Core Insights - Alerus (ALRS) has shown strong year-to-date performance, returning approximately 3.5%, outperforming the Finance sector average of 1.8% [2][3] - The Zacks Rank for Alerus is 1 (Strong Buy), indicating a positive earnings outlook with a 19.5% increase in the consensus estimate for full-year earnings over the past 90 days [2][3] - Alerus is part of the Financial - Miscellaneous Services industry, which has gained an average of 3.2% this year, indicating better performance compared to its industry ranking of 157 [3] Company Performance - Alerus has outperformed the Finance sector, with a year-to-date return of 3.5% compared to the sector's average gain of 1.8% [2] - The stock's earnings outlook has improved significantly, with a 19.5% increase in the consensus earnings estimate over the last three months [2] - T. Rowe Price (TROW) is another Finance stock that has performed well, with a year-to-date increase of 2.1% and a consensus EPS estimate increase of 10.4% [2][3] Industry Context - The Financial - Miscellaneous Services industry, which includes Alerus, has seen an average gain of 3.2% this year, indicating a competitive performance within its sector [3] - In contrast, the Financial - Investment Management industry, to which T. Rowe Price belongs, has performed better with a 6.9% increase this year [3] - Alerus is ranked 8 in the Zacks Sector Rank, which includes 857 companies, reflecting its strong position within the Finance sector [1]

Alerus (ALRS) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.Analysts' growing optimism on the earnings prospects of this company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-t ...

Alerus EARNINGS PRESENTATION Q4 2023 NASDAQ: ALRS DISCLAIMERS Forward-Looking Statements Thispresentation 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 a ...

Financial Data and Key Metrics Changes - Net interest income increased by 5.7% on a linked-quarter basis, driven by strong organic loan and deposit growth [11] - Net interest margin improved to 2.37%, an increase of 10 basis points from the prior quarter [12] - Tangible common equity (TCE) stood at 7.96% and common equity tier 1 (CET1) at 11.81% [9] - Tangible book value grew by 8% [9] Business Line Data and Key Metrics Changes - Total loans grew by 5.7% from the prior quarter, with significant contributions from commercial real estate, C&I, and residential real estate [13] - Deposits increased by 7.8% from the prior quarter, with non-interest-bearing deposits representing 24% of total deposits [14] - Mortgage revenues decreased by 49% from the prior quarter due to a seasonal decline in originations [18] Market Data and Key Metrics Changes - Synergistic deposits from Wealth and Retirement businesses grew by 23% year-over-year and 11.5% from the prior quarter, now accounting for over 27% of total deposits [15] - The Retirement business saw a 1.6% increase in revenues, with assets under management and administration rising by 6.2% [17] - Wealth Management revenues increased by 12.7% on a linked-quarter basis, with assets under management up by 7.9% [18] Company Strategy and Development Direction - The company is focused on prudent and disciplined organic growth while being opportunistic with strategic acquisitions in both Commercial Wealth and Retirement sectors [35] - The "One Alerus" strategy aims to enhance collaboration across business lines, leading to improved client service and market share [4][6] - The company is committed to optimizing its infrastructure to return to a history of strong profitability and tangible book value growth [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum from Q4 2023 into 2024, highlighting a strong and diversified business model [63] - The company anticipates modest loan growth for 2024, driven by newly onboarded talent and streamlined processes [41][42] - Credit quality remains strong, with expectations of normalization in charge-off activity but no significant issues on the horizon [54] Other Important Information - Non-interest expense increased by 3.7%, primarily due to inflationary pressures [19] - The company returned $5.8 million to shareholders through dividends and share repurchases [9] - The company is actively searching for a Chief Retirement Services Officer to enhance its Retirement business [7] Q&A Session Summary Question: Insights on loan and deposit growth - Management confirmed that the strong growth was not pulled forward and is expected to continue into 2024, driven by newly acquired talent [24][25] Question: Margin improvement and rate cuts - Management indicated that net interest margins are expected to improve, with potential rate cuts further enhancing this trajectory [29][30] Question: Capital and M&A appetite - The company remains focused on organic growth but is open to strategic acquisitions in the Retirement sector [35] Question: Loan growth outlook - Management expects modest loan growth, supported by strong deposit growth and talent acquisition [41][42] Question: Credit quality outlook - Management anticipates some level of charge-off activity as credit normalizes but sees no significant issues on the horizon [54]

Alerus (ALRS) reported $46.99 million in revenue for the quarter ended December 2023, representing a year-over-year decline of 10.5%. EPS of $0.24 for the same period compares to $0.53 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $45 million, representing a surprise of +4.41%. The company delivered an EPS surprise of -17.24%, with the consensus EPS estimate being $0.29.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how t ...

Alerus (ALRS) came out with quarterly earnings of $0.24 per share, missing the Zacks Consensus Estimate of $0.29 per share. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -17.24%. A quarter ago, it was expected that this company would post earnings of $0.34 per share when it actually produced earnings of $0.45, delivering a surprise of 32.35%.Over the last four quarters, the company has surp ...

Core Insights - Alerus Financial Corporation reported a net loss of $14.8 million for Q4 2023, a significant decline from net income of $9.2 million in Q3 2023 and $10.9 million in Q4 2022 [1] - The company executed a balance sheet repositioning, selling $172.3 million in available-for-sale securities, resulting in a one-time pre-tax net loss of $24.6 million [1][4] - Adjusted pre-provision net revenue for Q4 2023 was $9.0 million, slightly up from $8.9 million in Q3 2023 [1] Financial Performance - Total deposits reached $3.1 billion as of December 31, 2023, marking a 7.8% increase from $2.9 billion in Q3 2023 [4] - Total loans increased to $2.8 billion, a 5.7% rise from Q3 2023 [4] - Net interest margin improved to 2.37%, up 10 basis points from 2.27% in Q3 2023 [4][9] - Net interest income rose by 5.7% to $21.6 million compared to $20.4 million in Q3 2023 [4][8] Operational Highlights - The company added over 120 new team members while reducing overall headcount, indicating a restructuring effort [2] - Noninterest income for Q4 2023 was $0.8 million, a 97.2% decrease from Q3 2023, primarily due to the loss on the sale of investment securities [10] - The efficiency ratio for Q4 2023 was 165.40%, significantly higher than 73.37% in Q3 2023, reflecting increased noninterest expenses [7] Asset Quality - Total nonperforming assets increased to $8.8 million, a 129.3% rise from $3.8 million in Q4 2022 [20] - The allowance for credit losses on loans was $35.8 million, or 1.30% of total loans, compared to $31.1 million, or 1.27%, in the previous year [20][22] Capital and Shareholder Returns - Tangible book value per common share increased by 8.0% to $15.46 as of December 31, 2023, from $14.37 a year earlier [6][23] - The company repurchased $2.1 million of its outstanding stock at an average price of $17.65, reducing common shares outstanding by 118,000 [23]

Core Insights - Alerus (ALRS) is expected to report quarterly earnings of $0.29 per share, a decline of 45.3% year-over-year, with revenues forecasted at $45 million, down 14.3% from the previous year [1][2] Earnings Estimates - The consensus EPS estimate has remained unchanged over the last 30 days, indicating analysts have reevaluated their initial estimates [1] - Analysts predict 'Net interest margin, tax-equivalent' will reach 2.2%, down from 3.1% in the same quarter last year [2] - The 'Efficiency ratio' is estimated at 81.3%, compared to 69.6% a year ago [2] Key Financial Metrics - Estimated 'Total Noninterest income' is $24.91 million, down from $25.52 million in the same quarter last year [3] - 'Net interest income' is projected to be $20.13 million, a decrease from $26.96 million in the same quarter last year [3] - 'Average Balance - Total interest earning assets' is expected to reach $3.68 billion, compared to $3.47 billion in the same quarter of the previous year [2] Stock Performance - Over the past month, Alerus shares have returned -3.5%, while the Zacks S&P 500 composite has increased by +2.1% [3] - Alerus currently holds a Zacks Rank 1 (Strong Buy), suggesting potential outperformance in the near future [3]

Dividend and Shareholder Returns - The Company declared a quarterly cash dividend of $0.19 per common share, paid on October 13, 2023, to stockholders of record as of September 15, 2023[168]. - Dividend payout ratio remained stable at 42.22% in Q3 2023, compared to 38.30% in Q3 2022[171]. Financial Performance - Return on average total assets for Q3 2023 was 0.95%, slightly down from 1.02% in Q3 2022[171]. - Earnings per common share (diluted) for Q3 2023 was $0.45, compared to $0.47 in Q3 2022[171]. - Net income for Q3 2023 was $9,161,000, slightly up from $9,104,000 in Q3 2022[175]. - The efficiency ratio for Q3 2023 was 73.37%, compared to 74.76% in Q3 2022[171]. - For the nine months ended September 30, 2023, net income was $26.5 million, or $1.30 per diluted share, a decrease of 9.1% from $29.1 million, or $1.56 per diluted share in the same period of 2022[180]. Revenue Composition - The Company generates a majority of its revenue from noninterest income, primarily from retirement and benefit services, wealth management, and mortgage business lines[164]. - Noninterest income as a percentage of revenue increased to 58.21% in Q3 2023 from 48.82% in Q3 2022[171]. - Total noninterest income for Q3 2023 was $28.4 million, a 5.2% increase from $27.0 million in Q3 2022, driven by a $2.0 million increase in retirement and benefit services[193]. - Total noninterest income for the nine months ended September 30, 2023, was $79.4 million, a 7.3% decrease from $85.7 million in the same period of 2022, primarily due to a $7.6 million decrease in mortgage banking revenue[193]. Asset and Loan Growth - Total assets as of September 30, 2023, were $3,869,138,000, up from $3,691,253,000 in September 2022[175]. - Loans increased to $2,606,430,000 as of September 30, 2023, compared to $2,318,231,000 in September 2022[175]. - Total loans reached $2,495,122 thousand, an increase from $1,958,216 thousand, representing a growth of approximately 27.4%[1]. - Total loans as of September 30, 2023, amounted to $2,606,430 thousand, with a breakdown of $284,891 thousand in commercial loans and $901,287 thousand in consumer loans[205]. Interest Income and Margin - Net interest margin on a taxable-equivalent basis decreased to 2.27% in Q3 2023 from 3.21% in Q3 2022[171]. - Net interest income for Q3 2023 was $20.4 million, a decrease of $7.9 million, or 28.0%, compared to $28.3 million in Q3 2022[182]. - The average yield on interest earning assets was 4.51%, compared to 3.30% in the previous year, indicating an increase of 1.21 percentage points[1]. - The company anticipates continued pressure on net interest income and net interest margin due to expected increases in the target federal funds interest rate[183]. Credit Quality and Risk Management - The Company is focused on managing credit risk and maintaining an adequate level of allowance for credit losses, which is critical to financial statement presentation[167]. - The allowance for credit losses on loans increased to $55,774 thousand as of September 30, 2023, compared to $35,285 thousand as of December 31, 2022[209]. - Nonperforming loans rose to $9,007 thousand as of September 30, 2023, up from $3,794 thousand at the end of 2022, indicating a deterioration in asset quality[210]. - The ratio of nonperforming loans to total loans increased to 0.35% from 0.16% year-over-year, reflecting a higher level of credit risk[210]. - The company emphasizes a strategy of diversification across geographic, industry, and client levels to manage credit risk effectively[206]. Economic and Market Conditions - The Company is monitoring the impact of economic conditions, including inflation and potential recession, on its financial performance and credit quality[162]. - The Company is facing increased competition from non-banking entities such as credit unions and Fintech companies, impacting its market position[162]. - The company expects noninterest income to be adversely affected in future periods due to increasing interest rates and inflationary pressures impacting mortgage originations[193]. Liquidity and Capital Management - The company has established a liquidity contingency plan to address potential short-term and long-term funding crises[234]. - The company was eligible to borrow up to an additional $477.1 million from the FHLB based on $1.5 billion of collateral pledged[234]. - The estimated impact on the company's net interest income for a +400 basis points shift in interest rates is a decrease of 6.3% as of September 30, 2023[241]. - The company has a well-capitalized status, allowing it to manage liquidity effectively and meet financial commitments[234].

Financial Data and Key Metrics Changes - Net interest income declined by 8.3% on a linked quarter basis, primarily due to increased funding costs, representing 41.8% of total revenues [12][13] - Non-interest income increased by 10.2% on a linked-quarter basis, driven by the divestiture of the ESOP trustee business [12] - Net interest margin was 2.27%, a decrease of 25 basis points from the prior quarter, but showed improvement towards the end of the quarter [13][14] - Total loans grew by 2.9% from the prior quarter, with strong growth in C&I, commercial real estate, and residential real estate [14] - Deposits increased by 0.7% from the prior quarter, with non-interest-bearing deposits remaining at 25% of total deposits [15] Business Line Data and Key Metrics Changes - Retirement business accounted for approximately 38% of total revenues, with revenues increasing over 17% on a linked-quarter basis due to the divestiture of the ESOP trustee business [17][18] - Wealth management revenues decreased by 3.3% on a linked-quarter basis, with assets under management also decreasing by 3.5% due to challenging market conditions [21] - Mortgage revenues decreased by 13.6% from the prior quarter, with expectations for a further decrease in the fourth quarter due to seasonality [20] Market Data and Key Metrics Changes - Synergistic deposits sourced from retirement and wealth businesses grew by 21% year-over-year and 2.7% over the prior quarter, now accounting for 26.5% of total deposits [15][16] - HSA balances grew to $175.7 million, representing over 23% of synergistic deposits, highlighting a low-cost funding source [16] Company Strategy and Development Direction - The company is focused on strategic divestitures to prioritize growth in core product lines, particularly in retirement services [6][11] - Investments are being made in key business lines while exiting non-core products, aiming to enhance client service and operational efficiency [11][21] - The company is committed to improving profitability through rightsizing infrastructure and optimizing processes [9][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from the interest rate environment and deposit competition but expressed confidence in building a stronger franchise [4][10] - Future expectations include gradual improvement in net interest margin and stable deposit levels, with a focus on attracting new client relationships [14][15][46] - The company remains optimistic about growth in fee income from retirement and wealth management as market conditions stabilize [50][51] Other Important Information - Credit quality remains strong with low levels of past dues and non-performing loans, and the allowance for credit losses on loans remains stable at 1.39% [10][22] - Capital levels are robust, with common equity Tier 1 capital over 13%, well above regulatory minimums [22][23] Q&A Session Summary Question: Margin expectations for Q4 and 2024 - Management expects 7 to 10 basis points of margin compression in Q4 but anticipates improvement in net interest margin as the year progresses [25][26] Question: Details on non-accrual loans - The increase in non-accrual loans is attributed to a single commercial credit in the Arizona market, not indicative of broader issues [29][30] Question: Funding dynamics and deposit initiatives - The company is focused on attracting talent in deposit-rich verticals and has seen an increase in the CD book, with core deposits expected to remain stable [34][35] Question: Future loan growth and funding levels - Management is optimistic about increasing deposits and reducing reliance on wholesale funding to support loan growth [47][48] Question: Growth potential in fee income lines - Stable market conditions are expected to benefit both retirement and wealth management revenues, with ongoing initiatives to improve efficiencies [49][50]