8-K - ALRS - Equibles

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): January 25, 2023

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 January 25, 2023, Alerus Financial Corporation (the “Company”) issued a press release announcing its financial results for the three and twelve months ended December 31, 2022. 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 January 25, 2023, 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 January 25, 2023
99.2<br><br>104		Investor Presentation of Alerus Financial Corporation<br><br>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: January 25, 2023	Alerus Financial Corporation


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

Exhibit 99.1

<br><br><br><br>	<br><br>
<br><br><br><br>FOR RELEASE (01.25.2023)<br><br>	Alan A. Villalon, Chief Financial Officer<br><br>952.417.3733 (Office)

ALERUS FINANCIAL CORPORATION REPORTS

FOURTH QUARTER 2022 NET INCOME OF $10.9 MILLION

MINNEAPOLIS, MN (January 25, 2023) – Alerus Financial Corporation (Nasdaq: ALRS) reported net income of $10.9 million for the fourth quarter of 2022, or $0.53 per diluted common share, compared to net income of $9.6 million, or $0.47 per diluted common share, for the third quarter of 2022, and net income of $12.7 million, or $0.72 per diluted common share, for the fourth quarter of 2021.

CEO Comments

President and Chief Executive Officer Katie Lorenson said, “2022 was a year of transitions and milestones for our Company. We completed our largest acquisition with Metro Phoenix Bank, which was transformational to our growth in the Arizona market. We added new leadership and had continued momentum in talent acquisitions with successful lift outs and additions of commercial bankers, treasury management professionals, and wealth and retirement advisors. We remain focused on client acquisition and deepening of relationships with existing clients through our diversified business model. We continue to right size our infrastructure and manage expenses, despite facing inflationary pressures. During the year, we returned over 33% of our earnings to our shareholders by increasing our dividend 11%. We remain focused on creating long-term value for our clients, and in return, our shareholders. I want to thank our employees for all their continued hard work in developing the strong foundation from which we will continue to grow from in 2023 and beyond.”

Quarterly Highlights

◾	Return on average total assets of 1.17%, compared to 1.02% for the third quarter of 2022
◾	Return on average common equity of 12.37%, compared to 10.25% for the third quarter of 2022
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◾	Return on average tangible common equity^(1)^ of 16.63%, compared to 13.89% for the third quarter of 2022
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◾	Net interest margin (tax-equivalent) was 3.09%, compared to 3.21% for the third quarter of 2022
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◾	Noninterest expense was $37.9 million, a $4.8 million, or 11.3%, decrease compared to $42.8 million for the third quarter of 2022
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◾	Efficiency ratio^(1)^of 69.6%, compared to 74.8% for the third quarter of 2022
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◾	Allowance for loan losses to total loans was 1.27% compared to 1.80% as of December 31, 2021. Excluding the acquisition of Metro Phoenix Bank the allowance for loan losses to total loans was 1.43% as of December 31, 2022
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◾	Noninterest income for the third quarter of 2022 was 48.62% of total revenue, compared to 48.82% for the third quarter of 2022
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◾	Loan to deposit ratio was 83.8%, compared to 60.2% as of December 31, 2021
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◾	Common equity tier 1 capital to risk weighted assets was 13.39%, compared to 14.65% as of December 31, 2021
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Full Year 2022 Highlights

◾	Net income of $40.0 million, a decrease of $12.7 million, or 24.1%, compared to $52.7 million in 2021
◾	Noninterest expense of $158.8 million, a decrease of $10.1 million, or 6.0%, compared to $168.9 million in 2021
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◾	No provision for loan losses expense in 2022, compared to a $3.5 million reversal of provision for loan losses expense in 2021
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◾	Loans held for investment increased $686.0 million, or 39.0%, since December 31, 2021, including $270.4 million of loans acquired from Metro Phoenix Bank. Excluding the acquisition of Metro Phoenix Bank and Paycheck Protection Program, or PPP, loans, loans held for investment increased $448.4 million, or 25.5%, since December 31, 2021
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◾	Average loans of $2.1 billion, an increase of $200.7 million, or 10.8%, from 2021
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◾	Average deposits of $2.9 billion, an increase of $158.0 million, or 5.8%, from 2021
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◾	Diluted earnings per share, or EPS, of $2.10, compared to $2.97 in 2021
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◾	Return on average total assets of 1.14%, compared to 1.66% in 2021
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◾	Return on average common equity of 11.55%, compared to 15.22% in 2021
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◾	Return on average tangible common equity^(1)^of 15.09%, compared to 18.89% in 2021
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◾	Revenue of $211.0 million, a decrease of $23.5 million, or 10.0%, compared to $234.5 million in 2021
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o	Net interest income was $99.7 million, an increase of $12.6 million, or 14.5%, compared to $87.1 million in 2021
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o	Noninterest income was $111.2 million, a decrease of $36.2 million, or 24.5%, compared to $147.4 million in 2021
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◾	Dividends declared per common share were $0.70, a $0.07, or 11.1% increase compared to $0.63 in 2021
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(1)	Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”
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Selected Financial Data (unaudited)


	As of and for the
	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(dollars and shares in thousands, except per share data)	2022			2022			2021			2022			2021		****
Performance Ratios
Return on average total assets		1.17	%		1.02	%		1.50	%		1.14	%		1.66	%
Return on average common equity		12.37	%		10.25	%		14.12	%		11.55	%		15.22	%
Return on average tangible common equity ^(1)^		16.63	%		13.89	%		17.36	%		15.09	%		18.89	%
Noninterest income as a % of revenue		48.62	%		48.82	%		59.67	%		52.72	%		62.86	%
Net interest margin (tax-equivalent)		3.09	%		3.21	%		2.84	%		3.04	%		2.90	%
Efficiency ratio ^(1)^		69.62	%		74.76	%		71.06	%		72.86	%		70.02	%
Net charge-offs/(recoveries) to average loans		(0.03)	%		0.07	%		(0.22)	%		0.02	%		(0.04)	%
Dividend payout ratio		33.96	%		38.30	%		22.22	%		33.33	%		21.21	%
Per Common Share
Earnings per common share - basic	$	0.54		$	0.48		$	0.73		$	2.12		$	3.02
Earnings per common share - diluted	$	0.53		$	0.47		$	0.72		$	2.10		$	2.97
Dividends declared per common share	$	0.18		$	0.18		$	0.16		$	0.70		$	0.63
Book value per common share	$	17.85		$	17.25		$	20.88
Tangible book value per common share ^(1)^	$	14.37		$	13.76		$	17.87
Average common shares outstanding - basic		19,988			19,987			17,210			18,640			17,189
Average common shares outstanding - diluted		20,232			20,230			17,480			18,884			17,486
Other Data
Retirement and benefit services assets under administration/management	$	32,122,520		$	30,545,694		$	36,732,938
Wealth management assets under administration/management	$	3,582,648		$	3,435,786		$	4,039,931
Mortgage originations	$	126,254		$	229,901		$	356,821		$	812,314		$	1,836,064

(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 2022 was $27.0 million, a $1.4 million, or 4.8%, decrease from the third quarter of 2022. Net interest income increased $4.2 million, or 18.3%, from $22.8 million for the fourth quarter of 2021. The quarter over quarter decrease in net interest income was primarily driven by an increase of $4.8 million, or 123.5%, in interest expense, partially offset by a $3.5 million, or 11.0%, increase in interest income. The increase in interest expense was primarily due to increases of $3.8 million in interest expense paid on deposits and $1.0 million in interest expense paid on short-term borrowings. The increase in interest expense paid on deposits was primarily due to deposit rate increases in response to a highly competitive deposit environment arising from the Federal Reserve Bank raising short-term rates. Short-term borrowings expense increased as short-term rates increased and the average balance of short-term borrowings increased as loan growth outpaced deposit growth in the fourth quarter of 2022.

Net interest margin (tax-equivalent), a non-GAAP financial measure, was 3.09% for the fourth quarter of 2022, a 12 basis point decrease from 3.21% for the third quarter of 2022, and a 25 basis point increase from 2.84% in the fourth quarter of 2021. The linked quarter decrease was primarily driven by a 79 basis point increase in the rate paid on interest-bearing liabilities, partially offset by a 45 basis point increase in interest earning asset yields. The increase in the rate paid on interest-bearing liabilities was the result of a 73 basis point increase on the rate paid on interest-bearing deposits and a 143 basis point increase in the rate paid on fed funds purchased and short-term borrowings. The increase in interest earning asset yields was primarily driven by a 49 basis point increase in loan yields. Additionally, we saw a $97.4 million increase in average total loans, primarily due to a $56.6 million increase in the average balance of commercial real estate and real estate construction loans.

Noninterest Income

Noninterest income for the fourth quarter of 2022 was $25.5 million, a $1.5 million, or 5.5%, decrease from the third quarter of 2022. The quarter over quarter decrease was primarily driven by a $1.6 million decrease in mortgage banking revenue, partially offset by a $292 thousand increase in wealth management revenue. The decrease in mortgage banking revenue was primarily due to a $103.6 million, or 45.1%, decrease in mortgage originations driven by macroeconomic challenges, partially offset by a 41 basis point increase in the gain on sale margin. The increase in wealth management revenue was primarily driven by a $146.9 million increase in assets under management, due to increased market value from improved bond and equity markets.

Noninterest income for the fourth quarter of 2022 decreased $8.2 million, or 24.3%, from $33.7 million in the fourth quarter of 2021. The decrease in noninterest income was primarily due to decreases of $5.8 million in mortgage banking revenue, $2.0 million in retirement and benefit services revenue and $489 thousand in wealth management revenue. The decrease in mortgage banking revenue was primarily due to a $230.6 million decrease in mortgage originations driven by macroeconomic challenges. The decrease in retirement and benefit services revenue was primarily due to a $4.6 billion decrease in assets under administration/management. Wealth management revenue decreased primarily due to a $457.3 million decrease in assets under management. Both decreases in assets under administration/management were mainly driven by lower bond and equity markets.

Noninterest Expense

Noninterest expense for the fourth quarter of 2022 was $37.9 million, a $4.8 million, or 11.3%, decrease compared to the third quarter of 2022. The linked quarter decrease in noninterest expense was primarily due to decreases of $2.0 million in compensation expense, $1.7 million in professional fees and assessments, and $968 thousand in business services, software and technology expense. Compensation expense decreased primarily due to lower mortgage incentives associated with the decrease in mortgage originations as well as an accrual adjustment to performance bonus accruals. The decrease in professional fees and assessments was primarily driven by a decline in the one-time expenses associated with the acquisition of Metro Phoenix Bank. Business services, software and technology expense decreased primarily due to the timing of contract renewals.

Noninterest expense for the fourth quarter of 2022 decreased $3.3 million, or 8.1%, from $41.3 million in the fourth quarter of 2021. The year over year decrease in noninterest expense was primarily driven by decreases of $2.9 million in compensation expense, $815 thousand of business services, software and technology expense, and $703 thousand in employee taxes and benefits expense, partially offset by a $1.0 million increase in other noninterest expense. The decrease in compensation expense was primarily due to lower mortgage incentives associated with the decrease in mortgage originations. Business services, software and technology expense decreased primarily due to the timing of contract renewals. The decrease in employee taxes and benefits expense was primarily due to a $531 thousand decrease in share-based compensation from an acceleration upon employee retirements. The increase in other noninterest expense included $469 thousand in one-time expenses from our divestiture of payroll services and $247 thousand increase in the provision for unfunded commitments.

Financial Condition

Total assets were $3.8 billion as of December 31, 2022, an increase of $386.9 million, or 11.4%, from December 31, 2021. The increase in assets included an increase of $686.0 million in loans held for investment, partially offset by decreases of $184.1 million in cash and cash equivalents and $166.5 million in investment securities.

Loans

Total loans were $2.4 billion as of December 31, 2022, an increase of $686.0 million, or 39.0%, from December 31, 2021. The increase in total loans was primarily due to increases of $415.6 million in organic loan growth and $270.4 million in loans acquired from Metro Phoenix Bank. Excluding loans acquired from Metro Phoenix Bank, the increase in organic loan growth included increases of $154.5 million in commercial real estate, $149.2 million in residential real estate first mortgages and $50.5 million in commercial and industrial loans. Excluding PPP loans and loans acquired from Metro Phoenix Bank, commercial and industrial loans increased $83.4 million.

The following table presents the composition of our loan portfolio as of the dates indicated:



		December 31,		September 30,		June 30,		March 31,		December 31,
(dollars in thousands)	****	2022		2022		2022		2022		2021
Commercial
Commercial and industrial ^(1)^		$	583,876	$	564,655	$	484,426	$	467,449	$	436,761
Real estate construction			97,810		89,215		48,870		41,604		40,619
Commercial real estate			881,670		819,068		599,737		602,158		598,893
Total commercial			1,563,356		1,472,938		1,133,033		1,111,211		1,076,273
Consumer
Residential real estate first mortgage			679,551		649,818		568,571		522,489		510,716
Residential real estate junior lien			150,479		143,681		135,255		130,604		125,668
Other revolving and installment			50,608		51,794		53,384		53,738		45,363
Total consumer			880,638		845,293		757,210		706,831		681,747
Total loans		$	2,443,994	$	2,318,231	$	1,890,243	$	1,818,042	$	1,758,020

(1)	Includes PPP loans of $737 thousand at December 31, 2022, $2.9 million at September 30, 2022, $6.9 million at June 30, 2022, $13.1 million at March 31, 2022 and $33.6 million at December 31, 2021.

Deposits

Total deposits were $2.9 billion as of December 31, 2022, a decrease of $5.1 million, or 0.2%, from December 31, 2021. Interest-bearing deposits increased $72.8 million, while noninterest-bearing deposits decreased $77.9 million in the fourth quarter of 2022. In the third quarter of 2022, we acquired $353.7 million in deposits from our acquisition of Metro Phoenix Bank. Excluding deposits acquired from Metro Phoenix Bank, deposits decreased $358.8 million, or 12.3%, from December 31, 2021. The decrease was primarily due to decreases of $184.7 million in interest-bearing deposits and $174.0 million in noninterest-bearing deposits. Interest-bearing deposits decreased primarily due to a $84.9 million decrease in money market savings accounts, and a $69.0 million decrease in time deposits. Noninterest-bearing deposits decreased primarily due to a $68.3 million decrease in synergistic deposits. Synergistic deposits, which include deposits from our retirement and benefit services and wealth management segments as well as HSA deposits, increased $22.6 million from December 31, 2021, primarily due to increases in our synergistic deposits from our wealth management division.

The following table presents the composition of our deposit portfolio as of the dates indicated:


		December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)	****	2022		****	2022		****	2022		****	2022		****	2021
Noninterest-bearing demand		$	860,987		$	905,228		$	764,808		$	831,558		$	938,840
Interest-bearing
Interest-bearing demand			706,275			653,216			642,641			760,321			714,669
Savings accounts			99,882			101,820			97,227			99,299			96,825
Money market savings			1,035,981			1,079,520			914,423			976,905			937,305
Time deposits			212,359			222,027			200,451			224,184			232,912
Total interest-bearing			2,054,497			2,056,583			1,854,742			2,060,709			1,981,711
Total deposits		$	2,915,484		$	2,961,811		$	2,619,550		$	2,892,267		$	2,920,551

Asset Quality

Total nonperforming assets were $3.8 million as of December 31, 2022, an increase of $742 thousand, or 24.1%, from December 31, 2021. As of December 31, 2022, the allowance for loan losses was $31.1 million, or 1.27% of total loans, compared to $31.6 million, or 1.80% of total loans, as of December 31, 2021. Excluding Metro Phoenix Bank, the allowance for loan losses to total loans was 1.43% as of December 31, 2022.

The following table presents selected asset quality data as of and for the periods indicated:


		As of and for the three months ended
		December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)	****	2022		****	2022		****	2022		****	2022		****	2021		****
Nonaccrual loans		$	3,794		$	4,303		$	4,370		$	4,069		$	2,076
Accruing loans 90+ days past due			—			1,000			—			146			121
Total nonperforming loans			3,794			5,303			4,370			4,215			2,197
OREO and repossessed assets			30			904			860			865			885
Total nonperforming assets		$	3,824		$	6,207		$	5,230		$	5,080		$	3,082
Net charge-offs/(recoveries)			(178)			405			340			(141)			(1,006)
Net charge-offs/(recoveries) to average loans			(0.03)	%		0.07	%		0.07	%		(0.03)	%		(0.22)	%
Nonperforming loans to total loans			0.16	%		0.23	%		0.23	%		0.23	%		0.12	%
Nonperforming assets to total assets			0.10	%		0.17	%		0.16	%		0.15	%		0.09	%
Allowance for loan losses to total loans			1.27	%		1.34	%		1.66	%		1.74	%		1.80	%
Allowance for loan losses to nonperforming loans			821	%		584	%		718	%		752	%		1,437	%

For the fourth quarter of 2022, we had net recoveries of $178 thousand compared to net charge-offs of $405 thousand for the third quarter of 2022 and $1.0 million of net recoveries for the fourth quarter of 2021.

There was no provision expense recorded for the three months ended December 31, 2022, no change compared to the three months ended September 30, 2022, and a $1.5 million increase as compared to the three months ended December 31, 2021. With the decrease in nonperforming assets, as well as adjustments for pandemic related qualitative factors, management concluded no need for additional provision expense in the period.

Capital

Total stockholders’ equity was $356.9 million as of December 31, 2022, a decrease of $2.5 million, or 0.7%, from December 31, 2021. The decrease in stockholders’ equity was primarily due to a $94.4 million decrease in other comprehensive loss, due to rising interest rates, which resulted in a lower fair value of our available-for-sale investment securities portfolio. Tangible book value per common share, a non-GAAP financial measure, decreased to $14.37 as of December 31, 2022, from $17.87 as of December 31, 2021. Tangible common equity to tangible assets, a non-GAAP financial measure, decreased to 7.74% as of December 31, 2022, from 9.21% as of December 31, 2021. Common equity tier 1 capital to risk weighted assets decreased to 13.39% as of December 31, 2022, from 14.65% as of December 31, 2021.

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


	****	December 31,		****	September 30,		****	December 31,
	****	2022		****	2022		****	2021
Capital Ratios^(1)^
Alerus Financial Corporation Consolidated
Common equity tier 1 capital to risk weighted assets			13.39	%		13.63	%		14.65	%
Tier 1 capital to risk weighted assets			13.69	%		13.94	%		15.06	%
Total capital to risk weighted assets			16.48	%		16.84	%		18.64	%
Tier 1 capital to average assets			11.25	%		10.82	%		9.79	%
Tangible common equity / tangible assets ^(2)^			7.74	%		7.59	%		9.21	%

Alerus Financial, N.A.
Common equity tier 1 capital to risk weighted assets			12.76	%		13.01	%		13.87	%
Tier 1 capital to risk weighted assets			12.76	%		13.01	%		13.87	%
Total capital to risk weighted assets			13.83	%		14.11	%		15.12	%
Tier 1 capital to average assets			10.48	%		11.12	%		9.01	%

(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.”
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Conference Call

The Company will host a conference call at 11:00 a.m. Central Time on Thursday, January 26, 2023, to discuss its financial results. The call can be accessed via telephone at (844) 200-6205, using access code 249132. 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 is a diversified financial services company with corporate offices in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area. Through its subsidiary, Alerus Financial, N.A., Alerus provides innovative and comprehensive financial solutions to business and consumer clients through four distinct business segments—banking, retirement and benefit services, wealth management, and mortgage. 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 has banking, mortgage, and wealth management offices in Grand Forks and Fargo, North Dakota, the Minneapolis-St. Paul, Minnesota metropolitan area, and Phoenix, Scottsdale, and Mesa Arizona. Alerus Retirement and Benefits plan administration hubs are located in Minnesota, Michigan, and Colorado.

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, tangible common equity per share, return on average tangible common equity, net interest margin (tax-equivalent), and the efficiency ratio. 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 we calculate 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 we make 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 the future of 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 the 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 the forward-looking statements include, among others, the following: interest rate risks associated with our business, including the effects of recent and anticipated rate increases by the Federal Reserve; our ability to successfully manage credit risk and maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the implementation of the new Current Expected Credit Loss Standard; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including continued rising rates of inflation; the overall health of the local and national real estate market; concentrations within our loan portfolio; the level of nonperforming assets on our balance sheet; our ability to implement our organic and acquisition growth strategies, including the integration of Metro Phoenix Bank which we acquired in 2022; 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 information security controls or cybersecurity-related incidents; 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 from non-banks such as credit unions and Fintech companies, including 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 effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; potential impairment to the goodwill we recorded in connection with our past acquisitions, including the acquisition of Metro Phoenix Bank; the extensive regulatory framework that applies to us; the impact of recent and future legislative and regulatory changes; fluctuations in the values of the securities held in our securities portfolio, including as a result of rising interest rates, which has resulted in unrealized losses in our portfolio; 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, such as the COVID-19 global pandemic, the negative effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our clients, and our operations, including due to supply chain disruptions, as well as any changes to federal, state, or local government laws, regulations, or orders in response to the pandemic; acts of war or terrorism, including the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial reporting; developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate, as well as the development and implementation of other alternative reference rates; changes to U.S. or state tax laws, regulations and guidance, including the new 1.0% excise tax on stock buybacks by publicly traded companies; 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. We undertake 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)


	****	December 31,		****	December 31,
	****	2022		****	2021
Assets		(Unaudited)			(Audited)
Cash and cash equivalents		$	58,242		$	242,311
Investment securities
Available-for-sale, at fair value			717,324			853,649
Held-to-maturity, at carrying value			321,902			352,061
Fed funds sold			—			—
Loans held for sale			9,488			46,490
Loans			2,443,994			1,758,020
Allowance for loan losses			(31,146)			(31,572)
Net loans			2,412,848			1,726,448
Land, premises and equipment, net			17,288			18,370
Operating lease right-of-use assets			5,419			3,727
Accrued interest receivable			12,869			8,537
Bank-owned life insurance			33,991			33,156
Goodwill			47,087			31,490
Other intangible assets			22,455			20,250
Servicing rights			2,643			1,880
Deferred income taxes, net			42,369			11,614
Other assets			75,712			42,708
Total assets		$	3,779,637		$	3,392,691
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing		$	860,987		$	938,840
Interest-bearing			2,054,497			1,981,711
Total deposits			2,915,484			2,920,551
Short-term borrowings			378,080			—
Long-term debt			58,843			58,933
Operating lease liabilities			5,902			4,275
Accrued expenses and other liabilities			64,456			49,529
Total liabilities			3,422,765			3,033,288
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: 19,991,681 and 17,212,588 issued and outstanding			19,992			17,213
Additional paid-in capital			155,095			92,878
Retained earnings			280,426			253,567
Accumulated other comprehensive income (loss)			(98,641)			(4,255)
Total stockholders’ equity			356,872			359,403
Total liabilities and stockholders’ equity		$	3,779,637		$	3,392,691

Alerus Financial Corporation and Subsidiaries

Consolidated Statements of Income

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


	Three months ended						Year ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2022		2022		2021		2022		2021
Interest Income	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Audited)
Loans, including fees	$	29,248	$	25,379	$	19,354	$	89,907	$	78,133
Investment securities
Taxable		5,813		5,939		4,454		23,260		13,001
Exempt from federal income taxes		210		209		231		848		925
Other		541		748		166		1,562		598
Total interest income		35,812		32,275		24,205		115,577		92,657
Interest Expense
Deposits		5,675		1,852		880		9,169		3,661
Short-term borrowings		2,545		1,516		—		4,339		—
Long-term debt		628		591		536		2,340		1,897
Total interest expense		8,848		3,959		1,416		15,848		5,558
Net interest income		26,964		28,316		22,789		99,729		87,099
Provision for loan losses		—		—		(1,500)		—		(3,500)
Net interest income after provision for loan losses		26,964		28,316		24,289		99,729		90,599
Noninterest Income
Retirement and benefit services		16,599		16,597		18,552		67,135		71,709
Wealth management		5,144		4,852		5,633		20,870		21,052
Mortgage banking		2,170		3,782		7,967		16,921		48,502
Service charges on deposit accounts		282		377		370		1,434		1,395
Net gains (losses) on investment securities		—		—		—		—		125
Other		1,322		1,402		1,196		4,863		4,604
Total noninterest income		25,517		27,010		33,718		111,223		147,387
Noninterest Expense
Compensation		19,189		21,168		22,088		80,656		93,386
Employee taxes and benefits		4,887		5,079		5,590		21,915		22,033
Occupancy and equipment expense		1,892		1,926		1,936		7,605		8,148
Business services, software and technology expense		4,405		5,373		5,220		19,487		20,486
Intangible amortization expense		1,324		1,324		1,053		4,754		4,380
Professional fees and assessments		1,454		3,126		1,808		8,367		6,292
Marketing and business development		950		890		872		3,254		3,182
Supplies and postage		634		588		778		2,440		2,361
Travel		356		291		206		1,182		442
Mortgage and lending expenses		606		409		488		2,183		4,250
Other		2,251		2,593		1,237		6,927		3,949
Total noninterest expense		37,948		42,767		41,276		158,770		168,909
Income before income taxes		14,533		12,559		16,731		52,182		69,077
Income tax expense		3,624		2,940		4,026		12,177		16,396
Net income	$	10,909	$	9,619	$	12,705	$	40,005	$	52,681
Per Common Share Data
Earnings per common share	$	0.54	$	0.48	$	0.73	$	2.12	$	3.02
Diluted earnings per common share	$	0.53	$	0.47	$	0.72	$	2.10	$	2.97
Dividends declared per common share	$	0.18	$	0.18	$	0.16	$	0.70	$	0.63
Average common shares outstanding		19,988		19,987		17,210		18,640		17,189
Diluted average common shares outstanding		20,232		20,230		17,480		18,884		17,486

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)


	****	December 31,			September 30,			December 31,
	****	2022			2022			2021
Tangible Common Equity to Tangible Assets
Total common stockholders’ equity		$	356,872		$	344,839		$	359,403
Less: Goodwill			47,087			46,060			31,490
Less: Other intangible assets			22,455			23,779			20,250
Tangible common equity (a)			287,330			275,000			307,663
Total assets			3,779,637			3,691,253			3,392,691
Less: Goodwill			47,087			46,060			31,490
Less: Other intangible assets			22,455			23,779			20,250
Tangible assets (b)			3,710,095			3,621,414			3,340,951
Tangible common equity to tangible assets (a)/(b)			7.74	%		7.59	%		9.21	%
Tangible Book Value Per Common Share
Total common stockholders’ equity		$	356,872		$	344,839		$	359,403
Less: Goodwill			47,087			46,060			31,490
Less: Other intangible assets			22,455			23,779			20,250
Tangible common equity (c)			287,330			275,000			307,663
Total common shares issued and outstanding (d)			19,992			19,987			17,213
Tangible book value per common share (c)/(d)		$	14.37		$	13.76		$	17.87


	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021
Return on Average Tangible Common Equity
Net income	$	10,909		$	9,619		$	12,705		$	40,005		$	52,681
Add: Intangible amortization expense (net of tax)		1,046			1,046			832			3,756			3,460
Net income, excluding intangible amortization (e)		11,955			10,665			13,537			43,761			56,141
Average total equity		349,812			372,274			357,084			346,355			346,059
Less: Average goodwill		46,283			48,141			30,930			39,415			30,385
Less: Average other intangible assets (net of tax)		18,243			19,466			16,843			17,018			18,548
Average tangible common equity (f)		285,286			304,667			309,311			289,922			297,126
Return on average tangible common equity (e)/(f)		16.63	%		13.89	%		17.36	%		15.09	%		18.89	%
Efficiency Ratio
Noninterest expense	$	37,948		$	42,767		$	41,276		$	158,770		$	168,909
Less: Intangible amortization expense		1,324			1,324			1,053			4,754			4,380
Adjusted noninterest expense (g)		36,624			41,443			40,223			154,016			164,529
Net interest income		26,964			28,316			22,789			99,729			87,099
Noninterest income		25,517			27,010			33,718			111,223			147,387
Tax-equivalent adjustment		124			112			99			429			492
Total tax-equivalent revenue (h)		52,605			55,438			56,606			211,381			234,978
Efficiency ratio (g)/(h)		69.62	%		74.76	%		71.06	%		72.86	%		70.02	%

Alerus Financial Corporation and Subsidiaries

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

(dollars in thousands)


	Three months ended												Year ended
	December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
			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	$	26,510	2.16	%	$	72,157	2.02	%	$	232,650	0.16	%	$	58,149	1.01	%	$	222,916	0.14	%
Investment securities ^(1)^		1,046,441	2.30	%		1,116,458	2.20	%		1,119,370	1.68	%		1,135,426	2.14	%		864,273	1.64	%
Fed funds sold		7,119	3.40	%		21,893	2.37	%		—	—	%		7,313	2.63	%		—	—	%
Loans held for sale		14,505	4.54	%		27,032	4.14	%		53,357	2.33	%		24,497	3.49	%		65,968	2.26	%
Loans
Commercial:
Commercial and industrial		561,252	5.80	%		566,987	5.41	%		471,262	5.61	%		507,040	5.13	%		579,002	4.91	%
Real estate construction		96,189	6.02	%		70,545	5.60	%		41,573	3.89	%		63,296	5.21	%		41,751	4.10	%
Commercial real estate		838,466	4.85	%		807,505	4.07	%		587,542	3.90	%		713,102	4.16	%		571,326	3.77	%
Total commercial		1,495,907	5.28	%		1,445,037	4.67	%		1,100,377	4.63	%		1,283,438	4.59	%		1,192,079	4.34	%
Consumer
Residential real estate first mortgage		665,135	3.64	%		624,826	3.54	%		504,997	3.30	%		587,443	3.50	%		477,621	3.47	%
Residential real estate junior lien		146,912	6.46	%		140,664	5.41	%		129,238	4.52	%		136,483	5.29	%		131,412	4.64	%
Other revolving and installment		51,836	5.62	%		51,834	4.98	%		48,045	4.53	%		52,071	4.85	%		57,574	4.41	%
Total consumer		863,883	4.24	%		817,324	3.96	%		682,280	3.62	%		775,997	3.91	%		666,607	3.78	%
Total loans ^(1)^		2,359,790	4.90	%		2,262,361	4.41	%		1,782,657	4.25	%		2,059,435	4.33	%		1,858,686	4.14	%
Federal Reserve/FHLB stock		19,603	6.80	%		18,449	5.35	%		6,496	4.34	%		13,824	5.67	%		6,329	4.36	%
Total interest earning assets		3,473,968	4.10	%		3,518,350	3.65	%		3,194,530	3.02	%		3,298,644	3.52	%		3,018,172	3.09	%
Noninterest earning assets		232,754				224,804				159,370				202,011				160,648
Total assets	$	3,706,722			$	3,743,154			$	3,353,900			$	3,500,655			$	3,178,820
Interest-Bearing Liabilities
Interest-bearing demand deposits	$	692,217	0.50	%	$	659,696	0.13	%	$	754,432	0.13	%	$	692,287	0.22	%	$	697,276	0.14	%
Money market and savings deposits		1,185,502	1.39	%		1,180,576	0.40	%		1,039,492	0.14	%		1,113,426	0.55	%		1,023,677	0.15	%
Time deposits		214,264	1.20	%		234,459	0.74	%		225,497	0.46	%		221,997	0.70	%		215,624	0.54	%
Fed funds purchased		86,350	3.78	%		84,149	2.31	%		—	—	%		63,296	2.46	%		3	—	%
Short-term borrowings		178,533	3.82	%		168,750	2.41	%		—	—	%		89,932	3.10	%		—	—	%
Long-term debt		58,830	4.24	%		58,843	3.98	%		58,938	3.61	%		58,864	3.98	%		50,759	3.74	%
Total interest-bearing liabilities		2,415,696	1.45	%		2,386,473	0.66	%		2,078,359	0.27	%		2,239,802	0.71	%		1,987,339	0.28	%
Noninterest-Bearing Liabilities and Stockholders' Equity
Noninterest-bearing deposits		870,948				920,340				851,210				851,821				784,998
Other noninterest-bearing liabilities		70,266				64,067				67,247				62,677				60,424
Stockholders’ equity		349,812				372,274				357,084				346,355				346,059
Total liabilities and stockholders’ equity	$	3,706,722			$	3,743,154			$	3,353,900			$	3,500,655			$	3,178,820
Net interest income (1)
Net interest rate spread			2.65	%			2.99	%			2.75	%			2.81	%			2.81	%
Net interest margin, tax-equivalent ^(1)^			3.09	%			3.21	%			2.84	%			3.04	%			2.90	%

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

Exhibit 99.2

EARNINGS PRESENTATION<br>4Q 2022<br>Alerus
1<br>Forward<br>-<br>Looking<br>Statements<br>This<br>presentation<br>contains<br>“forward<br>-<br>looking<br>statements”<br>within<br>the<br>meaning<br>of<br>the<br>safe<br>harbor<br>provisions<br>of<br>the<br>U<br>..<br>S<br>..<br>Private<br>Securities<br>Litigation<br>Reform<br>Act<br>of<br>1995<br>..<br>Forward<br>-<br>looking<br>statements<br>include,<br>without<br>limitation,<br>statements<br>concerning<br>plans,<br>estimates,<br>calculations,<br>forecasts<br>and<br>projections<br>with<br>respect<br>to<br>the<br>anticipated<br>future<br>performance<br>of<br>Alerus<br>Financial<br>Corporation<br>..<br>These<br>statements<br>are<br>often,<br>but<br>not<br>always,<br>identified<br>by<br>words<br>such<br>as<br>“may”,<br>“might”,<br>“should”,<br>“could”,<br>“predict”,<br>“potential”,<br>“believe”,<br>“expect”,<br>“continue”,<br>“will”,<br>“anticipate”,<br>“seek”,<br>“estimate”,<br>“intend”,<br>“plan”,<br>“projection”,<br>“would”,<br>“annualized”,<br>“target”<br>and<br>“outlook”,<br>or<br>the<br>negative<br>version<br>of<br>those<br>words<br>or<br>other<br>comparable<br>words<br>of<br>a<br>future<br>or<br>forward<br>-<br>looking<br>nature<br>..<br>Examples<br>of<br>forward<br>-<br>looking<br>statements<br>include,<br>among<br>others,<br>statements<br>we<br>make<br>regarding<br>our<br>projected<br>growth,<br>anticipated<br>future<br>financial<br>performance,<br>financial<br>condition,<br>credit<br>quality,<br>management’s<br>long<br>-<br>term<br>performance<br>goals<br>and<br>the<br>future<br>plans<br>and<br>prospects<br>of<br>Alerus<br>Financial<br>Corporation<br>..<br>Forward<br>-<br>looking<br>statements<br>are<br>neither<br>historical<br>facts<br>nor<br>assurances<br>of<br>future<br>performance<br>..<br>Instead,<br>they<br>are<br>based<br>only<br>on<br>our<br>current<br>beliefs,<br>expectations<br>and<br>assumptions<br>regarding<br>the<br>future<br>of<br>our<br>business,<br>future<br>plans<br>and<br>strategies,<br>projections,<br>anticipated<br>events<br>and<br>trends,<br>the<br>economy<br>and<br>other<br>future<br>conditions<br>..<br>Because<br>forward<br>-<br>looking<br>statements<br>relate<br>to<br>the<br>future,<br>they<br>are<br>subject<br>to<br>inherent<br>uncertainties,<br>risks<br>and<br>changes<br>in<br>circumstances<br>that<br>are<br>difficult<br>to<br>predict<br>and<br>many<br>of<br>which<br>are<br>outside<br>of<br>our<br>control<br>..<br>Our<br>actual<br>results<br>and<br>financial<br>condition<br>may<br>differ<br>materially<br>from<br>those<br>indicated<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>..<br>Therefore,<br>you<br>should<br>not<br>rely<br>on<br>any<br>of<br>these<br>forward<br>-<br>looking<br>statements<br>..<br>Important<br>factors<br>that<br>could<br>cause<br>our<br>actual<br>results<br>and<br>financial<br>condition<br>to<br>differ<br>materially<br>from<br>those<br>indicated<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>include,<br>among<br>others,<br>the<br>following<br>:<br>interest<br>rate<br>risks<br>associated<br>with<br>our<br>business,<br>including<br>the<br>effects<br>of<br>recent<br>and<br>anticipated<br>rate<br>increases<br>by<br>the<br>Federal<br>Reserve<br>;<br>our<br>ability<br>to<br>successfully<br>manage<br>credit<br>risk<br>and<br>maintain<br>an<br>adequate<br>level<br>of<br>allowance<br>for<br>loan<br>losses<br>;<br>new<br>or<br>revised<br>accounting<br>standards,<br>including<br>as<br>a<br>result<br>of<br>the<br>implementation<br>of<br>the<br>new<br>Current<br>Expected<br>Credit<br>Loss<br>Standard<br>;<br>business<br>and<br>economic<br>conditions<br>generally<br>and<br>in<br>the<br>financial<br>services<br>industry,<br>nationally<br>and<br>within<br>our<br>market<br>areas,<br>including<br>continued<br>rising<br>rates<br>of<br>inflation<br>;<br>the<br>overall<br>health<br>of<br>the<br>local<br>and<br>national<br>real<br>estate<br>market<br>;<br>concentrations<br>within<br>our<br>loan<br>portfolio<br>;<br>the<br>level<br>of<br>nonperforming<br>assets<br>on<br>our<br>balance<br>sheet<br>;<br>our<br>ability<br>to<br>implement<br>our<br>organic<br>and<br>acquisition<br>growth<br>strategies,<br>including<br>the<br>integration<br>of<br>Metro<br>Phoenix<br>Bank<br>which<br>we<br>acquired<br>in<br>2022<br>;<br>the<br>impact<br>of<br>economic<br>or<br>market<br>conditions<br>on<br>our<br>fee<br>-<br>based<br>services<br>;<br>our<br>ability<br>to<br>continue<br>to<br>grow<br>our<br>retirement<br>and<br>benefit<br>services<br>business<br>;<br>our<br>ability<br>to<br>continue<br>to<br>originate<br>a<br>sufficient<br>volume<br>of<br>residential<br>mortgages<br>;<br>the<br>occurrence<br>of<br>fraudulent<br>activity,<br>breaches<br>or<br>failures<br>of<br>our<br>information<br>security<br>controls<br>or<br>cybersecurity<br>-<br>related<br>incidents<br>;<br>interruptions<br>involving<br>our<br>information<br>technology<br>and<br>telecommunications<br>systems<br>or<br>third<br>-<br>party<br>servicers<br>;<br>potential<br>losses<br>incurred<br>in<br>connection<br>with<br>mortgage<br>loan<br>repurchases<br>;<br>the<br>composition<br>of<br>our<br>executive<br>management<br>team<br>and<br>our<br>ability<br>to<br>attract<br>and<br>retain<br>key<br>personnel<br>;<br>rapid<br>technological<br>change<br>in<br>the<br>financial<br>services<br>industry<br>;<br>increased<br>competition<br>in<br>the<br>financial<br>services<br>industry<br>from<br>non<br>-<br>banks<br>such<br>as<br>credit<br>unions<br>and<br>Fintech<br>companies,<br>including<br>digital<br>asset<br>service<br>providers<br>;<br>our<br>ability<br>to<br>successfully<br>manage<br>liquidity<br>risk,<br>including<br>our<br>need<br>to<br>access<br>higher<br>cost<br>sources<br>of<br>funds<br>such<br>as<br>fed<br>funds<br>purchased<br>and<br>short<br>-<br>term<br>borrowings<br>;<br>the<br>effectiveness<br>of<br>our<br>risk<br>management<br>framework<br>;<br>the<br>commencement<br>and<br>outcome<br>of<br>litigation<br>and<br>other<br>legal<br>proceedings<br>and<br>regulatory<br>actions<br>against<br>us<br>or<br>to<br>which<br>we<br>may<br>become<br>subject<br>;<br>potential<br>impairment<br>to<br>the<br>goodwill<br>we<br>recorded<br>in<br>connection<br>with<br>our<br>past<br>acquisitions,<br>including<br>the<br>acquisition<br>of<br>Metro<br>Phoenix<br>Bank<br>;<br>the<br>extensive<br>regulatory<br>framework<br>that<br>applies<br>to<br>us<br>;<br>the<br>impact<br>of<br>recent<br>and<br>future<br>legislative<br>and<br>regulatory<br>changes<br>;<br>fluctuations<br>in<br>the<br>values<br>of<br>the<br>securities<br>held<br>in<br>our<br>securities<br>portfolio,<br>including<br>as<br>a<br>result<br>of<br>rising<br>interest<br>rates,<br>which<br>has<br>resulted<br>in<br>unrealized<br>losses<br>in<br>our<br>portfolio<br>;<br>governmental<br>monetary,<br>trade<br>and<br>fiscal<br>policies<br>;<br>risks<br>related<br>to<br>climate<br>change<br>and<br>the<br>negative<br>impact<br>it<br>may<br>have<br>on<br>our<br>customers<br>and<br>their<br>businesses<br>;<br>severe<br>weather,<br>natural<br>disasters,<br>widespread<br>disease<br>or<br>pandemics,<br>such<br>as<br>the<br>COVID<br>-<br>19<br>global<br>pandemic,<br>the<br>negative<br>effects<br>of<br>the<br>ongoing<br>COVID<br>-<br>19<br>pandemic,<br>including<br>its<br>effects<br>on<br>the<br>economic<br>environment,<br>our<br>clients,<br>and<br>our<br>operations,<br>including<br>due<br>to<br>supply<br>chain<br>disruptions,<br>as<br>well<br>as<br>any<br>changes<br>to<br>federal,<br>state,<br>or<br>local<br>government<br>laws,<br>regulations,<br>or<br>orders<br>in<br>response<br>to<br>the<br>pandemic<br>;<br>acts<br>of<br>war<br>or<br>terrorism,<br>including<br>the<br>Russian<br>invasion<br>of<br>Ukraine,<br>or<br>other<br>adverse<br>external<br>events<br>;<br>any<br>material<br>weaknesses<br>in<br>our<br>internal<br>control<br>over<br>financial<br>reporting<br>;<br>developments<br>and<br>uncertainty<br>related<br>to<br>the<br>future<br>use<br>and<br>availability<br>of<br>some<br>reference<br>rates,<br>such<br>as<br>the<br>expected<br>discontinuation<br>of<br>the<br>London<br>Interbank<br>Offered<br>Rate,<br>as<br>well<br>as<br>the<br>development<br>and<br>implementation<br>of<br>other<br>alternative<br>reference<br>rates<br>;<br>changes<br>to<br>U<br>..<br>S<br>..<br>or<br>state<br>tax<br>laws,<br>regulations<br>and<br>guidance,<br>including<br>the<br>new<br>1<br>..<br>0<br>%<br>excise<br>tax<br>on<br>stock<br>buybacks<br>by<br>publicly<br>traded<br>companies<br>;<br>talent<br>and<br>labor<br>shortages<br>and<br>employee<br>turnover<br>;<br>our<br>success<br>at<br>managing<br>the<br>risks<br>involved<br>in<br>the<br>foregoing<br>items<br>;<br>and<br>any<br>other<br>risks<br>described<br>in<br>the<br>“Risk<br>Factors”<br>sections<br>of<br>the<br>reports<br>filed<br>by<br>Alerus<br>Financial<br>Corporation<br>with<br>the<br>Securities<br>and<br>Exchange<br>Commission<br>..<br>Any<br>forward<br>-<br>looking<br>statement<br>made<br>by<br>us<br>in<br>this<br>presentation<br>is<br>based<br>only<br>on<br>information<br>currently<br>available<br>to<br>us<br>and<br>speaks<br>only<br>as<br>of<br>the<br>date<br>on<br>which<br>it<br>is<br>made<br>..<br>We<br>undertake<br>no<br>obligation<br>to<br>publicly<br>update<br>any<br>forward<br>-<br>looking<br>statement,<br>whether<br>written<br>or<br>oral,<br>that<br>may<br>be<br>made<br>from<br>time<br>to<br>time,<br>whether<br>as<br>a<br>result<br>of<br>new<br>information,<br>future<br>developments<br>or<br>otherwise<br>..<br>Non<br>-<br>GAAP<br>Financial<br>Measures<br>This<br>presentation<br>includes<br>certain<br>ratios<br>and<br>amounts<br>that<br>do<br>not<br>conform<br>to<br>U<br>..<br>S<br>..<br>Generally<br>Accepted<br>Accounting<br>Principles,<br>or<br>GAAP<br>..<br>Management<br>uses<br>certain<br>non<br>-<br>GAAP<br>financial<br>measures<br>to<br>evaluate<br>financial<br>performance<br>and<br>business<br>trends<br>from<br>period<br>to<br>period<br>and<br>believes<br>that<br>disclosure<br>of<br>these<br>non<br>-<br>GAAP<br>financial<br>measures<br>will<br>help<br>investors,<br>rating<br>agencies<br>and<br>analysts<br>evaluate<br>the<br>financial<br>performance<br>and<br>condition<br>of<br>Alerus<br>Financial<br>Corporation<br>..<br>This<br>presentation<br>includes<br>a<br>reconciliation<br>of<br>each<br>non<br>-<br>GAAP<br>financial<br>measure<br>to<br>the<br>most<br>comparable<br>GAAP<br>equivalent<br>..<br>Miscellaneous<br>Except<br>as<br>otherwise<br>indicated,<br>this<br>presentation<br>speaks<br>as<br>of<br>the<br>date<br>hereof<br>..<br>The<br>delivery<br>of<br>this<br>presentation<br>shall<br>not,<br>under<br>any<br>circumstances,<br>create<br>any<br>implication<br>that<br>there<br>has<br>been<br>no<br>change<br>in<br>the<br>affairs<br>of<br>Alerus<br>Financial<br>Corporation<br>after<br>the<br>date<br>hereof<br>..<br>Certain<br>of<br>the<br>information<br>contained<br>herein<br>may<br>be<br>derived<br>from<br>information<br>provided<br>by<br>industry<br>sources<br>..<br>We<br>believe<br>that<br>such<br>information<br>is<br>accurate<br>and<br>that<br>the<br>sources<br>from<br>which<br>it<br>has<br>been<br>obtained<br>are<br>reliable<br>..<br>We<br>cannot<br>guarantee<br>the<br>accuracy<br>of<br>such<br>information,<br>however,<br>and<br>we<br>have<br>not<br>independently<br>verified<br>such<br>information<br>..<br>DISCLAIMERS
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2<br>Retirement and<br>Benefit Revenue<br>31.8%<br>Wealth<br>Management<br>Revenue<br>9.9%<br>Mortgage<br>Revenue<br>8.0%<br>Banking<br>Fees<br>3.0%<br>Net<br>Interest<br>Income<br>47.3%<br>FOR THE TWELVE<br>MONTHS ENDED<br>DEC<br>EMBER<br>31<br>, 2022<br>Noninterest income:<br>$111.2 million<br>Net interest income:<br>$99.7 million<br>$27.8<br>$31.9<br>$34.2<br>$36.7<br>$32.1<br>2018<br>2019<br>2020<br>2021<br>2022<br>OUR MISSION<br>▪<br>To positively impact our clients’ financial potential<br>-<br>through holistic guidance, unparalleled service, and engaging technology.<br>COMPANY PROFILE<br>Data as of 12/31/2022.<br>DIVERSIFIED REVENUE STREAM<br>ASSET GROWTH (IN BILLIONS)<br>Banking Assets<br>Retirement and Benefits AUA/AUM<br>Wealth Management AUA/AUM<br>$2.6<br>$3.1<br>$3.3<br>$4.0<br>$3.6<br>2018<br>2019<br>2020<br>2021<br>2022<br>NONINTEREST<br>INCOME AS A %<br>OF REVENUE:<br>52.7%<br>DIVERSIFIED FINANCIAL SERVICES COMPANY<br>▪<br>$3.8 billion Banking assets<br>▪<br>$32.1 billion Retirement and Benefits AUA/AUM<br>▪<br>$3.6 billion Wealth Management AUA/AUM<br>▪<br>$812.3 million in Mortgage Originations YTD<br>ALERUS BUSINESS LINES<br>▪<br>Banking<br>▪<br>Retirement and Benefits<br>▪<br>Wealth Management<br>▪<br>Mortgage<br>$2.2<br>$2.4<br>$3.0<br>$3.4<br>$3.8<br>2018<br>2019<br>2020<br>2021<br>2022
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3<br>A BIG COMPANY MODEL WITH SMALL COMPANY EXECUTION<br>OUR DIVERSE BUSINESS LINES<br>Revenue data LTM as of 12/31/2022.<br>TRUSTED<br>ADVISOR<br>BANKING<br>WEALTH<br>MANAGEMENT<br>•<br>Residential mortgage lending<br>•<br>Residential construction lending<br>•<br>Home equity/second mortgages<br>•<br>Advisory services<br>•<br>Trust and fiduciary services<br>•<br>Investment management<br>•<br>Insurance planning<br>•<br>Financial planning<br>•<br>Education planning<br>•<br>Retirement plan<br>administration and<br>recordkeeping<br>•<br>Retirement plan<br>investment advisory<br>•<br>Health and welfare<br>administration<br>BUSINESS BANKING<br>•<br>Commercial and commercial<br>real estate lending<br>•<br>Small business lending<br>•<br>Treasury management<br>•<br>Deposit services<br>CONSUMER BANKING<br>•<br>Private banking<br>•<br>Deposit products<br>and services<br>•<br>Consumer lending<br>MORTGAGE<br>RETIREMENT<br>AND BENEFITS<br>32% of Revenue<br>8% of Revenue<br>10% of Revenue<br>50% of Revenue
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4<br>FRANCHISE FOOTPRINT<br>FULL<br>-<br>SERVICE BANKING OFFICES<br>Alerus offers banking, retirement and benefits, mortgage and<br>wealth management services at all full<br>-<br>service banking offices<br>▪<br>Grand Forks, ND:<br>4<br>full<br>-<br>service banking offices<br>▪<br>Fargo, ND:<br>3 full<br>-<br>service banking offices<br>▪<br>Twin Cities, MN:<br>6 full<br>-<br>service banking offices<br>▪<br>Phoenix, AZ:<br>3<br>full<br>-<br>service banking offices<br>RETIREMENT AND BENEFITS SERVICES OFFICES<br>▪<br>1 office in Minnesota<br>▪<br>1 office in Michigan<br>▪<br>1 office in Colorado<br>▪<br>Serve clients in all 50 states through retirement plan services<br>DIVERSIFIED CLIENT BASE<br>▪<br>38,500 consumer clients<br>▪<br>16,600 commercial clients<br>▪<br>8,100 employer<br>-<br>sponsored retirement plans<br>Data as of 12/31/2022.<br>▪<br>384,800 employer<br>-<br>sponsored retirement plan participants<br>▪<br>69,000 health savings account participants<br>▪<br>37,900 flexible spending account/health reimbursement<br>arrangement participants
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5<br>STRONG GROWTH MARKETS AND STABLE CORE FUNDING<br>MARKET DISTRIBUTION<br>DEPOSITS ($2,915)<br>LOANS ($2,444)<br>(1)<br>ARB ASSETS UNDER<br>ADMIN/MGMT. ($32,123)<br>WM ASSETS UNDER<br>ADMIN/MGMT. ($3,583)<br>MORTGAGE ORIGINATIONS ($812)<br>($ IN MILLIONS)<br>Data as of 12/31/2022.<br>1<br>–<br>Loans in our national market are purchased participation loans not sourced directly through advisors located in one of our g<br>eographical markets.<br>LEGEND<br>31.1%<br>49.1%<br>17.4%<br>2.4%<br>38.4%<br>24.9%<br>12.4%<br>24.3%<br>5.4%<br>91.4%<br>3.2%<br>73.4%<br>10.4%<br>3.4%<br>12.8%<br>9.0%<br>13.2%<br>77.8%
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6<br>ONE<br>ALERUS<br>REINVENTION OF PROCESSES<br>We consistently seek new ways to enhance<br>efficiencies and improve scalability<br>TAILORED ADVICE<br>We strive to provide each<br>client with a primary point of<br>contact<br>—<br>a trusted advisor<br>—<br>who deals with individual<br>needs and integrates other<br>department’s expertise when<br>necessary<br>SYNERGISTIC GROWTH<br>Deposits sourced from our retirement and benefits<br>division totaled $691.6 million as of December 31,<br>2022<br>Cumulative rollovers have added $1.1 billion of<br>assets under management<br>Residential real estate first mortgages totaled<br>$679.6 million in the fourth quarter<br>TECHNOLOGY INVESTMENT<br>We have proactively invested in technology to<br>further our goal to effectively integrate all<br>departments and business lines<br>These investments allow for digital and proactive<br>engagement with clients<br>DIVERSIFIED SERVICES<br>We provide comprehensive<br>products and services to clients<br>including banking, mortgage,<br>wealth management, and<br>retirement and benefits<br>ONE ALERUS STRATEGY<br>Our collaborative One Alerus culture brings our product and service<br>offerings to clients in a cohesive and seamless manner. We believe<br>One Alerus enables us to achieve future organic growth through<br>client acquisition, retention and expansion to provide strong<br>returns to our stockholders and employees through our ESOP.<br>CULTURE + BUSINESS MODEL = SUSTAINED TOP TIER SHAREHOLDER RESULT<br>S<br>ONE ALERUS
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7<br>EXPANDED TO COLORADO<br>Acquired Retirement Planning Services, Inc.<br>(Littleton, CO)<br>To supplement our strong organic growth, we have executed 25 acquisitions throughout the history of<br>our company across all business lines:<br>STRATEGIC GROWTH<br>2000<br>2002<br>2003<br>2006<br>2007<br>2019<br>2009<br>2016<br>2015<br>2014<br>2013<br>2012<br>2011<br>REBRANDED TO ALERUS<br>Acquired a branch from BNC National Bank<br>(Fargo, ND)<br>Acquired Pension Solutions, Inc. (St. Paul, MN)<br>The catalyst to the Retirement Division<br>OPENED A TRUST AND INVESTMENT OFFICE<br>(TWIN CITIES)<br>Acquired Stanton Trust Company (Minneapolis, MN)<br>EXPANDED TO MINNESOTA MARKET<br>OPENED A BUSINESS BANKING OFFICE<br>(MINNETONKA, MN)<br>Acquired Acclaim Benefits, Inc. (Minneapolis, MN)<br>Acquired Stanton Investment Advisors<br>(Minneapolis, MN)<br>EXPANDED TO ARIZONA MARKET<br>OPENED A BUSINESS BANKING OFFICE<br>(SCOTTSDALE, AZ)<br>Acquired retirement plan practice<br>of Eide Bailly, LLP (Minneapolis, MN)<br>Acquired Prosperan Bank (Twin Cities, MN)<br>Acquired deposits from BankFirst (Minneapolis, MN)<br>Acquired Residential Mortgage Group<br>(Minnetonka, MN)<br>Acquired selected loans and deposits (in MN) and a<br>branch<br>(in AZ) from BN<br>C National Bank<br>EXPANDED TO MICHIGAN<br>Acquired PensionTrend, Inc. and PensionTrend<br>Investment Advisers, LLC (Okemos, MI)<br>Acquired Tegrit Administrators, LLC<br>EXPANDED TO NEW HAMPSHIRE<br>Acquired Private Bank Minnesota (Minneapolis, MN)<br>Acquired Retirement Alliance, Inc. (Manchester, NH)<br>Acquired Interactive Retirement Systems, Ltd.<br>(Bloomington, MN)<br>Acquired Beacon Bank (Shorewood, Excelsior, Eden<br>Prairie and Duluth, MN)<br>Acquired Alliance Benefit Group North Central States,<br>Inc. (Albert Lea and Eden Prairie, MN)<br>COMPLETED INITIAL PUBLIC OFFERING (IPO)<br>2017<br>LAUNCHED ONE ALERUS STRATEGIC GROWTH PLAN<br>2020<br>2022<br>Acquired Metro Phoenix Bank (Phoenix, AZ)
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8<br>▪<br>Diversified client base<br>consists of<br>38,500<br>consumers clients<br>,<br>16,600<br>commercial clients and over<br>384,800<br>employer<br>-<br>sponsored<br>retirement and benefit plan participants<br>▪<br>Harness<br>product<br>synergies<br>unavailable to traditional banking organizations<br>▪<br>Capitalize on<br>strategic opportunities<br>to grow in our existing markets or new markets<br>▪<br>Acquisition targets include<br>banks and nationwide fee income<br>companies with<br>complementary<br>business models,<br>cultural similarities, synergy and growth opportunities<br>▪<br>Recruit<br>top talent<br>to<br>accelerate growth<br>in our existing markets or jumpstart our entrance into new markets<br>▪<br>Market disruption caused by M&A activity provides<br>lift<br>-<br>out opportunities<br>▪<br>Purpose driven<br>organization with a<br>recognizable mission<br>for clients, employees, and stakeholders<br>▪<br>Proactively position ourselves as an<br>acquirer<br>and employer of choice<br>▪<br>Invested in one of the<br>leading marketing automation technologies<br>▪<br>Provide<br>secure and reliable<br>technology that meets evolving client expectations<br>▪<br>Integrate our full product and service offerings through our<br>fast<br>-<br>follower<br>strategy<br>KEY STRATEGIC INITIATIVES<br>GROWING THE ALERUS FRANCHISE<br>LEVERAGE OUR EXISTING<br>CLIENT BASE<br>EXECUTE STRATEGIC<br>ACQUISITIONS<br>PURSUE TALENT<br>ACQUISITION<br>ENHANCE BRAND<br>AWARENESS<br>STRENGTHEN AND BUILD<br>INFRASTRUCTURE<br>▪<br>Collaborative leadership team focused on<br>growing organically<br>by deepening relationships with existing clients<br>through our expansive services<br>▪<br>Diversified business model focused on bringing value to the client through advice and specialty solutions to help<br>clients grow<br>ORGANIC GROWTH<br>“ONE ALERUS”
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9<br>DAN COUGHLIN<br>Since 2016<br>Chairman, Alerus Financial Corp.<br>Former MD & Co<br>-<br>Head<br>–<br>Fin’l<br>Services Inv. Banking, Raymond<br>James; Former Chairman<br>& CEO, Howe Barnes Hoefer &<br>Arnett<br>MARY ZIMMER<br>Since 2021<br>Former Director of Diverse Client Segments<br>and Former Northern Regional President,<br>Wells Fargo Advisors<br>Former Head of Intl. Wealth USA, Royal Bank<br>of Canada U.S. Wealth Mgmt.<br>JANET ESTEP<br>Since 2021<br>Former President and CEO, Nacha<br>Former EVP, US Bank Transaction Division<br>Former VP, Pace Analytical Services<br>RANDY NEWMAN<br>Since 1987<br>Former President and CEO, Alerus<br>OFFICERS AND DIRECTORS<br>MICHAEL MATHEWS<br>Since 2019<br>Former CIO, Deluxe Corporation<br>Former SVP<br>–<br>Technology and Enterprise<br>Programs, UnitedHealth Group<br>JON HENDRY<br>Executive Vice President and<br>Chief Technology Officer<br>39 years with Alerus<br>KARIN TAYLOR<br>Executive Vice President and<br>Chief Risk Officer<br>5 years with Alerus<br>KEVIN LEMKE<br>Since 1994<br>President<br>Virtual Systems, Inc.<br>GALEN VETTER<br>Since 2013<br>Former Global CFO, Franklin Templeton<br>Investments; Former Partner<br>-<br>in<br>-<br>Charge,<br>Upper Midwest Region, RSM<br>EXECUTIVE MANAGEMENT<br>BOARD OF DIRECTORS<br>KATIE LORENSON<br>Director,<br>President and<br>Chief Executive Officer<br>6 years with Alerus<br>MISSY KENEY<br>Executive Vice President and<br>Chief Engagement Officer<br>18 years with Alerus<br>AL VILLALON<br>Executive Vice President and<br>Chief Financial Officer<br>Joined Alerus in 2022<br>JIM COLLINS<br>Executive Vice President and<br>Chief Banking and Revenue Officer<br>Joined Alerus in 2022
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10<br>FOURTH QUARTER HIGHLIGHTS
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11<br>▪<br>Reported net income of $10.9 million for the fourth quarter of 2022, or $0.53 per diluted<br>common share.<br>▪<br>Loans increased $686.0 million, or 39.0%, compared to the end of the fourth quarter of<br>2021. Excluding the $270.4 million in loans acquired from Metro Phoenix Bank, organic<br>loan growth increased $415.6 million compared to the end of the fourth quarter of 2021.<br>▪<br>Return on Assets increased 15 bps from the fourth quarter of 2022 to 1.17%.<br>▪<br>Net interest income decreased $1.4 million, or 4.8%, compared to the third quarter,<br>primarily due to deposit rate increases in a highly competitive deposit environment driven<br>by rapid rate increases by the Federal Reserve Bank.<br>▪<br>Net interest margin decreased 12 basis points due to a 79 basis point increase on interest<br>-<br>bearing liabilities, a result of rising rates, partially offset by a 45 basis point increase in<br>interest earning asset yields, led by a 49 basis point increase in loan yields.<br>▪<br>Maintained strong credit quality. No additional provision expense was recorded for the<br>quarter. Allowance for loan losses to non<br>-<br>performing loans was 821%.<br>SUCCESS IS NEVER FINAL<br>Q4 2022 SUMMARY
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12<br>INCOME STATEMENT<br>Q4 2022 FINANCIAL HIGHLIGHTS<br>1<br>–<br>Represents a non<br>-<br>GAAP Financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation.”<br>(dollars and shares in thousands, except per share data)<br>Net Interest Income<br>$<br>26,964<br><br><br>$<br>28,316<br><br><br>$<br>22,789<br><br><br>$<br>99,729<br><br><br>$<br>87,099<br><br><br>Provision for Loan Losses<br>—<br><br><br>—<br><br><br>(1,500)<br><br><br>—<br><br><br>(3,500)<br><br><br>Net Interest Income After Provision for Loan Losses<br>26,964<br><br><br>28,316<br><br><br>24,289<br><br><br>99,729<br><br><br>90,599<br><br><br>Noninterest Income<br>25,517<br><br><br>27,010<br><br><br>33,718<br><br><br>111,223<br><br><br>147,387<br><br><br>Noninterest Expense<br>37,948<br><br><br>42,767<br><br><br>41,276<br><br><br>158,770<br><br><br>168,909<br><br><br>Income Before Income Taxes<br>14,533<br><br><br>12,559<br><br><br>16,731<br><br><br>52,182<br><br><br>69,077<br><br><br>Income Tax Expense<br>3,624<br><br><br>2,940<br><br><br>4,026<br><br><br>12,177<br><br><br>16,396<br><br><br>Net Income<br>$<br>10,909<br><br><br>$<br>9,619<br><br><br>$<br>12,705<br><br><br>$<br>40,005<br><br><br>$<br>52,681<br><br><br>Per Common Share Data<br>Earnings Per Common Share - Diluted<br>$<br>0.53<br>$<br>0.47<br>$<br>0.72<br>$<br>2.10<br>$<br>2.97<br>Diluted Average Common Shares Outstanding<br>20,232<br><br><br>20,230<br><br><br>17,480<br><br><br>18,884<br><br><br>17,486<br><br><br>Performance Ratios<br>Return on Average Total Assets<br>1.17<br><br><br>%<br>1.02<br><br><br>%<br>1.50<br><br><br>%<br>1.14<br><br><br>%<br>1.66<br><br><br>%<br>Return on Average Tangible Common Equity<br>(1)<br>16.63<br><br><br>%<br>13.89<br><br><br>%<br>17.36<br><br><br>%<br>15.09<br><br><br>%<br>18.89<br><br><br>%<br>Noninterest Income as a % of Revenue<br>48.62<br><br><br>%<br>48.82<br><br><br>%<br>59.67<br><br><br>%<br>52.72<br><br><br>%<br>62.86<br><br><br>%<br>Net Interest Margin (Tax-Equivalent)<br>3.09<br><br><br>%<br>3.21<br><br><br>%<br>2.84<br><br><br>%<br>3.04<br><br><br>%<br>2.90<br><br><br>%<br>Efficiency Ratio<br>(1)<br>69.62<br><br><br>%<br>74.76<br><br><br>%<br>71.06<br><br><br>%<br>72.86<br><br><br>%<br>70.02<br><br><br>%<br>December 31,<br>2022<br>December 31,<br>2021<br>Three months ended<br>Year ended<br>2022<br>December 31,<br>September 30,<br>2022<br>December 31,<br>2021
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13<br>PERFORMANCE RATIOS<br>1<br>–<br>Represents a non<br>-<br>GAAP Financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation.”<br>2<br>–<br>Rates have been annualized<br>3<br>–<br>Q3 2022 Rates segregate merger and acquisition expenses associated with the acquisition of Metro Phoenix Bank.<br>1.50%<br>1.02%<br>1.17%<br>0.15%<br>1.17%<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Return on Average Assets<br>(2)/(3)<br>17.36%<br>13.89%<br>16.63%<br>1.86%<br>15.75%<br>16.63%<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Return on Average Tangible<br>Common Equity<br>(1)/(2)/(3)<br>$17.87<br>$13.76<br>$14.37<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Tangible Book Value per Share<br>(1)
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14<br>KEY BALANCE SHEET ITEMS<br>DOLLARS IN MILLIONS<br>$1,718.5<br>$1,976.1<br>$2,358.2<br>$64.2<br>$5.2<br>$1.6<br>$281.1<br>$1,782.7<br>$2,262.4<br>$2,359.8<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Average Loans<br>Core Loans<br>PPP Loans<br>MPB Loans<br>$2,019.4<br>$1,838.9<br>$2,092.1<br>$851.2<br>$829.1<br>$870.9<br>$327.1<br>$2,870.6<br>$2,995.1<br>$2,963.0<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Average Deposits<br>Interest-Bearing Deposits<br>Non-Interest Bearing Deposits<br>MPB Deposits<br>Core<br>4.5%<br>Linked Quarter<br>Loans<br>37.2%<br>Year-over-year<br>Average<br>(1.1)%<br>Linked Quarter<br>Deposits<br>3.2%<br>Year-over-year
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15<br>1.30%<br>1.39%<br>1.73%<br>1.80%<br>1.27%<br>0.16%<br>1.43%<br>0.00%<br>0.40%<br>0.80%<br>1.20%<br>1.60%<br>2.00%<br>2018<br>2019<br>2020<br>2021<br>2022<br>318%<br>306%<br>674%<br>1,437%<br>821%<br>00%<br>200%<br>400%<br>600%<br>800%<br>1,000%<br>1,200%<br>1,400%<br>1,600%<br>2018<br>2019<br>2020<br>2021<br>2022<br>0.33%<br>0.33%<br>0.17%<br>0.09%<br>0.10%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>2018<br>2019<br>2020<br>2021<br>2022<br>ASSET QUALITY AND RESERVE LEVELS<br>OVERVIEW<br>NPAS / ASSETS<br>(%)<br>RESERVES<br>/ LOANS<br>(%)<br>1<br>RESERVES<br>/ NPLS (%)<br>▪<br>Solid asset quality based on low levels of<br>nonperforming assets.<br>▪<br>Strong reserve levels as criticized loans remain<br>low and below<br>pre<br>-<br>pandemic levels.<br>▪<br>Strong credit quality as evidenced by historic net<br>charge<br>-<br>off ratio of 27 bps, dating back 25 years.<br>NCO/<br>Avg Loans<br>0.18%<br>0.33%<br>0.03%<br>(0.04)%<br>0.02%<br>1<br>–<br>The 2022 total segregates loans acquired from Metro Phoenix Bank
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16<br>STRONG CORE FUNDING MIX<br>▪<br>Commercial transaction accounts totaled $1.3 billion and<br>increased 2.4% YoY. Consumer transaction accounts totaled<br>$708.1 million and decreased 4.2% YoY.<br>▪<br>Synergistic deposits, including HSA deposits and those sourced<br>through retirement plans and participants, totaled $669.6<br>million, with a YTD cost of 0.41%.<br>▪<br>CD portfolio is primarily 6<br>-<br>month maturity CD with over 50%<br>held by clients for 10+ years<br>▪<br>Stable deposit relationships with 23<br>-<br>year average tenure on 10<br>largest depositors.<br>As of December 31, 2022, core deposits totaled<br>$2.9 billion or 98% of our total deposits<br>OVERVIEW AS OF<br>DECEMBER 31<br>, 2022<br>DECEMBER 31, 2022<br>DEPOSIT FUNDING<br>($2,915<br>MM<br>)<br>LOW COST OF FUNDS<br>Data YTD as of 12/31/2022.<br>Non<br>-<br>Interest Bearing<br>Deposits<br>29.5%<br>Money<br>Market &<br>Savings<br>Deposits<br>39.0%<br>Interest<br>-<br>Bearing<br>Demand Deposits<br>18.5%<br>Time<br>Deposits<br>7.3%<br>HSA<br>Deposits<br>5.7%<br>0.32%<br>0.45%<br>0.51%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>1.20%<br>1.40%<br>Cost of<br>Total Deposits<br>Cost of Interest-<br>Bearing Deposits<br>Total Cost of<br>Funds<br>2019<br>2020<br>2021<br>2022
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17<br>12.9%<br>16.7%<br>16.8%<br>18.6%<br>16.5%<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>14.0%<br>16.0%<br>18.0%<br>20.0%<br>2018<br>2019<br>2020<br>2021<br>2022<br>7.5%<br>11.1%<br>9.2%<br>9.8%<br>11.3%<br>8.9%<br>12.9%<br>13.2%<br>15.1%<br>13.7%<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>14.0%<br>16.0%<br>2018<br>2019<br>2020<br>2021<br>2022<br>Tier 1 Leverage<br>Tier 1 Capital<br>STRONG CAPITAL AND SOURCES OF LIQUIDITY<br>COMMON EQUITY TIER 1<br>TIER 1 CAPITAL/TIER 1 LEVERAGE RATIOS<br>SOURCES OF LIQUIDITY<br>TOTAL RISK BASED CAPITAL<br>Regulatory Capital Minimum to be considered well capitalized.<br>(dollars in thousands)<br>Cash and cash equivalents<br>$54,242<br>Unencumbered securities<br>–<br>AFS<br>707,836<br>FHLB borrowing availability<br>531,583<br>Brokered CD capacity<br>755,927<br>Fed<br>funds lines<br>102,000<br>Total as of 12/31/2022<br>$2,151,588<br>Tier 1<br>Capital<br>Leverage<br>Regulatory Capital Minimum to be considered well capitalized.<br>8.4%<br>12.5%<br>12.8%<br>14.7%<br>13.4%<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>14.0%<br>16.0%<br>2018<br>2019<br>2020<br>2021<br>2022
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18<br>KEY REVENUE ITEMS<br>DOLLARS IN THOUSANDS<br>1<br>–<br>Other noninterest income consists of service charges on deposit accounts, net gains (losses) on investment securities, speci<br>fic interchange income and other noninterest income.<br>$20,570<br>$28,218<br>$26,939<br>$2,219<br>$98<br>$25<br>$22,789<br>$28,316<br>$26,964<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>$25,000<br>$30,000<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Net Interest Income<br>Net Interest Income<br>PPP fees<br>$18,552<br>$16,597<br>$16,599<br>$5,633<br>$4,852<br>$5,144<br>$7,967<br>$3,782<br>$2,170<br>$1,566<br>$1,779<br>$1,604<br>$33,718<br>$27,010<br>$25,517<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Noninterest Income<br>Retirement and benefits<br>Wealth management<br>Mortgage banking<br>Other(1)<br>Net Interest<br>(4.8%)<br><br><br>Linked Quarter<br>Income<br>18.3%<br><br><br>Year-over-year<br>Noninterest<br>(5.5)%<br>Linked Quarter<br>Income<br>(24.3)%<br>Year-over-year
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19<br>NET INTEREST MARGIN (NIM)<br>LOAN YIELD<br>(1)<br>/N<br>ET INTEREST MARGIN<br>(1)<br>QUARTERLY HIGHLIGHTS<br>AVERAGE EFFECTIVE FF RATE/COST OF FUNDS<br>(1)<br>1<br>–<br>Rates have been annualized for interim periods. Source: Alerus Financial Corporation; Federal Reserve.<br>▪<br>Loan yield increased as a result of an increase in the<br>average rate received from loans compared to Q3 2022.<br>▪<br>Average loans increased $97.4 million compared to Q3<br>2022, primarily due to a $50.9 million increase in average<br>commercial loans.<br>▪<br>Net interest margin decreased 12 basis points, primarily<br>due to a 51 basis point increase on the average rate paid<br>on deposits. Purchase accounting accretion impacted net<br>interest margin by 10 bps in Q4 2022.<br>▪<br>The average rate paid on short<br>-<br>term borrowings and fed<br>funds purchased increased 143 basis points compared to<br>Q3 2022.<br>▪<br>The average balance of short<br>-<br>term borrowings and fed<br>funds purchased increased as loan growth outpaced<br>deposit growth in Q4 2022.<br>1.83%<br>2.16%<br>0.08%<br>1.68%<br>0.97%<br>0.51%<br>0.20%<br>0.51%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br>2.50%<br>2019<br>2020<br>2021<br>2022<br>Average effective FF rate<br>Cost of funds<br>4.97%<br>4.35%<br>4.14%<br>4.33%<br>3.65%<br>3.16%<br>2.73%<br>3.02%<br>0.06%<br>0.17%<br>0.02%<br>3.22%<br>2.90%<br>3.04%<br>0.00%<br>1.00%<br>2.00%<br>3.00%<br>4.00%<br>5.00%<br>6.00%<br>2019<br>2020<br>2021<br>2022<br>Loan yield<br>NIM ex. PPP<br>Effect of PPP
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20<br>NII AND LOAN FLOORS<br>VARIABLE RATE FLOORS BY INDEX<br>VARIABLE RATE FLOORS<br>QUARTER OVER QUARTER HIGHLIGHTS<br>$ in Millions<br>Balance<br>% of Total<br>Balance<br>Cumulative % of<br>Total Balance<br>No Floors<br>$<br>384<br>37.1%<br>37.1%<br>At Floor<br>127<br>12.3%<br>49.4%<br>0<br>-<br>50 bps above floor<br>30<br>2.9%<br>52.3%<br>>50bps to above floor<br>494<br>47.7%<br>100.0%<br>Total<br>$<br>1,035<br>100.0%<br>$ in Millions<br>Index<br>Above<br>the Floor<br>At the<br>Floor<br>No Floor<br>Total<br>Total %<br>Prime<br>$<br>342<br>$<br>36<br>$<br>170<br>$<br>548<br>53.0%<br>1 Month<br>LIBOR<br>–<br>–<br>146<br>146<br>14.1%<br>12 Month LIBOR<br>92<br>2<br>18<br>112<br>10.8%<br>FHLB 5 Year<br>13<br>16<br>10<br>39<br>3.7<br>%<br>Other<br>77<br>73<br>40<br>190<br>18.4%<br>Total<br>$<br>524<br>$<br>127<br>$<br>384<br>$<br>1,035<br>100.0<br>%<br>Percent<br>of Total<br>50.6%<br>12.3%<br>37.1%<br>100.0%<br>NET INTEREST<br>INCOME<br>NIM:<br>3.21%<br>0.01%<br>0.29%<br>(0.01)%<br>0.00%<br>(0.41)<br>%<br>0.00%<br>3.09%<br>▪<br>Average loan rates increased 49 basis points due to loans repricing as<br>a result of a rising interest rate environment.<br>▪<br>Short<br>-<br>term borrowings and fed funds purchased increased in the<br>quarter due to loan growth outpacing deposit growth<br>▪<br>Cost of deposits increased due to a more competitive deposit<br>environment arising from higher interest rates and from banks<br>looking to fund loan growth.<br>▪<br>Per our last 10<br>-<br>Q, assuming a parallel<br>move in<br>interest rates, +300<br>bps move would result in a decrease in net interest income of 10.1%<br>in the following 12 months but a 2.4% increase in the following 24<br>months.<br>A<br>+400 bps<br>move would result in a 13.4% decrease in the<br>following 12 months but a 0.7% increase in the following 24 months.
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21<br>RETIREMENT AND BENEFITS<br>OVERVIEW<br>–<br>8,100 PLANS<br>-<br>NATIONAL FOOTPRINT<br>ASSETS UNDER ADMINISTRATION/MANAGEMENT<br>REVENUE MIX<br>2<br>▪<br>RETIREMENT<br>(58% of Revenue)<br>-<br>Provide recordkeeping and<br>administration services to qualified retirement plans<br>▪<br>TRUST CUSTODY & ADVISORY SERVICES (10%<br>of Revenue<br>)<br>-<br>Provide investment fiduciary services to retirement plans<br>▪<br>HEALTH AND WELFARE (11%<br>of Revenue<br>)<br>-<br>Provide HSA, FSA,<br>COBRA recordkeeping and administration services to employers<br>▪<br>ONE ALERUS SYNERGIES<br>•<br>IRA<br>rollovers $145.4 million<br>YTD 12/31/2022<br>•<br>Deposits $692 million<br>-<br>HSA deposits, 401(k) Money Market<br>Funds, Emergency Savings, Terminated Participants<br>•<br>Managed accounts<br>•<br>Commercial Banking client expansion<br>($ in Millions)<br>QUARTERLY RESULTS<br>($ 000s)<br>1<br>Net Income:<br>$28,404<br>$25,720<br>$31,545<br>$40,929<br>Revenue:<br>$63,811<br>$60,956<br>$71,709<br>$67,135<br>Profit Margin:<br>44.5%<br>42.2%<br>44.0%<br>61.0%<br>Profit Margin:<br>47.5%<br>63.1%<br>69.6%<br>Recurring<br>annual plan<br>revenue<br>81%<br>Transaction<br>based revenue<br>19%<br>$8,808<br>$10,467<br>$11,555<br>$18,552<br>$16,597<br>$16,599<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Net Income<br>Revenue<br>1<br>–<br>Net income before tax and indirect allocations. Includes funds transfer pricing credit of deposits<br>sourced by division<br>..<br>2<br>–<br>Revenue mix includes 35% market sensitive revenue.<br>$31,905<br>$34,200<br>$36,733<br>$32,123<br> 375,000<br> 390,000<br> 405,000<br> 420,000<br> 435,000<br> 450,000<br> 465,000<br> 480,000<br> 495,000<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>$25,000<br>$30,000<br>$35,000<br>$40,000<br>2019<br>2020<br>2021<br>2022<br>AUA/AUM<br>Participants
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22<br>$3,446<br>$3,276<br>$4,227<br>$5,633<br>$4,852<br>$5,144<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>$5,000<br>$6,000<br>$7,000<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Net Income<br>Revenue<br>$3,103<br>$3,339<br>$4,040<br>$3,583<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>2019<br>2020<br>2021<br>2022<br>▪<br>ADVISORY AND PLANNING SERVICES<br>•<br>Retirement Planning, Tax Planning, Insurance Planning,<br>Wealth Transfer Planning and Business Transition Planning<br>▪<br>ASSET MANAGEMENT<br>•<br>Personalized SMA strategies, Tax Management and Global<br>Perspective<br>▪<br>FIDUCIARY SERVICES<br>•<br>IRA, Agency and Personal Trust<br>▪<br>ONE ALERUS SYNERGIES<br>•<br>IRA rollovers<br>•<br>401(k) managed accounts<br>WEALTH MANAGEMENT SERVICES<br>OVERVIEW OF SERVICES<br>ASSETS UNDER ADMINISTRATION/MANAGEMENT<br>REVENUE MIX<br>($ in Millions)<br>QUARTERLY RESULTS<br>1<br>($ 000s)<br>Net Income:<br>$8,314<br>$9,162<br>$12,183<br>$14,891<br>Revenue:<br>$15,502<br>$17,451<br>$21,052<br>$20,870<br>Profit Margin:<br>53.6%<br>52.2%<br>57.9%<br>71.4%<br>Profit Margin:<br>61.2%<br>67.5%<br>82.2%<br>Asset<br>Management<br>87%<br>Brokerage<br>9%<br>Insurance &<br>Advisory<br>4%<br>1<br>–<br>Net income before tax and indirect allocations. Includes funds transfer pricing credit of deposits<br>sourced by division<br>..
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23<br>MORTGAGE BANKING<br>OVERVIEW OF SERVICES<br>YEARLY MORTGAGE ORIGINATIONS<br>($000s)<br>QUARTERLY RESULT<br>S<br>▪<br>1st and 2nd mortgage product offerings through centralized<br>mortgage operations in Minneapolis, Minnesota<br>▪<br>Our Twin Cities originators averaged $56 million in annual<br>volume over the last three years<br>▪<br>YTD 2,068 loans closed, approximately 88% purchase<br>originations, with approximately 91% sourced from the Twin<br>Cities MSA<br>▪<br>Q4 2022 96% pull through on secondary market<br>▪<br>ONE ALERUS SYNERGIES<br>•<br>Through enhanced technology, digital applications total<br>approximately 90%. Paperless environment eliminated<br>nearly 200,000+ pages printed on a monthly basis<br>•<br>As of December 31, 2022, residential real estate first<br>mortgages excluding construction mortgages totaled<br>$644.6 million<br>QUARTERLY<br>ORIGINATIONS<br>1<br>–<br>Net income before tax and indirect allocations.<br>Purchase:<br>71.2%<br>45.2%<br>51.2%<br>88.3%<br>Refinance:<br>28.8%<br>54.8%<br>48.8%<br>11.7%<br>Purchase:<br>57.7%<br>94.0%<br>92.2%<br>Refinance:<br>42.3%<br>6.0%<br>7.8%<br>$863.4<br>$1,632.5<br>$1,592.1<br>$604.8<br>$83.0<br>$146.5<br>$244.0<br>$207.5<br>$946.4<br>$1,779.0<br>$1,836.1<br>$812.3<br> $-<br> $500.0<br> $1,000.0<br> $1,500.0<br> $2,000.0<br>2019<br>2020<br>2021<br>2022<br>Portfolio<br>Sale<br>$295.4<br>$163.9<br>$87.4<br>$61.4<br>$66.0<br>$38.9<br>$356.8<br>$229.9<br>$126.3<br> $-<br> $250.0<br> $500.0<br> $750.0<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Portfolio<br>Sale<br>Q4<br>Q1<br>Q2<br>Q3<br>Q4<br>($000s)<br>2021<br>2022<br>2022<br>2022<br>2022<br>Orignation<br>and Sale<br>$<br>9,812<br><br><br>$<br>4,935<br><br><br>$<br>5,821<br><br><br>$<br>5,028<br><br><br>$<br>3,145<br><br><br>Fair Value<br>Changes<br>(1,846)<br><br><br>(4)<br><br><br>217<br><br><br>(1,246)<br><br><br>(974)<br><br><br>Total<br>$<br>7,966<br><br><br>$<br>4,931<br><br><br>$<br>6,038<br><br><br>$<br>3,782<br><br><br>$<br>2,171<br><br><br>Net<br>income<br>(1)<br>$<br>1,329<br><br><br>$<br>620<br><br><br>$<br>1,387<br><br><br>$<br>(308)<br><br><br>$<br>(1,489)<br><br><br>Profit<br>Margin<br>16.7%<br><br><br>12.6%<br><br><br>23.0%<br><br><br>(8.1%)<br><br><br>(68.6%)<br><br>Gain on Sale<br>Margin<br>3.2%<br><br><br>2.8%<br><br><br>3.4%<br><br><br>2.6%<br><br><br>3.0%
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24<br>$27,678<br>$26,247<br>$24,076<br>$1,936<br>$1,926<br>$1,892<br>$5,220<br>$5,373<br>$4,405<br>$1,681<br>$1,314<br>$1,454<br>$216<br>$1,812<br>$4,545<br>$6,095<br>$6,121<br>$41,276<br>$42,767<br>$37,948<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>$25,000<br>$30,000<br>$35,000<br>$40,000<br>$45,000<br>Q4 2021<br>Q3 2022<br>Q4 2022<br>Other(1)<br>Nonrecurring expense(2)<br>Professional Fees and Assessments<br>Business Services, Software and Technology<br>Occupancy and Equipment<br>Compensation and benefits<br>NONINTEREST EXPENSE<br>1<br>–<br>Other noninterest expense consists of intangible amortization, marketing and business development, supplies and postage, tra<br>vel, mortgage and lending, and other noninterest expense.<br>2<br>–<br>Nonrecurring expenses consists of merger & acquisition expense and 1x executive recruiting expense.<br>QUARTERLY HIGHLIGHTS<br>YEAR OVER YEAR HIGHLIGHTS<br>▪<br>Decrease in compensation expense primarily the result of a<br>decrease in mortgage incentives associated with the decline in<br>mortgage originations as well as an accrual adjustment to<br>performance bonus accruals.<br>▪<br>Professional fees and assessments decreased due to the one<br>-<br>time expenses associated with the acquisition Metro Phoenix<br>Bank in Q3 2022.<br>▪<br>Business services, software and technology expense decreased<br>as a result of the timing of contract renewals.<br>▪<br>Compensation expense decreased primarily due to lower<br>mortgage compensation from a decline in mortgage<br>originations.<br>▪<br>Employee benefits decreased primarily due to a decrease in<br>share<br>-<br>based compensation from an acceleration upon<br>employee retirements.<br>▪<br>Other noninterest expense increased primarily due to an<br>increase in reserves related to unfunded commitments arising<br>from the growth in our commercial real estate portfolio.<br>Noninterest<br>(11.3)%<br>Linked quarter<br>Expense<br>(8.1)%<br>Year-over-year
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25<br>APPENDIX
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26<br>BY OUTSTANDING BALANCES<br>WELL DIVERSIFIED LOAN PORTFOLIO<br>As of 12/31/2022<br>1<br>-<br>4 Residential 1st<br>26%<br>1<br>-<br>4 Residential Construction<br>1%<br>1<br>-<br>4 Residential Jr Lien<br>1%<br>HELOC<br>5%<br>C&I<br>22%<br>Ag Production<br>1%<br>Other CRE<br>21%<br>Owner Occupied CRE<br>10%<br>Ag Land<br>2%<br>Multifamily<br>4%<br>Retail Indirect<br>1%<br>Other Consumer<br>2%<br>RE Construction<br>4%
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27<br>SUMMARY BY INDUSTRY TYPE<br>TOTAL COMMITMENT COMMERCIAL & INDUSTRIAL<br>1<br>1<br>–<br>Commercial and industrial loans includes C & I, loans to public entities, and other loans. It excludes PPP and ag production<br>loans.<br>“Other” includes to the following industries (1) Nonclassifiable establishments, (2) Management of Companies and Enterprises,<br>(3<br>) Administrative and Support and Waste Management and Remediation Services, (4)<br>Accommodation and Food Services, (5) Educational Services, (6) Other Services (except Public Administration), (7) Information<br>, (<br>8) Arts, Entertainment, and Recreation, (9) Agriculture Forestry, Fishing, and Hunting,<br>(10) Public Administration), (11) Mining Quarrying, and Oil and Gas Extraction, and (12) Utilities.<br>“Other Retail Trade” includes the following sub<br>-<br>industries within Retail Trade: (1) Miscellaneous Store Retailers, (2) Furniture<br>and Home Furnishings Stores, (3) Sporting Goods, Hobby, Musical Instrument, and Book<br>Stores, (4) Clothing and Clothing Accessories Stores, and (5) General Merchandise Stores.<br>Transportation and<br>Warehousing<br>3%<br>Health Care and Social<br>Assistance<br>6%<br>Professional, Scientific and<br>Technical Services<br>8%<br>Manufacturing<br>11%<br>Real Estate and Rental<br>and Leasing<br>11%<br>Wholesale Trade<br>7%<br>Construction<br>11%<br>Finance and<br>Insurance<br>11%<br>Other<br>19%<br>Motor Vehicle and Parts<br>Dealers<br>7%<br>Food and Beverage Stores<br>1%<br>Electronics and<br>Appliance Stores<br>2%<br>Gasoline Stations<br>1%<br>Nonstore Retailers<br>1%<br>Other Retail Trade<br>1%<br>Retail Trade<br>13%
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28<br>Office<br>15%<br>Retail<br>12%<br>Warehouse<br>16%<br>Manufacturing<br>1%<br>Commercial<br>Development<br>2%<br>Mixed<br>Commercial<br>3%<br>Apartments<br>14%<br>Hotel<br>2%<br>Medical or Nursing<br>Facilities<br>5%<br>Commercial/Land<br>Development<br>26%<br>Ag Land<br>4%<br>LOANS SECURED BY REAL ESTATE<br>TOTAL COMMITMENT<br>COMMERCIAL REAL ESTATE<br>1<br>1<br>–<br>Loans secured by commercial real estate include multifamily loans, ag land, other CRE, owner occupied CRE, and ag production<br>..<br>Portfolio<br>Avg<br>FICO<br>Avg LTV<br>Serviced<br>758<br>66%<br>Non<br>-<br>Serviced<br>796<br>31%<br>Junior<br>762<br>76%<br>HELOC<br>796<br>74%<br>TOTAL COMMITMENT<br>RESIDENTIAL REAL ESTATE<br>Serviced<br>55%<br>1<br>-<br>4 1st Non<br>-<br>Serviced<br>5%<br>1<br>-<br>4 Family Jr Liens<br>3%<br>1<br>-<br>4 Family<br>Revolving<br>29%<br>1<br>-<br>4 Family<br>Construction<br>7%<br>Held for Sale<br>1%
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29<br>LINE OF CREDIT UTILIZATION<br>C&I AND HOME EQUITY LINES OF CREDIT<br>1<br>1<br>–<br>Commercial and industrial loans includes revolving C & I loans and other loans. It excludes non<br>-<br>revolving C&I loans, ag prod<br>uction, PPP and loans to public entities.<br>0%<br>5%<br>10%<br>15%<br>20%<br>25%<br>30%<br>35%<br>40%<br>45%<br>50%<br>55%<br>60%<br> -<br> 50,000<br> 100,000<br> 150,000<br> 200,000<br> 250,000<br> 300,000<br> 350,000<br> 400,000<br> 450,000<br>C&I<br>Funded<br>Unfunded<br>Funded%<br>0%<br>5%<br>10%<br>15%<br>20%<br>25%<br>30%<br>35%<br>40%<br>45%<br>50%<br>55%<br>60%<br> -<br> 50,000<br> 100,000<br> 150,000<br> 200,000<br> 250,000<br> 300,000<br> 350,000<br>Home Equity Lines of Credit<br>Funded<br>Unfunded<br>Funded%
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30<br>CHANGES IN THE ALLL BY PORTFOLIO SEGMENT<br>ALLOWANCE FOR LOAN LOSSES<br>(dollars in thousands)<br>Commercial<br>Commercial and industrial<br>$<br>8,925<br><br><br>$<br>1,168<br><br><br>$<br>(1,396)<br><br><br>$<br>461<br><br><br>$<br>9,158<br><br><br>Real estate construction<br>783<br><br><br>587<br><br><br>—<br><br><br>76<br><br><br>1,446<br><br><br>Commercial real estate<br>12,376<br><br><br>178<br><br><br>—<br><br><br>134<br><br><br>12,688<br><br><br>Total commercial<br>22,084<br><br><br>1,933<br><br><br>(1,396)<br><br><br>671<br><br><br>23,292<br><br><br>Consumer<br>Residential real estate first mortgage<br>6,532<br><br><br>(763)<br><br><br>—<br><br><br>—<br><br><br>5,769<br><br><br>Residential real estate junior lien<br>1,295<br><br><br>(288)<br><br><br>—<br><br><br>282<br><br><br>1,289<br><br><br>Other revolving and installment<br>481<br><br><br>30<br><br><br>(153)<br><br><br>170<br><br><br>528<br><br><br>Total consumer<br>8,308<br><br><br>(1,021)<br><br><br>(153)<br><br><br>452<br><br><br>7,586<br><br><br>Unallocated<br>1,180<br><br><br>(912)<br><br><br>—<br><br><br>—<br><br><br>268<br><br><br>Total<br>$<br>31,572<br><br><br>$<br>—<br><br><br>$<br>(1,549)<br><br><br>$<br>1,123<br><br><br>$<br>31,146<br><br><br>Ending<br>Balance<br>Year ended December 31, 2022<br>Loan<br>Charge-offs<br>Loan<br>Recoveries<br>Beginning<br>Balance<br>Provision for<br>Loan Losses
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31<br>ALLOCATION BY PORTFOLIO SEGMENT<br>ALLOWANCE FOR LOAN LOSSES<br>(dollars in thousands)<br>Commercial and industrial<br>$<br>9,158<br><br><br>23.9%<br><br><br>$<br>8,925<br><br><br>24.8%<br><br><br>Real estate construction<br>1,446<br><br><br>4.0%<br><br><br>783<br><br><br>2.3%<br><br><br>Commercial real estate<br>12,688<br><br><br>36.0%<br><br><br>12,376<br><br><br>34.1%<br><br><br>Residential real estate first mortgage<br>5,769<br><br><br>27.8%<br><br><br>6,532<br><br><br>29.1%<br><br><br>Residential real estate junior lien<br>1,289<br><br><br>6.2%<br><br><br>1,295<br><br><br>7.1%<br><br><br>Other revolving and installment<br>528<br><br><br>2.1%<br><br><br>481<br><br><br>2.6%<br><br><br>Unallocated<br>268<br><br><br>—<br><br><br>1,180<br><br><br>—<br><br><br>Total loans<br>$<br>31,146<br><br><br>100.0%<br><br><br>$<br>31,572<br><br><br>100.0%<br><br><br>total loans<br>December 31, 2022<br>December 31, 2021<br>Allocated<br>of loans to<br>Allowance<br>total loans<br>Allocated<br>Allowance<br>of loans to<br>Percentage<br>Percentage
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32<br>ALLOCATION BY RISK SEGMENT (DOLLARS IN THOUSANDS)<br>ALLOWANCE FOR LOAN LOSSES<br>As of 12/31/2022.<br>1<br>-<br>Unguaranteed balances exclude PPP loans as well as loans that are guaranteed by another government agency.<br>Reserve/<br>Unguaranteed<br>Reserve/Total<br>Risk Level<br>Loans<br>Loans<br>Pass<br>$<br>2,408,636<br><br><br>$<br>2,396,975<br><br><br>$<br>28,000<br><br><br>1.2%<br><br><br>1.2%<br><br><br>Special Mention<br>21,954<br><br><br>21,954<br><br><br>918<br><br><br>4.2%<br><br><br>4.2%<br><br><br>Substandard<br>9,458<br><br><br>8,761<br><br><br>1,005<br><br><br>11.5%<br><br><br>10.6%<br><br><br>Total Loans Evaluated Collectively<br>2,440,048<br><br><br>2,427,690<br><br><br>29,923<br><br><br>1.2%<br><br><br>1.2%<br><br><br>Total Loans Evaluated Individually<br>3,945<br><br><br>3,945<br><br><br>955<br><br><br>24.2%<br><br><br>24.2%<br><br><br>Unallocated<br>—<br><br><br>—<br><br><br>268<br><br><br>—<br><br><br>—<br><br><br>Total<br>2,443,993<br><br><br>2,431,635<br><br><br>31,146<br><br><br>1.3%<br><br><br>1.3%<br><br><br>Amount<br>Total Loans<br>Balance<br>1<br>Reserve<br>Unguaranteed
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33<br>FINANCIAL HIGHLIGHTS<br>(dollars in thousands,<br>except where otherwise noted)<br>Q4 2021<br>Q1 2022<br>Q2 2022<br>Q3 2022<br>Q4 2022<br>Total Assets<br>3,392,691<br>$<br><br>3,336,199<br>$<br><br>3,295,065<br>$<br><br>3,691,253<br>$<br><br>3,779,637<br>$<br><br>Total Loans<br>1,758,020<br><br><br>1,818,042<br><br><br>1,890,243<br><br><br>2,318,231<br><br><br>2,443,994<br><br><br>Total Deposits<br>2,920,551<br><br><br>2,892,266<br><br><br>2,619,550<br><br><br>2,961,811<br><br><br>2,915,484<br><br><br>Tangible Common Equity<br>1<br>307,663<br><br><br>277,818<br><br><br>258,310<br><br><br>275,000<br><br><br>287,330<br><br><br>Net Income<br>12,705<br>$<br><br>10,184<br>$<br><br>9,293<br>$<br><br>9,619<br>$<br><br>10,909<br>$<br><br>ROAA (%)<br>1.50<br><br><br>1.26<br><br><br>1.14<br><br><br>1.02<br><br><br>1.17<br><br><br>ROATCE(%)<br>1<br>17.36<br><br><br>14.72<br><br><br>15.25<br><br><br>13.89<br><br><br>16.63<br><br><br>Net Interest Margin (FTE) (%)<br>2.11<br><br><br>2.83<br><br><br>2.98<br><br><br>3.21<br><br><br>3.09<br><br><br>Efficiency Ratio (FTE) (%)<br>1<br>71.06<br><br><br>72.25<br><br><br>74.72<br><br><br>74.76<br><br><br>69.62<br><br><br>Non-Int. Income/Op. Rev. (%)<br>59.67<br><br><br>57.62<br><br><br>56.20<br><br><br>48.82<br><br><br>48.62<br><br><br>Earnings per common share - diluted<br>0.72<br>$<br><br>0.57<br>$<br><br>0.52<br>$<br><br>0.47<br>$<br><br>0.53<br>$<br><br>Total Equity/Total Assets (%)<br>10.59<br><br><br>9.85<br><br><br>9.32<br><br><br>9.34<br><br><br>9.44<br><br><br>Tang. Cmn. Equity/Tang. Assets (%)<br>1<br>9.21<br><br><br>8.46<br><br><br>7.96<br><br><br>7.59<br><br><br>7.74<br><br><br>Loans/Deposits (%)<br>60.19<br><br><br>62.86<br><br><br>72.16<br><br><br>78.27<br><br><br>83.83<br><br><br>NPLs/Loans (%)<br>0.12<br><br><br>0.23<br><br><br>0.23<br><br><br>0.23<br><br><br>0.16<br><br><br>NPAs/Assets (%)<br>0.09<br><br><br>0.15<br><br><br>0.16<br><br><br>0.17<br><br><br>0.10<br><br><br>Allowance/NPLs (%)<br>1,437.05<br><br><br>752.38<br><br><br>717.92<br><br><br>583.97<br><br><br>820.93<br><br><br>Allowance/Loans (%)<br>1.80<br><br><br>1.74<br><br><br>1.66<br><br><br>1.34<br><br><br>1.27<br><br><br>NCOs/Average Loans (%)<br>(0.21)<br><br><br>(0.03)<br><br><br>0.07<br><br><br>0.07<br><br><br>(0.03)<br><br><br>Quarterly<br>1<br>–<br>Represents a non<br>-<br>GAAP financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation”.
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34<br>FINANCIAL HIGHLIGHTS<br>1<br>–<br>Represents a non<br>-<br>GAAP financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation”.<br>(dollars in thousands,<br>18-'22<br>except where otherwise noted)<br>2018<br>2019<br>2020<br>2021<br>2022<br>CAGR<br>Total Assets<br>2,179,070<br>$<br><br>2,356,878<br>$<br><br>3,013,771<br>$<br><br>3,392,691<br>$<br><br>3,779,637<br>$<br><br>14.8%<br>Total Loans<br>1,701,850<br><br><br>1,721,279<br><br><br>1,979,375<br><br><br>1,758,020<br><br><br>2,443,994<br><br><br>9.5%<br>Total Deposits<br>1,775,096<br><br><br>1,971,316<br><br><br>2,571,993<br><br><br>2,920,551<br><br><br>2,915,484<br><br><br>13.2%<br>Tangible Common Equity<br>1<br>147,152<br><br><br>240,008<br><br><br>274,043<br><br><br>307,663<br><br><br>287,329<br><br><br>18.2%<br>Net Income<br>25,866<br>$<br><br>29,540<br>$<br><br>44,675<br>$<br><br>52,681<br>$<br><br>40,005<br>$<br><br>11.5%<br>ROAA (%)<br>1.21<br><br><br>1.34<br><br><br>1.61<br><br><br>1.66<br><br><br>1.14<br><br><br>ROATCE(%)<br>1<br>21.02<br><br><br>17.46<br><br><br>17.74<br><br><br>18.89<br><br><br>15.09<br><br><br>Net Interest Margin (FTE) (%)<br>3.84<br><br><br>3.65<br><br><br>3.22<br><br><br>2.90<br><br><br>3.04<br><br><br>Efficiency Ratio (FTE) (%)<br>1<br>73.80<br><br><br>73.22<br><br><br>68.40<br><br><br>70.02<br><br><br>72.86<br><br><br>Non-Int. Income/Op. Rev. (%)<br>57.73<br><br><br>60.50<br><br><br>64.05<br><br><br>62.86<br><br><br>52.72<br><br><br>Earnings per common share - diluted<br>1.84<br><br><br>1.91<br><br><br>2.52<br><br><br>2.97<br><br><br>2.10<br><br><br>Total Equity/Total Assets (%)<br>9.04<br><br><br>12.12<br><br><br>10.96<br><br><br>10.59<br><br><br>9.44<br><br><br>Tang. Cmn. Equity/Tang. Assets (%)<br>1<br>6.91<br><br><br>10.38<br><br><br>9.27<br><br><br>9.21<br><br><br>7.74<br><br><br>Loans/Deposits (%)<br>95.87<br><br><br>87.32<br><br><br>76.96<br><br><br>60.19<br><br><br>83.83<br><br><br>NPLs/Loans (%)<br>0.41<br><br><br>0.45<br><br><br>0.26<br><br><br>0.12<br><br><br>0.16<br><br><br>NPAs/Assets (%)<br>0.33<br><br><br>0.33<br><br><br>0.17<br><br><br>0.09<br><br><br>0.10<br><br><br>Allowance/NPLs (%)<br>318.45<br><br><br>305.66<br><br><br>674.13<br><br><br>1,437.05<br><br><br>820.93<br><br><br>Allowance/Loans (%)<br>1.30<br><br><br>1.39<br><br><br>1.73<br><br><br>1.80<br><br><br>1.27<br><br><br>NCOs/Average Loans (%)<br>0.18<br><br><br>0.33<br><br><br>0.03<br><br><br>(0.04)<br><br><br>0.02<br><br><br>Annual
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35<br>NON<br>-<br>GAAP<br>DISCLOSURE<br>RECONCILIATION<br>($000s, except where otherwise noted)<br>Q4 2021<br>Q1 2022<br>Q2 2022<br>Q3 2022<br>Q4 2022<br>Tangible common equity to tangible assets<br>Total common stockholders' equity<br>359,403<br>$<br><br>328,505<br>$<br><br>307,158<br>$<br><br>344,839<br>$<br><br>356,872<br>$<br><br>Less: Goodwill<br>31,490<br><br><br>31,490<br><br><br>31,337<br><br><br>46,060<br><br><br>47,087<br><br><br>Less: Other intangible assets<br>20,250<br><br><br>19,197<br><br><br>17,511<br><br><br>23,779<br><br><br>22,455<br><br><br>Tangible common equity (a)<br>307,663<br><br><br>277,818<br><br><br>258,310<br><br><br>275,000<br><br><br>287,330<br><br><br>Total assets<br>3,392,691<br><br><br>3,336,199<br><br><br>3,295,065<br><br><br>3,691,253<br><br><br>3,779,637<br><br><br>Less: Goodwill<br>31,490<br><br><br>31,490<br><br><br>31,337<br><br><br>46,060<br><br><br>47,087<br><br><br>Less: Other intangible assets<br>20,250<br><br><br>19,197<br><br><br>17,511<br><br><br>23,779<br><br><br>22,455<br><br><br>Tangible assets (b)<br>3,340,951<br><br><br>3,285,512<br><br><br>3,246,217<br><br><br>3,621,414<br><br><br>3,710,095<br><br><br>Tangible common equity to tangible assets (a)/(b)<br>9.21%<br><br><br>8.46%<br><br><br>7.96%<br><br><br>7.59%<br><br><br>7.74%<br><br><br>Tangible common equity per common share<br>Total stockholders' equity<br>359,403<br>$<br><br>328,505<br>$<br><br>307,158<br>$<br><br>344,839<br>$<br><br>356,872<br>$<br><br>Less: Goodwill<br>31,490<br><br><br>31,490<br><br><br>31,337<br><br><br>46,060<br><br><br>47,087<br><br><br>Less: Other intangible assets<br>20,250<br><br><br>19,197<br><br><br>17,511<br><br><br>23,779<br><br><br>22,455<br><br><br>Tangible common equity (c)<br>307,663<br><br><br>277,818<br><br><br>258,310<br><br><br>275,000<br><br><br>287,330<br><br><br>Common shares outstanding (d)<br>17,213<br><br><br>17,289<br><br><br>17,306<br><br><br>19,987<br><br><br>19,992<br><br><br>Tangible common equity per common share (c)/(d)<br>17.87<br>$<br><br>16.07<br>$<br><br>14.93<br>$<br><br>13.76<br>$<br><br>14.37<br>$<br><br>Return on average tangible common equity<br>Net income<br>12,705<br>$<br><br>10,184<br>$<br><br>9,293<br>$<br><br>9,619<br>$<br><br>10,909<br>$<br><br>Add: Intangible amortization expense (net of tax)<br>832<br><br><br>832<br><br><br>832<br><br><br>1,046<br><br><br>1,046<br><br><br>Net income, excluding intangible amortization (e)<br>13,537<br><br><br>11,016<br><br><br>10,125<br><br><br>10,665<br><br><br>11,955<br><br><br>Average total equity<br>357,084<br><br><br>350,545<br><br><br>312,515<br><br><br>372,274<br><br><br>349,812<br><br><br>Less: Average goodwill<br>30,930<br><br><br>31,490<br><br><br>31,488<br><br><br>48,141<br><br><br>46,283<br><br><br>Less: Average other intangible assets (net of tax)<br>16,843<br><br><br>15,569<br><br><br>14,737<br><br><br>19,466<br><br><br>18,243<br><br><br>Average tangible common equity (f)<br>309,311<br><br><br>303,486<br><br><br>266,290<br><br><br>304,667<br><br><br>285,286<br><br><br>Return on average tangible common equity (e)/(f)<br>17.36%<br><br><br>14.72%<br><br><br>15.25%<br><br><br>13.89%<br><br><br>16.63%<br><br><br>Efficiency Ratio<br>Noninterest expense<br>41,276<br>$<br><br>38,071<br>$<br><br>39,984<br>$<br><br>42,767<br>$<br><br>37,948<br>$<br><br>Less: Intangible amortization expense<br>1,053<br><br><br>1,053<br><br><br>1,053<br><br><br>1,324<br><br><br>1,324<br><br><br>Adjusted noninterest expense (i)<br>40,223<br><br><br>37,018<br><br><br>38,931<br><br><br>41,443<br><br><br>36,624<br><br><br>Net interest income<br>22,789<br><br><br>21,673<br><br><br>22,776<br><br><br>28,316<br><br><br>26,964<br><br><br>Noninterest income<br>33,718<br><br><br>29,470<br><br><br>29,226<br><br><br>27,010<br><br><br>25,517<br><br><br>Tax-equivalent adjustment<br>99<br><br><br>94<br><br><br>100<br><br><br>112<br><br><br>124<br><br><br>Total tax-equivalent revenue(j)<br>56,606<br><br><br>51,237<br><br><br>52,102<br><br><br>55,438<br><br><br>52,605<br><br><br>Efficiency ratio (i)/(j)<br>71.06%<br><br><br>72.25%<br><br><br>74.72%<br><br><br>74.76%<br><br><br>69.62%<br><br><br>Quarterly
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36<br>NON<br>-<br>GAAP DISCLOSURE RECONCILIATION<br>($000s, except where otherwise noted)<br>2018<br>2019<br>2020<br>2021<br>2022<br>Tangible common equity to tangible assets<br>Total common stockholders' equity<br>196,954<br>$<br><br>285,728<br>$<br><br>330,163<br>$<br><br>359,403<br>$<br><br>356,871<br>$<br><br>Less: Goodwill<br>27,329<br><br><br>27,329<br><br><br>30,201<br><br><br>31,490<br><br><br>47,087<br><br><br>Less: Other intangible assets<br>22,473<br><br><br>18,391<br><br><br>25,919<br><br><br>20,250<br><br><br>22,455<br><br><br>Tangible common equity (a)<br>147,152<br><br><br>240,008<br><br><br>274,043<br><br><br>307,663<br><br><br>287,329<br><br><br>Total assets<br>2,179,070<br><br><br>2,356,878<br><br><br>3,013,771<br><br><br>3,392,691<br><br><br>3,779,637<br><br><br>Less: Goodwill<br>27,329<br><br><br>27,329<br><br><br>30,201<br><br><br>31,490<br><br><br>47,087<br><br><br>Less: Other intangible assets<br>22,473<br><br><br>18,391<br><br><br>25,919<br><br><br>20,250<br><br><br>22,455<br><br><br>Tangible assets (b)<br>2,129,268<br><br><br>2,311,158<br><br><br>2,957,651<br><br><br>3,340,951<br><br><br>3,710,095<br><br><br>Tangible common equity to tangible assets (a)/(b)<br>6.91%<br><br><br>10.38%<br><br><br>9.27%<br><br><br>9.21%<br><br><br>7.74%<br><br><br>Tangible common equity per common share<br>Total stockholders' equity<br>196,954<br>$<br><br>285,728<br>$<br><br>330,163<br>$<br><br>359,403<br>$<br><br>356,871<br>$<br><br>Less: Goodwill<br>27,329<br><br><br>27,329<br><br><br>30,201<br><br><br>31,490<br><br><br>47,087<br><br><br>Less: Other intangible assets<br>22,473<br><br><br>18,391<br><br><br>25,919<br><br><br>20,250<br><br><br>22,455<br><br><br>Tangible common equity (c)<br>147,152<br><br><br>240,008<br><br><br>274,043<br><br><br>307,663<br><br><br>287,329<br><br><br>Common shares outstanding (d)<br>13,775<br><br><br>17,050<br><br><br>17,125<br><br><br>17,213<br><br><br>19,992<br><br><br>Tangible common equity per common share (c)/(d)<br>10.68<br>$<br><br>14.08<br>$<br><br>16.00<br>$<br><br>17.87<br>$<br><br>14.37<br>$<br><br>Return on average tangible common equity<br>Net income<br>25,866<br>$<br><br>29,540<br>$<br><br>44,675<br>$<br><br>52,681<br>$<br><br>40,005<br>$<br><br>Add: Intangible amortization expense (net of tax)<br>3,664<br><br><br>3,224<br><br><br>3,129<br><br><br>3,460<br><br><br>3,756<br><br><br>Net income, excluding intangible amortization (e)<br>29,530<br><br><br>32,764<br><br><br>47,804<br><br><br>56,141<br><br><br>43,761<br><br><br>Average total equity<br>187,341<br><br><br>231,084<br><br><br>310,208<br><br><br>346,059<br><br><br>346,355<br><br><br>Less: Average goodwill<br>27,329<br><br><br>27,329<br><br><br>27,439<br><br><br>30,385<br><br><br>39,415<br><br><br>Less: Average other intangible assets (net of tax)<br>19,522<br><br><br>16,101<br><br><br>13,309<br><br><br>18,548<br><br><br>17,018<br><br><br>Average tangible common equity (f)<br>140,490<br><br><br>187,654<br><br><br>269,460<br><br><br>297,126<br><br><br>289,922<br><br><br>Return on average tangible common equity (e)/(f)<br>21.02%<br><br><br>17.46%<br><br><br>17.74%<br><br><br>18.89%<br><br><br>15.09%<br><br><br>Efficiency Ratio<br>Noninterest expense<br>136,325<br>$<br><br>142,537<br>$<br><br>163,799<br>$<br><br>168,909<br>$<br><br>158,770<br>$<br><br>Less: Intangible amortization expense<br>4,638<br><br><br>4,081<br><br><br>3,961<br><br><br>4,380<br><br><br>4,754<br><br><br>Adjusted noninterest expense (i)<br>131,687<br><br><br>138,456<br><br><br>159,838<br><br><br>164,529<br><br><br>154,016<br><br><br>Net interest income<br>75,224<br><br><br>74,551<br><br><br>83,846<br><br><br>87,099<br><br><br>99,729<br><br><br>Noninterest income<br>102,749<br><br><br>114,194<br><br><br>149,371<br><br><br>147,387<br><br><br>111,223<br><br><br>Tax-equivalent adjustment<br>462<br><br><br>347<br><br><br>455<br><br><br>492<br><br><br>429<br><br><br>Total tax-equivalent revenue(j)<br>178,435<br><br><br>189,092<br><br><br>233,672<br><br><br>234,978<br><br><br>211,381<br><br><br>Efficiency ratio (i)/(j)<br>73.80%<br><br><br>73.22%<br><br><br>68.40%<br><br><br>70.02%<br><br><br>72.86%<br><br><br>Annual
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