Alerus Financial Corporation · NASDAQ:ALRS
Alerus Financial — Q2 2025 Earnings Presentation
36 slides from Alerus Financial's earnings presentation, Jul 28, 2025
Slide 1: Investor Presentation 2Q 2025
INVESTOR PRESENTATION 2Q 2025 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 June 30, 2025 Retirement & Retirement Benefits Benefits Plan administration Health savings accounts Net Interest Income: Revenue
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 FORREST WILSON Executive Vice President and Chief Retirement Services Officer 1 year with Alerus KARIN TAYLOR Executive Vice President and Chief Operating Officer EXECUTIVE MANAGEMENT 7 years
Slide 8: Second Quarter Highlights
SECOND QUARTER HIGHLIGHTS Office in Minnetonka, Minnesota
Slide 9: 2Q 2025 Highlights
2Q 2025 HIGHLIGHTS Success is Never Final Adjusted EPS(1): NII: Adjusted ROAA(1): Adjusted ROTCE(1): EARNINGS $0.72 $43.0 million 1.41% 21.0% +$0.16 from 1Q25 3.51% NIM +31 bps vs. 1Q25 +3.4% vs. 1Q25 Loans: Strategic Loan Deposits: Synergistic BALANCE $4.0 billion Transfer: $4.3 billion Deposits(2)
Slide 10: 2Q 2025 Results
2Q 2025 RESULTS Income Statement Three months ended Six months ended June 30, March 31, June 30, June 30, June 30, 2025 2025 2024 2025 2024 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (dollars and shares in thousands, except per share data) Net Interest Income $ 43,032 $ 41,157 $ 24,
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) 1.41% 21.02% $16.11 1.10% $15.77 17.61% $15.27 0.65% 10.30% 2Q 2024 1Q 2025 2Q 2025 2Q 2024 1Q 2025 2Q 2025 2Q 2024 1Q 2025 2Q 2025 10 | 1. Rates have
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 One-time Items $31,763 10.2% $2,031 $43,032 6.4% $41,157 $27,371 $27,632 $6,345 $4,933 $4,621 20.0% 18.0% 16.7
Slide 13: Net Interest Income
NET INTEREST INCOME YIELDS AND RATES NII AND NIM(1) WALK Earning Assets $ in Thousands $473 $550 $757 $43,032 6.23% 6.31% 5.88% 5.26% 5.63% 5.71% $918 $(823) $41,157 2.69% 2.79% 2.69% Asset Asset Rate Liability 2Q 2024 1Q 2025 2Q 2025 Volume/Mix & PAA Volume/Mix Investment Loan Yield Total Earning A
Slide 14: Earning Assets
EARNING ASSETS JUNE 30, 2025 LOAN PORTFOLIO(1) LOAN PORTFOLIO(1) CHANGES $ in thousands 1.0% Chart As of As of As of Change Change Legend Category 6/30/2024 3/31/2025 6/30/2025 QoQ YoY Commercial and industrial $ 591,779 $ 658,446 $ 675,892 2.6% 14.2% CRE - Construction, land 161,751 360,024 352,749
Slide 15: Deposit Characteristics
DEPOSIT CHARACTERISTICS JUNE 30, 2025 DEPOSIT PORTFOLIO (BY CATEGORY) DEPOSIT PORTFOLIO CHANGES $ in thousands 4.6% Chart As of As of As of Change Change Legend Category 6/30/2024 3/31/2025 6/30/2025 QoQ YoY Noninterest-bearing $ 701,428 $ 889,270 $ 790,300 -11.1% 12.7% Noninterest- Interest-bearing
Slide 16: Banking Services
BANKING SERVICES DIVISIONAL(1) INCOME STATEMENT NONINTEREST INCOME(2) BREAKDOWN $ in thousands $ in thousands 2Q 2025 1Q 2025 2Q 2024 $8,376 Net interest income $ 43,032 $ 41,157 $ 24,001 $2,031 Provision for credit losses - 863 4,489 $4,933 $4,621 $1,073 Noninterest income(2) 8,376 4,621 4,933 $941
Slide 17: Retirement and Benefit Services
RETIREMENT AND BENEFIT SERVICES DIVISIONAL(1) INCOME STATEMENT AUA / AUM AND PARTICIPANTS $ in thousands $ in millions $42,452 $40,729 2Q 2025 1Q 2025 2Q 2024 $36,733 $36,682 Recurring annual income $ 12,772 $ 13,243 $ 12,781 $32,123 Transactional income 3,252 2,863 3,297 500,164 Total noninterest i
Slide 18: Wealth Advisory Services
WEALTH ADVISORY SERVICES DIVISIONAL(1) INCOME STATEMENT AUA / AUM $ in thousands $ in millions $4,579 $4,613 2Q 2025 1Q 2025 2Q 2024 Asset management $ 6,314 $ 5,761 $ 5,564 $4,040 $4,019 Brokerage 417 534 439 $3,583 Insurance and other 632 610 357 Total noninterest income 7,363 6,905 6,360 Noninter
Slide 19: Noninterest Expense
NONINTEREST EXPENSE $ in thousands QUARTERLY HIGHLIGHTS $50,365 Noninterest expense decreased $1.9 million, or 3.8%, compared $1,313 $48,438 to the first quarter of 2025. $7,986 $6,697 The quarter over quarter decrease was primarily driven by $38,752 $2,328 reduced employee benefit expenses due
Slide 20: Asset Quality and Reserve Levels
ASSET QUALITY AND RESERVE LEVELS NPA / ASSETS % RESERVES OVER NPL % $ in thousands 1.20% 1,437% 0.98% 821% 410% 95% 115% 0.22% 0.09% 0.10% 2021 2022 2023 2024 2Q 2025 2021 2022 2023 2024 2Q 2025 Nonaccrual loans $2,076 $3,794 $8,596 $54,433 $51,276 0.37% Accruing loans NCO/ 121 - 139 8,453 202 (0.04
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% 11.8% 12.1% 10.5% 11.3% 9.9% 10.6% 10.7% 9.8% 10.1% 9.2% 8.7% Tier 1 Capital 6% 4% Leverage 2021 2022 2023 2024 2Q 2025 2021 2022 2023 2024 2Q 2025 Tier 1 Leverage Tier 1 Capital Regul
Slide 22: Outlook
OUTLOOK Full Year Comparison 2025 Guidance Loans $4.0b Up mid single End of period 12/31/2024 digits* Deposits $4.4b Up low End of period 12/31/2024 single digits NIM 2.56% 3.25 – 3.35% 2024 Noninterest $114.9m Up low single Income 2024 digits Adjusted Efficiency 73.4% < 68.0% 2024 Ratio(1) *Exclude
Slide 23: Key Takeaways
KEY TAKEAWAYS Continued strong momentum in the second quarter driven by our diversified business model Strong earnings growth across the board EARNINGS Net interest income increased 4.6% compared to the first quarter of 2025 Noninterest income increased 15.0% from the prior quarter Adjusted EP
Slide 24: Appendix
Office in Downtown Minneapolis, Minnesota APPENDIX
Slide 25: Divisional Income Statement
DIVISIONAL INCOME STATEMENT ($ dollars in thousands) Quarter ended June 30, 2025 Retirement and Wealth Corporate Banking Services Benefit Services Advisory Services Administration Consolidated Net interest income $ 43,684 $ - $ - $ (652) $ 43,032 Provision for loan losses - - - - - Noninterest incom
Slide 26: Loan Portfolio Breakdown
LOAN PORTFOLIO BREAKDOWN June 30, 2025 March 31, 2025 December 31, 2024 Percent of Percent of Percent of ($ in thousands) Balance Portfolio Balance Portfolio Balance Portfolio Commercial and industrial: General business $ 287,886 7.1% $ 329,879 8.1% $ 340,702 8.5% Services 191,709 4.7% 177,036 4.3%
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 2021 2022 2023 2024 2Q 3Q 4Q 1Q 2Q 2024 2024 2024 2025 2025 Funded Unfunded Funded % Home Equity Lines of Credit 600,000 60% 500,000 50% 400,000 4
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 June 30, 2025 Beginning Provision for Loan Loan Ending (1) Balance Credit Losses Charge-offs Recoveries Balance ($ in thousands) Commercial: Commercial and industrial $ 7,960 $ 317 $ (79) $ 128
Slide 29: Allowance for Credit Losses on Loans
ALLOWANCE FOR CREDIT LOSSES ON LOANS Allocation by Loan Portfolio Segment June 30, 2025 December 31, 2024 Percentage of Percentage of Allocated segment allowance Allocated segment allowance ($ in thousands) Allowance to segment loans Allowance to segment loans Commercial and industrial $ 8,326 1.23%
Slide 30: Financial Highlights
FINANCIAL HIGHLIGHTS ($ in thousands, Quarterly Six months ended except where otherwise noted) 2Q 2024 3Q 2024 4Q 2024 1Q 2025 2Q 2025 June 30, 2025 June 30, 2024 Total Assets $ 4,358,623 $ 4,084,640 $ 5,261,673 $ 5,339,620 $ 5,323,822 $ 5,323,822 $ 4,358,623 Total Loans 2,915,792 3,032,343 3,992,53
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 $ 5,261,673 14.9% 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 Six months ended 2Q 2024 3Q 2024 4Q 2024 1Q 2025 2Q 2025 June 30, 2025 June 30, 2024 Tangible common equity to tangible assets Total common stockholders' equity $ 373,226 $ 386,486 $ 495,410 $ 514,232 $ 533,1
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 $ 495,410 Less: Goodwill 30,201 31,490 47,087 46,783 85,634 Less: Othe
Slide 34: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except for per share data and where otherwise noted) Annual 2019 2020 2021 2022 2023 2024 Average Adjusted net income excluding net gains (losses) on investment securities Net Income $ 29,540 $ 44,675 $ 52,681 $ 40,005 $ 11,696 $ 17,780 Less: Net g
Slide 35: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except for per share data and where otherwise noted) Quarterly Six months ended 2Q 2024 1Q 2025 2Q 2025 June 30, 2025 June 30, 2024 Pre-provision net revenue Add: Net interest income $ 24,001 $ 41,157 $ 43,032 $ 84,189 $ 46,220 Add: Noninterest inc
Slide 36: Non-GAAP Disclosure Reconciliation
NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except for per share data and where otherwise noted) Quarterly Six months ended Lettered items are continued from the prior slide 2Q 2024 1Q 2025 2Q 2025 June 30, 2025 June 30, 2024 Adjusted net income Net Income $ 6,208 $ 13,315 $ 20,253 $ 33,567