 

1,032,771

 

 

 

959,106

 

Time deposits

 

 

488,447

 

 

 

491,345

 

 

 

456,729

 

 

 

411,562

 

 

 

346,935

 

Total interest-bearing

 

 

2,666,003

 

 

 

2,597,147

 

 

 

2,592,469

 

 

 

2,367,529

 

 

 

2,154,194

 

Total deposits

 

$

3,323,550

 

 

$

3,298,575

 

 

$

3,284,969

 

 

$

3,095,611

 

 

$

2,872,184

 

Asset Quality

Total nonperforming assets were $48.0 million as of September 30, 2024, an increase of $39.3 million from December 31, 2023. $25.0 million of the increase was primarily driven by one construction, land and development loan moving to nonaccrual status in the second quarter of 2024. During the third quarter of 2024, management elected to make protective advances in order for construction to continue on that project. Management is actively working with the borrower on strategies to complete construction, preserve value and support repayment of the loan. A large residential real estate relationship and one CRE non-owner occupied loan moving to nonaccrual status also contributed $13.6 million to the increase in nonaccrual loans during the third quarter of 2024.

As of September 30, 2024, the allowance for credit losses on loans was $39.1 million, or 1.29% of total loans, compared to $35.8 million, or 1.30% of total loans, as of December 31, 2023.

The following table presents selected asset quality data as of and for the periods indicated:

 

 

As of and for the three months ended

 

 

September 30,

 

June 30,

 

March 30,

 

December 31,

 

September 30,

(dollars in thousands)

 

2024

 

2024

 

2024

 

2023

 

2023

Nonaccrual loans

 

$

48,026

 

 

$

27,618

 

 

$

7,345

 

 

$

8,596

 

 

$

9,007

 

Accruing loans 90+ days past due

 

 

 

 

 

 

 

 

 

 

 

139

 

 

 

 

Total nonperforming loans

 

 

48,026

 

 

 

27,618

 

 

 

7,345

 

 

 

8,735

 

 

 

9,007

 

OREO and repossessed assets

 

 

 

 

 

 

 

 

3

 

 

 

32

 

 

 

3

 

Total nonperforming assets

 

$

48,026

 

 

$

27,618

 

 

$

7,348

 

 

$

8,767

 

 

$

9,010

 

Net charge-offs/(recoveries)

 

 

316

 

 

 

2,522

 

 

 

58

 

 

 

(238

)

 

 

(594

)

Net charge-offs/(recoveries) to average loans

 

 

0.04

%

 

 

0.36

%

 

 

0.01

%

 

 

(0.04

)%

 

 

(0.09

)%

Nonperforming loans to total loans

 

 

1.58

%

 

 

0.95

%

 

 

0.26

%

 

 

0.32

%

 

 

0.35

%

Nonperforming assets to total assets

 

 

1.18

%

 

 

0.63

%

 

 

0.17

%

 

 

0.22

%

 

 

0.23

%

Allowance for credit losses on loans to total loans

 

 

1.29

%

 

 

1.31

%

 

 

1.31

%

 

 

1.30

%

 

 

1.39

%

Allowance for credit losses on loans to nonperforming loans

 

 

82

%

 

 

139

%

 

 

498

%

 

 

410

%

 

 

403

%

For the third quarter of 2024, the Company had net charge-offs of $0.3 million, compared to net charge-offs of $2.5 million for the second quarter of 2024 and net recoveries of $0.6 million for the third quarter of 2023. The quarter-over-quarter decrease in net charge-offs was driven by a $2.6 million charge-off of one commercial and industrial loan in the second quarter of 2024.

The Company recorded a provision for credit losses of $1.7 million for the third quarter of 2024, compared to a provision for credit losses of $4.5 million for the second quarter of 2024 and no provision for credit losses for the third quarter of 2023. The provision for credit losses for the third quarter of 2024 was primarily driven by loan growth and an increase in nonaccrual loans.

The unearned fair value adjustments on the acquired Metro Phoenix Bank loan portfolio were $3.8 million as of September 30, 2024, $5.2 million as of December 31, 2023, and $5.5 million as of September 30, 2023.

Capital

Total stockholders’ equity was $386.5 million as of September 30, 2024, an increase of $17.4 million from December 31, 2023. This change was primarily driven by an improvement in accumulated other comprehensive loss of $10.2 million and an increase in retained earnings of $6.2 million. Tangible book value per common share (non-GAAP) increased to $16.50 as of September 30, 2024, from $15.46 as of December 31, 2023. Tangible common equity to tangible assets (non-GAAP) increased to 8.11% as of September 30, 2024, from 7.94% as of December 31, 2023. Common equity tier 1 capital to risk weighted assets decreased to 11.12% as of September 30, 2024, from 11.82% as of December 31, 2023.

The following table presents our capital ratios as of the dates indicated:

 

 

September 30,

 

December 31,

 

September 30,

 

 

2024

 

2023

 

2023

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

 

 

 

Alerus Financial Corporation Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk weighted assets

 

 

11.12

%

 

 

11.82

%

 

 

13.01

%

Tier 1 capital to risk weighted assets

 

 

11.38

%

 

 

12.10

%

 

 

13.30

%

Total capital to risk weighted assets

 

 

14.04

%

 

 

14.76

%

 

 

16.10

%

Tier 1 capital to average assets

 

 

9.30

%

 

 

10.57

%

 

 

11.14

%

Tangible common equity / tangible assets (2)

 

 

8.11

%

 

 

7.94

%

 

 

7.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Alerus Financial, N.A.

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk weighted assets

 

 

10.73

%

 

 

11.40

%

 

 

12.68

%

Tier 1 capital to risk weighted assets

 

 

10.73

%

 

 

11.40

%

 

 

12.68

%

Total capital to risk weighted assets

 

 

11.98

%

 

 

12.51

%

 

 

13.86

%

Tier 1 capital to average assets

 

 

8.90

%

 

 

9.92

%

 

 

10.72

%

_______________

(1)

Capital ratios for the current quarter are to be considered preliminary until the Call Report for Alerus Financial, N.A. is filed.

(2)

Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

Conference Call

The Company will host a conference call at 11:00 a.m. Central Time on Wednesday, October 30, 2024, to discuss its financial results. Attendees are encouraged to register ahead of time for the call at investors.alerus.com. The call can also be accessed via telephone at +1 (833) 470-1428, using access code 572067. A recording of the call and transcript will be available on the Company’s investor relations website at investors.alerus.com following the call.

About Alerus Financial Corporation

Alerus Financial Corporation (Nasdaq: ALRS) is a commercial wealth bank and national retirement services provider with corporate offices in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area. Through its subsidiary, Alerus Financial, National Association, Alerus provides diversified and comprehensive financial solutions to business and consumer clients, including banking, wealth services, and retirement and benefit plans and services. Alerus provides clients with a primary point of contact to help fully understand the unique needs and delivery channel preferences of each client. Clients are provided with competitive products, valuable insight, and sound advice supported by digital solutions designed to meet the clients’ needs.

Alerus operates 29 banking and commercial wealth offices, with locations in Grand Forks and Fargo, North Dakota; the Minneapolis-St. Paul, Minnesota metropolitan area; Rochester, Minnesota; the southern Minnesota area; Marshalltown, Iowa; Pewaukee, Wisconsin; and Phoenix and Scottsdale, Arizona. Alerus also operates a commercial wealth office in La Crosse, Wisconsin. Alerus Retirement and Benefit serves advisors, brokers, employers, and plan participants across the United States.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized by U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measures include the ratio of tangible common equity to tangible assets, adjusted tangible common equity to tangible assets, tangible book value per common share, return on average tangible common equity, efficiency ratio, pre-provision net revenue, adjusted noninterest income, adjusted noninterest expense, adjusted pre-provision net revenue, adjusted efficiency ratio, adjusted net income, adjusted return on average assets, adjusted return on average tangible common equity, net interest margin (tax-equivalent), adjusted net interest margin (tax-equivalent), and adjusted earnings per common share - diluted. Management uses these non-GAAP financial measures in its analysis of its performance, and believes financial analysts and investors frequently use these measures, and other similar measures, to evaluate capital adequacy and financial performance. Reconciliations of non-GAAP disclosures used in this press release to the comparable GAAP measures are provided in the accompanying tables. Management, banking regulators, many financial analysts and other investors use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.

These non-GAAP financial measures should not be considered in isolation or as a substitute for total stockholders’ equity, total assets, book value per share, return on average assets, return on average equity, or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Company calculates these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of Alerus Financial Corporation. These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature. Examples of forward-looking statements include, among others, statements the Company makes regarding our projected growth, anticipated future financial performance, financial condition, credit quality, management’s long-term performance goals and the future plans and prospects of Alerus Financial Corporation.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the following: interest rate risk, including the effects of changes in interest rates; our ability to successfully manage credit risk and maintain an adequate level of allowance for credit losses; new or revised accounting standards; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; our ability to raise additional capital to implement our business plan; the overall health of the local and national real estate market; concentrations within our loan portfolio; the concentration of large loans to certain borrowers; our ability to successfully manage credit risk; the level of nonperforming assets on our balance sheet; our ability to implement our organic and acquisition growth strategies, including the integration of HMNF which the Company acquired in the fourth quarter of 2024; the impact of economic or market conditions on our fee-based services; our ability to continue to grow our retirement and benefit services business; our ability to continue to originate a sufficient volume of residential mortgages; the occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; interruptions involving our information technology and telecommunications systems or third-party servicers; potential losses incurred in connection with mortgage loan repurchases; the composition of our executive management team and our ability to attract and retain key personnel; rapid technological change in the financial services industry; increased competition in the financial services industry, including from non-banks such as credit unions, Fintech companies and digital asset service providers; our ability to successfully manage liquidity risk, including our need to access higher cost sources of funds such as fed funds purchased and short-term borrowings; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us or to which the Company may become subject; potential impairment to the goodwill the Company recorded in connection with our past acquisitions, including the acquisitions of Metro Phoenix Bank and HMNF; the extensive regulatory framework that applies to us; the impact of recent and future legislative and regulatory changes, including in response to recent bank failures; fluctuations in the values of the securities held in our securities portfolio, including as a result of changes in interest rates; governmental monetary, trade and fiscal policies; risks related to climate change and the negative impact it may have on our customers and their businesses; severe weather, natural disasters, widespread disease or pandemics; acts of war or terrorism, including the ongoing conflict in the Middle East and the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial reporting; changes to U.S. or state tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages and employee turnover; our success at managing the risks involved in the foregoing items; and any other risks described in the “Risk Factors” sections of the reports filed by Alerus Financial Corporation with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Alerus Financial Corporation and Subsidiaries Consolidated Balance Sheets (dollars in thousands, except share and per share data)

 

 

September 30,

 

December 31,

 

 

2024

 

2023

Assets

 

(Unaudited)

 

 

 

 

 

Cash and cash equivalents

 

$

65,975

 

 

$

129,893

 

Investment securities

 

 

 

 

 

 

 

 

Trading, at fair value

 

 

2,708

 

 

 

 

Available-for-sale, at fair value

 

 

466,003

 

 

 

486,736

 

Held-to-maturity, at amortized cost (with an allowance for credit losses on investments of $137 and $151, respectively)

 

 

281,913

 

 

 

299,515

 

Loans held for sale

 

 

13,487

 

 

 

11,497

 

Loans

 

 

3,032,343

 

 

 

2,759,583

 

Allowance for credit losses on loans

 

 

(39,142

)

 

 

(35,843

)

Net loans

 

 

2,993,201

 

 

 

2,723,740

 

Land, premises and equipment, net

 

 

18,790

 

 

 

17,940

 

Operating lease right-of-use assets

 

 

9,268

 

 

 

5,436

 

Accrued interest receivable

 

 

16,469

 

 

 

15,700

 

Bank-owned life insurance

 

 

35,793

 

 

 

33,236

 

Goodwill

 

 

46,783

 

 

 

46,783

 

Other intangible assets

 

 

13,186

 

 

 

17,158

 

Servicing rights

 

 

1,874

 

 

 

2,052

 

Deferred income taxes, net

 

 

33,054

 

 

 

34,595

 

Other assets

 

 

86,136

 

 

 

83,432

 

Total assets

 

$

4,084,640

 

 

$

3,907,713

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

657,547

 

 

$

728,082

 

Interest-bearing

 

 

2,666,003

 

 

 

2,367,529

 

Total deposits

 

 

3,323,550

 

 

 

3,095,611

 

Short-term borrowings

 

 

244,700

 

 

 

314,170

 

Long-term debt

 

 

59,041

 

 

 

58,956

 

Operating lease liabilities

 

 

9,643

 

 

 

5,751

 

Accrued expenses and other liabilities

 

 

61,220

 

 

 

64,098

 

Total liabilities

 

 

3,698,154

 

 

 

3,538,586

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding

 

 

 

 

 

 

Common stock, $1 par value, 30,000,000 shares authorized: 19,790,005 and 19,734,077 issued and outstanding

 

 

19,790

 

 

 

19,734

 

Additional paid-in capital

 

 

151,257

 

 

 

150,343

 

Retained earnings

 

 

278,863

 

 

 

272,705

 

Accumulated other comprehensive loss

 

 

(63,424

)

 

 

(73,655

)

Total stockholders’ equity

 

 

386,486

 

 

 

369,127

 

Total liabilities and stockholders’ equity

 

$

4,084,640

 

 

$

3,907,713

 

Alerus Financial Corporation and Subsidiaries Consolidated Statements of Income (dollars and shares in thousands, except per share data)

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2024

 

2024

 

2023

 

2024

 

2023

Interest Income

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Loans, including fees

 

$

42,593

 

 

$

41,663

 

 

$

34,986

 

 

$

123,551

 

 

$

99,187

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

4,596

 

 

 

4,845

 

 

 

6,146

 

 

 

14,008

 

 

 

18,222

 

Exempt from federal income taxes

 

 

169

 

 

 

170

 

 

 

182

 

 

 

512

 

 

 

558

 

Other

 

 

4,854

 

 

 

6,344

 

 

 

724

 

 

 

16,200

 

 

 

2,221

 

Total interest income

 

 

52,212

 

 

 

53,022

 

 

 

42,038

 

 

 

154,271

 

 

 

120,188

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

22,285

 

 

 

21,284

 

 

 

14,436

 

 

 

63,721

 

 

 

36,218

 

Short-term borrowings

 

 

6,706

 

 

 

7,053

 

 

 

6,528

 

 

 

19,748

 

 

 

15,684

 

Long-term debt

 

 

679

 

 

 

684

 

 

 

679

 

 

 

2,041

 

 

 

1,999

 

Total interest expense

 

 

29,670

 

 

 

29,021

 

 

 

21,643

 

 

 

85,510

 

 

 

53,901

 

Net interest income

 

 

22,542

 

 

 

24,001

 

 

 

20,395

 

 

 

68,761

 

 

 

66,287

 

Provision for credit losses

 

 

1,661

 

 

 

4,489

 

 

 

 

 

 

6,150

 

 

 

550

 

Net interest income after provision for credit losses

 

 

20,881

 

 

 

19,512

 

 

 

20,395

 

 

 

62,611

 

 

 

65,737

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement and benefit services

 

 

16,144

 

 

 

16,078

 

 

 

18,605

 

 

 

47,876

 

 

 

49,977

 

Wealth management

 

 

6,684

 

 

 

6,360

 

 

 

5,271

 

 

 

19,161

 

 

 

15,915

 

Mortgage banking

 

 

2,573

 

 

 

2,554

 

 

 

2,510

 

 

 

6,796

 

 

 

7,132

 

Service charges on deposit accounts

 

 

488

 

 

 

456

 

 

 

328

 

 

 

1,333

 

 

 

940

 

Other

 

 

2,474

 

 

 

1,923

 

 

 

1,693

 

 

 

5,891

 

 

 

5,475

 

Total noninterest income

 

 

28,363

 

 

 

27,371

 

 

 

28,407

 

 

 

81,057

 

 

 

79,439

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

 

21,058

 

 

 

20,265

 

 

 

19,071

 

 

 

60,655

 

 

 

57,076

 

Employee taxes and benefits

 

 

5,400

 

 

 

5,134

 

 

 

4,895

 

 

 

16,722

 

 

 

15,472

 

Occupancy and equipment expense

 

 

2,082

 

 

 

1,815

 

 

 

1,883

 

 

 

5,803

 

 

 

5,619

 

Business services, software and technology expense

 

 

4,879

 

 

 

4,599

 

 

 

4,774

 

 

 

14,823

 

 

 

15,367

 

Intangible amortization expense

 

 

1,324

 

 

 

1,324

 

 

 

1,324

 

 

 

3,972

 

 

 

3,972

 

Professional fees and assessments

 

 

4,267

 

 

 

2,373

 

 

 

1,716

 

 

 

8,633

 

 

 

4,397

 

Marketing and business development

 

 

764

 

 

 

651

 

 

 

750

 

 

 

2,200

 

 

 

2,139

 

Supplies and postage

 

 

422

 

 

 

370

 

 

 

410

 

 

 

1,321

 

 

 

1,275

 

Travel

 

 

330

 

 

 

332

 

 

 

322

 

 

 

954

 

 

 

876

 

Mortgage and lending expenses

 

 

684

 

 

 

467

 

 

 

689

 

 

 

1,592

 

 

 

1,401

 

Other

 

 

1,237

 

 

 

1,422

 

 

 

1,426

 

 

 

3,543

 

 

 

3,909

 

Total noninterest expense

 

 

42,447

 

 

 

38,752

 

 

 

37,260

 

 

 

120,218

 

 

 

111,503

 

Income before income tax expense

 

 

6,797

 

 

 

8,131

 

 

 

11,542

 

 

 

23,450

 

 

 

33,673

 

Income tax expense

 

 

1,590

 

 

 

1,923

 

 

 

2,381

 

 

 

5,604

 

 

 

7,222

 

Net income

 

$

5,207

 

 

$

6,208

 

 

$

9,161

 

 

$

17,846

 

 

$

26,451

 

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

$

0.26

 

 

$

0.31

 

 

$

0.46

 

 

$

0.90

 

 

$

1.31

 

Diluted earnings per common share

 

$

0.26

 

 

$

0.31

 

 

$

0.45

 

 

$

0.89

 

 

$

1.30

 

Dividends declared per common share

 

$

0.20

 

 

$

0.20

 

 

$

0.19

 

 

$

0.59

 

 

$

0.56

 

Average common shares outstanding

 

 

19,788

 

 

 

19,777

 

 

 

19,872

 

 

 

19,768

 

 

 

19,977

 

Diluted average common shares outstanding

 

 

20,075

 

 

 

20,050

 

 

 

20,095

 

 

 

20,037

 

 

 

20,193

 

Alerus Financial Corporation and Subsidiaries Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited) (dollars and shares in thousands, except per share data)

 

 

September 30,

 

June 30,

 

December 31,

 

September 30,

 

 

2024

 

2024

 

2023

 

2023

Tangible Common Equity to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total common stockholders’ equity

 

$

386,486

 

 

$

373,226

 

 

$

369,127

 

 

$

349,402

 

Less: Goodwill

 

 

46,783

 

 

 

46,783

 

 

 

46,783

 

 

 

46,783

 

Less: Other intangible assets

 

 

13,186

 

 

 

14,510

 

 

 

17,158

 

 

 

18,482

 

Tangible common equity (a)

 

 

326,517

 

 

 

311,933

 

 

 

305,186

 

 

 

284,137

 

Total assets

 

 

4,084,640

 

 

 

4,358,623

 

 

 

3,907,713

 

 

 

3,869,138

 

Less: Goodwill

 

 

46,783

 

 

 

46,783

 

 

 

46,783

 

 

 

46,783

 

Less: Other intangible assets

 

 

13,186

 

 

 

14,510

 

 

 

17,158

 

 

 

18,482

 

Tangible assets (b)

 

 

4,024,671

 

 

 

4,297,330

 

 

 

3,843,772

 

 

 

3,803,873

 

Tangible common equity to tangible assets (a)/(b)

 

 

8.11

%

 

 

7.26

%

 

 

7.94

%

 

 

7.47

%

Adjusted Tangible Common Equity to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible assets (b)

 

$

4,024,671

 

 

$

4,297,330

 

 

$

3,843,772

 

 

$

3,803,873

 

Less: Cash proceeds from BTFP

 

 

 

 

 

355,000

 

 

 

 

 

 

 

Adjusted tangible assets (c)

 

 

4,024,671

 

 

 

3,942,330

 

 

 

3,843,772

 

 

 

3,803,873

 

Adjusted tangible common equity to tangible assets (a)/(c)

 

 

8.11

%

 

 

7.91

%

 

 

7.94

%

 

 

7.47

%

Tangible Book Value Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total common stockholders’ equity

 

$

386,486

 

 

$

373,226

 

 

$

369,127

 

 

$

349,402

 

Less: Goodwill

 

 

46,783

 

 

 

46,783

 

 

 

46,783

 

 

 

46,783

 

Less: Other intangible assets

 

 

13,186

 

 

 

14,510

 

 

 

17,158

 

 

 

18,482

 

Tangible common equity (d)

 

 

326,517

 

 

 

311,933

 

 

 

305,186

 

 

 

284,137

 

Total common shares issued and outstanding (e)

 

 

19,790

 

 

 

19,778

 

 

 

19,734

 

 

 

19,848

 

Tangible book value per common share (d)/(e)

 

$

16.50

 

 

$

15.77

 

 

$

15.46

 

 

$

14.32

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2024

 

2024

 

2023

 

2024

 

2023

Return on Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

5,207

 

 

$

6,208

 

 

$

9,161

 

 

$

17,846

 

 

$

26,451

 

Add: Intangible amortization expense (net of tax) (1)

 

 

1,046

 

 

 

1,046

 

 

 

1,046

 

 

 

3,138

 

 

 

3,138

 

Net income, excluding intangible amortization (f)

 

 

6,253

 

 

 

7,254

 

 

 

10,207

 

 

 

20,984

 

 

 

29,589

 

Average total equity

 

 

375,229

 

 

 

369,217

 

 

 

361,735

 

 

 

370,758

 

 

 

361,260

 

Less: Average goodwill

 

 

46,783

 

 

 

46,783

 

 

 

46,882

 

 

 

46,783

 

 

 

47,018

 

Less: Average other intangible assets (net of tax) (1)

 

 

10,933

 

 

 

11,969

 

 

 

15,109

 

 

 

11,969

 

 

 

16,149

 

Average tangible common equity (g)

 

 

317,513

 

 

 

310,465

 

 

 

299,744

 

 

 

312,006

 

 

 

298,093

 

Return on average tangible common equity (f)/(g)

 

 

7.83

%

 

 

9.40

%

 

 

13.51

%

 

 

8.98

%

 

 

13.27

%

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

42,447

 

 

$

38,752

 

 

$

37,260

 

 

$

120,218

 

 

$

111,503

 

Less: Intangible amortization expense

 

 

1,324

 

 

 

1,324

 

 

 

1,324

 

 

 

3,972

 

 

 

3,972

 

Adjusted noninterest expense (h)

 

 

41,123

 

 

 

37,428

 

 

 

35,936

 

 

 

116,246

 

 

 

107,531

 

Net interest income

 

 

22,542

 

 

 

24,001

 

 

 

20,395

 

 

 

68,761

 

 

 

66,287

 

Noninterest income

 

 

28,363

 

 

 

27,371

 

 

 

28,407

 

 

 

81,057

 

 

 

79,439

 

Tax-equivalent adjustment

 

 

314

 

 

 

255

 

 

 

180

 

 

 

816

 

 

 

444

 

Total tax-equivalent revenue (i)

 

 

51,219

 

 

 

51,627

 

 

 

48,982

 

 

 

150,634

 

 

 

146,170

 

Efficiency ratio (h)/(i)

 

 

80.29

%

 

 

72.50

%

 

 

73.37

%

 

 

77.17

%

 

 

73.57

%

______________

(1)

Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

Alerus Financial Corporation and Subsidiaries Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited) (dollars and shares in thousands, except per share data)

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2024

 

2024

 

2023

 

2024

 

2023

Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

22,542

 

 

$

24,001

 

 

$

20,395

 

 

$

68,761

 

 

$

66,287

 

Add: Noninterest income

 

 

28,363

 

 

 

27,371

 

 

 

28,407

 

 

 

81,057

 

 

 

79,439

 

Less: Noninterest expense

 

 

42,447

 

 

 

38,752

 

 

 

37,260

 

 

 

120,218

 

 

 

111,503

 

Pre-provision net revenue

 

$

8,458

 

 

$

12,620

 

 

$

11,542

 

 

$

29,600

 

 

$

34,223

 

Adjusted Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

$

28,363

 

 

$

27,371

 

 

$

28,407

 

 

$

81,057

 

 

$

79,439

 

Less: Adjusted noninterest income items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOLI mortality proceeds (non-taxable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,196

 

Gain on sale of ESOP trustee business

 

 

 

 

 

 

 

 

2,775

 

 

 

 

 

 

2,775

 

Net gain on sale of premises and equipment

 

 

476

 

 

 

 

 

 

 

 

 

476

 

 

 

 

Total adjusted noninterest income items (j)

 

 

476

 

 

 

 

 

 

2,775

 

 

 

476

 

 

 

3,971

 

Adjusted noninterest income (k)

 

$

27,887

 

 

$

27,371

 

 

$

25,632

 

 

$

80,581

 

 

$

75,468

 

Adjusted Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

42,447

 

 

$

38,752

 

 

$

37,260

 

 

$

120,218

 

 

$

111,503

 

Less: Adjusted noninterest expense items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HMNF merger- and acquisition-related expenses

 

 

1,661

 

 

 

563

 

 

 

 

 

 

2,251

 

 

 

 

Severance and signing bonus expense

 

 

31

 

 

 

315

 

 

 

343

 

 

 

626

 

 

 

1,475

 

Total adjusted noninterest expense items (l)

 

 

1,692

 

 

 

878

 

 

 

343

 

 

 

2,877

 

 

 

1,475

 

Adjusted noninterest expense (m)

 

$

40,755

 

 

$

37,874

 

 

$

36,917

 

 

$

117,341

 

 

$

110,028

 

Adjusted Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

22,542

 

 

$

24,001

 

 

$

20,395

 

 

$

68,761

 

 

$

66,287

 

Add: Adjusted noninterest income (k)

 

 

27,887

 

 

 

27,371

 

 

 

25,632

 

 

 

80,581

 

 

 

75,468

 

Less: Adjusted noninterest expense (m)

 

 

40,755

 

 

 

37,874

 

 

 

36,917

 

 

 

117,341

 

 

 

110,028

 

Adjusted pre-provision net revenue

 

$

9,674

 

 

$

13,498

 

 

$

9,110

 

 

$

32,001

 

 

$

31,727

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense (m)

 

$

40,755

 

 

$

37,874

 

 

$

36,917

 

 

$

117,341

 

 

$

110,028

 

Less: Intangible amortization expense

 

 

1,324

 

 

 

1,324

 

 

 

1,324

 

 

 

3,972

 

 

 

3,972

 

Adjusted noninterest expense for efficiency ratio (n)

 

 

39,431

 

 

 

36,550

 

 

 

35,593

 

 

 

113,369

 

 

 

106,056

 

Tax-equivalent revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

22,542

 

 

 

24,001

 

 

 

20,395

 

 

 

68,761

 

 

 

66,287

 

Add: Adjusted noninterest income (k)

 

 

27,887

 

 

 

27,371

 

 

 

25,632

 

 

 

80,581

 

 

 

75,468

 

Add: Tax-equivalent adjustment

 

 

314

 

 

 

255

 

 

 

180

 

 

 

816

 

 

 

444

 

Total tax-equivalent revenue (o)

 

 

50,743

 

 

 

51,627

 

 

 

46,207

 

 

 

150,158

 

 

 

142,199

 

Adjusted efficiency ratio (n)/(o)

 

 

77.71

%

 

 

70.80

%

 

 

77.03

%

 

 

75.50

%

 

 

74.58

%

Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

5,207

 

 

$

6,208

 

 

$

9,161

 

 

$

17,846

 

 

$

26,451

 

Less: Adjusted noninterest income items (net of tax) (1) (j)

 

 

376

 

 

 

 

 

 

2,192

 

 

 

376

 

 

 

3,388

 

Add: Adjusted noninterest expense items (net of tax) (1) (l)

 

 

1,337

 

 

 

694

 

 

 

271

 

 

 

2,273

 

 

 

1,165

 

Adjusted net income (p)

 

$

6,168

 

 

$

6,902

 

 

$

7,240

 

 

$

19,743

 

 

$

24,228

 

Adjusted Return on Average Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets (q)

 

$

4,298,080

 

 

$

4,297,294

 

 

$

3,821,601

 

 

$

4,245,181

 

 

$

3,799,645

 

Adjusted return on average assets (p)/(q)

 

 

0.57

%

 

 

0.65

%

 

 

0.75

%

 

 

0.62

%

 

 

0.85

%

Adjusted Return on Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (p)

 

$

6,168

 

 

$

6,902

 

 

$

7,240

 

 

$

19,743

 

 

$

24,228

 

Add: Intangible amortization expense (net of tax) (1)

 

 

1,046

 

 

 

1,046

 

 

 

1,046

 

 

 

3,138

 

 

 

3,138

 

Adjusted net income, excluding intangible amortization (r)

 

 

7,214

 

 

 

7,948

 

 

 

8,286

 

 

 

22,881

 

 

 

27,366

 

Average total equity

 

 

375,229

 

 

 

369,217

 

 

 

361,735

 

 

 

370,758

 

 

 

361,260

 

Less: Average goodwill

 

 

46,783

 

 

 

46,783

 

 

 

46,882

 

 

 

46,783

 

 

 

47,018

 

Less: Average other intangible assets (net of tax)

 

 

10,933

 

 

 

11,969

 

 

 

15,109

 

 

 

11,969

 

 

 

16,149

 

Average tangible common equity (s)

 

 

317,513

 

 

 

310,465

 

 

 

299,744

 

 

 

312,006

 

 

 

298,093

 

Return on average tangible common equity (r)/(s)

 

 

9.04

%

 

 

10.30

%

 

 

10.97

%

 

 

9.80

%

 

 

12.27

%

______________

(1)

Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

Alerus Financial Corporation and Subsidiaries Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited) (dollars and shares in thousands, except per share data)

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2024

 

2024

 

2023

 

2024

 

2023

Adjusted Net Interest Margin (Tax-Equivalent)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

22,542

 

 

$

24,001

 

 

$

20,395

 

 

$

68,761

 

 

$

66,287

 

Less: BTFP cash interest income

 

 

4,113

 

 

 

4,766

 

 

 

 

 

 

12,494

 

 

 

 

Add: BTFP interest expense

 

 

3,717

 

 

 

4,307

 

 

 

 

 

 

11,291

 

 

 

 

Less: Purchase accounting net accretion

 

 

152

 

 

 

985

 

 

 

294

 

 

 

1,429

 

 

 

969

 

Net interest income excluding BTFP impact

 

 

21,994

 

 

 

22,557

 

 

 

20,101

 

 

 

66,129

 

 

 

65,318

 

Add: Tax equivalent adjustment for loans and securities

 

 

314

 

 

 

255

 

 

 

180

 

 

 

816

 

 

 

444

 

Adjusted net interest income (t)

 

$

22,308

 

 

$

22,812

 

 

$

20,281

 

 

$

66,945

 

 

$

65,762

 

Interest earning assets

 

 

4,077,716

 

 

 

4,075,003

 

 

 

3,591,478

 

 

 

4,024,942

 

 

 

3,574,675

 

Less: Average cash proceeds balance from BTFP

 

 

303,043

 

 

 

355,000

 

 

 

 

 

 

309,051

 

 

 

 

Add: Change in unearned purchase accounting discount

 

 

152

 

 

 

985

 

 

 

294

 

 

 

1,429

 

 

 

969

 

Adjusted interest earning assets (u)

 

$

3,774,825

 

 

$

3,720,988

 

 

$

3,591,772

 

 

$

3,717,320

 

 

$

3,575,644

 

Adjusted net interest margin (tax-equivalent) (t)/(u)

 

 

2.35

%

 

 

2.47

%

 

 

2.24

%

 

 

2.41

%

 

 

2.46

%

Adjusted Earnings Per Common Share - Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (p)

 

$

6,168

 

 

$

6,902

 

 

$

7,240

 

 

$

19,743

 

 

$

24,228

 

Less: Dividends and undistributed earnings allocated to participating securities

 

 

24

 

 

 

38

 

 

 

67

 

 

 

102

 

 

 

186

 

Net income available to common stockholders (v)

 

 

6,144

 

 

 

6,864

 

 

 

7,173

 

 

 

19,641

 

 

 

24,042

 

Weighted-average common shares outstanding for diluted earnings per share (w)

 

 

20,075

 

 

 

20,050

 

 

 

20,095

 

 

 

20,037

 

 

 

20,193

 

Adjusted earnings per common share - diluted (v)/(w)

 

$

0.31

 

 

$

0.34

 

 

$

0.36

 

 

$

0.98

 

 

$

1.19

 

_____________

(1)

Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

Alerus Financial Corporation and Subsidiaries Analysis of Average Balances, Yields, and Rates (unaudited) (dollars in thousands)

 

 

Three months ended

 

Nine months ended

 

 

September 30, 2024

 

June 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

 

 

 

 

 

 

Average

 

 

 

 

 

Average

 

 

 

 

 

Average

 

 

 

 

 

Average

 

 

 

 

 

Average

 

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

 

Balance

 

Rate

 

Balance

 

Rate

 

Balance

 

Rate

 

Balance

 

Rate

 

Balance

 

Rate

Interest Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits with banks

 

$

326,350

 

 

 

5.47

%

 

$

448,245

 

 

 

5.38

%

 

$

29,450

 

 

 

3.09

%

 

$

375,365

 

 

 

5.39

%

 

$

35,892

 

 

 

3.45

%

Investment securities (1)

 

 

749,062

 

 

 

2.55

 

 

 

756,413

 

 

 

2.69

 

 

 

971,913

 

 

 

2.60

 

 

 

760,219

 

 

 

2.58

 

 

 

1,004,436

 

 

 

2.52

 

Loans held for sale

 

 

15,795

 

 

 

3.20

 

 

 

16,473

 

 

 

8.91

 

 

 

16,518

 

 

 

5.55

 

 

 

13,768

 

 

 

6.01

 

 

 

13,822

 

 

 

5.29

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

593,685

 

 

 

7.26

 

 

 

578,544

 

 

 

7.39

 

 

 

523,263

 

 

 

6.61

 

 

 

578,839

 

 

 

7.21

 

 

 

524,083

 

 

 

6.54

 

CRE − Construction, land and development

 

 

184,611

 

 

 

5.68

 

 

 

126,744

 

 

 

8.01

 

 

 

88,450

 

 

 

8.52

 

 

 

146,454

 

 

 

7.03

 

 

 

93,098

 

 

 

7.46

 

CRE − Multifamily

 

 

242,558

 

 

 

5.62

 

 

 

243,076

 

 

 

5.52

 

 

 

209,020

 

 

 

5.17

 

 

 

245,372

 

 

 

5.57

 

 

 

171,043

 

 

 

5.15

 

CRE − Non-owner occupied

 

 

663,539

 

 

 

5.88

 

 

 

617,338

 

 

 

5.90

 

 

 

491,948

 

 

 

5.34

 

 

 

615,320

 

 

 

5.85

 

 

 

492,098

 

 

 

5.15

 

CRE − Owner occupied

 

 

289,963

 

 

 

5.41

 

 

 

283,754

 

 

 

5.47

 

 

 

256,983

 

 

 

5.22

 

 

 

284,315

 

 

 

5.41

 

 

 

253,460

 

 

 

5.03

 

Agricultural − Land

 

 

42,162

 

 

 

4.93

 

 

 

40,932

 

 

 

4.72

 

 

 

40,685

 

 

 

4.85

 

 

 

41,138

 

 

 

4.80

 

 

 

39,417

 

 

 

4.77

 

Agricultural − Production

 

 

40,964

 

 

 

6.84

 

 

 

38,004

 

 

 

6.69

 

 

 

32,386

 

 

 

6.68

 

 

 

38,110

 

 

 

6.65

 

 

 

29,377

 

 

 

6.42

 

RRE − First lien

 

 

689,382

 

 

 

3.98

 

 

 

694,866

 

 

 

4.07

 

 

 

681,610

 

 

 

3.83

 

 

 

695,313

 

 

 

4.02

 

 

 

667,041

 

 

 

3.75

 

RRE − Construction

 

 

16,792

 

 

 

3.86

 

 

 

21,225

 

 

 

5.38

 

 

 

33,264

 

 

 

5.14

 

 

 

19,847

 

 

 

4.89

 

 

 

33,693

 

 

 

4.99

 

RRE − HELOC

 

 

130,705

 

 

 

8.00

 

 

 

123,233

 

 

 

8.30

 

 

 

118,965

 

 

 

8.24

 

 

 

124,321

 

 

 

8.19

 

 

 

118,630

 

 

 

7.97

 

RRE − Junior lien

 

 

36,818

 

 

 

5.74

 

 

 

36,181

 

 

 

6.60

 

 

 

35,974

 

 

 

5.89

 

 

 

36,276

 

 

 

6.23

 

 

 

35,034

 

 

 

5.70

 

Other consumer

 

 

37,768

 

 

 

6.76

 

 

 

33,335

 

 

 

6.67

 

 

 

32,288

 

 

 

6.11

 

 

 

33,329

 

 

 

6.64

 

 

 

38,148

 

 

 

5.99

 

Total loans (1)

 

 

2,968,947

 

 

 

5.73

 

 

 

2,837,232

 

 

 

5.88

 

 

 

2,544,836

 

 

 

5.44

 

 

 

2,858,634

 

 

 

5.78

 

 

 

2,495,122

 

 

 

5.30

 

Federal Reserve/FHLB stock

 

 

17,562

 

 

 

8.25

 

 

 

16,640

 

 

 

8.53

 

 

 

28,761

 

 

 

6.83

 

 

 

16,956

 

 

 

8.30

 

 

 

25,403

 

 

 

6.81

 

Total interest earning assets

 

 

4,077,716

 

 

 

5.12

 

 

 

4,075,003

 

 

 

5.26

 

 

 

3,591,478

 

 

 

4.66

 

 

 

4,024,942

 

 

 

5.15

 

 

 

3,574,675

 

 

 

4.51

 

Noninterest earning assets

 

 

220,364

 

 

 

 

 

 

 

222,291

 

 

 

 

 

 

 

230,123

 

 

 

 

 

 

 

220,239

 

 

 

 

 

 

 

224,970

 

 

 

 

 

Total assets

 

$

4,298,080

 

 

 

 

 

 

$

4,297,294

 

 

 

 

 

 

$

3,821,601

 

 

 

 

 

 

$

4,245,181

 

 

 

 

 

 

$

3,799,645

 

 

 

 

 

Interest-Bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

$

1,003,595

 

 

 

2.31

%

 

$

959,119

 

 

 

2.24

%

 

$

751,455

 

 

 

1.34

%

 

$

944,143

 

 

 

2.18

%

 

$

757,995

 

 

 

1.16

%

Money market and savings deposits

 

 

1,146,896

 

 

 

3.82

 

 

 

1,147,525

 

 

 

3.79

 

 

 

1,073,297

 

 

 

3.20

 

 

 

1,160,391

 

 

 

3.79

 

 

 

1,127,630

 

 

 

2.72

 

Time deposits

 

 

485,533

 

 

 

4.46

 

 

 

458,125

 

 

 

4.50

 

 

 

327,264

 

 

 

3.94

 

 

 

458,545

 

 

 

4.47

 

 

 

276,797

 

 

 

3.26

 

Fed funds purchased and BTFP

 

 

327,543

 

 

 

4.97

 

 

 

366,186

 

 

 

4.90

 

 

 

312,121

 

 

 

5.50

 

 

 

325,455

 

 

 

4.95

 

 

 

320,861

 

 

 

5.23

 

FHLB short-term advances

 

 

200,000

 

 

 

5.20

 

 

 

200,000

 

 

 

5.21

 

 

 

173,913

 

 

 

5.02

 

 

 

200,000

 

 

 

5.13

 

 

 

84,982

 

 

 

4.92

 

Long-term debt

 

 

59,027

 

 

 

4.58

 

 

 

58,999

 

 

 

4.66

 

 

 

58,914

 

 

 

4.57

 

 

 

58,999

 

 

 

4.62

 

 

 

58,886

 

 

 

4.54

 

Total interest-bearing liabilities

 

 

3,222,594

 

 

 

3.66

 

 

 

3,189,954

 

 

 

3.66

 

 

 

2,696,964

 

 

 

3.18

 

 

 

3,147,533

 

 

 

3.63

 

 

 

2,627,151

 

 

 

2.74

 

Noninterest-Bearing Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

628,114

 

 

 

 

 

 

 

665,930

 

 

 

 

 

 

 

692,742

 

 

 

 

 

 

 

656,553

 

 

 

 

 

 

 

743,253

 

 

 

 

 

Other noninterest-bearing liabilities

 

 

72,143

 

 

 

 

 

 

 

72,193

 

 

 

 

 

 

 

70,160

 

 

 

 

 

 

 

70,337

 

 

 

 

 

 

 

67,981

 

 

 

 

 

Stockholders’ equity

 

 

375,229

 

 

 

 

 

 

 

369,217

 

 

 

 

 

 

 

361,735

 

 

 

 

 

 

 

370,758

 

 

 

 

 

 

 

361,260

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

4,298,080

 

 

 

 

 

 

$

4,297,294

 

 

 

 

 

 

$

3,821,601

 

 

 

 

 

 

$

4,245,181

 

 

 

 

 

 

$

3,799,645

 

 

 

 

 

Net interest income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

 

 

 

 

 

 

1.46

%

 

 

 

 

 

 

1.60

%

 

 

 

 

 

 

1.48

%

 

 

 

 

 

 

1.52

%

 

 

 

 

 

 

1.77

%

Net interest margin, tax-equivalent (1)

 

 

 

 

 

 

2.23

%

 

 

 

 

 

 

2.39

%

 

 

 

 

 

 

2.27

%

 

 

 

 

 

 

2.31

%

 

 

 

 

 

 

2.50

%

_____________

(1)

Taxable-equivalent adjustment was calculated utilizing a marginal income tax rate of 21.0%.

 

Alan A. Villalon, Chief Financial Officer 952.417.3733 (Office)

Alerus Financial (NASDAQ:ALRS)
過去 株価チャート
から 11 2024 まで 12 2024 Alerus Financialのチャートをもっと見るにはこちらをクリック
Alerus Financial (NASDAQ:ALRS)
過去 株価チャート
から 12 2023 まで 12 2024 Alerus Financialのチャートをもっと見るにはこちらをクリック