Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39036 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------------|--- ...

Alerus (ALRS) reported $50.91 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 4.3%. EPS of $0.26 for the same period compares to $0.45 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $52.3 million, representing a surprise of -2.67%. The company delivered an EPS surprise of -40.91%, with the consensus EPS estimate being $0.44.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Stre ...

Alerus (ALRS) came out with quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.44 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of -40.91%. A quarter ago, it was expected that this company would post earnings of $0.37 per share when it actually produced earnings of $0.31, delivering a surprise of -16.22%. Over the last four quarters, the company has su ...

[Overview of Q3 2024 Performance](index=1&type=section&id=Overview%20of%20Q3%202024%20Performance) Alerus Financial Corporation reported a net income of $5.2 million for Q3 2024, marked by growth in loans and deposits, and the strategic acquisition of HMN Financial [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Alerus Financial Corporation reported a net income of $5.2 million, or $0.26 per diluted share, for the third quarter of 2024, reflecting a decrease from prior periods despite growth in loans, deposits, and assets under administration Q3 2024 Key Financial Results | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Income | $5.2 million | $6.2 million | $9.2 million | | Diluted EPS | $0.26 | $0.31 | $0.45 | - Total loans grew to **$3.0 billion**, an increase of **9.9%** since year-end 2023, while total deposits increased by **7.4%** to **$3.3 billion** over the same period[6](index=6&type=chunk) - Assets under administration/management (AUA/M) reached **$45.6 billion**, a **4.8% increase** from the previous quarter[6](index=6&type=chunk) - Tangible book value per common share (non-GAAP) increased by **6.7%** from year-end 2023 to **$16.50**[6](index=6&type=chunk) - The company repaid its Bank Term Funding Program (BTFP) borrowings during the year, having earned **$1.2 million** in risk-free net interest income from the program year-to-date[6](index=6&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Katie Lorenson highlighted the successful closing of the company's largest acquisition, expanding into Southern Minnesota, alongside significant year-to-date growth across key business lines - The company closed its 26th and largest acquisition, expanding into the Rochester and Southern Minnesota markets with a strong core deposit base[2](index=2&type=chunk) - Significant year-to-date growth was achieved in key segments: retirement and benefits business grew over **19%**, wealth management by **18%**, loans by nearly **10%**, and deposits by over **7%**[3](index=3&type=chunk) - Credit quality normalization continued, with two large relationships driving an increase in nonaccrual loans; however, net charge-offs to average loans were minimal at **0.04%** for the quarter, and reserves to loans remained stable at **1.29%**[4](index=4&type=chunk) - Strategic focus is on efficient headcount management, balancing investments in talent and technology, while maintaining a strong balance sheet and capital levels[5](index=5&type=chunk) [HMN Financial Acquisition](index=2&type=section&id=HMN%20Financial%20Acquisition) On October 9, 2024, Alerus completed its largest-ever bank acquisition of HMN Financial, Inc., significantly expanding its footprint into Rochester, Minnesota, and increasing total assets to over $5.5 billion Post-Acquisition Company Scale | Metric | Amount | | :--- | :--- | | Total Assets | > $5.5 billion | | Total Loans | $3.8 billion | | Total Deposits | $4.3 billion | | AUA/M | ~$43.6 billion | | Locations | 29 | [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) The company's Q3 2024 financial performance was characterized by declining net interest income, a slight increase in noninterest income, and a significant rise in noninterest expenses [Results of Operations](index=3&type=section&id=Results%20of%20Operations) The company's operational results in Q3 2024 were marked by a decline in net interest income due to margin compression and higher funding costs, a slight quarterly increase in noninterest income, and a significant rise in noninterest expenses Key Performance Ratios (Q3 2024) | Ratio | Value | | :--- | :--- | | Return on average total assets | 0.48% | | Return on average common equity | 5.52% | | Net interest margin (tax-equivalent) | 2.23% | | Efficiency ratio | 80.29% | | Dividend payout ratio | 76.92% | [Net Interest Income](index=3&type=section&id=Net%20Interest%20Income) Net interest income (NII) for Q3 2024 was $22.5 million, a 6.1% decrease from Q2 2024, driven by lower purchase accounting accretion and higher deposit costs, with net interest margin compressing to 2.23% - NII decreased by **$1.5 million (6.1%)** from Q2 2024, primarily due to lower income from cash balances, reduced purchase accounting accretion, and higher interest expense on deposits[9](index=9&type=chunk) - NII increased by **$2.1 million (10.5%)** from Q3 2023, as strong loan growth and higher yields outweighed a significant increase in interest expense[10](index=10&type=chunk) - Net interest margin (tax-equivalent) fell by **16 basis points** QoQ to **2.23%**, attributed to less purchase accounting accretion, the impact of nonaccrual loans, and higher cost of funds[11](index=11&type=chunk) [Noninterest Income](index=4&type=section&id=Noninterest%20Income) Noninterest income was $28.4 million in Q3 2024, a 3.6% increase from Q2 2024, boosted by growth in wealth management revenue and a gain on asset sale, but remained flat year-over-year due to a prior-year divestiture gain - Noninterest income increased by **$1.0 million** QoQ, driven by a **5.1% increase** in wealth revenues and a **$0.6 million gain** on the sale of the Shorewood, Minnesota office[12](index=12&type=chunk) - Compared to Q3 2023, noninterest income was nearly flat, decreasing by **$44 thousand**, as a **$2.5 million decline** in retirement and benefit services revenue due to a prior-year divestiture gain offset a **26.8% increase** in wealth revenues[14](index=14&type=chunk) [Noninterest Expense](index=5&type=section&id=Noninterest%20Expense) Noninterest expense for Q3 2024 rose to $42.4 million, a 9.5% increase from Q2 2024 and a 13.9% increase from Q3 2023, primarily due to merger-related costs and higher compensation - Expenses increased by **$3.7 million (9.5%)** QoQ, with professional fees rising **79.8%** due to **$1.1 million** in HMNF merger-related costs, and compensation also increasing by **$0.8 million**[15](index=15&type=chunk) - Expenses increased by **$5.2 million (13.9%)** YoY, primarily due to **$1.7 million** in merger-related expenses, a **$2.0 million increase** in compensation, and higher FDIC assessments[16](index=16&type=chunk) [Financial Condition](index=5&type=section&id=Financial%20Condition) Alerus's financial condition as of Q3 2024 shows asset and loan growth, a shift in deposit mix, a significant increase in nonperforming assets, and strong capital levels [Balance Sheet Overview](index=5&type=section&id=Balance%20Sheet%20Overview) As of September 30, 2024, total assets stood at $4.1 billion, an increase of 4.5% since year-end 2023, primarily fueled by loan growth despite decreases in cash and investment securities - Total assets increased by **$176.9 million** from December 31, 2023, to **$4.1 billion**[17](index=17&type=chunk) - The asset growth was driven by a **$272.8 million increase** in loans, while cash and cash equivalents decreased by **$63.9 million** and investment securities fell by **$35.6 million**[17](index=17&type=chunk) [Loan Portfolio](index=5&type=section&id=Loan%20Portfolio) The loan portfolio grew to $3.0 billion at the end of Q3 2024, a 9.9% increase from year-end 2023, with broad-based growth across commercial lending categories - Total loans increased by **$272.8 million** since December 31, 2023, reaching **$3.0 billion**[18](index=18&type=chunk) Loan Growth by Category (vs. Dec 31, 2023) | Loan Category | Increase | | :--- | :--- | | Non-owner occupied CRE | $116.7 million | | Construction, land & development CRE | $49.6 million | | Commercial and industrial | $44.1 million | | Multifamily CRE | $30.3 million | [Deposit Portfolio](index=7&type=section&id=Deposit%20Portfolio) Total deposits reached $3.3 billion as of September 30, 2024, a 7.4% increase since year-end 2023, driven entirely by interest-bearing accounts and new commercial relationships, with no brokered deposits - Total deposits grew by **$227.9 million** from December 31, 2023, driven by new and expanded commercial relationships[21](index=21&type=chunk) - There was a notable mix shift: interest-bearing deposits grew by **$298.5 million**, while noninterest-bearing deposits decreased by **$70.5 million** since year-end 2023[21](index=21&type=chunk) - Synergistic deposits (from other business lines) grew by **$69.1 million (8.1%)** to **$920.6 million** since year-end 2023[21](index=21&type=chunk) [Asset Quality](index=7&type=section&id=Asset%20Quality) Asset quality showed signs of stress with total nonperforming assets surging to $48.0 million, primarily due to three large relationships moving to nonaccrual status, though the allowance for credit losses remained stable - Total nonperforming assets surged by **$39.3 million** since year-end 2023 to **$48.0 million**[22](index=22&type=chunk) - The increase in NPAs was primarily driven by three large relationships: a **$25.0 million** construction loan, a large residential real estate relationship, and one CRE non-owner occupied loan, which together contributed over **$38.6 million** to nonaccrual loans[22](index=22&type=chunk) Asset Quality Metrics | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Nonperforming loans to total loans | 1.58% | 0.32% | | Allowance for credit losses to total loans | 1.29% | 1.30% | | Net charge-offs to average loans (Q3'24 vs Q4'23) | 0.04% | (0.04)% | - The company recorded a provision for credit losses of **$1.7 million** in Q3 2024, compared to **$4.5 million** in Q2 2024 and zero in Q3 2023, driven by loan growth and the increase in nonaccrual loans[24](index=24&type=chunk)[25](index=25&type=chunk) [Capital](index=8&type=section&id=Capital) The company's capital position remains strong, with total stockholders' equity increasing to $386.5 million, improved tangible book value per share, and regulatory capital ratios well above 'well capitalized' minimums - Total stockholders' equity increased by **$17.4 million** since December 31, 2023, driven by a **$10.2 million improvement** in AOCI and a **$6.2 million increase** in retained earnings[25](index=25&type=chunk) Key Capital Metrics | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Tangible book value per share (non-GAAP) | $16.50 | $15.46 | | Tangible common equity to tangible assets (non-GAAP) | 8.11% | 7.94% | | Common equity tier 1 capital to risk weighted assets | 11.12% | 11.82% | [Supplementary Information and Financial Statements](index=9&type=section&id=Supplementary%20Information%20and%20Financial%20Statements) This section provides details on the upcoming conference call, company overview, consolidated financial statements, and non-GAAP reconciliations for enhanced financial analysis [Conference Call and Company Information](index=9&type=section&id=Conference%20Call%20and%20Company%20Information) Alerus Financial Corporation will host a conference call on October 30, 2024, to discuss Q3 2024 financial results, highlighting its role as a commercial wealth bank and national retirement services provider with 29 offices - A conference call to discuss Q3 2024 financial results is scheduled for **11:00 a.m. Central Time on Wednesday, October 30, 2024**[27](index=27&type=chunk) - Alerus provides banking, wealth services, and retirement and benefit plans through its subsidiary, Alerus Financial, N.A., with **29 locations** in states including North Dakota, Minnesota, Arizona, Iowa, and Wisconsin[28](index=28&type=chunk)[29](index=29&type=chunk) [Consolidated Financial Statements](index=12&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements provide detailed financial data, including the balance sheet as of September 30, 2024, showing total assets of $4.08 billion, and the income statement for Q3 2024, detailing the $5.2 million net income Consolidated Balance Sheet Highlights (Sep 30, 2024) | Account | Amount (thousands) | | :--- | :--- | | Total Assets | $4,084,640 | | Net Loans | $2,993,201 | | Total Deposits | $3,323,550 | | Total Liabilities | $3,698,154 | | Total Stockholders' Equity | $386,486 | Consolidated Income Statement Highlights (Q3 2024) | Account | Amount (thousands) | | :--- | :--- | | Net Interest Income | $22,542 | | Provision for Credit Losses | $1,661 | | Total Noninterest Income | $28,363 | | Total Noninterest Expense | $42,447 | | Net Income | $5,207 | [Non-GAAP Reconciliations and Analysis](index=9&type=section&id=Non-GAAP%20Reconciliations%20and%20Analysis) The report includes extensive reconciliations of non-GAAP financial measures to their nearest GAAP equivalents, providing investors with a clearer view of capital adequacy and financial performance through adjusted metrics and detailed analysis of net interest margin components - The company provides non-GAAP measures such as tangible book value per common share, return on average tangible common equity, and adjusted efficiency ratio to offer a clearer view of performance[30](index=30&type=chunk) - Detailed tables reconcile GAAP to non-GAAP figures, for example, calculating tangible common equity by subtracting goodwill and other intangible assets from total common stockholders' equity[39](index=39&type=chunk)[40](index=40&type=chunk) - An analysis of average balances, yields, and rates is included, breaking down the components of interest income and expense to explain the net interest margin[44](index=44&type=chunk)[45](index=45&type=chunk)

Alerus Financial (ALRS) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, ALRS's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross."A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages bei ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39036 | --- | --- | --- | |------------------------------------------------------------------|------------------------------------------------------------------ ...

Core Viewpoint - Investors in Alerus Financial Corporation (ALRS) should closely monitor the stock due to significant implied volatility in the options market, particularly for the Oct 18, 2024 $20 Put option [1] Company Analysis - Alerus Financial is currently rated as Zacks Rank 3 (Hold) within the Financial-Miscellaneous Services industry, which ranks in the top 37% of the Zacks Industry Rank [3] - Over the past 60 days, two analysts have raised their earnings estimates for the current quarter, while no analysts have decreased their estimates, resulting in an increase of the Zacks Consensus Estimate from 41 cents per share to 44 cents per share [3] Options Market Insights - The high implied volatility suggests that options traders are anticipating a significant price movement for Alerus Financial shares, indicating potential trading opportunities [4] - Seasoned options traders often seek out options with high implied volatility to sell premium, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected [4]

Alerus Financial Corporation (NASDAQ:ALRS) Q2 2024 Earnings Conference Call July 25, 2024 12:00 PM ET Company Participants Katie Lorenson – President and Chief Executive Officer Al Villalon – Chief Financial Officer Karin Taylor – Chief Risk and Operating Officer Jim Collins – Chief Banking and Revenue Officer Forrest Wilson – Chief Retirement Services Officer, Conference Call Participants Brendan Nosal – Hovde Group David Feaster – Raymond James Nathan Race – Piper Sandler Matt Renck – KBW Operator Good af ...

ALERUS INVESTOR PRESENTATION 2Q 2024 NASDAQ: ALRS DISCLAIMERS Forward-Looking Statements This presentation 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 ...

Alerus (ALRS) reported $51.37 million in revenue for the quarter ended June 2024, representing a year-over-year increase of 7%. EPS of $0.31 for the same period compares to $0.45 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $49.2 million, representing a surprise of +4.42%. The company delivered an EPS surprise of -16.22%, with the consensus EPS estimate being $0.37.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expe ...