Alerus Financial (ALRS) to Buy HMN Financial for $116.4 Million

Core Viewpoint - Alerus Financial has agreed to acquire HMN Financial in an all-stock deal valued at $116.4 million, marking its 26th acquisition since 2000, with expectations for closure in Q4 2024 [1][2]. Group 1: Acquisition Details - The acquisition will see HMN Financial shareholders receive 1.25 shares of Alerus Financial for each share they own [2]. - HMN Financial, through its subsidiary Home Federal Savings Bank, operates 12 branches in Minnesota and additional branches in Iowa and Wisconsin, with total assets of $1.2 billion as of March 31, 2024 [2]. - Post-acquisition, the combined entity will have nearly $5.5 billion in total assets, $3.7 billion in loans, and $4.3 billion in deposits, operating through 29 locations across the Midwest and Arizona [2]. Group 2: Financial Impact - The transaction is expected to be immediately accretive to Alerus Financial's 2025 earnings by 45%, excluding one-time expenses [3]. - The deal will yield 30% cost savings on HMN Financial's non-interest expenses, with one-time pre-tax charges of $21.7 million anticipated [3]. Group 3: Strategic Implications - This acquisition aligns with Alerus Financial's strategy of combining organic growth with inorganic expansion, diversifying its loan portfolio and enhancing market share in Rochester and other Minnesota markets [4]. - Over the past year, Alerus Financial's shares have increased by 34.7%, outperforming the industry average of 24.4% [4].