Alerus Financial Reports 107% Increase in Net Income for Q1 2025

Alerus Financial Corporation reported significant financial growth in its first quarter of 2025, with net income reaching $13.3 million, or $0.52 per diluted share, marking a 107% increase from $6.4 million, or $0.32 per diluted share, in the same period last year. This growth was primarily driven by an $18.9 million increase in net interest income, which totaled $41.2 million, and a $2.3 million rise in noninterest income, which amounted to $27.6 million. The increase in net interest income was attributed to a rise in interest income from loans, which surged by $22.5 million, reflecting a strong organic loan growth and the acquisition of HMN Financial, Inc. (HMNF).

Total assets for Alerus Financial increased by $77.9 million, or 1.5%, to $5.34 billion as of March 31, 2025, compared to $5.26 billion at the end of 2024. This growth was primarily driven by a $92.9 million increase in loans, which reached $4.09 billion, and a $21.7 million rise in cash and cash equivalents. However, the company experienced a decrease in available-for-sale and held-to-maturity investment securities, which fell by $20.3 million and $7.0 million, respectively. The total deposits also increased by $106.9 million, or 2.4%, to $4.49 billion, with interest-bearing deposits rising by $121.1 million.

In terms of operational developments, Alerus Financial's retirement and benefit services segment reported assets under administration of approximately $39.93 billion, while its wealth management segment managed about $4.50 billion in assets. The company also noted a significant increase in its employee headcount, driven by the integration of HMNF and ongoing talent acquisition efforts. The total number of employees rose to 500, reflecting the company's commitment to expanding its service capabilities.

The allowance for credit losses (ACL) on loans increased to $61.9 million, up from $59.9 million at the end of 2024, primarily due to organic loan growth. The company reported a provision for credit losses of $0.9 million for the quarter, compared to no provision in the same period last year. The nonperforming loans decreased to $50.5 million, representing 1.24% of total loans, down from 1.58% at the end of 2024, indicating improved asset quality.

Looking ahead, Alerus Financial remains optimistic about its growth trajectory, supported by its diversified revenue streams and strategic initiatives. The company plans to continue focusing on organic growth, particularly in its retirement and benefit services and wealth management segments, while also managing credit risk effectively. The management anticipates that the ongoing integration of HMNF will further enhance its market position and operational efficiency.