Alerus(US:ALRS)2022-01-27 17:12Financial Data and Key Metrics Changes - Alerus Financial Corporation reported record net income for 2021, achieving a return on tangible common equity (ROTC) of 18.89% [4] - Fee income constituted 63% of total revenue, highlighting the importance of maintaining high levels of fee income [4] - The company grew its deposit base by 14% in 2021, adding $450 million in new account balances [9] Business Line Data and Key Metrics Changes - The mortgage division generated $48.5 million in revenue, with over $1.8 billion in originations, despite a projected industry volume decrease of 30% in 2022 [5][6] - The retirement and benefits division surpassed $71 million in revenue, with a client base exceeding 440,000 participants [6] - Wealth management produced $527 million in new assets under management, with strong momentum in digital offerings [7] Market Data and Key Metrics Changes - Commercial line utilization dropped to 17%, the lowest in five years, indicating challenges in the current lending environment [13] - The company reported a decrease in non-performing loans to total loans to 12 basis points, down from 35 basis points in the previous quarter [12] Company Strategy and Development Direction - Alerus aims to maintain flat expenses in 2022, excluding the Metro transaction, while continuing to focus on organic growth and acquisition opportunities [11][30] - The company is actively building a pipeline for fee income acquisitions, despite a challenging market for potential sellers [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, anticipating mid to high single-digit growth for the balance sheet, while acknowledging wage pressures [20][30] - The company plans to replace recurring document restatement fees with new revenue generation to maintain revenue levels [27] Other Important Information - Alerus released $1.5 million in reserves in Q4, maintaining a robust allowance to total loans of 1.83% [12] - The company doubled the size of its investment portfolio, which has impacted net interest margins but increased earnings on the portfolio by $5 million year-over-year [9] Q&A Session Summary Question: Loan growth and demand outlook - Management expects mid to high single-digit growth for the Alerus balance sheet in 2022, with a focus on the Metro deal [20] Question: Retirement and benefit services revenue growth - Revenue is expected to be flat in 2022, with efforts to offset natural attrition in assets under administration [27] Question: Expense growth outlook - Alerus aims to hold expenses flat in 2022, despite wage pressures and additional costs from the Metro transaction [30] Question: Acquisition opportunities and capital deployment - The company continues to evaluate acquisition opportunities and is focused on organic growth while considering dividend and buyback strategies [32]