Alerus Financial Reports Q3 2024 Results, Net Income Down 43.2% Amid Increased Expenses and Credit Loss Provisions

Alerus Financial Corporation reported its financial results for the three and nine months ended September 30, 2024, highlighting significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the third quarter of 2024, Alerus generated net income of $5.2 million, or $0.26 per diluted share, a decrease of 43.2% from $9.2 million, or $0.45 per diluted share, in the same period of 2023. The decline in net income was attributed to a $5.2 million increase in noninterest expenses and a $1.7 million increase in the provision for credit losses. For the nine months ended September 30, 2024, net income was $17.8 million, down 32.5% from $26.5 million in the prior year.

Total revenue for the third quarter was $51.2 million, up from $48.0 million in the same quarter of 2023, driven by a 10.5% increase in net interest income to $22.5 million. This increase was supported by a $10.2 million rise in interest income, despite an $8.0 million increase in interest expenses. The net interest margin on a tax-equivalent basis was 2.23%, slightly down from 2.27% in the prior year.

Alerus's total loans increased to $3.0 billion as of September 30, 2024, reflecting a 9.9% growth from $2.8 billion at the end of 2023. This growth was primarily driven by increases in commercial real estate and commercial and industrial loans. Total deposits also rose to $3.3 billion, a 7.4% increase from $3.1 billion at year-end 2023.

Strategically, Alerus completed the acquisition of HMN Financial, Inc. and its subsidiary, Home Federal Savings Bank, on October 9, 2024, in an all-stock transaction valued at approximately $128.8 million. This acquisition is expected to enhance earnings and provide growth potential. The company incurred $1.7 million in pre-tax acquisition expenses during the third quarter.

The company’s total stockholders’ equity increased to $386.5 million as of September 30, 2024, up from $369.1 million at the end of 2023. The common equity tier 1 capital ratio was 11.12%, slightly down from 11.82% at year-end 2023, but still above the minimum required for capital adequacy.

Overall, Alerus Financial Corporation's performance in the third quarter of 2024 reflects a challenging environment with increased expenses and credit loss provisions, despite growth in loans and deposits, and strategic expansion through acquisition.