EX-99.1 2 alrs-20210728xex99d1.htm EX-99.1

Exhibit 99.1

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​ FOR RELEASE (7.28.2021) | Katie A. Lorenson, Chief Financial Officer 952.417.3725 (Office)

ALERUS FINANCIAL CORPORATION REPORTS

SECOND QUARTER 2021 NET INCOME OF $11.7 MILLION

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GRAND FORKS, N.D. (July 28, 2021) – Alerus Financial Corporation (Nasdaq: ALRS) reported net income of $11.7 million for the second quarter of 2021, or $0.66 per diluted common share, compared to net income of $15.2 million, or $0.86 per diluted common share, for the first quarter of 2021, and net income of $11.5 million, or $0.65 per diluted common share, for the second quarter of 2020.

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CEO Comments

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Chairman, President, and Chief Executive Officer Randy Newman said, “Alerus continues to deliver top tier financial performance, driven by our long-term strategies and focus on offering valued advice to clients, resulting in extraordinary revenue diversification and growth opportunities. Alerus continues to establish itself as a premier provider of holistic solutions to our consumer and business clients. Our client base of more than 540,000 consumer clients and 18,300 business clients is a significant differentiator in our ability to continue to grow and provide superior returns to our shareholders.

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Our diversified business is rooted by our long standing culture, focused on advice and working in the best interests of our clients, a foundation which has been built over decades of meeting our clients on their financial journey and guiding them to their path for financial success. This relationship focused model is a key differentiator both in working with clients and attracting talented professionals to our organization.

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During the quarter we strengthened our U.S. Small Business Administration, or SBA, lending capabilities with the addition of an experienced SBA team. Led by industry veteran John Kimball, who most recently served as SBA lending manager at a large, regional community bank, the five-person team collectively has more than 100 years of business banking and small business lending experience at community and regional banks. These team members are aligned with our culture of providing expertise and value to our business clients so they can continue to grow and expand.”

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Quarterly Highlights

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| ◾ | Return on average total assets of 1.50%, compared to 2.02% for the first quarter of 2021

| ◾ | Return on average tangible common equity(1) of 17.36%, compared to 23.03% for the first quarter of 2021

| ◾ | Net interest margin (tax-equivalent)(1) was 2.88%, compared to 3.12% for the first quarter of 2021

| ◾ | Allowance for loan losses to total loans, excluding Paycheck Protection Program, or PPP, loans, was 2.02%, compared to 2.00% as of December 31, 2020

| ◾ | Efficiency ratio(1) of 71.46%, compared to 66.43% for the first quarter of 2021

| ◾ | Noninterest income decreased $4.1 million from the first quarter of 2021 and was 63.48% of total revenue, compared to 64.97% for the first quarter of 2021

| ◾ | Mortgage originations totaled $545.4 million, a 5.3% increase from the first quarter of 2021

| ◾ | Investment securities increased $205.5 million, or 34.7%, from the fourth quarter of 2020

| ◾ | Loans held for sale decreased $55.6 million, or 45.4%, from the fourth quarter of 2020

| ◾ | Loans held for investment decreased $144.1 million, or 7.3%, from the fourth quarter of 2020

| ◾ | Deposits increased $138.9 million, or 5.4%, from the fourth quarter of 2020

| (1) | Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

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Selected Financial Data (unaudited)

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of and for the | ​
​ | ​ | Three months ended | ​ | Six months ended | ​
​ | ​ | June 30, | ​ | March 31, | ​ | June 30, | ​ | June 30, | ​ | June 30, | ​
(dollars and shares in thousands, except per share data) |  | 2021 |  | 2021 |  | 2020 |  | 2021 |  | 2020 |
Performance Ratios | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Return on average total assets | ​ |  | 1.50 | % |  | 2.02 | % |  | 1.68 | % |  | 1.76 | % |  | 1.31 | %
Return on average common equity | ​ |  | 13.82 | % |  | 18.46 | % |  | 15.30 | % |  | 16.11 | % |  | 11.35 | %
Return on average tangible common equity (1) | ​ |  | 17.36 | % |  | 23.03 | % |  | 18.88 | % |  | 20.15 | % |  | 14.39 | %
Noninterest income as a % of revenue | ​ |  | 63.48 | % |  | 64.97 | % |  | 65.55 | % |  | 64.26 | % |  | 62.69 | %
Net interest margin (tax-equivalent) (1) | ​ |  | 2.88 | % |  | 3.12 | % |  | 3.14 | % |  | 3.00 | % |  | 3.24 | %
Efficiency ratio (1) | ​ |  | 71.46 | % |  | 66.43 | % |  | 66.31 | % |  | 68.84 | % |  | 71.23 | %
Net charge-offs/(recoveries) to average loans | ​ | ​ | — | % |  | 0.10 | % |  | 0.66 | % |  | 0.05 | % |  | 0.29 | %
Dividend payout ratio | ​ |  | 24.24 | % |  | 17.44 | % |  | 23.08 | % | ​ | 20.39 | % | ​ | 31.58 | %
Per Common Share | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Earnings per common share - basic | ​ | $ | 0.67 | ​ | $ | 0.87 | ​ | $ | 0.66 | ​ | $ | 1.54 | ​ | $ | 0.97 | ​
Earnings per common share - diluted | ​ | $ | 0.66 | ​ | $ | 0.86 | ​ | $ | 0.65 | ​ | $ | 1.52 | ​ | $ | 0.95 | ​
Dividends declared per common share | ​ | $ | 0.16 | ​ | $ | 0.15 | ​ | $ | 0.15 | ​ | $ | 0.31 | ​ | $ | 0.30 | ​
Tangible book value per common share (1) | ​ | $ | 16.89 | ​ | $ | 15.95 | ​ | $ | 15.30 | ​ | ​ | ​ | ​ | ​ | ​ | ​
Average common shares outstanding - basic | ​ |  | 17,194 | ​ |  | 17,145 | ​ |  | 17,111 | ​ |  | 17,170 | ​ |  | 17,091 | ​
Average common shares outstanding - diluted | ​ |  | 17,497 | ​ |  | 17,465 | ​ |  | 17,445 | ​ |  | 17,482 | ​ |  | 17,425 | ​
Other Data | ​ |  |  | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​
Retirement and benefit services assets under administration/management | ​ | $ | 36,964,961 | ​ | $ | 34,774,650 | ​ | $ | 30,093,095 | ​ | ​ | ​ | ​ | ​ | ​ | ​
Wealth management assets under administration/management | ​ |  | 3,538,959 | ​ | ​ | 3,357,530 | ​ | ​ | 2,957,213 | ​ |  | ​ | ​ | ​ | ​ | ​
Mortgage originations | ​ |  | 545,437 | ​ | ​ | 518,014 | ​ | ​ | 431,638 | ​ | $ | 1,063,451 | ​ | $ | 660,206 | ​

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(1)Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

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Results of Operations

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Net Interest Income

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Net interest income for the second quarter of 2021 was $21.1 million, a decrease of $898 thousand, or 4.1%, from $22.0 million for the first quarter of 2021, and an increase of $1.0 million, or 5.2%, from $20.1 million for the second quarter of 2020. The linked quarter decrease in net interest income was primarily driven by a $1.2 million decrease in interest income from loans as average total loans decreased $57.5 million while the average yield decreased by 17 basis points. During the second quarter of 2021, average interest earning assets increased $78.2 million, primarily due to increases of $138.4 million in investment securities and $7.3 million in interest-bearing deposits with banks, partially offset by decreases of $57.5 million in loans held for investment and $10.8 million in loans held for sale. The change in the balance sheet mix resulted in a 22 basis point decrease in the average earning asset yield. Net interest income earned from PPP loans during the second quarter of 2021 totaled $2.6 million, a decrease of $477 thousand, from the $3.0 million earned during the first quarter. The cost of interest-bearing liabilities had a modest increase of 2 basis points from the first quarter of 2021 primarily due to increased average balances in interest-bearing demand deposits as well as long-term debt.

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Net interest margin (tax-equivalent), a non-GAAP financial measure, was 2.88% for the second quarter of 2021, a 24 basis point decrease from 3.12% for the first quarter of 2021, and a 26 basis point decrease from 3.14% in the second quarter of 2020. The linked quarter decrease was primarily due to lower yields on interest earning assets. Excluding PPP loans, net interest margin was 2.75% for the second quarter of 2021, a 20 basis point decrease from 2.95% for the first quarter of 2021. The year over year decrease was primarily attributable to the historically low and flat yield curve and a more liquid balance sheet mix which resulted in a 60 basis point decrease in interest earning asset yields.

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Noninterest Income

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Noninterest income for the second quarter of 2021 was $36.7 million, a $4.1 million, or 10.1%, decrease from the first quarter of 2021. The decrease was primarily driven by a $4.8 million decrease in mortgage banking revenue. The decrease in mortgage banking revenue was primarily a result of a $6.2 million decline in fair market value of the secondary market hedge, partially offset by a 56 basis point increase in the gain on sale margin.

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Noninterest income for the second quarter of 2021 decreased $1.5 million, or 3.9%, from $38.2 million in the second quarter of 2020. This decrease was primarily due to a $5.3 million decrease in mortgage banking revenue, a result of a $11.5 million decline in fair market value on the secondary market hedge, partially offset by a 56 basis point increase in the gain on sale margin. Offsetting this decrease was a $4.2 million increase in retirement and benefit services income, primarily driven by the revenue attributable to the

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acquisition of Retirement Planning Services, Inc. (doing business as RPS Plan Administrators and 24HourFlex) and a $693 thousand increase in document restatement fees, and a $1.0 million increase in wealth management revenue primarily driven by organic growth and market increases in assets under administration/management.

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Noninterest Expense

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Noninterest expense for the second quarter of 2021 was $42.6 million, a decrease of $492 thousand, or 1.1%, compared to the first quarter of 2021. The decrease was primarily due to decreases of $447 thousand in other noninterest expense, $313 thousand decrease in occupancy and equipment expense and $241 thousand decrease in employee taxes and benefits, partially offset by a $611 thousand increase in compensation expense. The decrease in other noninterest expense was a result of a loss recognized in the first quarter of 2021 on the redemption of the Company’s subordinated notes which were redeemed during the first quarter. The decrease in occupancy and equipment expense is attributable to the termination of facility leases and closure of nine office locations in 2020. The increase in compensation expense was primarily due to an increase in mortgage related compensation and incentives.

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Noninterest expense for the second quarter of 2021 increased $2.8 million, or 7.1%, from $39.7 million in the second quarter of 2020. The increase was primarily attributable to increased compensation expense, employee taxes and benefits, primarily as a result of the significant year over year increase in mortgage originations. Additionally, compensation expense and employee taxes and benefits increased as a result of the acquisition of RPS, as the number of full time employees increased from 791 employees in the second quarter of 2020 to 835 employees in the second quarter of 2021.

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Financial Condition

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Total assets were $3.2 billion as of June 30, 2021, an increase of $143.5 million, or 4.8%, from December 31, 2020. The overall increase in total assets included increases of $205.5 million in investment securities and $142.5 million in cash and cash equivalents, partially offset by a $55.6 million decrease in loans held for sale and a $144.1 million decrease in loans held for investment.

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Loans

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Total loans were $1.84 billion as of June 30, 2021, a decrease of $144.1 million, or 7.3%, from December 31, 2020. The decrease was primarily due to a $119.1 million decrease in the commercial and industrial loan portfolio, as approximately $213.5 million of PPP loans were forgiven, and $110.5 million of new PPP loans were funded. Excluding PPP loans, the commercial loan portfolio decreased by $18.6 million, or 1.8%, from December 31, 2020. The consumer loan portfolio decreased $22.0 million from December 31, 2020, due to high levels of refinancing and our strategic exit from indirect lending.

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

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
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​ | ​ | June 30, | ​ | March 31, | ​ | December 31, | ​ | September 30, | ​ | June 30,
(dollars in thousands) |  | 2021 | ​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020
Commercial |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Commercial and industrial (1) | ​ | $ | 572,734 | ​ | $ | 678,029 | ​ | $ | 691,858 | ​ | $ | 789,036 | ​ | $ | 794,204
Real estate construction | ​ |  | 36,549 | ​ |  | 40,473 | ​ |  | 44,451 | ​ |  | 33,169 | ​ |  | 31,344
Commercial real estate | ​ |  | 567,987 | ​ |  | 569,451 | ​ |  | 563,007 | ​ |  | 535,216 | ​ |  | 519,104
Total commercial | ​ |  | 1,177,270 | ​ |  | 1,287,953 | ​ |  | 1,299,316 | ​ |  | 1,357,421 | ​ |  | 1,344,652
Consumer | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Residential real estate first mortgage | ​ |  | 470,822 | ​ |  | 454,958 | ​ |  | 463,370 | ​ |  | 469,050 | ​ |  | 456,737
Residential real estate junior lien | ​ |  | 130,180 | ​ |  | 130,299 | ​ |  | 143,416 | ​ |  | 152,487 | ​ |  | 154,351
Other revolving and installment | ​ |  | 57,040 | ​ |  | 64,135 | ​ |  | 73,273 | ​ |  | 79,461 | ​ |  | 78,457
Total consumer | ​ |  | 658,042 | ​ |  | 649,392 | ​ |  | 680,059 | ​ |  | 700,998 | ​ |  | 689,545
Total loans | ​ | $ | 1,835,312 | ​ | $ | 1,937,345 | ​ | $ | 1,979,375 | ​ | $ | 2,058,419 | ​ | $ | 2,034,197

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(1) | Includes PPP loans of $165.0 million at June 30, 2021, $256.8 million at March 31, 2021, $268.4 million at December 31, 2020, $348.9 million at September 30, 2020 and $347.3 million at June 30, 2020.

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Deposits

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Total deposits were $2.71 billion as of June 30, 2021, an increase of $138.9 million, or 5.4%, from December 31, 2020. Interest-bearing deposits increased $134.8 million while noninterest-bearing deposits increased $4.1 million. Key drivers of the increase included ongoing higher depositor balances due to the uncertain economic environment, government stimulus programs and volatile financial markets. Although overall deposits increased, there was a $44.0 million decrease in synergistic deposits, primarily in

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the retirement and benefit services accounts as participants moved balances back into the markets. Excluding synergistic deposits, commercial transaction deposits increased $113.9 million, or 10.3%, while consumer transaction deposits increased, $75.8 million, or 11.8%, since December 31, 2020. Noninterest-bearing deposits as a percentage of total deposits was 28.0% as of June 30, 2021 compared to 29.3% as of December 31, 2020.

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

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, | ​ | March 31, | ​ | December 31, | ​ | September 30, | ​ | June 30,
(dollars in thousands) |  | 2021 |  | 2021 |  | 2020 |  | 2020 |  | 2020
Noninterest-bearing demand | ​ | $ | 758,820 | ​ | $ | 775,434 | ​ | $ | 754,716 | ​ | $ | 693,450 | ​ | $ | 700,892
Interest-bearing | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Interest-bearing demand | ​ |  | 736,043 | ​ |  | 674,466 | ​ |  | 618,900 | ​ |  | 590,366 | ​ |  | 579,840
Savings accounts | ​ |  | 89,437 | ​ |  | 87,492 | ​ |  | 79,902 | ​ |  | 78,659 | ​ |  | 75,973
Money market savings | ​ |  | 920,831 | ​ |  | 967,273 | ​ |  | 909,137 | ​ |  | 892,473 | ​ |  | 892,717
Time deposits | ​ |  | 205,809 | ​ |  | 212,908 | ​ |  | 209,338 | ​ |  | 207,422 | ​ |  | 203,731
Total interest-bearing | ​ |  | 1,952,120 | ​ |  | 1,942,139 | ​ |  | 1,817,277 | ​ |  | 1,768,920 | ​ |  | 1,752,261
Total deposits | ​ | $ | 2,710,940 | ​ | $ | 2,717,573 | ​ | $ | 2,571,993 | ​ | $ | 2,462,370 | ​ | $ | 2,453,153

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Asset Quality

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Total nonperforming assets were $7.8 million as of June 30, 2021, an increase of $2.7 million, or 52.0%, from December 31, 2020. As of June 30, 2021, the allowance for loan losses was $33.8 million, or 1.84% of total loans, compared to $34.2 million, or 1.73% of total loans, as of December 31, 2020. Excluding PPP loans, the ratio of allowance for loan losses to total loans was 2.02% at June 30, 2021, compared to 2.00% as of December 31, 2020.

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

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​ | ​ | As of and for the three months ended | ​
​ | ​ | June 30, | ​ | March 31, | ​ | December 31, | ​ | September 30, | ​ | June 30, | ​
(dollars in thousands) |  | 2021 |  | 2021 |  | 2020 |  | 2020 |  | 2020 |
Nonaccrual loans | ​ | $ | 6,960 | ​ | $ | 4,756 | ​ | $ | 5,050 | ​ | $ | 4,795 | ​ | $ | 5,328 | ​
Accruing loans 90+ days past due | ​ |  | — | ​ |  | — | ​ |  | 30 | ​ | ​ | — | ​ |  | — | ​
Total nonperforming loans | ​ |  | 6,960 | ​ |  | 4,756 | ​ |  | 5,080 | ​ |  | 4,795 | ​ |  | 5,328 | ​
OREO and repossessed assets | ​ |  | 858 | ​ |  | 139 | ​ |  | 63 | ​ |  | 10 | ​ |  | 26 | ​
Total nonperforming assets | ​ | $ | 7,818 | ​ | $ | 4,895 | ​ | $ | 5,143 | ​ | $ | 4,805 | ​ | $ | 5,354 | ​
Net charge-offs/(recoveries) | ​ | ​ | (6) | ​ | ​ | 488 | ​ | ​ | (1,509) | ​ | ​ | (581) | ​ | ​ | 3,264 | ​
Net charge-offs/(recoveries) to average loans | ​ | ​ | — | % | ​ | 0.10 | % | ​ | (0.30) | % | ​ | (0.11) | % | ​ | 0.66 | %
Nonperforming loans to total loans | ​ | ​ | 0.38 | % | ​ | 0.25 | % | ​ | 0.26 | % | ​ | 0.23 | % | ​ | 0.26 | %
Nonperforming assets to total assets | ​ | ​ | 0.25 | % | ​ | 0.16 | % | ​ | 0.17 | % | ​ | 0.17 | % | ​ | 0.19 | %
Allowance for loan losses to total loans | ​ | ​ | 1.84 | % | ​ | 1.74 | % | ​ | 1.73 | % | ​ | 1.52 | % | ​ | 1.34 | %
Allowance for loan losses to nonperforming loans | ​ | ​ | 485 | % | ​ | 710 | % | ​ | 674 | % | ​ | 654 | % | ​ | 512 | %

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For the second quarter of 2021, we had net recoveries of $6 thousand compared to net charge-offs of $488 thousand for the first quarter of 2021 and $3.3 million of net charge-offs for the second quarter of 2020.

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There was no provision recorded for the second quarter of 2021, no change from the first quarter of 2021 and a decrease of $3.5 million from the second quarter of 2020. Management decided additional provisions were not necessary in the second quarter of 2021 as credit quality indicators remained strong and loan balances decreased.

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The ratio of nonperforming loans to total loans at June 30, 2021 was 0.38%, and if PPP loans were excluded, this ratio would have been 0.42%. Nonperforming assets as a percentage of total assets was 0.25% at June 30, 2021. Excluding PPP loans, nonperforming assets as a percentage of total assets would have been 0.26% at June 30, 2021.

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Beginning in 2020, in accordance with the Interagency Statement on Loan Modifications and Reporting for Financial Institutions as issued on April 7, 2020, through June 30, 2021, we had entered into principal and interest deferrals on 584 loans, representing $154.5 million in total outstanding principal balances. Of those loans, 12 loans with a total outstanding principal balance of $5.3 million have been granted additional deferrals, 4 loans with a total outstanding principal balance of $653 thousand remain on the first deferral and the remaining loans have been returned to normal payment status. These loan modifications are not considered troubled debt restructurings.

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Capital

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Total stockholders’ equity was $344.4 million as of June 30, 2021, an increase of $14.2 million from December 31, 2020. The tangible book value per common share, a non-GAAP financial measure, increased to $16.89 as of June 30, 2021, from $16.00 as of December 31, 2020. Tangible common equity to tangible assets, a non-GAAP financial measure, increased to 9.36% as of June 30, 2021, from 9.27% as of December 31, 2020.

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

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​ |  | June 30, |  | December 31, |  | June 30, | ​
​ |  | 2021 |  | 2020 |  | 2020 | ​
Capital Ratios(1) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Alerus Financial Corporation Consolidated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | 14.30 | % | ​ | 12.75 | % | ​ | 12.58 | %
Tier 1 capital to risk weighted assets | ​ | ​ | 14.71 | % | ​ | 13.15 | % | ​ | 12.99 | %
Total capital to risk weighted assets | ​ | ​ | 18.43 | % | ​ | 16.79 | % | ​ | 16.70 | %
Tier 1 capital to average assets | ​ | ​ | 9.62 | % | ​ | 9.24 | % | ​ | 9.75 | %
Tangible common equity / tangible assets (2) | ​ |  | 9.36 | % |  | 9.27 | % |  | 9.25 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Alerus Financial, N.A. | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | 13.57 | % | ​ | 12.10 | % | ​ | 11.99 | %
Tier 1 capital to risk weighted assets | ​ | ​ | 13.57 | % | ​ | 12.10 | % | ​ | 11.99 | %
Total capital to risk weighted assets | ​ | ​ | 14.82 | % | ​ | 13.36 | % | ​ | 13.24 | %
Tier 1 capital to average assets | ​ | ​ | 8.98 | % | ​ | 8.50 | % | ​ | 9.00 | %

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(1) | Capital ratios for the current quarter are to be considered preliminary until the Call Report for Alerus Financial, N.A. is filed.

(2) | Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

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Conference Call

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The Company will host a conference call at 9:00 a.m. Central Time on Thursday, July 29, 2021, to discuss its financial results. The call can be accessed via telephone at (888) 317-6016. A recording of the call and transcript will be available on the Company’s investor relations website at investors.alerus.com following the call.

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About Alerus Financial Corporation

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Alerus Financial Corporation is a diversified financial services company headquartered in Grand Forks, ND. 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 Financial banking and wealth management offices are located in Grand Forks and Fargo, ND, the Minneapolis-St. Paul, MN metropolitan area, and Scottsdale and Mesa, AZ. Alerus Retirement and Benefits plan administration offices are located in St. Paul, MN, East Lansing, MI, and Littleton, CO.

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Non-GAAP Financial Measures

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

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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

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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.

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Forward-Looking Statements

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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.

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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 effects of the COVID-19 pandemic, including its effects on the economic environment, our clients, and our operations, 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; 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; our ability to successfully manage liquidity risk; 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; 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 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. tax laws, regulations and guidance; our success at managing the risks involved in the foregoing items; and any other risks described in the “Risk Factors” sections of the reports filed by Alerus Financial Corporation with the Securities and Exchange Commission.

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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.

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6

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​

Alerus Financial Corporation and Subsidiaries

Consolidated Balance Sheets

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

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, |  | December 31,
​ |  | 2021 |  | 2020
Assets |  | (Unaudited) |  | (Audited)
Cash and cash equivalents | ​ | $ | 315,430 | ​ | $ | 172,962
Investment securities | ​ |  |  | ​ |  |
Available-for-sale, at fair value | ​ |  | 651,546 | ​ |  | 592,342
Held-to-maturity, at carrying value | ​ |  | 146,316 | ​ |  | —
Loans held for sale | ​ |  | 66,856 | ​ |  | 122,440
Loans | ​ |  | 1,835,312 | ​ |  | 1,979,375
Allowance for loan losses | ​ |  | (33,764) | ​ |  | (34,246)
Net loans | ​ |  | 1,801,548 | ​ |  | 1,945,129
Land, premises and equipment, net | ​ |  | 18,847 | ​ |  | 20,289
Operating lease right-of-use assets | ​ |  | 4,203 | ​ |  | 6,918
Accrued interest receivable | ​ |  | 8,463 | ​ |  | 9,662
Bank-owned life insurance | ​ |  | 32,752 | ​ |  | 32,363
Goodwill | ​ |  | 30,201 | ​ |  | 30,201
Other intangible assets | ​ |  | 23,680 | ​ |  | 25,919
Servicing rights | ​ |  | 1,964 | ​ |  | 1,987
Deferred income taxes, net | ​ |  | 11,522 | ​ |  | 9,409
Other assets | ​ |  | 43,901 | ​ |  | 44,150
Total assets | ​ | $ | 3,157,229 | ​ | $ | 3,013,771
Liabilities and Stockholders’ Equity | ​ |  |  | ​ |  |
Deposits | ​ |  |  | ​ |  |
Noninterest-bearing | ​ | $ | 758,820 | ​ | $ | 754,716
Interest-bearing | ​ |  | 1,952,120 | ​ |  | 1,817,277
Total deposits | ​ |  | 2,710,940 | ​ |  | 2,571,993
Long-term debt | ​ |  | 58,992 | ​ |  | 58,735
Operating lease liabilities | ​ |  | 4,868 | ​ |  | 7,861
Accrued expenses and other liabilities | ​ |  | 38,038 | ​ |  | 45,019
Total liabilities | ​ |  | 2,812,838 | ​ |  | 2,683,608
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: 17,197,771 and 17,125,270 issued and outstanding | ​ |  | 17,198 | ​ |  | 17,125
Additional paid-in capital | ​ |  | 91,273 | ​ |  | 90,237
Retained earnings | ​ |  | 233,397 | ​ |  | 212,163
Accumulated other comprehensive income (loss) | ​ |  | 2,523 | ​ |  | 10,638
Total stockholders’ equity | ​ |  | 344,391 | ​ |  | 330,163
Total liabilities and stockholders’ equity | ​ | $ | 3,157,229 | ​ | $ | 3,013,771

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7

Alerus Financial Corporation and Subsidiaries

Consolidated Statements of Income

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

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Six months ended
​ | ​ | June 30, | ​ | March 31, | ​ | June 30, | ​ | June 30, | ​ | June 30,
​ |  | 2021 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Interest Income | ​ | (Unaudited) | ​ | (Unaudited) | ​ | (Unaudited) | ​ | (Unaudited) | ​ | (Unaudited)
Loans, including fees | ​ | $ | 19,324 | ​ | $ | 20,567 | ​ | $ | 21,372 | ​ | $ | 39,891 | ​ | $ | 41,914
Investment securities | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Taxable | ​ |  | 2,897 | ​ |  | 2,401 | ​ |  | 1,765 | ​ |  | 5,298 | ​ |  | 3,524
Exempt from federal income taxes | ​ |  | 233 | ​ |  | 236 | ​ |  | 239 | ​ |  | 469 | ​ |  | 474
Other | ​ |  | 130 | ​ |  | 117 | ​ |  | 130 | ​ |  | 247 | ​ |  | 700
Total interest income | ​ |  | 22,584 | ​ |  | 23,321 | ​ |  | 23,506 | ​ |  | 45,905 | ​ |  | 46,612
Interest Expense | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Deposits | ​ |  | 906 | ​ |  | 995 | ​ |  | 2,558 | ​ |  | 1,901 | ​ |  | 5,950
Long-term debt | ​ |  | 538 | ​ |  | 288 | ​ |  | 857 | ​ |  | 826 | ​ |  | 1,734
Total interest expense | ​ |  | 1,444 | ​ |  | 1,283 | ​ |  | 3,415 | ​ |  | 2,727 | ​ |  | 7,684
Net interest income | ​ |  | 21,140 | ​ |  | 22,038 | ​ |  | 20,091 | ​ |  | 43,178 | ​ |  | 38,928
Provision for loan losses | ​ |  | — | ​ |  | — | ​ |  | 3,500 | ​ |  | — | ​ |  | 6,000
Net interest income after provision for loan losses | ​ |  | 21,140 | ​ |  | 22,038 | ​ |  | 16,591 | ​ |  | 43,178 | ​ |  | 32,928
Noninterest Income | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Retirement and benefit services | ​ |  | 17,871 | ​ |  | 17,255 | ​ |  | 13,710 | ​ |  | 35,126 | ​ |  | 29,930
Wealth management | ​ |  | 5,138 | ​ |  | 4,986 | ​ |  | 4,112 | ​ |  | 10,124 | ​ |  | 8,158
Mortgage banking | ​ |  | 12,287 | ​ |  | 17,132 | ​ |  | 17,546 | ​ |  | 29,419 | ​ |  | 22,591
Service charges on deposit accounts | ​ |  | 330 | ​ |  | 338 | ​ |  | 297 | ​ |  | 668 | ​ |  | 720
Net gains (losses) on investment securities | ​ |  | — | ​ |  | 114 | ​ |  | 1,294 | ​ |  | 114 | ​ |  | 1,294
Other | ​ |  | 1,122 | ​ |  | 1,056 | ​ |  | 1,271 | ​ |  | 2,178 | ​ |  | 2,726
Total noninterest income | ​ |  | 36,748 | ​ |  | 40,881 | ​ |  | 38,230 | ​ |  | 77,629 | ​ |  | 65,419
Noninterest Expense | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Compensation | ​ |  | 24,309 | ​ |  | 23,698 | ​ |  | 21,213 | ​ |  | 48,007 | ​ |  | 39,944
Employee taxes and benefits | ​ |  | 5,572 | ​ |  | 5,813 | ​ |  | 4,747 | ​ |  | 11,385 | ​ |  | 10,055
Occupancy and equipment expense | ​ |  | 1,918 | ​ |  | 2,231 | ​ |  | 2,612 | ​ |  | 4,149 | ​ |  | 5,104
Business services, software and technology expense | ​ |  | 4,958 | ​ |  | 4,976 | ​ |  | 4,580 | ​ |  | 9,934 | ​ |  | 9,123
Intangible amortization expense | ​ |  | 1,088 | ​ |  | 1,151 | ​ |  | 991 | ​ |  | 2,239 | ​ |  | 1,981
Professional fees and assessments | ​ |  | 1,509 | ​ |  | 1,472 | ​ |  | 1,177 | ​ |  | 2,981 | ​ |  | 2,233
Marketing and business development | ​ |  | 769 | ​ |  | 676 | ​ |  | 549 | ​ |  | 1,445 | ​ |  | 1,159
Supplies and postage | ​ |  | 503 | ​ |  | 531 | ​ |  | 675 | ​ |  | 1,034 | ​ |  | 1,382
Travel | ​ |  | 36 | ​ |  | 26 | ​ |  | 51 | ​ |  | 62 | ​ |  | 312
Mortgage and lending expenses | ​ |  | 1,199 | ​ |  | 1,332 | ​ |  | 1,341 | ​ |  | 2,531 | ​ |  | 2,482
Other | ​ |  | 689 | ​ |  | 1,136 | ​ |  | 1,798 | ​ |  | 1,825 | ​ |  | 2,685
Total noninterest expense | ​ |  | 42,550 | ​ |  | 43,042 | ​ |  | 39,734 | ​ |  | 85,592 | ​ |  | 76,460
Income before income taxes | ​ |  | 15,338 | ​ |  | 19,877 | ​ |  | 15,087 | ​ |  | 35,215 | ​ |  | 21,887
Income tax expense | ​ |  | 3,644 | ​ |  | 4,662 | ​ |  | 3,613 | ​ |  | 8,306 | ​ |  | 5,050
Net income | ​ | $ | 11,694 | ​ | $ | 15,215 | ​ | $ | 11,474 | ​ | $ | 26,909 | ​ | $ | 16,837
Per Common Share Data | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings per common share | ​ | $ | 0.67 | ​ | $ | 0.87 | ​ | $ | 0.66 | ​ | $ | 1.54 | ​ | $ | 0.97
Diluted earnings per common share | ​ | $ | 0.66 | ​ | $ | 0.86 | ​ | $ | 0.65 | ​ | $ | 1.52 | ​ | $ | 0.95
Dividends declared per common share | ​ | $ | 0.16 | ​ | $ | 0.15 | ​ | $ | 0.15 | ​ | $ | 0.31 | ​ | $ | 0.30
Average common shares outstanding | ​ |  | 17,194 | ​ |  | 17,145 | ​ |  | 17,111 | ​ |  | 17,170 | ​ |  | 17,091
Diluted average common shares outstanding | ​ |  | 17,497 | ​ |  | 17,465 | ​ |  | 17,445 | ​ |  | 17,482 | ​ |  | 17,425

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8

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)

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, | ​ | March 31, | ​ | December 31, | ​ | June 30, | ​
​ |  | 2021 |  | 2021 |  | 2020 |  | 2020 | ​
Tangible Common Equity to Tangible Assets |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total common stockholders’ equity | ​ | $ | 344,391 | ​ | $ | 329,234 | ​ | $ | 330,163 | ​ | $ | 305,732 | ​
Less: Goodwill | ​ |  | 30,201 | ​ |  | 30,201 | ​ |  | 30,201 | ​ |  | 27,329 | ​
Less: Other intangible assets | ​ |  | 23,680 | ​ |  | 24,768 | ​ |  | 25,919 | ​ |  | 16,411 | ​
Tangible common equity (a) | ​ |  | 290,510 | ​ |  | 274,265 | ​ |  | 274,043 | ​ |  | 261,992 | ​
Total assets | ​ |  | 3,157,229 | ​ |  | 3,151,756 | ​ |  | 3,013,771 | ​ |  | 2,875,457 | ​
Less: Goodwill | ​ |  | 30,201 | ​ |  | 30,201 | ​ |  | 30,201 | ​ |  | 27,329 | ​
Less: Other intangible assets | ​ |  | 23,680 | ​ |  | 24,768 | ​ |  | 25,919 | ​ |  | 16,411 | ​
Tangible assets (b) | ​ |  | 3,103,348 | ​ |  | 3,096,787 | ​ |  | 2,957,651 | ​ |  | 2,831,717 | ​
Tangible common equity to tangible assets (a)/(b) | ​ |  | 9.36 | % |  | 8.86 | % |  | 9.27 | % |  | 9.25 | %
Tangible Book Value Per Common Share | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total common stockholders’ equity | ​ | $ | 344,391 | ​ | $ | 329,234 | ​ | $ | 330,163 | ​ | $ | 305,732 | ​
Less: Goodwill | ​ |  | 30,201 | ​ |  | 30,201 | ​ |  | 30,201 | ​ | ​ | 27,329 | ​
Less: Other intangible assets | ​ |  | 23,680 | ​ |  | 24,768 | ​ |  | 25,919 | ​ |  | 16,411 | ​
Tangible common equity (c) | ​ |  | 290,510 | ​ |  | 274,265 | ​ |  | 274,043 | ​ |  | 261,992 | ​
Total common shares issued and outstanding (d) | ​ |  | 17,198 | ​ |  | 17,190 | ​ |  | 17,125 | ​ |  | 17,120 | ​
Tangible book value per common share (c)/(d) | ​ | $ | 16.89 | ​ | $ | 15.95 | ​ | $ | 16.00 | ​ | $ | 15.30 | ​

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Six months ended | ​
​ | ​ | June 30, | ​ | March 31, | ​ | June 30, | ​ | June 30, | ​ | June 30, | ​
​ | ​ | 2021 |  | 2021 |  | 2020 | ​ | 2021 |  | 2020 | ​
Return on Average Tangible Common Equity | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income | ​ | $ | 11,694 | ​ | $ | 15,215 | ​ | $ | 11,474 | ​ | $ | 26,909 | ​ | $ | 16,837 | ​
Add: Intangible amortization expense (net of tax) | ​ |  | 860 | ​ |  | 909 | ​ |  | 783 | ​ |  | 1,769 | ​ |  | 1,565 | ​
Net income, excluding intangible amortization (e) | ​ |  | 12,554 | ​ |  | 16,124 | ​ |  | 12,257 | ​ |  | 28,678 | ​ |  | 18,402 | ​
Average total equity | ​ |  | 339,439 | ​ |  | 334,188 | ​ |  | 301,719 | ​ |  | 336,830 | ​ |  | 298,221 | ​
Less: Average goodwill | ​ |  | 30,201 | ​ |  | 30,201 | ​ |  | 27,329 | ​ |  | 30,201 | ​ |  | 27,329 | ​
Less: Average other intangible assets (net of tax) | ​ |  | 19,123 | ​ |  | 19,995 | ​ |  | 13,345 | ​ |  | 19,556 | ​ |  | 13,737 | ​
Average tangible common equity (f) | ​ |  | 290,115 | ​ |  | 283,992 | ​ |  | 261,045 | ​ |  | 287,073 | ​ |  | 257,155 | ​
Return on average tangible common equity (e)/(f) | ​ |  | 17.36 | % |  | 23.03 | % |  | 18.88 | % |  | 20.15 | % |  | 14.39 | %
Net Interest Margin (tax-equivalent) | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Net interest income | ​ | $ | 21,140 | ​ | $ | 22,038 | ​ | $ | 20,091 | ​ | $ | 43,178 | ​ | $ | 38,928 | ​
Tax-equivalent adjustment | ​ |  | 135 | ​ |  | 143 | ​ |  | 109 | ​ |  | 278 | ​ |  | 209 | ​
Tax-equivalent net interest income (g) | ​ |  | 21,275 | ​ |  | 22,181 | ​ |  | 20,200 | ​ |  | 43,456 | ​ |  | 39,137 | ​
Average earning assets (h) | ​ |  | 2,958,468 | ​ |  | 2,880,255 | ​ |  | 2,584,037 | ​ |  | 2,919,578 | ​ |  | 2,427,519 | ​
Net interest margin (tax-equivalent) (g)/(h) | ​ |  | 2.88 | % |  | 3.12 | % |  | 3.14 | % |  | 3.00 | % |  | 3.24 | %
Efficiency Ratio | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Noninterest expense | ​ | $ | 42,550 | ​ | $ | 43,042 | ​ | $ | 39,734 | ​ | $ | 85,592 | ​ | $ | 76,460 | ​
Less: Intangible amortization expense | ​ |  | 1,088 | ​ |  | 1,151 | ​ |  | 991 | ​ |  | 2,239 | ​ |  | 1,981 | ​
Adjusted noninterest expense (i) | ​ |  | 41,462 | ​ |  | 41,891 | ​ |  | 38,743 | ​ |  | 83,353 | ​ |  | 74,479 | ​
Net interest income | ​ |  | 21,140 | ​ |  | 22,038 | ​ |  | 20,091 | ​ |  | 43,178 | ​ |  | 38,928 | ​
Noninterest income | ​ |  | 36,748 | ​ |  | 40,881 | ​ |  | 38,230 | ​ |  | 77,629 | ​ |  | 65,419 | ​
Tax-equivalent adjustment | ​ |  | 135 | ​ |  | 143 | ​ |  | 109 | ​ |  | 278 | ​ |  | 209 | ​
Total tax-equivalent revenue (j) | ​ |  | 58,023 | ​ |  | 63,062 | ​ |  | 58,430 | ​ |  | 121,085 | ​ |  | 104,556 | ​
Efficiency ratio (i)/(j) | ​ |  | 71.46 | % |  | 66.43 | % |  | 66.31 | % |  | 68.84 | % |  | 71.23 | %

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9

Alerus Financial Corporation and Subsidiaries

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

(dollars in thousands)

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Six months ended
​ | ​ | June 30, 2021 | ​ | March 31, 2021 | ​ | June 30, 2020 | ​ | June 30, 2021 | ​ | June 30, 2020
​ | ​ | ​ | ​ | ​ | 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 | ​ | $ | 191,695 | ​ | 0.12 | % | ​ | $ | 184,376 | ​ | 0.12 | % | ​ | $ | 153,197 |  | 0.16 | % | ​ | $ | 188,056 | ​ | 0.12 | % | ​ | $ | 158,274 | ​ | 0.72 | %
Investment securities (1) | ​ |  | 800,812 | ​ | 1.60 | % | ​ |  | 662,413 | ​ | 1.65 | % | ​ |  | 369,247 |  | 2.25 | % | ​ |  | 731,995 | ​ | 1.62 | % | ​ |  | 353,203 | ​ | 2.35 | %
Loans held for sale | ​ |  | 71,447 | ​ | 2.26 | % | ​ |  | 82,249 | ​ | 2.13 | % | ​ |  | 69,606 |  | 2.69 | % | ​ |  | 76,818 | ​ | 2.19 | % | ​ |  | 51,372 | ​ | 2.81 | %
Loans | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Commercial: | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Commercial and industrial | ​ |  | 627,613 | ​ | 4.55 | % | ​ |  | 674,935 | ​ | 4.72 | % | ​ |  | 739,816 |  | 4.12 | % | ​ |  | 651,143 | ​ | 4.64 | % | ​ |  | 609,553 | ​ | 4.57 | %
Real estate construction | ​ |  | 42,511 | ​ | 4.28 | % | ​ |  | 45,264 | ​ | 4.22 | % | ​ |  | 31,660 |  | 4.48 | % | ​ |  | 43,880 | ​ | 4.25 | % | ​ |  | 29,191 | ​ | 4.73 | %
Commercial real estate | ​ |  | 568,827 | ​ | 3.71 | % | ​ |  | 560,986 | ​ | 3.79 | % | ​ |  | 513,497 |  | 4.31 | % | ​ |  | 564,928 | ​ | 3.75 | % | ​ |  | 510,831 | ​ | 4.46 | %
Total commercial | ​ |  | 1,238,951 | ​ | 4.15 | % | ​ |  | 1,281,185 | ​ | 4.30 | % | ​ |  | 1,284,973 |  | 4.21 | % | ​ |  | 1,259,951 | ​ | 4.23 | % | ​ |  | 1,149,575 | ​ | 4.53 | %
Consumer | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Residential real estate first mortgage | ​ |  | 459,278 | ​ | 3.53 | % | ​ |  | 457,882 | ​ | 3.76 | % | ​ |  | 459,789 |  | 4.09 | % | ​ |  | 458,584 | ​ | 3.65 | % | ​ |  | 460,258 | ​ | 4.10 | %
Residential real estate junior lien | ​ |  | 129,544 | ​ | 4.58 | % | ​ |  | 137,745 | ​ | 4.86 | % | ​ |  | 163,345 |  | 4.79 | % | ​ |  | 133,622 | ​ | 4.72 | % | ​ |  | 168,390 | ​ | 4.98 | %
Other revolving and installment | ​ |  | 60,213 | ​ | 4.31 | % | ​ |  | 68,625 | ​ | 4.38 | % | ​ |  | 77,921 |  | 4.56 | % | ​ |  | 64,396 | ​ | 4.35 | % | ​ |  | 80,587 | ​ | 4.63 | %
Total consumer | ​ |  | 649,035 | ​ | 3.81 | % | ​ |  | 664,252 | ​ | 4.05 | % | ​ |  | 701,055 |  | 4.31 | % | ​ |  | 656,602 | ​ | 3.93 | % | ​ |  | 709,235 | ​ | 4.37 | %
Total loans (1) | ​ |  | 1,887,986 | ​ | 4.04 | % | ​ |  | 1,945,437 | ​ | 4.21 | % | ​ |  | 1,986,028 |  | 4.24 | % | ​ |  | 1,916,553 | ​ | 4.13 | % | ​ |  | 1,858,810 | ​ | 4.47 | %
Federal Reserve/FHLB stock | ​ |  | 6,528 | ​ | 4.36 | % | ​ |  | 5,780 | ​ | 4.49 | % | ​ |  | 5,959 |  | 4.59 | % | ​ |  | 6,156 | ​ | 4.42 | % | ​ |  | 5,860 | ​ | 4.67 | %
Total interest earning assets | ​ |  | 2,958,468 | ​ | 3.08 | % | ​ |  | 2,880,255 | ​ | 3.30 | % | ​ |  | 2,584,037 |  | 3.68 | % | ​ |  | 2,919,578 | ​ | 3.19 | % | ​ |  | 2,427,519 | ​ | 3.88 | %
Noninterest earning assets | ​ | ​ | 161,272 | ​ | ​ | ​ | ​ | ​ | 167,006 | ​ | ​ | ​ | ​ | ​ | 156,293 | ​ | ​ | ​ | ​ | ​ | 164,124 | ​ | ​ | ​ | ​ | ​ | 152,476 | ​ | ​ | ​
Total assets | ​ | $ | 3,119,740 | ​ |  | ​ | ​ | $ | 3,047,261 | ​ |  | ​ | ​ | $ | 2,740,330 |  |  | ​ | ​ | $ | 3,083,702 | ​ |  | ​ | ​ | $ | 2,579,995 | ​ |  | ​
Interest-Bearing Liabilities | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Interest-bearing demand deposits | ​ | $ | 697,789 | ​ | 0.14 | % | ​ | $ | 642,832 | ​ | 0.16 | % | ​ | $ | 534,733 |  | 0.30 | % | ​ | $ | 670,462 | ​ | 0.15 | % | ​ | $ | 496,880 | ​ | 0.38 | %
Money market and savings deposits | ​ |  | 1,015,358 | ​ | 0.14 | % | ​ |  | 1,030,348 | ​ | 0.16 | % | ​ |  | 900,812 |  | 0.67 | % | ​ |  | 1,022,812 | ​ | 0.15 | % | ​ |  | 852,325 | ​ | 0.85 | %
Time deposits | ​ |  | 208,338 | ​ | 0.56 | % | ​ |  | 210,719 | ​ | 0.66 | % | ​ |  | 201,147 |  | 1.30 | % | ​ |  | 209,521 | ​ | 0.61 | % | ​ |  | 200,117 | ​ | 1.44 | %
Short-term borrowings | ​ |  | — | ​ | — | % | ​ |  | — | ​ | — | % | ​ |  | 321 |  | — | % | ​ |  | — | ​ | — | % | ​ |  | 161 | ​ | — | %
Long-term debt | ​ |  | 58,996 | ​ | 3.66 | % | ​ |  | 25,677 | ​ | 4.55 | % | ​ |  | 58,747 |  | 5.87 | % | ​ |  | 42,429 | ​ | 3.93 | % | ​ |  | 58,751 | ​ | 5.94 | %
Total interest-bearing liabilities | ​ |  | 1,980,481 | ​ | 0.29 | % | ​ |  | 1,909,576 | ​ | 0.27 | % | ​ |  | 1,695,760 |  | 0.81 | % | ​ |  | 1,945,224 | ​ | 0.28 | % | ​ |  | 1,608,234 | ​ | 0.96 | %
Noninterest-Bearing Liabilities and Stockholders' Equity | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Noninterest-bearing deposits | ​ |  | 755,773 | ​ |  | ​ | ​ |  | 731,680 | ​ |  | ​ | ​ |  | 692,500 |  |  | ​ | ​ |  | 743,793 | ​ |  | ​ | ​ |  | 628,404 | ​ |  | ​
Other noninterest-bearing liabilities | ​ | ​ | 44,047 | ​ | ​ | ​ | ​ | ​ | 71,817 | ​ | ​ | ​ | ​ | ​ | 50,351 | ​ | ​ | ​ | ​ | ​ | 57,855 | ​ | ​ | ​ | ​ | ​ | 45,136 | ​ | ​ | ​
Stockholders’ equity | ​ |  | 339,439 | ​ |  | ​ | ​ |  | 334,188 | ​ |  | ​ | ​ |  | 301,719 |  |  | ​ | ​ |  | 336,830 | ​ |  | ​ | ​ |  | 298,221 | ​ |  | ​
Total liabilities and stockholders’ equity | ​ | $ | 3,119,740 | ​ |  | ​ | ​ | $ | 3,047,261 | ​ |  | ​ | ​ | $ | 2,740,330 |  |  | ​ | ​ | $ | 3,083,702 | ​ |  | ​ | ​ | $ | 2,579,995 | ​ |  | ​
Net interest rate spread | ​ |  | ​ | ​ | 2.79 | % | ​ |  |  | ​ | 3.03 | % | ​ |  |  |  | 2.87 | % | ​ |  |  | ​ | 2.91 | % | ​ |  |  | ​ | 2.92 | %
Net interest margin, tax-equivalent (2) | ​ |  | ​ | ​ | 2.88 | % | ​ |  |  | ​ | 3.12 | % | ​ |  |  |  | 3.14 | % | ​ |  |  | ​ | 3.00 | % | ​ |  |  | ​ | 3.24 | %

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

(2) | Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

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