Alerus Financial Corporation Announces Fourth Quarter 2025 Results, Including Balance Sheet Repositioning | ALRS Stock News

MINNEAPOLIS, Jan. 28, 2026 (GLOBE NEWSWIRE) -- Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported a net loss of $33.1 million for the fourth quarter of 2025, or $(1.27) per diluted common share, compared to net income of $16.9 million, or $0.65 per diluted common share, for the third quarter of 2025, and a net loss of $0.1 million, or $0.00 per diluted common share, for the fourth quarter of 2024. During the fourth quarter of 2025, the Company sold $360.1 million of available-for-sale securities as part of a strategic balance sheet repositioning. The sale resulted in a one-time pre-tax net loss of $68.4 million. Proceeds from the sale were reinvested into new, higher yielding investment securities. Adjusted pre-provision net revenue (non-GAAP)(1) was $25.3 million, compared to $22.1 million for the third quarter 2025. CEO Comments President and Chief Executive Officer Katie O'Neill Lorenson said, “2025 was a defining year for Alerus. In our first full year integrating the HMN Financial, Inc. ("HMNF") acquisition, we exceeded our financial performance expectations with an adjusted return on average assets ("ROAA") (non-GAAP)(1) of 1.35% and adjusted efficiency ratio (non-GAAP)(1) of 64.45% for the year ended December 31, 2025. We demonstrated our capabilities as a high-quality consolidator with strong retention of team members and clients throughout the transaction and integration process. We also took decisive strategic action to position the company for the next stage of growth. Our strategic balance sheet repositioning removed the drag of legacy low-yielding securities, and positions Alerus for higher profitability in 2026 and beyond. In parallel, we de-risked the loan portfolio by reducing commercial real estate ("CRE") concentrations, completing targeted loan sales, and managing renewals with greater selectivity, all while achieving strong commercial and industrial ("C&I") loan growth. These actions strengthened our capital and risk profile, with tangible common equity to tangible assets rising to 8.72% and reserves ending at 1.53% of loans. Strong banking operating results were bolstered by differentiated and durable fee-based revenue, where Alerus maintained our position as an industry leader with adjusted noninterest income as a percentage of revenue (non-GAAP)(1) of 40.77%. Adjusted non-interest income (non-GAAP)(1) increased 7.0% year over year, driven by sustained organic growth across our retirement and wealth segments, as assets under administration and management expanded to a combined $49.8 billion. Throughout 2025, we strengthened our operating foundation by implementing new core systems and processes to support client and advisor growth. While we will continue to invest in people and technology, we are very focused on delivering positive operating leverage to drive returns and tangible book value growth higher. Our disciplined focus on shareholder value translated into tangible book value growth of 21.54% from the prior year, supported by a fourth quarter adjusted return on average tangible equity (non-GAAP)(1) of 21.05%. As we enter 2026, our commitment is clear - drive superior returns, strengthen long-term shareholder value, and execute with the discipline and vision enabled by our diversified business model and exceptional team.” Fourth Quarter Highlights Diluted earnings (loss) per common share of $(1.27); adjusted diluted earnings per common share (non-GAAP)(1) of $0.85, versus $0.66 in the third quarter of 2025.Return on average total assets of (2.50)%; adjusted return on average total assets (non-GAAP)(1) of 1.62%, versus 1.28% in the third quarter of 2025.Return on average tangible common equity of (28.15)%; adjusted return on average tangible common equity (non-GAAP)(1) of 21.05%, versus 18.55% in the third quarter of 2025.Net interest income was $45.2 million, an increase of 4.7% from $43.1 million in the third quarter of 2025.Net interest margin was 3.69%, an increase compared to 3.50% in the third quarter of 2025. Retirement and benefit services income was $17.3 million, an increase of 4.6% from $16.5 million in the third quarter of 2025. Assets under administration grew 2.1% over the prior quarter.Wealth management income was $7.4 million, an increase of 13.4% from $6.6 million in the third quarter of 2025. Assets under management grew 0.8% over the prior quarter.Efficiency ratio of 557.48%; adjusted efficiency ratio (non-GAAP)(1) of 63.55%, versus 65.22% in the third quarter of 2025.Pre-provision net revenue of $(43.7) million; adjusted pre-provision net revenue (non-GAAP)(1) of $25.3, an increase of 14.3% from $22.1 in the third quarter of 2025.Net charge-offs (recoveries) to average loans was (0.03)%.Tangible book value per common share (non-GAAP)(1) was $17.55 as of December 31, 2025, an increase of 3.8% from $16.90 as of September 30, 2025.Tangible common equity to tangible assets ratio (non-GAAP)(1) was 8.72% as of December 31, 2025, an increase from 8.24% as of September 30, 2025. Full Year 2025 Highlights Diluted earnings per common share of $0.68; adjusted diluted earnings per common share (non-GAAP)(1) of $2.78, versus $1.45 for the full year 2024.Return on average total assets of 0.33%; adjusted return on average total assets (non-GAAP)(1) of 1.35%, versus 0.69% for the full year 2024.Return on average tangible common equity of 6.29%; adjusted return on average tangible common equity (non-GAAP)(1) of 19.48%, versus 11.22% in the full year 2024.Net interest income was $172.5 million, an increase of 61.1% from $107.0 million for the year ended December 31, 2024.Net interest margin was 3.53%, an increase of 97 basis points from 2.56% for the year ended December 31, 2024.Total loans at the end of 2025 grew 1.4% over the prior year.Noninterest income was $51.9 million; adjusted noninterest income (non-GAAP)(1) was $118.7 million, an increase of 7.0% compared to $111.0 million for the year ended December 31, 2024. Retirement and benefit services income was $65.9 million, an increase of 2.4% from $64.4 million for the year ended December 31, 2024. Assets under administration grew 10.3% over the prior year end.Wealth management income was $28.3 million, an increase of 8.0% from $26.2 million for the year ended December 31, 2024. Assets under management grew 5.9% over the prior year end.Mortgage originations were $484.8 million, an increase of 54.4% from $334.3 million for the year ended December 31, 2024.Efficiency ratio of 84.10%; adjusted efficiency ratio (non-GAAP)(1) of 64.45%, versus 73.45% for the full year 2024.Pre-provision net revenue of $23.1 million; adjusted pre-provision net revenue (non-GAAP)(1) of $91.5 million, an increase of 82.0% from $50.2 million for the full year 2024.Net charge-offs to average loans of 0.05%; adjusted net recoveries to average loans (non-GAAP)(1) of (0.02)%, versus adjusted net charge-offs to average loans (non-GAAP)(1) of 0.13% for the full year 2024.Tangible book value per common share (non-GAAP)(1) was $17.55, compared to $14.44 as of December 31, 2024.Tangible common equity to tangible assets ratio (non-GAAP)(1) was 8.72%, an increase from 7.13% as of December 31, 2024. _______________(1) Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.” Selected Financial Data (unaudited) As of and for the Three months ended Year ended December 31, September 30, December 31, December 31, December 31, (dollars and shares in thousands, except per share data) 2025 2025 2024 2025 2024 Performance Ratios Return on average total assets (2.50)% 1.27% (0.00)% 0.33% 0.39%Adjusted return on average total assets (1) 1.62% 1.28% 0.85% 1.35% 0.69%Return on average common equity (23.75)% 12.80% (0.05)% 3.32% 4.47%Return on average tangible common equity (1) (28.15)% 18.48% 2.38% 6.29% 7.14%Adjusted return on average tangible common equity (1) 21.05% 18.55% 14.89% 19.48% 11.22%Noninterest (loss) income as a % of revenue (449.23)% 40.56% 46.94% 23.12% 51.78%Adjusted noninterest (loss) income as a % of revenue (1) 41.39% 40.58% 44.27% 40.77% 50.90%Net interest margin (tax-equivalent) 3.69% 3.50% 3.20% 3.53% 2.56%Efficiency ratio (1) 557.48% 65.34% 79.47% 84.10% 77.92%Adjusted efficiency ratio (1) 63.55% 65.22% 68.97% 64.45% 73.45%Net charge-offs (recoveries) to average loans (0.03)% (0.17)% 0.13% 0.05% 0.13%Adjusted net charge-offs (recoveries) to average loans (1) (0.03)% (0.17)% 0.13% (0.02)% 0.13%Dividend payout ratio (16.54)% 32.31% —% 122.06% 95.18%Per Common Share Earnings (loss) per common share - basic $(1.28) $0.66 $— $0.69 $0.84 Earnings (loss) per common share - diluted $(1.27) $0.65 $— $0.68 $0.83 Adjusted earnings per common share - diluted (1) $0.85 $0.66 $0.45 $2.78 $1.45 Dividends declared per common share $0.21 $0.21 $0.20 $0.83 $0.79 Book value per common share $22.24 $21.68 $19.55 Tangible book value per common share (1) $17.55 $16.90 $14.44 Average common shares outstanding - basic 25,398 25,395 24,857 25,380 21,047 Average common shares outstanding - diluted 25,710 25,713 25,144 25,697 21,321 Other Data Retirement and benefit services assets under administration/management $44,925,311 $44,005,277 $40,728,699 Wealth management assets under administration/management $4,850,600 $4,812,250 $4,579,189 Mortgage originations $136,780 $142,768 $88,576 $484,775 $334,318 _______________(1) Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.” Results of Operations Net Interest Income Net interest income for the fourth quarter of 2025 was $45.2 million, a $2.0 million, or 4.7%, increase from the third quarter of 2025. The increase was primarily due to lower cost of funds and a one-time $2.4 million adjustment related to a sold loan participation. Interest expense decreased $2.3 million, or 8.3%, from the third quarter of 2025, as the average rates paid on deposits and borrowings declined. Net interest income increased $6.9 million, or 18.0%, from $38.3 million for the fourth quarter of 2024. Interest income increased $3.1 million, or 4.6%, from the fourth quarter of 2024, primarily driven by earning assets acquired in the HMNF acquisition, organic loan growth at higher yields, and purchase accounting accretion. Interest expense decreased $3.8 million, or 13.1%, from the fourth quarter of 2024, as the average rates paid on deposits and borrowings declined, which more than offset the increase in interest-bearing deposits and borrowing balances. Net interest margin (on a tax-equivalent basis) was 3.69% for the fourth quarter of 2025, a 19 basis point increase from 3.50% for the third quarter of 2025, and a 49 basis point increase from 3.20% for the fourth quarter of 2024. The quarter over quarter increase was mainly attributable to lower cost of funds and a one-time adjustment related to a sold loan participation, offset by less purchase accounting accretion. The increase from the fourth quarter of 2024 was primarily driven by lower cost of funds and higher rates on interest-earning assets, offset by less purchase accounting accretion. Noninterest (Loss) Income Noninterest (loss) income for the fourth quarter of 2025 was $(36.9) million, a $66.4 million, or 225.5%, decrease from the third quarter of 2025. The quarter over quarter decrease was driven by the previously announced strategic balance sheet repositioning, which resulted in a $68.4 million loss on the sale of investment securities in the fourth quarter of 2025. Adjusted noninterest income (non-GAAP)(1) was $31.9 million in the fourth quarter of 2025, an increase of 8.3% compared to $29.5 million in the third quarter of 2025. Wealth management revenue increased $0.9 million, or 13.4%, from the third quarter of 2025, primarily driven by asset-based fees. Retirement and benefit services revenue increased $0.8 million, or 4.6%, from the third quarter of 2025, primarily driven by both asset-based and transaction-based fees. Other noninterest income increased $0.6 million, or 26.3%, from the third quarter of 2025, primarily driven by increased swap fee revenue. Noninterest income for the fourth quarter of 2025 decreased by $70.8 million, or 209.1%, from the fourth quarter of 2024. This decrease was driven by the previously announced strategic balance sheet repositioning recognized in the fourth quarter of 2025. Adjusted noninterest income (non-GAAP)(1) was $31.9 million in the fourth quarter of 2025, an increase of 4.9% compared to $30.4 million in the fourth quarter of 2024. Other interest income decreased $3.6 million, or 56.3%, in the fourth quarter of 2025 compared to the fourth quarter of 2024, primarily due to a gain on the sale of fixed assets related to the sale of a Fargo, North Dakota office in the fourth quarter of 2024. Retirement and benefit services revenue increased $0.8 million, or 4.7%, in the fourth quarter of 2025 compared to the fourth quarter of 2024, primarily driven by asset-based fees, due to a 10.3% increase in assets under administration/management during that same period. _______________(1) Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.” Noninterest Expense Noninterest expense for the fourth quarter of 2025 was $51.9 million, a $1.3 million, or 2.7%, increase from the third quarter of 2025. Occupancy and equipment expense increased $0.8 million, or 28.4%, from the third quarter of 2025, primarily driven by the opening of a new facility in our Fargo, North Dakota market. Business services, software and technology expense increased $0.5 million, or 8.1%, from the third quarter of 2025, primarily due to data processing expenses. Professional fees and assessments increased $0.4 million, or 15.4%, from the third quarter of 2025, primarily driven by an increase in fees related to the balance sheet repositioning in the fourth quarter of 2025. Mortgage and lending expenses decreased $0.4 million, or 38.9%, from the third quarter of 2025, primarily driven by a decrease in reimbursable loan expenses. Noninterest expense for the fourth quarter of 2025 decreased $8.6 million, or 14.2%, from $60.5 million in the fourth quarter of 2024. The decrease was primarily driven by decreases in professional fees and assessments, compensation expense, and intangible amortization expense, offset by an increase in occupancy and equipment expense. In the fourth quarter of 2025, professional fees and assessments decreased $7.9 million, or 71.8%, from the fourth quarter of 2024, primarily due to acquisition-related expenses in connection with the HMNF acquisition incurred in 2024. Compensation expense decreased $1.5 million, or 5.6% compared to the fourth quarter of 2024 primarily due to lower headcount. Intangible amortization expense decreased $0.4 million, or 15.0%, in the fourth quarter of 2025, primarily due to the annual reset of the $33.5 million core deposit intangible recorded in connection with the HMNF acquisition. Occupancy and equipment expense increased $1.7 million, or 86.3%, from the fourth quarter of 2024, primarily driven by facility upgrades. Financial Condition Total assets were $5.2 billion as of December 31, 2025, a decrease of $31.6 million, or 0.6%, from December 31, 2024. The decrease was primarily due to a $74.0 million decrease in available-for-sale investment securities and a $21.1 million decrease in held-to-maturity investment securities, partially offset by an increase of $55.5 million in loans held for investment and an increase of $15.3 million in operating lease right-of-use assets. Loans Held for Investment Total loans held for investment were $4.0 billion as of December 31, 2025, an increase of $55.5 million, or 1.4%, from December 31, 2024. The increase was primarily driven by a $45.8 million increase in consumer loans and a $9.7 million increase in commercial loans. The following table presents the composition of our loans held for investment portfolio as of the dates indicated: December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2025 2025 2025 2025 2024 Commercial Commercial and industrial $736,833 $702,135 $675,892 $658,446 $666,727 Commercial real estate Construction, land and development 246,238 349,768 352,749 360,024 294,677 Multifamily 383,505 374,761 333,307 353,060 363,123 Non-owner occupied 875,862 865,785 887,643 951,559 967,025 Owner occupied 427,260 435,320 440,170 424,880 371,418 Total commercial real estate 1,932,865 2,025,634 2,013,869 2,089,523 1,996,243 Agricultural Land 64,799 65,900 66,395 68,894 61,299 Production 62,500 63,051 67,931 64,240 63,008 Total agricultural 127,299 128,951 134,326 133,134 124,307 Total commercial 2,796,997 2,856,720 2,824,087 2,881,103 2,787,277 Consumer Residential real estate First lien 874,737 894,402 901,738 907,534 921,019 Construction 33,703 34,124 35,754 38,553 33,547 HELOC 260,883 234,681 200,624 175,600 162,509 Junior lien 36,844 40,434 41,450 43,740 44,060 Total residential real estate 1,206,167 1,203,641 1,179,566 1,165,427 1,161,135 Other consumer 44,858 41,715 41,003 38,955 44,122 Total consumer 1,251,025 1,245,356 1,220,569 1,204,382 1,205,257 Total loans $4,048,022 $4,102,076 $4,044,656 $4,085,485 $3,992,534 Deposits Total deposits were $4.2 billion as of December 31, 2025, a decrease of $186.4 million, or 4.3%, from December 31, 2024. Noninterest-bearing deposits decreased $95.6 million and interest-bearing deposits decreased $90.8 million from December 31, 2024. The decrease was primarily driven by a decrease in high-cost time deposits, which included $22.2 million of brokered CDs that matured in 2025 and were not renewed. The following table presents the composition of the Company’s deposit portfolio as of the dates indicated: December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2025 2025 2025 2025 2024 Noninterest-bearing demand $807,896 $776,791 $790,300 $889,270 $903,466 Interest-bearing Interest-bearing demand 1,296,315 1,256,687 1,214,597 1,283,031 1,220,173 Savings accounts 173,759 174,113 175,586 177,341 165,882 Money market savings 1,337,491 1,460,006 1,358,516 1,472,127 1,381,924 Time deposits 576,542 745,056 798,469 663,522 706,965 Total interest-bearing 3,384,107 3,635,862 3,547,168 3,596,021 3,474,944 Total deposits $4,192,003 $4,412,653 $4,337,468 $4,485,291 $4,378,410 Asset Quality Total nonperforming assets were $66.5 million as of December 31, 2025, increase of $3.6 million, or 5.7%, from December 31, 2024. As of December 31, 2025, the allowance for credit losses on loans was $61.9 million, or 1.53% of total loans, compared to $59.9 million, or 1.50% of total loans, as of December 31, 2024. The following table presents selected asset quality data as of and for the periods indicated: As of and for the three months ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2025 2025 2025 2025 2024 Nonaccrual loans $66,148 $59,644 $51,276 $50,517 $54,433 Accruing loans 90+ days past due — — 202 — 8,453 Total nonperforming loans 66,148 59,644 51,478 50,517 62,886 OREO and repossessed assets 308 467 751 493 — Total nonperforming assets $66,456 $60,111 $52,229 $51,010 $62,886 Net charge-offs (recoveries) (311) (1,715) 3,767 407 1,258 Net charge-offs (recoveries) to average loans (0.03)% (0.17)% 0.37% 0.04% 0.13%Nonperforming loans to total loans 1.63% 1.45% 1.27% 1.24% 1.58%Nonperforming assets to total assets 1.27% 1.13% 0.98% 0.96% 1.20%Allowance for credit losses on loans to total loans 1.53% 1.51% 1.47% 1.52% 1.50%Allowance for credit losses on loans to nonperforming loans 94% 104% 115% 123% 95% For the fourth quarter of 2025, the Company had net recoveries of $0.3 million, compared to net recoveries of $1.7 million for the third quarter of 2025 and net charge-offs of $1.3 million for the fourth quarter of 2024. The quarter over quarter decrease in net recoveries was primarily due to a $1.9 million recovery on a commercial and industrial loan in the third quarter of 2025. The Company recorded a provision release of $0.3 million for the fourth quarter of 2025, and no provision for credit losses for the third quarter of 2025, compared to a provision for credit losses of $12.0 million for the fourth quarter of 2024. The provision for credit losses for the fourth quarter of 2024 was primarily driven by a $7.8 million day-one provision for credit losses and unfunded commitment reserve related to the HMNF acquisition. The unearned fair value adjustments on acquired loan portfolios were $43.8 million and $70.6 million as of December 31, 2025 and 2024, respectively. Capital Total stockholders’ equity was $564.9 million as of December 31, 2025, an increase of $69.5 million from December 31, 2024. The change was primarily driven by an increase in accumulated other comprehensive income of $71.2 million. Tangible book value per common share (non-GAAP)(1) increased to $17.55 as of December 31, 2025, from $14.44 as of December 31, 2024. Tangible common equity to tangible assets (non-GAAP)(1) increased to 8.72% as of December 31, 2025, from 7.13% as of December 31, 2024. Common equity tier 1 capital to risk weighted assets increased to 10.28% as of December 31, 2025, from 9.91% as of December 31, 2024. The following table presents our capital ratios as of the dates indicated: December 31, September 30, December 31, 2025 2025 2024 Capital Ratios(1) Alerus Financial Corporation Consolidated Common equity tier 1 capital to risk weighted assets 10.28% 10.84% 9.91%Tier 1 capital to risk weighted assets 10.48% 11.05% 10.12%Total capital to risk weighted assets 12.87% 13.41% 12.49%Tier 1 capital to average assets 8.86% 9.49% 8.65%Tangible common equity / tangible assets(2) 8.72% 8.24% 7.13% Alerus Financial, N.A. Common equity tier 1 capital to risk weighted assets 10.41% 11.00% 10.18%Tier 1 capital to risk weighted assets 10.41% 11.00% 10.18%Total capital to risk weighted assets 11.66% 12.25% 11.43%Tier 1 capital to average assets 8.62% 9.31% 8.69% _______________(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.” Conference Call The Company will host a conference call at 11:00 a.m. Central Time on Thursday, January 29, 2026, to discuss its financial results. Attendees are encouraged to register ahead of time for the call at investors.alerus.com. A recording of the call and transcript will be available on the Company’s investor relations website at investors.alerus.com following the call. About Alerus Financial Corporation Alerus Financial Corporation (Nasdaq: ALRS) is a commercial wealth bank and national retirement services provider with corporate offices in Grand Forks, North Dakota, and the Minneapolis-St. Paul, Minnesota metropolitan area. Through its subsidiary, Alerus Financial, National Association (the “Bank”), Alerus provides diversified and comprehensive financial solutions to business and consumer clients, including banking, wealth services, and retirement and benefit plans and services. Alerus provides clients with a primary point of contact to help fully understand their unique needs and delivery channel preferences. Clients are provided with competitive products, valuable insight, and sound advice supported by digital solutions designed to meet their needs. Alerus operates 27 banking and commercial wealth offices, with locations in Grand Forks and Fargo, North Dakota; the Minneapolis-St. Paul, Minnesota metropolitan area; Rochester, Minnesota; Southern Minnesota; Marshalltown, Iowa; Pewaukee, Wisconsin; and Phoenix and Scottsdale, Arizona. The Alerus Retirement and Benefit business serves advisors, brokers, employers, and plan participants across the United States. Non-GAAP Financial Measures 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 book value per common share, return on average tangible common equity, efficiency ratio, pre-provision net revenue, adjusted noninterest income, adjusted noninterest expense, adjusted pre-provision net revenue, adjusted efficiency ratio, adjusted net income, adjusted return on average total assets, adjusted return on average tangible common equity, net interest margin (tax-equivalent), adjusted earnings per common share - diluted, and adjusted net charge-offs to average loans. 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. 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. Forward-Looking Statements 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. 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: the strength of the local, state, national and international economies and financial markets (including effects of inflationary pressures and future monetary policies of the Federal Reserve and executive orders in response thereto); interest rate risk, including the effects of changes in interest rates; effects on the U.S. economy resulting from actions taken by the federal government, including the threat or implementation of tariffs, immigration enforcement and changes in foreign policy; disruptions to the global supply chain, including as a result of domestic or foreign policies; our ability to successfully manage credit risk, including in the commercial real estate portfolio, and maintain an adequate level of allowance for credit losses; business and economic conditions generally and in the financial services industry, nationally and within our market areas, including the level and impact of inflation rates and possible recession; our ability to raise additional capital to implement our business plan; credit risks and risks from concentrations (including by type of borrower, geographic area, collateral, and industry) within our loan portfolio; the concentration of large loans to certain borrowers (including commercial real estate loans); the level of nonperforming assets on our balance sheet; our ability to implement organic and acquisition growth strategies; the commencement, cost, and outcome of litigation and other legal proceedings and regulatory actions against us or to which the Company may become subject, including with respect to pending actions relating to the Company’s previous employee stock ownership program fiduciary services commenced by government and private parties; 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 or our third-party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; 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 and expensive technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; increased competition in the financial services industry, including from non-banks such as credit unions, Fintech companies and 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, including those who have balances above current Federal Deposit Insurance Corporation insurance limits; the effectiveness of our risk management framework; potential impairment to the goodwill the Company recorded in connection with our past acquisitions, including the acquisitions of Metro Phoenix Bank and HMNF; the extensive regulatory framework that applies to us; the ability of the Bank to pay dividends to us and our ability to pay dividends to our stockholders; new or revised accounting standards, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”) or the Public Company Accounting Oversight Board; 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 and natural disasters, and widespread disease or pandemics; acts of war, military conflicts, or terrorism, including ongoing conflicts in the Middle East, the Russian invasion of Ukraine and the recent military actions in Venezuela, or other adverse external events and changes in foreign relations; any material weaknesses in our internal control over financial reporting; our success at managing and responding to 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 SEC. 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. Alerus Financial Corporation and SubsidiariesConsolidated Balance Sheets (dollars in thousands, except share and per share data) December 31, December 31, 2025 2024Assets (Unaudited) Cash and cash equivalents $67,192 $61,239 Investment securities Trading, at fair value 1,758 3,309 Available-for-sale, at fair value 514,095 588,053 Held-to-maturity, at amortized cost (with an allowance for credit losses on investments of $123 and $131, respectively) 254,448 275,585 Loans held for sale 21,934 16,518 Loans held for investment 4,048,022 3,992,534 Allowance for credit losses on loans (61,915) (59,929)Net loans 3,986,107 3,932,605 Land, premises and equipment, net 43,253 39,780 Operating lease right-of-use assets 28,761 13,438 Accrued interest receivable 21,742 20,075 Bank-owned life insurance 39,307 36,033 Goodwill 85,634 85,634 Other intangible assets 33,371 43,882 Servicing rights 6,383 7,918 Deferred income taxes, net 23,080 52,885 Other assets 103,019 84,719 Total assets $5,230,084 $5,261,673 Liabilities and Stockholders’ Equity Deposits Noninterest-bearing $807,896 $903,466 Interest-bearing 3,384,107 3,474,944 Total deposits 4,192,003 4,378,410 Short-term borrowings 308,800 238,960 Long-term debt 59,182 59,069 Operating lease liabilities 36,282 18,991 Accrued expenses and other liabilities 68,883 70,833 Total liabilities 4,665,150 4,766,263 Stockholders’ equity Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding — — Common stock, $1 par value, 60,000,000 and 30,000,000 shares authorized: 25,406,278 and 25,344,803 issued and outstanding 25,406 25,345 Additional paid-in capital 271,609 269,708 Retained earnings 270,075 273,723 Accumulated other comprehensive loss (2,156) (73,366)Total stockholders’ equity 564,934 495,410 Total liabilities and stockholders’ equity $5,230,084 $5,261,673 Alerus Financial Corporation and SubsidiariesConsolidated Statements of Income(dollars and shares in thousands, except per share data) Three months ended Year ended December 31, September 30, December 31, December 31, December 31, 2025 2025 2024 2025 2024Interest Income (Unaudited) (Unaudited) (Unaudited) (Unaudited) Loans, including fees $64,477 $63,875 $60,009 $253,699 $183,560 Investment securities Taxable 4,592 5,091 5,737 20,699 19,745 Exempt from federal income taxes 160 160 166 640 679 Other 1,158 1,518 1,395 4,598 17,595 Total interest income 70,387 70,644 67,307 279,636 221,579 Interest Expense Deposits 21,998 24,350 25,521 92,641 89,243 Short-term borrowings 2,570 2,506 2,837 11,897 22,584 Long-term debt 645 652 665 2,599 2,707 Total interest expense 25,213 27,508 29,023 107,137 114,534 Net interest income 45,174 43,136 38,284 172,499 107,045 Provision for credit losses (308) — 11,992 556 18,141 Net interest income after provision for credit losses 45,482 43,136 26,292 171,943 88,904 Noninterest (Loss) Income Retirement and benefit services 17,260 16,496 16,488 65,885 64,365 Wealth management 7,438 6,560 7,010 28,265 26,171 Mortgage banking 3,203 3,474 3,277 11,855 10,073 Service charges on deposit accounts 734 703 644 2,768 1,976 Net gains (losses) on investment securities (68,403) — — (68,403) — Gain (loss) on sale of non-mortgage loans — (35) — 2,080 — Other 2,819 2,232 6,455 9,426 12,345 Total noninterest (loss) income (36,949) 29,430 33,874 51,876 114,930 Noninterest Expense Compensation 25,169 24,984 26,657 97,457 87,311 Employee taxes and benefits 6,325 6,094 6,245 26,815 22,967 Occupancy and equipment expense 3,658 2,849 1,963 11,973 7,766 Business services, software and technology expense 6,794 6,285 6,935 24,699 21,758 Intangible amortization expense 2,382 2,710 2,804 10,511 6,776 Professional fees and assessments 3,089 2,676 10,964 11,100 19,597 Marketing and business development 1,016 1,069 1,050 3,837 3,249 Supplies and postage 764 569 726 2,454 2,046 Travel 409 385 449 1,428 1,403 Mortgage and lending expenses 626 1,025 571 3,127 2,162 Other 1,649 1,895 2,093 7,826 5,640 Total noninterest expense 51,881 50,541 60,457 201,227 180,675 (Loss) Income before income tax (benefit) expense (43,348) 22,025 (291) 22,592 23,159 Income tax (benefit) expense (10,298) 5,101 (225) 5,153 5,379 Net income (loss) $(33,050) $16,924 $(66) $17,439 $17,780 Per Common Share Data Earnings (loss) per common share $(1.28) $0.66 $— $0.69 $0.84 Diluted earnings (loss) per common share $(1.27) $0.65 $— $0.68 $0.83 Dividends declared per common share $0.21 $0.21 $0.20 $0.83 $0.79 Average common shares outstanding 25,398 25,395 24,857 25,380 21,047 Diluted average common shares outstanding 25,710 25,713 25,144 25,697 21,321 Alerus Financial Corporation and SubsidiariesNon-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited)(dollars and shares in thousands, except per share data) December 31, September 30, December 31, 2025 2025 2024Tangible Common Equity to Tangible Assets Total common stockholders’ equity $564,934 $550,687 $495,410 Less: Goodwill 85,634 85,634 85,634 Less: Other intangible assets 33,371 35,753 43,882 Tangible common equity (a) 445,929 429,300 365,894 Total assets 5,230,084 5,330,572 5,261,673 Less: Goodwill 85,634 85,634 85,634 Less: Other intangible assets 33,371 35,753 43,882 Tangible assets (b) 5,111,079 5,209,185 5,132,157 Tangible common equity to tangible assets (a)/(b) 8.72% 8.24% 7.13%Tangible Book Value Per Common Share Tangible common equity (a) 445,929 429,300 365,894 Total common shares issued and outstanding (c) 25,406 25,397 25,345 Tangible book value per common share (a)/(c) $17.55 $16.90 $14.44 Three months ended Year ended December 31, September 30, December 31, December 31, December 31, 2025 2025 2024 2025 2024Return on Average Tangible Common Equity Net (loss) income $(33,050) $16,924 $(66) $17,439 $17,780 Add: Intangible amortization expense (net of tax)(1) 1,882 2,141 2,215 8,304 5,353 Net income, excluding intangible amortization (d) (31,168) 19,065 2,149 25,743 23,133 Average total equity 552,106 524,459 478,092 525,323 397,738 Less: Average goodwill 85,634 85,634 84,393 85,634 56,237 Less: Average other intangible assets (net of tax) (1) 27,270 29,540 34,107 30,470 17,534 Average tangible common equity (e) 439,202 409,285 359,592 409,219 323,967 Return on average tangible common equity (d)/(e) (28.15)% 18.48% 2.38% 6.29% 7.14%Efficiency Ratio Noninterest expense $51,881 $50,541 $60,457 $201,227 $180,675 Less: Intangible amortization expense 2,382 2,710 2,804 10,511 6,776 Noninterest expense excluding intangible amortization (f) 49,499 47,831 57,653 190,716 173,899 Net interest income (v) 45,174 43,136 38,284 172,499 107,045 Noninterest (loss) income (36,949) 29,430 33,874 51,876 114,930 Tax-equivalent adjustment 654 638 385 2,402 1,202 Total tax-equivalent revenue (g) 8,879 73,204 72,543 226,777 223,177 Efficiency ratio (f)/(g) 557.48% 65.34% 79.47% 84.10% 77.92%Pre-Provision Net Revenue Net interest income (v) $45,174 $43,136 $38,284 $172,499 $107,045 Add: Noninterest (loss) income (36,949) 29,430 33,874 51,876 114,930 Less: Noninterest expense 51,881 50,541 60,457 201,227 180,675 Pre-provision net revenue $(43,656) $22,025 $11,701 $23,148 $41,300 Adjusted Noninterest Income Noninterest (loss) income $(36,949) $29,430 $33,874 $51,876 $114,930 Less: Adjusted noninterest (loss) income items Net gains (losses) on investment securities (68,403) — — (68,403) — Net gain (loss) on sale of loans — (35) — 2,080 — Net gain (loss) on sale/disposal of premises and equipment (445) — 3,459 (530) 3,941 Total adjusted noninterest (loss) income items (h) (68,848) (35) 3,459 (66,853) 3,941 Adjusted noninterest income (i) $31,899 $29,465 $30,415 $118,729 $110,989 Adjusted Noninterest (Loss) Income as a Percentage of Revenue Adjusted noninterest income (i) $31,899 $29,465 $30,415 $118,729 $110,989 Net interest income (v) 45,174 43,136 38,284 172,499 107,045 Adjusted revenue (w) $77,073 $72,601 $68,699 $291,228 $218,034 Adjusted noninterest (loss) income as a percentage of revenue (i)/(w) 41.39% 40.58% 44.27% 40.77% 50.90%Adjusted Noninterest Expense Noninterest expense $51,881 $50,541 $60,457 $201,227 $180,675 Less: Adjusted noninterest expense items HMNF merger- and acquisition-related expenses (112) (43) 7,729 142 9,980 Severance and signing bonus expense 212 104 2,276 1,319 2,901 Total adjusted noninterest expense items (j) 100 61 10,005 1,461 12,881 Adjusted noninterest expense (k) $51,781 $50,480 $50,452 $199,766 $167,794 _______________(1) Items calculated after-tax utilizing a marginal income tax rate of 21.0%. Alerus Financial Corporation and SubsidiariesNon-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited)(dollars and shares in thousands, except per share data) Three months ended Year ended December 31, September 30, December 31, December 31, December 31, 2025 2025 2024 2025 2024Adjusted Pre-Provision Net Revenue Net interest income (v) $45,174 $43,136 $38,284 $172,499 $107,045 Add: Adjusted noninterest income (i) 31,899 29,465 30,415 118,729 110,989 Less: Adjusted noninterest expense (k) 51,781 50,480 50,452 199,766 167,794 Adjusted pre-provision net revenue $25,292 $22,121 $18,247 $91,462 $50,240 Adjusted Efficiency Ratio Adjusted noninterest expense (k) $51,781 $50,480 $50,452 $199,766 $167,794 Less: Intangible amortization expense 2,382 2,710 2,804 10,511 6,776 Adjusted noninterest expense for efficiency ratio (l) 49,399 47,770 47,648 189,255 161,018 Tax-equivalent revenue Net interest income (v) 45,174 43,136 38,284 172,499 107,045 Add: Adjusted noninterest income (i) 31,899 29,465 30,415 118,729 110,989 Add: Tax-equivalent adjustment 654 638 385 2,402 1,202 Total tax-equivalent revenue (m) 77,727 73,239 69,084 293,630 219,236 Adjusted efficiency ratio (l)/(m) 63.55% 65.22% 68.97% 64.45% 73.45%Adjusted Net Income Net (loss) income $(33,050) $16,924 $(66) $17,439 $17,780 Less: Adjusted noninterest (loss) income items (net of tax) (1) (h) (54,390) (28) 2,733 (52,814) 3,113 Add: HMNF day one provision for credit losses and unfunded commitments (net of tax) (1) — — 6,140 — 6,140 Add: Adjusted noninterest expense items (net of tax)(1)(j) 79 48 7,904 1,154 10,176 Adjusted net income (n) $21,419 $17,000 $11,245 $71,407 $30,983 Adjusted Return on Average Total Assets Average total assets (o) $5,252,046 $5,273,306 $5,272,777 $5,277,867 $4,503,483 Adjusted return on average total assets (n)/(o) 1.62% 1.28% 0.85% 1.35% 0.69%Adjusted Return on Average Tangible Common Equity Adjusted net income (n) $21,419 $17,000 $11,245 $71,407 $30,983 Add: Intangible amortization expense (net of tax)(1) 1,882 2,141 2,215 8,304 5,353 Adjusted net income, excluding intangible amortization (p) 23,301 19,141 13,460 79,711 36,336 Average total equity 552,106 524,459 478,092 525,323 397,738 Less: Average goodwill 85,634 85,634 84,393 85,634 56,237 Less: Average other intangible assets (net of tax) 27,270 29,540 34,107 30,470 17,534 Average tangible common equity (q) 439,202 409,285 359,592 409,219 323,967 Adjusted return on average tangible common equity (p)/(q) 21.05% 18.55% 14.89% 19.48% 11.22%Adjusted Earnings Per Common Share - Diluted Adjusted net income (n) $21,419 $17,000 $11,245 $71,407 $30,983 Less: Dividends and undistributed earnings allocated to participating securities (462) 148 (54) (29) 37 Adjusted net income available to common stockholders (r) 21,881 16,852 11,299 71,436 30,946 Weighted-average common shares outstanding for diluted earnings per share (s) 25,710 25,713 25,144 25,697 21,321 Adjusted earnings per common share - diluted (r)/(s) $0.85 $0.66 $0.45 $2.78 $1.45 Adjusted Net Charge-Offs to Average Loans Net charge-offs (recoveries) $(311) $(1,715) $1,258 $2,148 $4,154 Less: Charge-off of PCD reserves on loans transferred to non-mortgage loans held for sale — — — 3,053 — Adjusted net charge-offs (recoveries) (t) (311) (1,715) 1,258 (905) 4,154 Average total loans (u) $4,049,082 $4,036,936 $3,814,934 $4,047,034 $3,099,015 Adjusted net charge-offs (recoveries) to average loans (t)/(u) (0.03)% (0.17)% 0.13% (0.02)% 0.13% _______________(1) Items calculated after-tax utilizing a marginal income tax rate of 21.0%. Alerus Financial Corporation and SubsidiariesAnalysis of Average Balances, Yields, and Rates (unaudited)(dollars in thousands) Three months ended Year ended December 31, 2025 September 30, 2025 December 31, 2024 December 31, 2025 December 31, 2024 AverageBalance AverageYield/Rate AverageBalance AverageYield/Rate AverageBalance AverageYield/Rate AverageBalance AverageYield/Rate AverageBalance AverageYield/RateInterest Earning Assets Interest-bearing deposits with banks $57,008 4.68% $89,568 4.86% $74,217 5.34% $54,150 4.90% $299,666 5.39%Investment securities(1) 775,091 2.45 796,759 2.64 883,116 2.68 813,474 2.64 791,111 2.60 Loans held for sale 21,715 4.81 20,188 4.93 15,409 5.60 18,920 4.80 14,180 5.90 Loans Commercial and industrial 699,982 7.35 650,787 7.51 616,356 7.28 665,635 7.42 588,269 7.23 CRE − Construction, land and development 322,068 9.20 363,466 5.77 250,869 6.33 341,533 6.65 172,700 6.77 CRE − Multifamily 371,925 6.15 340,709 6.46 351,804 6.50 356,019 6.41 272,125 5.87 CRE − Non-owner occupied(2) 846,558 6.16 887,935 6.26 1,002,857 6.68 912,066 6.41 712,734 6.14 CRE − Owner occupied 429,087 6.18 435,469 7.73 293,169 6.56 421,997 6.62 286,540 5.71 Agricultural − Land 65,995 6.42 66,676 5.53 59,400 5.73 66,483 5.89 45,729 5.10 Agricultural − Production 63,408 6.78 64,685 6.80 58,999 7.36 64,118 7.05 43,361 6.89 RRE − First lien 884,293 4.81 898,011 4.83 904,414 4.50 895,225 4.83 747,874 4.17 RRE − Construction 34,858 6.74 33,834 6.61 31,722 9.74 36,309 7.37 22,832 6.58 RRE − HELOC 249,844 6.38 213,232 6.82 153,344 7.60 205,287 6.79 131,617 8.02 RRE − Junior lien 38,167 6.47 40,997 6.40 47,041 6.25 41,406 6.37 38,982 6.24 Other consumer 42,897 6.53 41,135 6.94 44,959 7.19 40,956 6.87 36,252 6.81 Total loans(1) 4,049,082 6.35 4,036,936 6.31 3,814,934 6.27 4,047,034 6.30 3,099,015 5.93 Federal Reserve/FHLB stock 23,634 8.16 22,398 7.46 20,717 7.66 24,142 8.05 17,901 8.12 Total interest earning assets 4,926,530 5.72 4,965,849 5.70 4,808,393 5.60 4,957,720 5.69 4,221,873 5.28 Noninterest earning assets 325,516 307,457 464,384 320,147 281,610 Total assets $5,252,046 $5,273,306 $5,272,777 $5,277,867 $4,503,483 Interest-Bearing Liabilities Interest-bearing demand deposits $1,305,972 1.72% $1,227,029 1.80% $1,209,674 1.98% $1,257,069 1.78% $1,010,888 2.12%Money market and savings deposits 1,592,569 2.72 1,587,694 2.84 1,520,616 3.15 1,583,232 2.81 1,250,939 3.60 Time deposits 600,966 3.57 772,345 3.81 698,358 4.24 687,320 3.76 518,826 4.39 Fed funds purchased and BTFP 35,617 4.20 16,636 4.94 22,012 4.93 62,618 4.60 249,180 4.95 FHLB short-term advances 207,065 4.20 200,000 4.56 200,000 5.10 201,781 4.47 200,000 5.12 Long-term debt 59,169 4.32 59,137 4.37 59,055 4.48 59,126 4.40 59,013 4.59 Total interest-bearing liabilities 3,801,358 2.63 3,862,841 2.83 3,709,715 3.11 3,851,146 2.78 3,288,846 3.48 Noninterest-Bearing Liabilities and Stockholders' Equity Noninterest-bearing deposits 797,521 800,028 847,153 813,785 704,463 Other noninterest-bearing liabilities 101,061 85,978 237,817 87,613 112,436 Stockholders’ equity 552,106 524,459 478,092 525,323 397,738 Total liabilities and stockholders’ equity $5,252,046 $5,273,306 $5,272,777 $5,277,867 $4,503,483 Net interest rate spread 3.09% 2.87% 2.49% 2.91% 1.80%Net interest margin, tax-equivalent(1) 3.69% 3.50% 3.20% 3.53% 2.56% _______________(1) Taxable-equivalent adjustment was calculated utilizing a marginal income tax rate of 21.0%. (2) Average balances and average yield/rate includes non-mortgage loans sold and held for sale for the three months ended December 31, 2025 and the year ended December 31, 2025. Alan A. Villalon, Chief Financial Officer952.417.3733 (Office)