MINNEAPOLIS, April 29, 2026 (GLOBE NEWSWIRE) -- Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $23.0 million for the first quarter of 2026, or $0.89 per diluted common share, compared to a net loss of $33.1 million, or $(1.27) per diluted common share, for the fourth quarter of 2025, and net income of $13.3 million, or $0.52 per diluted common share, for the first quarter of 2025.
CEO Comments
President and Chief Executive Officer Katie O'Neill Lorenson said, "We are pleased with the strong start to 2026, as our first quarter results reflect continued execution of our long-term strategy and the tangible benefits of the transformation we have undertaken over the past several years. Net income for the quarter was $23.0 million, translating to a return on average assets of 1.79% and a return on average tangible common equity exceeding 21%, demonstrating the earnings power of our diversified business model. Profitability continued to improve during the quarter, driven by disciplined balance-sheet management, expanding margins, improving credit performance, and focused investments across the franchise.
"Our performance underscores the resilience and sustainability of our earnings profile. Core relationship-based commercial and industrial lending continued to grow at a double-digit rate year-over-year, while intentional runoff reflected proactive risk and capital management. Our diversified fee-based businesses again provided stability, with noninterest income representing over 40% of total revenue, supported by steady retirement and benefit services revenues, continued growth in Health Savings Accounts, and ongoing investment in wealth advisory services leadership and talent. Asset quality also improved during the quarter, with declines in nonperforming assets reflecting meaningful progress on previously identified credits.
"Most importantly, these results are a testament to the exceptional team we have built at Alerus and the constant execution of our strategy of our value creation strategy. Together, our discipline, collaboration, and commitment to doing the right thing for our clients and communities continues to translate into consistent performance, strengthening returns, and a balanced business model we believe is well positioned to deliver sustained, long-term returns for our shareholders."
First Quarter Highlights
- Earnings per diluted common share of $0.89. Adjusted earnings per diluted common share(1) of $0.89, compared to adjusted earnings per diluted common share(1) of $0.85 in the fourth quarter of 2025.
- Return on average total assets of 1.79%. Adjusted return on average total assets(1) of 1.79%, compared to 1.62% in the fourth quarter of 2025.
- Return on average tangible common equity of 21.85%. Adjusted return on average tangible common equity(1) of 21.96%, compared to 21.05% in the fourth quarter of 2025.
- Noninterest income was $30.8 million, which represented 40.72% of total revenue.
- Net interest margin (on a tax-equivalent basis)(1) was 3.77%, an increase compared to 3.69% in the fourth quarter of 2025.
- Total deposits were $4.3 billion as of March 31, 2026, an increase of $155.9 million, or 3.7%, from December 31, 2025. Core commercial transactional deposits were $1.8 billion as of March 31, 2026, an increase of $143.2 million, or 8.6%, from December 31, 2025. Synergistic deposits were $742.7 million as of March 31, 2026, an increase of $16.8 million, or 2.3%, from December 31, 2025. Health Savings Account balances drove most of the increase, up $14.5 million, or 7.1%, from December 31, 2025.
- The loan to deposit ratio was 92.8% as of March 31, 2026, compared to 96.6% as of December 31, 2025.
- Efficiency ratio(1) of 63.39%. Adjusted efficiency ratio of 63.20% compared to adjusted efficiency ratio of 63.55% in the fourth quarter of 2025.
- Pre-provision net revenue(1) was $25.4 million. Adjusted pre-provision net revenue(1) was $25.5, an increase of 0.9% from $25.3 million in the fourth quarter of 2025.
- Nonperforming assets were $54.0 million as of March 31, 2026, a decrease of $15.4 million, or 22.1%, from $69.4 million as of December 31, 2025.
- Repurchased $6.0 million of the Company's outstanding common stock at an average per share price of $23.90, reducing common shares outstanding by 250,000 shares at quarter end.
- Tangible book value per common share(1) was $18.15 as of March 31, 2026, an increase of 3.4% from $17.55 as of December 31, 2025.
- Tangible common equity to tangible assets ratio(1) was 8.85% as of March 31, 2026, an increase from 8.72% as of December 31, 2025.
________________
(1) Represents a non-GAAP financial measure. See "Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures."
| Selected Financial Data (unaudited) | ||||||||||||
| As of and for the | ||||||||||||
| Three months ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| (dollars and shares in thousands, except per share data) | 2026 | 2025 | 2025 | |||||||||
| Performance Ratios | ||||||||||||
| Return on average total assets | 1.79 | - | (2.50 | )% | 1.02 | - | ||||||
| Adjusted return on average total assets (1) | 1.79 | - | 1.62 | - | 1.10 | - | ||||||
| Return on average common equity | 16.44 | - | (23.75 | )% | 10.82 | - | ||||||
| Return on average tangible common equity (1) | 21.85 | - | (28.15 | )% | 16.50 | - | ||||||
| Adjusted return on average tangible common equity (1) | 21.96 | - | 21.05 | - | 17.61 | - | ||||||
| Noninterest (loss) income as a % of revenue | 40.72 | - | (449.23 | )% | 40.17 | - | ||||||
| Adjusted noninterest (loss) income as a % of revenue (1) | 40.73 | - | 41.39 | - | 40.17 | - | ||||||
| Net interest margin (on a tax-equivalent basis)(1) | 3.77 | - | 3.69 | - | 3.41 | - | ||||||
| Efficiency ratio (1) | 63.39 | - | 557.48 | - | 68.76 | - | ||||||
| Adjusted efficiency ratio (1) | 63.20 | - | 63.55 | - | 66.86 | - | ||||||
| Net charge-offs (recoveries) to average loans (1) | 0.71 | - | (0.03 | )% | 0.04 | - | ||||||
| Dividend payout ratio | 23.60 | - | (16.54 | )% | 38.46 | - | ||||||
| Per Common Share | ||||||||||||
| Earnings (loss) per common share - basic | - | 0.90 | - | (1.28 | - | - | 0.52 | |||||
| Earnings (loss) per common share - diluted | - | 0.89 | - | (1.27 | - | - | 0.52 | |||||
| Adjusted earnings per common share - diluted (1) | - | 0.89 | - | 0.85 | - | 0.56 | ||||||
| Dividends declared per common share | - | 0.21 | - | 0.21 | - | 0.20 | ||||||
| Book value per common share | - | 22.79 | - | 22.24 | - | 20.27 | ||||||
| Tangible book value per common share (1) | - | 18.15 | - | 17.55 | - | 15.27 | ||||||
| Average common shares outstanding - basic | 25,380 | 25,398 | 25,359 | |||||||||
| Average common shares outstanding - diluted | 25,679 | 25,710 | 25,653 | |||||||||
| Other Data | ||||||||||||
| Retirement and benefit services assets under administration/management | - | 42,273,839 | - | 44,925,311 | - | 39,925,596 | ||||||
| Wealth advisory services assets under administration/management | - | 4,792,609 | - | 4,850,600 | - | 4,500,852 | ||||||
| Mortgage originations | - | 94,434 | - | 136,780 | - | 70,593 | ||||||
________________
(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 first quarter of 2026 was $44.9 million, a $0.3 million, or 0.6%, decrease from the fourth quarter of 2025. Interest income decreased $3.4 million, or 4.8%, primarily due to a one-time $2.4 million adjustment related to a sold loan participation recorded in the fourth quarter of 2025, partially offset by higher interest income on investment securities following a strategic balance sheet repositioning in the fourth quarter of 2025. Interest expense decreased $3.1 million, or 12.5%, from the fourth quarter of 2025, as the average rates paid on deposits and borrowings declined due to recent rate cuts by the Federal Reserve.
Net interest income increased $3.8 million, or 9.1%, from $41.2 million for the first quarter of 2025. Interest income decreased $1.2 million, or 1.8%, from the first quarter of 2025, primarily driven by less purchase accounting accretion, partially offset by higher interest income on investment securities following the strategic balance sheet repositioning in the fourth quarter of 2025. Interest expense decreased $5.0 million, or 18.4%, from the first quarter of 2025, as the average rates paid on deposits and borrowings declined due to recent rate cuts by the Federal Reserve.
Net interest margin (on a tax-equivalent basis)(1) was 3.77% for the first quarter of 2026, an 8 basis point increase from 3.69% for the fourth quarter of 2025, and a 36 basis point increase from 3.41% for the first quarter of 2025. The quarter over quarter increase was mainly attributable to lower cost of funds and higher yields on investment securities, partially offset by a one-time adjustment related to a sold loan participation recorded in the fourth quarter of 2025, lower loan yields, and less purchase accounting accretion. The increase from the first quarter of 2025 was primarily driven by lower cost of funds and higher yields on investment securities.
Noninterest (Loss) Income
Noninterest income for the first quarter of 2026 was $30.8 million, a $67.8 million, or 183.5%, increase from the fourth quarter of 2025. The quarter over quarter increase was driven by the strategic balance sheet repositioning in the fourth quarter of 2025, which resulted in a $68.4 million realized loss on the sale of investment securities. Adjusted noninterest income(1) was $30.9 million in the first quarter of 2026, a decrease of $1.0 million, or 3.2%, compared to $31.9 million in the fourth quarter of 2025. Other noninterest income decreased $1.1 million, or 38.4%, from the fourth quarter of 2025, primarily driven by a decrease in swap fee revenue. Wealth advisory services revenue decreased $0.2 million, or 2.7%, from the fourth quarter of 2025, primarily driven by a decline in both asset-based fees tied to equity markets, and transaction-based fees. Mortgage banking revenue increased $0.3 million, or 10.4%, from the fourth quarter of 2025, primarily driven by higher gain on sale margins and an increase in mortgage servicing asset valuation. Retirement and benefit services revenue increased $0.1 million, or 0.8%, from the fourth quarter of 2025. While retirement and benefit services assets under administration/management decreased $2.7 billion, or 5.9%, from $44.9 billion in the fourth quarter of 2025 to $42.3 billion in the first quarter of 2026, the decrease was primarily due to a strategic realignment of record-keeping partners that is expected to have minimal impact on revenue in future periods.
Noninterest income for the first quarter of 2026 increased by $3.2 million, or 11.6%, from the first quarter of 2025. This increase was driven by an increase in mortgage banking revenue and retirement and benefit services revenue. Mortgage banking revenue increased $2.0 million, or 131.5%, compared to the first quarter of 2025, due to an increase in mortgage servicing asset valuation, as well as increased origination volume and improved gain on sale margin. Retirement and benefit services revenue increased $1.3 million, or 8.1%, in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by both asset-based and transaction-based fees.
________________
(1) Represents a non-GAAP financial measure. See "Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures."
Noninterest Expense
Noninterest expense for the first quarter of 2026 was $50.4 million, a $1.5 million, or 2.9%, decrease from the fourth quarter of 2025. Compensation expense decreased $1.1 million, or 4.3%, from the fourth quarter of 2025, primarily due to decreases in annual bonus expense and mortgage incentive compensation due to seasonality. Business services, software and technology expense decreased $1.0 million, or 14.1%, from the fourth quarter of 2025, primarily due to a reclassification of consulting services and other third-party vendor expenses from business services, software and technology expense to professional fees and assessments. Professional fees and assessments increased $0.7 million, or 23.0%, from the fourth quarter of 2025, primarily due to this expense reclassification, partially offset by a decrease in legal fees.
Noninterest expense for the first quarter of 2026 increased $27.0 thousand, or 0.1%, from $50.4 million in the first quarter of 2025, primarily due to increases in compensation expense, professional fees and assessments, and occupancy and equipment expense, offset by decreases in employee taxes and benefits expense and intangible amortization expense. Compensation expense increased $1.1 million, or 4.9%, from the first quarter of 2025, primarily due to higher annual bonus expense. Professional fees and assessments increased $0.8 million, or 26.8%, from the first quarter of 2025, primarily due to the expense reclassification described above. Occupancy and equipment expense increased $0.5 million, or 17.9%, from the first quarter of 2025, primarily driven by facility investments and the strategic realignment of locations from owned to leased space. Employee taxes and benefits expense decreased $1.1 million, or 14.5%, from the first quarter of 2025, primarily due to lower claims on group insurance. Intangible amortization expense decreased $0.7 million, or 27.2%, in the first quarter of 2026, primarily due to the annual reset of the $33.5 million core deposit intangible recorded in connection with the HMN Financial, Inc. ("HMNF") acquisition in the fourth quarter of 2024.
Financial Condition
Total assets were $5.3 billion as of March 31, 2026, an increase of $57.9 million, or 1.1%, from December 31, 2025. The increase was primarily due to a $61.6 million increase in cash and cash equivalents and an $8.0 million increase in available-for-sale investment securities, partially offset by a decrease of $13.3 million in loans held for investment.
Loans Held for Investment
Total loans held for investment were $4.0 billion as of March 31, 2026, a decrease of $13.3 million, or 0.3%, from December 31, 2025. The decrease was primarily driven by a $28.3 million decrease in consumer loans, partially offset by a $15.1 million increase in commercial loans.
The following table presents the composition of our loans held for investment portfolio as of the dates indicated:
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (dollars in thousands) | 2026 | 2025 | 2025 | 2025 | 2025 | |||||||||||||||
| Commercial | ||||||||||||||||||||
| Commercial and business lending | ||||||||||||||||||||
| Commercial and industrial | - | 747,447 | - | 736,833 | - | 702,135 | - | 675,892 | - | 658,446 | ||||||||||
| Commercial real estate - Owner occupied | 444,276 | 427,260 | 435,320 | 440,170 | 424,880 | |||||||||||||||
| Total commercial and business lending | 1,191,723 | 1,164,093 | 1,137,455 | 1,116,062 | 1,083,326 | |||||||||||||||
| Investor commercial real estate | ||||||||||||||||||||
| Construction, land and development | 146,897 | 246,238 | 349,768 | 352,749 | 360,024 | |||||||||||||||
| Multifamily | 392,097 | 383,505 | 374,761 | 333,307 | 353,060 | |||||||||||||||
| Non-owner occupied | 976,339 | 875,862 | 865,785 | 887,643 | 951,559 | |||||||||||||||
| Total investor commercial real estate | 1,515,333 | 1,505,605 | 1,590,314 | 1,573,699 | 1,664,643 | |||||||||||||||
| Agricultural | ||||||||||||||||||||
| Land | 54,028 | 64,799 | 65,900 | 66,395 | 68,894 | |||||||||||||||
| Production | 50,983 | 62,500 | 63,051 | 67,931 | 64,240 | |||||||||||||||
| Total agricultural | 105,011 | 127,299 | 128,951 | 134,326 | 133,134 | |||||||||||||||
| Total commercial | 2,812,067 | 2,796,997 | 2,856,720 | 2,824,087 | 2,881,103 | |||||||||||||||
| Consumer | ||||||||||||||||||||
| Residential real estate | ||||||||||||||||||||
| First lien | 851,551 | 874,737 | 894,402 | 901,738 | 907,534 | |||||||||||||||
| Construction | 32,872 | 33,703 | 34,124 | 35,754 | 38,553 | |||||||||||||||
| HELOC | 262,131 | 260,883 | 234,681 | 200,624 | 175,600 | |||||||||||||||
| Junior lien | 35,783 | 36,844 | 40,434 | 41,450 | 43,740 | |||||||||||||||
| Total residential real estate | 1,182,337 | 1,206,167 | 1,203,641 | 1,179,566 | 1,165,427 | |||||||||||||||
| Other consumer | 40,340 | 44,858 | 41,715 | 41,003 | 38,955 | |||||||||||||||
| Total consumer | 1,222,677 | 1,251,025 | 1,245,356 | 1,220,569 | 1,204,382 | |||||||||||||||
| Total loans | - | 4,034,744 | - | 4,048,022 | - | 4,102,076 | - | 4,044,656 | - | 4,085,485 | ||||||||||
Deposits
Total deposits were $4.3 billion as of March 31, 2026, an increase of $155.9 million, or 3.7%, from December 31, 2025. Noninterest-bearing deposits increased $49.7 million and interest-bearing deposits increased $106.2 million from December 31, 2025. The increase was primarily driven by seasonal inflows of public depositor funds and consumer deposit growth.
The following table presents the composition of the Company's deposit portfolio as of the dates indicated:
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (dollars in thousands) | 2026 | 2025 | 2025 | 2025 | 2025 | |||||||||||||||
| Noninterest-bearing demand | - | 857,625 | - | 807,896 | - | 776,791 | - | 790,300 | - | 889,270 | ||||||||||
| Interest-bearing | ||||||||||||||||||||
| Interest-bearing demand | 1,449,156 | 1,296,315 | 1,256,687 | 1,214,597 | 1,283,031 | |||||||||||||||
| Savings accounts | 178,347 | 173,759 | 174,113 | 175,586 | 177,341 | |||||||||||||||
| Money market savings | 1,291,794 | 1,337,491 | 1,460,006 | 1,358,516 | 1,472,127 | |||||||||||||||
| Time deposits | 570,960 | 576,542 | 745,056 | 798,469 | 663,522 | |||||||||||||||
| Total interest-bearing | 3,490,257 | 3,384,107 | 3,635,862 | 3,547,168 | 3,596,021 | |||||||||||||||
| Total deposits | - | 4,347,882 | - | 4,192,003 | - | 4,412,653 | - | 4,337,468 | - | 4,485,291 | ||||||||||
Asset Quality
Total nonperforming assets were $54.0 million as of March 31, 2026, a decrease of $15.4 million, or 22.1%, from December 31, 2025. As of March 31, 2026, the allowance for credit losses on loans was $50.5 million, or 1.25% of total loans, compared to $61.9 million, or 1.53% of total loans, as of December 31, 2025.
The following table presents selected asset quality data as of and for the periods indicated:
| As of and for the three months ended | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (dollars in thousands) | 2026 | 2025 | 2025 | 2025 | 2025 | |||||||||||||||
| Nonaccrual loans | - | 53,881 | - | 69,065 | - | 59,644 | - | 51,276 | - | 50,517 | ||||||||||
| Accruing loans 90+ days past due | - | - | - | 202 | - | |||||||||||||||
| Total nonperforming loans | 53,881 | 69,065 | 59,644 | 51,478 | 50,517 | |||||||||||||||
| OREO and repossessed assets | 126 | 308 | 467 | 751 | 493 | |||||||||||||||
| Total nonperforming assets | - | 54,007 | - | 69,373 | - | 60,111 | - | 52,229 | - | 51,010 | ||||||||||
| Criticized loans | 132,459 | 149,162 | 191,331 | 212,592 | 230,369 | |||||||||||||||
| Net charge-offs (recoveries) | 7,027 | (311 | - | (1,715 | - | 3,767 | 407 | |||||||||||||
| Net charge-offs (recoveries) to average loans (1) | 0.71 | - | (0.03 | )% | (0.17 | )% | 0.37 | - | 0.04 | - | ||||||||||
| Nonperforming loans to total loans | 1.34 | - | 1.71 | - | 1.45 | - | 1.27 | - | 1.24 | - | ||||||||||
| Nonperforming assets to total assets | 1.02 | - | 1.33 | - | 1.13 | - | 0.98 | - | 0.96 | - | ||||||||||
| Criticized loans to total loans | 3.28 | - | 3.68 | - | 4.66 | - | 5.26 | - | 5.64 | - | ||||||||||
| Allowance for credit losses on loans to total loans | 1.25 | - | 1.53 | - | 1.51 | - | 1.47 | - | 1.52 | - | ||||||||||
| Allowance for credit losses on loans to nonperforming loans | 93.73 | - | 89.65 | - | 104.16 | - | 115.15 | - | 122.59 | - | ||||||||||
For the first quarter of 2026, the Company had net charge-offs of $7.0 million, compared to net recoveries of $0.3 million for the fourth quarter of 2025 and net charge-offs of $0.4 million for the first quarter of 2025. The quarter over quarter increase in net charge-offs was primarily due to charge-offs of $6.4 million related to one non-accruing long-term commercial and industrial client relationship. This relationship carried a specific reserve of $9.0 million as of December 31, 2025. As of March 31, 2026, the relationship had a remaining reserve of $3.5 million, which represented approximately 78% of the book balance as of that date. Management does not believe the charge-offs resulting from this relationship are indicative of a broader credit quality trend in the Company's loan portfolio.
The Company recorded a provision release of $4.9 million for the first quarter of 2026, a provision release of $0.3 million for the fourth quarter of 2025, and a provision for credit losses of $0.9 million for the first quarter of 2025. The provision release in the first quarter of 2026 was primarily driven by changes to loan balances and loan mix, largely due to decreases in balances in the commercial real estate construction, land and development pool, which is reserved at a higher rate than most other loan pools.
The unearned fair value adjustments on acquired loan portfolios were $40.8 million as of March 31, 2026, $43.8 million as of December 31, 2025, and $65.3 million as of March 31, 2025.
Capital
Total stockholders' equity was $574.7 million as of March 31, 2026, an increase of $9.8 million from December 31, 2025. The change was primarily driven by an increase in retained earnings of $17.6 million, partially offset by a decrease in additional paid-in capital of $5.6 million and a decrease in accumulated other comprehensive income of $2.1 million. Tangible book value per common share(1) increased to $18.15 as of March 31, 2026, from $17.55 as of December 31, 2025. Tangible common equity to tangible assets(1) increased to 8.85% as of March 31, 2026, from 8.72% as of December 31, 2025. Common equity tier 1 capital to risk weighted assets increased to 10.60% as of March 31, 2026, from 10.10% as of December 31, 2025.
During the first quarter of 2026, the Company repurchased approximately $6.0 million of its outstanding common stock at an average per share price of $23.90, which reduced common stock shares outstanding by 250,000 at quarter-end.
The following table presents our capital ratios as of the dates indicated:
| March 31, | December 31, | March 31, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Capital Ratios(1) | ||||||||||||
| Alerus Financial Corporation Consolidated | ||||||||||||
| Common equity tier 1 capital to risk weighted assets | 10.60 | - | 10.28 | - | 10.10 | - | ||||||
| Tier 1 capital to risk weighted assets | 10.81 | - | 10.48 | - | 10.31 | - | ||||||
| Total capital to risk weighted assets | 13.17 | - | 12.87 | - | 12.67 | - | ||||||
| Tier 1 capital to average assets | 9.30 | - | 8.86 | - | 8.86 | - | ||||||
| Tangible common equity / tangible assets (2) | 8.85 | - | 8.72 | - | 7.43 | - | ||||||
| Alerus Financial, N.A. | ||||||||||||
| Common equity tier 1 capital to risk weighted assets | 10.75 | - | 10.41 | - | 10.36 | - | ||||||
| Tier 1 capital to risk weighted assets | 10.75 | - | 10.41 | - | 10.36 | - | ||||||
| Total capital to risk weighted assets | 12.00 | - | 11.66 | - | 11.61 | - | ||||||
| Tier 1 capital to average assets | 9.11 | - | 8.62 | - | 9.06 | - | ||||||
________________
(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 Thursday, April 30, 2026, to discuss its financial results. Attendees are encouraged to register ahead of time for the call at investors.alerus.com. 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 advisory services bank and national retirement and benefit 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 (the "Bank"), Alerus provides diversified and comprehensive financial solutions to business and consumer clients, including banking, wealth advisory services, and retirement and benefit plans and services. Alerus provides clients with a primary point of contact to help fully understand their unique needs and delivery channel preferences. Clients are provided with competitive products, valuable insight, and sound advice supported by digital solutions designed to meet their needs.
Alerus operates 26 banking and commercial wealth offices, with locations in Grand Forks and Fargo, North Dakota; the Minneapolis-St. Paul, Minnesota metropolitan area; Rochester, Minnesota; Southern Minnesota; Marshalltown, Iowa; Pewaukee, Wisconsin; and Phoenix and Scottsdale, Arizona. The Alerus Retirement and Benefit business 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, tangible book value per common share, return on average tangible common equity, efficiency ratio, pre-provision net revenue, adjusted noninterest (loss) income, adjusted noninterest expense, adjusted pre-provision net revenue, adjusted efficiency ratio, adjusted net income, adjusted return on average total assets, adjusted return on average tangible common equity, net interest margin (on a tax-equivalent basis), adjusted earnings per common share - diluted, and adjusted net charge-offs to average loans. 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by 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 known and unknown uncertainties, risks, changes in circumstances, and other factors 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: the strength of the local, state, national and international economies and financial markets (including effects of inflationary pressures and future monetary policies of the Federal Reserve and executive orders in response thereto); interest rate risk, including the effects of changes in interest rates; effects on the U.S. economy resulting from actions taken by the federal government, including the threat or implementation of tariffs, immigration enforcement, executive orders, and changes in foreign policy; disruptions to the global supply chain, including as a result of domestic or foreign policies; our ability to successfully manage credit risk, including in the commercial real estate portfolio, and maintain an adequate level of allowance for credit losses; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including the level and impact of inflation rates and possible recession; our ability to raise additional capital to implement our business plan; credit risks and risks from concentrations (including by type of borrower, geographic area, collateral, and industry) within our loan portfolio; the concentration of large loans to certain borrowers (including commercial real estate loans); the level of nonperforming assets on our balance sheet; our ability to implement organic and acquisition growth strategies; the commencement, cost, and outcome of litigation and other legal proceedings and regulatory actions against us or to which the Company may become subject, including with respect to pending actions relating to the Company's previous employee stock ownership program fiduciary services commenced by government and private parties; 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 or as a result of insider fraud; 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 and expensive technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; 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 Federal Deposit Insurance Corporation insurance limits; the effectiveness of our risk management framework; 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 ability of the Bank to pay dividends to us and our ability to pay dividends to our stockholders; new or revised accounting standards, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission (the "SEC") or the Public Company Accounting Oversight Board; 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 and natural disasters, and widespread disease or pandemics; acts of war, military conflicts, or terrorism, including the wars in Iran and Ukraine, ongoing conflicts in the Middle East, and other international military conflicts, or other adverse external events and changes in foreign relations; the impact of the current partial shutdown of the federal government and possible future shutdowns; any material weaknesses in our internal control over financial reporting; our success at managing and responding to 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 SEC.
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) | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | (Unaudited) | |||||||
| Cash and cash equivalents | - | 128,826 | - | 67,192 | ||||
| Investment securities | ||||||||
| Trading, at fair value | 1,758 | 1,758 | ||||||
| Available-for-sale, at fair value | 522,101 | 514,095 | ||||||
| Held-to-maturity, at amortized cost (with an allowance for credit losses on investments of $118 and $123, respectively) | 247,437 | 254,448 | ||||||
| Loans held for sale | 22,345 | 21,934 | ||||||
| Loans held for investment | 4,034,744 | 4,048,022 | ||||||
| Allowance for credit losses on loans | (50,505 | - | (61,915 | - | ||||
| Net loans | 3,984,239 | 3,986,107 | ||||||
| Land, premises and equipment, net | 43,978 | 43,253 | ||||||
| Operating lease right-of-use assets | 32,573 | 28,761 | ||||||
| Accrued interest receivable | 20,469 | 21,742 | ||||||
| Bank-owned life insurance | 39,475 | 39,307 | ||||||
| Goodwill | 85,634 | 85,634 | ||||||
| Other intangible assets | 31,397 | 33,371 | ||||||
| Servicing rights | 6,615 | 6,383 | ||||||
| Deferred income taxes, net | 20,863 | 23,080 | ||||||
| Other assets | 100,261 | 103,019 | ||||||
| Total assets | - | 5,287,971 | - | 5,230,084 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Deposits | ||||||||
| Noninterest-bearing | - | 857,625 | - | 807,896 | ||||
| Interest-bearing | 3,490,257 | 3,384,107 | ||||||
| Total deposits | 4,347,882 | 4,192,003 | ||||||
| Short-term borrowings | 200,000 | 308,800 | ||||||
| Long-term debt | 59,211 | 59,182 | ||||||
| Operating lease liabilities | 42,590 | 36,282 | ||||||
| Accrued expenses and other liabilities | 63,595 | 68,883 | ||||||
| Total liabilities | 4,713,278 | 4,665,150 | ||||||
| Stockholders' equity | ||||||||
| Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding | - | - | ||||||
| Common stock, $1 par value, 60,000,000 and 30,000,000 shares authorized: 25,214,146 and 25,406,278 issued and outstanding | 25,214 | 25,406 | ||||||
| Additional paid-in capital | 266,016 | 271,609 | ||||||
| Retained earnings | 287,700 | 270,075 | ||||||
| Accumulated other comprehensive loss | (4,237 | - | (2,156 | - | ||||
| Total stockholders' equity | 574,693 | 564,934 | ||||||
| Total liabilities and stockholders' equity | - | 5,287,971 | - | 5,230,084 | ||||
| Alerus Financial Corporation and Subsidiaries Consolidated Statements of Income (dollars and shares in thousands, except per share data) | ||||||||||||
| Three months ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Interest Income | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
| Loans, including fees | - | 58,621 | - | 64,477 | - | 61,495 | ||||||
| Investment securities | ||||||||||||
| Taxable | 7,104 | 4,592 | 5,707 | |||||||||
| Exempt from federal income taxes | 158 | 160 | 160 | |||||||||
| Other | 1,094 | 1,158 | 819 | |||||||||
| Total interest income | 66,977 | 70,387 | 68,181 | |||||||||
| Interest Expense | ||||||||||||
| Deposits | 19,074 | 21,998 | 23,535 | |||||||||
| Short-term borrowings | 2,357 | 2,570 | 2,839 | |||||||||
| Long-term debt | 634 | 645 | 650 | |||||||||
| Total interest expense | 22,065 | 25,213 | 27,024 | |||||||||
| Net interest income | 44,912 | 45,174 | 41,157 | |||||||||
| Provision for (recovery of) credit losses | (4,883 | - | (308 | - | 863 | |||||||
| Net interest income after provision for (recovery of) credit losses | 49,795 | 45,482 | 40,294 | |||||||||
| Noninterest Income (Loss) | ||||||||||||
| Retirement and benefit services | 17,406 | 17,260 | 16,106 | |||||||||
| Wealth advisory services | 7,237 | 7,438 | 6,905 | |||||||||
| Mortgage banking | 3,535 | 3,203 | 1,527 | |||||||||
| Service charges on deposit accounts | 933 | 734 | 651 | |||||||||
| Net losses on investment securities | - | (68,403 | - | - | ||||||||
| Other | 1,736 | 2,819 | 2,443 | |||||||||
| Total noninterest income (loss) | 30,847 | (36,949 | - | 27,632 | ||||||||
| Noninterest Expense | ||||||||||||
| Compensation | 24,087 | 25,169 | 22,961 | |||||||||
| Employee taxes and benefits | 6,640 | 6,325 | 7,762 | |||||||||
| Occupancy and equipment expense | 3,427 | 3,658 | 2,907 | |||||||||
| Business services, software and technology expense | 5,839 | 6,794 | 5,752 | |||||||||
| Intangible amortization expense | 1,974 | 2,382 | 2,710 | |||||||||
| Professional fees and assessments | 3,800 | 3,089 | 2,996 | |||||||||
| Marketing and business development | 861 | 1,016 | 965 | |||||||||
| Supplies and postage | 607 | 764 | 630 | |||||||||
| Travel | 361 | 409 | 287 | |||||||||
| Mortgage and lending expenses | 710 | 626 | 536 | |||||||||
| Other | 2,086 | 1,649 | 2,859 | |||||||||
| Total noninterest expense | 50,392 | 51,881 | 50,365 | |||||||||
| Income (loss) before income tax expense (benefit) | 30,250 | (43,348 | - | 17,561 | ||||||||
| Income tax expense (benefit) | 7,279 | (10,298 | - | 4,246 | ||||||||
| Net income (loss) | - | 22,971 | - | (33,050 | - | - | 13,315 | |||||
| Per Common Share Data | ||||||||||||
| Earnings (loss) per common share | - | 0.90 | - | (1.28 | - | - | 0.52 | |||||
| Diluted earnings (loss) per common share | - | 0.89 | - | (1.27 | - | - | 0.52 | |||||
| Dividends declared per common share | - | 0.21 | - | 0.21 | - | 0.20 | ||||||
| Average common shares outstanding | 25,380 | 25,398 | 25,359 | |||||||||
| Diluted average common shares outstanding | 25,679 | 25,710 | 25,653 | |||||||||
| 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) | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Tangible Common Equity to Tangible Assets | ||||||||||||
| Total common stockholders' equity | - | 574,693 | - | 564,934 | - | 514,232 | ||||||
| Less: Goodwill | 85,634 | 85,634 | 85,634 | |||||||||
| Less: Other intangible assets | 31,397 | 33,371 | 41,172 | |||||||||
| Tangible common equity (a) | 457,662 | 445,929 | 387,426 | |||||||||
| Total assets | 5,287,971 | 5,230,084 | 5,339,620 | |||||||||
| Less: Goodwill | 85,634 | 85,634 | 85,634 | |||||||||
| Less: Other intangible assets | 31,397 | 33,371 | 41,172 | |||||||||
| Tangible assets (b) | 5,170,940 | 5,111,079 | 5,212,814 | |||||||||
| Tangible common equity to tangible assets (a)/(b) | 8.85 | - | 8.72 | - | 7.43 | - | ||||||
| Tangible Book Value Per Common Share | ||||||||||||
| Tangible common equity (a) | 457,662 | 445,929 | 387,426 | |||||||||
| Total common shares issued and outstanding (c) | 25,214 | 25,406 | 25,366 | |||||||||
| Tangible book value per common share (a)/(c) | - | 18.15 | - | 17.55 | - | 15.27 | ||||||
| Three months ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Return on Average Tangible Common Equity | ||||||||||||
| Net income (loss) | - | 22,971 | - | (33,050 | - | - | 13,315 | |||||
| Add: Intangible amortization expense (net of tax) (1) | 1,559 | 1,882 | 2,141 | |||||||||
| Net income (loss), excluding intangible amortization (d) | 24,530 | (31,168 | - | 15,456 | ||||||||
| Average total equity | 566,563 | 552,106 | 499,224 | |||||||||
| Less: Average goodwill | 85,634 | 85,634 | 85,634 | |||||||||
| Less: Average other intangible assets (net of tax) (1) | 25,664 | 27,270 | 33,718 | |||||||||
| Average tangible common equity (e) | 455,265 | 439,202 | 379,872 | |||||||||
| Return on average tangible common equity (d)/(e) | 21.85 | - | (28.15 | )% | 16.50 | - | ||||||
| Efficiency Ratio | ||||||||||||
| Noninterest expense | - | 50,392 | - | 51,881 | - | 50,365 | ||||||
| Less: Intangible amortization expense | 1,974 | 2,382 | 2,710 | |||||||||
| Noninterest expense excluding intangible amortization (f) | 48,418 | 49,499 | 47,655 | |||||||||
| Net interest income (v) | 44,912 | 45,174 | 41,157 | |||||||||
| Noninterest income (loss) | 30,847 | (36,949 | - | 27,632 | ||||||||
| Tax equivalent adjustment for loans and securities | 619 | 654 | 520 | |||||||||
| Total tax-equivalent revenue (g) | 76,378 | 8,879 | 69,309 | |||||||||
| Efficiency ratio (f)/(g) | 63.39 | - | 557.48 | - | 68.76 | - | ||||||
| Pre-Provision Net Revenue | ||||||||||||
| Net interest income (v) | - | 44,912 | - | 45,174 | - | 41,157 | ||||||
| Add: Noninterest income (loss) | 30,847 | (36,949 | - | 27,632 | ||||||||
| Less: Noninterest expense | 50,392 | 51,881 | 50,365 | |||||||||
| Pre-provision net revenue (loss) | - | 25,367 | - | (43,656 | - | - | 18,424 | |||||
| Adjusted Noninterest Income | ||||||||||||
| Noninterest income (loss) | - | 30,847 | - | (36,949 | - | - | 27,632 | |||||
| Less: Adjusted noninterest (loss) income items | ||||||||||||
| Net gains (losses) on investment securities | - | (68,403 | - | - | ||||||||
| Net gain (loss) on sale/disposal of premises and equipment | (21 | - | (445 | - | - | |||||||
| Total adjusted noninterest income (loss) items (h) | (21 | - | (68,848 | - | - | |||||||
| Adjusted noninterest income (i) | - | 30,868 | - | 31,899 | - | 27,632 | ||||||
| Adjusted Noninterest (Loss) Income as a Percentage of Revenue | ||||||||||||
| Adjusted noninterest income (i) | - | 30,868 | - | 31,899 | - | 27,632 | ||||||
| Net interest income (v) | 44,912 | 45,174 | 41,157 | |||||||||
| Adjusted revenue (w) | - | 75,780 | - | 77,073 | - | 68,789 | ||||||
| Adjusted noninterest (loss) income as a percentage of revenue (i)/(w) | 40.73 | - | 41.39 | - | 40.17 | - | ||||||
| Adjusted Noninterest Expense | ||||||||||||
| Noninterest expense | - | 50,392 | - | 51,881 | - | 50,365 | ||||||
| Less: Adjusted noninterest expense items | ||||||||||||
| HMNF merger- and acquisition-related expenses | (34 | - | (112 | - | 286 | |||||||
| Severance and signing bonus expense | 167 | 212 | 1,027 | |||||||||
| Total adjusted noninterest expense items (j) | 133 | 100 | 1,313 | |||||||||
| Adjusted noninterest expense (k) | - | 50,259 | - | 51,781 | - | 49,052 | ||||||
________________
(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 | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Adjusted Pre-Provision Net Revenue | ||||||||||||
| Net interest income (v) | - | 44,912 | - | 45,174 | - | 41,157 | ||||||
| Add: Adjusted noninterest income (i) | 30,868 | 31,899 | 27,632 | |||||||||
| Less: Adjusted noninterest expense (k) | 50,259 | 51,781 | 49,052 | |||||||||
| Adjusted pre-provision net revenue | - | 25,521 | - | 25,292 | - | 19,737 | ||||||
| Adjusted Efficiency Ratio | ||||||||||||
| Adjusted noninterest expense (k) | - | 50,259 | - | 51,781 | - | 49,052 | ||||||
| Less: Intangible amortization expense | 1,974 | 2,382 | 2,710 | |||||||||
| Adjusted noninterest expense for efficiency ratio (l) | 48,285 | 49,399 | 46,342 | |||||||||
| Tax-equivalent revenue | ||||||||||||
| Net interest income (v) | 44,912 | 45,174 | 41,157 | |||||||||
| Add: Adjusted noninterest income (i) | 30,868 | 31,899 | 27,632 | |||||||||
| Add: Tax equivalent adjustment for loans and securities (1) | 619 | 654 | 520 | |||||||||
| Total tax-equivalent revenue (m) | 76,399 | 77,727 | 69,309 | |||||||||
| Adjusted efficiency ratio (l)/(m) | 63.20 | - | 63.55 | - | 66.86 | - | ||||||
| Adjusted Net Income | ||||||||||||
| Net (loss) income | - | 22,971 | - | (33,050 | - | - | 13,315 | |||||
| Less: Adjusted noninterest (loss) income items (net of tax) (1) (h) | (17 | - | (54,390 | - | - | |||||||
| Add: Adjusted noninterest expense items (net of tax) (1) (j) | 105 | 79 | 1,037 | |||||||||
| Adjusted net income (n) | - | 23,093 | - | 21,419 | - | 14,352 | ||||||
| Adjusted Return on Average Total Assets | ||||||||||||
| Average total assets (o) | - | 5,218,515 | - | 5,252,046 | - | 5,272,319 | ||||||
| Adjusted return on average total assets (n)/(o) | 1.79 | - | 1.62 | - | 1.10 | - | ||||||
| Adjusted Return on Average Tangible Common Equity | ||||||||||||
| Adjusted net income (n) | - | 23,093 | - | 21,419 | - | 14,352 | ||||||
| Add: Intangible amortization expense (net of tax) (1) | 1,559 | 1,882 | 2,141 | |||||||||
| Adjusted net income, excluding intangible amortization (p) | 24,652 | 23,301 | 16,493 | |||||||||
| Average total equity | 566,563 | 552,106 | 499,224 | |||||||||
| Less: Average goodwill | 85,634 | 85,634 | 85,634 | |||||||||
| Less: Average other intangible assets (net of tax) | 25,664 | 27,270 | 33,718 | |||||||||
| Average tangible common equity (q) | 455,265 | 439,202 | 379,872 | |||||||||
| Adjusted return on average tangible common equity (p)/(q) | 21.96 | - | 21.05 | - | 17.61 | - | ||||||
| Adjusted Earnings Per Common Share - Diluted | ||||||||||||
| Adjusted net income (n) | - | 23,093 | - | 21,419 | - | 14,352 | ||||||
| Less: Dividends and undistributed earnings allocated to participating securities | 207 | (462 | - | 99 | ||||||||
| Adjusted net income available to common stockholders (r) | 22,886 | 21,881 | 14,253 | |||||||||
| Weighted-average common shares outstanding for diluted earnings per share (s) | 25,679 | 25,710 | 25,653 | |||||||||
| Adjusted earnings per common share - diluted (r)/(s) | - | 0.89 | - | 0.85 | - | 0.56 | ||||||
| Net Charge-Offs (Recoveries) to Average Loans | ||||||||||||
| Net charge-offs (recoveries) (t) | - | 7,027 | - | (311 | - | - | 407 | |||||
| Average total loans (u) | - | 4,029,719 | - | 4,049,082 | - | 4,022,863 | ||||||
| Net charge-offs (recoveries) to average loans (t)/(u) | 0.71 | - | (0.03 | )% | 0.04 | - | ||||||
| Net Interest Margin (on a Tax-Equivalent Basis) | ||||||||||||
| Net interest income (v) | - | 44,912 | - | 45,174 | - | 41,157 | ||||||
| Add: Tax equivalent adjustment for loans and securities | 619 | 654 | 520 | |||||||||
| Net interest income (on a tax-equivalent basis) (1) (w) | - | 45,531 | - | 45,828 | - | 41,677 | ||||||
| Average interest earning assets (x) | - | 4,901,399 | - | 4,926,530 | - | 4,949,729 | ||||||
| Net interest margin (on a tax-equivalent basis) (1) (w)/(x) | 3.77 | - | 3.69 | - | 3.41 | - | ||||||
________________
(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 | ||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||||||||||||||
| Average | Average | Average | ||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||
| Balance | Rate | Balance | Rate | Balance | Rate | |||||||||||||||||||
| Interest Earning Assets | ||||||||||||||||||||||||
| Interest-bearing deposits with banks | - | 60,675 | 4.26 | - | - | 57,008 | 4.68 | - | - | 33,425 | 4.74 | - | ||||||||||||
| Investment securities (1) | 771,885 | 3.84 | 775,091 | 2.45 | 859,696 | 2.79 | ||||||||||||||||||
| Loans held for sale | 15,617 | 4.70 | 21,715 | 4.81 | 11,348 | 5.32 | ||||||||||||||||||
| Loans | ||||||||||||||||||||||||
| Commercial and industrial | 723,803 | 7.10 | 699,982 | 7.35 | 657,838 | 7.31 | ||||||||||||||||||
| CRE - Owner occupied | 430,332 | 6.14 | 429,087 | 6.18 | 379,948 | 6.19 | ||||||||||||||||||
| CRE - Construction, land and development | 211,754 | 5.17 | 322,068 | 9.20 | 342,718 | 5.84 | ||||||||||||||||||
| CRE - Multifamily | 393,412 | 5.80 | 371,925 | 6.15 | 364,247 | 6.34 | ||||||||||||||||||
| CRE - Non-owner occupied (2) | 914,642 | 5.97 | 846,558 | 6.16 | 960,152 | 6.66 | ||||||||||||||||||
| Agricultural - Land | 59,787 | 6.00 | 65,995 | 6.42 | 67,228 | 5.85 | ||||||||||||||||||
| Agricultural - Production | 58,833 | 6.98 | 63,408 | 6.78 | 60,933 | 7.28 | ||||||||||||||||||
| RRE - First lien | 865,077 | 4.93 | 884,293 | 4.81 | 899,835 | 4.78 | ||||||||||||||||||
| RRE - Construction | 32,906 | 6.29 | 34,858 | 6.74 | 36,913 | 8.40 | ||||||||||||||||||
| RRE - HELOC | 261,586 | 6.03 | 249,844 | 6.38 | 168,599 | 7.12 | ||||||||||||||||||
| RRE - Junior lien | 36,306 | 6.42 | 38,167 | 6.47 | 44,096 | 6.24 | ||||||||||||||||||
| Other consumer | 41,281 | 6.31 | 42,897 | 6.53 | 40,356 | 7.02 | ||||||||||||||||||
| Total loans (1) | 4,029,719 | 5.94 | 4,049,082 | 6.35 | 4,022,863 | 6.23 | ||||||||||||||||||
| Federal Reserve/FHLB stock | 23,503 | 7.87 | 23,634 | 8.16 | 22,397 | 7.77 | ||||||||||||||||||
| Total interest earning assets | 4,901,399 | 5.59 | 4,926,530 | 5.72 | 4,949,729 | 5.63 | ||||||||||||||||||
| Noninterest earning assets | 317,116 | 325,516 | 322,590 | |||||||||||||||||||||
| Total assets | - | 5,218,515 | - | 5,252,046 | - | 5,272,319 | ||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||
| Interest-bearing demand deposits | - | 1,367,270 | 1.64 | - | - | 1,305,972 | 1.72 | - | - | 1,247,725 | 1.81 | - | ||||||||||||
| Money market and savings deposits | 1,503,798 | 2.37 | 1,592,569 | 2.72 | 1,590,616 | 2.89 | ||||||||||||||||||
| Time deposits | 569,065 | 3.40 | 600,966 | 3.57 | 688,569 | 3.91 | ||||||||||||||||||
| Fed funds purchased | 35,628 | 4.01 | 35,617 | 4.20 | 49,834 | 4.69 | ||||||||||||||||||
| FHLB short-term advances | 204,444 | 3.98 | 207,065 | 4.20 | 200,000 | 4.59 | ||||||||||||||||||
| Long-term debt | 59,195 | 4.34 | 59,169 | 4.32 | 59,084 | 4.46 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,739,400 | 2.39 | 3,801,358 | 2.63 | 3,835,828 | 2.86 | ||||||||||||||||||
| Noninterest-Bearing Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 798,579 | 797,521 | 849,687 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 113,973 | 101,061 | 87,580 | |||||||||||||||||||||
| Stockholders' equity | 566,563 | 552,106 | 499,224 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | - | 5,218,515 | - | 5,252,046 | - | 5,272,319 | ||||||||||||||||||
| Net interest rate spread | 3.20 | - | 3.09 | - | 2.77 | - | ||||||||||||||||||
| Net interest margin (on a tax-equivalent basis) (1) | 3.77 | - | 3.69 | - | 3.41 | - | ||||||||||||||||||
________________
(1) Taxable-equivalent adjustment was calculated utilizing a marginal income tax rate of 21.0%.
(2) Average balances and average yield/rate includes non-mortgage loans sold and held for sale for the three months ended December 31, 2025.
Alan A. Villalon, Chief Financial Officer
952.417.3733 (Office)
