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): July 27, 2022

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 July 27, 2022, Alerus Financial Corporation (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2022. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in Item 2.02 of this Current Report on Form 8-K, and the related Exhibit 99.1, attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

On July 27, 2022, 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 July 27, 2022
99.2<br><br>104		Investor Presentation of Alerus Financial Corporation<br><br>Cover Page Interactive Data File (embedded within the Inline XBLR 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: July 27, 2022	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 (07.27.2022)<br><br>	Alan A. Villalon, Chief Financial Officer<br><br>952.417.3733 (Office)

ALERUS FINANCIAL CORPORATION REPORTS

SECOND QUARTER 2022 NET INCOME OF $9.3 MILLION

MINNEAPOLIS, M.N. (July 27, 2022) – Alerus Financial Corporation (Nasdaq: ALRS) reported net income of $9.3 million for the second quarter of 2022, or $0.52 per diluted common share, compared to net income of $10.2 million, or $0.57 per diluted common share, for the first quarter of 2022, and net income of $11.7 million, or $0.66 per diluted common share, for the second quarter of 2021.

CEO Comments

President and Chief Executive Officer Katie Lorenson said, “In the second quarter, we reported earnings per share of $0.53, which included a merger expense impact of $(0.05) related to the acquisition of Metro Phoenix Bank. Excluding the impact of this merger related expense, our underlying core ROE was 12.7% which is consistent with our long-term strategic performance and continued goal of achieving a ROE greater than 12%. We continue to see robust loan growth which drove solid net interest income growth. Despite the challenging mortgage and equity markets, we saw the value of our diversified business model as we expanded our client base in both retirement services and wealth management through consistent execution of our One Alerus Growth Strategy.

Our credit quality remains strong and our allowance for loan loss reserve is 1.66% to total loans. We are well positioned for any potential economic volatility, with a common tier 1 ratio of 14.19%. With the closing of the Metro Phoenix Bank acquisition and the continued recruiting successes, Alerus is poised to expand its commercial presence especially in the faster growing parts of our footprint. As we continue to grow and position ourselves for the long term, I want to thank our talented team members for their hard work and dedication to serving in the best interest of our clients.”

Quarterly Highlights

◾	Return on average total assets of 1.14%, compared to 1.26% for the first quarter of 2022
◾	Return on average common equity of 11.93%, compared to 11.78% for the first quarter of 2022
---	---
◾	Return on average tangible common equity^(1)^ of 15.25%, compared to 14.72% for the first quarter of 2022
---	---
◾	Net interest margin (tax-equivalent) was 2.98%, compared to 2.83% for the first quarter of 2022
---	---
◾	Allowance for loan losses to total loans was 1.66%, compared to 1.80% as of December 31, 2021
---	---
◾	Noninterest income for the second quarter of 2022 was 56.20% of total revenue, compared to 57.62% for the first quarter of 2022
---	---
◾	Loans held for investment increased $132.2 million, or 7.5%, since December 31, 2021; excluding Paycheck Protection Program, or PPP loans, loans held for investment increased $158.8 million, or 9.2%, since December 31, 2021
---	---
◾	Common equity tier 1 capital to risk weighted assets was 14.19%, compared to 14.65% as of December 31, 2021
---	---
(1)	Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”
---	---

---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---

Selected Financial Data (unaudited)


	As of and for the
	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(dollars and shares in thousands, except per share data)	2022			2022			2021			2022			2021		****
Performance Ratios
Return on average total assets		1.14	%		1.26	%		1.50	%		1.20	%		1.76	%
Return on average common equity		11.93	%		11.78	%		13.82	%		11.85	%		16.11	%
Return on average tangible common equity ^(1)^		15.25	%		14.72	%		17.36	%		14.97	%		20.15	%
Noninterest income as a % of revenue		56.20	%		57.62	%		63.48	%		56.91	%		64.26	%
Net interest margin (tax-equivalent)		2.98	%		2.83	%		2.88	%		2.91	%		3.00	%
Efficiency ratio ^(1)^		74.72	%		72.25	%		71.46	%		73.50	%		68.84	%
Net charge-offs/(recoveries) to average loans		0.07	%		(0.03)	%		—	%		0.02	%		0.05	%
Dividend payout ratio		34.62	%		28.07	%		24.24	%		30.91	%		20.39	%
Per Common Share
Earnings per common share - basic	$	0.53		$	0.58		$	0.67		$	1.11		$	1.54
Earnings per common share - diluted	$	0.52		$	0.57		$	0.66		$	1.10		$	1.52
Dividends declared per common share	$	0.18		$	0.16		$	0.16		$	0.34		$	0.31
Book value per common share	$	17.75		$	19.00		$	20.03
Tangible book value per common share ^(1)^	$	14.93		$	16.07		$	16.89
Average common shares outstanding - basic		17,297			17,244			17,194			17,271			17,170
Average common shares outstanding - diluted		17,532			17,500			17,497			17,517			17,482
Other Data
Retirement and benefit services assets under administration/management	$	31,749,157		$	35,333,131		$	36,964,961
Wealth management assets under administration/management	$	4,147,763		$	4,584,856		$	3,538,959
Mortgage originations	$	269,397		$	186,762		$	545,437		$	456,159		$	1,063,451

(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 second quarter of 2022 was $22.8 million, a $1.1 million, or 5.1%, increase from the first quarter of 2022. Net interest income increased $1.6 million, or 7.7%, from $21.1 million for the second quarter of 2021. The linked quarter increase in net interest income was primarily driven by increases of $696 thousand in interest income from loans and $625 thousand in interest income from investment securities, partially offset by a $259 thousand increase in interest expense. Interest expense increased due to an increase in short-term borrowings because of corresponding decrease in deposits. Interest income from loans increased primarily due to a $70.4 million increase in average loans.

Net interest margin (tax-equivalent), a non-GAAP financial measure, was 2.98% for the second quarter of 2022, a 15 basis point increase from 2.83% for the first quarter of 2022, and a 10 basis point increase from 2.88% in the second quarter of 2021, primarily due to an increase in earning asset yields and a change in balance sheet mix given strong growth in the loan portfolio.

Noninterest Income

Noninterest income for the second quarter of 2022 was $29.2 million, a $244 thousand, or 0.8%, decrease from the first quarter of 2022. This linked quarter decrease was primarily driven by a $1.4 million decrease in retirement and benefit services revenue, partially offset by a $1.1 million increase in mortgage banking revenue. Retirement and benefit services revenue decreased primarily due to decreases of $685 thousand in non-asset based fees and $668 thousand in asset based fees. The decreases in non-asset based fees were primarily the result of seasonally lower revenues in the health and welfare and payroll businesses. Asset based fees for retirement and benefit services revenue decreased primarily as a result of a $3.6 billion, or 10.1%, decrease in the market value of assets under administration/management primarily due to market value decreases in the bond and equity markets. Mortgage banking revenue increased primarily due to an $82.6 million, or 44.2%, increase in mortgage originations as well as a 64 basis point increase in the gain on sale margin.

Noninterest income for the second quarter of 2022 decreased $7.5 million, or 20.5%, from $36.7 million in the second quarter of 2021. This year over year decrease was primarily the result of a $6.2 million decrease in mortgage banking revenue as well as a $1.6 million decrease in retirement and benefit services revenue, partially offset by a $410 thousand increase in wealth management 2

revenue. Mortgage banking revenue decreased primarily due to a $276.0 million decrease in mortgage originations as well as a 29 basis point decrease in gain on sale margin. Retirement and benefit services revenue decreased primarily due to decreases of $912 thousand in asset based fees and $667 thousand in non-asset based fees. The asset based fees for retirement and benefit services decreased primarily due to a $5.2 billion, or 14.1%, decrease in assets under administration/management. Non-asset based fees decreased primarily due to a $316 thousand decrease in plan document fees. Wealth management revenue increased primarily due to a $608.8 million increase in assets under management.

Noninterest Expense

Noninterest expense for the second quarter of 2022 was $40.0 million, a $1.9 million, or 5.0%, increase compared to the first quarter of 2022. The quarter over quarter increase was primarily driven by increases of $2.2 million in compensation expense and $705 thousand in professional fees and assessments. Partially offsetting these increases were decreases of $375 thousand in employee taxes and benefits and $314 thousand in occupancy and equipment expense. The increase in compensation expense was primarily due to an increase in mortgage originations. Professional fees and assessments increased primarily due to $814 thousand in merger related expenses from our acquisition of MPB BHC, Inc. The decrease in employee taxes and benefits was primarily due to seasonally higher payroll taxes in the first quarter. Occupancy and equipment expensed decreased primarily as a result of a decrease in depreciation expense, a result of assets being fully depreciated.

Noninterest expense for the second quarter of 2022 decreased $2.6 million, or 6.0%, from $42.6 million in the second quarter of 2021. The year over year decrease in noninterest expense was primarily due to a $3.1 million decrease in compensation expense as well as a $717 thousand decrease in mortgage and lending expenses, partially offset by a $737 thousand increase in professional fees and assessments. The decreases in compensation expense and mortgage and lending expenses were primarily due to a $276.0 million decrease in mortgage originations. Professional fees and assessments increased primarily due to the acquisition of Metro Phoenix Bank.

Financial Condition

Total assets were $3.3 billion as of June 30, 2022, a decrease of $97.6 million, or 2.9%, from December 31, 2021. The overall change in assets included decreases of $205.3 million in cash and cash equivalents and $75.2 million in investment securities. Partially offsetting these decreases were increases of $132.2 million in loans held for investment and $21.2 million in deferred tax assets. Deferred tax assets increased primarily due to the impact of unrealized losses attributed to available-for-sale investment securities. If PPP loans were excluded, loans held for investment would have increased $158.8 million, or 9.2%, from December 31, 2021.

Loans

Total loans were $1.9 billion as of June 30, 2022, an increase of $132.2 million, or 7.5%, from December 31, 2021. This increase was primarily a result of increases of $57.9 million in residential real estate first mortgages and $47.7 million in commercial and industrial loans. If PPP loans were excluded, commercial and industrial loans would have increased $74.3 million, or 18.4%, from December 31, 2021, primarily as a result of organic growth.

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



		June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	****	2022		2022		2021		2021		2021
Commercial
Commercial and industrial ^(1)^		$	484,426	$	467,449	$	436,761	$	506,599	$	572,734
Real estate construction			48,870		41,604		40,619		37,751		36,549
Commercial real estate			599,737		602,158		598,893		573,518		567,987
Total commercial			1,133,033		1,111,211		1,076,273		1,117,868		1,177,270
Consumer
Residential real estate first mortgage			568,571		522,489		510,716		501,339		470,822
Residential real estate junior lien			135,255		130,604		125,668		130,243		130,180
Other revolving and installment			53,384		53,738		45,363		50,936		57,040
Total consumer			757,210		706,831		681,747		682,518		658,042
Total loans		$	1,890,243	$	1,818,042	$	1,758,020	$	1,800,386	$	1,835,312

(1)	Includes PPP loans of $6.9 million at June 30, 2022, $13.1 million at March 31, 2022, $33.6 million at December 31, 2021, $103.5 million at September 30, 2021 and $165.0 million at June 30, 2021.

Deposits

Total deposits were $2.6 billion as of June 30, 2022, a decrease of $301.0 million, or 10.3%, from December 31, 2021. Interest-bearing deposits decreased $127.0 million, while noninterest-bearing deposits decreased $174.0 million in the second quarter of 2022. The decrease in interest-bearing deposits included decreases of $72.0 million in interest-bearing demand deposits, $32.5 million in time deposits and $22.9 million in money market savings deposits. The decrease in interest-bearing demand deposits decreased due to a seasonal decrease in our public unit deposits. Time deposits decreased primarily due to clients shifting balances to more liquid accounts. Synergistic deposits decreased $82.1 million from December 31, 2021, primarily due to year-end seasonally higher temporary balances from retirement plan terminations. Excluding synergistic deposits, commercial transaction deposits decreased $178.0 million and consumer transaction deposits decreased $10.1 million. Noninterest-bearing deposits as a percentage of total deposits were 29.2% as of June 30, 2022, compared to 32.1% as of December 31, 2021.

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


		June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	****	2022		****	2022		****	2021		****	2021		****	2021
Noninterest-bearing demand		$	764,808		$	831,558		$	938,840		$	797,062		$	758,820
Interest-bearing
Interest-bearing demand			642,641			760,321			714,669			673,916			736,043
Savings accounts			97,227			99,299			96,825			92,632			89,437
Money market savings			914,423			976,905			937,305			924,678			920,831
Time deposits			200,451			224,184			232,912			224,800			205,809
Total interest-bearing			1,854,742			2,060,709			1,981,711			1,916,026			1,952,120
Total deposits		$	2,619,550		$	2,892,267		$	2,920,551		$	2,713,088		$	2,710,940

Asset Quality

Total nonperforming assets were $5.2 million as of June 30, 2022, an increase of $2.1 million, or 69.7%, from December 31, 2021. As of June 30, 2022, the allowance for loan losses was $31.4 million, or 1.66% of total loans, compared to $31.6 million, or 1.80% of total loans, as of December 31, 2021.

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


		As of and for the three months ended
		June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	****	2022		****	2022		****	2021		****	2021		****	2021		****
Nonaccrual loans		$	4,370		$	4,069		$	2,076		$	6,229		$	6,960
Accruing loans 90+ days past due			—			146			121			—			—
Total nonperforming loans			4,370			4,215			2,197			6,229			6,960
OREO and repossessed assets			860			865			885			862			858
Total nonperforming assets		$	5,230		$	5,080		$	3,082		$	7,091		$	7,818
Net charge-offs/(recoveries)			340			(141)			(1,006)			(302)			(6)
Net charge-offs/(recoveries) to average loans			0.07	%		(0.03)	%		(0.22)	%		(0.06)	%		—	%
Nonperforming loans to total loans			0.23	%		0.23	%		0.12	%		0.35	%		0.38	%
Nonperforming assets to total assets			0.16	%		0.15	%		0.09	%		0.22	%		0.25	%
Allowance for loan losses to total loans			1.66	%		1.74	%		1.80	%		1.78	%		1.84	%
Allowance for loan losses to nonperforming loans			718	%		752	%		1,437	%		515	%		485	%

For the second quarter of 2022, we had net charge-offs of $340 thousand compared to net recoveries of $141 thousand for the first quarter of 2022 and $6 thousand of net recoveries for the second quarter of 2021.

There was no provision expense recorded for the three months ended June 30, 2022, no change compared to the three months ended March 31, 2022, and no change compared to the three months ended June 30, 2021. Although nonperforming assets increased, management continues to see an overall decrease in criticized loan volume, which includes substandard and special mention loans, supported the decision that no additional provision expense should be recognized.

Capital

Total stockholders’ equity was $307.2 million as of June 30, 2022, a decrease of $52.2 million, or 14.5%, from December 31, 2021. The decrease in stockholders’ equity was primarily due to a $66.2 million decrease in other comprehensive loss, due to rising interest rates, which resulted in a lower fair value of our available-for-sale investment securities. Management expects that we could see a continued decline in other comprehensive loss if the Federal Reserve continues to raise interest rates. Tangible book value per common share, a non-GAAP financial measure, decreased to $14.93 as of June 30, 2022, from $17.87 as of December 31, 2021. Tangible common equity to tangible assets, a non-GAAP financial measure, decreased to 7.96% as of June 30, 2022, from 9.21% as of December 31, 2021. Common equity tier 1 capital to risk weighted assets decreased to 14.19% as of June 30, 2022, from 14.65% as of December 31, 2021.

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


	****	June 30,		****	December 31,		****	June 30,
	****	2022		****	2021		****	2021
Capital Ratios^(1)^
Alerus Financial Corporation Consolidated
Common equity tier 1 capital to risk weighted assets			14.19	%		14.65	%		14.30	%
Tier 1 capital to risk weighted assets			14.56	%		15.06	%		14.71	%
Total capital to risk weighted assets			17.95	%		18.64	%		18.43	%
Tier 1 capital to average assets			10.80	%		9.79	%		9.62	%
Tangible common equity / tangible assets ^(2)^			7.96	%		9.21	%		9.36	%

Alerus Financial, N.A.
Common equity tier 1 capital to risk weighted assets			13.64	%		13.87	%		13.57	%
Tier 1 capital to risk weighted assets			13.64	%		13.87	%		13.57	%
Total capital to risk weighted assets			14.89	%		15.12	%		14.82	%
Tier 1 capital to average assets			10.12	%		9.01	%		8.98	%

(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.”
---	---

Metro Phoenix Bank Acquisition

On December 8, 2021, the Company announced the signing of a definitive agreement and plan of merger to acquire MPB BHC, Inc. (OTCPK: MPHX), the bank holding company for Metro Phoenix Bank, the largest full-service community bank headquartered in Phoenix.

The merger was completed on July 1, 2022, the Company’s twenty fifth since 2000, and significantly increases the Alerus presence in Arizona. Alerus currently intends to merge Metro Phoenix Bank into Alerus Financial, N.A. in September of this year, subject to regulatory approval.

As a result of the merger, Alerus now has the fifth largest deposit market share in the Phoenix metropolitan statistical area (MSA) among community banks and operates three branch locations in Arizona (Phoenix, Scottsdale and Mesa). The combined company’s Arizona operation has approximately $423 million in total loans and approximately $466 million in total deposits.

Conference Call

The Company will host a conference call at 11:00 a.m. Central Time on Thursday, July 28, 2022, to discuss its financial results. The call can be accessed via telephone at (844) 200-6205, using access code 874956. A recording of the call and transcript will be available on the Company’s investor relations website at investors.alerus.com following the call.

About Alerus Financial Corporation

Alerus Financial Corporation is a diversified financial services company with corporate offices in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area. Through its subsidiary, Alerus Financial, N.A., Alerus provides innovative and comprehensive financial solutions to business and consumer clients through four distinct business segments—banking, retirement and benefit services, wealth management, and mortgage. Alerus provides clients with a primary point of contact to help fully understand the unique needs and delivery channel preferences of each client. Clients are provided with competitive products, valuable insight and sound advice supported by digital solutions designed to meet the clients’ needs. Alerus has banking, mortgage, and wealth management offices in Grand Forks and Fargo, North Dakota, the Minneapolis-St. Paul, Minnesota metropolitan area, and Phoenix, Scottsdale, and Mesa Arizona. Alerus Retirement and Benefits plan administration hubs are located in Minnesota, Michigan, and Colorado.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized by U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measures include the ratio of tangible common equity to tangible assets, tangible common equity per share, return on average tangible common equity, net interest margin (tax-equivalent), and the efficiency ratio. Management uses these non-GAAP financial measures in its analysis of its performance, and 6

believes financial analysts and investors frequently use these measures, and other similar measures, to evaluate capital adequacy and financial performance. Reconciliations of non-GAAP disclosures used in this press release to the comparable GAAP measures are provided in the accompanying tables. Management, banking regulators, many financial analysts and other investors use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.

These non-GAAP financial measures should not be considered in isolation or as a substitute for total stockholders’ equity, total assets, book value per share, return on average assets, return on average equity, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of Alerus Financial Corporation. These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature. Examples of forward-looking statements include, among others, statements we make regarding our projected growth, anticipated future financial performance, financial condition, credit quality, management’s long-term performance goals and the future plans and prospects of Alerus Financial Corporation.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the negative effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our clients, and our operations, including due to supply chain disruptions, as well as any changes to federal, state, or local government laws, regulations, or orders in response to the pandemic; our ability to successfully manage credit risk and maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the implementation of the new Current Expected Credit Loss Standard; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including rising rates of inflation; the overall health of the local and national real estate market; concentrations within our loan portfolio; the level of nonperforming assets on our balance sheet; our ability to implement our organic and acquisition growth strategies; the impact of economic or market conditions on our fee-based services; our ability to continue to grow our retirement and benefit services business; our ability to continue to originate a sufficient volume of residential mortgages; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; potential losses incurred in connection with mortgage loan repurchases; the composition of our executive management team and our ability to attract and retain key personnel; rapid technological change in the financial services industry; increased competition in the financial services industry from non-banks such as credit unions and other Fintech companies; our ability to successfully manage liquidity risk, especially in light of recent excess liquidity at the Bank; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; potential impairment to the goodwill we recorded in connection with our past acquisitions; the extensive regulatory framework that applies to us; the impact of recent and future legislative and regulatory changes; interest rate risks associated with our business, including the effects of recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio; governmental monetary, trade and fiscal policies; severe weather, natural disasters, widespread disease or pandemics, such as the COVID-19 global pandemic, acts of war or terrorism, including the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial reporting; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative rates; changes to U.S. or state tax laws, regulations and guidance, including recent proposals to increase the federal corporate tax rate; talent and labor shortages and employee turnover; possible federal mask and vaccine mandates; our success at managing the risks involved in the 7

foregoing items; and any other risks described in the “Risk Factors” sections of the reports filed by Alerus Financial Corporation with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Alerus Financial Corporation and Subsidiaries

Consolidated Balance Sheets

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


	****	June 30,		****	December 31,
	****	2022		****	2021
Assets		(Unaudited)			(Audited)
Cash and cash equivalents		$	37,043		$	242,311
Investment securities
Available-for-sale, at fair value			798,797			853,649
Held-to-maturity, at carrying value			331,741			352,061
Loans held for sale			54,363			46,490
Loans			1,890,243			1,758,020
Allowance for loan losses			(31,373)			(31,572)
Net loans			1,858,870			1,726,448
Land, premises and equipment, net			17,180			18,370
Operating lease right-of-use assets			3,439			3,727
Accrued interest receivable			9,155			8,537
Bank-owned life insurance			33,564			33,156
Goodwill			31,337			31,490
Other intangible assets			17,511			20,250
Servicing rights			2,064			1,880
Deferred income taxes, net			32,814			11,614
Other assets			67,187			42,708
Total assets		$	3,295,065		$	3,392,691
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing		$	764,808		$	938,840
Interest-bearing			1,854,742			1,981,711
Total deposits			2,619,550			2,920,551
Short-term borrowings			242,350			—
Long-term debt			58,870			58,933
Operating lease liabilities			3,856			4,275
Accrued expenses and other liabilities			63,281			49,529
Total liabilities			2,987,907			3,033,288
Stockholders’ equity
Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding			—			—
Common stock, $1 par value, 30,000,000 shares authorized: 17,306,237 and 17,212,588 issued and outstanding			17,306			17,213
Additional paid-in capital			93,129			92,878
Retained earnings			267,128			253,567
Accumulated other comprehensive income (loss)			(70,405)			(4,255)
Total stockholders’ equity			307,158			359,403
Total liabilities and stockholders’ equity		$	3,295,065		$	3,392,691

Alerus Financial Corporation and Subsidiaries

Consolidated Statements of Income

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


	Three months ended						Six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2022		2022		2021		2022		2021
Interest Income	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Loans, including fees	$	17,988	$	17,292	$	19,324	$	35,280	$	39,891
Investment securities
Taxable		6,068		5,440		2,897		11,508		5,298
Exempt from federal income taxes		213		216		233		429		469
Other		157		116		130		273		247
Total interest income		24,426		23,064		22,584		47,490		45,905
Interest Expense
Deposits		813		829		906		1,642		1,901
Short-term borrowings		278		—		—		278		—
Long-term debt		559		562		538		1,121		826
Total interest expense		1,650		1,391		1,444		3,041		2,727
Net interest income		22,776		21,673		21,140		44,449		43,178
Provision for loan losses		—		—		—		—		—
Net interest income after provision for loan losses		22,776		21,673		21,140		44,449		43,178
Noninterest Income
Retirement and benefit services		16,293		17,646		17,871		33,939		35,126
Wealth management		5,548		5,326		5,138		10,874		10,124
Mortgage banking		6,038		4,931		12,287		10,969		29,419
Service charges on deposit accounts		412		363		330		775		668
Net gains (losses) on investment securities		—		—		—		—		114
Other		935		1,204		1,122		2,139		2,178
Total noninterest income		29,226		29,470		36,748		58,696		77,629
Noninterest Expense
Compensation		21,248		19,051		24,309		40,299		48,007
Employee taxes and benefits		5,787		6,162		5,572		11,949		11,385
Occupancy and equipment expense		1,737		2,051		1,918		3,788		4,149
Business services, software and technology expense		4,785		4,924		4,958		9,709		9,934
Intangible amortization expense		1,053		1,053		1,088		2,106		2,239
Professional fees and assessments		2,246		1,541		1,509		3,787		2,981
Marketing and business development		814		600		769		1,414		1,445
Supplies and postage		572		646		503		1,218		1,034
Travel		356		179		36		535		62
Mortgage and lending expenses		482		686		1,199		1,168		2,531
Other		904		1,178		689		2,082		1,825
Total noninterest expense		39,984		38,071		42,550		78,055		85,592
Income before income taxes		12,018		13,072		15,338		25,090		35,215
Income tax expense		2,725		2,888		3,644		5,613		8,306
Net income	$	9,293	$	10,184	$	11,694	$	19,477	$	26,909
Per Common Share Data
Earnings per common share	$	0.53	$	0.58	$	0.67	$	1.11	$	1.54
Diluted earnings per common share	$	0.52	$	0.57	$	0.66	$	1.10	$	1.52
Dividends declared per common share	$	0.18	$	0.16	$	0.16	$	0.34	$	0.31
Average common shares outstanding		17,297		17,244		17,194		17,271		17,170
Diluted average common shares outstanding		17,532		17,500		17,497		17,517		17,482

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)


	****	June 30,			March 31,			December 31,			June 30,
	****	2022			2022			2021			2021
Tangible Common Equity to Tangible Assets
Total common stockholders’ equity		$	307,158		$	328,505		$	359,403		$	344,391
Less: Goodwill			31,337			31,490			31,490			30,201
Less: Other intangible assets			17,511			19,197			20,250			23,680
Tangible common equity (a)			258,310			277,818			307,663			290,510
Total assets			3,295,065			3,336,199			3,392,691			3,157,229
Less: Goodwill			31,337			31,490			31,490			30,201
Less: Other intangible assets			17,511			19,197			20,250			23,680
Tangible assets (b)			3,246,217			3,285,512			3,340,951			3,103,348
Tangible common equity to tangible assets (a)/(b)			7.96	%		8.46	%		9.21	%		9.36	%
Tangible Book Value Per Common Share
Total common stockholders’ equity		$	307,158		$	328,505		$	359,403		$	344,391
Less: Goodwill			31,337			31,490			31,490			30,201
Less: Other intangible assets			17,511			19,197			20,250			23,680
Tangible common equity (c)			258,310			277,818			307,663			290,510
Total common shares issued and outstanding (d)			17,306			17,289			17,213			17,198
Tangible book value per common share (c)/(d)		$	14.93		$	16.07		$	17.87		$	16.89


	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2022			2022			2021			2022			2021
Return on Average Tangible Common Equity
Net income	$	9,293		$	10,184		$	11,694		$	19,477		$	26,909
Add: Intangible amortization expense (net of tax)		832			832			860			1,664			1,769
Net income, excluding intangible amortization (e)		10,125			11,016			12,554			21,141			28,678
Average total equity		312,515			350,545			339,439			331,425			336,830
Less: Average goodwill		31,488			31,490			30,201			31,489			30,201
Less: Average other intangible assets (net of tax)		14,737			15,569			19,123			15,151			19,556
Average tangible common equity (f)		266,290			303,486			290,115			284,785			287,073
Return on average tangible common equity (e)/(f)		15.25	%		14.72	%		17.36	%		14.97	%		20.15	%
Efficiency Ratio
Noninterest expense	$	39,984		$	38,071		$	42,550		$	78,055		$	85,592
Less: Intangible amortization expense		1,053			1,053			1,088			2,106			2,239
Adjusted noninterest expense (g)		38,931			37,018			41,462			75,949			83,353
Net interest income		22,776			21,673			21,140			44,449			43,178
Noninterest income		29,226			29,470			36,748			58,696			77,629
Tax-equivalent adjustment		100			94			135			194			278
Total tax-equivalent revenue (h)		52,102			51,237			58,023			103,339			121,085
Efficiency ratio (g)/(h)		74.72	%		72.25	%		71.46	%		73.50	%		68.84	%

Alerus Financial Corporation and Subsidiaries

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

(dollars in thousands)


	Three months ended												Six months ended
	June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
			Average				Average				Average				Average				Average
	Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/
	Balance		Rate		Balance		Rate		Balance		Rate		Balance		Rate		Balance		Rate
Interest Earning Assets
Interest-bearing deposits with banks	$	28,920	0.39	%	$	105,726	0.18	%	$	191,695	0.12	%	$	67,111	0.22	%	$	188,056	0.12	%
Investment securities ^(1)^		1,164,625	2.18	%		1,216,256	1.90	%		800,812	1.60	%		1,190,298	2.04	%		731,995	1.62	%
Loans held for sale		31,878	3.15	%		24,656	2.57	%		71,447	2.26	%		28,287	2.90	%		76,818	2.19	%
Loans
Commercial:
Commercial and industrial		463,215	4.38	%		434,656	4.68	%		627,613	4.55	%		449,014	4.52	%		651,143	4.64	%
Real estate construction		44,627	4.04	%		41,139	3.89	%		42,511	4.28	%		42,893	3.97	%		43,880	4.25	%
Commercial real estate		601,765	3.80	%		601,024	3.64	%		568,827	3.71	%		601,397	3.72	%		564,928	3.75	%
Total commercial		1,109,607	4.05	%		1,076,819	4.07	%		1,238,951	4.15	%		1,093,304	4.06	%		1,259,951	4.23	%
Consumer
Residential real estate first mortgage		543,023	3.29	%		514,724	3.49	%		459,278	3.53	%		528,952	3.39	%		458,584	3.65	%
Residential real estate junior lien		132,082	4.64	%		125,997	4.45	%		129,544	4.58	%		129,056	4.55	%		133,622	4.72	%
Other revolving and installment		53,919	4.40	%		50,686	4.38	%		60,213	4.31	%		52,311	4.39	%		64,396	4.35	%
Total consumer		729,024	3.62	%		691,407	3.73	%		649,035	3.81	%		710,319	3.67	%		656,602	3.93	%
Total loans ^(1)^		1,838,631	3.88	%		1,768,226	3.94	%		1,887,986	4.04	%		1,803,623	3.91	%		1,916,553	4.13	%
Federal Reserve/FHLB stock		10,564	4.90	%		6,486	4.38	%		6,528	4.36	%		8,536	4.70	%		6,156	4.42	%
Total interest earning assets		3,074,618	3.20	%		3,121,350	3.01	%		2,958,468	3.08	%		3,097,855	3.10	%		2,919,578	3.19	%
Noninterest earning assets		184,037				165,459				161,272				174,799				164,124
Total assets	$	3,258,655			$	3,286,809			$	3,119,740			$	3,272,654			$	3,083,702
Interest-Bearing Liabilities
Interest-bearing demand deposits	$	703,365	0.12	%	$	714,472	0.12	%	$	697,789	0.14	%	$	708,888	0.12	%	$	670,462	0.15	%
Money market and savings deposits		1,041,898	0.14	%		1,043,430	0.14	%		1,015,358	0.14	%		1,042,660	0.14	%		1,022,812	0.15	%
Time deposits		211,787	0.43	%		227,485	0.44	%		208,338	0.56	%		219,592	0.44	%		209,521	0.61	%
Fed funds purchased		81,506	1.18	%		—	—	%		—	—	%		40,978	1.18	%		—	—	%
Short-term borrowings		9,615	1.59	%		—	—	%		—	—	%		4,834	1.59	%		—	—	%
Long-term debt		58,876	3.81	%		58,908	3.87	%		58,996	3.66	%		58,892	3.84	%		42,429	3.93	%
Total interest-bearing liabilities		2,107,047	0.31	%		2,044,295	0.28	%		1,980,481	0.29	%		2,075,844	0.30	%		1,945,224	0.28	%
Noninterest-Bearing Liabilities and Stockholders' Equity
Noninterest-bearing deposits		783,367				831,441				755,773				807,271				743,793
Other noninterest-bearing liabilities		55,726				60,528				44,047				58,114				57,855
Stockholders’ equity		312,515				350,545				339,439				331,425				336,830
Total liabilities and stockholders’ equity	$	3,258,655			$	3,286,809			$	3,119,740			$	3,272,654			$	3,083,702
Net interest rate spread			2.89	%			2.73	%			2.79	%			2.80	%			2.91	%
Net interest margin, tax-equivalent ^(1)^			2.98	%			2.83	%			2.88	%			2.91	%			3.00	%

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

Exhibit 99.2

INVESTOR PRESENTATION<br>JULY 2022<br>Alerus
1<br>Forward<br>-<br>Looking<br>Statements<br>This<br>presentation<br>contains<br>“forward<br>-<br>looking<br>statements”<br>within<br>the<br>meaning<br>of<br>the<br>safe<br>harbor<br>provisions<br>of<br>the<br>U<br>..<br>S<br>..<br>Private<br>Securities<br>Litigation<br>Reform<br>Act<br>of<br>1995<br>..<br>Forward<br>-<br>looking<br>statements<br>include,<br>without<br>limitation,<br>statements<br>concerning<br>plans,<br>estimates,<br>calculations,<br>forecasts<br>and<br>projections<br>with<br>respect<br>to<br>the<br>anticipated<br>future<br>performance<br>of<br>Alerus<br>Financial<br>Corporation<br>..<br>These<br>statements<br>are<br>often,<br>but<br>not<br>always,<br>identified<br>by<br>words<br>such<br>as<br>“may”,<br>“might”,<br>“should”,<br>“could”,<br>“predict”,<br>“potential”,<br>“believe”,<br>“expect”,<br>“continue”,<br>“will”,<br>“anticipate”,<br>“seek”,<br>“estimate”,<br>“intend”,<br>“plan”,<br>“projection”,<br>“would”,<br>“annualized”,<br>“target”<br>and<br>“outlook”,<br>or<br>the<br>negative<br>version<br>of<br>those<br>words<br>or<br>other<br>comparable<br>words<br>of<br>a<br>future<br>or<br>forward<br>-<br>looking<br>nature<br>..<br>Examples<br>of<br>forward<br>-<br>looking<br>statements<br>include,<br>among<br>others,<br>statements<br>we<br>make<br>regarding<br>our<br>projected<br>growth,<br>anticipated<br>future<br>financial<br>performance,<br>financial<br>condition,<br>credit<br>quality,<br>management’s<br>long<br>-<br>term<br>performance<br>goals<br>and<br>the<br>future<br>plans<br>and<br>prospects<br>of<br>Alerus<br>Financial<br>Corporation<br>..<br>Forward<br>-<br>looking<br>statements<br>are<br>neither<br>historical<br>facts<br>nor<br>assurances<br>of<br>future<br>performance<br>..<br>Instead,<br>they<br>are<br>based<br>only<br>on<br>our<br>current<br>beliefs,<br>expectations<br>and<br>assumptions<br>regarding<br>the<br>future<br>of<br>our<br>business,<br>future<br>plans<br>and<br>strategies,<br>projections,<br>anticipated<br>events<br>and<br>trends,<br>the<br>economy<br>and<br>other<br>future<br>conditions<br>..<br>Because<br>forward<br>-<br>looking<br>statements<br>relate<br>to<br>the<br>future,<br>they<br>are<br>subject<br>to<br>inherent<br>uncertainties,<br>risks<br>and<br>changes<br>in<br>circumstances<br>that<br>are<br>difficult<br>to<br>predict<br>and<br>many<br>of<br>which<br>are<br>outside<br>of<br>our<br>control<br>..<br>Our<br>actual<br>results<br>and<br>financial<br>condition<br>may<br>differ<br>materially<br>from<br>those<br>indicated<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>..<br>Therefore,<br>you<br>should<br>not<br>rely<br>on<br>any<br>of<br>these<br>forward<br>-<br>looking<br>statements<br>..<br>Important<br>factors<br>that<br>could<br>cause<br>our<br>actual<br>results<br>and<br>financial<br>condition<br>to<br>differ<br>materially<br>from<br>those<br>indicated<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>include,<br>among<br>others,<br>the<br>following<br>:<br>the<br>negative<br>effects<br>of<br>the<br>ongoing<br>COVID<br>-<br>19<br>pandemic,<br>including<br>its<br>effects<br>on<br>the<br>economic<br>environment,<br>our<br>clients<br>and<br>our<br>operations<br>including<br>due<br>to<br>supply<br>chain<br>disruptions,<br>as<br>well<br>as<br>any<br>changes<br>to<br>federal,<br>state<br>or<br>local<br>government<br>laws,<br>regulations<br>or<br>orders<br>in<br>connection<br>with<br>the<br>pandemic<br>;<br>our<br>ability<br>to<br>successfully<br>manage<br>credit<br>risk<br>and<br>maintain<br>an<br>adequate<br>level<br>of<br>allowance<br>for<br>loan<br>losses<br>;<br>new<br>or<br>revised<br>accounting<br>standards,<br>including<br>as<br>a<br>result<br>of<br>the<br>future<br>implementation<br>of<br>the<br>new<br>Current<br>Expected<br>Credit<br>Loss<br>Standard<br>;<br>business<br>and<br>economic<br>conditions<br>generally<br>and<br>in<br>the<br>financial<br>services<br>industry,<br>nationally<br>and<br>within<br>our<br>market<br>areas<br>,<br>including<br>rising<br>rates<br>of<br>inflation<br>;<br>the<br>overall<br>health<br>of<br>the<br>local<br>and<br>national<br>real<br>estate<br>market<br>;<br>concentrations<br>within<br>our<br>loan<br>portfolio<br>;<br>the<br>level<br>of<br>nonperforming<br>assets<br>on<br>our<br>balance<br>sheet<br>;<br>our<br>ability<br>to<br>implement<br>our<br>organic<br>and<br>acquisition<br>growth<br>strategies<br>;<br>the<br>impact<br>of<br>economic<br>or<br>market<br>conditions<br>on<br>our<br>fee<br>-<br>based<br>services<br>;<br>our<br>ability<br>to<br>continue<br>to<br>grow<br>our<br>retirement<br>and<br>benefit<br>services<br>business<br>;<br>our<br>ability<br>to<br>continue<br>to<br>originate<br>a<br>sufficient<br>volume<br>of<br>residential<br>mortgages<br>;<br>the<br>occurrence<br>of<br>fraudulent<br>activity,<br>breaches<br>or<br>failures<br>of<br>our<br>information<br>security<br>controls<br>or<br>cybersecurity<br>related<br>incidents<br>;<br>interruptions<br>involving<br>our<br>information<br>technology<br>and<br>telecommunications<br>systems<br>or<br>third<br>-<br>party<br>servicers<br>;<br>potential<br>losses<br>incurred<br>in<br>connection<br>with<br>mortgage<br>loan<br>repurchases<br>;<br>the<br>composition<br>of<br>our<br>executive<br>management<br>team<br>and<br>our<br>ability<br>to<br>attract<br>and<br>retain<br>key<br>personnel<br>;<br>rapid<br>technological<br>change<br>in<br>the<br>financial<br>services<br>industry<br>;<br>increased<br>competition<br>in<br>the<br>financial<br>services<br>industry<br>,<br>from<br>non<br>-<br>banks<br>such<br>as<br>credit<br>unions<br>and<br>other<br>Fintech<br>companies<br>;<br>our<br>ability<br>to<br>successfully<br>manage<br>liquidity<br>risk<br>,<br>especially<br>in<br>light<br>of<br>recent<br>excess<br>liquidity<br>at<br>the<br>Bank<br>;<br>the<br>effectiveness<br>of<br>our<br>risk<br>management<br>framework<br>;<br>the<br>commencement<br>and<br>outcome<br>of<br>litigation<br>and<br>other<br>legal<br>proceedings<br>and<br>regulatory<br>actions<br>against<br>us<br>or<br>to<br>which<br>we<br>may<br>become<br>subject<br>;<br>potential<br>impairment<br>to<br>the<br>goodwill<br>we<br>recorded<br>in<br>connection<br>with<br>our<br>past<br>acquisitions<br>;<br>the<br>extensive<br>regulatory<br>framework<br>that<br>applies<br>to<br>us<br>;<br>the<br>impact<br>of<br>recent<br>and<br>future<br>legislative<br>and<br>regulatory<br>changes<br>;<br>interest<br>rate<br>risks<br>associated<br>with<br>our<br>business<br>,<br>including<br>the<br>effects<br>of<br>anticipated<br>rate<br>increases<br>by<br>the<br>Federal<br>Reserve<br>;<br>fluctuations<br>in<br>the<br>values<br>of<br>the<br>securities<br>held<br>in<br>our<br>securities<br>portfolio<br>;<br>governmental<br>monetary,<br>trade<br>and<br>fiscal<br>policies<br>;<br>severe<br>weather,<br>natural<br>disasters,<br>widespread<br>disease<br>or<br>pandemics,<br>such<br>as<br>the<br>COVID<br>-<br>19<br>global<br>pandemic,<br>acts<br>of<br>war<br>or<br>terrorism<br>,<br>including<br>the<br>Russian<br>invasion<br>of<br>Ukraine,<br>or<br>other<br>adverse<br>external<br>events<br>;<br>any<br>material<br>weaknesses<br>in<br>our<br>internal<br>control<br>over<br>financial<br>reporting<br>;<br>developments<br>and<br>uncertainty<br>related<br>to<br>the<br>future<br>use<br>and<br>availability<br>of<br>some<br>reference<br>rates,<br>such<br>as<br>the<br>London<br>Interbank<br>Offered<br>Rate,<br>as<br>well<br>as<br>other<br>alternative<br>rates<br>;<br>changes<br>to<br>U<br>..<br>S<br>..<br>or<br>state<br>tax<br>laws,<br>regulations<br>and<br>guidance,<br>including<br>recent<br>proposals<br>to<br>increase<br>the<br>federal<br>corporate<br>tax<br>rate<br>;<br>the<br>impact<br>of<br>inflation<br>and<br>recent<br>and<br>anticipated<br>interest<br>rate<br>increases<br>;<br>talent<br>and<br>labor<br>shortages<br>and<br>employee<br>turnover<br>;<br>possible<br>federal<br>mask<br>and<br>vaccine<br>mandates<br>;<br>our<br>success<br>at<br>managing<br>the<br>risks<br>involved<br>in<br>the<br>foregoing<br>items<br>;<br>and<br>any<br>other<br>risks<br>described<br>in<br>the<br>“Risk<br>Factors”<br>sections<br>of<br>the<br>reports<br>filed<br>by<br>Alerus<br>Financial<br>Corporation<br>with<br>the<br>Securities<br>and<br>Exchange<br>Commission<br>..<br>Any<br>forward<br>-<br>looking<br>statement<br>made<br>by<br>us<br>in<br>this<br>presentation<br>is<br>based<br>only<br>on<br>information<br>currently<br>available<br>to<br>us<br>and<br>speaks<br>only<br>as<br>of<br>the<br>date<br>on<br>which<br>it<br>is<br>made<br>..<br>We<br>undertake<br>no<br>obligation<br>to<br>publicly<br>update<br>any<br>forward<br>-<br>looking<br>statement,<br>whether<br>written<br>or<br>oral,<br>that<br>may<br>be<br>made<br>from<br>time<br>to<br>time,<br>whether<br>as<br>a<br>result<br>of<br>new<br>information,<br>future<br>developments<br>or<br>otherwise<br>..<br>Non<br>-<br>GAAP<br>Financial<br>Measures<br>This<br>presentation<br>includes<br>certain<br>ratios<br>and<br>amounts<br>that<br>do<br>not<br>conform<br>to<br>U<br>..<br>S<br>..<br>Generally<br>Accepted<br>Accounting<br>Principles,<br>or<br>GAAP<br>..<br>Management<br>uses<br>certain<br>non<br>-<br>GAAP<br>financial<br>measures<br>to<br>evaluate<br>financial<br>performance<br>and<br>business<br>trends<br>from<br>period<br>to<br>period<br>and<br>believes<br>that<br>disclosure<br>of<br>these<br>non<br>-<br>GAAP<br>financial<br>measures<br>will<br>help<br>investors,<br>rating<br>agencies<br>and<br>analysts<br>evaluate<br>the<br>financial<br>performance<br>and<br>condition<br>of<br>Alerus<br>Financial<br>Corporation<br>..<br>This<br>presentation<br>includes<br>a<br>reconciliation<br>of<br>each<br>non<br>-<br>GAAP<br>financial<br>measure<br>to<br>the<br>most<br>comparable<br>GAAP<br>equivalent<br>..<br>Miscellaneous<br>Except<br>as<br>otherwise<br>indicated,<br>this<br>presentation<br>speaks<br>as<br>of<br>the<br>date<br>hereof<br>..<br>The<br>delivery<br>of<br>this<br>presentation<br>shall<br>not,<br>under<br>any<br>circumstances,<br>create<br>any<br>implication<br>that<br>there<br>has<br>been<br>no<br>change<br>in<br>the<br>affairs<br>of<br>Alerus<br>Financial<br>Corporation<br>after<br>the<br>date<br>hereof<br>..<br>Certain<br>of<br>the<br>information<br>contained<br>herein<br>may<br>be<br>derived<br>from<br>information<br>provided<br>by<br>industry<br>sources<br>..<br>We<br>believe<br>that<br>such<br>information<br>is<br>accurate<br>and<br>that<br>the<br>sources<br>from<br>which<br>it<br>has<br>been<br>obtained<br>are<br>reliable<br>..<br>We<br>cannot<br>guarantee<br>the<br>accuracy<br>of<br>such<br>information,<br>however,<br>and<br>we<br>have<br>not<br>independently<br>verified<br>such<br>information<br>..<br>DISCLAIMERS
---
2<br>FOR THE TWELVE<br>MONTHS ENDED<br>JUNE 30<br>, 2022<br>Noninterest income:<br>$128.5 million<br>Net interest income:<br>$88.4 million<br>$27.8<br>$31.9<br>$34.2<br>$36.7<br>$31.7<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>OUR MISSION<br>▪<br>To positively impact our clients’ financial potential<br>-<br>through holistic guidance, unparalleled service, and engaging technology.<br>COMPANY PROFILE<br>Data as of 6/30/2022.<br>DIVERSIFIED REVENUE STREAM<br>ASSET GROWTH (IN BILLIONS)<br>Banking Assets<br>Retirement and Benefits AUA/AUM<br>Wealth Management AUA/AUM<br>$2.6<br>$3.1<br>$3.3<br>$4.0<br>$4.1<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>NONINTEREST<br>INCOME AS A %<br>OF REVENUE:<br>59.3%<br>DIVERSIFIED FINANCIAL SERVICES COMPANY<br>▪<br>$3.3 billion Banking assets<br>▪<br>$31.7 billion Retirement and Benefits AUA/AUM<br>▪<br>$4.1 billion Wealth Management AUA/AUM<br>▪<br>$269.4 million in Mortgage Originations YTD<br>ALERUS BUSINESS LINES<br>▪<br>Banking<br>▪<br>Retirement and Benefits<br>▪<br>Wealth Management<br>▪<br>Mortgage<br>$2.2<br>$2.4<br>$3.0<br>$3.4<br>$3.3<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>Retirement and<br>Benefit Revenue<br>32.5%<br>Wealth<br>Management<br>Revenue<br>10.1%<br>Mortgage<br>Revenue<br>13.9%<br>Banking<br>Fees<br>2.8%<br>Net<br>Interest<br>Income<br>40.7%
---
3<br>A BIG COMPANY MODEL WITH SMALL COMPANY EXECUTION<br>OUR DIVERSE BUSINESS LINES<br>Revenue data LTM as of 06/30/2022.<br>TRUSTED<br>ADVISOR<br>BANKING<br>WEALTH<br>MANAGEMENT<br>•<br>Residential mortgage lending<br>•<br>Residential construction lending<br>•<br>Home equity/second mortgages<br>•<br>Advisory services<br>•<br>Trust and fiduciary services<br>•<br>Investment management<br>•<br>Insurance planning<br>•<br>Financial planning<br>•<br>Education planning<br>•<br>Retirement plan<br>administration and<br>recordkeeping<br>•<br>Retirement plan<br>investment advisory<br>•<br>Health and welfare<br>administration<br>BUSINESS BANKING<br>•<br>Commercial and commercial<br>real estate lending<br>•<br>Small business lending<br>•<br>Treasury management<br>•<br>Deposit services<br>CONSUMER BANKING<br>•<br>Private banking<br>•<br>Deposit products<br>and services<br>•<br>Consumer lending<br>MORTGAGE<br>RETIREMENT<br>AND BENEFITS<br>33% of Revenue<br>14% of Revenue<br>10% of Revenue<br>43% of Revenue
---
4<br>FRANCHISE FOOTPRINT<br>FULL<br>-<br>SERVICE BANKING OFFICES<br>Alerus offers banking, retirement and benefits, mortgage and<br>wealth management services at all full<br>-<br>service banking offices<br>▪<br>Grand Forks, ND:<br>4<br>full<br>-<br>service banking offices<br>▪<br>Fargo, ND:<br>3 full<br>-<br>service banking offices<br>▪<br>Twin Cities, MN:<br>6 full<br>-<br>service banking offices<br>▪<br>Phoenix, AZ:<br>3<br>full<br>-<br>service banking offices<br>RETIREMENT AND BENEFITS SERVICES OFFICES<br>▪<br>1 office in Minnesota<br>▪<br>1 office in Michigan<br>▪<br>1 office in Colorado<br>▪<br>Serve clients in all 50 states through retirement plan services<br>DIVERSIFIED CLIENT BASE<br>▪<br>38,600 consumer clients<br>▪<br>15,200 commercial clients<br>▪<br>8,000 employer<br>-<br>sponsored retirement plans<br>Data as of 06/30/2022.<br>▪<br>381,200 employer<br>-<br>sponsored retirement plan participants<br>▪<br>68,600 health savings account participants<br>▪<br>59,300 flexible spending account/health reimbursement<br>arrangement participants
---
5<br>STRONG GROWTH MARKETS AND STABLE CORE FUNDING<br>MARKET DISTRIBUTION<br>DEPOSITS ($2,620)<br>LOANS ($1,890)<br>(1)<br>ARB ASSETS UNDER<br>ADMIN/MGMT. ($31,749)<br>WM ASSETS UNDER<br>ADMIN/MGMT. ($4,148)<br>MORTGAGE ORIGINATIONS ($269)<br>($ IN MILLIONS)<br>Data as of 06/30/2022.<br>1<br>-<br>Loans in our national market are participant loans not sourced directly through advisors located in one of our geographical m<br>a<br>rkets.<br>LEGEND<br>36.1%<br>53.5%<br>7.7%<br>2.7%<br>42.5%<br>29.9%<br>4.2%<br>23.4%<br>4.6%<br>91.9%<br>3.5%<br>55.5%<br>29.9%<br>1.9%<br>12.7%<br>8.9%<br>13.5%<br>0.1%<br>77.5%
---
6<br>ONE<br>ALERUS<br>REINVENTION OF PROCESSES<br>We have aligned processes, policies, and<br>procedures throughout all departments to<br>enhance the client experience and improve our<br>Company's efficiency<br>Our expectation is this initiative will continue to<br>improve our scalability and operating costs<br>TAILORED ADVICE<br>We strive to provide each<br>client with a primary point of<br>contact<br>—<br>a trusted advisor<br>—<br>who deals with individual<br>needs and integrates other<br>department’s expertise when<br>necessary<br>SYNERGISTIC GROWTH<br>Deposits sourced from our retirement and benefits<br>division totaled $586.8 million as of June 30, 2022<br>Cumulative rollovers have added $1.1 billion of<br>assets under management<br>1<br>-<br>4 Family 1<br>st<br>Liens totaled $534.7 million in the<br>second quarter<br>TECHNOLOGY INVESTMENT<br>We have proactively invested in technology to<br>further our goal to effectively integrate all<br>departments and business lines<br>These investments allow for digital and proactive<br>engagement with clients<br>DIVERSIFIED SERVICES<br>We offer comprehensive product<br>and service packages to our<br>clients including banking,<br>mortgage, wealth management,<br>and retirement and benefits<br>ONE ALERUS STRATEGY<br>One Alerus enables us to bring our product and service offerings<br>to clients in a cohesive and seamless manner. We believe the One<br>Alerus initiative will enable us to achieve future organic growth by<br>leveraging our existing client base and help us continue to provide<br>strong returns to our stockholders<br>ONE ALERUS
---
7<br>EXPANDED TO COLORADO<br>Acquired Retirement Planning Services, Inc. (Littleton,<br>CO)<br>To supplement our strong organic growth, we have executed 25 acquisitions throughout the history of<br>our company across all business lines:<br>STRATEGIC GROWTH<br>2000<br>2002<br>2003<br>2006<br>2007<br>2019<br>2009<br>2016<br>2015<br>2014<br>2013<br>2012<br>2011<br>REBRANDED TO ALERUS<br>Acquired a branch from BNC National Bank<br>(Fargo, ND)<br>Acquired Pension Solutions, Inc. (St. Paul, MN)<br>The catalyst to the Retirement Division<br>OPENED A TRUST AND INVESTMENT OFFICE<br>(TWIN CITIES)<br>Acquired Stanton Trust Company (Minneapolis, MN)<br>EXPANDED TO MINNESOTA MARKET<br>OPENED A BUSINESS BANKING OFFICE<br>(MINNETONKA, MN)<br>Acquired Acclaim Benefits, Inc. (Minneapolis, MN)<br>Acquired Stanton Investment Advisors<br>(Minneapolis, MN)<br>EXPANDED TO ARIZONA MARKET<br>OPENED A BUSINESS BANKING OFFICE<br>(SCOTTSDALE, AZ)<br>Acquired retirement plan practice<br>of Eide Bailly, LLP (Minneapolis, MN)<br>Acquired Prosperan Bank (Twin Cities, MN)<br>Acquired deposits from BankFirst (Minneapolis, MN)<br>Acquired Residential Mortgage Group<br>(Minnetonka, MN)<br>Acquired selected loans and deposits (in MN) and a<br>branch<br>(in AZ) from BN<br>C National Bank<br>EXPANDED TO MICHIGAN<br>Acquired PensionTrend, Inc. and PensionTrend<br>Investment Advisers, LLC (Okemos, MI)<br>Acquired Tegrit Administrators, LLC<br>EXPANDED TO NEW HAMPSHIRE<br>Acquired Private Bank Minnesota (Minneapolis, MN)<br>Acquired Retirement Alliance, Inc. (Manchester, NH)<br>Acquired Interactive Retirement Systems, Ltd.<br>(Bloomington, MN)<br>Acquired Beacon Bank (Shorewood, Excelsior, Eden<br>Prairie and Duluth, MN)<br>Acquired Alliance Benefit Group North Central States,<br>Inc. (Albert Lea and Eden Prairie, MN)<br>COMPLETED INITIAL PUBLIC OFFERING (IPO)<br>2017<br>LAUNCHED ONE ALERUS STRATEGIC GROWTH PLAN<br>2020<br>2022<br>Acquired Metro Phoenix Bank (Phoenix, AZ)
---
8<br>▪<br>Diversified client base<br>consists of<br>38,600<br>consumers clients,<br>15,200<br>commercial clients and over<br>381,200<br>employer<br>-<br>sponsored<br>retirement and benefit plan participants<br>▪<br>Harness<br>product<br>synergies<br>unavailable to traditional banking organizations<br>▪<br>Capitalize on<br>strategic opportunities<br>to grow in our existing markets or new markets<br>▪<br>Acquisition targets include<br>banks and nationwide fee income<br>companies with<br>complementary<br>business models,<br>cultural similarities, synergy and growth opportunities<br>▪<br>Recruit<br>top talent<br>to<br>accelerate growth<br>in our existing markets or jumpstart our entrance into new markets<br>▪<br>Market disruption caused by M&A activity provides<br>lift<br>-<br>out opportunities<br>▪<br>Purpose driven<br>organization with a<br>recognizable mission<br>for clients, employees, and stakeholders<br>▪<br>Proactively position ourselves as an<br>acquirer<br>and employer of choice<br>▪<br>Invested in one of the<br>leading marketing automation technologies<br>▪<br>Provide<br>secure and reliable<br>technology that meets evolving client expectations<br>▪<br>Integrate our full product and service offerings through our<br>fast<br>-<br>follower<br>strategy<br>KEY STRATEGIC INITIATIVES<br>GROWING THE ALERUS FRANCHISE<br>LEVERAGE OUR EXISTING<br>CLIENT BASE<br>EXECUTE STRATEGIC<br>ACQUISITIONS<br>PURSUE TALENT<br>ACQUISITION<br>ENHANCE BRAND<br>AWARENESS<br>STRENGTHEN AND BUILD<br>INFRASTRUCTURE<br>▪<br>Collaborative leadership team focused on<br>growing organically<br>by deepening relationships with existing clients<br>through our expansive services<br>▪<br>Diversified business model focused on bringing value to the client through advice and specialty solutions to help<br>clients grow<br>ORGANIC GROWTH<br>“ONE ALERUS”
---
9<br>DAN COUGHLIN<br>Since 2016<br>Chairman, Alerus Financial Corp.<br>Former MD & Co<br>-<br>Head<br>–<br>Fin’l<br>Services Inv. Banking, Raymond<br>James; Former Chairman<br>& CEO, Howe Barnes Hoefer &<br>Arnett<br>MARY ZIMMER<br>Since 2021<br>Former Director of Diverse Client Segments and<br>Former Northern Regional President, Wells Fargo Advisors<br>Former Head of Intl. Wealth USA, Royal Bank 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>CIO, Deluxe Corporation<br>Former SVP<br>–<br>Technology and Enterprise<br>Programs, UnitedHealth Group<br>JON HENDRY<br>Executive Vice President and<br>Chief Technology Officer<br>38 years with Alerus<br>KARIN TAYLOR<br>Executive Vice President and<br>Chief Risk Officer<br>4 years with Alerus<br>KEVIN LEMKE<br>Since 1994<br>President<br>Virtual Systems, Inc.<br>GALEN VETTER<br>Since 2013<br>Former Global CFO, Franklin Templeton<br>Investments; Former Partner<br>-<br>in<br>-<br>Charge,<br>Upper Midwest Region, RSM<br>JILL SCHURTZ<br>Since 2021<br>CEO and CIO, St. Paul Teacher's<br>Retirement Fund Association<br>Former CEO and COO, Robeco<br>-<br>Sage Mgmt.<br>SENIOR EXECUTIVE TEAM<br>BOARD OF DIRECTORS<br>KATIE LORENSON<br>Director,<br>President and<br>Chief Executive Officer<br>5 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<br>MISSY KENEY<br>Executive Vice President and<br>Chief Engagement Officer<br>17 years with Alerus<br>ANN MCCONN<br>Executive Vice President and<br>Chief Shared Services Officer<br>20 years with Alerus
---
10<br>SECOND QUARTER HIGHLIGHTS
---
11<br>▪<br>Reported net income of $9.3 million in the second quarter of 2022, or $0.52 per diluted<br>common share.<br>▪<br>Net interest income increased $1.1 million primarily driven by an increase in net interest<br>margin, due to an increase in earning asset yields and a change in balance sheet mix.<br>▪<br>Net interest margin increased 15 bps due to an increase in earnings asset yield of 19 bps,<br>primarily the result of a 28 bps increase in investment securities yield and 4% loan<br>growth in average loans.<br>▪<br>Loans HFI, excluding PPP, increased $78.4 million from the prior quarter end due to<br>organic loan growth and increased 1<br>-<br>4 family 1<br>st<br>liens.<br>▪<br>Maintained exceptional credit quality. No additional provision expense recorded for the<br>quarter. Allowance for loan losses to non<br>-<br>performing loans was 718%.<br>▪<br>Wealth management increased $222 thousand primarily due to seasonal increases in<br>insurance related income.<br>▪<br>Named Star Tribune’s 2022 Top Workplace.<br>▪<br>Announced Jim Collins, a banking industry veteran with over 30 years of leadership<br>experience in the Twin Cities banking market, as Chief Banking and Revenue Officer<br>effective May 31, 2022.<br>SUCCESS IS NEVER FINAL<br>Q2 2022 SUMMARY
---
12<br>INCOME STATEMENT<br>Q2 2022 FINANCIAL HIGHLIGHTS<br>1<br>–<br>Represents a non<br>-<br>GAAP Financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation.”<br>(dollars and shares in thousands, except per share data)<br>Net Interest Income<br>$<br>22,776<br><br><br>$<br>21,673<br><br><br>$<br>21,140<br><br><br>$<br>44,449<br><br><br>$<br>43,178<br><br><br>Provision for Loan Losses<br>—<br><br><br>—<br><br><br>—<br><br><br>—<br><br><br>—<br><br><br>Net Interest Income After Provision for Loan Losses<br>22,776<br><br><br>21,673<br><br><br>21,140<br><br><br>44,449<br><br><br>43,178<br><br><br>Noninterest Income<br>29,226<br><br><br>29,470<br><br><br>36,748<br><br><br>58,696<br><br><br>77,629<br><br><br>Noninterest Expense<br>39,984<br><br><br>38,071<br><br><br>42,550<br><br><br>78,055<br><br><br>85,592<br><br><br>Income Before Income Taxes<br>12,018<br><br><br>13,072<br><br><br>15,338<br><br><br>25,090<br><br><br>35,215<br><br><br>Income Tax Expense<br>2,725<br><br><br>2,888<br><br><br>3,644<br><br><br>5,613<br><br><br>8,306<br><br><br>Net Income<br>$<br>9,293<br><br><br>$<br>10,184<br><br><br>$<br>11,694<br><br><br>$<br>19,477<br><br><br>$<br>26,909<br><br><br>Per Common Share Data<br>Earnings Per Common Share - Diluted<br>$<br>0.52<br>$<br>0.57<br>$<br>0.66<br>$<br>1.10<br>$<br>1.52<br>Diluted Average Common Shares Outstanding<br>17,532<br><br><br>17,500<br><br><br>17,497<br><br><br>17,517<br><br><br>17,482<br><br><br>Performance Ratios<br>Return on Average Total Assets<br>1.14<br><br><br>%<br>1.26<br><br><br>%<br>1.50<br><br><br>%<br>1.20<br><br><br>%<br>1.76<br><br><br>%<br>Return on Average Tangible Common Equity<br>(1)<br>15.25<br><br><br>%<br>14.72<br><br><br>%<br>17.36<br><br><br>%<br>14.97<br><br><br>%<br>20.15<br><br><br>%<br>Noninterest Income as a % of Revenue<br>56.20<br><br><br>%<br>57.62<br><br><br>%<br>63.48<br><br><br>%<br>56.91<br><br><br>%<br>64.26<br><br><br>%<br>Net Interest Margin (Tax-Equivalent)<br>2.98<br><br><br>%<br>2.83<br><br><br>%<br>2.88<br><br><br>%<br>2.91<br><br><br>%<br>3.00<br><br><br>%<br>Efficiency Ratio<br>(1)<br>74.72<br><br><br>%<br>72.25<br><br><br>%<br>71.46<br><br><br>%<br>73.50<br><br><br>%<br>68.84<br><br><br>%<br>June 30,<br>2022<br>June 30,<br>2021<br>Three months ended<br>Year ended<br>2022<br>June 30,<br>March 31,<br>2022<br>June 30,<br>2021
---
13<br>PERFORMANCE RATIOS<br>1<br>–<br>Represents a non<br>-<br>GAAP Financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation.”<br>2<br>–<br>Rates have been annualized.<br>1.50%<br>1.26%<br>1.14%<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Return on Average Assets<br>(2)<br>17.36%<br>14.72%<br>15.25%<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Return on Average Tangible<br>Common Equity<br>(1)/(2)<br>$16.89<br>$16.07<br>$14.93<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Tangible Book Value per Share<br>(1)
---
14<br>KEY BALANCE SHEET ITEMS<br>DOLLARS IN MILLIONS<br>$1,657.3<br>$1,748.1<br>$1,828.1<br>$230.7<br>$20.1<br>$10.5<br>$1,888.0<br>$1,768.2<br>$1,838.6<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Average Loans<br>Core Loans<br>PPP Loans<br>$1,921.5<br>$1,985.4<br>$1,957.1<br>$755.8<br>$831.4<br>$783.4<br>$2,677.3<br>$2,816.8<br>$2,740.5<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Average Deposits<br>Interest-Bearing Deposits<br>Non-Interest Bearing Deposits<br>Core<br>4.6%<br>Linked Quarter<br>Loans<br>10.3%<br>Year-over-year<br>Average<br>(2.7)%<br>Linked Quarter<br>Deposits<br>2.4%<br>Year-over-year
---
15<br>1.30%<br>1.39%<br>1.73%<br>1.80%<br>1.66%<br>0.00%<br>0.40%<br>0.80%<br>1.20%<br>1.60%<br>2.00%<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>318%<br>306%<br>674%<br>1,437%<br>718%<br>00%<br>200%<br>400%<br>600%<br>800%<br>1,000%<br>1,200%<br>1,400%<br>1,600%<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>0.33%<br>0.33%<br>0.17%<br>0.09%<br>0.16%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>ASSET QUALITY AND RESERVE LEVELS<br>OVERVIEW<br>NPAS / ASSETS<br>(%)<br>RESERVES<br>/ LOANS<br>(%)<br>RESERVES<br>/ NPLS (%)<br>▪<br>Solid asset quality based on low levels of<br>nonperforming assets.<br>▪<br>Strong reserve levels with a recent trend of<br>declines in criticized loans.<br>▪<br>Currently a non<br>-<br>CECL institution with strong<br>credit quality as evidenced ten<br>-<br>year average net<br>charge<br>-<br>offs of 9 bps.<br>NCO/<br>Avg Loans<br>0.18%<br>0.33%<br>0.03%<br>(0.04)%<br>0.02%
---
16<br>KEY REVENUE ITEMS<br>DOLLARS IN THOUSANDS<br>1<br>–<br>Other noninterest income consists of service charges on deposit accounts, net gains (losses) on investment securities, and o<br>ther noninterest income.<br>$18,579<br>$21,075<br>$22,523<br>$2,561<br>$598<br>$253<br>$21,140<br>$21,673<br>$22,776<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>$25,000<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Net Interest Income<br>Net Interest Income<br>PPP fees<br>$17,871<br>$17,646<br>$16,293<br>$5,138<br>$5,326<br>$5,548<br>$12,287<br>$4,931<br>$6,038<br>$1,452<br>$1,567<br>$1,347<br>$36,748<br>$29,470<br>$29,226<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Noninterest Income<br>Retirement and benefits<br>Wealth management<br>Mortgage banking<br>Other(1)<br>Net Interest<br>5.1%<br>Linked Quarter<br>Income<br>7.7%<br>Year-over-year<br>Noninterest<br>(0.8)%<br>Linked Quarter<br>Income<br>(20.5)%<br>Year-over-year
---
17<br>NET INTEREST MARGIN (NIM)<br>LOAN YIELD<br>(1)<br>/N<br>ET INTEREST MARGIN<br>(1)<br>QUARTERLY HIGHLIGHTS<br>AVERAGE EFFECTIVE FF RATE/COST OF FUNDS<br>(1)<br>1<br>–<br>Rates have been annualized for interim periods. Source: Alerus Financial Corporation; Federal Reserve.<br>▪<br>Loan yield decreased as a result of a $1.3 million decrease<br>in interest income received from loans compared to Q2<br>2021. Excluding PPP loan income, interest income<br>received from loans would have increased $972 thousand.<br>▪<br>Excluding PPP loans, average loans HFI would have<br>increased $170.8 million compared to Q2 2021.<br>▪<br>Net interest margin increased 15 basis points from the Q1<br>2022 total of 2.83%.<br>▪<br>Average effective federal funds rate increased due to a<br>rising interest rate environment.<br>▪<br>Average interest<br>-<br>bearing deposits decreased $28.3<br>million, the largest decrease being commercial<br>transaction accounts.<br>▪<br>Average noninterest bearing deposits decreased $48.1<br>million, the largest decrease being commercial<br>transaction accounts. Interest<br>-<br>bearing synergistic<br>deposits increased $12.3 million.<br>1.83%<br>2.16%<br>0.08%<br>0.44%<br>0.97%<br>0.51%<br>0.05%<br>0.21%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br>2.50%<br>2019<br>2020<br>2021<br>Q2 2022 YTD<br>Average effective FF rate<br>Cost of funds<br>4.97%<br>4.35%<br>4.14%<br>3.91%<br>3.65%<br>3.16%<br>2.73%<br>2.86%<br>0.06%<br>0.17%<br>0.04%<br>3.22%<br>2.90%<br>2.91%<br>0.00%<br>1.00%<br>2.00%<br>3.00%<br>4.00%<br>5.00%<br>6.00%<br>2019<br>2020<br>2021<br>Q2 2022 YTD<br>Loan yield<br>NIM ex. PPP<br>Effect of PPP
---
18<br>NII AND LOAN FLOORS<br>VARIABLE RATE FLOORS BY INDEX<br>VARIABLE RATE FLOORS<br>QUARTER OVER QUARTER HIGHLIGHTS<br>$ in Millions<br>Balance<br>% of Total<br>Balance<br>Cumulative % of<br>Total Balance<br>No Floors<br>$<br>268<br>37.9%<br>37.9%<br>Floors Reached<br>122<br>17.3%<br>55.2%<br>0<br>-<br>50 bps to reach floor<br>76<br>10.7%<br>65.9%<br>>50bps to reach floor<br>241<br>34.1%<br>100.0%<br>Total<br>$<br>707<br>100.0%<br>$ in Millions<br>Index<br>Above<br>the Floor<br>At the<br>Floor<br>No Floor<br>Total<br>Total %<br>Prime<br>$<br>194<br>$<br>82<br>$<br>45<br>$<br>321<br>45.4%<br>1 Month<br>LIBOR<br>–<br>–<br>143<br>143<br>20.2%<br>12 Month LIBOR<br>94<br>2<br>63<br>159<br>22.5%<br>FHLB 5 Year<br>13<br>18<br>13<br>44<br>6.2<br>%<br>Other<br>16<br>20<br>4<br>40<br>5.7%<br>Total<br>$<br>317<br>$<br>122<br>$<br>268<br>$<br>707<br>100.0<br>%<br>Percent<br>of Total<br>44.8%<br>17.3%<br>37.9%<br>100.0%<br>NET INTEREST<br>INCOME<br>NIM:<br>2.83%<br>(0.04)%<br>0.10%<br>0.10%<br>(0.03)<br>%<br>–<br>%<br>0.03%<br>2.98%<br>▪<br>Earning asset yields up 19 bps with average loan balances<br>increasing $70.4 million. Largest rate increase was LHFS (58<br>bps) and Federal Reserve/FHLB stock (52 bps), a result of the<br>increased short<br>-<br>term borrowings.<br>▪<br>Borrowing rates were up 118 bps for fed funds purchased due<br>to the overall decrease in deposits. Average balances increased<br>as well due to the borrowed position.<br>▪<br>Deposit yields remain flat in the rising interest rate<br>environment.
---
19<br>STRONG CORE FUNDING MIX<br>▪<br>Commercial transaction accounts totaled $1.1 billion and<br>decreased 11.1% YoY. Consumer transaction accounts totaled<br>$729.1 million and increased 1.3% YoY.<br>▪<br>Synergistic deposits, including HSA deposits and those sourced<br>through retirement plans and participants, totaled $586.8<br>million, with a YTD cost of 0.04%.<br>▪<br>CD portfolio is primarily 6<br>-<br>month flex CD with over 50% held<br>by clients for 10+ years<br>▪<br>Stable deposit relationships with 22<br>-<br>year average tenure on 10<br>largest depositors.<br>As of June 30, 2022, core deposits totaled $2.6<br>billion or 97.6% of our total deposits<br>OVERVIEW AS OF JUNE 30, 2022<br>JUNE 30<br>,<br>2022<br>DEPOSIT FUNDING<br>($<br>2,892MM<br>)<br>LOW COST OF FUNDS<br>Data YTD as of 06/30/2022.<br>Non<br>-<br>Interest Bearing<br>Deposits<br>29.2%<br>Money<br>Market &<br>Savings<br>Deposits<br>38.6%<br>Interest<br>-<br>Bearing<br>Demand Deposits<br>18.4%<br>Time<br>Deposits<br>7.7%<br>HSA<br>Deposits<br>6.1%<br>0.12%<br>0.17%<br>0.21%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>1.20%<br>1.40%<br>Cost of<br>Total Deposits<br>Cost of Interest-<br>Bearing Deposits<br>Total Cost of<br>Funds<br>2019<br>2020<br>2021<br>Q2 2022 YTD
---
20<br>$7,883<br>$9,214<br>$9,695<br>$17,871<br>$17,646<br>$16,293<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Net Income<br>Revenue<br>$31,905<br>$34,200<br>$36,733<br>$31,749<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>$29,000<br>$30,000<br>$31,000<br>$32,000<br>$33,000<br>$34,000<br>$35,000<br>$36,000<br>$37,000<br>$38,000<br>2019<br>2020<br>2021<br>Q2 2022 YTD<br>AUA/AUM<br>Participants<br>RETIREMENT AND BENEFITS<br>OVERVIEW<br>–<br>8,000 PLANS<br>-<br>NATIONAL FOOTPRINT<br>ASSETS UNDER ADMINISTRATION/MANAGEMENT<br>REVENUE MIX<br>▪<br>RETIREMENT<br>(59%)<br>-<br>Provide recordkeeping and administration<br>services to qualified retirement plans<br>▪<br>TRUST CUSTODY & ADVISORY SERVICES (10%)<br>-<br>Provide<br>investment fiduciary services to retirement plans<br>▪<br>HEALTH AND WELFARE (11%)<br>-<br>Provide HSA, FSA, COBRA<br>recordkeeping and administration services to employers<br>▪<br>ONE ALERUS SYNERGIES<br>•<br>IRA<br>rollovers $70.9 million<br>YTD 06/30/2022<br>•<br>Deposits $587 million<br>-<br>HSA deposits, 401(k) Money Market<br>Funds, Emergency Savings, Terminated Participants<br>•<br>Managed accounts<br>•<br>Commercial Banking client expansion<br>($ in Millions)<br>QUARTERLY RESULTS<br>($ 000s)<br>1<br>1<br>–<br>Net income before tax and indirect allocations.<br>Net Income:<br>$28,404<br>$25,720<br>$31,545<br>$18,909<br>Revenue:<br>$63,811<br>$60,956<br>$71,709<br>$33,939<br>Profit Margin:<br>44.5%<br>42.2%<br>44.0%<br>55.7%<br>Profit Margin:<br>44.1%<br>52.2%<br>59.5%<br>Recurring annual<br>plan revenue<br>83%<br>Transaction<br>based revenue<br>17%
---
21<br>$3,010<br>$3,488<br>$3,917<br>$5,138<br>$5,326<br>$5,548<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>$5,000<br>$6,000<br>$7,000<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Net Income<br>Revenue<br>$3,103<br>$3,339<br>$4,040<br>$4,148<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>2019<br>2020<br>2021<br>Q2 2022 YTD<br>▪<br>ADVISORY AND PLANNING SERVICES<br>•<br>Retirement Planning, Tax Planning, Insurance Planning,<br>Wealth Transfer Planning and Business Transition Planning<br>▪<br>ASSET MANAGEMENT<br>•<br>Personalized SMA strategies, Tax Management and Global<br>Perspective<br>▪<br>FIDUCIARY SERVICES<br>•<br>IRA, Agency and Personal Trust<br>▪<br>ONE ALERUS SYNERGIES<br>•<br>IRA rollovers<br>•<br>401(k) managed accounts<br>WEALTH MANAGEMENT SERVICES<br>OVERVIEW OF SERVICES<br>ASSETS UNDER ADMINISTRATION/MANAGEMENT<br>REVENUE MIX<br>($ in Millions)<br>QUARTERLY RESULTS<br>1<br>($ 000s)<br>1<br>–<br>Net income before tax and indirect allocations.<br>Net Income:<br>$8,314<br>$9,162<br>$12,183<br>$7,406<br>Revenue:<br>$15,502<br>$17,451<br>$21,052<br>$10,874<br>Profit Margin:<br>53.6%<br>52.2%<br>57.9%<br>68.1%<br>Profit Margin:<br>58.6%<br>65.5%<br>70.6%<br>Asset<br>Management<br>88%<br>Brokerage<br>9%<br>Insurance &<br>Advisory<br>3%
---
22<br>MORTGAGE BANKING<br>OVERVIEW OF SERVICES<br>YEARLY MORTGAGE ORIGINATIONS<br>($000s)<br>QUARTERLY RESULT<br>S<br>▪<br>1st and 2nd mortgage product offerings through centralized<br>mortgage operations in Minneapolis, Minnesota<br>▪<br>Our Twin Cities originators averaged $58+ million in annual<br>volume over the last three years<br>▪<br>YTD 1,187 loans closed, approximately 84% purchase<br>originations, with approximately 92% sourced from the Twin<br>Cities MSA<br>▪<br>Q2 2022 96% pull through on secondary market<br>▪<br>ONE ALERUS SYNERGIES<br>•<br>Through enhanced technology, digital applications total<br>approximately 90%. Paperless environment eliminated<br>nearly 200,000+ pages printed on a monthly basis<br>•<br>As of June 30, 2022, residential real estate first mortgages<br>excluding construction mortgages totaled $535 million<br>QUARTERLY<br>ORIGINATIONS<br>1<br>–<br>Net income before tax and indirect allocations.<br>Purchase:<br>71.2%<br>45.2%<br>51.2%<br>84.4%<br>Refinance:<br>28.8%<br>54.8%<br>48.8%<br>15.6%<br>Purchase:<br>52.5%<br>70.3%<br>94.2%<br>Refinance:<br>47.5%<br>29.7%<br>5.8%<br>$863.4<br>$1,632.5<br>$1,592.1<br>$353.6<br>$83.0<br>$146.5<br>$244.0<br>$102.6<br>$946.4<br>$1,779.0<br>$1,836.1<br>$456.2<br> $-<br> $500.0<br> $1,000.0<br> $1,500.0<br> $2,000.0<br>2019<br>2020<br>2021<br>YTD Q2 2022<br>Portfolio<br>Sale<br>$465.4<br>$151.8<br>$201.8<br>$80.0<br>$35.0<br>$67.6<br>$545.4<br>$186.8<br>$269.4<br> $-<br> $250.0<br> $500.0<br> $750.0<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Portfolio<br>Sale<br>Q2<br>Q3<br>Q4<br>Q1<br>Q2<br>($000s)<br>2021<br>2021<br>2021<br>2022<br>2022<br>Orignation<br>and Sale<br>$<br>17,803<br><br>$<br>12,925<br><br>$<br>9,812<br><br><br>$<br>4,935<br><br><br>$<br>5,821<br><br><br>Fair Value<br>Changes<br>(5,515)<br><br><br>(1,810)<br><br><br>(1,846)<br><br><br>(4)<br><br><br>217<br><br><br>Total<br>$<br>12,288<br><br>$<br>11,115<br><br>$<br>7,966<br><br><br>$<br>4,931<br><br><br>$<br>6,038<br><br><br>Net<br>income<br>(1)<br>$<br>2,116<br><br><br>$<br>3,151<br><br><br>$<br>1,329<br><br><br>$<br>620<br><br><br>$<br>1,387<br><br><br>Profit<br>Margin<br>17.2%<br><br><br>28.3%<br><br><br>16.7%<br><br><br>12.6%<br><br><br>23.0%<br><br><br>Gain on Sale<br>Margin<br>3.7%<br><br><br>3.6%<br><br><br>3.2%<br><br><br>2.8%<br><br><br>3.4%
---
23<br>$29,881<br>$25,213<br>$27,035<br>$1,918<br>$2,051<br>$1,737<br>$4,958<br>$4,924<br>$4,785<br>$1,509<br>$1,536<br>$1,432<br>$0<br>$92<br>$965<br>$4,284<br>$4,255<br>$4,030<br>$42,550<br>$38,071<br>$39,984<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>$25,000<br>$30,000<br>$35,000<br>$40,000<br>$45,000<br>Q2 2021<br>Q1 2022<br>Q2 2022<br>Other(1)<br>Nonrecurring expense(2)<br>Professional Fees and Assessments<br>Business Services, Software and Technology<br>Occupancy and Equipment<br>Compensation and benefits<br>NONINTEREST EXPENSE<br>1<br>–<br>Other noninterest expense consists of intangible amortization, marketing and business development, supplies and postage, tra<br>vel, mortgage and lending, and other noninterest expense.<br>2<br>–<br>Nonrecurring expenses consists of merger & acquisition expense and 1x executive recruiting expense.<br>QUARTERLY HIGHLIGHTS<br>YEAR OVER YEAR HIGHLIGHTS<br>▪<br>Compensation expense increased as mortgage related incentive<br>compensation expense increased due to the increases in<br>mortgage originations.<br>▪<br>Employee benefits expense decreased, driven by seasonally<br>lower payroll taxes and benefits.<br>▪<br>Professional fees and assessments increased due to an increase<br>in M&A expenses recorded in Q2.<br>▪<br>Occupancy and equipment decreased primarily as a result of<br>FF&E depreciation runoff.<br>▪<br>Compensation and benefits decreased as mortgage related<br>incentive compensation declined due to the decrease in<br>mortgage originations.<br>▪<br>Other expenses decreased due to a decline in mortgage and<br>lending expenses from a decrease in mortgage originations.<br>▪<br>Professional fees and assessments increased due to an increase<br>in M&A expenses recorded in 2022.<br>Noninterest<br>5.0%<br>Linked quarter<br>Expense<br>(6.0)%<br>Year-over-year
---
24<br>12.9%<br>16.7%<br>16.8%<br>18.6%<br>18.0%<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>14.0%<br>16.0%<br>18.0%<br>20.0%<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>7.5%<br>11.1%<br>9.2%<br>9.8%<br>10.8%<br>8.9%<br>12.9%<br>13.2%<br>15.1%<br>14.6%<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>14.0%<br>16.0%<br>2018<br>2019<br>2020<br>2021<br>Q2 2022<br>Tier 1 Leverage<br>Tier 1 Capital<br>STRONG CAPITAL AND SOURCES OF LIQUIDITY<br>TANGIBLE COMMON EQUITY/TANGIBLE ASSETS<br>1<br>TIER 1 CAPITAL/TIER 1 LEVERAGE RATIOS<br>PRIMARY AND SECONDARY SOURCES OF LIQUIDITY<br>TOTAL RISK BASED CAPITAL<br>Regulatory Capital Minimum to be considered well capitalized.<br>(dollars in thousands)<br>Cash and cash equivalents<br>$37,043<br>Unencumbered securities<br>–<br>AFS<br>795,549<br>FHLB borrowing availability<br>538,650<br>Brokered CD capacity<br>659,013<br>Fed<br>funds lines<br>102,000<br>Total as of 6/30/2022<br>$2,132,255<br>Tier 1<br>Capital<br>Leverage<br>1<br>-<br>Represents a non<br>-<br>GAAP financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation.”<br>Regulatory Capital Minimum to be considered well capitalized.<br>6.9%<br>10.4%<br>9.3%<br>9.2%<br>8.0%<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>2018<br>2019<br>2020<br>2021<br>Q2 2022
---
25<br>APPENDIX
---
26<br>BY OUTSTANDING BALANCES<br>WELL DIVERSIFIED LOAN PORTFOLIO<br>As of 06/30/2022<br>1<br>-<br>4 Residential 1st<br>28%<br>1<br>-<br>4 Residential Construction<br>2%<br>1<br>-<br>4 Residential Jr Lien<br>2%<br>HELOC<br>5%<br>RE Loans to be Sold<br>3%<br>C&I<br>23%<br>Ag Production<br>1%<br>Other CRE<br>15%<br>Owner Occupied CRE<br>10%<br>Ag Land<br>2%<br>Multifamily<br>3%<br>Retail Indirect<br>1%<br>Other Consumer<br>2%<br>RE Construction<br>3%
---
27<br>SUMMARY BY INDUSTRY TYPE<br>TOTAL COMMITMENT COMMERCIAL & INDUSTRIAL<br>1<br>1<br>–<br>Commercial and industrial loans includes C & I, loans to public entities, and other loans. It excludes PPP and ag production<br>loans.<br>“Other” includes to the following industries (1) Nonclassifiable establishments, (2) Management of Companies and Enterprises,<br>(3<br>) Administrative and Support and Waste Management and Remediation Services, (4)<br>Accommodation and Food Services, (5) Educational Services, (6) Other Services (except Public Administration), (7) Information<br>, (<br>8) Arts, Entertainment, and Recreation, (9) Agriculture Forestry, Fishing, and Hunting,<br>(10) Public Administration), (11) Mining Quarrying, and Oil and Gas Extraction, and (12) Utilities.<br>“Other Retail Trade” includes the following sub<br>-<br>industries within Retail Trade: (1) Miscellaneous Store Retailers, (2) Furniture<br>and Home Furnishings Stores, (3) Sporting Goods, Hobby, Musical Instrument, and Book<br>Stores, (4) Clothing and Clothing Accessories Stores, and (5) General Merchandise Stores.<br>Transportation and Warehousing<br>4%<br>Health Care and Social Assistance<br>7%<br>Professional, Scientific and<br>Technical Services<br>6%<br>Manufacturing<br>13%<br>Real Estate and Rental and<br>Leasing<br>7%<br>Wholesale Trade<br>10%<br>Construction<br>11%<br>Finance and Insurance<br>13%<br>Other<br>11%<br>Motor Vehicle and Parts<br>Dealers<br>9%<br>Food and Beverage Stores<br>1%<br>Electronics and Appliance<br>Stores<br>3%<br>Health and Personal Care<br>Services<br>1%<br>Gasoline Stations<br>1%<br>Building Material and<br>Garden Equipment<br>and Supplies Dealers<br>1%<br>Nonstore Retailers<br>1%<br>Other Retail Trade<br>1%<br>Retail Trade<br>18%
---
28<br>Office<br>19%<br>Retail<br>17%<br>Warehouse<br>19%<br>Manufacturing<br>1%<br>Residential<br>Development<br>1%<br>Commercial<br>Development<br>1%<br>Mixed<br>Residential/Commercial<br>1%<br>Mixed<br>Commercial<br>4%<br>Apartments<br>12%<br>Medical or Nursing<br>Facilities<br>7%<br>Commercial/Land<br>Development<br>13%<br>Ag Land<br>5%<br>LOANS SECURED BY REAL ESTATE<br>TOTAL COMMITMENT<br>COMMERCIAL REAL ESTATE<br>1<br>1<br>–<br>Loans secured by commercial real estate include multifamily loans, ag land, other CRE, owner occupied CRE, and ag production<br>..<br>Portfolio<br>Avg<br>FICO<br>Avg LTV<br>Serviced<br>762<br>65%<br>Non<br>-<br>Serviced<br>779<br>25%<br>Junior<br>756<br>78%<br>HELOC<br>796<br>64%<br>TOTAL COMMITMENT<br>RESIDENTIAL REAL ESTATE<br>Serviced<br>51%<br>1<br>-<br>4 1st Non<br>-<br>Serviced<br>4%<br>1<br>-<br>4 Family Jr Liens<br>3%<br>1<br>-<br>4 Family Revolving<br>30%<br>1<br>-<br>4 Family<br>Construction<br>6%<br>Held for Sale<br>6%
---
29<br>LINE OF CREDIT UTILIZATION<br>C&I AND HOME EQUITY LINES OF CREDIT<br>1<br>1<br>–<br>Commercial and industrial loans includes revolving C & I loans and other loans. It excludes non<br>-<br>revolving C&I loans, ag prod<br>uction, PPP and loans to public entities.<br>0%<br>5%<br>10%<br>15%<br>20%<br>25%<br>30%<br>35%<br>40%<br> -<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>Q3<br>2019<br>Q4<br>2019<br>Q1<br>2020<br>Q2<br>2020<br>Q3<br>2020<br>Q4<br>2020<br>Q1<br>2021<br>Q2<br>2021<br>Q3<br>2021<br>Q4<br>2021<br>Q1<br>2022<br>Q2<br>2022<br>C&I<br>Funded<br>Unfunded<br>Funded%<br>0%<br>10%<br>20%<br>30%<br>40%<br>50%<br>60%<br> -<br> 50,000<br> 100,000<br> 150,000<br> 200,000<br> 250,000<br> 300,000<br>Q3<br>2019<br>Q4<br>2019<br>Q1<br>2020<br>Q2<br>2020<br>Q3<br>2020<br>Q4<br>2020<br>Q1<br>2021<br>Q2<br>2021<br>Q3<br>2021<br>Q4<br>2021<br>Q1<br>2022<br>Q2<br>2022<br>Home Equity Lines of Credit<br>Funded<br>Unfunded<br>Funded%
---
30<br>CHANGES IN THE ALLL BY PORTFOLIO SEGMENT<br>ALLOWANCE FOR LOAN LOSSES<br>(dollars in thousands)<br>Commercial<br>Commercial and industrial<br>$<br>8,925<br><br><br>$<br>1,856<br><br><br>$<br>(664)<br><br><br>$<br>216<br><br><br>$<br>10,333<br><br><br>Real estate construction<br>783<br><br><br>95<br><br><br>—<br><br><br>—<br><br><br>878<br><br><br>Commercial real estate<br>12,376<br><br><br>(1,564)<br><br><br>—<br><br><br>22<br><br><br>10,834<br><br><br>Total commercial<br>22,084<br><br><br>387<br><br><br>(664)<br><br><br>238<br><br><br>22,045<br><br><br>Consumer<br>Residential real estate first mortgage<br>6,532<br><br><br>(357)<br><br><br>—<br><br><br>—<br><br><br>6,175<br><br><br>Residential real estate junior lien<br>1,295<br><br><br>(42)<br><br><br>—<br><br><br>214<br><br><br>1,467<br><br><br>Other revolving and installment<br>481<br><br><br>140<br><br><br>(55)<br><br><br>68<br><br><br>634<br><br><br>Total consumer<br>8,308<br><br><br>(259)<br><br><br>(55)<br><br><br>282<br><br><br>8,276<br><br><br>Unallocated<br>1,180<br><br><br>(128)<br><br><br>—<br><br><br>—<br><br><br>1,052<br><br><br>Total<br>$<br>31,572<br><br><br>$<br>—<br><br><br>$<br>(719)<br><br><br>$<br>520<br><br><br>$<br>31,373<br><br><br>Ending<br>Balance<br>Six months ended June 30, 2022<br>Loan<br>Charge-offs<br>Loan<br>Recoveries<br>Beginning<br>Balance<br>Provision for<br>Loan Losses
---
31<br>ALLOCATION BY PORTFOLIO SEGMENT<br>ALLOWANCE FOR LOAN LOSSES<br>(dollars in thousands)<br>Commercial and industrial<br>$<br>10,333<br><br><br>25.6%<br><br><br>$<br>8,925<br><br><br>24.8%<br><br><br>Real estate construction<br>878<br><br><br>2.6%<br><br><br>783<br><br><br>2.3%<br><br><br>Commercial real estate<br>10,834<br><br><br>31.7%<br><br><br>12,376<br><br><br>34.1%<br><br><br>Residential real estate first mortgage<br>6,175<br><br><br>30.1%<br><br><br>6,532<br><br><br>29.1%<br><br><br>Residential real estate junior lien<br>1,467<br><br><br>7.2%<br><br><br>1,295<br><br><br>7.1%<br><br><br>Other revolving and installment<br>634<br><br><br>2.8%<br><br><br>481<br><br><br>2.6%<br><br><br>Unallocated<br>1,052<br><br><br>—<br><br><br>1,180<br><br><br>—<br><br><br>Total loans<br>$<br>31,373<br><br><br>100.0%<br><br><br>$<br>31,572<br><br><br>100.0%<br><br><br>total loans<br>June 30, 2022<br>December 31, 2021<br>Allocated<br>of loans to<br>Allowance<br>total loans<br>Allocated<br>Allowance<br>of loans to<br>Percentage<br>Percentage
---
32<br>ALLOCATION BY RISK SEGMENT (DOLLARS IN THOUSANDS)<br>ALLOWANCE FOR LOAN LOSSES<br>As of 6/30/2022.<br>1<br>-<br>Unguaranteed balances exclude PPP loans as well as loans that are guaranteed by another government agency.<br>Reserve/<br>Unguaranteed<br>Reserve/Total<br>Risk Level<br>Loans<br>Loans<br>Pass<br>$<br>1,871,490<br><br><br>$<br>1,845,312<br><br><br>$<br>28,425<br><br><br>1.5%<br><br><br>1.5%<br><br><br>Special Mention<br>5,956<br><br><br>5,956<br><br><br>252<br><br><br>4.2%<br><br><br>4.2%<br><br><br>Substandard<br>8,084<br><br><br>7,397<br><br><br>785<br><br><br>10.6%<br><br><br>9.7%<br><br><br>Total Loans Evaluated Collectively<br>1,885,530<br><br><br>1,858,665<br><br><br>29,462<br><br><br>1.6%<br><br><br>1.6%<br><br><br>Total Loans Evaluated Individually<br>4,713<br><br><br>4,713<br><br><br>859<br><br><br>18.2%<br><br><br>18.2%<br><br><br>Unallocated<br>—<br><br><br>—<br><br><br>1,052<br><br><br>—<br><br><br>—<br><br><br>Total<br>1,890,243<br><br><br>1,863,378<br><br><br>31,373<br><br><br>1.7%<br><br><br>1.7%<br><br><br>Amount<br>Total Loans<br>Balance<br>1<br>Reserve<br>Unguaranteed
---
33<br>FINANCIAL HIGHLIGHTS<br>1<br>Represents a non<br>-<br>GAAP financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation”.<br>(dollars in thousands,<br>except where otherwise noted)<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Q1 2022<br>Q2 2022<br>June 30, 2022<br>June 30, 2021<br>Total Assets<br>3,157,229<br>$<br><br>3,175,169<br>$<br><br>3,392,691<br>$<br><br>3,336,199<br>$<br><br>3,295,065<br>$<br><br>3,295,065<br>$<br><br>3,157,229<br>$<br><br>Total Loans<br>1,835,312<br><br><br>1,800,386<br><br><br>1,758,020<br><br><br>1,818,042<br><br><br>1,890,243<br><br><br>1,890,243<br><br><br>1,835,312<br><br><br>Total Deposits<br>2,710,940<br><br><br>2,713,088<br><br><br>2,920,551<br><br><br>2,892,266<br><br><br>2,619,550<br><br><br>2,619,550<br><br><br>2,710,939<br><br><br>Tangible Common Equity<br>1<br>290,510<br><br><br>300,401<br><br><br>307,663<br><br><br>277,818<br><br><br>258,310<br><br><br>258,310<br><br><br>290,510<br><br><br>Net Income<br>11,694<br>$<br><br>13,067<br>$<br><br>12,705<br>$<br><br>10,184<br>$<br><br>9,293<br>$<br><br>19,477<br>$<br><br>26,909<br>$<br><br>ROAA (%)<br>1.50<br><br><br>1.62<br><br><br>1.50<br><br><br>1.26<br><br><br>1.14<br><br><br>1.20<br><br><br>1.76<br><br><br>ROATCE(%)<br>1<br>17.36<br><br><br>18.13<br><br><br>17.36<br><br><br>14.72<br><br><br>15.25<br><br><br>14.97<br><br><br>20.15<br><br><br>Net Interest Margin (FTE) (%)<br>2.88<br><br><br>2.78<br><br><br>2.84<br><br><br>2.83<br><br><br>2.98<br><br><br>2.91<br><br><br>3.00<br><br><br>Efficiency Ratio (FTE) (%)<br>1<br>71.46<br><br><br>71.49<br><br><br>71.06<br><br><br>72.25<br><br><br>74.72<br><br><br>73.50<br><br><br>68.84<br><br><br>Non-Int. Income/Op. Rev. (%)<br>63.48<br><br><br>63.04<br><br><br>59.67<br><br><br>57.62<br><br><br>56.20<br><br><br>56.91<br><br><br>64.26<br><br><br>Earnings per common share - diluted<br>0.66<br>$<br><br>0.74<br>$<br><br>0.72<br>$<br><br>0.57<br>$<br><br>0.52<br>$<br><br>1.10<br>$<br><br>1.52<br>$<br><br>Total Equity/Total Assets (%)<br>10.91<br><br><br>11.12<br><br><br>10.59<br><br><br>9.85<br><br><br>9.32<br><br><br>9.32<br><br><br>10.91<br><br><br>Tang. Cmn. Equity/Tang. Assets (%)<br>1<br>9.36<br><br><br>9.62<br><br><br>9.21<br><br><br>8.46<br><br><br>7.96<br><br><br>7.96<br><br><br>9.36<br><br><br>Loans/Deposits (%)<br>67.70<br><br><br>66.36<br><br><br>60.19<br><br><br>62.86<br><br><br>72.16<br><br><br>72.16<br><br><br>67.70<br><br><br>NPLs/Loans (%)<br>0.38<br><br><br>0.35<br><br><br>0.12<br><br><br>0.23<br><br><br>0.23<br><br><br>0.23<br><br><br>0.38<br><br><br>NPAs/Assets (%)<br>0.25<br><br><br>0.22<br><br><br>0.09<br><br><br>0.15<br><br><br>0.16<br><br><br>0.16<br><br><br>0.25<br><br><br>Allowance/NPLs (%)<br>485.11<br><br><br>514.79<br><br><br>1,437.05<br><br><br>752.38<br><br><br>717.92<br><br><br>717.92<br><br><br>485.11<br><br><br>Allowance/Loans (%)<br>1.84<br><br><br>1.78<br><br><br>1.80<br><br><br>1.74<br><br><br>1.66<br><br><br>1.66<br><br><br>1.84<br><br><br>NCOs/Average Loans (%)<br>—<br><br><br>(0.06)<br><br><br>(0.22)<br><br><br>(0.03)<br><br><br>0.07<br><br><br>0.02<br><br><br>0.05<br><br><br>Six months ended<br>Quarterly
---
34<br>FINANCIAL HIGHLIGHTS<br>1<br>Represents a non<br>-<br>GAAP financial measure. See “Non<br>-<br>GAAP Disclosure Reconciliation”.<br>(dollars in thousands,<br>17-'21<br>except where otherwise noted)<br>2017<br>2018<br>2019<br>2020<br>2021<br>CAGR<br>Total Assets<br>2,136,081<br>$<br><br>2,179,070<br>$<br><br>2,356,878<br>$<br><br>3,013,771<br>$<br><br>3,392,691<br>$<br><br>12.3%<br>Total Loans<br>1,574,474<br><br><br>1,701,850<br><br><br>1,721,279<br><br><br>1,979,375<br><br><br>1,758,020<br><br><br>2.8%<br>Total Deposits<br>1,834,962<br><br><br>1,775,096<br><br><br>1,971,316<br><br><br>2,571,993<br><br><br>2,920,551<br><br><br>12.3%<br>Tangible Common Equity<br>1<br>125,154<br><br><br>147,152<br><br><br>240,008<br><br><br>274,043<br><br><br>307,663<br><br><br>25.2%<br>Net Income<br>15,001<br>$<br><br>25,866<br>$<br><br>29,540<br>$<br><br>44,675<br>$<br><br>52,681<br>$<br><br>36.9%<br>ROAA (%)<br>0.75<br><br><br>1.21<br><br><br>1.34<br><br><br>1.61<br><br><br>1.66<br><br><br>ROATCE(%)<br>1<br>18.04<br><br><br>21.02<br><br><br>17.46<br><br><br>17.74<br><br><br>18.89<br><br><br>Net Interest Margin (FTE) (%)<br>3.74<br><br><br>3.84<br><br><br>3.65<br><br><br>3.22<br><br><br>2.90<br><br><br>Efficiency Ratio (FTE) (%)<br>1<br>75.36<br><br><br>73.80<br><br><br>73.22<br><br><br>68.40<br><br><br>70.02<br><br><br>Non-Int. Income/Op. Rev. (%)<br>60.36<br><br><br>57.73<br><br><br>60.50<br><br><br>64.05<br><br><br>62.86<br><br><br>Earnings per common share - diluted<br>1.07<br>1.84<br>1.91<br>2.52<br>2.97<br>Total Equity/Total Assets (%)<br>8.41<br><br><br>9.04<br><br><br>12.12<br><br><br>10.96<br><br><br>10.59<br><br><br>Tang. Cmn. Equity/Tang. Assets (%)<br>1<br>6.01<br><br><br>6.91<br><br><br>10.38<br><br><br>9.27<br><br><br>9.21<br><br><br>Loans/Deposits (%)<br>85.80<br><br><br>95.87<br><br><br>87.32<br><br><br>76.96<br><br><br>60.19<br><br><br>NPLs/Loans (%)<br>0.37<br><br><br>0.41<br><br><br>0.45<br><br><br>0.26<br><br><br>0.12<br><br><br>NPAs/Assets (%)<br>0.30<br><br><br>0.33<br><br><br>0.33<br><br><br>0.17<br><br><br>0.09<br><br><br>Allowance/NPLs (%)<br>282.04<br><br><br>318.45<br><br><br>305.66<br><br><br>674.13<br><br><br>1,437.05<br><br><br>Allowance/Loans (%)<br>1.05<br><br><br>1.30<br><br><br>1.39<br><br><br>1.73<br><br><br>1.80<br><br><br>NCOs/Average Loans (%)<br>0.16<br><br><br>0.18<br><br><br>0.33<br><br><br>0.03<br><br><br>(0.04)<br><br><br>Annual
---
35<br>NON<br>-<br>GAAP<br>DISCLOSURE<br>RECONCILIATION<br>($000s, except where otherwise noted)<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Q1 2022<br>Q2 2022<br>June 30, 2022<br>June 30, 2021<br>Tangible common equity to tangible assets<br>Total common stockholders' equity<br>344,391<br>$<br><br>353,195<br>$<br><br>359,403<br>$<br><br>328,505<br>$<br><br>307,158<br>$<br><br>307,158<br>$<br><br>344,391<br>$<br><br>Less: Goodwill<br>30,201<br><br><br>30,201<br><br><br>31,490<br><br><br>31,490<br><br><br>31,337<br><br><br>31,337<br><br><br>30,201<br><br><br>Less: Other intangible assets<br>23,680<br><br><br>22,593<br><br><br>20,250<br><br><br>19,197<br><br><br>17,511<br><br><br>17,511<br><br><br>23,680<br><br><br>Tangible common equity (a)<br>290,510<br><br><br>300,401<br><br><br>307,663<br><br><br>277,818<br><br><br>258,310<br><br><br>258,310<br><br><br>290,510<br><br><br>Total assets<br>3,157,229<br><br><br>3,175,169<br><br><br>3,392,691<br><br><br>3,336,199<br><br><br>3,295,065<br><br><br>3,295,065<br><br><br>3,157,229<br><br><br>Less: Goodwill<br>30,201<br><br><br>30,201<br><br><br>31,490<br><br><br>31,490<br><br><br>31,337<br><br><br>31,337<br><br><br>30,201<br><br><br>Less: Other intangible assets<br>23,680<br><br><br>22,593<br><br><br>20,250<br><br><br>19,197<br><br><br>17,511<br><br><br>17,511<br><br><br>23,680<br><br><br>Tangible assets (b)<br>3,103,348<br><br><br>3,122,375<br><br><br>3,340,951<br><br><br>3,285,512<br><br><br>3,246,217<br><br><br>3,246,217<br><br><br>3,103,348<br><br><br>Tangible common equity to tangible assets (a)/(b)<br>9.36%<br><br><br>9.62%<br><br><br>9.21%<br><br><br>8.46%<br><br><br>7.96%<br><br><br>7.96%<br><br><br>9.36%<br><br><br>Tangible common equity per common share<br>Total stockholders' equity<br>344,391<br>$<br><br>353,195<br>$<br><br>359,403<br>$<br><br>328,505<br>$<br><br>307,158<br>$<br><br>307,158<br>$<br><br>344,391<br>$<br><br>Less: Goodwill<br>30,201<br><br><br>30,201<br><br><br>31,490<br><br><br>31,490<br><br><br>31,337<br><br><br>31,337<br><br><br>30,201<br><br><br>Less: Other intangible assets<br>23,680<br><br><br>22,593<br><br><br>20,250<br><br><br>19,197<br><br><br>17,511<br><br><br>17,511<br><br><br>23,680<br><br><br>Tangible common equity (c)<br>290,510<br><br><br>300,401<br><br><br>307,663<br><br><br>277,818<br><br><br>258,310<br><br><br>258,310<br><br><br>290,510<br><br><br>Common shares outstanding (d)<br>17,198<br><br><br>17,208<br><br><br>17,213<br><br><br>17,289<br><br><br>17,306<br><br><br>17,306<br><br><br>17,198<br><br><br>Tangible common equity per common share (c)/(d)<br>16.89<br>$<br><br>17.46<br>$<br><br>17.87<br>$<br><br>16.07<br>$<br><br>14.93<br>$<br><br>14.93<br>$<br><br>16.89<br>$<br><br>Return on average tangible common equity<br>Net income<br>11,694<br>$<br><br>13,067<br>$<br><br>12,705<br>$<br><br>10,184<br>$<br><br>9,293<br>$<br><br>19,477<br>$<br><br>26,909<br>$<br><br>Add: Intangible amortization expense (net of tax)<br>860<br><br><br>860<br><br><br>832<br><br><br>832<br><br><br>832<br><br><br>1,664<br><br><br>1,769<br><br><br>Net income, excluding intangible amortization (e)<br>12,554<br><br><br>13,927<br><br><br>13,537<br><br><br>11,016<br><br><br>10,125<br><br><br>21,141<br><br><br>28,678<br><br><br>Average total equity<br>339,439<br><br><br>353,196<br><br><br>357,084<br><br><br>350,545<br><br><br>312,515<br><br><br>331,425<br><br><br>336,830<br><br><br>Less: Average goodwill<br>30,201<br><br><br>30,201<br><br><br>30,930<br><br><br>31,490<br><br><br>31,488<br><br><br>31,489<br><br><br>30,201<br><br><br>Less: Average other intangible assets (net of tax)<br>19,123<br><br><br>18,272<br><br><br>16,843<br><br><br>15,569<br><br><br>14,737<br><br><br>15,151<br><br><br>19,556<br><br><br>Average tangible common equity (f)<br>290,115<br><br><br>304,723<br><br><br>309,311<br><br><br>303,486<br><br><br>266,290<br><br><br>284,785<br><br><br>287,073<br><br><br>Return on average tangible common equity (e)/(f)<br>17.36%<br><br><br>18.13%<br><br><br>17.36%<br><br><br>14.72%<br><br><br>15.25%<br><br><br>14.97%<br><br><br>20.15%<br><br><br>Efficiency Ratio<br>Noninterest expense<br>42,550<br>$<br><br>42,041<br>$<br><br>41,276<br>$<br><br>38,071<br>$<br><br>39,984<br>$<br><br>78,055<br>$<br><br>85,592<br>$<br><br>Less: Intangible amortization expense<br>1,088<br><br><br>1,088<br><br><br>1,053<br><br><br>1,053<br><br><br>1,053<br><br><br>2,106<br><br><br>2,239<br><br><br>Adjusted noninterest expense (i)<br>41,462<br><br><br>40,953<br><br><br>40,223<br><br><br>37,018<br><br><br>38,931<br><br><br>75,949<br><br><br>83,353<br><br><br>Net interest income<br>21,140<br><br><br>21,132<br><br><br>22,789<br><br><br>21,673<br><br><br>22,776<br><br><br>44,449<br><br><br>43,178<br><br><br>Noninterest income<br>36,748<br><br><br>36,040<br><br><br>33,718<br><br><br>29,470<br><br><br>29,226<br><br><br>58,696<br><br><br>77,629<br><br><br>Tax-equivalent adjustment<br>135<br><br><br>115<br><br><br>99<br><br><br>94<br><br><br>100<br><br><br>194<br><br><br>278<br><br><br>Total tax-equivalent revenue(j)<br>58,023<br><br><br>57,287<br><br><br>56,606<br><br><br>51,237<br><br><br>52,102<br><br><br>103,339<br><br><br>121,085<br><br><br>Efficiency ratio (i)/(j)<br>71.46%<br><br><br>71.49%<br><br><br>71.06%<br><br><br>72.25%<br><br><br>74.72%<br><br><br>73.50%<br><br><br>68.84%<br><br><br>Six months ended<br>Quarterly
---
36<br>NON<br>-<br>GAAP DISCLOSURE RECONCILIATION<br>(dollars in thousands, except where otherwise noted )<br>Annual<br>2017<br>2018<br>2019<br>2020<br>2021<br>Tangible common equity to tangible assets<br>Total common stockholders' equity<br>$ 179,594<br>$ 196,954<br>$ 285,728<br>$ 330,163<br>$ 359,403<br>Less: Goodwill<br>27,329<br>27,329<br>27,329<br>30,201<br>31,490<br>Less: Other intangible assets<br>27,111<br>22,473<br>18,391<br>25,919<br>20,250<br>Tangible common equity (a)<br>125,154<br>147,152<br>240,008<br>274,043<br>307,663<br>Total assets<br>2,136,081<br>2,179,070<br>2,356,878<br>3,013,771<br>3,392,691<br>Less: Goodwill<br>27,329<br>27,329<br>27,329<br>30,201<br>31,490<br>Less: Other intangible assets<br>27,111<br>22,473<br>18,391<br>25,919<br>20,250<br>Tangible assets (b)<br>2,081,641<br>2,129,268<br>2,311,158<br>2,957,651<br>3,340,951<br>Tangible common equity to tangible assets (a)/(b)<br>6.01<br>%<br>6.91<br>%<br>10.38<br>%<br>9.27<br>%<br>9.21<br>%<br>Tangible common equity per common share<br>Total stockholders' equity<br>$ 179,594<br>$ 196,954<br>$ 285,728<br>$ 330,163<br>$ 359,403<br>Less: Goodwill<br>27,329<br>27,329<br>27,329<br>30,201<br>31,490<br>Less: Other intangible assets<br>27,111<br>22,473<br>18,391<br>25,919<br>20,250<br>Tangible common equity (c)<br>125,154<br>147,152<br>240,008<br>274,043<br>307,663<br>Common shares outstanding (d)<br>13,699<br>13,775<br>17,050<br>17,125<br>17,213<br>Tangible common equity per common share (c)/(d)<br>$ 9.14<br>$ 10.68<br>$ 14.08<br>$ 16.00<br>$ 17.87<br>Return on average tangible common equity<br>Net income<br>$ 15,001<br>$ 25,866<br>$ 29,540<br>$ 44,675<br>$ 52,681<br>Add: Intangible amortization expense (net of tax)<br>3,655<br>3,664<br>3,224<br>3,129<br>3,460<br>Remeasurement due to tax reform<br>4,818<br>—<br>—<br>—<br>—<br>Net income, excluding intangible amortization (e)<br>23,474<br>29,530<br>32,764<br>47,804<br>56,141<br>Average total equity<br>176,779<br>187,341<br>231,084<br>310,208<br>346,059<br>Less: Average goodwill<br>27,329<br>27,329<br>27,329<br>27,439<br>30,385<br>Less: Average other intangible assets (net of tax)<br>19,358<br>19,522<br>16,101<br>13,309<br>18,548<br>Average tangible common equity (f)<br>130,092<br>140,490<br>187,654<br>269,460<br>297,126<br>Return on average tangible common equity (e)/(f)<br>18.04<br>%<br>21.02<br>%<br>17.46<br>%<br>17.74<br>%<br>18.89<br>%<br>Efficiency Ratio<br>Noninterest expense<br>$ 134,920<br>$ 136,325<br>$ 142,537<br>$ 163,799<br>$ 168,909<br>Less: Intangible amortization expense<br>5,623<br>4,638<br>4,081<br>3,961<br>4,380<br>Adjusted noninterest expense (g)<br>129,297<br>131,687<br>138,456<br>159,838<br>164,529<br>Net interest income<br>67,670<br>75,224<br>74,551<br>83,846<br>87,099<br>Noninterest income<br>103,045<br>102,749<br>114,194<br>149,371<br>147,387<br>Tax equivalent adjustment<br>865<br>462<br>347<br>455<br>492<br>Total tax equivalent revenue (h)<br>171,580<br>178,435<br>189,092<br>233,672<br>234,978<br>Efficiency ratio (g)/(h)<br>75.36<br>%<br>73.80<br>%<br>73.22<br>%<br>68.40<br>%<br>70.02<br>%
---