Alerus Financial Corporation · NASDAQ:ALRS
Alerus Financial — Q4 2024 Earnings Presentation
36 slides from Alerus Financial's earnings presentation, Jan 29, 2025
Slide 1: Investor Presentation 4Q 2024
INVESTOR PRESENTATION 4Q 2024 NASDAQ: ALRS
Slide 2: Disclaimers
DISCLAIMERS Forward-Looking Statements This presentation 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
Slide 3: Company Profile
COMPANY PROFILE Alerus is a commercial wealth bank and a national retirement plan provider DIVERSIFIED REVENUE RETIREMENT AND BENEFIT SERVICES Last Twelve Months Ended December 31, 2024 Retirement Benefits Retirement & Plan administration Health savings accounts Net Interest Income: Benefits Rev
Slide 4: Franchise Footprint
FRANCHISE FOOTPRINT 29 FULL-SERVICE BANKING OFFICES Grand Forks, ND: 4 offices Fargo, ND: 3 offices Twin Cities, MN: 7 offices Rochester, MN: 4 offices Southern MN, WI and IA: 9 offices La Crosse, WI: 1 loan production office Phoenix, AZ: 2 offices RETIREMENT AND BENEFIT SERVICES Off
Slide 5: Strategic Growth
STRATEGIC GROWTH To supplement our organic growth, we have executed 26 acquisitions throughout the history of our company including: 16 in Banking and 10 in Retirement and Benefits. Rebranded to Expanded to Acquired Metro Alerus Arizona Market Phoenix Bank 1879 2007 2019 2024 2000 2009 2022 Began as
Slide 6: Strategic Initiatives
STRATEGIC INITIATIVES One Alerus = Working Better Together to Grow Client ORGANIC GROWTH Oriented Collaborative leadership team focused on new client acquisition, retention, and deepening relationships with existing clients Reinvention Diversified Diversified business model focused on bringing v
Slide 7: Officers and Directors
OFFICERS AND DIRECTORS AL VILLALON Executive Vice President and Chief Financial Officer 3 years with Alerus KARIN TAYLOR Executive Vice President and Chief Operating Officer JIM COLLINS 7 years with Alerus Executive Vice President and Chief Banking and Revenue Officer EXECUTIVE MANAGEMENT 3 years wi
Slide 8: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS Office in Minnetonka, Minnesota
Slide 9: 4Q 2024 Highlights
4Q 2024 HIGHLIGHTS Success is Never Final NII: Adjusted PPNR(1): Adjusted Efficiency Adjusted ROTCE(1): $38.3 million $18.2 million Ratio(1) : 14.7% EARNINGS +5.6% vs. 3Q24 3.20% NIM +89% vs. 3Q24 69.0% -8.7% vs. 3Q24 Loans: Deposits: L/D Ratio: NIB Deposits: BALANCE $4.0 billion $4.4 billion 91% 20
Slide 10: 4Q 2024 Results
4Q 2024 RESULTS Income Statement Three months ended Year ended December 31, September 30, December 31, December 31, December 31, 2024 2024 2023 2024 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (dollars and shares in thousands, except per share data) Net Interest Income $ 38,284 $ 22,542 $ 2
Slide 11: Performance Ratios
PERFORMANCE RATIOS Adjusted Return on Average Adjusted Return on Average Tangible Book Value per Share(2) Assets(1)/(2) Tangible Common Equity(1)/(2) 14.65% $16.50 $15.46 0.83% $14.49 9.04% 8.38% 0.57% 0.52% 4Q 2023 3Q 2024 4Q 2024 4Q 2023 3Q 2024 4Q 2024 4Q 2023 3Q 2024 4Q 2024 10 | 1. Rates have b
Slide 12: Key Revenue Items
KEY REVENUE ITEMS Net Interest Income Noninterest Income $ in thousands $ in thousands | % of noninterest income Retirement & Benefit Services Wealth Advisory (1)/(2) Banking Fees and Other $33,874 $38,284 $28,363 $10,376 $25,434 30.6% $5,535 (2) 19.5% $4,177 16.4% $6,684 $7,010 $5,940 23.6% 20.7% $
Slide 13: Net Interest Income
NET INTEREST INCOME YIELDS AND RATES NII AND NIM(1) WALK Earning Assets $ in Thousands $- $3,516 $5,876 $38,284 6.27% $(2,870) 5.64% 5.73% 5.60% $9,220 4.89% 5.12% 2.70% 2.55% 2.68% $22,542 4Q 2023 3Q 2024 4Q 2024 3Q 2024 Asset Asset Liability Accrual Liability 4Q 2024 Investment Loan Yield Total Ea
Slide 14: Earning Assets
EARNING ASSETS DECEMBER 31, 2024 LOAN PORTFOLIO(1) LOAN PORTFOLIO(1) CHANGES $ in thousands Chart As of As of As of Change Change 1.1% Legend Category 12/31/2023 9/30/2024 12/31/2024 QoQ YoY Commercial and industrial $ 562,180 $ 606,245 $ 666,727 10.0% 18.6% CRE - Construction, land 124,034 173,629
Slide 15: Deposit Characteristics
DEPOSIT CHARACTERISTICS DECEMBER 31, 2024 DEPOSIT PORTFOLIO (BY CATEGORY) DEPOSIT PORTFOLIO CHANGES $ in thousands 4.3% Chart As of As of As of Change Change Legend Category 12/31/2023 9/30/2024 12/31/2024 QoQ YoY Noninterest-bearing $ 728,082 $ 657,547 $ 903,466 37.4% 24.1% Noninterest- Interest-be
Slide 16: Banking Services
BANKING SERVICES DIVISIONAL(1) INCOME STATEMENT NONINTEREST INCOME(3) BREAKDOWN $ in thousands $ in thousands $10,376 4Q 2024 3Q 2024 4Q 2023 Net interest income $ 38,284 $ 22,542 $ 21,552 (2) $5,337 Provision for credit losses 11,992 1,661 1,507 $5,535 Noninterest income (3) 10,376 5,535 4,177 $4,1
Slide 17: Retirement and Benefit Services
RETIREMENT AND BENEFIT SERVICES DIVISIONAL(1) INCOME STATEMENT AUA / AUM AND PARTICIPANTS $ in thousands $ in millions $40,729 4Q 2024 3Q 2024 4Q 2023 $36,733 $36,682 $34,200 Recurring annual income $ 13,174 $ 12,827 $ 12,613 $32,123 500,164 Transactional income 3,314 3,317 2,704 Gain on sale of ESO
Slide 18: Wealth Advisory Services
WEALTH ADVISORY SERVICES DIVISIONAL(1) INCOME STATEMENT AUA / AUM $ in thousands $ in millions $4,579 4Q 2024 3Q 2024 4Q 2023 $4,040 $4,019 Asset management 5,974 $ 5,972 $ 4,974 $3,583 Brokerage 651 365 563 $3,339 Insurance and advisory 385 347 403 Total noninterest income 7,010 6,684 5,940 Noninte
Slide 19: Noninterest Expense
NONINTEREST EXPENSE $ in thousands $56,023 QUARTERLY HIGHLIGHTS $5,571 Noninterest expense increased $13.6 million, or 32.0%, compared to the third quarter of 2024. $7,693 $42,447 The quarter over quarter increase was primarily driven by the $38,654 $1,693 $3,235 acquisition of HMN Financial, In
Slide 20: Asset Quality and Reserve Levels
ASSET QUALITY AND RESERVE LEVELS NPA / ASSETS % RESERVES OVER NPL % 1.19% $ in thousands 1,437% 821% 674% 410% 0.22% 95% 0.17% 0.09% 0.10% 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Nonaccrual loans $5,050 $2,076 $3,794 $8,596 $54,433 NCO/ Accruing loans 0.03% (0.04%) 0.02% (0.04%) 0.13% 30 1
Slide 21: Capital and Sources of Liquidity
CAPITAL AND SOURCES OF LIQUIDITY COMMON EQUITY TIER 1 TIER 1 CAPITAL/TIER 1 LEVERAGE RATIOS 14.7% 15.1% 13.4% 13.7% 12.8% 13.2% 11.8% 12.1% 11.3% 10.0% 10.6% 10.2% 9.8% 9.2% 8.7% Tier 1 Capital 6% 4% Leverage 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Tier 1 Leverage Tier 1 Capital Regulatory
Slide 22: Outlook
OUTLOOK Full Year Comparison 2025 Guidance Loans $4.0b Up low-to-mid 12/31/2024 End of period single digits Deposits $4.4b Up low End of period 12/31/2024 single digits NIM 2.56% > 3.00% 2024 Noninterest Income $114.9m Stable 2024 Adjusted Efficiency 73.4% < 70.0% 2024 Ratio(1) 21 | 1. Represents a
Slide 23: Key Takeaways
KEY TAKEAWAYS Alerus is set for a strong 2025 with enhanced scale and operating leverage through HMNF Robust earnings driven by the HMNF acquisition and organic growth EARNINGS Net interest income increased 69.8% compared to the third quarter of 2024 Adjusted ROTCE(1) of 14.7% in the fourth quar
Slide 24: Appendix
Office in Downtown Minneapolis, Minnesota APPENDIX
Slide 25: Divisional Income Statement
DIVISIONAL INCOME STATEMENT ($ dollars in thousands) Quarter ended December 31, 2024 Retirement and Wealth Corporate Banking Services Benefit Services Advisory Services Administration Consolidated Net interest income $ 38,949 $ - $ - $ (665) $ 38,284 Provision for loan losses(1) 11,992 - - - 11,992
Slide 26: Loan Portfolio Breakdown
LOAN PORTFOLIO BREAKDOWN December 31, 2024 December 31, 2023 Percent of Percent of ($ in thousands) Balance Portfolio Balance Portfolio Commercial and industrial: General business $ 340,702 8.5% $ 258,008 9.3% Services 177,813 4.5% 146,318 5.3% Retail trade 88,105 2.2% 91,216 3.3% Manufacturing 60,1
Slide 27: Line of Credit Utilization
LINE OF CREDIT UTILIZATION C&I 500,000 60% 450,000 50% 400,000 350,000 40% 300,000 250,000 30% 200,000 20% 150,000 100,000 10% 50,000 - 0% $ in thousands 2020 2021 2022 2023 2024 1Q 2Q 3Q 4Q 2024 2024 2024 2024 Funded Unfunded Funded % Home Equity Lines of Credit 450,000 60% 400,000 50% 350,000 300,
Slide 28: Allowance for Credit Losses on Loans
ALLOWANCE FOR CREDIT LOSSES ON LOANS Changes in the ACL for Loans by Portfolio Segment Three months ended December 31, 2024 Beginning ACL on PCD Provision for Loan Loan Ending (1) Balance Acquired Loans Credit Losses Charge-offs Recoveries Balance ($ in thousands) Commercial: Commercial and industri
Slide 29: Allowance for Credit Losses on Loans
ALLOWANCE FOR CREDIT LOSSES ON LOANS Allocation by Loan Portfolio Segment December 31, 2024 December 31, 2023 Percentage of Percentage of Allocated segment allowance Allocated segment allowance ($ in thousands) Allowance to segment loans Allowance to segment loans Commercial and industrial $ 8,170 1
Slide 30: Financial Highlights
FINANCIAL HIGHLIGHTS ($ in thousands, Quarterly Year ended except where otherwise noted) 4Q 2023 1Q 2024 2Q 2024 3Q 2024 4Q 2024 December 31, 2024 December 31, 2023 Total Assets $ 3,907,713 $ 4,338,093 $ 4,358,623 $ 4,084,640 $ 5,265,308 $ 5,265,308 $ 3,907,713 Total Loans 2,759,583 2,799,475 2,915,
Slide 31: Financial Highlights
FINANCIAL HIGHLIGHTS ($ in thousands, Annual 20 - '24 except where otherwise noted) 2020 2021 2022 2023 2024 CAGR Total Assets $ 3,013,771 $ 3,392,691 $ 3,779,637 $ 3,907,713 $ 5,265,308 15.0% Total Loans 1,979,375 1,758,020 2,443,994 2,759,583 3,992,534 19.2% Total Deposits 2,571,993 2,920,551 2,91
Slide 32: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except where otherwise noted) Quarterly Year ended 4Q 2023 1Q 2024 2Q 2024 3Q 2024 4Q 2024 December 31, 2024 December 31, 2023 Tangible common equity to tangible assets Total common stockholders' equity $ 369,127 $ 371,635 $ 373,226 $ 386,486 $ 498
Slide 33: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except where otherwise noted) Annual 2020 2021 2022 2023 2024 Tangible common equity to tangible assets Total common stockholders' equity $ 330,163 $ 359,403 $ 356,872 $ 369,127 $ 498,699 Less: Goodwill 30,201 31,490 47,087 46,783 87,564 Less: Othe
Slide 34: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except for where otherwise noted) Quarterly Twelve Months Ended 4Q 2023 1Q 2024 2Q 2024 3Q 2024 4Q 2024 December 31, 2024 Banking fees and other income(1) excluding net losses on investment securities Ba nki ng fees a nd other i ncome (1) ($20,466)
Slide 35: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except for per share data and where otherwise noted) Quarterly Year ended 4Q 2023 3Q 2024 4Q 2024 December 31, 2024 December 31, 2023 Pre-provision net revenue Add: Net interest income $ 21,552 $ 22,542 $ 38,284 $ 107,045 $ 87,839 Add: Noninterest
Slide 36: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except for per share data and where otherwise noted) Quarterly Year ended Lettered items are continued from the prior slide 4Q 2023 3Q 2024 4Q 2024 December 31, 2024 December 31, 2023 Adjusted net income Net Income $ (14,754) $ 5,207 $ 3,222 $ 21,0