Alerus(US:ALRS)2024-05-02 20:16Financial Performance - For the three months ended March 31, 2024, the return on average total assets was 0.63%, a decrease from 1.51% in the previous quarter[202]. - The return on average common equity was 7.04%, down from 16.75% in the previous quarter[202]. - Earnings per common share (basic) for the quarter was $0.32, compared to a loss of $0.74 in the previous quarter[202]. - Net income for the three months ended March 31, 2024, was $6,432 thousand, a recovery from a net loss of $14,754 thousand in the previous quarter[205]. - Net income for Q1 2024 was $6.4 million, a decrease of $1.8 million or 21.4% compared to $8.2 million in Q1 2023[211]. Income and Revenue - Noninterest income as a percentage of revenue increased to 53.26% from 51.63% in the previous quarter[202]. - Noninterest income rose to $25,323 thousand for the same period, compared to $25,253 thousand in the previous quarter, indicating a growth of 0.3%[205]. - Total interest income for the three months ended March 31, 2024, was $11.352 million, a decrease of $1.316 million compared to $12.668 million for the same period in 2023[221]. - Total noninterest income for the three months ended March 31, 2024, was $25.323 million, reflecting a slight increase of $70 thousand or 0.3% compared to $25.253 million in the same period of 2023[225]. Loans and Assets - Total loans increased to $2,768,514 thousand as of March 31, 2024, up from $2,653,622 thousand in the previous quarter, representing a growth of 4.3%[205]. - Total assets reached $4,338,093 thousand as of March 31, 2024, up from $3,907,713 thousand in the previous quarter, marking an increase of 11.0%[205]. - Total loans as of March 31, 2024, amounted to $2.768 billion, with a net interest income of $39.368 million[219]. - The total commercial loans as of March 31, 2024, were $1.861 billion, with a net interest income of $28.602 million[219]. Interest and Margins - The net interest margin (taxable-equivalent basis) decreased to 2.30% from 2.37% in the previous quarter[202]. - Net interest income for the three months ended March 31, 2024, was $22,219 thousand, compared to $21,552 thousand in the previous quarter, reflecting an increase of 3.1%[205]. - Net interest margin (tax-equivalent) for Q1 2024 was 2.30%, compared to 2.70% in Q1 2023[215]. - Adjusted net interest margin (tax-equivalent) for Q1 2024 was 2.44%, a decrease of 26 basis points from 2.70% in Q1 2023[215]. Deposits and Funding - Total deposits increased to $3,284,969 thousand as of March 31, 2024, compared to $3,095,611 thousand in the previous quarter, a rise of 6.1%[205]. - Interest-bearing deposits rose by $224.9 million, while noninterest-bearing deposits decreased by $35.6 million, leading to a shift in the deposit composition[272]. - The Company reported total uninsured deposits of approximately $1.2 billion as of March 31, 2024[276]. Credit Losses and Risk Management - The provision for credit losses was $1,507 thousand for the three months ended March 31, 2024, compared to $550 thousand in the previous quarter, indicating a significant increase[205]. - The allowance for credit losses (ACL) increased to $36,584 thousand as of March 31, 2024, from $35,102 thousand as of March 31, 2023, reflecting a growth of 4.2%[265]. - The net charge-offs for the three months ended March 31, 2024, were $58 thousand, a decrease of 65.9% compared to $170 thousand for the same period in 2023[267]. - The company’s strategy for credit risk management includes centralized credit policies and ongoing risk monitoring to maintain asset quality[255]. Equity and Capital - Stockholders' equity rose to $371,635 thousand as of March 31, 2024, up from $369,127 thousand in the previous quarter, reflecting a growth of 0.4%[208]. - Common equity tier 1 capital to risk-weighted assets increased to 11.86% as of March 31, 2024, up from 11.82% as of December 31, 2023[283]. - The Company maintained all regulatory capital ratios above the well-capitalized standards as of March 31, 2024[282]. Economic and Interest Rate Sensitivity - The company anticipates recovery in net interest income and margin as interest-earning assets remix at higher rates[216]. - As of March 31, 2024, a +400 basis points shift in interest rates is estimated to decrease net interest income by 10.9%[300]. - The economic value of equity is projected to decline by 8.5% with a +400 basis points increase in interest rates as of March 31, 2024[302]. - Management employs economic value of equity sensitivity analysis to assess the impact of interest rate changes on long-term cash flows and capital[301]. Operational and Compliance Risks - Operational risk management focuses on strengthening internal controls and enterprise risk management to mitigate potential losses[303]. - Compliance risk includes potential regulatory sanctions and reputational impacts due to non-compliance with banking regulations[304]. - Strategic risk management initiatives aim to enhance understanding and reporting of various risks associated with new products and business opportunities[305].