Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 29, 2024

Alerus Financial Corporation
(Exact Name of Registrant as Specified in Charter)

Delaware	001-39036	45-0375407
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

401 Demers Avenue
Grand Forks, North Dakota 58201
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (701) 795-3200

N/A

(Former Name or Former Address, if Changed Since Last Report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, $1.00 par value per share		ALRS		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On October 29, 2024, Alerus Financial Corporation (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in Item 2.02 of this Current Report on Form 8-K, and the related Exhibit 99.1, attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

On October 29, 2024, the Company posted a presentation to the Company’s investor relations website, located at investors.alerus.com. The presentation is also attached hereto as Exhibit 99.2.

The information in Item 7.01 of this Current Report on Form 8-K, and the related Exhibit 99.2, attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.		Description
99.1		Press Release of Alerus Financial Corporation, dated October 29, 2024
99.2		Investor Presentation of Alerus Financial Corporation
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 29, 2024	Alerus Financial Corporation


	By:	/s/ Katie A. Lorenson
	Name:	Katie A. Lorenson
	Title:	President and Chief Executive Officer

Exhibit 99.1

Alan A. Villalon, Chief Financial Officer

952.417.3733 (Office)

FOR RELEASE (10.29.2024)

ALERUS FINANCIAL CORPORATION REPORTS

Third QUARTER 2024 NET INCOME OF $5.2 MILLION

MINNEAPOLIS, MN (October 29, 2024) – Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $5.2 million for the third quarter of 2024, or $0.26 per diluted common share, compared to net income of $6.2 million, or $0.31 per diluted common share, for the second quarter of 2024, and net income of $9.2 million, or $0.45 per diluted common share, for the third quarter of 2023.

CEO Comments

President and Chief Executive Officer Katie Lorenson said, “Earlier this month we closed on our 26th and largest acquisition in company history. In the transaction, we acquired a strong core deposit base and strategically expanded into the vibrant Rochester and Southern Minnesota markets. Throughout the quarter and ahead of this closing, we continued to make long term investments to support and grow our uniquely diversified business model and revenue streams. We continued to demonstrate our position as an employer of choice, with the addition of a specialized equipment leasing team and key hires to drive growth and efficiencies throughout our organization, especially in our retirement and benefit services segment.

We have continued to see market share gains and growth of our client base both in adding new business and deepening relationships with current clients. This year, our retirement and benefits business has grown over 19%, our wealth management business has grown 18%, and we have grown loans nearly 10% and deposits over 7% in a very challenging and competitive environment.

Credit quality remains a key area of focus. Early identification of problem loans coupled with proactive and decisive actions are part of our credit culture. We continue to closely monitor and proactively downgrade loans where we see potential or emerging weaknesses. Normalization of credit continued during the quarter, as two large relationships drove the increase in nonaccrual loans. Charge-offs to average loans for the quarter were 0.04% and reserves to loans was stable at 1.29%.

We are focused on efficient headcount management, and balancing investments in talent, technology and infrastructure, while remaining committed to a strong balance sheet, capital levels, and improving performance as a bigger and better combined entity.

Thank you to the team members both new and long tenured for your hard work, dedication and invaluable contributions supporting our company, our clients and our communities, and helping us on our journey to achieving new milestones and our return to high-performance and top tier financial results.”

Third Quarter Highlights

■

Total loans were $3.0 billion as of September 30, 2024, an increase of $272.8 million, or 9.9%, from December 31, 2023.

■

Total deposits were $3.3 billion as of September 30, 2024, an increase of $227.9 million, or 7.4%, from December 31, 2023; brokered deposits remained at $0.

■

The loan to deposit ratio as of September 30, 2024 was 91.2%, compared to 89.1% as of December 31, 2023.

■

Noninterest income, which represented 55.7% of total revenues, was $28.4 million in the third quarter of 2024, an increase of 3.6% from $27.4 million in the second quarter of 2024.

■

Total assets under administration/management at September 30, 2024 were $45.6 billion, a 4.8% increase from June 30, 2024.

■

Net charge-offs to average loans were 0.04% in the third quarter of 2024, a decrease of 32 basis points from 0.36% in the second quarter of 2024.

■

Tangible book value per common share (non-GAAP) was $16.50 as of September 30, 2024, a 6.7% increase from December 31, 2023.

■

Tangible common equity to tangible assets (non-GAAP) was 8.11% at September 30, 2024, an increase of 85 basis points from 7.26% in the second quarter of 2024.

■

Common equity tier 1 capital to risk weighted assets as of September 30, 2024 was 11.12% and continues to be well above the minimum threshold to be “well capitalized” of 6.50%.

	■	Repaid Bank Term Funding Program (“BTFP”) borrowings, resulting in risk-free net interest income of $1.2 million earned during the course of the year to date.
	■	$400.0 million of interest rate swaps matured during the third quarter of 2024, which drove increased liability sensitivity as the Federal Reserve began to cut interest rates. Of the remaining $400.0 million of interest rate swaps, $200.0 million will mature in January 2025.

HMN Financial Acquisition

On October 9, 2024, the Company completed its previously announced acquisition of HMN Financial, Inc. and its subsidiary, Home Federal Savings Bank (together, "HMNF"). The transaction expands the Company's franchise into Rochester, Minnesota and represents the largest bank acquisition in its history. With the addition of HMNF, the Company now has over $5.5 billion in total assets, $3.8 billion in total loans, $4.3 billion in total deposits, and asset under administration and management of approximately $43.6 billion, with 29 locations across the Midwest, as well as Arizona.

Selected Financial Data (unaudited)

	As of and for the
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars and shares in thousands, except per share data)	2024			2024			2023			2024			2023
Performance Ratios
Return on average total assets		0.48	%		0.58	%		0.95	%		0.56	%		0.93	%
Adjusted return on average total assets ⁽¹⁾		0.57	%		0.65	%		0.75	%		0.62	%		0.85	%
Return on average common equity		5.52	%		6.76	%		10.05	%		6.43	%		9.79	%
Return on average tangible common equity ⁽¹⁾		7.83	%		9.40	%		13.51	%		8.98	%		13.27	%
Adjusted return on average tangible common equity ⁽¹⁾		9.04	%		10.30	%		10.97	%		9.80	%		12.27	%
Noninterest income as a % of revenue		55.72	%		53.28	%		58.21	%		54.10	%		54.51	%
Net interest margin (tax-equivalent)		2.23	%		2.39	%		2.27	%		2.31	%		2.50	%
Adjusted net interest margin (tax-equivalent) ⁽¹⁾		2.35	%		2.47	%		2.24	%		2.41	%		2.46	%
Efficiency ratio ⁽¹⁾		80.29	%		72.50	%		73.37	%		77.17	%		73.57	%
Adjusted efficiency ratio ⁽¹⁾		77.71	%		70.80	%		77.03	%		75.50	%		74.58	%
Net charge-offs/(recoveries) to average loans		0.04	%		0.36	%		(0.09	)%		0.14	%		(0.04	)%
Dividend payout ratio		76.92	%		64.52	%		42.22	%		66.29	%		43.08	%
Per Common Share
Earnings per common share - basic	$	0.26		$	0.31		$	0.46		$	0.90		$	1.31
Earnings per common share - diluted	$	0.26		$	0.31		$	0.45		$	0.89		$	1.30
Adjusted earnings per common share - diluted ⁽¹⁾	$	0.31		$	0.34		$	0.36		$	0.98		$	1.19
Dividends declared per common share	$	0.20		$	0.20		$	0.19		$	0.59		$	0.56
Book value per common share	$	19.53		$	18.87		$	17.60
Tangible book value per common share ⁽¹⁾	$	16.50		$	15.77		$	14.32
Average common shares outstanding - basic		19,788			19,777			19,872			19,768			19,977
Average common shares outstanding - diluted		20,075			20,050			20,095			20,037			20,193
Other Data
Retirement and benefit services assets under administration/management	$	41,249,280		$	39,389,533		$	34,552,569
Wealth management assets under administration/management	$	4,397,505		$	4,172,290		$	3,724,091
Mortgage originations	$	82,388		$	109,254		$	109,637		$	245,743		$	298,626

(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 third quarter of 2024 was $22.5 million, a $1.5 million, or 6.1%, decrease from the second quarter of 2024. The decrease was primarily due to a decrease in interest income on lower cash balances, lower purchase accounting accretion from the Metro Phoenix Bank acquisition, and increased interest expense on higher deposit balances. These pressures were partially offset by an increase in interest income on higher average loan balances.

Net interest income increased $2.1 million, or 10.5%, from $20.4 million for the third quarter of 2023. Interest income increased $10.2 million, or 24.2%, from the third quarter of 2023, primarily driven by strong organic loan growth at higher yields, in addition to higher cash balances due to the BTFP. The increase in interest income was partially offset by an $8.0 million, or 37.1%, 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 2.23% for the third quarter of 2024, a 16 basis point decrease from 2.39% for the second quarter of 2024, and a 4 basis point decrease from 2.27% for the third quarter of 2023. The decrease in net interest margin (on a tax-equivalent basis) was mainly attributable to less purchase accounting accretion, the impact of nonaccrual loans, and higher cost of funds from growth in average interest-bearing deposit balances. This was partially offset by strong loan growth. Adjusted net interest margin (on a tax-equivalent basis) (non-GAAP), which excludes BTFP borrowings and purchase accounting accretion, was 2.35% for the third quarter of 2024, an 11 basis point decrease from 2.47% for the second quarter of 2024, and an 11 basis point increase from 2.24% for the third quarter of 2023.

Noninterest Income

Noninterest income for the third quarter of 2024 was $28.4 million, a $1.0 million increase from the second quarter of 2024. The quarter over quarter increase was primarily driven by improvement across all fee-based businesses. Wealth revenues increased $0.3 million during the third quarter of 2024, a 5.1% increase from the second quarter of 2024. Retirement and benefit services revenue increased $0.1 million for the third quarter of 2024, a 0.4% increase from the second quarter of 2024 results. Combined assets under administration/management in wealth and retirement and benefit services increased 4.8% from June 30, 2024. The increase in wealth, retirement and benefit services revenue, and assets under administration/management was primarily due to improved equity and bond markets. Additionally, other noninterest income increased $0.6 million during the third quarter of 2024, a 28.7% increase from the second quarter of 2024, primarily due to a gain on the sale of fixed assets related to the sale of the Shorewood, Minnesota office in the western suburbs of the Twin Cities.

Noninterest income for the third quarter of 2024 decreased by $44 thousand, or 0.2%, from the third quarter of 2023. Wealth revenues increased $1.4 million, or 26.8%, in the third quarter of 2024, due to an increase in assets under administration/management of 5.4% during that same period. Other noninterest income increased $0.8 million, or 46.1% in the third quarter of 2024 compared to the third quarter of 2023, primarily due to a gain on the sale of fixed assets related to the sale of the Shorewood, Minnesota office and increased client swap fees. Offsetting these increases, retirement and benefit services revenue decreased $2.5 million, or 13.2%, from $18.6 million in the third quarter of 2023, driven by the divestiture of the ESOP trustee business in the third quarter of 2023 which resulted in a one-time recognized gain of $2.8 million.

Noninterest Expense

Noninterest expense for the third quarter of 2024 was $42.4 million, a $3.7 million, or 9.5%, increase from the second quarter of 2024. Professional fees and assessments increased $1.9 million, or 79.8%, from the second quarter of 2024, primarily driven by increased merger-related expenses of $1.1 million in connection with the acquisition of HMNF. Compensation expenses increased $0.8 million, or 3.9%, from the second quarter of 2024, primarily driven by experienced talent acquisitions in commercial lending and increased labor costs. Business services, software and technology expense increased $0.3 million, or 6.1%, from the second quarter of 2024, primarily driven by increased data processing expenses and custodian fees. Occupancy and equipment expense increased $0.3 million, or 14.7%, from the second quarter of 2024, primarily driven by increased rent and depreciation expense driven by the opening of the Shoreview, Minnesota office in the northern suburbs of the Twin Cities in July 2024.

Noninterest expense for the third quarter of 2024 increased $5.2 million, or 13.9%, from $37.3 million in the third quarter of 2023. The increase was primarily driven by professional fees and assessments, compensation and employee taxes and benefits. Professional fees and assessments increased primarily due to increased merger-related expenses of $1.7 million in connection with the acquisition of HMNF and an increase in Federal Deposit Insurance Corporation (“FDIC”) assessments. Compensation expense increased $2.0 million, or 10.4%, in the third quarter of 2024, primarily due to increased labor costs. Employee taxes and benefits expense increased $0.5 million, or 10.3%, primarily due to increased costs related to group insurance.

Financial Condition

Total assets were $4.1 billion as of September 30, 2024, an increase of $176.9 million, or 4.5%, from December 31, 2023. The increase was primarily due to a $272.8 million increase in loans, partially offset by a decrease of $63.9 million in cash and cash equivalents and a decrease of $35.6 million in investment securities.

Loans

Total loans were $3.0 billion as of September 30, 2024, an increase of $272.8 million, or 9.9%, from December 31, 2023. The increase was primarily driven by a $116.7 million increase in non-owner occupied commercial real estate (“CRE”) loans, a $49.6 million increase in construction, land and development CRE loans, a $44.1 million increase in commercial and industrial loans, a $30.3 million increase in multifamily CRE loans and a $24.7 million increase in owner occupied CRE loans, partially offset by $7.4 million and $17.2 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:

	September 30,		June 30,		March 30,		December 31,		September 30,
(dollars in thousands)	2024		2024		2024		2023		2023
Commercial
Commercial and industrial	$	606,245	$	591,779	$	575,259	$	562,180	$	547,644
Commercial real estate
Construction, land and development		173,629		161,751		125,966		124,034		97,742
Multifamily		275,377		242,041		260,609		245,103		214,148
Non-owner occupied		686,071		647,776		565,979		569,354		504,827
Owner occupied		296,366		283,356		285,211		271,623		264,458
Total commercial real estate		1,431,443		1,334,924		1,237,765		1,210,114		1,081,175
Agricultural
Land		45,821		41,410		41,149		40,832		41,581
Production		39,436		40,549		36,436		36,141		34,743
Total agricultural		85,257		81,959		77,585		76,973		76,324
Total commercial		2,122,945		2,008,662		1,890,609		1,849,267		1,705,143
Consumer
Residential real estate
First lien		690,451		686,286		703,726		697,900		680,634
Construction		11,808		22,573		18,425		28,979		37,159
HELOC		134,301		126,211		120,501		118,315		116,296
Junior lien		36,445		36,323		36,381		35,819		36,381
Total residential real estate		873,005		871,393		879,033		881,013		870,470
Other consumer		36,393		35,737		29,833		29,303		30,817
Total consumer		909,398		907,130		908,866		910,316		901,287
Total loans	$	3,032,343	$	2,915,792	$	2,799,475	$	2,759,583	$	2,606,430

Deposits

Total deposits were $3.3 billion as of September 30, 2024, an increase of $227.9 million, or 7.4%, from December 31, 2023. Interest-bearing deposits increased $298.5 million, while noninterest-bearing deposits decreased $70.5 million, from December 31, 2023. The increase in total deposits was due to both expanded and new commercial deposit relationships and synergistic deposit growth. Synergistic deposits were $920.6 million as of September 30, 2024, an increase of $69.1 million, or 8.1%, from December 31, 2023. The Company continued to have $0 of brokered deposits as of September 30, 2024.

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

	September 30,		June 30,		March 30,		December 31,		September 30,
(dollars in thousands)	2024		2024		2024		2023		2023
Noninterest-bearing demand	$	657,547	$	701,428	$	692,500	$	728,082	$	717,990
Interest-bearing
Interest-bearing demand		1,034,694		1,003,585		938,751		840,711		759,812
Savings accounts		75,675		79,747		82,727		82,485		88,341
Money market savings		1,067,187		1,022,470		1,114,262		1,032,771		959,106
Time deposits		488,447		491,345		456,729		411,562		346,935
Total interest-bearing		2,666,003		2,597,147		2,592,469		2,367,529		2,154,194
Total deposits	$	3,323,550	$	3,298,575	$	3,284,969	$	3,095,611	$	2,872,184

Asset Quality

Total nonperforming assets were $48.0 million as of September 30, 2024, an increase of $39.3 million from December 31, 2023. $25.0 million of the increase was primarily driven by one construction, land and development loan moving to nonaccrual status in the second quarter of 2024. During the third quarter of 2024, management elected to make protective advances in order for construction to continue on that project. Management is actively working with the borrower on strategies to complete construction, preserve value and support repayment of the loan. A large residential real estate relationship and one CRE non-owner occupied loan moving to nonaccrual status also contributed $13.6 million to the increase in nonaccrual loans during the third quarter of 2024.

As of September 30, 2024, the allowance for credit losses on loans was $39.1 million, or 1.29% 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
	September 30,			June 30,			March 30,			December 31,			September 30,
(dollars in thousands)	2024			2024			2024			2023			2023
Nonaccrual loans	$	48,026		$	27,618		$	7,345		$	8,596		$	9,007
Accruing loans 90+ days past due		—			—			—			139			—
Total nonperforming loans		48,026			27,618			7,345			8,735			9,007
OREO and repossessed assets		—			—			3			32			3
Total nonperforming assets	$	48,026		$	27,618		$	7,348		$	8,767		$	9,010
Net charge-offs/(recoveries)		316			2,522			58			(238	)		(594	)
Net charge-offs/(recoveries) to average loans		0.04	%		0.36	%		0.01	%		(0.04	)%		(0.09	)%
Nonperforming loans to total loans		1.58	%		0.95	%		0.26	%		0.32	%		0.35	%
Nonperforming assets to total assets		1.18	%		0.63	%		0.17	%		0.22	%		0.23	%
Allowance for credit losses on loans to total loans		1.29	%		1.31	%		1.31	%		1.30	%		1.39	%
Allowance for credit losses on loans to nonperforming loans		82	%		139	%		498	%		410	%		403	%

For the third quarter of 2024, the Company had net charge-offs of $0.3 million, compared to net charge-offs of $2.5 million for the second quarter of 2024 and net recoveries of $0.6 million for the third quarter of 2023. The quarter-over-quarter decrease in net charge-offs was driven by a $2.6 million charge-off of one commercial and industrial loan in the second quarter of 2024.

The Company recorded a provision for credit losses of $1.7 million for the third quarter of 2024, compared to a provision for credit losses of $4.5 million for the second quarter of 2024 and no provision for credit losses for the third quarter of 2023. The provision for credit losses for the third quarter of 2024 was primarily driven by loan growth and an increase in nonaccrual loans.

The unearned fair value adjustments on the acquired Metro Phoenix Bank loan portfolio were $3.8 million as of September 30, 2024, $5.2 million as of December 31, 2023, and $5.5 million as of September 30, 2023.

Capital

Total stockholders’ equity was $386.5 million as of September 30, 2024, an increase of $17.4 million from December 31, 2023. This change was primarily driven by an improvement in accumulated other comprehensive loss of $10.2 million and an increase in retained earnings of $6.2 million. Tangible book value per common share (non-GAAP) increased to $16.50 as of September 30, 2024, from $15.46 as of December 31, 2023. Tangible common equity to tangible assets (non-GAAP) increased to 8.11% as of September 30, 2024, from 7.94% as of December 31, 2023. Common equity tier 1 capital to risk weighted assets decreased to 11.12% as of September 30, 2024, from 11.82% as of December 31, 2023.

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

	September 30,			December 31,			September 30,
	2024			2023			2023
Capital Ratios⁽¹⁾
Alerus Financial Corporation Consolidated
Common equity tier 1 capital to risk weighted assets		11.12	%		11.82	%		13.01	%
Tier 1 capital to risk weighted assets		11.38	%		12.10	%		13.30	%
Total capital to risk weighted assets		14.04	%		14.76	%		16.10	%
Tier 1 capital to average assets		9.30	%		10.57	%		11.14	%
Tangible common equity / tangible assets ⁽²⁾		8.11	%		7.94	%		7.47	%

Alerus Financial, N.A.
Common equity tier 1 capital to risk weighted assets		10.73	%		11.40	%		12.68	%
Tier 1 capital to risk weighted assets		10.73	%		11.40	%		12.68	%
Total capital to risk weighted assets		11.98	%		12.51	%		13.86	%
Tier 1 capital to average assets		8.90	%		9.92	%		10.72	%

(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 Wednesday, October 30, 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 572067. 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 operates 29 banking and commercial wealth offices, with locations in Grand Forks and Fargo, North Dakota; the Minneapolis-St. Paul, Minnesota metropolitan area; Rochester, Minnesota; the southern Minnesota area; Marshalltown, Iowa; Pewaukee, Wisconsin; and Phoenix and Scottsdale, Arizona. Alerus also operates a commercial wealth office in La Crosse, Wisconsin. 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, adjusted noninterest income, adjusted noninterest expense, adjusted pre-provision net revenue, adjusted efficiency ratio, adjusted net income, adjusted return on average assets, adjusted return on average tangible common equity, net interest margin (tax-equivalent), adjusted net interest margin (tax-equivalent), and adjusted earnings per common share - diluted. 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 changes in 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 the level and impact 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; our ability to raise additional capital to implement our business plan; the overall health of the local and national real estate market; concentrations within our loan portfolio; the concentration of large loans to certain borrowers; our ability to successfully manage credit risk; the level of nonperforming assets on our balance sheet; our ability to implement our organic and acquisition growth strategies, including the integration of HMNF which the Company acquired in the fourth quarter of 2024; 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, including from non-banks such as credit unions, Fintech companies and 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, including those 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 acquisitions of Metro Phoenix Bank and HMNF; 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 conflict in the Middle East 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.

Alerus Financial Corporation and Subsidiaries

Consolidated Balance Sheets

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

	September 30,			December 31,
	2024			2023
Assets	(Unaudited)
Cash and cash equivalents	$	65,975		$	129,893
Investment securities
Trading, at fair value		2,708			—
Available-for-sale, at fair value		466,003			486,736
Held-to-maturity, at amortized cost (with an allowance for credit losses on investments of $137 and $151, respectively)		281,913			299,515
Loans held for sale		13,487			11,497
Loans		3,032,343			2,759,583
Allowance for credit losses on loans		(39,142	)		(35,843	)
Net loans		2,993,201			2,723,740
Land, premises and equipment, net		18,790			17,940
Operating lease right-of-use assets		9,268			5,436
Accrued interest receivable		16,469			15,700
Bank-owned life insurance		35,793			33,236
Goodwill		46,783			46,783
Other intangible assets		13,186			17,158
Servicing rights		1,874			2,052
Deferred income taxes, net		33,054			34,595
Other assets		86,136			83,432
Total assets	$	4,084,640		$	3,907,713
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	657,547		$	728,082
Interest-bearing		2,666,003			2,367,529
Total deposits		3,323,550			3,095,611
Short-term borrowings		244,700			314,170
Long-term debt		59,041			58,956
Operating lease liabilities		9,643			5,751
Accrued expenses and other liabilities		61,220			64,098
Total liabilities		3,698,154			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: 19,790,005 and 19,734,077 issued and outstanding		19,790			19,734
Additional paid-in capital		151,257			150,343
Retained earnings		278,863			272,705
Accumulated other comprehensive loss		(63,424	)		(73,655	)
Total stockholders’ equity		386,486			369,127
Total liabilities and stockholders’ equity	$	4,084,640		$	3,907,713

Alerus Financial Corporation and Subsidiaries

Consolidated Statements of Income

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

	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
Interest Income	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Loans, including fees	$	42,593	$	41,663	$	34,986	$	123,551	$	99,187
Investment securities
Taxable		4,596		4,845		6,146		14,008		18,222
Exempt from federal income taxes		169		170		182		512		558
Other		4,854		6,344		724		16,200		2,221
Total interest income		52,212		53,022		42,038		154,271		120,188
Interest Expense
Deposits		22,285		21,284		14,436		63,721		36,218
Short-term borrowings		6,706		7,053		6,528		19,748		15,684
Long-term debt		679		684		679		2,041		1,999
Total interest expense		29,670		29,021		21,643		85,510		53,901
Net interest income		22,542		24,001		20,395		68,761		66,287
Provision for credit losses		1,661		4,489		—		6,150		550
Net interest income after provision for credit losses		20,881		19,512		20,395		62,611		65,737
Noninterest Income
Retirement and benefit services		16,144		16,078		18,605		47,876		49,977
Wealth management		6,684		6,360		5,271		19,161		15,915
Mortgage banking		2,573		2,554		2,510		6,796		7,132
Service charges on deposit accounts		488		456		328		1,333		940
Other		2,474		1,923		1,693		5,891		5,475
Total noninterest income		28,363		27,371		28,407		81,057		79,439
Noninterest Expense
Compensation		21,058		20,265		19,071		60,655		57,076
Employee taxes and benefits		5,400		5,134		4,895		16,722		15,472
Occupancy and equipment expense		2,082		1,815		1,883		5,803		5,619
Business services, software and technology expense		4,879		4,599		4,774		14,823		15,367
Intangible amortization expense		1,324		1,324		1,324		3,972		3,972
Professional fees and assessments		4,267		2,373		1,716		8,633		4,397
Marketing and business development		764		651		750		2,200		2,139
Supplies and postage		422		370		410		1,321		1,275
Travel		330		332		322		954		876
Mortgage and lending expenses		684		467		689		1,592		1,401
Other		1,237		1,422		1,426		3,543		3,909
Total noninterest expense		42,447		38,752		37,260		120,218		111,503
Income before income tax expense		6,797		8,131		11,542		23,450		33,673
Income tax expense		1,590		1,923		2,381		5,604		7,222
Net income	$	5,207	$	6,208	$	9,161	$	17,846	$	26,451
Per Common Share Data
Earnings per common share	$	0.26	$	0.31	$	0.46	$	0.90	$	1.31
Diluted earnings per common share	$	0.26	$	0.31	$	0.45	$	0.89	$	1.30
Dividends declared per common share	$	0.20	$	0.20	$	0.19	$	0.59	$	0.56
Average common shares outstanding		19,788		19,777		19,872		19,768		19,977
Diluted average common shares outstanding		20,075		20,050		20,095		20,037		20,193

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)

	September 30,			June 30,			December 31,			September 30,
	2024			2024			2023			2023
Tangible Common Equity to Tangible Assets
Total common stockholders’ equity	$	386,486		$	373,226		$	369,127		$	349,402
Less: Goodwill		46,783			46,783			46,783			46,783
Less: Other intangible assets		13,186			14,510			17,158			18,482
Tangible common equity (a)		326,517			311,933			305,186			284,137
Total assets		4,084,640			4,358,623			3,907,713			3,869,138
Less: Goodwill		46,783			46,783			46,783			46,783
Less: Other intangible assets		13,186			14,510			17,158			18,482
Tangible assets (b)		4,024,671			4,297,330			3,843,772			3,803,873
Tangible common equity to tangible assets (a)/(b)		8.11	%		7.26	%		7.94	%		7.47	%
Adjusted Tangible Common Equity to Tangible Assets
Tangible assets (b)	$	4,024,671		$	4,297,330		$	3,843,772		$	3,803,873
Less: Cash proceeds from BTFP		—			355,000			—			—
Adjusted tangible assets (c)		4,024,671			3,942,330			3,843,772			3,803,873
Adjusted tangible common equity to tangible assets (a)/(c)		8.11	%		7.91	%		7.94	%		7.47	%
Tangible Book Value Per Common Share
Total common stockholders’ equity	$	386,486		$	373,226		$	369,127		$	349,402
Less: Goodwill		46,783			46,783			46,783			46,783
Less: Other intangible assets		13,186			14,510			17,158			18,482
Tangible common equity (d)		326,517			311,933			305,186			284,137
Total common shares issued and outstanding (e)		19,790			19,778			19,734			19,848
Tangible book value per common share (d)/(e)	$	16.50		$	15.77		$	15.46		$	14.32

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Return on Average Tangible Common Equity
Net income	$	5,207		$	6,208		$	9,161		$	17,846		$	26,451
Add: Intangible amortization expense (net of tax) ⁽¹⁾		1,046			1,046			1,046			3,138			3,138
Net income, excluding intangible amortization (f)		6,253			7,254			10,207			20,984			29,589
Average total equity		375,229			369,217			361,735			370,758			361,260
Less: Average goodwill		46,783			46,783			46,882			46,783			47,018
Less: Average other intangible assets (net of tax) ⁽¹⁾		10,933			11,969			15,109			11,969			16,149
Average tangible common equity (g)		317,513			310,465			299,744			312,006			298,093
Return on average tangible common equity (f)/(g)		7.83	%		9.40	%		13.51	%		8.98	%		13.27	%
Efficiency Ratio
Noninterest expense	$	42,447		$	38,752		$	37,260		$	120,218		$	111,503
Less: Intangible amortization expense		1,324			1,324			1,324			3,972			3,972
Adjusted noninterest expense (h)		41,123			37,428			35,936			116,246			107,531
Net interest income		22,542			24,001			20,395			68,761			66,287
Noninterest income		28,363			27,371			28,407			81,057			79,439
Tax-equivalent adjustment		314			255			180			816			444
Total tax-equivalent revenue (i)		51,219			51,627			48,982			150,634			146,170
Efficiency ratio (h)/(i)		80.29	%		72.50	%		73.37	%		77.17	%		73.57	%

(1)	Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

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									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Pre-Provision Net Revenue
Net interest income	$	22,542		$	24,001		$	20,395		$	68,761		$	66,287
Add: Noninterest income		28,363			27,371			28,407			81,057			79,439
Less: Noninterest expense		42,447			38,752			37,260			120,218			111,503
Pre-provision net revenue	$	8,458		$	12,620		$	11,542		$	29,600		$	34,223
Adjusted Noninterest Income
Noninterest income	$	28,363		$	27,371		$	28,407		$	81,057		$	79,439
Less: Adjusted noninterest income items
BOLI mortality proceeds (non-taxable)		—			—			—			—			1,196
Gain on sale of ESOP trustee business		—			—			2,775			—			2,775
Net gain on sale of premises and equipment		476			—			—			476			—
Total adjusted noninterest income items (j)		476			—			2,775			476			3,971
Adjusted noninterest income (k)	$	27,887		$	27,371		$	25,632		$	80,581		$	75,468
Adjusted Noninterest Expense
Noninterest expense	$	42,447		$	38,752		$	37,260		$	120,218		$	111,503
Less: Adjusted noninterest expense items
HMNF merger- and acquisition-related expenses		1,661			563			—			2,251			—
Severance and signing bonus expense		31			315			343			626			1,475
Total adjusted noninterest expense items (l)		1,692			878			343			2,877			1,475
Adjusted noninterest expense (m)	$	40,755		$	37,874		$	36,917		$	117,341		$	110,028
Adjusted Pre-Provision Net Revenue
Net interest income	$	22,542		$	24,001		$	20,395		$	68,761		$	66,287
Add: Adjusted noninterest income (k)		27,887			27,371			25,632			80,581			75,468
Less: Adjusted noninterest expense (m)		40,755			37,874			36,917			117,341			110,028
Adjusted pre-provision net revenue	$	9,674		$	13,498		$	9,110		$	32,001		$	31,727
Adjusted Efficiency Ratio
Adjusted noninterest expense (m)	$	40,755		$	37,874		$	36,917		$	117,341		$	110,028
Less: Intangible amortization expense		1,324			1,324			1,324			3,972			3,972
Adjusted noninterest expense for efficiency ratio (n)		39,431			36,550			35,593			113,369			106,056
Tax-equivalent revenue
Net interest income		22,542			24,001			20,395			68,761			66,287
Add: Adjusted noninterest income (k)		27,887			27,371			25,632			80,581			75,468
Add: Tax-equivalent adjustment		314			255			180			816			444
Total tax-equivalent revenue (o)		50,743			51,627			46,207			150,158			142,199
Adjusted efficiency ratio (n)/(o)		77.71	%		70.80	%		77.03	%		75.50	%		74.58	%
Adjusted Net Income
Net income	$	5,207		$	6,208		$	9,161		$	17,846		$	26,451
Less: Adjusted noninterest income items (net of tax) ⁽¹⁾ (j)		376			—			2,192			376			3,388
Add: Adjusted noninterest expense items (net of tax) ⁽¹⁾ (l)		1,337			694			271			2,273			1,165
Adjusted net income (p)	$	6,168		$	6,902		$	7,240		$	19,743		$	24,228
Adjusted Return on Average Assets
Average total assets (q)	$	4,298,080		$	4,297,294		$	3,821,601		$	4,245,181		$	3,799,645
Adjusted return on average assets (p)/(q)		0.57	%		0.65	%		0.75	%		0.62	%		0.85	%
Adjusted Return on Average Tangible Common Equity
Adjusted net income (p)	$	6,168		$	6,902		$	7,240		$	19,743		$	24,228
Add: Intangible amortization expense (net of tax) ⁽¹⁾		1,046			1,046			1,046			3,138			3,138
Adjusted net income, excluding intangible amortization (r)		7,214			7,948			8,286			22,881			27,366
Average total equity		375,229			369,217			361,735			370,758			361,260
Less: Average goodwill		46,783			46,783			46,882			46,783			47,018
Less: Average other intangible assets (net of tax)		10,933			11,969			15,109			11,969			16,149
Average tangible common equity (s)		317,513			310,465			299,744			312,006			298,093
Return on average tangible common equity (r)/(s)		9.04	%		10.30	%		10.97	%		9.80	%		12.27	%

(1)	Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

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									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Adjusted Net Interest Margin (Tax-Equivalent)
Net interest income	$	22,542		$	24,001		$	20,395		$	68,761		$	66,287
Less: BTFP cash interest income		4,113			4,766			—			12,494			—
Add: BTFP interest expense		3,717			4,307			—			11,291			—
Less: Purchase accounting net accretion		152			985			294			1,429			969
Net interest income excluding BTFP impact		21,994			22,557			20,101			66,129			65,318
Add: Tax equivalent adjustment for loans and securities		314			255			180			816			444
Adjusted net interest income (t)	$	22,308		$	22,812		$	20,281		$	66,945		$	65,762
Interest earning assets		4,077,716			4,075,003			3,591,478			4,024,942			3,574,675
Less: Average cash proceeds balance from BTFP		303,043			355,000			—			309,051			—
Add: Change in unearned purchase accounting discount		152			985			294			1,429			969
Adjusted interest earning assets (u)	$	3,774,825		$	3,720,988		$	3,591,772		$	3,717,320		$	3,575,644
Adjusted net interest margin (tax-equivalent) (t)/(u)		2.35	%		2.47	%		2.24	%		2.41	%		2.46	%
Adjusted Earnings Per Common Share - Diluted
Adjusted net income (p)	$	6,168		$	6,902		$	7,240		$	19,743		$	24,228
Less: Dividends and undistributed earnings allocated to participating securities		24			38			67			102			186
Net income available to common stockholders (v)		6,144			6,864			7,173			19,641			24,042
Weighted-average common shares outstanding for diluted earnings per share (w)		20,075			20,050			20,095			20,037			20,193
Adjusted earnings per common share - diluted (v)/(w)	$	0.31		$	0.34		$	0.36		$	0.98		$	1.19

(1)	Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

Alerus Financial Corporation and Subsidiaries

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

(dollars in thousands)

	Three months ended															Nine months ended
	September 30, 2024					June 30, 2024					September 30, 2023					September 30, 2024					September 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	$	326,350		5.47	%	$	448,245		5.38	%	$	29,450		3.09	%	$	375,365		5.39	%	$	35,892		3.45	%
Investment securities ⁽¹⁾		749,062		2.55			756,413		2.69			971,913		2.60			760,219		2.58			1,004,436		2.52
Loans held for sale		15,795		3.20			16,473		8.91			16,518		5.55			13,768		6.01			13,822		5.29
Loans
Commercial and industrial		593,685		7.26			578,544		7.39			523,263		6.61			578,839		7.21			524,083		6.54
CRE − Construction, land and development		184,611		5.68			126,744		8.01			88,450		8.52			146,454		7.03			93,098		7.46
CRE − Multifamily		242,558		5.62			243,076		5.52			209,020		5.17			245,372		5.57			171,043		5.15
CRE − Non-owner occupied		663,539		5.88			617,338		5.90			491,948		5.34			615,320		5.85			492,098		5.15
CRE − Owner occupied		289,963		5.41			283,754		5.47			256,983		5.22			284,315		5.41			253,460		5.03
Agricultural − Land		42,162		4.93			40,932		4.72			40,685		4.85			41,138		4.80			39,417		4.77
Agricultural − Production		40,964		6.84			38,004		6.69			32,386		6.68			38,110		6.65			29,377		6.42
RRE − First lien		689,382		3.98			694,866		4.07			681,610		3.83			695,313		4.02			667,041		3.75
RRE − Construction		16,792		3.86			21,225		5.38			33,264		5.14			19,847		4.89			33,693		4.99
RRE − HELOC		130,705		8.00			123,233		8.30			118,965		8.24			124,321		8.19			118,630		7.97
RRE − Junior lien		36,818		5.74			36,181		6.60			35,974		5.89			36,276		6.23			35,034		5.70
Other consumer		37,768		6.76			33,335		6.67			32,288		6.11			33,329		6.64			38,148		5.99
Total loans ⁽¹⁾		2,968,947		5.73			2,837,232		5.88			2,544,836		5.44			2,858,634		5.78			2,495,122		5.30
Federal Reserve/FHLB stock		17,562		8.25			16,640		8.53			28,761		6.83			16,956		8.30			25,403		6.81
Total interest earning assets		4,077,716		5.12			4,075,003		5.26			3,591,478		4.66			4,024,942		5.15			3,574,675		4.51
Noninterest earning assets		220,364					222,291					230,123					220,239					224,970
Total assets	$	4,298,080				$	4,297,294				$	3,821,601				$	4,245,181				$	3,799,645
Interest-Bearing Liabilities
Interest-bearing demand deposits	$	1,003,595		2.31	%	$	959,119		2.24	%	$	751,455		1.34	%	$	944,143		2.18	%	$	757,995		1.16	%
Money market and savings deposits		1,146,896		3.82			1,147,525		3.79			1,073,297		3.20			1,160,391		3.79			1,127,630		2.72
Time deposits		485,533		4.46			458,125		4.50			327,264		3.94			458,545		4.47			276,797		3.26
Fed funds purchased and BTFP		327,543		4.97			366,186		4.90			312,121		5.50			325,455		4.95			320,861		5.23
FHLB short-term advances		200,000		5.20			200,000		5.21			173,913		5.02			200,000		5.13			84,982		4.92
Long-term debt		59,027		4.58			58,999		4.66			58,914		4.57			58,999		4.62			58,886		4.54
Total interest-bearing liabilities		3,222,594		3.66			3,189,954		3.66			2,696,964		3.18			3,147,533		3.63			2,627,151		2.74
Noninterest-Bearing Liabilities and Stockholders' Equity
Noninterest-bearing deposits		628,114					665,930					692,742					656,553					743,253
Other noninterest-bearing liabilities		72,143					72,193					70,160					70,337					67,981
Stockholders’ equity		375,229					369,217					361,735					370,758					361,260
Total liabilities and stockholders’ equity	$	4,298,080				$	4,297,294				$	3,821,601				$	4,245,181				$	3,799,645
Net interest income ⁽¹⁾
Net interest rate spread				1.46	%				1.60	%				1.48	%				1.52	%				1.77	%
Net interest margin, tax-equivalent ⁽¹⁾				2.23	%				2.39	%				2.27	%				2.31	%				2.50	%

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

Exhibit 99.2

Document And Entity Information	Oct. 29, 2024
Document Information [Line Items]
Entity, Registrant Name	Alerus Financial Corporation
Document, Type	8-K
Document, Period End Date	Oct. 29, 2024
Entity, Incorporation, State or Country Code	DE
Entity, File Number	001-39036
Entity, Tax Identification Number	45-0375407
Entity, Address, Address Line One	401 Demers Avenue
Entity, Address, City or Town	Grand Forks
Entity, Address, State or Province	ND
Entity, Address, Postal Zip Code	58201
City Area Code	701
Local Phone Number	795-3200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $1.00 par value per share
Trading Symbol	ALRS
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	true
Entity, Ex Transition Period	false
Amendment Flag	false
Entity, Central Index Key	0000903419