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): October 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 October 25, 2023, Alerus Financial Corporation (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2023. 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 October 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 October 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: October 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 (10.25.2023)<br><br>	Alan A. Villalon, Chief Financial Officer<br><br>952.417.3733 (Office)

ALERUS FINANCIAL CORPORATION REPORTS

THIRD QUARTER 2023 NET INCOME OF $9.2 MILLION

MINNEAPOLIS, MN (October 25, 2023) – Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $9.2 million for the third quarter of 2023, or $0.45 per diluted common share, compared to net income of $9.1 million, or $0.45 per diluted common share, for the second quarter of 2023, and net income of $9.6 million, or $0.47 per diluted common share, for the third quarter of 2022.

CEO Comments

President and Chief Executive Officer Katie Lorenson said, “Alerus’ fundamental execution of key strategic initiatives continued during the third quarter with strong deposit retention and acquisition while maintaining noninterest-bearing deposits at 25% and a loan to deposit ratio of 90% without the utilization of brokered deposits. We remain focused on building a valuable commercial wealth bank and continued to attract high-performing revenue producers while prudently managing expenses. In our National Retirement Services division, we exited the ESOP trustee business to invest in our scaled key service lines where Alerus is currently ranked as a top 25 provider in the country. Throughout the Company our teams continued to work together with urgency on process improvement with a constant focus on speed and responsiveness to deliver an exceptional client experience while driving increased capacity and resulting efficiencies.

As the industry continues to face headwinds, we believe Alerus is well positioned for the future. We have a best in class diversified business model that is non-spread dependent with over half of our revenues derived from retirement and wealth management which deliver durable, recurring, and annuitized revenues on minimal capital allocation. We have strong capital, reserves and liquidity levels allowing us to be strategic and opportunistic while holding steadfast to our financial disciplines. In addition, we have a dedicated and loyal team who is focused on adding value to our clients. We thank our team members for their hard work as we continue to build upon our strong foundation.”

Third Quarter Highlights

◾	Total deposits were stable at $2.9 billion compared to the end of the second quarter and as of December 31, 2022
◾	Noninterest-bearing deposits remained constant at 25% of total deposits from the second quarter to the third quarter of 2023
---	---
◾	Loan to deposit ratio as of September 30, 2023 was 90.7%, compared to 83.8% as of December 31, 2022, with no brokered deposits utilized
---	---
◾	Noninterest income was 58.21% of total revenue, compared to 53.69% for the second quarter of 2023
---	---
◾	Yield on interest earning assets increased 11 basis points from 4.55% in the second quarter to 4.66% in the third quarter of 2023
---	---
◾	Noninterest income increased $2.6 million, or 10.2%, driven by a $2.8 million gain related to the sale of the ESOP trustee business in the retirement and benefit services division in the third quarter of 2023. Excluding the ESOP trustee business, noninterest income was up $0.4 million, or 1.6%, when compared to the second quarter of 2023
---	---
◾	Core retirement and benefit services revenue, excluding the ESOP trustee business, increased $0.5 million, or 3.3%, when compared to the second quarter of 2023
---	---
◾	Net recoveries to average loans of 0.09%, compared to net recoveries to average loans of 0.07% for the second quarter of 2023
---	---
◾	Allowance for credit losses to total loans was 1.39% as of September 30, 2023, compared to 1.27% as of December 31, 2022
---	---
◾	Repurchased $1.2 million of the Company’s outstanding stock at an average purchase price of $17.98, reducing common shares outstanding by 68,428 at quarter end
---	---
◾	Common equity tier 1 capital to risk weighted assets as of September 30, 2023 was 13.01%, compared to 13.39% as of December 31, 2022
---	---

Selected Financial Data (unaudited)


	As of and for the
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars and shares in thousands, except per share data)	2023			2023			2022			2023			2022		****
Performance Ratios
Return on average total assets		0.95	%		0.96	%		1.02	%		0.93	%		1.13	%
Return on average common equity		10.05	%		10.14	%		10.25	%		9.79	%		11.27	%
Return on average tangible common equity ^(1)^		13.51	%		13.71	%		13.89	%		13.27	%		14.59	%
Noninterest income as a % of revenue		58.21	%		53.69	%		48.82	%		54.51	%		54.08	%
Net interest margin (tax-equivalent)		2.27	%		2.52	%		3.21	%		2.50	%		3.02	%
Efficiency ratio ^(1)^		73.37	%		72.79	%		74.76	%		73.57	%		73.94	%
Net charge-offs/(recoveries) to average loans		(0.09)	%		(0.07)	%		0.07	%		(0.04)	%		0.04	%
Dividend payout ratio		42.22	%		42.22	%		38.30	%		43.08	%		33.33	%
Per Common Share
Earnings per common share - basic	$	0.46		$	0.45		$	0.48		$	1.31		$	1.58
Earnings per common share - diluted	$	0.45		$	0.45		$	0.47		$	1.30		$	1.56
Dividends declared per common share	$	0.19		$	0.19		$	0.18		$	0.56		$	0.52
Book value per common share	$	17.60		$	17.96		$	17.25
Tangible book value per common share ^(1)^	$	14.32		$	14.60		$	13.76
Average common shares outstanding - basic		19,872			20,033			19,987			19,977			18,186
Average common shares outstanding - diluted		20,095			20,241			20,230			20,193			18,431
Other Data
Retirement and benefit services assets under administration/management	$	34,552,569		$	35,052,652		$	30,545,694
Wealth management assets under administration/management	$	3,724,091		$	3,857,710		$	3,435,786
Mortgage originations	$	109,637		$	111,261		$	229,901		$	298,626		$	686,060

(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 2023 was $20.4 million, a $1.8 million, or 8.3%, decrease from the second quarter of 2023. Net interest income decreased $7.9 million, or 28.0%, from $28.3 million from the third quarter of 2022. Interest income increased $1.7 million, or 4.2%, from the second quarter of 2023, primarily driven by an 11 basis point increase in yield on interest earning assets mostly attributable to higher yields on new loans. The increase in interest income was more than offset by a $3.5 million increase in interest expense, primarily due to an increase in rates paid on interest-bearing deposits and an increase in the average short-term borrowings balance. The increase in interest expense paid on deposits was due to heightened deposit competition, the impact of rising short-term interest rates on indexed money market deposits and clients moving deposits out of noninterest bearing products into interest-bearing products.

Net interest margin (tax-equivalent), was 2.27% for the third quarter of 2023, a 25 basis point decrease from 2.52% for the second quarter of 2023, and a 94 basis point decrease from 3.21% for the third quarter of 2022. The decrease in net interest margin from the prior quarter reflected the impact of rising interest rates on our interest-bearing liabilities partially offset by higher yields on new loans and accretion of fair value marks from the Metro Phoenix Bank transaction.

Noninterest Income

Noninterest income for the third quarter of 2023 was $28.4 million, a $2.6 million, or 10.2%, increase from the second quarter of 2023. The quarter over quarter increase was driven by the divestiture of the ESOP trustee business where a $2.8 million gain was recognized in the quarter. Excluding the ESOP trustee business, core retirement and benefit services revenue increased $0.5 million, or 3.3%, when compared to the second quarter of 2023. Mortgage saw a $0.4 million decrease in mortgage banking revenue with mortgage originations of $109.6 million for the third quarter of 2023, compared to originations of $111.3 million in the second quarter of 2023. Retirement and benefit services revenue increased $2.7 million, or 17.1%, mainly due to the gain on sale as a result of the sale of the ESOP trustee business. Assets under administration/management decreased due to challenged equity and bond market 2

returns. Similarly, wealth management revenue decreased $0.2 million, remaining mostly stable despite assets under administration/management decreasing due to challenging equity and bond markets.

Noninterest income for the third quarter of 2023 increased $1.4 million, or 5.2%, from $27.0 million in the third quarter of 2022. The year over year increase was primarily driven by a $2.0 million increase in Retirement and Benefit services revenue due to the divestiture of the ESOP trustee business and increased assets under administration/management. Assets under administration/management were higher due to an increase in overall plans and participants coupled with improved equity and bond markets. The increase in revenues was partially offset by a $0.2 million decrease related to the exit of the payroll business in 2022. In addition, mortgage revenue decreased $1.3 million due to decreased origination volume resulting from higher interest rates. Wealth management revenue increased $0.4 million driven by an increase in assets under administration/management over the prior year. Assets under administration/management increased over the prior year due to continued success in client acquisition coupled with improved equity and bond markets.

Noninterest Expense

Noninterest expense for the third quarter of 2023 was $37.2 million, a $0.9 million, or 2.4%, increase from the second quarter of 2023. Compensation and employee taxes and benefits expenses increased $0.4 million from the second quarter of 2023, mainly due to severance costs of $0.3 million and $0.3 million of talent acquisition costs, offset by decreased salaries and mortgage incentive compensation as overall headcount declined. Net of the $0.6 million severance and talent acquisition costs, compensation and employee taxes and benefits expenses decreased $0.2 million in the third quarter of 2023.

Noninterest expense for the third quarter of 2023 decreased $5.5 million, or 12.9%, from $42.8 million in the third quarter of 2022. The year over year decrease was primarily due to a $2.1 million decrease in compensation and a $1.4 million decrease in professional fees and assessments. Compensation decreased primarily due to a decrease in overall headcount and due to lower mortgage-related incentive compensation due to lower mortgage originations. The decrease in professional fees and assessments was due to merger-related expenses incurred in the third quarter of 2022, in connection with the acquisition of Metro Phoenix Bank.

Financial Condition

Total assets were $3.9 billion as of September 30, 2023, an increase of $89.5 million, or 2.4%, from December 31, 2022. The increase was primarily due to a $162.4 million increase in loans, a $6.9 million increase in loans held for sale and a $6.5 million increase in cash and cash equivalents, partially offset by a decrease of $96.0 million in investment securities.

Loans

Total loans were $2.6 billion as of September 30, 2023, an increase of $162.4 million, or 6.6%, from December 31, 2022. The increase was primarily driven by a $143.3 million increase in commercial real estate loans and a $38.2 million increase in residential real estate loans, offset by a $1.5 million decrease in commercial and industrial loans, a $0.1 million decrease in real estate construction loans and a $19.8 million decrease in other consumer revolving and installment loans.

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



		September 30,		June 30,		March 31,		December 31,		September 30,
(dollars in thousands)	****	2023		2023		2023		2022		2022
Commercial
Commercial and industrial		$	582,387	$	551,860	$	553,578	$	583,876	$	564,655
Real estate construction			97,742		78,428		108,776		97,810		89,215
Commercial real estate			1,025,014		1,003,821		934,324		881,670		819,068
Total commercial			1,705,143		1,634,109		1,596,678		1,563,356		1,472,938
Consumer
Residential real estate first mortgage			717,793		707,630		698,002		679,551		649,818
Residential real estate junior lien			152,677		157,231		152,281		150,479		143,681
Other revolving and installment			30,817		34,552		39,664		50,608		51,794
Total consumer			901,287		899,413		889,947		880,638		845,293
Total loans		$	2,606,430	$	2,533,522	$	2,486,625	$	2,443,994	$	2,318,231

Deposits

Total deposits were $2.9 billion as of September 30, 2023, a decrease of $43.3 million, or 1.5%, from December 31, 2022. Interest-bearing deposits increased $99.7 million, while noninterest-bearing deposits decreased $143.0 million, from December 31, 2022. The decrease in total deposits was due to both public unit depositor seasonality and clients using excess liquidity and paying down revolving debt. Noninterest-bearing deposits remained stable at 25% of total deposits. Time deposit balances increased as higher short-term CD rates attracted primarily new deposits to the Company with some internal transfers of money from current customers. The Company continued to have $0 of brokered deposits as of September 30, 2023.

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


		September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	****	2023		****	2023		****	2023		****	2022		****	2022
Noninterest-bearing demand		$	717,990		$	715,534		$	792,977		$	860,987		$	905,228
Interest-bearing
Interest-bearing demand			759,812			753,194			817,675			706,275			653,216
Savings accounts			88,341			93,557			99,742			99,882			101,820
Money market savings			959,106			986,403			1,076,166			1,035,981			1,079,520
Time deposits			346,935			304,167			245,418			212,359			222,027
Total interest-bearing			2,154,194			2,137,321			2,239,001			2,054,497			2,056,583
Total deposits		$	2,872,184		$	2,852,855		$	3,031,978		$	2,915,484		$	2,961,811

Asset Quality

Total nonperforming assets were $9.0 million as of September 30, 2023, an increase of $5.2 million, or 135.6%, from December 31, 2022. This increase was primarily driven by one borrower relationship. As of September 30, 2023, the allowance for credit losses on loans was $36.3 million, or 1.39% of total loans, compared to $31.1 million, or 1.27% of total loans, 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
		September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	****	2023		****	2023		****	2023		****	2022		****	2022		****
Nonaccrual loans		$	9,007		$	2,233		$	2,118		$	3,794		$	4,303
Accruing loans 90+ days past due			—			347			—			—			1,000
Total nonperforming loans			9,007			2,580			2,118			3,794			5,303
OREO and repossessed assets			3			—			—			30			904
Total nonperforming assets		$	9,010		$	2,580		$	2,118		$	3,824		$	6,207
Net charge-offs/(recoveries)			(594)			(403)			170			(178)			405
Net charge-offs/(recoveries) to average loans			(0.09)	%		(0.07)	%		0.03	%		(0.03)	%		0.07	%
Nonperforming loans to total loans			0.35	%		0.10	%		0.09	%		0.16	%		0.23	%
Nonperforming assets to total assets			0.23	%		0.07	%		0.05	%		0.10	%		0.17	%
Allowance for credit losses on loans to total loans			1.39	%		1.41	%		1.41	%		1.27	%		1.34	%
Allowance for credit losses on loans to nonperforming loans			403	%		1,384	%		1,657	%		821	%		584	%

For the third quarter of 2023, the Company had net recoveries of $594 thousand, compared to net recoveries of $403 thousand for the second quarter of 2023 and $405 thousand of net charge-offs for the third quarter of 2022.

The Company did not record a provision for credit losses for the third quarter of 2023 due to strong credit quality indicators and net recoveries for the quarter. Beginning on January 1, 2023, the allowance for credit losses on loans is computed under the current expected credit loss, or CECL, accounting standard and prior to that the allowance for credit losses was computed using the incurred loss method. The unearned fair value adjustments on the acquired Metro Phoenix Bank loan portfolio were $5.5 million and $7.1 million, as of September 30, 2023 and December 31, 2022, respectively.

Capital

Total stockholders’ equity was $349.4 million as of September 30, 2023, a decrease of $7.5 million from December 31, 2022. This change was driven by an increase in accumulated other comprehensive loss of $14.8 million. Tangible book value per common share, a non-GAAP financial measure, decreased to $14.32 as of September 30, 2023, from $14.37 as of December 31, 2022. Tangible common equity to tangible assets, a non-GAAP financial measure, decreased to 7.47% as of September 30, 2023, from 7.74% as of December 31, 2022. Common equity tier 1 capital to risk weighted assets decreased to 13.01% as of September 30, 2023, from 13.39% as of December 31, 2022.

During the third quarter of 2023, the Company repurchased approximately $1.2 million of its outstanding stock at an average purchase price of $17.98, which reduced common shares outstanding by 68,428 at quarter end.

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


	****	September 30,		****	December 31,		****	September 30,
	****	2023		****	2022		****	2022
Capital Ratios^(1)^
Alerus Financial Corporation Consolidated
Common equity tier 1 capital to risk weighted assets			13.01	%		13.39	%		13.63	%
Tier 1 capital to risk weighted assets			13.30	%		13.69	%		13.94	%
Total capital to risk weighted assets			16.10	%		16.48	%		16.84	%
Tier 1 capital to average assets			11.14	%		11.25	%		10.82	%
Tangible common equity / tangible assets ^(2)^			7.47	%		7.74	%		7.59	%

Alerus Financial, N.A.
Common equity tier 1 capital to risk weighted assets			12.68	%		12.76	%		13.01	%
Tier 1 capital to risk weighted assets			12.68	%		12.76	%		13.01	%
Total capital to risk weighted assets			13.86	%		13.83	%		14.11	%
Tier 1 capital to average assets			10.72	%		10.48	%		11.12	%

(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.”
---	---

Conference Call

The Company will host a conference call at 11:00 a.m. Central Time on Thursday, October 26, 2023, to discuss its financial results. The call can be accessed via telephone at (833) 470-1428, using access code 328527. 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., the Company 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. The Company 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. The Company 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 benefit services 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 the Company calculates 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 the Company makes 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 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 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 forward-looking statements include, among others, the following: interest rate risk, including the effects of recent and potential additional rate increases by the Federal Reserve; our ability to successfully manage credit risk and maintain an adequate level of allowance for credit 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 and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short-period of time at Silicon Valley Bank, Signature Bank and First Republic Bank that resulted in the failure of those institutions; 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 the Company 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, including as a result of sophisticated attacks using artificial intelligence and similar tools; 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 concentration of large deposits from certain clients, who have balances above current FDIC insurance limits; 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 the Company may become subject; potential impairment to the goodwill the Company 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, including in response to the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank; fluctuations in the values of the securities held in our securities portfolio, including as a result of changes in interest rates; 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; acts of war or terrorism, including the Israeli-Palestinian conflict and the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial reporting; 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. The Company undertakes 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)


	****	September 30,		****	December 31,
	****	2023		****	2022
Assets		(Unaudited)			(Audited)
Cash and cash equivalents		$	64,724		$	58,242
Investment securities
Available-for-sale, at fair value			640,001			717,324
Held-to-maturity, at carrying value (allowance for credit losses of $218 at September 30, 2023)			303,268			321,902
Loans held for sale			16,346			9,488
Loans			2,606,430			2,443,994
Allowance for credit losses on loans			(36,290)			(31,146)
Net loans			2,570,140			2,412,848
Land, premises and equipment, net			17,182			17,288
Operating lease right-of-use assets			5,986			5,419
Accrued interest receivable			15,561			12,869
Bank-owned life insurance			33,012			33,991
Goodwill			46,783			47,087
Other intangible assets			18,482			22,455
Servicing rights			2,214			2,643
Deferred income taxes, net			47,978			42,369
Other assets			87,461			75,712
Total assets		$	3,869,138		$	3,779,637
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing		$	717,990		$	860,987
Interest-bearing			2,154,194			2,054,497
Total deposits			2,872,184			2,915,484
Short-term borrowings			515,470			378,080
Long-term debt			58,928			58,843
Operating lease liabilities			6,286			5,902
Accrued expenses and other liabilities			66,868			64,456
Total liabilities			3,519,736			3,422,765
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: 19,847,706 and 19,991,681 issued and outstanding			19,848			19,992
Additional paid-in capital			151,875			155,095
Retained earnings			291,162			280,426
Accumulated other comprehensive loss			(113,483)			(98,641)
Total stockholders’ equity			349,402			356,872
Total liabilities and stockholders’ equity		$	3,869,138		$	3,779,637

Alerus Financial Corporation and Subsidiaries

Consolidated Statements of Income

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


	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2023		2023		2022		2023		2022
Interest Income	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Loans, including fees	$	34,986	$	33,267	$	25,379	$	99,187	$	60,659
Investment securities
Taxable		6,146		6,125		5,939		18,222		17,447
Exempt from federal income taxes		182		186		209		558		638
Other		724		762		748		2,221		1,021
Total interest income		42,038		40,340		32,275		120,188		79,765
Interest Expense
Deposits		14,436		12,678		1,852		36,218		3,494
Short-term borrowings		6,528		4,763		1,516		15,684		1,794
Long-term debt		679		665		591		1,999		1,712
Total interest expense		21,643		18,106		3,959		53,901		7,000
Net interest income		20,395		22,234		28,316		66,287		72,765
Provision for credit losses		—		—		—		550		—
Net interest income after provision for credit losses		20,395		22,234		28,316		65,737		72,765
Noninterest Income
Retirement and benefit services		18,605		15,890		16,597		49,977		50,536
Wealth management		5,271		5,450		4,852		15,915		15,726
Mortgage banking		2,510		2,905		3,782		7,132		14,751
Service charges on deposit accounts		328		311		377		940		1,152
Other		1,693		1,222		1,402		5,475		3,541
Total noninterest income		28,407		25,778		27,010		79,439		85,706
Noninterest Expense
Compensation		19,071		18,847		21,168		57,076		61,467
Employee taxes and benefits		4,895		4,724		5,079		15,472		17,028
Occupancy and equipment expense		1,883		1,837		1,926		5,619		5,713
Business services, software and technology expense		4,774		5,269		5,373		15,367		15,082
Intangible amortization expense		1,324		1,324		1,324		3,972		3,430
Professional fees and assessments		1,716		1,530		3,126		4,397		6,913
Marketing and business development		692		648		890		2,026		2,304
Supplies and postage		410		406		588		1,275		1,806
Travel		322		306		291		876		826
Mortgage and lending expenses		689		215		409		1,401		1,577
Other		1,484		1,267		2,593		4,022		4,676
Total noninterest expense		37,260		36,373		42,767		111,503		120,822
Income before income taxes		11,542		11,639		12,559		33,673		37,649
Income tax expense		2,381		2,535		2,940		7,222		8,553
Net income	$	9,161	$	9,104	$	9,619	$	26,451	$	29,096
Per Common Share Data
Earnings per common share	$	0.46	$	0.45	$	0.48	$	1.31	$	1.58
Diluted earnings per common share	$	0.45	$	0.45	$	0.47	$	1.30	$	1.56
Dividends declared per common share	$	0.19	$	0.19	$	0.18	$	0.56	$	0.52
Average common shares outstanding		19,872		20,033		19,987		19,977		18,186
Diluted average common shares outstanding		20,095		20,241		20,230		20,193		18,431

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)


	****	September 30,			June 30,			December 31,			September 30,
	****	2023			2023			2022			2022
Tangible Common Equity to Tangible Assets
Total common stockholders’ equity		$	349,402		$	357,685		$	356,872		$	344,839
Less: Goodwill			46,783			47,087			47,087			46,060
Less: Other intangible assets			18,482			19,806			22,455			23,779
Tangible common equity (a)			284,137			290,792			287,330			275,000
Total assets			3,869,138			3,832,978			3,779,637			3,691,253
Less: Goodwill			46,783			47,087			47,087			46,060
Less: Other intangible assets			18,482			19,806			22,455			23,779
Tangible assets (b)			3,803,873			3,766,085			3,710,095			3,621,414
Tangible common equity to tangible assets (a)/(b)			7.47	%		7.72	%		7.74	%		7.59	%
Tangible Book Value Per Common Share
Total common stockholders’ equity		$	349,402		$	357,685		$	356,872		$	344,839
Less: Goodwill			46,783			47,087			47,087			46,060
Less: Other intangible assets			18,482			19,806			22,455			23,779
Tangible common equity (c)			284,137			290,792			287,330			275,000
Total common shares issued and outstanding (d)			19,848			19,915			19,992			19,987
Tangible book value per common share (c)/(d)		$	14.32		$	14.60		$	14.37		$	13.76


	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2023			2023			2022			2023			2022
Return on Average Tangible Common Equity
Net income	$	9,161		$	9,104		$	9,619		$	26,451		$	29,096
Add: Intangible amortization expense (net of tax)		1,046			1,046			1,046			3,138			2,710
Net income, excluding intangible amortization (e)		10,207			10,150			10,665			29,589			31,806
Average total equity		361,735			360,216			372,274			361,260			345,192
Less: Average goodwill		46,882			47,087			48,141			47,018			37,101
Less: Average other intangible assets (net of tax)		15,109			16,153			19,466			16,149			16,605
Average tangible common equity (f)		299,744			296,976			304,667			298,093			291,486
Return on average tangible common equity (e)/(f)		13.51	%		13.71	%		13.89	%		13.27	%		14.59	%
Efficiency Ratio
Noninterest expense	$	37,260		$	36,373		$	42,767		$	111,503		$	120,822
Less: Intangible amortization expense		1,324			1,324			1,324			3,972			3,430
Adjusted noninterest expense (g)		35,936			35,049			41,443			107,531			117,392
Net interest income		20,395			22,234			28,316			66,287			72,765
Noninterest income		28,407			25,778			27,010			79,439			85,706
Tax-equivalent adjustment		180			140			112			444			306
Total tax-equivalent revenue (h)		48,982			48,152			55,438			146,170			158,777
Efficiency ratio (g)/(h)		73.37	%		72.79	%		74.76	%		73.57	%		73.94	%

Alerus Financial Corporation and Subsidiaries

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

(dollars in thousands)


	Three months ended												Nine months ended
	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
			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	$	29,450	3.09	%	$	36,418	4.00	%	$	72,157	2.02	%	$	35,892	3.45	%	$	68,811	0.86	%
Investment securities ^(1)^		971,913	2.60	%		1,007,792	2.53	%		1,116,458	2.20	%		1,004,436	2.52	%		1,165,414	2.09	%
Fed funds sold		—	—	%		—	—	%		21,893	2.37	%		—	—	%		7,378	2.37	%
Loans held for sale		16,518	5.55	%		14,536	5.22	%		27,032	4.14	%		13,822	5.29	%		27,864	3.31	%
Loans
Commercial:
Commercial and industrial		555,649	6.61	%		545,357	6.90	%		566,987	5.41	%		553,460	6.53	%		488,771	4.87	%
Real estate construction		88,450	8.52	%		87,905	7.43	%		70,545	5.60	%		93,098	7.46	%		52,212	4.71	%
Commercial real estate		998,636	5.25	%		956,828	5.09	%		807,505	4.07	%		956,018	5.10	%		670,854	3.86	%
Total commercial		1,642,735	5.89	%		1,590,090	5.84	%		1,445,037	4.67	%		1,602,576	5.73	%		1,211,837	4.30	%
Consumer
Residential real estate first mortgage		714,874	3.89	%		698,288	3.76	%		624,826	3.54	%		700,734	3.80	%		561,261	3.45	%
Residential real estate junior lien		154,939	7.69	%		156,276	7.44	%		140,664	5.41	%		153,664	7.45	%		132,968	4.86	%
Other revolving and installment		32,288	6.11	%		37,759	6.03	%		51,834	4.98	%		38,148	5.99	%		52,150	4.59	%
Total consumer		902,101	4.62	%		892,323	4.50	%		817,324	3.96	%		892,546	4.53	%		746,379	3.78	%
Total loans ^(1)^		2,544,836	5.44	%		2,482,413	5.36	%		2,262,361	4.41	%		2,495,122	5.30	%		1,958,216	4.10	%
Federal Reserve/FHLB stock		28,761	6.83	%		23,724	6.76	%		18,449	5.35	%		25,403	6.81	%		11,877	5.04	%
Total interest earning assets		3,591,478	4.66	%		3,564,883	4.55	%		3,518,350	3.65	%		3,574,675	4.51	%		3,239,560	3.30	%
Noninterest earning assets		230,123				220,604				224,804				224,970				191,652
Total assets	$	3,821,601			$	3,785,487			$	3,743,154			$	3,799,645			$	3,431,212
Interest-Bearing Liabilities
Interest-bearing demand deposits	$	751,455	1.34	%	$	775,818	1.26	%	$	659,696	0.13	%	$	757,995	1.16	%	$	692,310	0.12	%
Money market and savings deposits		1,073,297	3.20	%		1,145,335	2.81	%		1,180,576	0.40	%		1,127,630	2.72	%		1,089,137	0.24	%
Time deposits		327,264	3.94	%		270,121	3.29	%		234,459	0.74	%		276,797	3.26	%		224,603	0.54	%
Fed funds purchased		312,121	5.50	%		360,033	5.31	%		84,149	3.71	%		320,861	5.23	%		55,527	2.47	%
Short-term borrowings		173,913	5.02	%		—	—	%		168,750	1.71	%		84,982	4.92	%		60,073	1.71	%
Long-term debt		58,914	4.57	%		58,886	4.52	%		58,843	3.98	%		58,886	4.54	%		58,875	3.89	%
Total interest-bearing liabilities		2,696,964	3.18	%		2,610,193	2.78	%		2,386,473	0.66	%		2,627,151	2.74	%		2,180,525	0.43	%
Noninterest-Bearing Liabilities and Stockholders' Equity
Noninterest-bearing deposits		692,742				748,942				920,340				743,253				845,375
Other noninterest-bearing liabilities		70,160				66,136				64,067				67,981				60,120
Stockholders’ equity		361,735				360,216				372,274				361,260				345,192
Total liabilities and stockholders’ equity	$	3,821,601			$	3,785,487			$	3,743,154			$	3,799,645			$	3,431,212
Net interest rate spread			1.48	%			1.77	%			2.99	%			1.77	%			2.87	%
Net interest margin, tax-equivalent ^(1)^			2.27	%			2.52	%			3.21	%			2.50	%			3.02	%

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

Exhibit 99.2

EARNINGS PRESENTATION<br>Q3 2023<br>NASDAQ: ALRS<br>Alerus
1<br>Forward-Looking Statements<br>This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements<br>include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of Alerus Financial Corporation. These<br>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”,<br>“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<br>statements include, among others, statements we make regarding our projected growth, anticipated future financial performance, financial condition, credit quality, management’s long-term<br>performance goals and the future plans and prospects of Alerus Financial Corporation.<br>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 our business,<br>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<br>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<br>indicated in 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<br>materially from those indicated in forward-looking statements include, among others, the following: interest rate risk, including the effects of recent and potential additional rate increases by the Federal<br>Reserve; our ability to successfully manage credit risk and maintain an adequate level of allowance for credit losses; new or revised accounting standards, including as a result of the implementation of<br>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<br>rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short-period of time at<br>Silicon Valley Bank, Signature Bank and First Republic Bank that resulted in the failure of those institutions; the overall health of the local and national real estate market; concentrations within our loan<br>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<br>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<br>a sufficient volume of residential mortgages; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents, including as a result of<br>sophisticated attacks using artificial intelligence and similar tools; interruptions involving our information technology and telecommunications systems or third-party servicers; potential losses incurred<br>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<br>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<br>manage liquidity risk, including our need to access higher cost sources of funds such as fed funds purchased and short-term borrowings; the concentration of large deposits from certain clients, who have<br>balances above current FDIC insurance limits; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions<br>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<br>regulatory framework that applies to us; the impact of recent and future legislative and regulatory changes, including in response to the recent failures of Silicon Valley Bank, Signature Bank and First<br>Republic Bank; fluctuations in the values of the securities held in our securities portfolio, including as a result of changes in interest rates; governmental monetary, trade and fiscal policies; risks related<br>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;<br>acts of war or terrorism, including the Israeli-Palestinian conflict and the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial<br>reporting; 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<br>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<br>Securities and Exchange Commission.<br>Any forward-looking statement made by us in this presentation 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<br>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.<br>Non-GAAP Financial Measures<br>This presentation includes certain ratios and amounts that do not conform to U.S. Generally Accepted Accounting Principles, or GAAP. Management uses certain non-GAAP financial measures to evaluate<br>financial performance and business trends from period to period and believes that disclosure of these non-GAAP financial measures will help investors, rating agencies and analysts evaluate the financial<br>performance and condition of Alerus Financial Corporation. This presentation includes a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.<br>Miscellaneous<br>Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in<br>the affairs of Alerus Financial Corporation after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. We believe that such<br>information is accurate and that the sources from which it has been obtained are reliable. We cannot guarantee the accuracy of such information, however, and we have not independently verified such<br>information.<br>DISCLAIMERS
---
2<br>Retirement and<br>Benefit Revenue<br>33.6%<br>Wealth<br>Management<br>Revenue 10.6%<br>Mortgage<br>Revenue<br>4.7%<br>Banking Fees and<br>Other Income 4.0%<br>Net Interest<br>Income<br>47.1%<br>FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2023<br>Noninterest income:<br>$105.0 million<br>Net interest income:<br>$93.3 million<br>$31.9 $34.2 $36.7 $32.1 $34.6<br>2019 2020 2021 2022 Q3 2023<br>OUR MISSION<br>▪ To positively impact our clients’ financial potential-through holistic guidance, unparalleled service, and engaging technology.<br>COMPANY PROFILE<br>Data as of 9/30/2023.<br>DIVERSIFIED REVENUE STREAM ASSET GROWTH ($ IN BILLIONS)<br>Banking Assets<br>Retirement and Benefit Services AUA/AUM<br>Wealth Management AUA/AUM<br>$3.1 $3.3 $4.0 $3.6 $3.7<br>2019 2020 2021 2022 Q3 2023<br>NONINTEREST<br>INCOME AS A %<br>OF REVENUE:<br>52.9%<br>DIVERSIFIED FINANCIAL SERVICES COMPANY<br>▪ $3.9 billion Banking assets<br>▪ $34.6 billion Retirement and Benefit Services AUA/AUM<br>▪ $3.7 billion Wealth Management AUA/AUM<br>▪ $298.6 million in Mortgage Originations YTD<br>ALERUS BUSINESS LINES<br>▪ Banking<br>▪ Retirement and Benefit Services<br>▪ Wealth Management<br>▪ Mortgage<br>$2.4 $3.0 $3.4 $3.8 $3.9<br>2019 2020 2021 2022 Q3 2023
---
3<br>A BIG COMPANY MODEL WITH SMALL COMPANY EXECUTION<br>OUR DIVERSE BUSINESS LINES<br>Revenue data LTM as of 9/30/2023.<br>TRUSTED<br>ADVISOR<br>BANKING<br>WEALTH<br>MANAGEMENT<br>• Residential mortgage lending<br>• Residential construction lending<br>• Home equity/second mortgages<br>• Advisory services<br>• Trust and fiduciary services<br>• Investment management<br>• Insurance planning<br>• Financial planning<br>• Education planning<br>• Retirement plan<br>administration and<br>recordkeeping<br>• Retirement plan<br>investment advisory<br>• Health and benefits<br>administration<br>COMMERCIAL BANKING<br>• Commercial and commercial real<br>estate lending<br>• Government and non-profit banking<br>• Small business lending<br>• Treasury management<br>• Deposit services<br>CONSUMER BANKING<br>• Private banking<br>• Deposit products<br>and services<br>• Consumer lending<br>MORTGAGE RETIREMENT<br>& BENEFIT SERVICES<br>33% of Revenue 5% of Revenue<br>11% of Revenue<br>51% of Revenue
---
4<br>FRANCHISE FOOTPRINT<br>FULL-SERVICE BANKING OFFICES<br>Alerus offers banking, retirement and benefit services, mortgage<br>and wealth management services at all full-service banking offices<br>▪ Grand Forks, ND: 4 full-service banking offices<br>▪ Fargo, ND: 3 full-service banking offices<br>▪ Twin Cities, MN: 6 full-service banking offices<br>▪ Phoenix, AZ: 2 full-service banking offices<br>RETIREMENT AND BENEFIT SERVICES OFFICES<br>▪ 1 office in Minnesota<br>▪ 1 office in Michigan<br>▪ 1 office in Colorado<br>▪ Serve clients in all 50 states through retirement plan services<br>DIVERSIFIED CLIENT BASE<br>▪ 38,000 consumer clients<br>▪ 16,700 commercial clients<br>▪ 8,250 employer-sponsored retirement plans<br>Data as of 9/30/2023.<br>▪ 468,000 employer-sponsored retirement plan participants /<br>health savings account participants<br>▪ 38,500 flexible spending account / health reimbursement<br>arrangement participants
---
5<br>39.0%<br>24.2%<br>10.2%<br>30.0% 26.6%<br>54.3%<br>15.7%<br>STRONG GROWTH MARKETS AND STABLE CORE FUNDING<br>MARKET DISTRIBUTION<br>LOANS $2,606 DEPOSITS $2,872<br>ARB ASSETS UNDER<br>ADMIN/MGMT. $34,553<br>WM ASSETS UNDER<br>ADMIN/MGMT. $3,724<br>MORTGAGE<br>ORIGINATIONS $110<br>(DOLLARS IN MILLIONS)<br>Data as of 9/30/2023 QTD.<br>LEGEND<br>North Dakota<br>Minnesota<br>Arizona<br>National<br>Synergistic<br>9.8%<br>84.2%<br>6.0%<br>71.8%<br>11.4%<br>4.0% 12.8% 9.3%<br>13.5%<br>77.2%
---
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 — a trusted advisor —<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 benefit<br>services and wealth management divisions totaled<br>$763.7 million as of September 30, 2023.<br>Cumulative rollovers have added $1.2 billion of<br>assets under management.<br>Residential real estate first mortgages totaled<br>$717.8 million as of September 30, 2023.<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 benefit services.<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 RESULTS<br>ONE ALERUS<br>Data as of 9/30/2023.
---
7<br>EXPANDED TO COLORADO<br>Acquired Retirement Planning Services, Inc.<br>(Littleton, CO)<br>To supplement our organic growth, we have executed 25 acquisitions throughout the history of our<br>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>REBRANDED TO ALERUS 2011<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 (in AZ) from BNC National Bank<br>EXPANDED TO MICHIGAN<br>Acquired PensionTrend, Inc. and PensionTrend<br>Investment Advisers, LLC (Okemos, MI)<br>Acquired Tegrit Administrators, LLC<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 LAUNCHED ONE ALERUS STRATEGIC GROWTH PLAN<br>2020<br>2022 Acquired Metro Phoenix Bank (Phoenix, AZ)
---
8<br>▪ Diversified client base consists of 38,000 consumers clients, 16,700 commercial clients and over 395,000<br>employer-sponsored retirement and benefit plan participants<br>▪ Harness product synergies unavailable to traditional banking organizations<br>▪ Capitalize on strategic opportunities to grow in our existing markets or new markets<br>▪ Acquisition targets include banks and nationwide fee income companies with complementary business models,<br>cultural similarities, synergy and growth opportunities<br>▪ Recruiting top talent in mid-market C&I banking and specialty niches to accelerate growth in our existing<br>markets or jumpstart our entrance into new markets<br>▪ Market disruption caused by M&A activity provides lift-out opportunities<br>▪ Purpose driven organization with a recognizable mission for clients, employees, and stakeholders<br>▪ Proactively position ourselves as an acquirer and employer of choice<br>▪ Invested in one of the leading marketing automation technologies<br>▪ Provide secure and reliable technology that meets evolving client expectations<br>▪ Integrate our full product and service offerings through our fast-follower 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>▪ Collaborative leadership team focused on growing organically by deepening relationships with existing clients<br>through our expansive services<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”
---
9<br>DAN COUGHLIN<br>Since 2016<br>Chairman, Alerus Financial Corp.<br>Former MD & Co-Head – 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 – 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-in-Charge,<br>Upper Midwest Region, RSM<br>EXECUTIVE MANAGEMENT<br>BOARD OF DIRECTORS<br>KATIE LORENSON<br>Director, 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
---
10<br>THIRD QUARTER HIGHLIGHTS
---
11<br>▪ Returned $5.0 million to shareholders through dividends and share repurchases during the quarter<br>▪ Repurchased $1.2 million of outstanding stock in the quarter at an average purchase price of $17.98<br>which reduced outstanding common shares by 68,428 at quarter end<br>▪ Common equity tier 1 capital to risk weighted assets as of September 30, 2023 was 13.01%, compared<br>to 13.39% as of December 31, 2022<br>▪ Total deposits were stable at $2.9 billion compared to June 30, 2023, and December 31, 2022<br>▪ Noninterest-bearing deposits remained constant at 25% of total deposits from the second quarter to<br>the third quarter of 2023<br>▪ Loan to deposit ratio as of September 30, 2023 was 90.7%, compared to 83.8% as of December 31,<br>2022, with no brokered deposits utilized<br>▪ Net recoveries to average loans of 0.09%, compared to net recoveries to average loans of 0.07% for the<br>second quarter of 2023<br>▪ Allowance for credit losses to total loans was 1.39% compared to 1.27% as of December 31, 2022<br>▪ Noninterest income represented 58.2% of total revenue compared to 53.7% for the prior quarter<br>▪ Yield on earning assets increased 11 bps from 4.55% in the second quarter to 4.66% in the third<br>quarter of 2023<br>▪ Noninterest income increased $2.6, million or 10.2%, from the prior quarter<br>▪ Includes a $2.8 million impact related to the sale of the ESOP trustee business. Excluding the<br>ESOP trustee business, noninterest income was up $0.4 million, or 1.6%, from the prior quarter<br>▪ Noninterest expense down 12.9% from the third quarter of 2022<br>SUCCESS IS NEVER FINAL<br>Q3 2023 HIGHLIGHTS<br>EARNINGS<br>BALANCE SHEET &<br>ASSET QUALITY<br>CAPITAL STRENGTH
---
12<br>INCOME STATEMENT<br>Q3 2023 FINANCIAL HIGHLIGHTS<br>1 – Represents a non-GAAP Financial measure. See “Non-GAAP Disclosure Reconciliation.”<br>(dollars and shares in thousands, except per share data)<br>Net Interest Income $ 20,395 $ 22,234 $ 28,316 $ 66,287 $ 72,765<br>Provision for Credit Losses — — — 550 —<br>Net Interest Income After Provision for Credit Losses 20,395 22,234 28,316 65,737 72,765<br>Noninterest Income 28,407 25,778 27,010 79,439 85,706<br>Noninterest Expense 37,260 36,373 42,767 111,503 120,822<br>Income Before Income Taxes 11,542 11,639 12,559 33,673 37,649<br>Income Tax Expense 2,381 2,535 2,940 7,222 8,553<br>Net Income $ 9,161 $ 9,104 $ 9,619 $ 26,451 $ 29,096<br>Per Common Share Data<br>Earnings Per Common Share - Diluted $ 0.45 $ 0.45 $ 0.47 $ 1.30 $ 1.56<br>Diluted Average Common Shares Outstanding 20,095 20,241 20,230 20,193 18,431<br>Performance Ratios<br>Return on Average Total Assets 0.95 % 0.96 % 1.02 % 0.93 % 1.13 %<br>Return on Average Tangible Common Equity (1)<br> 13.51 % 13.71 % 13.89 % 13.27 % 14.59 %<br>Noninterest Income as a % of Revenue 58.21 % 53.69 % 48.82 % 54.51 % 54.08 %<br>Net Interest Margin (Tax-Equivalent) 2.27 % 2.52 % 3.21 % 2.50 % 3.02 %<br>Efficiency Ratio (1)<br> 73.37 % 72.79 % 74.76 % 73.57 % 73.94 %<br>September 30,<br>2023<br>September 30,<br>2022<br>Three months ended Nine months ended<br>2023<br>September 30, June 30,<br>2023<br>September 30,<br>2022
---
13<br>PERFORMANCE RATIOS<br>1 – Represents a non-GAAP Financial measure. See “Non-GAAP Disclosure Reconciliation.”<br>2 – Rates have been annualized<br>1.02%<br>0.96%<br>0.95%<br>Q3 2022 Q2 2023 Q3 2023<br>Return on Average Assets(2)<br>13.89%<br>13.71%<br>13.51%<br>Q3 2022 Q2 2023 Q3 2023<br>Return on Average Tangible<br>Common Equity(1)/(2)<br>$13.76<br>$14.60<br>$14.32<br>Q3 2022 Q2 2023 Q3 2023<br>Tangible Book Value per Share(1)
---
14<br>KEY REVENUE ITEMS<br>DOLLARS IN THOUSANDS<br>1 – Other noninterest income consists of service charges on deposit accounts, interchange income and other noninterest income. Net Interest (8.3%) Linked Quarter<br>Income (28.0%) Year-over-year<br>Noninterest 10.2% Linked Quarter<br>Income 5.2% Year-over-year<br>$28,316<br>$22,234<br>$20,395<br>Q3 2022 Q2 2023 Q3 2023<br>Net Interest Income<br>$16,597 $15,890<br>$18,605<br>$4,852 $5,450<br>$5,271<br>$3,782 $2,905<br>$2,510<br>$1,779<br>$1,533<br>$2,021<br>$27,010<br>$25,778<br>$28,407<br>Q3 2022 Q2 2023 Q3 2023<br>Noninterest Income<br>Retirement & Benefit Services Wealth Management<br>Mortgage Banking Other(1)
---
15<br>NET INTEREST INCOME<br>LOAN YIELD ANDNET INTEREST MARGIN (NIM)(1)<br>AVERAGE EFFECTIVE FF RATE AND COST OF FUNDS QUARTERLY HIGHLIGHTS (1)<br>1 – Rates have been annualized for interim periods. Source: Federal Reserve.<br>▪ While NII decreased in the quarter, interest income<br>increased $1.7 million, or 4.2%, from Q2 2023 driven by<br>higher loan volume and higher yields along with one extra<br>day in the quarter<br>▪ Interest income was offset by a $3.5 million increase in<br>interest expense over the prior quarter primarily due to a<br>34 bps rate increase on interest-bearing deposits and<br>increased short term borrowings<br>▪ The beta on interest-bearing deposits from the beginning<br>of the current tightening cycle was 49% as of Q3 2023<br>NET INTEREST INCOME (NII)<br>($ in Thousands)<br>NIM: 2.52% 0.10% 0.07% 0.03% (0.19)% (0.26)% 2.27%<br>4.41%<br>5.36% 5.44%<br>3.21%<br>2.52% 2.27%<br>Q3 2022 Q2 2023 Q3 2023<br>Loan yield NIM<br>2.20%<br>4.99%<br>5.26%<br>0.47%<br>2.16%<br>2.53%<br>Q3 2022 Q2 2023 Q3 2023<br>Average effective FF rate Cost of funds
---
16<br>DIVERSIFIED LOAN PORTFOLIO<br>TOTAL LOANS<br>DIVERSIFIED LOAN PORTFOLIO<br>HIGHLIGHTS<br>▪ Total loans grew 6.6% from December 31, 2022<br>▪ Year to date loan growth was primarily driven by an<br>increase in commercial real estate and residential<br>real estate loans, offset by a decrease in other<br>consumer revolving and installment loans.<br>▪ Total loan yield in the current quarter increased to<br>5.44% from 5.36% in the prior quarter<br>Commercial<br>and industrial<br>22.3%<br>Real estate<br>construction<br>3.8%<br>Commercial real<br>estate 39.3%<br>Residential real<br>estate first<br>mortgage<br>27.5%<br>Residentital real estate<br>junior lien 5.9%<br>Other revolving and<br>installment 1.2%<br>($ in Millions)<br>PORTFOLIO CHANGES<br>As of As of As of Change Change<br>($ in Thousands) 9/30/2022 6/30/2023 9/30/2023 QoQ YoY<br>Commercial and industrial $ 564,655 551,860 $ 582,387 5.5% 3.1%<br>Real estate construction 89,215 78,428 97,742 24.6% 9.6%<br>Commercial real estate 819,068 1,003,821 1,025,014 2.1% 25.1%<br>Residential real estate first<br>mortgage 649,818 707,630 717,793 1.4% 10.5%<br>Residentital real estate<br>junior lien 143,681 157,231 152,677 -2.9% 6.3%<br>Other revolving and<br>installment 51,794 34,552 30,817 -10.8% -40.5%<br>Total 2,318,231 2,533,522 2,606,430 2.9% 12.4%<br>Loans to deposits ratio 78.3% 88.8% 90.7%<br>$2,318.2<br>$2,533.5 $2,606.4<br>Q3 2022 Q2 2023 Q3 2023
---
17<br>NonInterest-Bearing<br>Deposits 25.0%<br>Interest-Bearing<br>Demand Deposits<br>26.5%<br>Money Market &<br>Savings 30.3%<br>HSA<br>Deposits<br>6.1%<br>Time Deposits<br>12.1%<br>STRONG CORE FUNDING MIX<br>TOTAL DEPOSITS HIGHLIGHTS<br>CHECKING<br>ACCOUNTS:<br>51.5%<br>SEPTEMBER 30, 2023 DEPOSIT FUNDING ($2,872 MILLION) PORTFOLIO CHANGES<br>($ in Millions)<br>▪ Total deposits increased $19.3 million in the third<br>quarter compared to June 30, 2023<br>▪ Noninterest-bearing deposits increased 0.3%<br>compared to June 30, 2023<br>▪ Time deposits increased 14.1% in the current<br>quarter as higher short-term CD rates attracted<br>both existing non-maturity deposits as well as new<br>deposits to the Company<br>As of As of As of Change Change<br>($ in Thousands) 9/30/2022 6/30/2023 9/30/2023 QoQ YoY<br>Noninterest-bearing 905,228 715,534 717,990 0.3% -20.7%<br>Interest-bearing demand 653,216 753,194 759,812 0.9% 16.3%<br>Money market and savings 1,018,289 906,460 871,720 -3.8% -14.4%<br>Time deposits<br> 222,027 304,167 346,935 14.1% 56.3%<br>HSA deposits 163,052 173,500 175,727 1.3% 7.8%<br>Total<br> 2,961,811 2,852,855 2,872,184 0.7% -3.0%<br>$2,056.6 $2,137.3 $2,154.2<br>$905.2 $715.5 $718.0<br>$2,961.8 $2,852.8 $2,872.2<br>Q3 2022 Q2 2023 Q3 2023<br>Interest-Bearing Deposits NonInterest-Bearing Deposits
---
18<br>$633.5<br>$743.4 $763.7<br>Q322 Q223 Q323<br>Commercial<br>38.6%<br>Consumer<br>30.4%<br>Synergistic<br>26.6%<br>Public<br>4.4%<br>DEPOSIT CHARACTERISTICS<br>STRONG LIQUIDITY WELL IN EXCESS OF UNINSURED BALANCES<br>2 – Uninsured and not collateralized deposits represent those customer deposit balances over the current FDIC<br>insurance limit of $250,000 that are not collateralized by other means such as pledged loans or pledged securities<br>COST OF FUNDS INCREASING WITH SHORT-TERM RATES SEPTEMBER 30, 2023 DEPOSIT COMPOSITION<br>SYNERGISTIC DEPOSIT GROWTH(1) UNINSURED VS INSURED<br>($ in Millions)<br>As of September 30, 2023, our loan to deposit ratio<br>was 90.7% with no brokered deposits utilized<br>21% YoY growth<br>1 – Synergistic deposits are sourced from our retirement and benefit services and wealth management divisions<br>0.25% 0.35%<br>0.47%<br>1.73%<br>2.32%<br>2.16%<br>2.01%<br>2.66%<br>2.53%<br>Cost of<br>Total Deposits<br>Cost of Interest-Bearing Deposits<br>Total Cost of<br>Funds<br>Q3 2022 Q2 2023 Q3 2023<br>Uninsured and not<br>collateralized (2)<br>25.1%<br>Uninsured but<br>collateralized<br>6.6%<br>Uninsured Holding<br>Company deposits held<br>at Bank 2.4%<br>Insured 65.9%
---
19<br>INVESTMENT PORTFOLIO<br>INVESTMENT PORTFOLIO MIX<br>AOCI<br>Yield on Securities: 2.2% 2.5% 2.6%<br>% of Earning Assets: 30.0% 27.7% 26.3%<br>($ in Thousands)<br>($ in Thousands)<br>Held-to-Maturity: 32.2% Available-for-Sale: 67.8%<br>$(102,909)<br>$(100,742)<br>$(113,483)<br>Q3 2022 Q2 2023 Q3 2023<br>Agency Non-MBS 0.3%<br>Corporate Debt<br>6.0%<br>Agency MBS<br>34.5%<br>Corporate ABS &<br>CMO 45.4%<br>Municipals<br>13.8%<br>$1,055,520 $985,870 $943,269<br>Q3 2022 Q2 2023 Q3 2023
---
20<br>$31,905 $34,200<br>$36,733<br>$32,123 $34,553<br>434,045<br>423,156<br>447,564 453,757<br>468,182<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 2020 2021 2022 Q3 2023 YTD<br>AUA/AUM Participants<br>$89,685<br>$230,498 $202,330 $195,617 $221,042<br>$119,728<br>$126,518 $153,224 $166,171<br>$175,727<br>$93,629<br>$136,946 $170,224 $167,796 $141,691<br>$303,042<br>$493,962<br>$525,778 $529,584 $538,459<br>2019 2020 2021 2022 Q3 2023<br>Money Market HSA Other<br>$12,403 $12,280 $12,458<br>$3,313 $2,505 $2,807<br>$881 $1,105 $565<br>$2,775 $16,597 $15,890<br>$18,605<br>Q3 2022 Q2 2023 Q3 2023<br>Recurring annual revenue Transaction based revenue<br>ESOP Trustee revenue One-time gain on ESOP Trustee sale<br>RETIREMENT AND BENEFIT SERVICES<br>OVERVIEW – 8,250 PLANS – NATIONAL FOOTPRINT ASSETS UNDER ADMINISTRATION/MANAGEMENT<br>REVENUE MIX<br>▪ RETIREMENT - Provide recordkeeping and administration<br>services to qualified retirement plans<br>▪ TRUST CUSTODY & ADVISORY SERVICES - Provide investment<br>fiduciary services to retirement plans<br>▪ HEALTH AND BENEFITS - Provide HSA, FSA, COBRA<br>recordkeeping and administration services to employers<br>▪ REVENUE MIX - 35% market sensitive<br>▪ ONE ALERUS SYNERGIES<br>• IRA rollovers $100.6 million YTD 9/30/2023<br>• Deposits $538 million - HSA deposits, 401(k) Money Market<br>Funds, Emergency Savings, Terminated Participants<br>• Commercial Banking client expansion<br>($ in Millions)<br>STABLE SYNERGISTIC DEPOSITS<br>($ in Thousands)<br>Revenue: $63,811 $60,956 $71,709 $67,135 $49,977<br>($ in Thousands)
---
21<br>$4,250 $4,782 $4,726<br>$401<br>$389 $391 $201<br>$279 $154 $4,852<br>$5,450 $5,271<br>Q3 2022 Q2 2023 Q3 2023<br>Asset Management Brokerage Insurance & Advisory<br>$3,103 $3,339<br>$4,040 $3,583 $3,724<br>2019 2020 2021 2022 Q3 2023 YTD<br>▪ ADVISORY AND PLANNING SERVICES<br>• Advisory Services, Insurance Planning, Financial Planning,<br>Education Planning<br>▪ INVESTMENT MANAGEMENT<br>• Personalized SMA strategies, Tax Management and Global<br>Perspective<br>▪ TRUST AND FIDUCIARY SERVICES<br>• IRA, Agency and Personal Trust<br>▪ ONE ALERUS SYNERGIES<br>• IRA rollovers<br>• 401(k) managed accounts<br>• Synergistic deposits totaled $225.3 million at Q3 2023<br>WEALTH MANAGEMENT SERVICES<br>OVERVIEW OF SERVICES ASSETS UNDER ADMINISTRATION/MANAGEMENT<br>REVENUE MIX<br>($ in Millions)<br>SYNERGISTIC DEPOSITS<br>($ in Thousands) ($ in Thousands)<br>$108,504 $101,621<br>$143,183 $161,973<br>$225,262<br>2019 2020 2021 2022 Q3 2023<br>Revenue: $15,502 $17,451 $21,052 $20,870 $15,915
---
22<br>$1,633 $1,592<br>$605<br>$239<br>$147 $244<br>$208<br>$60<br>$1,779 $1,836<br>$812<br>$299<br>2020 2021 2022 YTD Q3 2023<br>Portfolio Sale<br>MORTGAGE BANKING<br>OVERVIEW OF SERVICES YEARLY MORTGAGE ORIGINATIONS<br>($ in Millions)<br>QUARTERLY RESULTS<br>▪ 1st and 2nd mortgage product offerings through<br>centralized mortgage operations in Minneapolis,<br>Minnesota<br>▪ 86% year-to-date originations sourced from the<br>Twin Cities MSA<br>▪ Enhanced technology with 90% of applications<br>through digital channel<br>QUARTERLY ORIGINATIONS<br>Purchase: 45.2% 51.2% 88.3% 97.2%<br>Refinance: 54.8% 48.8% 11.7% 2.8%<br>Purchase: 94.0% 98.2% 97.7%<br>Refinance: 6.0% 1.8% 2.3%<br>($ in Millions)<br>Q3 Q4 Q1 Q2 Q3<br>($ in Thousands) 2022 2022 2023 2023 2023<br>Orignation and Sale $ 5,028 $ 3,145 $ 1,463 $ 2,432 $ 2,917<br>Fair Value<br>Changes (1,246) (974) 254 473 (407)<br>Total $ 3,782 $ 2,171 $ 1,717 $ 2,905 $ 2,510<br>Gain on Sale Margin 2.6% 3.0% 3.0% 2.8% 3.0%<br>$164<br>$90 $92<br>$66<br>$21 $17<br>$230<br>$111 $110<br>Q3 2022 Q2 2023 Q3 2023<br>Portfolio Sale
---
23<br>$26,247<br>$23,571 $23,966<br>$1,926<br>$1,837 $1,883<br>$5,373<br>$5,269 $4,774<br>$3,126<br>$1,530 $1,716<br>$6,095<br>$4,166 $4,921<br>$42,767<br>$36,373 $37,260<br>Q3 2022 Q2 2023 Q3 2023<br>Other(1) Professional Fees and Assessments<br>Business Services, Software and Technology Occupancy and Equipment<br>Compensation and benefits<br>NONINTEREST EXPENSE<br>1 – Other noninterest expense consists of intangible amortization, marketing and business development, supplies and postage, travel, mortgage and lending, and other noninterest expense.<br>QUARTERLY HIGHLIGHTS<br>YEAR OVER YEAR HIGHLIGHTS<br>▪ Noninterest expense increased $0.9 million or 2.4%<br>over the last quarter<br>▪ Increase was primarily driven by a $0.8 million<br>increase in other expenses, a $0.4 million increase in<br>compensation and benefits, partially offset by a $0.5<br>million decrease in business services, software and<br>technology costs<br>▪ Noninterest expense decreased $5.5 million or 12.9%<br>compared to the third quarter of 2022<br>▪ Professional fees and assessments decreased due to<br>one-time expenses associated with the acquisition<br>Metro Phoenix Bank in the third quarter of 2022<br>▪ Improvement in compensation costs and lower group<br>insurance claims were a result of reduced FTE from<br>824 as of September 30, 2022 to 752 as of September<br>30, 2023, which represents a 9% reduction<br>($ in Thousands)<br>Noninterest 2.4% Linked quarter<br>Expense (12.9)% Year-over-year
---
24 306%<br>674%<br>1,437%<br>821%<br>403%<br>2019 2020 2021 2022 Q3 2023<br>1.39%<br>1.73% 1.80%<br>1.27%<br>1.39%<br>2019 2020 2021 2022 Q3 2023<br>0.33%<br>0.17%<br>0.09% 0.10%<br>0.23%<br>2019 2020 2021 2022 Q3 2023<br>ASSET QUALITY AND RESERVE LEVELS<br>OVERVIEW NPA / ASSETS (%)<br>RESERVES / NPL (%) RESERVES / LOANS (%)<br>▪ Non-performing loans remain at low levels<br>▪ Reserve levels remain strong despite quarter over<br>quarter increase in non-performing loans<br>▪ Strong credit quality continues to be evidenced by a<br>second straight quarter of net recoveries<br>NCO/<br>Avg Loans 0.33% 0.03% (0.04)% 0.02% (0.09)%
---
25<br>($ in thousands)<br>Total Assets $ 3,869,138<br>Cash and cash equivalents 64,724<br>Unencumbered Securities (at Market Value) 551,562<br>Total On Balance Sheet Liquidity 616,286<br>FHLB Borrowing Capacity 477,080<br>Fed Funds Lines 107,000<br>Brokered CD Capacity 773,828<br>Total Off Balance Sheet Liquidity 1,357,908<br>Total Liquidity as of 9/30/2023 $ 1,974,194<br>11.1%<br>9.2% 9.8%<br>11.3% 11.1%<br>12.9% 13.2%<br>15.1%<br>13.7% 13.3%<br>2019 2020 2021 2022 Q3 2023<br>Tier 1 Leverage Tier 1 Capital<br>16.7% 16.8%<br>18.6%<br>16.5% 16.1%<br>2019 2020 2021 2022 Q3 2023<br>STRONG CAPITAL AND SOURCES OF LIQUIDITY<br>COMMON EQUITY TIER 1 TIER 1 CAPITAL/TIER 1 LEVERAGE RATIOS<br>TOTAL RISK BASED CAPITAL SOURCES OF LIQUIDITY<br>Regulatory Capital Minimum to be considered adequately capitalized.<br>Tier 1<br>Capital<br>Leverage<br>Regulatory Capital Minimum to be considered adequately capitalized.<br>12.5% 12.8%<br>14.7%<br>13.4% 13.0%<br>2019 2020 2021 2022 Q3 2023<br>6%<br>4%<br>8%
---
26<br>KEY TAKEAWAYS<br>ALERUS CONTINUES TO DELIVER QUALITY RESULTS WHILE BEING<br>WELL POSITIONED FOR WHAT IS TO COME<br>▪ Returned $5.0 million to shareholders through dividends and share repurchases<br>during the quarter<br>▪ Capital levels are strong with tangible common equity to tangible assets of<br>7.47% and regulatory CET 1 ratio of 13.0% at quarter end<br>▪ Noninterest income of 58.2% of total revenues for the quarter highlights a<br>durable and differentiated business model equipped to supplement and<br>complement periods of NIM compression<br>▪ Credit quality remains robust as nonperforming assets are 0.23% of total assets<br>and the quarter had net recoveries of 0.09%<br>▪ Allowance for credit losses to total loans remains healthy at 1.39% as of<br>September 30, 2023<br>▪ Yield on earning assets increased 11 bps from the prior quarter to 4.66%
---
27<br>APPENDIX
---
28<br>BY OUTSTANDING BALANCES<br>WELL DIVERSIFIED LOAN PORTFOLIO<br>Data as of 9/30/2023. 1-4 Residential 1st 27%<br>1-4 Residential Construction 1%<br>1-4 Residential Jr Lien 1%<br>HELOC 4%<br>RE Loans to be Sold 1%<br>C&I 21%<br>Ag Production 1%<br>Other CRE 19%<br>Owner Occupied CRE<br>10%<br>Ag Land 2%<br>Multifamily 8%<br>Other Consumer 1% RE Construction 4%
---
29<br>SUMMARY BY INDUSTRY TYPE<br>TOTAL COMMITMENT COMMERCIAL & INDUSTRIAL1<br>1 – Commercial and industrial loans includes C & I, loans to public entities, and other loans. It excludes ag production loans.<br>“Other” includes to the following industries (1) Nonclassifiable establishments, (2) Management of Companies and Enterprises, (3) 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, (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-industries within Retail Trade: (1) Miscellaneous Store Retailers, (2) Furniture 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 3%<br>Health Care and Social<br>Assistance 6%<br>Professional, Scientific and<br>Technical Services 8%<br>Manufacturing<br>11%<br>Real Estate and Rental<br>and Leasing 13%<br>Wholesale Trade 7%<br>Construction 10%<br>Finance and<br>Insurance 10% Other<br>17%<br>Motor Vehicle and Parts<br>Dealers 10%<br>Food and Beverage Stores 1%<br>Electronics<br>and Appliance<br>Stores 2%<br>Other Retail Trade<br>Retail Trade 15% 2%<br>Data as of 9/30/2023.
---
30<br>LOANS SECURED BY REAL ESTATE<br>TOTAL COMMITMENT<br>COMMERCIAL REAL ESTATE1<br>1 – Total commitment commercial real estate loans include multifamily loans, ag land, other CRE, owner occupied CRE, real estate construction and ag production.<br>2 – Total commitment investor real estate loans include multifamily loans, other CRE and real estate construction loans.<br>TOTAL COMMITMENT<br>INVESTOR REAL ESTATE2<br>Data as of 9/30/2023.<br>Office<br>16%<br>Retail<br>14%<br>Warehouse<br>13%<br>Manufacturing 2%<br>Commercial<br>Development 1%<br>Mixed<br>Commercial<br>2%<br>Apartments<br>17%<br>Hotel 7%<br>Medical or<br>Nursing Facilities<br>5%<br>Other 2%<br>Commercial<br>Construction 18%<br>Ag Land 3%<br>Office 14%<br>Retail 11%<br>Warehouse 9%<br>Manufacturing 2%<br>Mixed Commercial<br>2%<br>Apartments 22%<br>Hotel 9%<br>Medical or Nursing<br>Facilities 5%<br>Other 2%<br>Commercial<br>Construction 24%
---
31<br>LOANS SECURED BY REAL ESTATE<br>Portfolio Avg FICO Avg LTV<br>1<br>st Mortgage 759 53%<br>Junior 764 75%<br>HELOC 796 73%<br>TOTAL COMMITMENT RESIDENTIAL REAL ESTATE<br>1-4 1st Mortage<br>61%<br>1-4 Family Jr Liens<br>3%<br>1-4 Family Revolving<br>29%<br>1-4 Family<br>Construction 5%<br>Held for Sale 2%<br>Data as of 9/30/2023.
---
32<br>LINE OF CREDIT UTILIZATION<br>C&I AND HOME EQUITY LINES OF CREDIT1<br>1 – Commercial and industrial loans includes revolving C & I loans and other loans. It excludes non-revolving C&I loans, ag production, 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>2017 2018 2019 2020 2021 2022 Q123 Q223 Q323<br>C&I<br>Funded Unfunded 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>2017 2018 2019 2020 2021 2022 Q123 Q223 Q323<br>Home Equity Lines of Credit<br>Funded Unfunded Funded%
---
33<br>CECL ADOPTION – DRIVERS OF CHANGE FROM ALLL<br>ALLOWANCE FOR CREDIT LOSSES ON LOANS<br>1 – ACL is the allowance for credit losses on loans and excludes the allowance for investment securities held-for-maturity, and the allowance for unfunded commitments. Portfolio changes primarily represent the impact<br>of increases/decreases in loan balances, age and mix due to new originations, as well as credit quality and net charge-off activity. Economic/Qualitative factors primarily represent our evaluation and determination of an<br>economic forecast applied to our loan portfolio, as well as updates to qualitative factors.<br>($ in Thousands)<br>Data as of 9/30/2023.
---
34<br>CHANGES IN THE ACL FOR LOANS BY PORTFOLIO SEGMENT<br>ALLOWANCE FOR CREDIT LOSSES ON LOANS<br>1 – The difference in the adoption of ASC 326 and the total pre-tax amount adjusted on the Consolidated Balance Sheet included a $2.0 million adjustment for the adoption of ASC 326 on unfunded commitments and<br>$172 thousand adjustment for the adoption of ASC 326 on investment securities held-to-maturity. The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is<br>associated with the credit loss expense of $44 thousand related to unfunded commitments and $46 thousand related to investment securities held-to-maturity.<br>($ in thousands)<br>Commercial<br>Commercial and industrial $ 9,158 $ (862) $ (275) $ (394) $ 950 $ 8,577<br>Real estate construction 1,446 2,518 745 — — 4,709<br>Commercial real estate 12,688 (424) 408 — 34 12,706<br>Total commercial 23,292 1,232 878 (394) 984 25,992<br>Consumer<br>Residential real estate first mortgage 5,769 2,080 (339) (9) 256 7,757<br>Residential real estate junior lien 1,289 (67) 140 (77) 52 1,337<br>Other revolving and installment 528 (104) (188) (36) 51 251<br>Total consumer 7,586 1,909 (387) (122) 359 9,345<br>Unallocated 268 716 (31) — — 953<br>Total $ 31,146 $ 3,857 $ 460 $ (516) $ 1,343 $ 36,290<br>Ending<br>Balance<br>Nine months ended September 30, 2023<br>Loan<br>Charge-offs<br>Loan<br>Recoveries<br>Beginning<br>Balance<br>Provision for<br>Credit Losses(1)<br>Adoption<br>of ASC 326(1)
---
35<br>ALLOCATION BY LOAN PORTFOLIO SEGMENT<br>ALLOWANCE FOR CREDIT LOSSES ON LOANS<br>($ in thousands)<br>Commercial and industrial $ 8,577 22.3% $ 9,158 23.9%<br>Real estate construction 4,709 3.8% 1,446 4.0%<br>Commercial real estate 12,706 39.3% 12,688 36.0%<br>Residential real estate first mortgage 7,757 27.5% 5,769 27.8%<br>Residential real estate junior lien 1,337 5.9% 1,289 6.2%<br>Other revolving and installment 251 1.2% 528 2.1%<br>Unallocated 953 — 268 —<br>Total loans $ 36,290 100.0% $ 31,146 100.0%<br>total loans<br>September 30, 2023 December 31, 2022 (1)<br>Allocated of loans to<br>Allowance total loans<br>Allocated<br>Allowance<br>of loans to<br>Percentage Percentage<br>1 – Pre-ASC 326 adoption allowance for loan losses.
---
36<br>FINANCIAL HIGHLIGHTS<br>1 – Represents a non-GAAP financial measure. See “Non-GAAP Disclosure Reconciliation”.<br>($ in thousands,<br>except where otherwise noted) Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 September 30, 2023 September 30, 2022<br>Total Assets $ 3,691,253 $ 3,779,637 $ 3,886,773 $ 3,832,978 $ 3,869,138 $ 3,869,138 $ 3,691,253<br>Total Loans 2,318,231 2,443,994 2,486,625 2,533,522 2,606,430 2,606,430 2,318,231<br>Total Deposits 2,961,811 2,915,484 3,031,978 2,852,855 2,872,184 2,872,184 2,961,811<br>Tangible Common Equity1<br> 275,000 287,330 290,900 290,792 284,137 284,137 275,000<br>Net Income $ 9,619 $ 10,909 $ 8,186 $ 9,104 $ 9,161 $ 26,451 $ 29,096<br>ROAA (%) 1.02 1.17 0.88 0.96 0.95 0.93 1.13<br>ROATCE(%)1<br> 13.89 16.63 12.58 13.71 13.51 13.27 14.59<br>Net Interest Margin (FTE) (%) 3.21 3.09 2.70 2.52 2.27 2.50 3.02<br>Efficiency Ratio (FTE) (%)1<br> 74.76 69.62 74.53 72.79 73.37 73.57 73.94<br>Non-Int. Income/Op. Rev. (%) 48.82 48.62 51.63 53.69 58.21 54.51 54.08<br>Earnings per common share - diluted $ 0.47 $ 0.53 $ 0.40 $ 0.45 $ 0.45 $ 1.30 $ 1.56<br>Total Equity/Total Assets (%) 9.34 9.44 9.24 9.33 9.03 9.03 9.34<br>Tang. Cmn. Equity/Tang. Assets (%)1<br> 7.59 7.74 7.62 7.72 7.47 7.47 7.59<br>Loans/Deposits (%) 78.27 83.83 82.01 88.81 90.75 90.75 78.27<br>NPLs/Loans (%) 0.23 0.16 0.09 0.10 0.35 0.35 0.23<br>NPAs/Assets (%) 0.17 0.10 0.05 0.07 0.23 0.23 0.17<br>Allowance/NPLs (%) 583.97 820.93 1,657.32 1,383.57 402.91 402.91 583.97<br>Allowance/Loans (%) 1.34 1.27 1.41 1.41 1.39 1.39 1.34<br>NCOs/Average Loans (%) 0.07 (0.03) 0.03 (0.07) (0.09) (0.04) 0.04<br>Quarterly Nine months ended
---
37<br>FINANCIAL HIGHLIGHTS<br>1 – Represents a non-GAAP financial measure. See “Non-GAAP Disclosure Reconciliation”.<br>($ in thousands, 18-'22<br>except where otherwise noted) 2018 2019 2020 2021 2022 CAGR<br>Total Assets $ 2,179,070 $ 2,356,878 $ 3,013,771 $ 3,392,691 $ 3,779,637 14.8%<br>Total Loans 1,701,850 1,721,279 1,979,375 1,758,020 2,443,994 9.5%<br>Total Deposits 1,775,096 1,971,316 2,571,993 2,920,551 2,915,484 13.2%<br>Tangible Common Equity1<br> 147,152 240,008 274,043 307,663 287,329 18.2%<br>Net Income $ 25,866 $ 29,540 $ 44,675 $ 52,681 $ 40,005 11.5%<br>ROAA (%) 1.21 1.34 1.61 1.66 1.14<br>ROATCE(%)1<br> 21.02 17.46 17.74 18.89 15.09<br>Net Interest Margin (FTE) (%) 3.84 3.65 3.22 2.90 3.04<br>Efficiency Ratio (FTE) (%)1<br> 73.80 73.22 68.40 70.02 72.86<br>Non-Int. Income/Op. Rev. (%) 57.73 60.50 64.05 62.86 52.72<br>Earnings per common share - diluted 1.84 1.91 2.52 2.97 2.10<br>Total Equity/Total Assets (%) 9.04 12.12 10.96 10.59 9.44<br>Tang. Cmn. Equity/Tang. Assets (%)1<br> 6.91 10.38 9.27 9.21 7.74<br>Loans/Deposits (%) 95.87 87.32 76.96 60.19 83.83<br>NPLs/Loans (%) 0.41 0.45 0.26 0.12 0.16<br>NPAs/Assets (%) 0.33 0.33 0.17 0.09 0.10<br>Allowance/NPLs (%) 318.45 305.66 674.13 1,437.05 820.93<br>Allowance/Loans (%) 1.30 1.39 1.73 1.80 1.27<br>NCOs/Average Loans (%) 0.18 0.33 0.03 (0.04) 0.02<br>Annual
---
38<br>NON-GAAP DISCLOSURE RECONCILIATION<br>($ in thousands, except where otherwise noted)<br>Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 September 30, 2023 September 30, 2022<br>Tangible common equity to tangible assets<br>Total common stockholders' equity $ 344,839 $ 356,872 $ 359,118 $ 357,685 $ 349,402 $ 349,402 $ 344,839<br>Less: Goodwill 46,060 47,087 47,087 47,087 46,783 46,783 46,060<br>Less: Other intangible assets 23,779 22,455 21,131 19,806 18,482 18,482 23,779<br>Tangible common equity (a) 275,000 287,330 290,900 290,792 284,137 284,137 275,000<br>Total assets 3,691,253 3,779,637 3,886,773 3,832,978 3,869,138 3,869,138 3,691,253<br>Less: Goodwill 46,060 47,087 47,087 47,087 46,783 46,783 46,060<br>Less: Other intangible assets 23,779 22,455 21,131 19,806 18,482 18,482 23,779<br>Tangible assets (b) 3,621,414 3,710,095 3,818,555 3,766,085 3,803,873 3,803,873 3,621,414<br>Tangible common equity to tangible assets (a)/(b) 7.59% 7.74% 7.62% 7.72% 7.47% 7.47% 7.59%<br>Tangible common equity per common share<br>Total stockholders' equity $ 344,839 $ 356,872 $ 359,118 $ 357,685 $ 349,402 $ 349,402 $ 344,839<br>Less: Goodwill 46,060 47,087 47,087 47,087 46,783 46,783 46,060<br>Less: Other intangible assets 23,779 22,455 21,131 19,806 18,482 18,482 23,779<br>Tangible common equity (c) 275,000 287,330 290,900 290,792 284,137 284,137 275,000<br>Common shares outstanding (d) 19,987 19,992 20,067 19,915 19,848 19,848 19,987<br>Tangible common equity per common share (c)/(d) $ 13.76 $ 14.37 $ 14.50 $ 14.60 $ 14.32 $ 14.32 $ 13.76<br>Return on average tangible common equity<br>Net income $ 9,619 $ 10,909 $ 8,186 $ 9,104 $ 9,161 $ 26,451 $ 29,096<br>Add: Intangible amortization expense (net of tax) 1,046 1,046 1,046 1,046 1,046 3,138 2,710<br>Net income, excluding intangible amortization (e) 10,665 11,955 9,232 10,150 10,207 29,589 31,806<br>Average total equity 372,274 349,812 361,857 360,216 361,735 361,260 345,192<br>Less: Average goodwill 48,141 46,283 47,087 47,087 46,882 47,018 37,101<br>Less: Average other intangible assets (net of tax) 19,466 18,243 17,209 16,153 15,109 16,149 16,605<br>Average tangible common equity (f) 304,667 285,286 297,561 296,976 299,744 298,093 291,486<br>Return on average tangible common equity (e)/(f) 13.89% 16.63% 12.58% 13.71% 13.51% 13.27% 14.59%<br>Efficiency Ratio<br>Noninterest expense $ 42,767 $ 37,948 $ 37,869 $ 36,373 $ 37,260 $ 111,503 $ 120,822<br>Less: Intangible amortization expense 1,324 1,324 1,324 1,324 1,324 3,972 3,430<br>Adjusted noninterest expense (i) 41,443 36,624 36,545 35,049 35,936 107,531 117,392<br>Net interest income 28,316 26,964 23,658 22,234 20,395 66,287 72,765<br>Noninterest income 27,010 25,517 25,253 25,778 28,407 79,439 85,706<br>Tax-equivalent adjustment 112 124 124 140 180 444 306<br>Total tax-equivalent revenue(j) 55,438 52,605 49,035 48,152 48,982 146,170 158,777<br>Efficiency ratio (i)/(j) 74.76% 69.62% 74.53% 72.79% 73.37% 73.57% 73.94%<br>Quarterly Nine months ended
---
39<br>NON-GAAP DISCLOSURE RECONCILIATION ($ in thousands, except where otherwise noted)<br>2018 2019 2020 2021 2022<br>Tangible common equity to tangible assets<br>Total common stockholders' equity $ 196,954 $ 285,728 $ 330,163 $ 359,403 $ 356,871<br>Less: Goodwill 27,329 27,329 30,201 31,490 47,087<br>Less: Other intangible assets 22,473 18,391 25,919 20,250 22,455<br>Tangible common equity (a) 147,152 240,008 274,043 307,663 287,329<br>Total assets 2,179,070 2,356,878 3,013,771 3,392,691 3,779,637<br>Less: Goodwill 27,329 27,329 30,201 31,490 47,087<br>Less: Other intangible assets 22,473 18,391 25,919 20,250 22,455<br>Tangible assets (b) 2,129,268 2,311,158 2,957,651 3,340,951 3,710,095<br>Tangible common equity to tangible assets (a)/(b) 6.91% 10.38% 9.27% 9.21% 7.74%<br>Tangible common equity per common share<br>Total stockholders' equity $ 196,954 $ 285,728 $ 330,163 $ 359,403 $ 356,871<br>Less: Goodwill 27,329 27,329 30,201 31,490 47,087<br>Less: Other intangible assets 22,473 18,391 25,919 20,250 22,455<br>Tangible common equity (c) 147,152 240,008 274,043 307,663 287,329<br>Common shares outstanding (d) 13,775 17,050 17,125 17,213 19,992<br>Tangible common equity per common share (c)/(d) $ 10.68 $ 14.08 $ 16.00 $ 17.87 $ 14.37<br>Return on average tangible common equity<br>Net income $ 25,866 $ 29,540 $ 44,675 $ 52,681 $ 40,005<br>Add: Intangible amortization expense (net of tax) 3,664 3,224 3,129 3,460 3,756<br>Net income, excluding intangible amortization (e) 29,530 32,764 47,804 56,141 43,761<br>Average total equity 187,341 231,084 310,208 346,059 346,355<br>Less: Average goodwill 27,329 27,329 27,439 30,385 39,415<br>Less: Average other intangible assets (net of tax) 19,522 16,101 13,309 18,548 17,018<br>Average tangible common equity (f) 140,490 187,654 269,460 297,126 289,922<br>Return on average tangible common equity (e)/(f) 21.02% 17.46% 17.74% 18.89% 15.09%<br>Efficiency Ratio<br>Noninterest expense $ 136,325 $ 142,537 $ 163,799 $ 168,909 $ 158,770<br>Less: Intangible amortization expense 4,638 4,081 3,961 4,380 4,754<br>Adjusted noninterest expense (i) 131,687 138,456 159,838 164,529 154,016<br>Net interest income 75,224 74,551 83,846 87,099 99,729<br>Noninterest income 102,749 114,194 149,371 147,387 111,223<br>Tax-equivalent adjustment 462 347 455 492 429<br>Total tax-equivalent revenue(j) 178,435 189,092 233,672 234,978 211,381<br>Efficiency ratio (i)/(j) 73.80% 73.22% 68.40% 70.02% 72.86%<br>Annual
---