Core Insights - Alerus (ALRS) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending December 2024, with the consensus outlook indicating a significant impact on the stock price based on actual results compared to estimates [1][3] Earnings Expectations - The consensus estimate for Alerus's quarterly earnings is projected at $0.01 per share, reflecting a year-over-year decrease of 95.8%, while revenues are expected to reach $61.8 million, marking a 31.5% increase from the previous year [3] Estimate Revisions - Over the past 30 days, the consensus EPS estimate has been revised down by 9.33%, indicating a collective reassessment by analysts regarding the company's earnings prospects [4] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Alerus is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -200%, which indicates a bearish outlook from analysts [10][11] Historical Performance - In the last reported quarter, Alerus was expected to post earnings of $0.44 per share but only achieved $0.26, resulting in a surprise of -40.91%. Over the last four quarters, the company has only beaten consensus EPS estimates once [12][13] Investment Considerations - Alerus does not appear to be a strong candidate for an earnings beat, and investors are advised to consider other factors when making investment decisions regarding this stock ahead of its earnings release [16]

Stocks Added to Zacks Rank 5 (Strong Sell) List - Anglo American (NGLOY), a mining company operating globally, has seen a 20 2% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Advanced Drainage Systems (WMS), a manufacturer of thermoplastic corrugated pipe and water management products, has experienced a 5 9% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Alerus Financial (ALRS), a financial services company, has had its Zacks Consensus Estimate for current year earnings revised downward by almost 5 2% over the last 60 days [3]

ALERUS INVESTOR PRESENTATION 3Q 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 ...

Financial Data and Key Metrics Changes - Net income decreased by 6.1% compared to the prior quarter, while fee income grew by 3.6% [30] - Net interest income decreased to $22.5 million, impacted by lower purchase accounting accretion and higher interest expenses [31] - The net interest margin (NIM) was affected by non-accrual loans and pricing pressure on deposits, with a long-term guidance of reaching 3% [20][32] Business Line Data and Key Metrics Changes - The Banking segment, including Mortgage, saw non-interest income increase by over 12% from the prior quarter, primarily due to a gain from the sale of an office [35] - Retirement business revenue increased by 0.4%, with assets under management rising by 4.7% [36] - Wealth Management revenues increased by 5.1%, with assets under management also up by 5.4% [37] Market Data and Key Metrics Changes - Deposit growth for the year exceeded 7%, with deposits remaining flat despite seasonal outflows [14] - Non-interest-bearing deposits decreased to 19.8% of total deposits, down from 21.3% in the prior quarter [34] - Loan growth was robust, primarily driven by market share gains from established companies [15] Company Strategy and Development Direction - The company is focused on building a premier Commercial Wealth Bank, diversifying its loan portfolio, and executing strategic acquisitions [8][12] - A commitment to maintaining a fortress balance sheet and delivering dividends to shareholders remains a priority [29] - The company is investing in technology upgrades to improve client experience and advisor processes in Wealth Management [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a tough quarter but emphasized ongoing progress in long-term strategic initiatives [6][10] - The competitive environment remains challenging, but the company is focused on long-term retention and growth [20][21] - Management expressed confidence in the ability to achieve superior returns over time despite current challenges [104] Other Important Information - The company closed its acquisition of Home Federal, marking its 26th acquisition in the past 20 years [12][13] - Non-interest expenses increased by 9.5%, influenced by merger-related costs and professional fees [38] - The company is committed to achieving 30% cost savings from the Home Federal acquisition [40] Q&A Session Summary Question: On the larger credit and non-accrual loans - Management is evaluating options for a particular credit that went non-accrual due to delayed equity injections, with completion expected in early 2025 [45][46] Question: On expense trends and normalization - Management expects professional fees to normalize, with a commitment to reducing core expenses despite merger-related costs [49][50] Question: On loan growth and market share - Loan growth is attributed to market share gains, with management noting that the overall market is stable but not experiencing robust growth [54][56] Question: On margin outlook and deposit betas - Management anticipates a slower realization of deposit betas on the way down, with a core margin expected to improve in the back half of the year [66][67] Question: On Retirement and Wealth business profitability - Management expects margins to improve through efficiency and new partnerships, with steady growth anticipated over time [70] Question: On the impact of Home Federal acquisition - Management is considering loan sales and securities portfolio restructuring to optimize the balance sheet post-acquisition [80] Question: On criticized classified loan trends - Management noted an increase in criticized classified loans, but overall levels are consistent with pre-pandemic figures [82] Question: On managing excess capital - The company remains focused on organic growth and is open to selective acquisitions in the Retirement and Wealth sectors [86]

Acquisition and Divestitures - The acquisition of HMNF was completed on October 9, 2024, valued at approximately $128.8 million, resulting in former HMNF stockholders holding about 21.9% of the Company's outstanding common stock[223]. - During the three and nine months ended September 30, 2024, the Company incurred pre-tax acquisition expenses of $1.7 million and $2.3 million, respectively, related to the acquisition of HMNF[224]. - The Company entered into a purchase agreement to sell its South Fargo branch for $5.1 million, expecting to record a gain upon closing[226]. - The West Fargo branch is listed for sale at $3.8 million, with an expected sale within the next 12 months, also anticipating a gain on sale[226]. Financial Performance - Net income for the three months ended September 30, 2024, was $5,207,000, down from $6,208,000 in the previous quarter and $9,161,000 in the same period last year[231]. - The efficiency ratio improved to 80.29% for the three months ended September 30, 2024, compared to 72.50% in the previous quarter and 73.37% a year ago[231]. - The average return on average total assets was 0.57% for the three months ended September 30, 2024, down from 0.65% in the previous quarter and 0.75% a year ago[228]. - The company declared a dividend of $0.20 per common share for the three months ended September 30, 2024, consistent with the previous quarter and up from $0.19 a year ago[231]. - Net interest income for the three months ended September 30, 2024, was $22,542,000, compared to $24,001,000 for the previous quarter and $20,395,000 for the same period last year[231]. - Provision for credit losses was $1,661,000 for the three months ended September 30, 2024, down from $4,489,000 in the previous quarter and no provision in the same period last year[231]. - Noninterest income increased to $28,363,000 for the three months ended September 30, 2024, compared to $27,371,000 in the previous quarter and $28,407,000 in the same period last year[231]. Assets and Liabilities - Total assets as of September 30, 2024, were $4,298,080,000, slightly up from $4,297,294,000 in the previous quarter and significantly higher than $3,821,601,000 a year ago[229]. - Loans outstanding increased to $2,968,947,000 as of September 30, 2024, from $2,837,232,000 in the previous quarter and $2,544,836,000 a year ago[229]. - Deposits reached $3,264,138,000 as of September 30, 2024, compared to $3,230,699,000 in the previous quarter and $2,844,758,000 a year ago[229]. - The Company’s long-term debt stands at $58.956 million as of the latest reporting period[208]. - Total common stockholders' equity reached $386,486,000 as of September 30, 2024, an increase from $373,226,000 in June 30, 2024[234]. Revenue Streams - The Company generates a majority of its revenue from noninterest income, primarily from retirement and benefit services and wealth management[217]. - The Company’s business model is designed to produce strong financial performance and a diversified revenue stream[217]. - Total tax-equivalent revenue for the nine months ended September 30, 2024, was $150,634 thousand, up from $146,170 thousand for the same period last year, representing a growth of 3.4%[235]. - The adjusted noninterest income for the nine months ended September 30, 2024, was $80,581 thousand, compared to $75,468 thousand for the same period last year, reflecting a growth of 6.5%[236]. Credit Risk Management - The Company emphasizes the importance of managing credit risk, particularly in the commercial real estate portfolio[210]. - The Company’s strategy for credit risk management includes centralized credit policies and ongoing risk monitoring, emphasizing diversification across geographic and industry levels[297]. - The Company utilizes an internal lending division, Special Credit Services, to manage individual nonperforming loans[297]. - The total loans with fixed interest rates amount to $1,673.4 million, while loans with floating interest rates total $1,358.9 million[295]. Nonperforming Loans and Allowance for Credit Losses - Nonperforming loans rose to $48,026 thousand as of September 30, 2024, compared to $8,735 thousand on December 31, 2023, indicating a significant increase of 450%[300]. - The allowance for credit losses (ACL) on loans at the end of the period was $39,142 thousand, up from $36,290 thousand, reflecting a 5% increase[307]. - Nonperforming loans to total loans ratio increased to 1.58% as of September 30, 2024, compared to 0.32% on December 31, 2023[301]. - The ACL on loans to nonperforming loans ratio decreased to 81.50% as of September 30, 2024, down from 402.91% on December 31, 2023[307]. Deposits and Liquidity - Total deposits increased by $227.9 million, or 7.4%, to $3.3 billion as of September 30, 2024, compared to December 31, 2023[314]. - Interest-bearing deposits rose by $300.4 million, while noninterest-bearing deposits decreased by $67.9 million during the same period[314]. - The company's total uninsured deposits were approximately $1.3 billion as of September 30, 2024, up from approximately $1.1 billion as of December 31, 2023[319]. - The Company had on-balance sheet liquidity of $424.8 million as of September 30, 2024, a decrease from $668.2 million as of December 31, 2023[330]. Future Outlook - The company anticipates that net interest income and adjusted net interest margin will increase in future periods due to expected interest rate cuts lowering funding costs[245]. - The company expects mortgage revenue to increase in future periods due to recent and anticipated interest rate cuts[255]. - The company anticipates continued loan growth in the commercial and industrial and CRE loan portfolios for the remainder of 2024 due to recently added production talent[281].

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 ...

Company Performance - Alerus reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.44 per share, and down from $0.45 per share a year ago, representing an earnings surprise of -40.91% [1] - The company posted revenues of $50.91 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.67%, but up from $48.8 million year-over-year [2] - Over the last four quarters, Alerus has surpassed consensus EPS estimates only once, while it has topped consensus revenue estimates three times [2] Market Comparison - Alerus shares have increased by approximately 6.7% since the beginning of the year, compared to the S&P 500's gain of 22.1% [3] - The current Zacks Rank for Alerus is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.15 on revenues of $62.45 million, and for the current fiscal year, it is $1.21 on revenues of $213.75 million [7] - The outlook for the Financial - Miscellaneous Services industry, to which Alerus belongs, is currently in the bottom 43% of over 250 Zacks industries, which may impact stock performance [8]

[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 ...

Dividend and Stockholder Information - The Company reported a quarterly cash dividend of $0.20 per common share, paid on July 12, 2024, to stockholders of record as of June 14, 2024[216]. Acquisition and Merger Activities - The Company incurred $0.6 million in pre-tax acquisition expenses related to the planned acquisition of HMNF during the three and six months ended June 30, 2024[215]. - The Company announced a merger agreement to acquire HMNF, with HMNF stockholders receiving 1.25 shares of the Company's common stock for each share of HMNF common stock, subject to potential adjustments[214]. - The Company is focused on organic and acquisition growth strategies, including the integration of Metro Phoenix Bank acquired in 2022 and the pending acquisition of HMNF[206]. Financial Performance and Revenue - The Company generates a majority of its revenue from noninterest income, primarily from retirement and benefit services, wealth management, and mortgage business lines[210]. - The Company’s revenue consists of net interest income from traditional banking products and services, alongside significant noninterest income[210]. - The Company’s business model has established a loyal client base and a dedicated employee culture, contributing to strong financial performance[210]. - The company reported a net income of $6,208 for the three months ended June 30, 2024, compared to $9,104 for the same period last year, reflecting a decrease of 31.5%[223]. - Net income for Q2 2024 was $6.2 million, a decrease of 31.8% from $9.1 million in Q2 2023, primarily due to a $4.5 million increase in provision for credit losses[231]. - Net income for the first six months of 2024 was $12.6 million, down 26.9% from $17.3 million in the same period of 2023, attributed to a $3.9 million increase in provision for credit losses[232]. Asset and Loan Growth - As of June 30, 2024, total assets reached $4,297,294, an increase from $3,785,487 a year earlier, representing a growth of 13.5%[221]. - Loans increased to $2,837,232 from $2,482,413 year-over-year, reflecting a growth of 14.3%[221]. - Retirement and benefit services assets under administration/management increased to $39,389,533 from $35,052,652 year-over-year, representing a growth of 12.9%[221]. - Total loans amounted to $2,915,792 thousand, up from $2,533,522 thousand in the previous period[293]. Interest Income and Margin - Net interest income for the three months ended June 30, 2024, was $24,001, compared to $22,234 for the same period last year, marking an increase of 7.9%[223]. - Net interest income for Q2 2024 was $24.0 million, an increase of 7.9% from $22.2 million in Q2 2023, driven by a $12.7 million increase in interest income[234]. - Adjusted net interest margin (tax-equivalent) for Q2 2024 was 2.57%, compared to 2.44% in Q1 2024[229]. - Net interest margin (on a tax-equivalent basis) for Q2 2024 was 2.39%, down from 2.52% in Q2 2023, primarily due to higher earning assets at lower yields[236]. - The company expects net interest income and adjusted net interest margin to recover as interest earning assets reprice at higher rates and deposit cost increases slow[237]. Credit Quality and Provision for Losses - The company recorded a provision for credit losses of $4.5 million for Q2 2024, compared to no provision in Q2 2023, primarily due to loan growth and a $21.5 million construction loan moving to nonaccrual status[248]. - The provision for loan losses was $4.3 million for Q2 2024, compared to $0.2 million in Q2 2023, indicating a significant increase in credit risk[247]. - Nonperforming loans totaled $27,618 thousand as of June 30, 2024, up from $8,596 thousand on December 31, 2023, indicating a significant increase in credit quality issues[286]. - The allowance for credit losses (ACL) is maintained at a level deemed sufficient to absorb expected losses, with management performing ongoing evaluations[288]. Noninterest Income and Expenses - Total noninterest income for Q2 2024 was $27.4 million, a $1.6 million, or 6.2% increase from $25.8 million in Q2 2023, driven by a $0.9 million increase in wealth management revenue[249]. - Total noninterest expense for the three months ended June 30, 2024 was $38.8 million, a $2.4 million, or 6.5%, increase compared to $36.4 million for the same period in 2023[254]. - Total noninterest expense for the six months ended June 30, 2024 was $77.8 million, a $3.5 million, or 4.8%, increase compared to $74.2 million for the same period in 2023[255]. Risk Management and Compliance - The Company is subject to various risks, including interest rate risk, credit risk management, and competition from non-bank financial service providers[205]. - Management continuously enhances internal controls and risk management processes to mitigate operational risk, which includes human behavior and external influences[333]. - Compliance risk includes potential regulatory sanctions and reputational damage due to non-compliance with banking regulations and practices[334]. - Strategic risk involves the potential loss of reputation and failure to execute business plans effectively, which the Company aims to mitigate through better risk understanding[335]. Capital and Liquidity - Total common stockholders' equity as of June 30, 2024, was $373.226 million, up from $371.635 million as of March 31, 2024[227]. - The tangible common equity to tangible assets ratio was 7.26% as of June 30, 2024, slightly up from 7.23% as of March 31, 2024[227]. - On balance sheet liquidity was $678.0 million as of June 30, 2024, compared to $668.2 million as of December 31, 2023[319]. - Off balance sheet liquidity increased to $1.9 billion as of June 30, 2024, from $1.6 billion as of December 31, 2023[319].