Financial Performance - Alerus Financial Corporation reported a net loss of $33.1 million for Q4 2025, compared to a net income of $16.9 million in Q3 2025[1]. - The company sold $360.1 million of available-for-sale securities, resulting in a one-time pre-tax net loss of $68.4 million[2]. - Adjusted return on average assets for 2025 was 1.35%, with an adjusted efficiency ratio of 64.45%[3]. - The company achieved tangible book value growth of 21.54% from the prior year, with a tangible book value per common share of $17.55[6]. - Earnings per common share for the year ended December 31, 2025, was $0.69, down from $0.84 in 2024, indicating a decrease of approximately 17.9%[42]. - Adjusted net income for Q4 2025 was $21,419 thousand, compared to $17,000 thousand in Q3 2025 and $11,245 thousand in Q4 2024, indicating a year-over-year increase of 90.7%[45]. - Adjusted earnings per common share for the year ended December 31, 2025, was $2.78, up from $1.45 in 2024, marking an increase of 91.0%[46]. Income and Expenses - Net interest income for Q4 2025 was $45.2 million, a 4.7% increase from Q3 2025[11]. - Noninterest (loss) income for Q4 2025 was $(36.9) million, a decrease of $66.4 million, or 225.5%, from Q3 2025, primarily due to a $68.4 million loss on the sale of investment securities[15]. - Noninterest expense for Q4 2025 was $51.9 million, a $1.3 million, or 2.7%, increase from Q3 2025, driven by occupancy and equipment expenses[18]. - Noninterest expense for the year ended December 31, 2025, was $201,227 thousand, up from $180,675 thousand in 2024, reflecting an increase of 11.4%[42]. Asset and Loan Growth - Assets under administration and management grew to a combined $49.8 billion, reflecting strong organic growth in retirement and wealth segments[5]. - Mortgage originations for the full year 2025 were $484.8 million, a 54.4% increase from the previous year[9]. - Total loans held for investment increased by $55.5 million, or 1.4%, to $4.0 billion as of December 31, 2025, driven by increases in consumer and commercial loans[21]. - Average total loans for the year ended December 31, 2025, were $4,047,034 thousand, compared to $3,099,015 thousand in 2024, reflecting a growth of 30.7%[46]. Asset Quality and Credit Losses - Total nonperforming assets increased by $3.6 million, or 5.7%, to $66.5 million as of December 31, 2025[26]. - The allowance for credit losses on loans was $61.9 million, or 1.53% of total loans, as of December 31, 2025, compared to $59.9 million, or 1.50%, as of December 31, 2024[26]. - The provision for credit losses was released by $0.3 million in the fourth quarter of 2025, contrasting with a provision of $12.0 million in the fourth quarter of 2024[28]. - Nonperforming loans totaled $66.1 million, an increase from $59.6 million as of September 30, 2025, and $51.5 million as of June 30, 2025[27]. Capital and Equity - Total stockholders' equity increased to $564.9 million as of December 31, 2025, up by $69.5 million from December 31, 2024, primarily due to a rise in accumulated other comprehensive income[30]. - Common equity tier 1 capital to risk-weighted assets improved to 10.28% as of December 31, 2025, up from 9.91% as of December 31, 2024[31]. - Tangible common equity increased to $445,929 thousand in December 2025 from $429,300 thousand in September 2025, representing a growth of 8.5%[43]. Operational Efficiency - The adjusted efficiency ratio improved to 63.55% in Q4 2025 from 65.22% in Q3 2025 and 68.97% in Q4 2024, indicating enhanced operational efficiency[45]. - The adjusted return on average tangible common equity for Q4 2025 was 21.05%, up from 18.55% in Q3 2025 and 14.89% in Q4 2024, showing significant improvement in profitability[45]. Future Outlook - The company will host a conference call on January 29, 2026, to discuss its financial results[32].

Core Insights - Alerus Financial Corporation reported a net loss of $33.1 million for Q4 2025, a significant decline from a net income of $16.9 million in Q3 2025 and a slight loss of $0.1 million in Q4 2024 [1][8] - The company undertook a strategic balance sheet repositioning, selling $360.1 million in available-for-sale securities, resulting in a one-time pre-tax net loss of $68.4 million [2][4] - CEO Katie O'Neill Lorenson highlighted 2025 as a defining year, achieving an adjusted return on average assets of 1.35% and an adjusted efficiency ratio of 64.45% [3][6] Financial Performance - Adjusted pre-provision net revenue for Q4 2025 was $25.3 million, up from $22.1 million in Q3 2025, indicating improved operational efficiency [2][8] - Net interest income for Q4 2025 was $45.2 million, a 4.7% increase from $43.1 million in Q3 2025, driven by lower costs of funds [11][12] - The adjusted return on average tangible common equity for Q4 2025 was 21.05%, compared to 18.55% in Q3 2025, reflecting strong profitability despite the net loss [8][27] Asset and Liability Management - Total assets decreased to $5.2 billion as of December 31, 2025, primarily due to declines in available-for-sale and held-to-maturity investment securities [19] - Total loans held for investment increased by 1.4% to $4.0 billion, driven by growth in consumer and commercial loans [20] - Total deposits were $4.2 billion, a decrease of 4.3% from the previous year, attributed to a reduction in high-cost time deposits [21] Noninterest Income and Expenses - Noninterest loss income for Q4 2025 was $(36.9) million, a significant decrease from Q3 2025, primarily due to the strategic repositioning [14][15] - Noninterest expense for Q4 2025 was $51.9 million, a slight increase from Q3 2025, driven by higher occupancy and equipment expenses [16][17] - Adjusted noninterest income for Q4 2025 was $31.9 million, an increase of 8.3% from Q3 2025, supported by growth in wealth management and retirement services [14][15] Capital and Equity - Tangible book value per common share increased to $17.55 as of December 31, 2025, up from $14.44 a year earlier, indicating strong capital growth [27] - The tangible common equity to tangible assets ratio improved to 8.72% as of December 31, 2025, from 7.13% the previous year, reflecting enhanced capital strength [27][28] - Total stockholders' equity rose to $564.9 million, an increase of $69.5 million from the previous year, primarily due to higher accumulated other comprehensive income [27]

Core Viewpoint - Alerus Financial Corporation is positioned as a stable financial services provider with a consistent price target of $27, reflecting analysts' positive outlook on its financial health and performance [1][6]. Financial Performance - Alerus reported a quarterly earnings per share (EPS) of $0.66, exceeding the Zacks Consensus Estimate of $0.59, and showing significant improvement from $0.26 per share in the same quarter last year, indicating strong financial health [2][6]. - Analysts anticipate growth in earnings for Alerus's upcoming earnings report, although there are concerns that the company may lack the optimal factors for an earnings beat [5]. Analyst Insights - Despite the stable consensus price target, analyst Wallave William IV from Raymond James has set a slightly lower price target of $24, suggesting potential growth opportunities for the stock [3][6]. - The Zacks Rank system highlights Alerus as a promising stock for value investors, focusing on trends in value, growth, and momentum [3]. Strategic Initiatives - Alerus's recent earnings call featured key leaders discussing the company's achievements and future plans, indicating strong interest from analysts in the company's performance and potential [4].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Alerus (ALRS) - Alerus currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned for potential outperformance [3] Price Performance - Over the past week, Alerus shares increased by 7.57%, outperforming the Zacks Financial - Miscellaneous Services industry, which rose by 1.82% [5] - In a longer timeframe, Alerus shares rose by 14.18% over the past quarter and 24.61% over the last year, while the S&P 500 only increased by 4.41% and 18.09%, respectively [6] Trading Volume - Alerus has an average 20-day trading volume of 116,353 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, one earnings estimate for Alerus has increased, raising the consensus estimate from $2.50 to $2.51 [9] - For the next fiscal year, one estimate has also moved upwards, with no downward revisions during the same period [9] Conclusion - Given the strong momentum indicators and positive earnings outlook, Alerus is recommended as a 2 (Buy) stock with a Momentum Score of A, making it a potential candidate for near-term investment [11]

Company Performance - Alerus (ALRS) shares have increased by 2.9% over the past month, reaching a new 52-week high of $24.42 [1] - Year-to-date, Alerus has gained 7.2%, outperforming the Zacks Finance sector's 19.1% but underperforming the Zacks Financial - Miscellaneous Services industry's -8.2% [1] Earnings and Revenue - Alerus has consistently exceeded earnings expectations, reporting EPS of $0.66 against a consensus estimate of $0.59 in its last earnings report on October 30, 2025, and beating revenue estimates by 2.31% [2] - For the current fiscal year, Alerus is projected to earn $2.52 per share on revenues of $287.05 million, with a year-over-year earnings growth of 0.53% [3] - The next fiscal year is expected to see earnings of $2.75 per share on revenues of $303.15 million, representing a year-over-year change of 5.61% [3] Valuation Metrics - Alerus currently trades at 9.6 times the current fiscal year EPS estimates, below the peer industry average of 11.8 times [7] - On a trailing cash flow basis, Alerus trades at 13 times, compared to the peer group's average of 11.2 times, indicating strong value positioning [7] Zacks Rank and Style Scores - Alerus holds a Zacks Rank of 2 (Buy) due to rising earnings estimates, making it a suitable choice for investors looking for stocks with strong potential [8] - The company has a Value Score of A, a Growth Score of C, and a Momentum Score of A, resulting in a combined VGM Score of A [6] Industry Comparison - Alerus is positioned well within its industry, with Pagaya Technologies Ltd. (PGY) also showing strong performance, having a Zacks Rank of 1 (Strong Buy) and expected earnings of $3.41 per share on revenues of $1.32 billion for the current fiscal year [9][10] - Despite the Financial - Miscellaneous Services industry ranking in the bottom 64% of all industries, Alerus and Pagaya Technologies are expected to benefit from favorable market conditions [11]

Core Viewpoint - Alerus Financial Corporation will release its fourth quarter financial results on January 28, 2026, followed by a conference call on January 29, 2026, to discuss these results with analysts and institutional investors [1][2]. Company Overview - Alerus Financial Corporation (Nasdaq: ALRS) is a commercial wealth bank and national retirement services provider, headquartered in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area [3]. - The company offers a range of financial solutions through its subsidiary, Alerus Financial, National Association, including banking, wealth services, and retirement and benefit plans [3]. - Alerus operates 27 banking and commercial wealth offices across various locations, including North Dakota, Minnesota, Iowa, Wisconsin, and Arizona [3].

Core Insights - Alerus Financial Corporation (ALRS) is currently ranked at the top among eight companies in the Diversified Financial Services industry according to Seeking Alpha's Quant rating [1] - Alerus Financial is noted to be one of the smallest firms in its sector, based in North Dakota [1] Company Analysis - The article emphasizes the belief in the efficiency of financial markets, suggesting that most stocks reflect their real current value [1] - It highlights that the best investment opportunities often arise from stocks that are less widely followed or do not accurately reflect market opportunities [1]

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Financial Performance - For the three months ended September 30, 2025, the return on average total assets was 1.27%, compared to 0.48% for the same period in 2024[200]. - The Company reported a diluted earnings per common share of $0.65 for the three months ended September 30, 2025, compared to $0.26 for the same period in 2024[200]. - Net income for the three months ended September 30, 2025, was $16,924 thousand, down from $20,252 thousand in the same period in 2024, a decrease of 16.3%[202]. - Net income for Q3 2025 was $16.9 million, a 225.0% increase from $5.2 million in Q3 2024, resulting in $0.65 per diluted share[209]. - For the nine months ended September 30, 2025, net income reached $50.5 million, up 182.9% from $17.8 million in the same period of 2024, translating to $1.95 per diluted share[210]. Revenue and Income Sources - Noninterest income as a percentage of revenue was 40.56% for the three months ended September 30, 2025, down from 55.72% in the same period of 2024[200]. - Noninterest income for the nine months ended September 30, 2025, was $88,824 thousand, up from $81,057 thousand in the same period of 2024, indicating a rise of 9.5%[202]. - Total noninterest income for the three months ended September 30, 2025 was $29.4 million, an increase of $1.1 million, or 3.8%, from the same period in 2024[225]. - Mortgage banking revenue for the three months ended September 30, 2025 increased by $0.9 million, or 35.0%, compared to the same period in 2024[225]. Asset and Loan Growth - Total assets reached $5,330,573 thousand as of September 30, 2025, compared to $4,084,640 thousand a year prior, marking a growth of 30.5%[202]. - Loans increased to $4,102,075 thousand as of September 30, 2025, up from $3,032,343 thousand a year earlier, representing a growth of 35.4%[202]. - Total loans for the nine months ended September 30, 2025 amounted to $52.1 million, an increase of $14.5 million, or 38.5%, compared to the same period in 2024[222]. - Total loans outstanding reached $4.1 billion as of September 30, 2025, an increase of $109.5 million, or 2.7%, from December 31, 2024[248]. Equity and Capital - Total stockholders' equity increased to $550,688 thousand as of September 30, 2025, from $386,486 thousand a year earlier, a growth of 42.4%[202]. - Tangible common equity to tangible assets ratio improved to 8.24% as of September 30, 2025, compared to 7.13% a year earlier[204]. - Stockholders' equity increased by $55.3 million, or 11.2%, to $550.7 million as of September 30, 2025[284]. - Common equity tier 1 capital to risk-weighted assets increased to 10.84% as of September 30, 2025, from 9.91% as of December 31, 2024[288]. Interest Income and Margin - Net interest income for the three months ended September 30, 2025, was $43,136 thousand, compared to $22,542 thousand for the same period in 2024, reflecting an increase of 91.2%[202]. - The net interest margin (taxable-equivalent basis) for the three months ended September 30, 2025, was 3.50%, compared to 2.23% for the same period in 2024[200]. - Total interest income for the three months ended September 30, 2025 was $11.9 million, an increase of $6.9 million, or 138.5%, compared to the same period in 2024[222]. - The net interest margin for Q3 2025 was 3.50%, compared to 2.23% in Q3 2024, driven by higher rates on interest-earning assets and lower rates paid on deposits[216]. Expenses and Efficiency - The efficiency ratio for the three months ended September 30, 2025, was 65.34%, compared to 80.29% for the same period in 2024[200]. - Total noninterest expense for the three months ended September 30, 2025 was $50.5 million, an increase of $8.1 million, or 19.1%, compared to $42.4 million for the same period in 2024[228]. - The company experienced a $29.1 million increase in noninterest expenses for the nine months ended September 30, 2025, impacting overall earnings[211]. - Adjusted efficiency ratio improved to 65.22% for the three months ended September 30, 2025, from 62.35% in the previous quarter[207]. Credit Quality and Risk Management - The provision for credit losses was $1,661 thousand for the three months ended September 30, 2025, compared to $863 thousand for the same period in 2024, reflecting an increase of 92.5%[202]. - Nonperforming loans increased from $62,886 thousand as of December 31, 2024 to $59,644 thousand as of September 30, 2025, with nonperforming loans to total loans ratio at 1.45%[265]. - The allowance for credit losses (ACL) on loans increased from $39,142 thousand as of September 30, 2024 to $62,127 thousand as of September 30, 2025, reflecting a rise of approximately 58.7%[269]. - The company employs a centralized credit risk management strategy, focusing on diversification across geographic, industry, and client levels[262]. Liquidity and Funding - Total deposits increased to $4.4 billion as of September 30, 2025, up $34.2 million, or 0.8%, from December 31, 2024[275]. - On-balance sheet liquidity was $566.9 million as of September 30, 2025, compared to $579.0 million as of December 31, 2024[292]. - Off-balance sheet liquidity decreased to $2.2 billion as of September 30, 2025, down from $2.3 billion as of December 31, 2024[293]. - The Company can accept wholesale deposits up to 20.0% of total assets, equating to $1.1 billion, as of September 30, 2025[295]. Operational and Strategic Risk - Operational risk management focuses on strengthening internal controls and enterprise risk management to mitigate potential losses[309]. - Compliance risk includes potential regulatory sanctions and reputational impacts related to various banking regulations[310]. - Strategic risk is mitigated through initiatives aimed at understanding and reporting on various risks, including new product development[311].

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