Alerus(US:ALRS)2021-05-05 16:00Financial Performance - Net income for the three months ended March 31, 2021, was $15,215,000, compared to $10,180,000 for the previous quarter, representing a 49.9% increase [176]. - Net income for Q1 2021 was $15.2 million, a $9.9 million increase from $5.4 million in Q1 2020, primarily driven by a $13.7 million increase in noninterest income [180]. - Noninterest income was $40,881,000 for the three months ended March 31, 2021, compared to $38,696,000 in the previous quarter, reflecting a 5.6% increase [176]. - Total noninterest income for the three months ended March 31, 2021, was $40.9 million, an increase of $13.7 million, or 50.4%, compared to $27.2 million for the same period in 2020, primarily driven by a $12.1 million increase in mortgage banking revenue [195]. - The efficiency ratio improved to 66.43% for the three months ended March 31, 2021, down from 74.44% in the previous quarter [179]. Loan and Asset Management - Total assets as of March 31, 2021, were $3,151,756,000, an increase from $3,013,771,000 in the previous quarter [174]. - Loans decreased to $1,937,345,000 as of March 31, 2021, from $1,979,375,000 in the previous quarter [174]. - The loan portfolio composition as of March 31, 2021, included 35.0% commercial and industrial loans, 29.4% commercial real estate, and 30.2% residential real estate [204]. - The company executed 582 payment deferrals for lending clients affected by COVID-19, representing $154.0 million, with 16 loans totaling $7.6 million granted second deferrals [208]. - The company anticipates that loan growth will slow down in the future due to COVID-19 and the related decline in economic conditions [209]. Capital and Equity - Stockholders' equity decreased by $929 thousand to $329.2 million as of March 31, 2021, primarily due to a $13.6 million drop in accumulated other comprehensive income [237]. - Common equity tier 1 capital to risk-weighted assets was 13.48% as of March 31, 2021, compared to 12.75% at the end of 2020 [240]. - Total capital to risk-weighted assets increased to 17.54% as of March 31, 2021, up from 16.79% at the end of 2020 [240]. Dividends and Stock Repurchase - The Board of Directors declared a quarterly cash dividend of $0.15 per common share, paid on April 9, 2021 [169]. - A stock repurchase program was approved, allowing the company to repurchase up to 770,000 shares over 36 months, with no shares repurchased as of March 31, 2021 [170]. Economic Outlook and Impact of COVID-19 - The company anticipates significant economic distress for borrowers in the retail, restaurant, and hospitality industries, impacting their ability to repay loans [163]. - The company expects a gradual and uneven economic recovery, which may affect its financial condition and results of operations [163]. - The company expects deposit levels to generally decrease in future periods due to the economic impact of the COVID-19 pandemic [230]. Liquidity and Funding - On-balance sheet liquidity increased to $708.2 million as of March 31, 2021, compared to $511.1 million as of December 31, 2020 [247]. - The liquidity contingency plan has been approved by the board of directors and the ALCO to address potential funding crises [250]. - Management believes it has adequate resources to fund all commitments as of March 31, 2021 [249]. Interest Income and Margin - Net interest income for Q1 2021 was $22.0 million, an increase of $3.2 million from $18.8 million in Q1 2020, with a $3.0 million decrease in interest expense [182]. - The net interest margin for Q1 2021 was 3.12%, down from 3.35% in Q1 2020, due to an 81 basis point decrease in average earning asset yield [183]. - The company anticipates a decrease in net interest income and net interest margin in future periods due to the impact of the COVID-19 pandemic and lower interest rates [184].