EX-99.1 2 alrs-20230726xex99d1.htm EX-99.1

Exhibit 99.1

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​ FOR RELEASE (07.26.2023) ​ | Alan A. Villalon, Chief Financial Officer 952.417.3733 (Office)

ALERUS FINANCIAL CORPORATION REPORTS

SECOND QUARTER 2023 NET INCOME OF $9.1 MILLION

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MINNEAPOLIS, MN (July 26, 2023) – Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $9.1 million for the second quarter of 2023, or $0.45 per diluted common share, compared to net income of $8.2 million, or $0.40 per diluted common share, for the first quarter of 2023, and net income of $9.3 million, or $0.52 per diluted common share, for the second quarter of 2022.

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CEO Comments

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President and Chief Executive Officer Katie Lorenson said, “During the second quarter, we continued to evolve Alerus into a high performing commercial wealth bank and a national retirement and benefits provider through strategic talent acquisitions and infrastructure optimization. The foundational strength and unique business model of our Company allowed us to continue to attract experienced professionals who will continue to build our commercial banking segment in addition to doubling the size of our treasury management team. More recently, we lifted out a highly regarded and seasoned team to lead the launch of our private banking franchise. We believe that the addition of these professionals coupled with our tenured talent will drive continued new client acquisition and existing client expansion throughout our growing markets.

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While the macroeconomic environment remains uncertain, our diversified business model shined in the second quarter as fee income represented 53.7% of total revenues, an industry leading standard, driven primarily by our nationally scaled retirement services and growing wealth management business.

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During the quarter, we continued to execute on prudent expense management as noninterest expenses declined 4% from the prior quarter. Our focus on a client-centric organizational structure has resulted in efficiency improvements across the organization. As of July, these improvements have allowed us to reduce total headcount by 10% over the past 12 months, even after taking account of the acquisition of Metro Phoenix Bank.

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Despite ongoing industry and economic challenges, we believe Alerus is positioned to emerge stronger than ever. Our unique business model is anchored by durable and highly recurring fee income and our balance sheet is characterized by superior capital and reserves, a highly diversified loan and deposit portfolio, and a long history of strong credit performance. We remain optimistic about our continued ability to attract and retain the best talent and are seeing the benefits of our ongoing implementation of infrastructure optimization.

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We are grateful for our Alerus team members whose ongoing collaboration and client focus are continuing to position the company’s future for top tier shareholder returns and performance.”

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Second Quarter Highlights

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| ◾ | Return on average tangible common equity(1) of 13.71%, compared to 12.58% for the first quarter of 2023

| ◾ | Return on average common equity of 10.14%, compared to 9.17% for the first quarter of 2023

| ◾ | Return on average total assets of 0.96%, compared to 0.88% for the first quarter of 2023

| ◾ | Repurchased $3.0 million of the Company’s outstanding stock, reducing common shares outstanding by 170,046 at quarter end

| ◾ | Increased quarterly dividend by 5.6% to $0.19 per share

| ◾ | Loan to deposit ratio as of June 30, 2023 was 88.8%, compared to 83.8% as of December 31, 2022

| ◾ | Common equity tier 1 capital to risk weighted assets as of June 30, 2023 was 13.30%, compared to 13.39% as of December 31, 2022

| ◾ | Noninterest expense was $36.4 million, compared to $37.9 million for the first quarter of 2023

| ◾ | Efficiency ratio improved to 72.79% compared to 74.53% for the first quarter of 2023

| ◾ | Noninterest income was 53.69% of total revenue, compared to 51.63% for the first quarter of 2023

| ◾ | Allowance for credit losses to total loans was 1.41% compared to 1.27% as of December 31, 2022

| ◾ | Net recoveries to average loans of 0.07% compared to net charge-offs to average loans of 0.03% for the first quarter of 2023

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

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Selected Financial Data (unaudited)

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of and for the | ​
​ | ​ | Three months ended | ​ | Six months ended | ​
​ | ​ | June 30, | ​ | March 31, | ​ | June 30, | ​ | June 30, | ​ | June 30, | ​
(dollars and shares in thousands, except per share data) |  | 2023 |  | 2023 |  | 2022 |  | 2023 |  | 2022 |
Performance Ratios | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Return on average total assets | ​ |  | 0.96 | % |  | 0.88 | % |  | 1.14 | % |  | 0.92 | % |  | 1.20 | %
Return on average common equity | ​ |  | 10.14 | % |  | 9.17 | % |  | 11.93 | % |  | 9.66 | % |  | 11.85 | %
Return on average tangible common equity (1) | ​ |  | 13.71 | % |  | 12.58 | % |  | 15.25 | % |  | 13.15 | % |  | 14.97 | %
Noninterest income as a % of revenue | ​ |  | 53.69 | % |  | 51.63 | % |  | 56.20 | % |  | 52.65 | % |  | 56.91 | %
Net interest margin (tax-equivalent) | ​ |  | 2.52 | % |  | 2.70 | % |  | 2.98 | % |  | 2.61 | % |  | 2.91 | %
Efficiency ratio (1) | ​ |  | 72.79 | % |  | 74.53 | % |  | 74.72 | % |  | 73.67 | % |  | 73.50 | %
Net charge-offs/(recoveries) to average loans | ​ | ​ | (0.07) | % |  | 0.03 | % |  | 0.07 | % |  | (0.02) | % |  | 0.02 | %
Dividend payout ratio | ​ |  | 42.22 | % |  | 45.00 | % |  | 34.62 | % | ​ | 43.53 | % | ​ | 30.91 | %
Per Common Share | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Earnings per common share - basic | ​ | $ | 0.45 | ​ | $ | 0.41 | ​ | $ | 0.53 | ​ | $ | 0.86 | ​ | $ | 1.11 | ​
Earnings per common share - diluted | ​ | $ | 0.45 | ​ | $ | 0.40 | ​ | $ | 0.52 | ​ | $ | 0.85 | ​ | $ | 1.10 | ​
Dividends declared per common share | ​ | $ | 0.19 | ​ | $ | 0.18 | ​ | $ | 0.18 | ​ | $ | 0.37 | ​ | $ | 0.34 | ​
Book value per common share | ​ | $ | 17.96 | ​ | $ | 17.90 | ​ | $ | 17.75 | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tangible book value per common share (1) | ​ | $ | 14.60 | ​ | $ | 14.50 | ​ | $ | 14.93 | ​ | ​ | ​ | ​ | ​ | ​ | ​
Average common shares outstanding - basic | ​ |  | 20,033 | ​ |  | 20,028 | ​ |  | 17,297 | ​ |  | 20,030 | ​ |  | 17,271 | ​
Average common shares outstanding - diluted | ​ |  | 20,241 | ​ |  | 20,246 | ​ |  | 17,532 | ​ |  | 20,243 | ​ |  | 17,517 | ​
Other Data | ​ |  |  | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​
Retirement and benefit services assets under administration/management | ​ | $ | 35,052,652 | ​ | $ | 33,404,342 | ​ | $ | 31,749,157 | ​ | ​ | ​ | ​ | ​ | ​ | ​
Wealth management assets under administration/management | ​ | $ | 3,857,710 | ​ | $ | 3,675,684 | ​ | $ | 4,147,763 | ​ |  | ​ | ​ | ​ | ​ | ​
Mortgage originations | ​ | $ | 111,261 | ​ | $ | 77,728 | ​ | $ | 269,397 | ​ | $ | 188,989 | ​ | $ | 456,159 | ​

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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 2023 was $22.2 million, a $1.4 million, or 6.0%, decrease from the first quarter of 2023. Net interest income decreased $542.0 thousand, or 2.4%, from $22.8 million for the second quarter of 2022. Interest income increased $2.5 million, or 6.7% from the first quarter of 2023, primarily driven by a 24 basis point increase in yield on interest earning assets. Contributing factors to higher asset yields were higher new loan yields and accretion of fair value marks from the Metro Phoenix Bank transaction. The increase in interest income was more than offset by a $4.0 million increase in interest expense, primarily due to an increase in rates paid on interest-bearing deposits. The increase in interest expense paid on deposits was due to heightened deposit competition, the impact of rising short-term interest rates on indexed money market deposits and clients moving deposits out of noninterest bearing products into interest-bearing products.

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Net interest margin (tax-equivalent), was 2.52% for the second quarter of 2023, an 18 basis point decrease from 2.70% for the first quarter of 2023, and a 46 basis point decrease from 2.98% for the second quarter of 2022. The decrease in net interest margin from the prior quarter reflected the impact of rising interest rates on our interest-bearing liabilities partially offset by slightly higher yields on new loans and accretion of fair value marks from the Metro Phoenix Bank transaction.

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Noninterest Income

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Noninterest income for the second quarter of 2023 was $25.8 million, a $525.0 thousand, or 2.1%, increase from the first quarter of 2023. The quarter over quarter increase was primarily driven by improvement across all fee-based business segments. Mortgage saw a $1.2 million, or 69.2%, increase in mortgage banking revenue due to a seasonal rebound in originations as mortgage

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originations grew 43% from the prior quarter. Retirement and benefit services revenue increased $408 thousand, or 2.6%, mainly due to increased administration, recordkeeping, and asset-based fees. Assets under management/administration grew due to improved equity markets and organic growth in plans and participants. Wealth management revenue increased $256 thousand, or 4.9%, as assets under management/administration grew due to improved equity markets and organic net inflows from new and existing relationships.

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Noninterest income for the second quarter of 2023 decreased $3.4 million, or 11.8%, from $29.2 million in the second quarter of 2022. The year over year decrease was primarily driven by a $3.1 million decrease in mortgage revenue due to a $158.1 million decrease in mortgage originations as higher interest rates dramatically impacted demand. Retirement and benefit services decreased $403 thousand mainly from the exit of the payroll services business and one-time document restatement fees recognized in 2022.

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Noninterest Expense

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Noninterest expense for the second quarter of 2023 was $36.4 million, a $1.5 million, or 4.0% decrease from the first quarter of 2023. The quarter over quarter decrease was primarily driven by a $1.1 million decrease in employee taxes and benefits resulting from lower headcount and lower group insurance costs. Compensation expense decreased $311 thousand from the first quarter of 2023 due to a reduction in severance costs and salaries, offset by increased mortgage incentive compensation. Offsetting the improvement in compensation and benefits expense, professional fees and assessments increased $378 thousand due to higher Federal Deposit Insurance Corporation (FDIC) assessment fees.

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Noninterest expense for the second quarter of 2023 decreased $3.6 million, or 9.0%, from $40.0 million in the second quarter of 2022. The year over year decrease was primarily due to a $2.4 million decrease in compensation, $1.1 million decrease in employee taxes and benefits, and $716 thousand decrease in professional fees and assessments. Compensation decreased primarily due to a decrease in mortgage related incentive compensation from lower mortgage originations. The decrease in employee taxes and benefits resulted from lower group insurance claims, reduced headcount, and lower compensation costs.

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Financial Condition

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Total assets were $3.8 billion as of June 30, 2023, an increase of $53.3 million, or 1.4%, from December 31, 2022. The increase was primarily due to an $89.5 million increase in loans, an $11.4 million increase in loans held for sale and a $7.2 million increase in cash and cash equivalents, offset by a decrease of $53.4 million in investment securities.

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Loans

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Total loans were $2.5 billion as of June 30, 2023, an increase of $89.5 million, or 3.7%, from December 31, 2022. The increase was primarily driven by a $122.2 million increase in commercial real estate and a $34.8 million increase in residential real estate loans, offset by a $32.0 million decrease in commercial and industrial, a $19.4 million decrease in real estate construction and a $16.1 million decrease in other consumer revolving and installment loans.

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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) |  | 2023 | ​ | 2023 | ​ | 2022 | ​ | 2022 | ​ | 2022
Commercial |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Commercial and industrial | ​ | $ | 551,860 | ​ | $ | 553,578 | ​ | $ | 583,876 | ​ | $ | 564,655 | ​ | $ | 484,426
Real estate construction | ​ |  | 78,428 | ​ |  | 108,776 | ​ |  | 97,810 | ​ |  | 89,215 | ​ |  | 48,870
Commercial real estate | ​ |  | 1,003,821 | ​ |  | 934,324 | ​ |  | 881,670 | ​ |  | 819,068 | ​ |  | 599,737
Total commercial | ​ |  | 1,634,109 | ​ |  | 1,596,678 | ​ |  | 1,563,356 | ​ |  | 1,472,938 | ​ |  | 1,133,033
Consumer | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Residential real estate first mortgage | ​ |  | 707,630 | ​ |  | 698,002 | ​ |  | 679,551 | ​ |  | 649,818 | ​ |  | 568,571
Residential real estate junior lien | ​ |  | 157,231 | ​ |  | 152,281 | ​ |  | 150,479 | ​ |  | 143,681 | ​ |  | 135,255
Other revolving and installment | ​ |  | 34,552 | ​ |  | 39,664 | ​ |  | 50,608 | ​ |  | 51,794 | ​ |  | 53,384
Total consumer | ​ |  | 899,413 | ​ |  | 889,947 | ​ |  | 880,638 | ​ |  | 845,293 | ​ |  | 757,210
Total loans | ​ | $ | 2,533,522 | ​ | $ | 2,486,625 | ​ | $ | 2,443,994 | ​ | $ | 2,318,231 | ​ | $ | 1,890,243

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Deposits

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Total deposits were $2.9 billion as of June 30, 2023, a decrease of $62.6 million, or 2.1%, from December 31, 2022. Interest-bearing deposits increased $82.8 million, while noninterest-bearing deposits decreased $145.5 million from December 31, 2022. The decrease in total deposits was due to both public unit depositor seasonality and clients using excess liquidity and paying down revolving debt. Noninterest-bearing deposits decreased from 29.5% of total deposits to 25.1% as higher interest rates continued a migration to interest-bearing accounts. Time deposit balances increased as higher short-term CD rates attracted both internal transfers of current deposits as well as new clients and deposits to the Company.

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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) |  | 2023 |  | 2023 |  | 2022 |  | 2022 |  | 2022
Noninterest-bearing demand | ​ | $ | 715,534 | ​ | $ | 792,977 | ​ | $ | 860,987 | ​ | $ | 905,228 | ​ | $ | 764,808
Interest-bearing | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Interest-bearing demand | ​ |  | 753,194 | ​ |  | 817,675 | ​ |  | 706,275 | ​ |  | 653,216 | ​ |  | 642,641
Savings accounts | ​ |  | 93,557 | ​ |  | 99,742 | ​ |  | 99,882 | ​ |  | 101,820 | ​ |  | 97,227
Money market savings | ​ |  | 986,403 | ​ |  | 1,076,166 | ​ |  | 1,035,981 | ​ |  | 1,079,520 | ​ |  | 914,423
Time deposits | ​ |  | 304,167 | ​ |  | 245,418 | ​ |  | 212,359 | ​ |  | 222,027 | ​ |  | 200,451
Total interest-bearing | ​ |  | 2,137,321 | ​ |  | 2,239,001 | ​ |  | 2,054,497 | ​ |  | 2,056,583 | ​ |  | 1,854,742
Total deposits | ​ | $ | 2,852,855 | ​ | $ | 3,031,978 | ​ | $ | 2,915,484 | ​ | $ | 2,961,811 | ​ | $ | 2,619,550

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Asset Quality

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Total nonperforming assets were $2.6 million as of June 30, 2023, a decrease of $1.2 million, or 32.5%, from December 31, 2022. As of June 30, 2023, the allowance for credit losses on loans was $35.7 million, or 1.41% of total loans, compared to $31.1 million, or 1.27% of total loans, as of December 31, 2022.

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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) |  | 2023 |  | 2023 |  | 2022 |  | 2022 |  | 2022 |
Nonaccrual loans | ​ | $ | 2,233 | ​ | $ | 2,118 | ​ | $ | 3,794 | ​ | $ | 4,303 | ​ | $ | 4,370 | ​
Accruing loans 90+ days past due | ​ |  | 347 | ​ |  | — | ​ |  | — | ​ | ​ | 1,000 | ​ |  | — | ​
Total nonperforming loans | ​ |  | 2,580 | ​ |  | 2,118 | ​ |  | 3,794 | ​ |  | 5,303 | ​ |  | 4,370 | ​
OREO and repossessed assets | ​ |  | — | ​ |  | — | ​ |  | 30 | ​ |  | 904 | ​ |  | 860 | ​
Total nonperforming assets | ​ | $ | 2,580 | ​ | $ | 2,118 | ​ | $ | 3,824 | ​ | $ | 6,207 | ​ | $ | 5,230 | ​
Net charge-offs/(recoveries) | ​ | ​ | (403) | ​ | ​ | 170 | ​ | ​ | (178) | ​ | ​ | 405 | ​ | ​ | 340 | ​
Net charge-offs/(recoveries) to average loans | ​ | ​ | (0.07) | % | ​ | 0.03 | % | ​ | (0.03) | % | ​ | 0.07 | % | ​ | 0.07 | %
Nonperforming loans to total loans | ​ | ​ | 0.10 | % | ​ | 0.09 | % | ​ | 0.16 | % | ​ | 0.23 | % | ​ | 0.23 | %
Nonperforming assets to total assets | ​ | ​ | 0.07 | % | ​ | 0.05 | % | ​ | 0.10 | % | ​ | 0.17 | % | ​ | 0.16 | %
Allowance for credit losses on loans to total loans | ​ | ​ | 1.41 | % | ​ | 1.41 | % | ​ | 1.27 | % | ​ | 1.34 | % | ​ | 1.66 | %
Allowance for credit losses on loans to nonperforming loans | ​ | ​ | 1,384 | % | ​ | 1,657 | % | ​ | 821 | % | ​ | 584 | % | ​ | 718 | %

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For the second quarter of 2023, the Company had net recoveries of $403 thousand compared to net charge-offs of $170 thousand for the first quarter of 2023 and $340 thousand of net charge-offs for the second quarter of 2022.

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The Company did not record a provision for credit losses for the second quarter of 2023 due to strong credit quality indicators and net recoveries for the quarter. The allowance for credit losses on loans to total loans increased from 1.27% at December 31, 2022 to 1.41% at June 30, 2023. Beginning on January 1, 2023 the allowance for credit losses on loans is computed under the current expected credit loss, or CECL, accounting standard and prior to that the allowance for credit losses was computed using the incurred loss method. The unearned fair value adjustments on the acquired Metro Phoenix Bank loan portfolio were $6.2 million and $7.1 million, as of June 30, 2023 and December 31, 2022, respectively.

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Capital

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Total stockholders’ equity was $357.7 million as of June 30, 2023, an increase of $813 thousand from December 31, 2022. Tangible book value per common share, a non-GAAP financial measure, increased to $14.60 as of June 30, 2023, from $14.37 as of December 31, 2022. Tangible common equity to tangible assets, a non-GAAP financial measure, decreased to 7.72% as of June 30, 2023, from 7.74% as of December 31, 2022. Common equity tier 1 capital to risk weighted assets decreased to 13.30% as of June 30, 2023, from 13.39% as of December 31, 2022.

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During the second quarter of 2023, the Company repurchased approximately $3.0 million of its outstanding stock, which reduced common shares outstanding by 170,046 at quarter end.

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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, | ​
​ |  | 2023 |  | 2022 |  | 2022 | ​
Capital Ratios(1) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Alerus Financial Corporation Consolidated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | 13.30 | % | ​ | 13.39 | % | ​ | 14.19 | %
Tier 1 capital to risk weighted assets | ​ | ​ | 13.60 | % | ​ | 13.69 | % | ​ | 14.56 | %
Total capital to risk weighted assets | ​ | ​ | 16.49 | % | ​ | 16.48 | % | ​ | 17.95 | %
Tier 1 capital to average assets | ​ | ​ | 11.15 | % | ​ | 11.25 | % | ​ | 10.80 | %
Tangible common equity / tangible assets (2) | ​ |  | 7.72 | % |  | 7.74 | % |  | 7.96 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Alerus Financial, N.A. | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | 12.93 | % | ​ | 12.76 | % | ​ | 13.64 | %
Tier 1 capital to risk weighted assets | ​ | ​ | 12.93 | % | ​ | 12.76 | % | ​ | 13.64 | %
Total capital to risk weighted assets | ​ | ​ | 14.14 | % | ​ | 13.83 | % | ​ | 14.89 | %
Tier 1 capital to average assets | ​ | ​ | 10.59 | % | ​ | 10.48 | % | ​ | 10.12 | %

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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 11:00 a.m. Central Time on Thursday, July 27, 2023, to discuss its financial results. The call can be accessed via telephone at (833) 470-1428, using access code 067281. 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 with corporate offices in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area. Through its subsidiary, Alerus Financial, N.A., the Company provides innovative and comprehensive financial solutions to business and consumer clients through four distinct business segments—banking, retirement and benefit services, wealth management, and mortgage. The Company provides clients with a primary point of contact to help fully understand the unique needs and delivery channel preferences of each client. Clients are provided with competitive products, valuable insight and sound advice supported by digital solutions designed to meet the clients’ needs. The Company has banking, mortgage, and wealth management offices in Grand Forks and Fargo, North Dakota, the Minneapolis-St. Paul, Minnesota metropolitan area, and Phoenix, Scottsdale, and Mesa Arizona. Alerus retirement and benefit services plan administration hubs are located in Minnesota, Michigan, and Colorado.

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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 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.

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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 with GAAP. Moreover, the manner in which the Company calculates these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

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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 forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the following: interest rate risks associated with our business, including the effects of recent and anticipated rate increases by the Federal Reserve; our ability to successfully manage credit risk and maintain an adequate level of allowance for credit losses; new or revised accounting standards, including as a result of the implementation of the new Current Expected Credit Loss Standard; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including continued rising rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short-period of time at Silicon Valley Bank, Signature Bank and First Republic Bank that resulted in the failure of those institutions; the overall health of the local and national real estate market; concentrations within our loan portfolio; the level of nonperforming assets on our balance sheet; our ability to implement our organic and acquisition growth strategies, including the integration of Metro Phoenix Bank which we acquired in 2022; the impact of economic or market conditions on our fee-based services; our ability to continue to grow our retirement and benefit services business; our ability to continue to originate a sufficient volume of residential mortgages; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; interruptions involving our information technology and telecommunications systems or third-party servicers; potential losses incurred in connection with mortgage loan repurchases; the composition of our executive management team and our ability to attract and retain key personnel; rapid technological change in the financial services industry; increased competition in the financial services industry from non-banks such as credit unions and Fintech companies, including digital asset service providers; our ability to successfully manage liquidity risk, including our need to access higher cost sources of funds such as fed funds purchased and short-term borrowings; the concentration of large deposits from certain clients, who have balances above current FDIC insurance limits; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; potential impairment to the goodwill we recorded in connection with our past acquisitions, including the acquisition of Metro Phoenix Bank; the extensive regulatory framework that applies to us; the impact of recent and future legislative and regulatory changes, including in response to the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank; fluctuations in the values of the securities held in our securities portfolio, including as a result of changes in interest rates; governmental monetary, trade and fiscal policies; risks related to climate change and the negative impact it may have on our customers and their businesses; severe weather, natural disasters, widespread disease or pandemics, such as the COVID-19 global pandemic; acts of war or terrorism, including the Russian invasion of Ukraine, or other adverse external events; any material weaknesses in our internal control over financial reporting; changes to U.S. or state tax laws, regulations and guidance, including the new 1.0% excise tax on stock buybacks by publicly traded companies; talent and labor shortages and employee turnover; our success at managing the risks involved in the foregoing items; and any other risks described in the “Risk Factors” sections of the reports filed by Alerus Financial Corporation with the Securities and Exchange Commission.

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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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7

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​

Alerus Financial Corporation and Subsidiaries

Consolidated Balance Sheets

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

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, |  | December 31,
​ |  | 2023 |  | 2022
Assets |  | (Unaudited) |  | (Audited)
Cash and cash equivalents | ​ | $ | 65,471 | ​ | $ | 58,242
Investment securities | ​ |  |  | ​ |  |
Available-for-sale, at fair value | ​ |  | 677,454 | ​ |  | 717,324
Held-to-maturity, at carrying value (allowance for credit losses of $218 at June 30, 2023) | ​ |  | 308,416 | ​ |  | 321,902
Loans held for sale | ​ |  | 20,893 | ​ |  | 9,488
Loans | ​ |  | 2,533,522 | ​ |  | 2,443,994
Allowance for credit losses on loans | ​ |  | (35,696) | ​ |  | (31,146)
Net loans | ​ |  | 2,497,826 | ​ |  | 2,412,848
Land, premises and equipment, net | ​ |  | 17,488 | ​ |  | 17,288
Operating lease right-of-use assets | ​ |  | 6,440 | ​ |  | 5,419
Accrued interest receivable | ​ |  | 13,587 | ​ |  | 12,869
Bank-owned life insurance | ​ |  | 32,793 | ​ |  | 33,991
Goodwill | ​ |  | 47,087 | ​ |  | 47,087
Other intangible assets | ​ |  | 19,806 | ​ |  | 22,455
Servicing rights | ​ |  | 2,351 | ​ |  | 2,643
Deferred income taxes, net | ​ |  | 43,709 | ​ |  | 42,369
Other assets | ​ |  | 79,657 | ​ |  | 75,712
Total assets | ​ | $ | 3,832,978 | ​ | $ | 3,779,637
Liabilities and Stockholders’ Equity | ​ |  |  | ​ |  |
Deposits | ​ |  |  | ​ |  |
Noninterest-bearing | ​ | $ | 715,534 | ​ | $ | 860,987
Interest-bearing | ​ |  | 2,137,321 | ​ |  | 2,054,497
Total deposits | ​ |  | 2,852,855 | ​ |  | 2,915,484
Short-term borrowings | ​ |  | 492,060 | ​ |  | 378,080
Long-term debt | ​ |  | 58,900 | ​ |  | 58,843
Operating lease liabilities | ​ |  | 6,746 | ​ |  | 5,902
Accrued expenses and other liabilities | ​ |  | 64,732 | ​ |  | 64,456
Total liabilities | ​ |  | 3,475,293 | ​ |  | 3,422,765
Stockholders’ equity | ​ |  |  | ​ |  |
Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding | ​ | ​ | — | ​ | ​ | —
Common stock, $1 par value, 30,000,000 shares authorized: 19,914,884 and 19,991,681 issued and outstanding | ​ |  | 19,915 | ​ |  | 19,992
Additional paid-in capital | ​ |  | 152,673 | ​ |  | 155,095
Retained earnings | ​ |  | 285,839 | ​ |  | 280,426
Accumulated other comprehensive income (loss) | ​ |  | (100,742) | ​ |  | (98,641)
Total stockholders’ equity | ​ |  | 357,685 | ​ |  | 356,872
Total liabilities and stockholders’ equity | ​ | $ | 3,832,978 | ​ | $ | 3,779,637

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8

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,
​ |  | 2023 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Interest Income | ​ | (Unaudited) | ​ | (Unaudited) | ​ | (Unaudited) | ​ | (Unaudited) | ​ | (Unaudited)
Loans, including fees | ​ | $ | 33,267 | ​ | $ | 30,933 | ​ | $ | 17,988 | ​ | $ | 64,200 | ​ | $ | 35,280
Investment securities | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Taxable | ​ |  | 6,125 | ​ |  | 5,951 | ​ |  | 6,068 | ​ |  | 12,076 | ​ |  | 11,508
Exempt from federal income taxes | ​ |  | 186 | ​ |  | 190 | ​ |  | 213 | ​ |  | 376 | ​ |  | 429
Other | ​ |  | 762 | ​ |  | 735 | ​ |  | 157 | ​ |  | 1,497 | ​ |  | 273
Total interest income | ​ |  | 40,340 | ​ |  | 37,809 | ​ |  | 24,426 | ​ |  | 78,149 | ​ |  | 47,490
Interest Expense | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Deposits | ​ |  | 12,678 | ​ |  | 9,104 | ​ |  | 813 | ​ |  | 21,782 | ​ |  | 1,642
Short-term borrowings | ​ |  | 4,763 | ​ |  | 4,393 | ​ |  | 278 | ​ |  | 9,156 | ​ |  | 278
Long-term debt | ​ |  | 665 | ​ |  | 654 | ​ |  | 559 | ​ |  | 1,319 | ​ |  | 1,121
Total interest expense | ​ |  | 18,106 | ​ |  | 14,151 | ​ |  | 1,650 | ​ |  | 32,257 | ​ |  | 3,041
Net interest income | ​ |  | 22,234 | ​ |  | 23,658 | ​ |  | 22,776 | ​ |  | 45,892 | ​ |  | 44,449
Provision for credit losses | ​ |  | — | ​ |  | 550 | ​ |  | — | ​ |  | 550 | ​ |  | —
Net interest income after provision for credit losses | ​ |  | 22,234 | ​ |  | 23,108 | ​ |  | 22,776 | ​ |  | 45,342 | ​ |  | 44,449
Noninterest Income | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Retirement and benefit services | ​ |  | 15,890 | ​ |  | 15,482 | ​ |  | 16,293 | ​ |  | 31,372 | ​ |  | 33,939
Wealth management | ​ |  | 5,450 | ​ |  | 5,194 | ​ |  | 5,548 | ​ |  | 10,644 | ​ |  | 10,874
Mortgage banking | ​ |  | 2,905 | ​ |  | 1,717 | ​ |  | 6,038 | ​ |  | 4,622 | ​ |  | 10,969
Service charges on deposit accounts | ​ |  | 311 | ​ |  | 301 | ​ |  | 412 | ​ |  | 612 | ​ |  | 775
Other | ​ |  | 1,222 | ​ |  | 2,559 | ​ |  | 935 | ​ |  | 3,781 | ​ |  | 2,139
Total noninterest income | ​ |  | 25,778 | ​ |  | 25,253 | ​ |  | 29,226 | ​ |  | 51,031 | ​ |  | 58,696
Noninterest Expense | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Compensation | ​ |  | 18,847 | ​ |  | 19,158 | ​ |  | 21,248 | ​ |  | 38,005 | ​ |  | 40,299
Employee taxes and benefits | ​ |  | 4,724 | ​ |  | 5,853 | ​ |  | 5,787 | ​ |  | 10,577 | ​ |  | 11,949
Occupancy and equipment expense | ​ |  | 1,837 | ​ |  | 1,899 | ​ |  | 1,737 | ​ |  | 3,736 | ​ |  | 3,788
Business services, software and technology expense | ​ |  | 5,269 | ​ |  | 5,324 | ​ |  | 4,785 | ​ |  | 10,593 | ​ |  | 9,709
Intangible amortization expense | ​ |  | 1,324 | ​ |  | 1,324 | ​ |  | 1,053 | ​ |  | 2,648 | ​ |  | 2,106
Professional fees and assessments | ​ |  | 1,530 | ​ |  | 1,152 | ​ |  | 2,246 | ​ |  | 2,682 | ​ |  | 3,787
Marketing and business development | ​ |  | 648 | ​ |  | 686 | ​ |  | 814 | ​ |  | 1,334 | ​ |  | 1,414
Supplies and postage | ​ |  | 406 | ​ |  | 460 | ​ |  | 572 | ​ |  | 866 | ​ |  | 1,218
Travel | ​ |  | 306 | ​ |  | 248 | ​ |  | 356 | ​ |  | 554 | ​ |  | 535
Mortgage and lending expenses | ​ |  | 215 | ​ |  | 497 | ​ |  | 482 | ​ |  | 712 | ​ |  | 1,168
Other | ​ |  | 1,267 | ​ |  | 1,268 | ​ |  | 904 | ​ |  | 2,535 | ​ |  | 2,082
Total noninterest expense | ​ |  | 36,373 | ​ |  | 37,869 | ​ |  | 39,984 | ​ |  | 74,242 | ​ |  | 78,055
Income before income taxes | ​ |  | 11,639 | ​ |  | 10,492 | ​ |  | 12,018 | ​ |  | 22,131 | ​ |  | 25,090
Income tax expense | ​ |  | 2,535 | ​ |  | 2,306 | ​ |  | 2,725 | ​ |  | 4,841 | ​ |  | 5,613
Net income | ​ | $ | 9,104 | ​ | $ | 8,186 | ​ | $ | 9,293 | ​ | $ | 17,290 | ​ | $ | 19,477
Per Common Share Data | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings per common share | ​ | $ | 0.45 | ​ | $ | 0.41 | ​ | $ | 0.53 | ​ | $ | 0.86 | ​ | $ | 1.11
Diluted earnings per common share | ​ | $ | 0.45 | ​ | $ | 0.40 | ​ | $ | 0.52 | ​ | $ | 0.85 | ​ | $ | 1.10
Dividends declared per common share | ​ | $ | 0.19 | ​ | $ | 0.18 | ​ | $ | 0.18 | ​ | $ | 0.37 | ​ | $ | 0.34
Average common shares outstanding | ​ |  | 20,033 | ​ |  | 20,028 | ​ |  | 17,297 | ​ |  | 20,030 | ​ |  | 17,271
Diluted average common shares outstanding | ​ |  | 20,241 | ​ |  | 20,246 | ​ |  | 17,532 | ​ |  | 20,243 | ​ |  | 17,517

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9

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, | ​
​ |  | 2023 |  | 2023 |  | 2022 |  | 2022 | ​
Tangible Common Equity to Tangible Assets |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total common stockholders’ equity | ​ | $ | 357,685 | ​ | $ | 359,118 | ​ | $ | 356,872 | ​ | $ | 307,158 | ​
Less: Goodwill | ​ |  | 47,087 | ​ |  | 47,087 | ​ |  | 47,087 | ​ |  | 31,337 | ​
Less: Other intangible assets | ​ |  | 19,806 | ​ |  | 21,131 | ​ |  | 22,455 | ​ |  | 17,511 | ​
Tangible common equity (a) | ​ |  | 290,792 | ​ |  | 290,900 | ​ |  | 287,330 | ​ |  | 258,310 | ​
Total assets | ​ |  | 3,832,978 | ​ |  | 3,886,773 | ​ |  | 3,779,637 | ​ |  | 3,295,065 | ​
Less: Goodwill | ​ |  | 47,087 | ​ |  | 47,087 | ​ |  | 47,087 | ​ |  | 31,337 | ​
Less: Other intangible assets | ​ |  | 19,806 | ​ |  | 21,131 | ​ |  | 22,455 | ​ |  | 17,511 | ​
Tangible assets (b) | ​ |  | 3,766,085 | ​ |  | 3,818,555 | ​ |  | 3,710,095 | ​ |  | 3,246,217 | ​
Tangible common equity to tangible assets (a)/(b) | ​ |  | 7.72 | % |  | 7.62 | % |  | 7.74 | % |  | 7.96 | %
Tangible Book Value Per Common Share | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total common stockholders’ equity | ​ | $ | 357,685 | ​ | $ | 359,118 | ​ | $ | 356,872 | ​ | $ | 307,158 | ​
Less: Goodwill | ​ |  | 47,087 | ​ |  | 47,087 | ​ |  | 47,087 | ​ | ​ | 31,337 | ​
Less: Other intangible assets | ​ |  | 19,806 | ​ |  | 21,131 | ​ |  | 22,455 | ​ |  | 17,511 | ​
Tangible common equity (c) | ​ |  | 290,792 | ​ |  | 290,900 | ​ |  | 287,330 | ​ |  | 258,310 | ​
Total common shares issued and outstanding (d) | ​ |  | 19,915 | ​ |  | 20,067 | ​ |  | 19,992 | ​ |  | 17,306 | ​
Tangible book value per common share (c)/(d) | ​ | $ | 14.60 | ​ | $ | 14.50 | ​ | $ | 14.37 | ​ | $ | 14.93 | ​

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Six months ended | ​
​ | ​ | June 30, | ​ | March 31, | ​ | June 30, | ​ | June 30, | ​ | June 30, | ​
​ | ​ | 2023 |  | 2023 |  | 2022 | ​ | 2023 |  | 2022 | ​
Return on Average Tangible Common Equity | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income | ​ | $ | 9,104 | ​ | $ | 8,186 | ​ | $ | 9,293 | ​ | $ | 17,290 | ​ | $ | 19,477 | ​
Add: Intangible amortization expense (net of tax) | ​ |  | 1,046 | ​ |  | 1,046 | ​ |  | 832 | ​ |  | 2,092 | ​ |  | 1,664 | ​
Net income, excluding intangible amortization (e) | ​ |  | 10,150 | ​ |  | 9,232 | ​ |  | 10,125 | ​ |  | 19,382 | ​ |  | 21,141 | ​
Average total equity | ​ |  | 360,216 | ​ |  | 361,857 | ​ |  | 312,515 | ​ |  | 361,032 | ​ |  | 331,425 | ​
Less: Average goodwill | ​ |  | 47,087 | ​ |  | 47,087 | ​ |  | 31,488 | ​ |  | 47,087 | ​ |  | 31,489 | ​
Less: Average other intangible assets (net of tax) | ​ |  | 16,153 | ​ |  | 17,209 | ​ |  | 14,737 | ​ |  | 16,678 | ​ |  | 15,151 | ​
Average tangible common equity (f) | ​ |  | 296,976 | ​ |  | 297,561 | ​ |  | 266,290 | ​ |  | 297,267 | ​ |  | 284,785 | ​
Return on average tangible common equity (e)/(f) | ​ |  | 13.71 | % |  | 12.58 | % |  | 15.25 | % |  | 13.15 | % |  | 14.97 | %
Efficiency Ratio | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Noninterest expense | ​ | $ | 36,373 | ​ | $ | 37,869 | ​ | $ | 39,984 | ​ | $ | 74,242 | ​ | $ | 78,055 | ​
Less: Intangible amortization expense | ​ |  | 1,324 | ​ |  | 1,324 | ​ |  | 1,053 | ​ |  | 2,648 | ​ |  | 2,106 | ​
Adjusted noninterest expense (g) | ​ |  | 35,049 | ​ |  | 36,545 | ​ |  | 38,931 | ​ |  | 71,594 | ​ |  | 75,949 | ​
Net interest income | ​ |  | 22,234 | ​ |  | 23,658 | ​ |  | 22,776 | ​ |  | 45,892 | ​ |  | 44,449 | ​
Noninterest income | ​ |  | 25,778 | ​ |  | 25,253 | ​ |  | 29,226 | ​ |  | 51,031 | ​ |  | 58,696 | ​
Tax-equivalent adjustment | ​ |  | 140 | ​ |  | 124 | ​ |  | 100 | ​ |  | 264 | ​ |  | 194 | ​
Total tax-equivalent revenue (h) | ​ |  | 48,152 | ​ |  | 49,035 | ​ |  | 52,102 | ​ |  | 97,187 | ​ |  | 103,339 | ​
Efficiency ratio (g)/(h) | ​ |  | 72.79 | % |  | 74.53 | % |  | 74.72 | % |  | 73.67 | % |  | 73.50 | %

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10

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, 2023 | ​ | March 31, 2023 | ​ | June 30, 2022 | ​ | June 30, 2023 | ​ | June 30, 2022
​ | ​ | ​ | ​ | ​ | Average | ​ | ​ | ​ | ​ | Average | ​ | ​ | ​ | ​ | Average | ​ | ​ | ​ | ​ | Average | ​ | ​ | ​ | ​ | Average
​ | ​ | Average | ​ | Yield/ | ​ | Average | ​ | Yield/ | ​ | Average | ​ | Yield/ | ​ | Average | ​ | Yield/ | ​ | Average | ​ | Yield/
​ |  | Balance |  | Rate |  | Balance |  | Rate |  | Balance |  | Rate |  | Balance |  | Rate |  | Balance |  | Rate
Interest Earning Assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest-bearing deposits with banks | ​ | $ | 36,418 | ​ | 4.00 | % | ​ | $ | 41,947 | ​ | 3.23 | % | ​ | $ | 28,920 |  | 0.39 | % | ​ | $ | 39,167 | ​ | 3.59 | % | ​ | $ | 67,111 | ​ | 0.22 | %
Investment securities (1) | ​ |  | 1,007,792 | ​ | 2.53 | % | ​ |  | 1,034,288 | ​ | 2.43 | % | ​ |  | 1,164,625 |  | 2.18 | % | ​ |  | 1,020,967 | ​ | 2.48 | % | ​ |  | 1,190,298 | ​ | 2.04 | %
Loans held for sale | ​ |  | 14,536 | ​ | 5.22 | % | ​ |  | 10,345 | ​ | 4.98 | % | ​ |  | 31,878 |  | 3.15 | % | ​ |  | 12,452 | ​ | 5.12 | % | ​ |  | 28,287 | ​ | 2.90 | %
Loans | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Commercial: | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Commercial and industrial | ​ |  | 545,357 | ​ | 6.90 | % | ​ |  | 559,416 | ​ | 6.09 | % | ​ |  | 463,215 |  | 4.38 | % | ​ |  | 552,348 | ​ | 6.49 | % | ​ |  | 449,014 | ​ | 4.52 | %
Real estate construction | ​ |  | 87,905 | ​ | 7.43 | % | ​ |  | 103,099 | ​ | 6.56 | % | ​ |  | 44,627 |  | 4.04 | % | ​ |  | 95,460 | ​ | 6.96 | % | ​ |  | 42,893 | ​ | 3.97 | %
Commercial real estate | ​ |  | 956,828 | ​ | 5.09 | % | ​ |  | 911,634 | ​ | 4.95 | % | ​ |  | 601,765 |  | 3.80 | % | ​ |  | 934,356 | ​ | 5.02 | % | ​ |  | 601,397 | ​ | 3.72 | %
Total commercial | ​ |  | 1,590,090 | ​ | 5.84 | % | ​ |  | 1,574,149 | ​ | 5.46 | % | ​ |  | 1,109,607 |  | 4.05 | % | ​ |  | 1,582,164 | ​ | 5.65 | % | ​ |  | 1,093,304 | ​ | 4.06 | %
Consumer | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Residential real estate first mortgage | ​ |  | 698,288 | ​ | 3.76 | % | ​ |  | 688,754 | ​ | 3.76 | % | ​ |  | 543,023 |  | 3.29 | % | ​ |  | 693,547 | ​ | 3.76 | % | ​ |  | 528,952 | ​ | 3.39 | %
Residential real estate junior lien | ​ |  | 156,276 | ​ | 7.44 | % | ​ |  | 149,720 | ​ | 7.21 | % | ​ |  | 132,082 |  | 4.64 | % | ​ |  | 153,016 | ​ | 7.33 | % | ​ |  | 129,056 | ​ | 4.55 | %
Other revolving and installment | ​ |  | 37,759 | ​ | 6.03 | % | ​ |  | 44,531 | ​ | 5.86 | % | ​ |  | 53,919 |  | 4.40 | % | ​ |  | 41,126 | ​ | 5.94 | % | ​ |  | 52,311 | ​ | 4.39 | %
Total consumer | ​ |  | 892,323 | ​ | 4.50 | % | ​ |  | 883,005 | ​ | 4.45 | % | ​ |  | 729,024 |  | 3.62 | % | ​ |  | 887,689 | ​ | 4.48 | % | ​ |  | 710,319 | ​ | 3.67 | %
Total loans (1) | ​ |  | 2,482,413 | ​ | 5.36 | % | ​ |  | 2,457,154 | ​ | 5.10 | % | ​ |  | 1,838,631 |  | 3.88 | % | ​ |  | 2,469,853 | ​ | 5.23 | % | ​ |  | 1,803,623 | ​ | 3.91 | %
Federal Reserve/FHLB stock | ​ |  | 23,724 | ​ | 6.76 | % | ​ |  | 23,668 | ​ | 6.87 | % | ​ |  | 10,564 |  | 4.90 | % | ​ |  | 23,697 | ​ | 6.82 | % | ​ |  | 8,536 | ​ | 4.70 | %
Total interest earning assets | ​ |  | 3,564,883 | ​ | 4.55 | % | ​ |  | 3,567,402 | ​ | 4.31 | % | ​ |  | 3,074,618 |  | 3.20 | % | ​ |  | 3,566,136 | ​ | 4.43 | % | ​ |  | 3,097,855 | ​ | 3.10 | %
Noninterest earning assets | ​ | ​ | 220,604 | ​ | ​ | ​ | ​ | ​ | 224,134 | ​ | ​ | ​ | ​ | ​ | 184,037 | ​ | ​ | ​ | ​ | ​ | 222,358 | ​ | ​ | ​ | ​ | ​ | 174,799 | ​ | ​ | ​
Total assets | ​ | $ | 3,785,487 | ​ |  | ​ | ​ | $ | 3,791,536 | ​ |  | ​ | ​ | $ | 3,258,655 |  |  | ​ | ​ | $ | 3,788,494 | ​ |  | ​ | ​ | $ | 3,272,654 | ​ |  | ​
Interest-Bearing Liabilities | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Interest-bearing demand deposits | ​ | $ | 775,818 | ​ | 1.26 | % | ​ | $ | 746,660 | ​ | 0.87 | % | ​ | $ | 703,365 |  | 0.12 | % | ​ | $ | 761,319 | ​ | 1.07 | % | ​ | $ | 708,888 | ​ | 0.12 | %
Money market and savings deposits | ​ |  | 1,145,335 | ​ | 2.81 | % | ​ |  | 1,165,269 | ​ | 2.17 | % | ​ |  | 1,041,898 |  | 0.14 | % | ​ |  | 1,155,247 | ​ | 2.49 | % | ​ |  | 1,042,660 | ​ | 0.14 | %
Time deposits | ​ |  | 270,121 | ​ | 3.29 | % | ​ |  | 231,959 | ​ | 2.23 | % | ​ |  | 211,787 |  | 0.43 | % | ​ |  | 251,145 | ​ | 2.80 | % | ​ |  | 219,592 | ​ | 0.44 | %
Fed funds purchased | ​ |  | 360,033 | ​ | 5.31 | % | ​ |  | 290,187 | ​ | 4.85 | % | ​ |  | 81,506 |  | 1.18 | % | ​ |  | 325,303 | ​ | 5.10 | % | ​ |  | 40,978 | ​ | 1.18 | %
Short-term borrowings | ​ | ​ | — | ​ | — | % | ​ |  | 80,000 | ​ | 4.69 | % | ​ |  | 9,615 |  | 1.59 | % | ​ |  | 39,779 | ​ | 4.69 | % | ​ |  | 4,834 | ​ | 1.59 | %
Long-term debt | ​ |  | 58,886 | ​ | 4.52 | % | ​ |  | 58,858 | ​ | 4.51 | % | ​ |  | 58,876 |  | 3.81 | % | ​ |  | 58,872 | ​ | 4.51 | % | ​ |  | 58,892 | ​ | 3.84 | %
Total interest-bearing liabilities | ​ |  | 2,610,193 | ​ | 2.78 | % | ​ |  | 2,572,933 | ​ | 2.23 | % | ​ |  | 2,107,047 |  | 0.31 | % | ​ |  | 2,591,665 | ​ | 2.51 | % | ​ |  | 2,075,844 | ​ | 0.30 | %
Noninterest-Bearing Liabilities and Stockholders' Equity | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Noninterest-bearing deposits | ​ |  | 748,942 | ​ |  | ​ | ​ |  | 789,134 | ​ |  | ​ | ​ |  | 783,367 |  |  | ​ | ​ |  | 768,927 | ​ |  | ​ | ​ |  | 807,271 | ​ |  | ​
Other noninterest-bearing liabilities | ​ | ​ | 66,136 | ​ | ​ | ​ | ​ | ​ | 67,612 | ​ | ​ | ​ | ​ | ​ | 55,726 | ​ | ​ | ​ | ​ | ​ | 66,870 | ​ | ​ | ​ | ​ | ​ | 58,114 | ​ | ​ | ​
Stockholders’ equity | ​ |  | 360,216 | ​ |  | ​ | ​ |  | 361,857 | ​ |  | ​ | ​ |  | 312,515 |  |  | ​ | ​ |  | 361,032 | ​ |  | ​ | ​ |  | 331,425 | ​ |  | ​
Total liabilities and stockholders’ equity | ​ | $ | 3,785,487 | ​ |  | ​ | ​ | $ | 3,791,536 | ​ |  | ​ | ​ | $ | 3,258,655 |  |  | ​ | ​ | $ | 3,788,494 | ​ |  | ​ | ​ | $ | 3,272,654 | ​ |  | ​
Net interest income (1) | ​ | ​ | ​ | ​ |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  |  |  | ​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  | ​
Net interest rate spread | ​ |  | ​ | ​ | 1.77 | % | ​ |  |  | ​ | 2.08 | % | ​ |  |  |  | 2.89 | % | ​ |  |  | ​ | 1.92 | % | ​ |  |  | ​ | 2.80 | %
Net interest margin, tax-equivalent (1) | ​ |  | ​ | ​ | 2.52 | % | ​ |  |  | ​ | 2.70 | % | ​ |  |  |  | 2.98 | % | ​ |  |  | ​ | 2.61 | % | ​ |  |  | ​ | 2.91 | %

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

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