Alerus Financial Corporation Announces Fourth Quarter 2025 Results, Including Balance Sheet Repositioning

Rhea-AI Impact

(Moderate)

Rhea-AI Sentiment

(Neutral)

Rhea-AI Summary

Alerus Financial Corporation (Nasdaq: ALRS) reported a fourth-quarter 2025 net loss of $33.1 million (loss of $1.27 per diluted share), driven by a one-time pre-tax loss of $68.4 million from the sale of $360.1 million of available-for-sale securities as part of a balance sheet repositioning.

Adjusted pre-provision net revenue was $25.3 million for Q4; full-year 2025 highlights include adjusted diluted EPS $2.78, net interest income of $172.5 million (up 61.1% YoY), and tangible book value per share of $17.55 (up 21.54% YoY).

Positive

Net interest income +61.1% YoY to $172.5 million for 2025
Adjusted diluted EPS rose to $2.78 for 2025 from $1.45
Tangible book value per share +21.54% YoY to $17.55
Mortgage originations +54.4% YoY to $484.8 million

Negative

Q4 2025 net loss of $33.1 million (loss of $1.27 per diluted share)
One-time pre-tax loss of $68.4 million from sale of securities in Q4
Pre-provision net revenue of $(43.7) million in Q4 before adjustments

News Market Reaction

-0.71%

3 alerts

-0.71% News Effect

-$5M Valuation Impact

$634M Market Cap

0.5x Rel. Volume

On the day this news was published, ALRS declined 0.71%, reflecting a mild negative market reaction. Our momentum scanner triggered 3 alerts that day, indicating moderate trading interest and price volatility. This price movement removed approximately $5M from the company's valuation, bringing the market cap to $634M at that time.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Q4 2025 net loss: $33.1 million Q4 diluted EPS (GAAP): $(1.27) Securities sold: $360.1 million +5 more

8 metrics

Q4 2025 net loss $33.1 million GAAP net loss for fourth quarter 2025

Q4 diluted EPS (GAAP) $(1.27) Fourth quarter 2025 diluted EPS

Securities sold $360.1 million Available-for-sale securities sold in Q4 2025 repositioning

Loss on securities sale $68.4 million One-time pre-tax net loss from Q4 2025 sale

Q4 adjusted EPS $0.85 Adjusted diluted EPS (non-GAAP) for Q4 2025

FY 2025 adjusted EPS $2.78 Adjusted diluted EPS (non-GAAP) full year 2025 vs $1.45 in 2024

Tangible book value/share $17.55 As of December 31, 2025; up from $14.44 in 2024

AUA/AUM total $49.8 billion Combined assets under administration and management year-end 2025

Market Reality Check

Price: $25.18 Vol: Volume 189,917 is 1.33x t...

normal vol

$25.18 Last Close

Volume Volume 189,917 is 1.33x the 20-day average of 142,449 shares. normal

Technical Price 23.8 trades above the 200-day MA at 21.69 ahead of this release.

Peers on Argus

ALRS was up 0.97% pre-release while key regional bank peers like GNTY, SUPV, EGB...

ALRS was up 0.97% pre-release while key regional bank peers like GNTY, SUPV, EGBN, MOFG, and WASH showed declines between -0.26% and -1.46%, indicating stock-specific strength.

Common Catalyst One peer, WASH, also reported quarterly and full-year 2025 results, but broader peer moves were negative, suggesting ALRS trading was not part of a sector-wide rally.

Previous Earnings Reports

5 past events · Latest: Jul 28 (Positive)

Same Type Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jul 28	Quarterly earnings	Positive	+6.2%	Strong Q2 2025 income, higher margin, and growing noninterest revenue.
Jan 28	Quarterly earnings	Neutral	+3.8%	Q4 2024 results and completion of HMNF acquisition with margin gains.
Oct 29	Quarterly earnings	Negative	-13.8%	Q3 2024 income decline and higher nonperforming commercial real estate loan.
Jul 24	Quarterly earnings	Neutral	+0.3%	Q2 2024 stable earnings with deposit and loan growth and better PPNR.
Apr 24	Quarterly earnings	Neutral	-2.2%	Q1 2024 results release; details not highlighted in summary.

Pattern Detected

Earnings releases have typically produced moderate single-digit moves, with mostly positive reactions and one notable selloff after weaker results.

Recent Company History

Recent earnings history for ALRS shows a series of quarterly reports where net interest margin and noninterest income trends were key drivers. Prior updates highlighted acquisition integration, margin expansion, and improving efficiency ratios, with several quarters seeing positive price reactions of 3%–6%. One Q3 2024 report, tied to lower earnings, saw a double-digit decline. Against this backdrop, the current quarter’s large GAAP loss from balance sheet repositioning contrasts with otherwise solid adjusted returns and capital metrics.

Historical Comparison

+5.3% avg move · In the past five earnings releases, ALRS saw average absolute moves of about 5.27%, typically reacti...

earnings

+5.3%

Average Historical Move earnings

In the past five earnings releases, ALRS saw average absolute moves of about 5.27%, typically reacting in line with the tone of results. This quarter’s large GAAP loss from security sales contrasts with historically steadier earnings updates.

Across 2024–2025 earnings, ALRS emphasized integration of the HMNF acquisition, net interest margin expansion, higher noninterest income, and improving efficiency ratios, culminating in 2025 results that pair a one-time repositioning loss with stronger adjusted returns and capital metrics.

Market Pulse Summary

This announcement details a one-time balance sheet repositioning that generated a $33.1 million Q4 n...

Analysis

This announcement details a one-time balance sheet repositioning that generated a $33.1 million Q4 net loss, driven by a $68.4 million loss on selling $360.1 million of securities. Underlying trends were stronger: Q4 adjusted EPS was $0.85, full-year 2025 adjusted EPS reached $2.78, and tangible book value rose to $17.55. Investors may track net interest income, adjusted returns, credit quality, and capital ratios to judge whether the repositioning supports the higher-margin, fee-rich model described.

Key Terms

non-gaap, adjusted pre-provision net revenue, commercial real estate, net interest margin, +3 more

7 terms

non-gaap financial

"Adjusted pre-provision net revenue (non-GAAP)(1) was $25.3 million..."

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

adjusted pre-provision net revenue financial

"Adjusted pre-provision net revenue (non-GAAP)(1) was $25.3 million..."

A bank metric that measures the money a lender earns from its core business—interest from loans plus fees and other income—after paying regular operating costs but before setting aside funds for expected loan losses. Think of it as a household’s monthly take-home pay after bills but before putting money into a rainy-day savings account; investors use it to judge a bank’s underlying ability to absorb future loan losses and sustain profitability.

commercial real estate financial

"reducing commercial real estate ("CRE") concentrations, completing targeted loan sales..."

Commercial real estate is property used to run businesses or earn rental income—examples include office buildings, shopping centers, warehouses and apartment complexes leased to tenants. Investors care because these properties generate regular cash flow through rent and can change value with the economy, interest rates and local demand, so owning them is like owning a small business that depends on customers, location and ongoing costs.

net interest margin financial

"Net interest margin was 3.69%, an increase compared to 3.50%..."

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

tangible common equity financial

"tangible common equity to tangible assets rising to 8.72%..."

Tangible common equity is the portion of a company’s net worth that belongs to ordinary shareholders after removing intangible items (like goodwill or patents) and any preferred claims; it’s often expressed on a per-share basis. Think of it as the hard, sellable value left for common owners if you removed non-physical assets and paid off debts—investors use it to judge how much real cushion a company has and whether the stock might be under- or over-valued.

assets under administration financial

"assets under administration and management expanded to a combined $49.8 billion."

Assets under administration (AUA) is the total market value of clients’ investments and accounts that a financial firm oversees for recordkeeping, reporting, and transaction processing without necessarily deciding how the money is invested. Think of it like a warehouse that stores and tracks other people’s goods: bigger AUA shows a firm’s scale, steady fee potential and client trust, so changes can signal growing business or client withdrawals that matter to investors.

net charge-offs financial

"Net charge-offs (recoveries) to average loans was (0.03)%."

Net charge-offs are the amount of loans or credit a lender removes from its books as uncollectible after subtracting any money later recovered from previously written-off accounts. Think of it like a store writing off unpaid tabs but getting back a few dollars later — the net figure shows the real loss. Investors watch this to judge a lender’s loan quality, future profits and how much capital may be needed to cover bad debts.

AI-generated analysis. Not financial advice.

01/28/2026 - 04:30 PM

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 Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)

	December 31,			December 31,
	2025			2024
Assets	(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 Subsidiaries
Consolidated 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			2024
Interest 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 Subsidiaries
Non-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			2024
Tangible 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			2024
Return 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%.

	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2025			2025			2024			2025			2024
Adjusted 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 Subsidiaries
Analysis 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
	Average Balance		Average Yield/ Rate			Average Balance		Average Yield/ Rate			Average Balance		Average Yield/ Rate			Average Balance		Average Yield/ Rate			Average Balance		Average Yield/ Rate
Interest 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 Officer
952.417.3733 (Office)

FAQ

Why did ALRS report a $33.1 million net loss in Q4 2025?

The net loss was mainly due to a one-time pre-tax loss of $68.4 million. According to the company, the loss resulted from selling $360.1 million of available-for-sale securities as part of a strategic balance sheet repositioning.

How did Alerus (ALRS) perform on adjusted earnings for full-year 2025?

Adjusted diluted earnings per share were $2.78 for 2025, up from $1.45 in 2024. According to the company, adjusted metrics exclude one-time repositioning items and show stronger operating profitability across segments.

What impact did the balance sheet repositioning have on ALRS results?

The repositioning generated a one-time pre-tax loss of $68.4 million but freed capital for higher-yield securities. According to the company, proceeds were reinvested into higher-yielding investments to boost future profitability.

Did ALRS show revenue or margin improvement in Q4 2025?

Net interest income for Q4 increased to $45.2 million and net interest margin rose to 3.69%. According to the company, higher yields on earning assets and lower funding costs drove the quarter-over-quarter improvement.

How did Alerus's assets under administration and management change in 2025?

Combined assets under administration and management reached $49.8 billion by year-end 2025. According to the company, AUA/AUM growth was driven by organic expansion in retirement and wealth segments, supporting higher fee income.

What does ALRS say about capital and tangible book value after 2025 results?

Tangible book value per share increased to $17.55, a 21.54% rise year-over-year. According to the company, tangible common equity to tangible assets improved to 8.72%, reflecting strengthened capital and risk profile.

Alerus Financial Corporation Announces Fourth Quarter 2025 Results, Including Balance Sheet Repositioning