Alerus Financial Corporation Reports Second Quarter 2024 Net Income of $6.2 Million

Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $6.2 million for the second quarter of 2024, or $0.31 per diluted common share, compared to net income of $6.4 million, or $0.32 per diluted common share, for the first quarter of 2024, and net income of $9.1 million, or $0.45 per diluted common share, for the second quarter of 2023.

CEO Comments

President and Chief Executive Officer Katie Lorenson said, “We continued to see improvement in our underlying core business during the second quarter of 2024. Overall revenues grew 8% sequentially from the prior quarter as both our spread based and fee based revenues grew at a similar rate. A continued rebound in our net interest margin coupled with strong balance sheet growth in loans and deposits, including noninterest bearing deposits, propelled our spread income higher. Fee based revenues benefitted from an improvement in both asset based and non-market based fees from our wealth and retirement businesses. In addition, operating leverage improved with continued prudent expense management, which drove overall expenses down slightly during the quarter. These strong core underlying trends led to sequential improvement of over 48% in pre-provision net revenue from the prior quarter. Provision expense for the quarter was $4.5 million which was driven by loan growth and moving one previously identified commercial real estate loan to nonperforming. Overall classified asset levels improved during the quarter and credit quality is strong relative to historical standards. Reserve and capital levels remain robust with an allowance of 1.31% to total loans, CET1 ratio of 11.67%, while tangible book value per common share grew more than 8% over the past year.

I want to thank all the Alerus team members for their efforts in driving continuous improvement, their expertise and commitment to our clients, communities and shareholders to make Alerus better every day.”

Second Quarter Highlights

  • Total deposits were $3.3 billion as of June 30, 2024, an increase of $203.0 million, or 6.6%, from December 31, 2023
  • Total loans were $2.9 billion as of June 30, 2024, an increase of $156.2 million, or 5.7%, from December 31, 2023
  • The loan to deposit ratio as of June 30, 2024 was 88.4%, compared to 89.1% as of December 31, 2023; brokered deposits remained at $0
  • Net interest margin (on a tax equivalent basis) was 2.39% in the second quarter of 2024, compared to 2.30% in the first quarter of 2024. Adjusted net interest margin (on a tax-equivalent basis) (non-GAAP) increased 13 basis points from 2.44% in the first quarter of 2024 to 2.57% in the second quarter of 2024
  • Net interest income was $24.0 million in the second quarter of 2024, an increase of 8.0% from $22.2 million in the first quarter of 2024
  • Noninterest income, which represented 53.3% of total revenues, was $27.4 million in the second quarter of 2024, an increase of 8.1% from $25.3 million in the first quarter of 2024
  • Noninterest expense was $38.8 million in the second quarter of 2024, a decrease of 0.7%, from $39.0 million in the first quarter of 2024
  • Total assets under administration/management at June 30, 2024 were $43.6 billion, a 1.9% increase from March 31, 2024
  • Increased quarterly dividend by 5.26% over the first quarter of 2024 to $0.20 per share
  • Allowance for credit losses to total loans remained stable at 1.31% as of June 30, 2024 and March 31, 2024
  • Tangible book value per common share (non-GAAP) was $15.77 as of June 30, 2024, a 0.9% increase from March 31, 2024
  • Common equity tier 1 capital to risk weighted assets as of June 30, 2024 was 11.67% and continues to be well above the minimum threshold to be “well capitalized” of 6.50%
  • Continued to hold cash of $355.0 million from the Bank Term Funding Program (“BTFP”), earning 52 basis points of risk free return resulting in $0.5 million in net interest income for the second quarter of 2024

Selected Financial Data (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

(dollars and shares in thousands, except per share data)

 

2024

 

2024

 

2023

 

2024

 

2023

 

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average total assets

 

 

0.58

%

 

0.63

%

 

0.96

%

 

0.60

%

 

0.92

%

Return on average common equity

 

 

6.76

%

 

7.04

%

 

10.14

%

 

6.90

%

 

9.66

%

Return on average tangible common equity (1)

 

 

9.40

%

 

9.78

%

 

13.71

%

 

9.58

%

 

13.15

%

Noninterest income as a % of revenue

 

 

53.28

%

 

53.26

%

 

53.69

%

 

53.27

%

 

52.65

%

Net interest margin (tax-equivalent)

 

 

2.39

%

 

2.30

%

 

2.52

%

 

2.35

%

 

2.61

%

Adjusted net interest margin (tax-equivalent) (1)

 

 

2.57

%

 

2.44

%

 

2.52

%

 

2.50

%

 

2.61

%

Efficiency ratio (1)

 

 

72.50

%

 

78.88

%

 

72.79

%

 

75.56

%

 

73.67

%

Net charge-offs/(recoveries) to average loans

 

 

0.36

%

 

0.01

%

 

(0.07)

%

 

0.19

%

 

(0.02)

%

Dividend payout ratio

 

 

64.52

%

 

59.38

%

 

42.22

%

 

61.90

%

 

43.53

%

Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

 

$

0.31

 

$

0.32

 

$

0.45

 

$

0.64

 

$

0.86

 

Earnings per common share - diluted

 

$

0.31

 

$

0.32

 

$

0.45

 

$

0.63

 

$

0.85

 

Dividends declared per common share

 

$

0.20

 

$

0.19

 

$

0.19

 

$

0.39

 

$

0.37

 

Book value per common share

 

$

18.87

 

$

18.79

 

$

17.96

 

 

 

 

 

 

 

Tangible book value per common share (1)

 

$

15.77

 

$

15.63

 

$

14.60

 

 

 

 

 

 

 

Average common shares outstanding - basic

 

 

19,777

 

 

19,739

 

 

20,033

 

 

19,758

 

 

20,030

 

Average common shares outstanding - diluted

 

 

20,050

 

 

19,986

 

 

20,241

 

 

20,018

 

 

20,243

 

Other Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement and benefit services assets under administration/management

 

$

39,389,533

 

$

38,488,523

 

$

35,052,652

 

 

 

 

 

 

 

Wealth management assets under administration/management

 

$

4,172,290

 

$

4,242,408

 

$

3,857,710

 

 

 

 

 

 

 

Mortgage originations

 

$

109,254

 

$

54,101

 

$

111,261

 

$

163,355

 

$

188,989

 

_______________

(1) Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

Results of Operations

Net Interest Income

Net interest income for the second quarter of 2024 was $24.0 million, a $1.8 million, or 8.0%, increase from the first quarter of 2024. The increase was due to interest income on increased loan balances and higher average cash balances related to the Bank Term Funding Program (“BTFP”) arbitrage trade. The increase was partially offset by an increase in interest expense on deposits, driven by higher average deposit and BTFP borrowing balances and higher deposit rates.

Net interest income increased $1.8 million, or 7.9%, from $22.2 million for the second quarter of 2023. Interest income increased $12.7 million, or 31.4%, from the second quarter of 2023, primarily driven by higher yields on new loans and strong organic loan growth, in addition to interest income on higher cash balances due to the BTFP arbitrage trade. The increase in interest income was partially offset by a $10.9 million, or 60.3%, increase in interest expense, due to both an increase in rates paid on interest-bearing deposits and higher deposit and short-term borrowing balances.

Net interest margin (on a tax-equivalent basis) was 2.39% for the second quarter of 2024, a 9 basis point increase from 2.30% for the first quarter of 2024, and a 13 basis point decrease from 2.52% for the second quarter of 2023. The increase in net interest margin (on a tax-equivalent basis) was mainly attributable to higher yields on loans and strong loan growth, partially offset by the higher cost of funds from continued growth in average interest-bearing deposit balances. Adjusted net interest margin (on a tax-equivalent basis) (non-GAAP), which excludes BTFP borrowings, was 2.57% for the second quarter of 2024, a 13 basis point increase from 2.44% for the first quarter of 2024, and a 5 basis point increase from 2.52% for the second quarter of 2023.

Noninterest Income

Noninterest income for the second quarter of 2024 was $27.4 million, a $2.0 million increase from the first quarter of 2024. The quarter over quarter increase was primarily driven by improvement across all fee-based businesses. Mortgage banking saw a $0.9 million increase in revenue with mortgage originations of $109.3 million in the second quarter of 2024, compared to originations of $54.1 million in the first quarter of 2024. Retirement and benefit services revenue increased $0.4 million for the second quarter of 2024, a 2.7% increase from first quarter of 2024 results, primarily due to the growth in asset-based revenue. Assets under administration/management in retirement and benefit services increased 2.3% from March 31, 2024, due to improved equity and bond markets. Wealth management revenues increased $0.2 million during the second quarter of 2024, a 4.0% increase from the first quarter of 2024, primarily due to fee schedule increases. Additionally, other noninterest income increased $0.4 million during the second quarter of 2024, a 29.0% increase from the first quarter of 2024, primarily due to client swap fees.

Noninterest income for the second quarter of 2024 was $27.4 million, an increase of $1.6 million, or 6.2%, from the second quarter of 2023. Wealth management revenues increased $0.9 million, or 16.7%, in the second quarter of 2024, as assets under administration/management increased 8.2% during that same period. Other noninterest income increased $0.7 million, or 57.2% in the second quarter of 2024 compared to the second quarter of 2023, primarily due to client swap fees. Partially offsetting this increase, mortgage revenue decreased $0.4 million, or 12.1%, from $2.9 million in the second quarter of 2023, primarily driven by timing differences related to the mortgage pipeline hedging.

Noninterest Expense

Noninterest expense for the second quarter of 2024 was $38.8 million, a $0.3 million, or 0.7%, decrease from the first quarter of 2024. Employee taxes and benefits expense decreased $1.1 million for the second quarter of 2024, a 17.0% decrease from the first quarter of 2024, primarily due to seasonality. Business services, software and technology expense decreased $0.7 million, or 14.0%, from the first quarter of 2024, primarily driven by reduced core processing and data processing expenses. The decrease in noninterest expense was partially offset by an increase in compensation and professional fees and assessments. Compensation expenses increased $0.9 million, or 4.8%, from the first quarter of 2024, primarily driven by an increase in mortgage incentive compensation. Professional fees and assessments increased $0.4 million, or 19.1%, from the first quarter of 2024, primarily driven by increased merger-related expenses of $0.5 million in connection with the pending acquisition of HMN Financial, Inc.

Noninterest expense for the second quarter of 2024 increased $2.4 million, or 6.5%, from $36.4 million in the second quarter of 2023. The increase was primarily driven by compensation expenses and professional fees and assessments. Compensation expenses increased primarily due to increased labor costs. Professional fees and assessments increased primarily due to increased merger-related expenses of $0.6 million in connection with the pending acquisition of HMN Financial, Inc. and an increase in Federal Deposit Insurance Corporation (“FDIC”) assessments.

Financial Condition

Total assets were $4.4 billion as of June 30, 2024, an increase of $450.9 million, or 11.5%, from December 31, 2023. The increase was primarily due to a $308.2 million increase in cash and cash equivalents and a $156.2 million increase in loans, partially offset by a decrease of $37.5 million in investment securities. The increase in cash and cash equivalents was primarily driven by the proceeds from BTFP borrowings.

Loans

Total loans were $2.9 billion as of June 30, 2024, an increase of $156.2 million, or 5.7%, from December 31, 2023. The increase was primarily driven by a $78.4 million increase in non-owner occupied commercial real estate (“CRE”) loans, a $37.7 million increase in construction, land and development CRE loans, and a $29.6 million increase in commercial and industrial loans, partially offset by $11.6 million and $6.4 million decreases in residential real estate first lien and construction loans, respectively.

The following table presents the composition of our loan portfolio as of the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(dollars in thousands)

 

2024

 

2024

 

2023

 

2023

 

2023

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

591,779

 

$

575,259

 

$

562,180

 

$

547,644

 

$

521,427

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, land and development

 

 

161,751

 

 

125,966

 

 

124,034

 

 

97,742

 

 

78,428

Multifamily

 

 

242,041

 

 

260,609

 

 

245,103

 

 

214,148

 

 

210,902

Non-owner occupied

 

 

647,776

 

 

565,979

 

 

569,354

 

 

504,827

 

 

500,334

Owner occupied

 

 

283,356

 

 

285,211

 

 

271,623

 

 

264,458

 

 

251,981

Total commercial real estate

 

 

1,334,924

 

 

1,237,765

 

 

1,210,114

 

 

1,081,175

 

 

1,041,645

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

41,410

 

 

41,149

 

 

40,832

 

 

41,581

 

 

40,603

Production

 

 

40,549

 

 

36,436

 

 

36,141

 

 

34,743

 

 

30,435

Total agricultural

 

 

81,959

 

 

77,585

 

 

76,973

 

 

76,324

 

 

71,038

Total commercial

 

 

2,008,662

 

 

1,890,609

 

 

1,849,267

 

 

1,705,143

 

 

1,634,110

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien

 

 

686,286

 

 

703,726

 

 

697,900

 

 

680,634

 

 

672,441

Construction

 

 

22,573

 

 

18,425

 

 

28,979

 

 

37,159

 

 

35,189

HELOC

 

 

126,211

 

 

120,501

 

 

118,315

 

 

116,296

 

 

121,474

Junior lien

 

 

36,323

 

 

36,381

 

 

35,819

 

 

36,381

 

 

35,757

Total residential real estate

 

 

871,393

 

 

879,033

 

 

881,013

 

 

870,470

 

 

864,861

Other consumer

 

 

35,737

 

 

29,833

 

 

29,303

 

 

30,817

 

 

34,552

Total consumer

 

 

907,130

 

 

908,866

 

 

910,316

 

 

901,287

 

 

899,413

Total loans

 

$

2,915,792

 

$

2,799,475

 

$

2,759,583

 

$

2,606,430

 

$

2,533,523

Deposits

Total deposits were $3.3 billion as of June 30, 2024, an increase of $203.0 million, or 6.6%, from December 31, 2023. Interest-bearing deposits increased $229.6 million, while noninterest-bearing deposits decreased $26.7 million, from December 31, 2023. The increase in total deposits was due to both expanded and new commercial deposit relationships, along with time deposit and synergistic deposit growth. Synergistic deposits were $874.8 million as of June 30, 2024, an increase of $23.2 million, or 2.7%, from December 31, 2023. The Company continued to have $0 of brokered deposits as of June 30, 2024.

The following table presents the composition of the Company’s deposit portfolio as of the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(dollars in thousands)

 

2024

 

2024

 

2023

 

2023

 

2023

Noninterest-bearing demand

 

$

701,428

 

$

692,500

 

$

728,082

 

$

717,990

 

$

715,534

Interest-bearing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

 

1,003,585

 

 

938,751

 

 

840,711

 

 

759,812

 

 

753,194

Savings accounts

 

 

79,747

 

 

82,727

 

 

82,485

 

 

88,341

 

 

93,557

Money market savings

 

 

1,022,470

 

 

1,114,262

 

 

1,032,771

 

 

959,106

 

 

986,403

Time deposits

 

 

491,345

 

 

456,729

 

 

411,562

 

 

346,935

 

 

304,167

Total interest-bearing

 

 

2,597,147

 

 

2,592,469

 

 

2,367,529

 

 

2,154,194

 

 

2,137,321

Total deposits

 

$

3,298,575

 

$

3,284,969

 

$

3,095,611

 

$

2,872,184

 

$

2,852,855

Asset Quality

Total nonperforming assets were $27.6 million as of June 30, 2024, an increase of $18.9 million from December 31, 2023. The increase was driven by one previously identified construction, land and development loan of $21.5 million moving to nonaccrual status.

As of June 30, 2024, the allowance for credit losses on loans was $38.3 million, or 1.31% of total loans, compared to $35.8 million, or 1.30% of total loans, as of December 31, 2023.

The following table presents selected asset quality data as of and for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

(dollars in thousands)

 

2024

 

2024

 

2023

 

2023

 

2023

 

Nonaccrual loans

 

$

27,618

 

$

7,345

 

$

8,596

 

$

9,007

 

$

2,233

 

Accruing loans 90+ days past due

 

 

 

 

 

 

139

 

 

 

 

347

 

Total nonperforming loans

 

 

27,618

 

 

7,345

 

 

8,735

 

 

9,007

 

 

2,580

 

OREO and repossessed assets

 

 

 

 

3

 

 

32

 

 

3

 

 

 

Total nonperforming assets

 

$

27,618

 

$

7,348

 

$

8,767

 

$

9,010

 

$

2,580

 

Net charge-offs/(recoveries)

 

 

2,522

 

 

58

 

 

(238)

 

 

(594)

 

 

(403)

 

Net charge-offs/(recoveries) to average loans

 

 

0.36

%

 

0.01

%

 

(0.04)

%

 

(0.09)

%

 

(0.07)

%

Nonperforming loans to total loans

 

 

0.95

%

 

0.26

%

 

0.32

%

 

0.35

%

 

0.10

%

Nonperforming assets to total assets

 

 

0.63

%

 

0.17

%

 

0.22

%

 

0.23

%

 

0.07

%

Allowance for credit losses on loans to total loans

 

 

1.31

%

 

1.31

%

 

1.30

%

 

1.39

%

 

1.41

%

Allowance for credit losses on loans to nonperforming loans

 

 

139

%

 

498

%

 

410

%

 

403

%

 

1,384

%

For the second quarter of 2024, the Company had net charge-offs of $2.5 million, compared to net charge-offs of $58 thousand for the first quarter of 2024 and net recoveries of $403 thousand for the second quarter of 2023. The increase in net charge-offs was driven by a $2.6 million charge-off of one commercial and industrial loan that had an individual reserve of $2.3 million in the first quarter of 2024.

The Company recorded a provision for credit losses of $4.5 million for the second quarter of 2024, compared to no provision for each of the first quarter of 2024 and the second quarter of 2023. The increase in the provision for credit losses was primarily driven by loan growth, as well as an increased reserve related to the previously identified $21.5 million construction, land and development loan which moved to nonaccrual status during the second quarter of 2024.

The unearned fair value adjustments on the acquired Metro Phoenix Bank loan portfolio were $4.1 million as of June 30, 2024, $5.2 million as of December 31, 2023, and $6.2 million as of June 30, 2023.

Capital

Total stockholders’ equity was $373.2 million as of June 30, 2024, an increase of $4.1 million from December 31, 2023. This change was primarily driven by an increase in retained earnings of $4.9 million. Tangible book value per common share (non-GAAP) increased to $15.77 as of June 30, 2024, from $15.46 as of December 31, 2023. Tangible common equity to tangible assets (non-GAAP) decreased to 7.26% as of June 30, 2024, from 7.94% as of December 31, 2023. Common equity tier 1 capital to risk weighted assets decreased to 11.67% as of June 30, 2024, from 11.82% as of December 31, 2023.

The following table presents our capital ratios as of the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

June 30,

 

 

 

2024

 

2023

 

2023

 

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

 

Alerus Financial Corporation Consolidated

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk weighted assets

 

 

11.67

%

 

11.82

%

 

13.30

%

Tier 1 capital to risk weighted assets

 

 

11.94

%

 

12.10

%

 

13.60

%

Total capital to risk weighted assets

 

 

14.70

%

 

14.76

%

 

16.49

%

Tier 1 capital to average assets

 

 

9.60

%

 

10.57

%

 

11.15

%

Tangible common equity / tangible assets (2)

 

 

7.26

%

 

7.94

%

 

7.72

%

 

 

 

 

 

 

 

 

 

 

 

Alerus Financial, N.A.

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk weighted assets

 

 

11.23

%

 

11.40

%

 

12.93

%

Tier 1 capital to risk weighted assets

 

 

11.23

%

 

11.40

%

 

12.93

%

Total capital to risk weighted assets

 

 

12.48

%

 

12.51

%

 

14.14

%

Tier 1 capital to average assets

 

 

9.05

%

 

9.92

%

 

10.59

%

_______________

(1) Capital ratios for the current quarter are to be considered preliminary until the Call Report for Alerus Financial, N.A. is filed.

(2) Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

Conference Call

The Company will host a conference call at 11:00 a.m. Central Time on Thursday, July 25, 2024, to discuss its financial results. Attendees are encouraged to register ahead of time for the call at investors.alerus.com. The call can also be accessed via telephone at 1 (833) 470-1428, using access code 287487. A recording of the call and transcript will be available on the Company’s investor relations website at investors.alerus.com following the call.

About Alerus Financial Corporation

Alerus Financial Corporation (Nasdaq: ALRS) is a commercial wealth bank and national retirement services provider with corporate offices in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area. Through its subsidiary, Alerus Financial, National Association, Alerus provides diversified and comprehensive financial solutions to business and consumer clients, including banking, wealth services, and retirement and benefit plans and services. Alerus provides clients with a primary point of contact to help fully understand the unique needs and delivery channel preferences of each client. Clients are provided with competitive products, valuable insight, and sound advice supported by digital solutions designed to meet the clients’ needs. Alerus has banking and wealth offices in Grand Forks and Fargo, North Dakota, the Minneapolis-St. Paul, Minnesota metropolitan area, and Phoenix and Scottsdale, Arizona. Alerus Retirement and Benefit serves advisors, brokers, employers, and plan participants across the United States.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized by U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measures include the ratio of tangible common equity to tangible assets, adjusted tangible common equity to tangible assets, tangible book value per common share, return on average tangible common equity, efficiency ratio, pre-provision net revenue, net interest margin (tax-equivalent), and adjusted net interest margin (tax-equivalent). Management uses these non-GAAP financial measures in its analysis of its performance, and believes financial analysts and investors frequently use these measures, and other similar measures, to evaluate capital adequacy and financial performance. Reconciliations of non-GAAP disclosures used in this press release to the comparable GAAP measures are provided in the accompanying tables. Management, banking regulators, many financial analysts and other investors use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.

These non-GAAP financial measures should not be considered in isolation or as a substitute for total stockholders’ equity, total assets, book value per share, return on average assets, return on average equity, or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Company calculates these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

Forward-Looking Statements

This press release 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 always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature. Examples of forward-looking statements include, among others, statements the Company makes regarding our projected growth, anticipated future financial performance, financial condition, credit quality, management’s long-term performance goals and the future plans and prospects of Alerus Financial Corporation.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the following: interest rate risk, including the effects of sustained high interest rates; our ability to successfully manage credit risk and maintain an adequate level of allowance for credit losses; new or revised accounting standards; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including high rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short-period of time that resulted in recent bank failures; the overall health of the local and national real estate market; concentrations within our loan portfolio; the level of nonperforming assets on our balance sheet; our ability to implement our organic and acquisition growth strategies, including the integration of Metro Phoenix Bank which the Company acquired in 2022 and the pending acquisition of HMN Financial, Inc.; the impact of economic or market conditions on our fee-based services; our ability to continue to grow our retirement and benefit services business; our ability to continue to originate a sufficient volume of residential mortgages; the occurrence of fraudulent activity, breaches or failures of our or our third party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; interruptions involving our information technology and telecommunications systems or third-party servicers; potential losses incurred in connection with mortgage loan repurchases; the composition of our executive management team and our ability to attract and retain key personnel; rapid technological change in the financial services industry; increased competition in the financial services industry from non-banks such as credit unions and Fintech companies, including digital asset service providers; our ability to successfully manage liquidity risk, including our need to access higher cost sources of funds such as fed funds purchased and short-term borrowings; the concentration of large deposits from certain clients, who have balances above current FDIC insurance limits; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us or to which the Company may become subject; potential impairment to the goodwill the Company recorded in connection with our past acquisitions, including the acquisition of Metro Phoenix Bank and the pending acquisition of HMN Financial, Inc.; the extensive regulatory framework that applies to us; the impact of recent and future legislative and regulatory changes, including in response to recent bank failures; fluctuations in the values of the securities held in our securities portfolio, including as a result of changes in interest rates; governmental monetary, trade and fiscal policies; risks related to climate change and the negative impact it may have on our customers and their businesses; severe weather, natural disasters, widespread disease or pandemics; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial reporting; changes to U.S. or state tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages and employee turnover; our success at managing the risks involved in the foregoing items; and any other risks described in the “Risk Factors” sections of the reports filed by Alerus Financial Corporation with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Additional Information and Where to Find It

The Company filed a Registration Statement on Form S-4 (Registration Statement No. 333-280815) with the SEC on July 15, 2024, in connection with a proposed transaction between the Company and HMN Financial, Inc. (“HMNF”). The registration statement includes a joint proxy statement of the Company and HMNF that also constitutes a prospectus of the Company, which will be sent to the stockholders of the Company and HMNF after the SEC declares the registration statement effective.

Before making any voting decision, the stockholders of the Company and HMNF are advised to read the joint proxy statement/prospectus, because it contains important information about the Company, HMNF and the proposed transaction.

This document and other documents relating to the proposed transaction filed by the Company can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing the Company’s website at www.alerus.com under the link “Investors Relations” and then under “SEC Filings” and HMNF’s website at www.justcallhome.com/HMNFinancial under “SEC Filings.” Alternatively, these documents can be obtained free of charge from the Company upon written request to Alerus Financial Corporation, Corporate Secretary, 401 Demers Avenue, Grand Forks, North Dakota 58201 or by calling (701) 795-3200, or from HMNF upon written request to HMN Financial, Inc., Corporate Secretary, 1016 Civic Center Drive NW, Rochester, Minnesota 55901 or by calling (507) 535-1200. The contents of the websites referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.

Participants in the Solicitation

This press release does not constitute a solicitation of proxy, an offer to purchase or a solicitation of an offer to sell any securities. The Company, HMNF, and certain of their directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of the Company and HMNF in connection with the proposed transaction under SEC rules. Information about the directors and executive officers of the Company and HMNF is included in the joint proxy statement/prospectus for the proposed transaction filed with the SEC. This document may be obtained free of charge in the manner described above under “Additional Information and Where to Find It.”

Alerus Financial Corporation and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2024

 

2023

Assets

 

(Unaudited)

 

 

Cash and cash equivalents

 

$

438,141

 

$

129,893

Investment securities

 

 

 

 

 

 

Trading, at fair value

 

 

2,868

 

 

Available-for-sale, at fair value

 

 

459,345

 

 

486,736

Held-to-maturity, at amortized cost (with an allowance for credit losses on investments of $151 and $207, respectively)

 

 

286,532

 

 

299,515

Loans held for sale

 

 

38,158

 

 

11,497

Loans

 

 

2,915,792

 

 

2,759,583

Allowance for credit losses on loans

 

 

(38,332)

 

 

(35,843)

Net loans

 

 

2,877,460

 

 

2,723,740

Land, premises and equipment, net

 

 

21,167

 

 

17,940

Operating lease right-of-use assets

 

 

4,871

 

 

5,436

Accrued interest receivable

 

 

16,877

 

 

15,700

Bank-owned life insurance

 

 

35,508

 

 

33,236

Goodwill

 

 

46,783

 

 

46,783

Other intangible assets

 

 

14,510

 

 

17,158

Servicing rights

 

 

1,963

 

 

2,052

Deferred income taxes, net

 

 

35,732

 

 

34,595

Other assets

 

 

78,708

 

 

83,432

Total assets

 

$

4,358,623

 

$

3,907,713

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Noninterest-bearing

 

$

701,428

 

$

728,082

Interest-bearing

 

 

2,597,147

 

 

2,367,529

Total deposits

 

 

3,298,575

 

 

3,095,611

Short-term borrowings

 

 

555,000

 

 

314,170

Long-term debt

 

 

59,013

 

 

58,956

Operating lease liabilities

 

 

5,197

 

 

5,751

Accrued expenses and other liabilities

 

 

67,612

 

 

64,098

Total liabilities

 

 

3,985,397

 

 

3,538,586

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding

 

 

 

 

Common stock, $1 par value, 30,000,000 shares authorized: 19,777,796 and 19,734,077 issued and outstanding

 

 

19,778

 

 

19,734

Additional paid-in capital

 

 

150,857

 

 

150,343

Retained earnings

 

 

277,620

 

 

272,705

Accumulated other comprehensive loss

 

 

(75,029)

 

 

(73,655)

Total stockholders’ equity

 

 

373,226

 

 

369,127

Total liabilities and stockholders’ equity

 

$

4,358,623

 

$

3,907,713

Alerus Financial Corporation and Subsidiaries

Consolidated Statements of Income

(dollars and shares in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

 

2024

 

2024

 

2023

 

2024

 

2023

Interest Income

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Loans, including fees

 

$

41,663

 

$

39,294

 

$

33,267

 

$

80,958

 

$

64,200

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

4,845

 

 

4,568

 

 

6,125

 

 

9,413

 

 

12,076

Exempt from federal income taxes

 

 

170

 

 

174

 

 

186

 

 

343

 

 

376

Other

 

 

6,344

 

 

5,002

 

 

762

 

 

11,346

 

 

1,497

Total interest income

 

 

53,022

 

 

49,038

 

 

40,340

 

 

102,060

 

 

78,149

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

21,284

 

 

20,152

 

 

12,678

 

 

41,436

 

 

21,782

Short-term borrowings

 

 

7,053

 

 

5,989

 

 

4,763

 

 

13,042

 

 

9,156

Long-term debt

 

 

684

 

 

678

 

 

665

 

 

1,362

 

 

1,319

Total interest expense

 

 

29,021

 

 

26,819

 

 

18,106

 

 

55,840

 

 

32,257

Net interest income

 

 

24,001

 

 

22,219

 

 

22,234

 

 

46,220

 

 

45,892

Provision for credit losses

 

 

4,489

 

 

 

 

 

 

4,489

 

 

550

Net interest income after provision for credit losses

 

 

19,512

 

 

22,219

 

 

22,234

 

 

41,731

 

 

45,342

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement and benefit services

 

 

16,078

 

 

15,655

 

 

15,890

 

 

31,733

 

 

31,372

Wealth management

 

 

6,360

 

 

6,118

 

 

5,449

 

 

12,477

 

 

10,644

Mortgage banking

 

 

2,554

 

 

1,670

 

 

2,905

 

 

4,224

 

 

4,622

Service charges on deposit accounts

 

 

456

 

 

389

 

 

311

 

 

845

 

 

612

Other

 

 

1,923

 

 

1,491

 

 

1,223

 

 

3,415

 

 

3,781

Total noninterest income

 

 

27,371

 

 

25,323

 

 

25,778

 

 

52,694

 

 

51,031

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

 

20,265

 

 

19,332

 

 

18,847

 

 

39,597

 

 

38,005

Employee taxes and benefits

 

 

5,134

 

 

6,188

 

 

4,724

 

 

11,322

 

 

10,577

Occupancy and equipment expense

 

 

1,815

 

 

1,906

 

 

1,837

 

 

3,722

 

 

3,736

Business services, software and technology expense

 

 

4,599

 

 

5,345

 

 

5,269

 

 

9,944

 

 

10,593

Intangible amortization expense

 

 

1,324

 

 

1,324

 

 

1,324

 

 

2,648

 

 

2,648

Professional fees and assessments

 

 

2,373

 

 

1,993

 

 

1,530

 

 

4,366

 

 

2,682

Marketing and business development

 

 

651

 

 

785

 

 

665

 

 

1,436

 

 

1,389

Supplies and postage

 

 

370

 

 

528

 

 

406

 

 

898

 

 

866

Travel

 

 

332

 

 

292

 

 

306

 

 

624

 

 

554

Mortgage and lending expenses

 

 

467

 

 

441

 

 

215

 

 

908

 

 

712

Other

 

 

1,422

 

 

885

 

 

1,250

 

 

2,306

 

 

2,480

Total noninterest expense

 

 

38,752

 

 

39,019

 

 

36,373

 

 

77,771

 

 

74,242

Income before income tax expense

 

 

8,131

 

 

8,523

 

 

11,639

 

 

16,654

 

 

22,131

Income tax expense

 

 

1,923

 

 

2,091

 

 

2,535

 

 

4,014

 

 

4,841

Net income

 

$

6,208

 

$

6,432

 

$

9,104

 

$

12,640

 

$

17,290

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

$

0.31

 

$

0.32

 

$

0.45

 

$

0.64

 

$

0.86

Diluted earnings per common share

 

$

0.31

 

$

0.32

 

$

0.45

 

$

0.63

 

$

0.85

Dividends declared per common share

 

$

0.20

 

$

0.19

 

$

0.19

 

$

0.39

 

$

0.37

Average common shares outstanding

 

 

19,777

 

 

19,739

 

 

20,033

 

 

19,758

 

 

20,030

Diluted average common shares outstanding

 

 

20,050

 

 

19,986

 

 

20,241

 

 

20,018

 

 

20,243

Alerus Financial Corporation and Subsidiaries

Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited)

(dollars and shares in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

June 30,

 

 

 

2024

 

2024

 

2023

 

2023

 

Tangible Common Equity to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Total common stockholders’ equity

 

$

373,226

 

$

371,635

 

$

369,127

 

$

357,685

 

Less: Goodwill

 

 

46,783

 

 

46,783

 

 

46,783

 

 

47,087

 

Less: Other intangible assets

 

 

14,510

 

 

15,834

 

 

17,158

 

 

19,806

 

Tangible common equity (a)

 

 

311,933

 

 

309,018

 

 

305,186

 

 

290,792

 

Total assets

 

 

4,358,623

 

 

4,338,094

 

 

3,907,713

 

 

3,832,978

 

Less: Goodwill

 

 

46,783

 

 

46,783

 

 

46,783

 

 

47,087

 

Less: Other intangible assets

 

 

14,510

 

 

15,834

 

 

17,158

 

 

19,806

 

Tangible assets (b)

 

 

4,297,330

 

 

4,275,477

 

 

3,843,772

 

 

3,766,085

 

Tangible common equity to tangible assets (a)/(b)

 

 

7.26

%

 

7.23

%

 

7.94

%

 

7.72

%

Adjusted Tangible Common Equity to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible assets (b)

 

$

4,297,330

 

$

4,275,477

 

$

3,843,772

 

$

3,766,085

 

Less: Cash proceeds from BTFP

 

 

355,000

 

 

355,000

 

 

 

 

 

Adjusted tangible assets (c)

 

 

3,942,330

 

 

3,920,477

 

 

3,843,772

 

 

3,766,085

 

Adjusted tangible common equity to tangible assets (a)/(c)

 

 

7.91

%

 

7.88

%

 

7.94

%

 

7.72

%

Tangible Book Value Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Total common stockholders’ equity

 

$

373,226

 

$

371,635

 

$

369,127

 

$

357,685

 

Less: Goodwill

 

 

46,783

 

 

46,783

 

 

46,783

 

 

47,087

 

Less: Other intangible assets

 

 

14,510

 

 

15,834

 

 

17,158

 

 

19,806

 

Tangible common equity (d)

 

 

311,933

 

 

309,018

 

 

305,186

 

 

290,792

 

Total common shares issued and outstanding (e)

 

 

19,778

 

 

19,777

 

 

19,734

 

 

19,915

 

Tangible book value per common share (d)/(e)

 

$

15.77

 

$

15.63

 

$

15.46

 

$

14.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2024

 

2024

 

2023

 

2024

 

2023

 

Return on Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

6,208

 

$

6,432

 

$

9,104

 

$

12,640

 

$

17,290

 

Add: Intangible amortization expense (net of tax)

 

 

1,046

 

 

1,046

 

 

1,046

 

 

2,092

 

 

2,092

 

Net income, excluding intangible amortization (f)

 

 

7,254

 

 

7,478

 

 

10,150

 

 

14,732

 

 

19,382

 

Average total equity

 

 

369,216

 

 

367,249

 

 

360,216

 

 

368,501

 

 

361,032

 

Less: Average goodwill

 

 

46,783

 

 

46,783

 

 

47,087

 

 

46,783

 

 

47,087

 

Less: Average other intangible assets (net of tax)

 

 

11,969

 

 

13,018

 

 

16,153

 

 

12,494

 

 

16,678

 

Average tangible common equity (g)

 

 

310,464

 

 

307,448

 

 

296,976

 

 

309,224

 

 

297,267

 

Return on average tangible common equity (f)/(g)

 

 

9.40

%

 

9.78

%

 

13.71

%

 

9.58

%

 

13.15

%

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

38,752

 

$

39,019

 

$

36,373

 

$

77,771

 

$

74,242

 

Less: Intangible amortization expense

 

 

1,324

 

 

1,324

 

 

1,324

 

 

2,648

 

 

2,648

 

Adjusted noninterest expense (h)

 

 

37,428

 

 

37,695

 

 

35,049

 

 

75,123

 

 

71,594

 

Net interest income

 

 

24,001

 

 

22,219

 

 

22,234

 

 

46,220

 

 

45,892

 

Noninterest income

 

 

27,371

 

 

25,323

 

 

25,778

 

 

52,694

 

 

51,031

 

Tax-equivalent adjustment

 

 

255

 

 

247

 

 

141

 

 

502

 

 

264

 

Total tax-equivalent revenue (i)

 

 

51,627

 

 

47,789

 

 

48,153

 

 

99,416

 

 

97,187

 

Efficiency ratio (h)/(i)

 

 

72.50

%

 

78.88

%

 

72.79

%

 

75.56

%

 

73.67

%

Alerus Financial Corporation and Subsidiaries

Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited)

(dollars and shares in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2024

 

2024

 

2023

 

2024

 

2023

 

Pre-Provision Net Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before taxes

 

$

8,131

 

$

8,523

 

$

11,639

 

$

16,654

 

$

22,131

 

Add: Provision for credit losses

 

 

4,489

 

 

 

 

 

 

4,489

 

 

550

 

Pre-provision net revenue

 

$

12,620

 

$

8,523

 

$

11,639

 

$

21,143

 

$

22,681

 

Adjusted Net Interest Margin (Tax-Equivalent)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

24,001

 

$

22,219

 

$

22,234

 

$

46,220

 

$

45,892

 

Less: BTFP cash interest income

 

 

4,766

 

 

3,615

 

 

 

 

8,381

 

 

 

Add: BTFP interest expense

 

 

4,307

 

 

3,266

 

 

 

 

7,573

 

 

 

Net interest income excluding BTFP impact

 

 

23,542

 

 

21,870

 

 

22,234

 

 

45,412

 

 

45,892

 

Add: Tax equivalent adjustment for loans and securities

 

 

255

 

 

247

 

 

141

 

 

502

 

 

264

 

Adjusted net interest income (j)

 

$

23,797

 

$

22,117

 

$

22,375

 

$

45,914

 

$

46,156

 

Interest earning assets

 

 

4,075,003

 

 

3,921,530

 

 

3,564,883

 

 

3,998,265

 

 

3,566,136

 

Less: Average cash proceeds balance from BTFP

 

 

355,000

 

 

269,176

 

 

 

 

312,088

 

 

 

Adjusted interest earning assets (k)

 

$

3,720,003

 

$

3,652,354

 

$

3,564,883

 

$

3,686,177

 

$

3,566,136

 

Adjusted net interest margin (tax-equivalent) (j)/(k)

 

 

2.57

%

 

2.44

%

 

2.52

%

 

2.50

%

 

2.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alerus Financial Corporation and Subsidiaries

Analysis of Average Balances, Yields, and Rates (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

 

 

 

 

 

Average

 

 

 

 

Average

 

 

 

 

Average

 

 

 

 

Average

 

 

 

 

Average

 

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

 

Balance

 

Rate

 

Balance

 

Rate

 

Balance

 

Rate

 

Balance

 

Rate

 

Balance

 

Rate

Interest Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits with banks

 

$

448,245

 

5.38

%

 

$

352,038

 

5.33

%

 

$

36,418

 

4.00

%

 

$

400,141

 

5.36

%

 

$

39,167

 

3.59

%

Investment securities (1)

 

 

756,413

 

2.69

 

 

 

775,305

 

2.48

 

 

 

1,007,792

 

2.53

 

 

 

765,859

 

2.59

 

 

 

1,020,967

 

2.48

 

Loans held for sale

 

 

16,473

 

8.91

 

 

 

9,014

 

5.67

 

 

 

14,536

 

5.22

 

 

 

12,743

 

7.76

 

 

 

12,452

 

5.12

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

578,544

 

7.39

 

 

 

564,125

 

6.96

 

 

 

516,943

 

6.92

 

 

 

571,334

 

7.18

 

 

 

524,500

 

6.50

 

CRE − Construction, land and development

 

 

126,744

 

8.01

 

 

 

127,587

 

8.04

 

 

 

87,905

 

7.43

 

 

 

127,165

 

8.02

 

 

 

95,460

 

6.96

 

CRE − Multifamily

 

 

243,076

 

5.52

 

 

 

250,513

 

5.56

 

 

 

191,100

 

5.15

 

 

 

246,794

 

5.54

 

 

 

151,740

 

5.14

 

CRE − Non-owner occupied

 

 

617,338

 

5.90

 

 

 

564,553

 

5.75

 

 

 

473,728

 

5.19

 

 

 

590,946

 

5.83

 

 

 

492,174

 

5.05

 

CRE − Owner occupied

 

 

283,754

 

5.47

 

 

 

279,165

 

5.36

 

 

 

252,320

 

4.90

 

 

 

281,459

 

5.41

 

 

 

251,669

 

4.94

 

Agricultural − Land

 

 

40,932

 

4.72

 

 

 

40,310

 

4.75

 

 

 

39,679

 

4.84

 

 

 

40,621

 

4.73

 

 

 

38,773

 

4.72

 

Agricultural − Production

 

 

38,004

 

6.69

 

 

 

35,331

 

6.39

 

 

 

28,415

 

6.47

 

 

 

36,668

 

6.54

 

 

 

27,848

 

6.26

 

RRE − First lien

 

 

694,866

 

4.07

 

 

 

701,756

 

4.01

 

 

 

665,519

 

3.71

 

 

 

698,311

 

4.04

 

 

 

659,636

 

3.70

 

RRE − Construction

 

 

21,225

 

5.38

 

 

 

21,559

 

5.20

 

 

 

32,769

 

4.81

 

 

 

21,392

 

5.30

 

 

 

33,911

 

4.91

 

RRE − HELOC

 

 

123,233

 

8.30

 

 

 

118,957

 

8.30

 

 

 

120,344

 

7.97

 

 

 

121,095

 

8.30

 

 

 

118,459

 

7.83

 

RRE − Junior lien

 

 

36,181

 

6.60

 

 

 

35,824

 

6.38

 

 

 

35,932

 

5.69

 

 

 

36,003

 

6.49

 

 

 

34,557

 

5.60

 

Other consumer

 

 

33,335

 

6.67

 

 

 

28,835

 

6.43

 

 

 

37,759

 

6.03

 

 

 

31,085

 

6.57

 

 

 

41,126

 

5.94

 

Total loans (1)

 

 

2,837,232

 

5.88

 

 

 

2,768,515

 

5.72

 

 

 

2,482,413

 

5.36

 

 

 

2,802,873

 

5.80

 

 

 

2,469,853

 

5.23

 

Federal Reserve/FHLB stock

 

 

16,640

 

8.53

 

 

 

16,658

 

8.14

 

 

 

23,724

 

6.75

 

 

 

16,649

 

8.33

 

 

 

23,697

 

6.82

 

Total interest earning assets

 

 

4,075,003

 

5.26

 

 

 

3,921,530

 

5.05

 

 

 

3,564,883

 

4.55

 

 

 

3,998,265

 

5.16

 

 

 

3,566,136

 

4.43

 

Noninterest earning assets

 

 

222,290

 

 

 

 

 

217,524

 

 

 

 

 

220,604

 

 

 

 

 

220,178

 

 

 

 

 

222,358

 

 

 

Total assets

 

$

4,297,293

 

 

 

 

$

4,139,054

 

 

 

 

$

3,785,487

 

 

 

 

$

4,218,443

 

 

 

 

$

3,788,494

 

 

 

Interest-Bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

$

959,119

 

2.24

%

 

$

869,060

 

1.97

%

 

$

775,818

 

1.26

%

 

$

914,090

 

2.11

%

 

$

761,319

 

1.07

%

Money market and savings deposits

 

 

1,147,525

 

3.79

 

 

 

1,186,900

 

3.77

 

 

 

1,145,335

 

2.81

 

 

 

1,167,213

 

3.78

 

 

 

1,155,247

 

2.49

 

Time deposits

 

 

458,125

 

4.50

 

 

 

431,679

 

4.46

 

 

 

270,121

 

3.29

 

 

 

444,902

 

4.48

 

 

 

251,145

 

2.80

 

Fed funds purchased and Bank Term Funding Program

 

 

366,186

 

4.90

 

 

 

282,614

 

4.99

 

 

 

360,033

 

5.31

 

 

 

324,400

 

4.94

 

 

 

325,303

 

5.10

 

FHLB short-term advances

 

 

200,000

 

5.21

 

 

 

200,000

 

4.99

 

 

 

 

 

 

 

200,000

 

5.10

 

 

 

39,779

 

4.69

 

Long-term debt

 

 

58,999

 

4.66

 

 

 

58,971

 

4.62

 

 

 

58,886

 

4.53

 

 

 

58,985

 

4.64

 

 

 

58,872

 

4.51

 

Total interest-bearing liabilities

 

 

3,189,954

 

3.66

 

 

 

3,029,224

 

3.56

 

 

 

2,610,193

 

2.78

 

 

 

3,109,590

 

3.61

 

 

 

2,591,665

 

2.51

 

Noninterest-Bearing Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

665,930

 

 

 

 

 

675,926

 

 

 

 

 

748,942

 

 

 

 

 

670,928

 

 

 

 

 

768,927

 

 

 

Other noninterest-bearing liabilities

 

 

72,193

 

 

 

 

 

66,655

 

 

 

 

 

66,136

 

 

 

 

 

69,424

 

 

 

 

 

66,870

 

 

 

Stockholders’ equity

 

 

369,216

 

 

 

 

 

367,249

 

 

 

 

 

360,216

 

 

 

 

 

368,501

 

 

 

 

 

361,032

 

 

 

Total liabilities and stockholders’ equity

 

$

4,297,293

 

 

 

 

$

4,139,054

 

 

 

 

$

3,785,487

 

 

 

 

$

4,218,443

 

 

 

 

$

3,788,494

 

 

 

Net interest income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

 

 

 

 

1.60

%

 

 

 

 

1.49

%

 

 

 

 

1.77

%

 

 

 

 

1.55

%

 

 

 

 

1.92

%

Net interest margin, tax-equivalent (1)

 

 

 

 

2.39

%

 

 

 

 

2.30

%

 

 

 

 

2.52

%

 

 

 

 

2.35

%

 

 

 

 

2.61

%

_______________

(1) Taxable-equivalent adjustment was calculated utilizing a marginal income tax rate of 21.0%.

 

Contacts

Alan A. Villalon, Chief Financial Officer

952.417.3733 (Office)

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