EX-99.1 2 alrs-20231025xex99d1.htm EX-99.1

Exhibit 99.1

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​ FOR RELEASE (10.25.2023) ​ | Alan A. Villalon, Chief Financial Officer 952.417.3733 (Office)

ALERUS FINANCIAL CORPORATION REPORTS

THIRD QUARTER 2023 NET INCOME OF $9.2 MILLION

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

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CEO Comments

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

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

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Third Quarter Highlights

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| ◾ | Total deposits were stable at $2.9 billion compared to the end of the second quarter and as of December 31, 2022

| ◾ | Noninterest-bearing deposits remained constant at 25% of total deposits from the second quarter to the third quarter of 2023

| ◾ | Loan to deposit ratio as of September 30, 2023 was 90.7%, compared to 83.8% as of December 31, 2022, with no brokered deposits utilized

| ◾ | Noninterest income was 58.21% of total revenue, compared to 53.69% for the second quarter of 2023

| ◾ | Yield on interest earning assets increased 11 basis points from 4.55% in the second quarter to 4.66% in the third quarter of 2023

| ◾ | Noninterest income increased $2.6 million, or 10.2%, driven by a $2.8 million gain related to the sale of the ESOP trustee business in the retirement and benefit services division in the third quarter of 2023. Excluding the ESOP trustee business, noninterest income was up $0.4 million, or 1.6%, when compared to the second quarter of 2023

| ◾ | Core retirement and benefit services revenue, excluding the ESOP trustee business, increased $0.5 million, or 3.3%, when compared to the second quarter of 2023

| ◾ | Net recoveries to average loans of 0.09%, compared to net recoveries to average loans of 0.07% for the second quarter of 2023

| ◾ | Allowance for credit losses to total loans was 1.39% as of September 30, 2023, compared to 1.27% as of December 31, 2022

| ◾ | Repurchased $1.2 million of the Company’s outstanding stock at an average purchase price of $17.98, reducing common shares outstanding by 68,428 at quarter end

| ◾ | Common equity tier 1 capital to risk weighted assets as of September 30, 2023 was 13.01%, compared to 13.39% as of December 31, 2022

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Selected Financial Data (unaudited)

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

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

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

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Noninterest Income

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

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

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

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Noninterest Expense

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

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

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Financial Condition

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

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Loans

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

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

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Deposits

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

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

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

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Asset Quality

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Total nonperforming assets were $9.0 million as of September 30, 2023, an increase of $5.2 million, or 135.6%, from December 31, 2022. This increase was primarily driven by one borrower relationship. As of September 30, 2023, the allowance for credit losses on loans was $36.3 million, or 1.39% of total loans, compared to $31.1 million, or 1.27% of total loans, as of December 31, 2022.

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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 | ​
​ | ​ | September 30, | ​ | June 30, | ​ | March 31, | ​ | December 31, | ​ | September 30, | ​
(dollars in thousands) |  | 2023 |  | 2023 |  | 2023 |  | 2022 |  | 2022 |
Nonaccrual loans | ​ | $ | 9,007 | ​ | $ | 2,233 | ​ | $ | 2,118 | ​ | $ | 3,794 | ​ | $ | 4,303 | ​
Accruing loans 90+ days past due | ​ |  | — | ​ |  | 347 | ​ |  | — | ​ | ​ | — | ​ |  | 1,000 | ​
Total nonperforming loans | ​ |  | 9,007 | ​ |  | 2,580 | ​ |  | 2,118 | ​ |  | 3,794 | ​ |  | 5,303 | ​
OREO and repossessed assets | ​ |  | 3 | ​ |  | — | ​ |  | — | ​ |  | 30 | ​ |  | 904 | ​
Total nonperforming assets | ​ | $ | 9,010 | ​ | $ | 2,580 | ​ | $ | 2,118 | ​ | $ | 3,824 | ​ | $ | 6,207 | ​
Net charge-offs/(recoveries) | ​ | ​ | (594) | ​ | ​ | (403) | ​ | ​ | 170 | ​ | ​ | (178) | ​ | ​ | 405 | ​
Net charge-offs/(recoveries) to average loans | ​ | ​ | (0.09) | % | ​ | (0.07) | % | ​ | 0.03 | % | ​ | (0.03) | % | ​ | 0.07 | %
Nonperforming loans to total loans | ​ | ​ | 0.35 | % | ​ | 0.10 | % | ​ | 0.09 | % | ​ | 0.16 | % | ​ | 0.23 | %
Nonperforming assets to total assets | ​ | ​ | 0.23 | % | ​ | 0.07 | % | ​ | 0.05 | % | ​ | 0.10 | % | ​ | 0.17 | %
Allowance for credit losses on loans to total loans | ​ | ​ | 1.39 | % | ​ | 1.41 | % | ​ | 1.41 | % | ​ | 1.27 | % | ​ | 1.34 | %
Allowance for credit losses on loans to nonperforming loans | ​ | ​ | 403 | % | ​ | 1,384 | % | ​ | 1,657 | % | ​ | 821 | % | ​ | 584 | %

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

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

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Capital

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

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

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

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, |  | December 31, |  | September 30, | ​
​ |  | 2023 |  | 2022 |  | 2022 | ​
Capital Ratios(1) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Alerus Financial Corporation Consolidated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | 13.01 | % | ​ | 13.39 | % | ​ | 13.63 | %
Tier 1 capital to risk weighted assets | ​ | ​ | 13.30 | % | ​ | 13.69 | % | ​ | 13.94 | %
Total capital to risk weighted assets | ​ | ​ | 16.10 | % | ​ | 16.48 | % | ​ | 16.84 | %
Tier 1 capital to average assets | ​ | ​ | 11.14 | % | ​ | 11.25 | % | ​ | 10.82 | %
Tangible common equity / tangible assets (2) | ​ |  | 7.47 | % |  | 7.74 | % |  | 7.59 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Alerus Financial, N.A. | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | 12.68 | % | ​ | 12.76 | % | ​ | 13.01 | %
Tier 1 capital to risk weighted assets | ​ | ​ | 12.68 | % | ​ | 12.76 | % | ​ | 13.01 | %
Total capital to risk weighted assets | ​ | ​ | 13.86 | % | ​ | 13.83 | % | ​ | 14.11 | %
Tier 1 capital to average assets | ​ | ​ | 10.72 | % | ​ | 10.48 | % | ​ | 11.12 | %

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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, October 26, 2023, to discuss its financial results. The call can be accessed via telephone at (833) 470-1428, using access code 328527. A recording of the call and transcript will be available on the Company’s investor relations website at investors.alerus.com following the call.

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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 the Company makes regarding our projected growth, anticipated future financial performance, financial condition, credit quality, management’s long-term performance goals and the future plans and prospects of Alerus Financial Corporation.

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

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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. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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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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​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, |  | December 31,
​ |  | 2023 |  | 2022
Assets |  | (Unaudited) |  | (Audited)
Cash and cash equivalents | ​ | $ | 64,724 | ​ | $ | 58,242
Investment securities | ​ |  |  | ​ |  |
Available-for-sale, at fair value | ​ |  | 640,001 | ​ |  | 717,324
Held-to-maturity, at carrying value (allowance for credit losses of $218 at September 30, 2023) | ​ |  | 303,268 | ​ |  | 321,902
Loans held for sale | ​ |  | 16,346 | ​ |  | 9,488
Loans | ​ |  | 2,606,430 | ​ |  | 2,443,994
Allowance for credit losses on loans | ​ |  | (36,290) | ​ |  | (31,146)
Net loans | ​ |  | 2,570,140 | ​ |  | 2,412,848
Land, premises and equipment, net | ​ |  | 17,182 | ​ |  | 17,288
Operating lease right-of-use assets | ​ |  | 5,986 | ​ |  | 5,419
Accrued interest receivable | ​ |  | 15,561 | ​ |  | 12,869
Bank-owned life insurance | ​ |  | 33,012 | ​ |  | 33,991
Goodwill | ​ |  | 46,783 | ​ |  | 47,087
Other intangible assets | ​ |  | 18,482 | ​ |  | 22,455
Servicing rights | ​ |  | 2,214 | ​ |  | 2,643
Deferred income taxes, net | ​ |  | 47,978 | ​ |  | 42,369
Other assets | ​ |  | 87,461 | ​ |  | 75,712
Total assets | ​ | $ | 3,869,138 | ​ | $ | 3,779,637
Liabilities and Stockholders’ Equity | ​ |  |  | ​ |  |
Deposits | ​ |  |  | ​ |  |
Noninterest-bearing | ​ | $ | 717,990 | ​ | $ | 860,987
Interest-bearing | ​ |  | 2,154,194 | ​ |  | 2,054,497
Total deposits | ​ |  | 2,872,184 | ​ |  | 2,915,484
Short-term borrowings | ​ |  | 515,470 | ​ |  | 378,080
Long-term debt | ​ |  | 58,928 | ​ |  | 58,843
Operating lease liabilities | ​ |  | 6,286 | ​ |  | 5,902
Accrued expenses and other liabilities | ​ |  | 66,868 | ​ |  | 64,456
Total liabilities | ​ |  | 3,519,736 | ​ |  | 3,422,765
Stockholders’ equity | ​ |  |  | ​ |  |
Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding | ​ | ​ | — | ​ | ​ | —
Common stock, $1 par value, 30,000,000 shares authorized: 19,847,706 and 19,991,681 issued and outstanding | ​ |  | 19,848 | ​ |  | 19,992
Additional paid-in capital | ​ |  | 151,875 | ​ |  | 155,095
Retained earnings | ​ |  | 291,162 | ​ |  | 280,426
Accumulated other comprehensive loss | ​ |  | (113,483) | ​ |  | (98,641)
Total stockholders’ equity | ​ |  | 349,402 | ​ |  | 356,872
Total liabilities and stockholders’ equity | ​ | $ | 3,869,138 | ​ | $ | 3,779,637

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

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

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

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

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

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