Alerus (ALRS) came out with quarterly earnings of $0.24 per share, missing the Zacks Consensus Estimate of $0.29 per share. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -17.24%. A quarter ago, it was expected that this company would post earnings of $0.34 per share when it actually produced earnings of $0.45, delivering a surprise of 32.35%.Over the last four quarters, the company has surp ...

MINNEAPOLIS--(BUSINESS WIRE)--Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net loss of $14.8 million for the fourth quarter of 2023, or ($0.73) per diluted common share, compared to net income of $9.2 million, or $0.45 per diluted common share, for the third quarter of 2023, and net income of $10.9 million, or $0.53 per diluted common share, for the fourth quarter of 2022. During the fourth quarter of 2023, the Company sold $172.3 million of available-for-sale (AFS) securities in ...

Core Insights - Alerus (ALRS) is expected to report quarterly earnings of $0.29 per share, a decline of 45.3% year-over-year, with revenues forecasted at $45 million, down 14.3% from the previous year [1][2] Earnings Estimates - The consensus EPS estimate has remained unchanged over the last 30 days, indicating analysts have reevaluated their initial estimates [1] - Analysts predict 'Net interest margin, tax-equivalent' will reach 2.2%, down from 3.1% in the same quarter last year [2] - The 'Efficiency ratio' is estimated at 81.3%, compared to 69.6% a year ago [2] Key Financial Metrics - Estimated 'Total Noninterest income' is $24.91 million, down from $25.52 million in the same quarter last year [3] - 'Net interest income' is projected to be $20.13 million, a decrease from $26.96 million in the same quarter last year [3] - 'Average Balance - Total interest earning assets' is expected to reach $3.68 billion, compared to $3.47 billion in the same quarter of the previous year [2] Stock Performance - Over the past month, Alerus shares have returned -3.5%, while the Zacks S&P 500 composite has increased by +2.1% [3] - Alerus currently holds a Zacks Rank 1 (Strong Buy), suggesting potential outperformance in the near future [3]

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, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39036 ALERUS FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 45-0375407 (State or other jurisdiction of incorporation ...

Financial Data and Key Metrics Changes - Net interest income declined by 8.3% on a linked quarter basis, primarily due to increased funding costs, representing 41.8% of total revenues [12][13] - Non-interest income increased by 10.2% on a linked-quarter basis, driven by the divestiture of the ESOP trustee business [12] - Net interest margin was 2.27%, a decrease of 25 basis points from the prior quarter, but showed improvement towards the end of the quarter [13][14] - Total loans grew by 2.9% from the prior quarter, with strong growth in C&I, commercial real estate, and residential real estate [14] - Deposits increased by 0.7% from the prior quarter, with non-interest-bearing deposits remaining at 25% of total deposits [15] Business Line Data and Key Metrics Changes - Retirement business accounted for approximately 38% of total revenues, with revenues increasing over 17% on a linked-quarter basis due to the divestiture of the ESOP trustee business [17][18] - Wealth management revenues decreased by 3.3% on a linked-quarter basis, with assets under management also decreasing by 3.5% due to challenging market conditions [21] - Mortgage revenues decreased by 13.6% from the prior quarter, with expectations for a further decrease in the fourth quarter due to seasonality [20] Market Data and Key Metrics Changes - Synergistic deposits sourced from retirement and wealth businesses grew by 21% year-over-year and 2.7% over the prior quarter, now accounting for 26.5% of total deposits [15][16] - HSA balances grew to $175.7 million, representing over 23% of synergistic deposits, highlighting a low-cost funding source [16] Company Strategy and Development Direction - The company is focused on strategic divestitures to prioritize growth in core product lines, particularly in retirement services [6][11] - Investments are being made in key business lines while exiting non-core products, aiming to enhance client service and operational efficiency [11][21] - The company is committed to improving profitability through rightsizing infrastructure and optimizing processes [9][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from the interest rate environment and deposit competition but expressed confidence in building a stronger franchise [4][10] - Future expectations include gradual improvement in net interest margin and stable deposit levels, with a focus on attracting new client relationships [14][15][46] - The company remains optimistic about growth in fee income from retirement and wealth management as market conditions stabilize [50][51] Other Important Information - Credit quality remains strong with low levels of past dues and non-performing loans, and the allowance for credit losses on loans remains stable at 1.39% [10][22] - Capital levels are robust, with common equity Tier 1 capital over 13%, well above regulatory minimums [22][23] Q&A Session Summary Question: Margin expectations for Q4 and 2024 - Management expects 7 to 10 basis points of margin compression in Q4 but anticipates improvement in net interest margin as the year progresses [25][26] Question: Details on non-accrual loans - The increase in non-accrual loans is attributed to a single commercial credit in the Arizona market, not indicative of broader issues [29][30] Question: Funding dynamics and deposit initiatives - The company is focused on attracting talent in deposit-rich verticals and has seen an increase in the CD book, with core deposits expected to remain stable [34][35] Question: Future loan growth and funding levels - Management is optimistic about increasing deposits and reducing reliance on wholesale funding to support loan growth [47][48] Question: Growth potential in fee income lines - Stable market conditions are expected to benefit both retirement and wealth management revenues, with ongoing initiatives to improve efficiencies [49][50]

Alerus EARNINGS PRESENTATION Q3 2023 NASDAQ: ALRS DISCLAIMERS Forward-Looking Statements Thispresentation 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 a ...

[Part 1. FINANCIAL INFORMATION](index=3&type=section&id=Part%201.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements and management's analysis of its financial condition and operating results [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Alerus Financial Corporation's unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2023 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$3.83 billion** driven by loan growth, while deposits slightly decreased and short-term borrowings rose Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | **Total Assets** | **$3,832,978** | **$3,779,637** | | Net loans | $2,497,826 | $2,412,848 | | Total investment securities (AFS & HTM) | $985,870 | $1,039,226 | | **Total Liabilities** | **$3,475,293** | **$3,422,765** | | Total deposits | $2,852,855 | $2,915,484 | | Short-term borrowings | $492,060 | $378,080 | | **Total Stockholders' Equity** | **$357,685** | **$356,872** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q2 2023 slightly decreased to **$9.1 million** due to lower noninterest and net interest income Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $22,234 | $22,776 | $45,892 | $44,449 | | Provision for credit losses | $0 | $0 | $550 | $0 | | Noninterest income | $25,778 | $29,226 | $51,031 | $58,696 | | Noninterest expense | $36,373 | $39,984 | $74,242 | $78,055 | | **Net income** | **$9,104** | **$9,293** | **$17,290** | **$19,477** | | Diluted EPS | $0.45 | $0.52 | $0.85 | $1.10 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income improved significantly to **$4.7 million** in Q2 2023, driven by a smaller other comprehensive loss Comprehensive Income (Loss) Summary (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $9,104 | $9,293 | $17,290 | $19,477 | | Other comprehensive income (loss), net of tax | $(4,435) | $(28,081) | $(2,101) | $(66,150) | | **Total comprehensive income (loss)** | **$4,669** | **$(18,788)** | **$15,189** | **$(46,673)** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity slightly increased to **$357.7 million**, influenced by net income, share repurchases, dividends, and an accounting principle change - For the six months ended June 30, 2023, stockholders' equity was impacted by a **$4.5 million** reduction to retained earnings due to the adoption of a new accounting principle (CECL)[13](index=13&type=chunk) - Key activities affecting equity in the first six months of 2023 included **$17.3 million** in net income, **$7.4 million** in common stock dividends, and **$3.3 million** in common stock repurchases[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$12.0 million**, with investing activities using **$45.4 million** and financing providing **$40.6 million** Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,000 | $17,731 | | Net cash used in investing activities | $(45,383) | $(157,962) | | Net cash provided (used) by financing activities | $40,612 | $(65,037) | | **Net change in cash and cash equivalents** | **$7,229** | **$(205,268)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies, including CECL adoption, and provides insights into investment securities, loans, and segment reporting - The company operates as a diversified financial services company with four distinct business lines: banking, retirement and benefit services, wealth management, and mortgage[21](index=21&type=chunk) - The company qualifies as an "emerging growth company" under the JOBS Act and has elected to use the extended transition period for complying with new or revised accounting standards[27](index=27&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q2 2023 financial performance, highlighting net interest margin pressure, declining mortgage revenue, expense management, and strong asset quality - The company generates a majority of its overall revenue from noninterest income, driven by its retirement and benefit services, wealth management, and mortgage business lines[161](index=161&type=chunk) - Net income for Q2 2023 was **$9.1 million**, a **2%** decrease from Q2 2022, primarily due to a **$3.4 million** decrease in noninterest income and a **$0.5 million** decrease in net interest income, partially offset by a **$3.6 million** decrease in noninterest expense[174](index=174&type=chunk) - Total assets increased by **$53.3 million** (**1.4%**) to **$3.8 billion** since year-end 2022, driven by an **$89.5 million** increase in loans[194](index=194&type=chunk) [Operating Results Overview](index=49&type=section&id=Operating%20Results%20Overview) Key Q2 2023 performance metrics include a **0.96%** ROA, **13.71%** ROTCE, **2.52%** net interest margin, and **53.69%** noninterest income as a percentage of revenue Key Performance Ratios | Performance Ratio | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Return on average total assets | 0.96% | 1.14% | | Return on average tangible common equity (Non-GAAP) | 13.71% | 15.25% | | Net interest margin (taxable-equivalent) | 2.52% | 2.98% | | Efficiency ratio (Non-GAAP) | 72.79% | 74.72% | | Noninterest income as a % of revenue | 53.69% | 56.20% | [Net Interest Income](index=52&type=section&id=Net%20Interest%20Income) Net interest income decreased by **2.4%** to **$22.2 million** in Q2 2023, with net interest margin compressing to **2.52%** due to rising interest expenses - Net interest income decreased by **$542 thousand** (**2.4%**) YoY to **$22.2 million** in Q2 2023[177](index=177&type=chunk) - The net interest margin (FTE) for Q2 2023 was **2.52%**, a decrease from **2.98%** in Q2 2022, due to rising costs of interest-bearing liabilities[177](index=177&type=chunk) Rate/Volume Analysis of Net Interest Income Change (Q2 2023 vs Q2 2022, in thousands) | Description | Change due to Volume | Change due to Rate | Total Interest Variance | | :--- | :--- | :--- | :--- | | Total interest income | $5,254 | $10,700 | $15,954 | | Total interest expense | $902 | $15,554 | $16,456 | | **Change in net interest income** | **$4,352** | **$(4,854)** | **$(502)** | [Noninterest Income](index=55&type=section&id=Noninterest%20Income) Total noninterest income decreased by **11.8%** to **$25.8 million** in Q2 2023, primarily due to a **$3.1 million** drop in mortgage banking revenue Noninterest Income Breakdown (in thousands) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Retirement and benefit services | $15,890 | $16,293 | | Wealth management | $5,449 | $5,548 | | Mortgage banking | $2,905 | $6,038 | | Other | $1,534 | $1,347 | | **Total noninterest income** | **$25,778** | **$29,226** | - The decrease in noninterest income was primarily driven by a **$3.1 million** decline in mortgage banking revenue, as originations decreased by **$158.1 million** (**58.7%**) compared to 2022[188](index=188&type=chunk) [Noninterest Expense](index=57&type=section&id=Noninterest%20Expense) Total noninterest expense decreased by **9%** to **$36.4 million** in Q2 2023, mainly due to lower compensation and employee benefits Noninterest Expense Breakdown (in thousands) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Compensation | $18,847 | $21,248 | | Employee taxes and benefits | $4,724 | $5,787 | | Business services, software and technology | $5,269 | $4,785 | | Professional fees and assessments | $1,530 | $2,246 | | Other | $6,003 | $5,888 | | **Total noninterest expense** | **$36,373** | **$39,984** | - The number of full-time equivalent employees was reduced by **65**, or **8.1%**, from Q2 2022 (after adjusting for the Metro Phoenix Bank acquisition), contributing to lower expenses[191](index=191&type=chunk) [Financial Condition](index=58&type=section&id=Financial%20Condition) Total assets reached **$3.8 billion** driven by loan growth, while deposits decreased, and asset quality and capital ratios remained strong - Total loans grew by **$89.5 million** (**3.7%**) since year-end 2022, primarily driven by a **$122.2 million** increase in commercial real estate loans[195](index=195&type=chunk) - Nonperforming assets decreased to **$2.6 million**, or **0.07%** of total assets, as of June 30, 2023, compared to **$3.8 million**, or **0.10%** of total assets, at year-end 2022[203](index=203&type=chunk) - Total deposits decreased by **$62.6 million** (**2.1%**) since year-end 2022, with a notable shift from noninterest-bearing deposits (down **$145.5 million**) to interest-bearing deposits (up **$82.8 million**)[218](index=218&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed through NII simulation and EVE sensitivity analysis, indicating liability sensitivity to rising rates - The company's primary market risk is interest rate risk, managed by the ALCO through NII simulation and EVE sensitivity analysis[230](index=230&type=chunk)[232](index=232&type=chunk) Net Interest Income Sensitivity Analysis (as of June 30, 2023) | Rate Shock | Change in NII (Next 12 Months) | Change in NII (Next 24 Months) | | :--- | :--- | :--- | | +400 bps | -35.0% | -18.2% | | +200 bps | -17.5% | -9.2% | | +100 bps | -8.5% | -4.1% | | -100 bps | +7.7% | +2.8% | Economic Value of Equity (EVE) Sensitivity Analysis | Rate Shock | Change in EVE (June 30, 2023) | Change in EVE (Dec 31, 2022) | | :--- | :--- | :--- | | +400 bps | -27.7% | -19.5% | | +200 bps | -14.6% | -10.4% | | +100 bps | -6.9% | -4.9% | | -100 bps | +5.7% | +4.0% | [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The President and CEO, CFO, and Chief Accounting Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[235](index=235&type=chunk)[238](index=238&type=chunk) - There were no changes in internal control over financial reporting during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[239](index=239&type=chunk) [Part 2: OTHER INFORMATION](index=71&type=section&id=Part%202%3A%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures [Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond ordinary routine litigation incidental to its business - There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business[240](index=240&type=chunk) [Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K have occurred[241](index=241&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **170,046** shares of common stock at an average price of **$17.37** per share during Q2 2023 Issuer Repurchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2023 | — | $— | | May 2023 | 62,513 | $16.13 | | June 2023 | 107,533 | $18.09 | | **Total** | **170,046** | **$17.37** | - The stock repurchase program, approved on February 18, 2021, authorizes the repurchase of up to **770,000** shares and is set to continue until February 28, 2024[243](index=243&type=chunk) [Other Information](index=72&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter ended June 30, 2023 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter[245](index=245&type=chunk) [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and iXBRL data files [Signatures](index=74&type=section&id=Signatures) The report is duly signed and authorized by the President and CEO, and the Executive Vice President and CFO, on August 3, 2023

Alerus EARNINGS PRESENTATION Q2 2023 NASDAQ: ALRS DISCLAIMERS Forward-Looking Statements Thispresentation 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 a ...

Financial Data and Key Metrics Changes - Net interest income declined by 6% on a linked quarter basis, now representing 46.3% of total revenues [13][14] - Non-interest income increased by 2.1% on a linked quarter basis, showing improvement across all income businesses [13] - Net interest margin decreased by 18 basis points to 2.52% due to rising funding costs [14] - Total loans grew by 1.9% from the prior quarter, driven by commercial and residential real estate [15] - Deposits declined by 5.9% from the prior quarter, primarily due to seasonal outflows from public funds [15] Business Line Data and Key Metrics Changes - The retirement business accounted for approximately 32% of total revenues, with assets under management increasing by 4.9% [18] - Wealth management revenues increased by 4.9% on a linked quarter basis, with assets under management also rising by 5% [19] - Mortgage revenues surged by 69% from the prior quarter, with originations increasing by over 43% [20] Market Data and Key Metrics Changes - The company’s uninsured deposits are at 23.6%, with a liquidity coverage ratio exceeding 300% [8][17] - Synergistic deposits sourced from wealth and retirement businesses grew by 27% year-over-year [16] Company Strategy and Development Direction - The company is focused on transforming into a top-performing commercial wealth bank and national retirement provider [3][4] - Alerus is optimizing its infrastructure while balancing investments, evidenced by a 4% linked quarter decline in non-interest expenses [6] - The company aims to leverage the SECURE Act 2.0 to expand its client base and improve margins [11] Management's Comments on Operating Environment and Future Outlook - Management noted near-term pressure on margins but emphasized prudent expense management [12] - The company expects modest loan growth for the remainder of the year due to rising interest rates impacting demand [15][33] - Management remains optimistic about the long-term embedded value in their diversified business model [12] Other Important Information - The company reduced its total headcount by 10% year-over-year, including the acquisition of Metro Phoenix Bank [6] - The company increased its dividend by 5.6% during the quarter [11] Q&A Session Summary Question: Non-interest expense outlook - Management indicated that non-interest expenses are expected to decrease in the low to mid-single digits for 2023, with some timing differences in compensation [25][26] Question: Loan growth expectations - Management noted that loan growth is expected to be modest due to slowing demand as interest rates rise [33] Question: Capital management and M&A - Management confirmed a focus on maintaining strong capital levels and ongoing conversations regarding potential M&A opportunities [37] Question: Non-performing loans and credit quality - Management stated that there is no significant pattern of deterioration in credit quality, with historically strong credit metrics [39] Question: Retirement platform engagement - Management emphasized that the engagement with consultants aims to enhance both revenue growth and operational efficiency [42][43] Question: Deposit growth expectations - Management expects public fund deposits to rebound in the second half of the year, despite recent outflows [53] Question: Mortgage market trends - Management indicated stable margins and volumes in the mortgage market, with expectations of a seasonal decline in the fourth quarter [62]

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 March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39036 ALERUS FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 45-0375407 (State or other jurisdiction of incorporation or ...