Alerus Financial Corporation Reports Third Quarter 2026 Net Income of $19.2 Million

Q: What were Alerus Financial's third-quarter 2026 earnings?

Alerus earned $19.2 million, or $0.76 per diluted common share, in the third quarter of 2026. This compares with $20.9 million, or $0.81 per diluted share, in the second quarter of 2026 and $16.9 million, or $0.65 per diluted share, in the third quarter of 2025.

Q: Why did Alerus Financial's net interest margin decline in the third quarter of 2026?

The sequential decline primarily reflected a one-time $1.6 million interest income recovery on a nonaccrual loan resolution in the second quarter and less purchase accounting accretion. Higher loan and investment yields partly offset those effects. Tax-equivalent net interest margin declined to 3.84% from 3.97%.

Q: Why did Alerus Financial's deposit service charges increase in the third quarter of 2026?

Deposit service charges increased 73.7% year over year, primarily because fees were reclassified from other noninterest income into deposit service charge revenue in the first quarter of 2026. The reported increase was $0.5 million.

Q: How much capital did Alerus Financial return to shareholders in the first nine months of 2026?

Alerus returned $37.2 million through dividends and share repurchases in the first nine months of 2026. Third-quarter repurchases totaled $8.2 million at an average price of $32.75 per share, reducing common shares outstanding by 250,000 at quarter-end.

Fee income grew 16.7% year over year, while quarterly share repurchases reduced common shares outstanding by 250,000.

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Rhea-AI Summary

Alerus Financial (ALRS) reported third-quarter 2026 net income of $19.2 million, below the previous quarter but above the year-earlier period. Diluted earnings were $0.76, versus $0.81 in the second quarter and $0.65 a year earlier; net income was $20.9 million and $16.9 million, respectively.

Net interest income reached $46.7 million, down 2.1% sequentially but up 8.3% year over year. Noninterest income rose 16.7% year over year to $34.4 million, while noninterest expense increased 6.6% to $53.9 million. Tax-equivalent net interest margin, a non-GAAP measure, was 3.84%, versus 3.97% sequentially and 3.50% a year earlier.

At September 30, loans totaled $4.2 billion and deposits $4.3 billion, up 3.7% and 2.7% from June 30. Nonperforming assets fell to $16.4 million from $17.1 million. Alerus repurchased $8.2 million of shares during the quarter.

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Positive

Moderate pointNoninterest income of $34.4 million rose 4.3% sequentially and 16.7% year over year.
Moderate pointTotal loans of $4.2 billion increased $150.5 million, or 3.7%, from June 30, 2026.
Moderate pointDeposits of $4.3 billion increased $111.2 million, or 2.7%, from June 30, 2026.
Moderate pointNet recoveries to average loans were 0.10%, versus net charge-offs of 0.26% in the second quarter.
Moderate pointNine-month diluted earnings of $2.46 increased from $1.95 in the corresponding 2025 period.
Moderate pointNine-month adjusted pre-provision net revenue of $78.7 million, a non-GAAP measure, increased 18.9% year over year.
Moderate pointTangible book value of $18.74 per share, a non-GAAP measure, rose 10.9% year over year.
Moderate pointCombined retirement and wealth assets under management/administration of $50.1 billion increased 2.7% year over year.

9 minor points

Minor pointRetirement and benefit services revenue increased 1.8% sequentially and 7.1% year over year.
Minor pointWealth advisory revenue rose 3.8% sequentially and 22.0% year over year.
Minor pointMortgage banking revenue increased 4.2% sequentially, supported by higher originations and gain-on-sale margins.
Minor pointOther noninterest income rose 15.1% sequentially and 85.3% year over year, primarily from a property-sale gain.
Minor pointCommercial and business lending grew 36.5% year over year, reaching 37.1% of the loan portfolio.
Minor pointNonperforming assets of $16.4 million declined from $17.1 million at June 30, 2026.
Minor pointQuarterly repurchases of $8.2 million retired 250,000 shares at an average price of $32.75.
Minor pointQuarterly dividend of $0.22 per share compared with $0.21 in the third quarter of 2025.
Minor pointTangible common equity to tangible assets of 8.77%, a non-GAAP measure, exceeded 8.24% a year earlier.

Negative

Moderate pointNet income of $19.2 million declined from $20.9 million sequentially, but exceeded $16.9 million a year earlier.
Moderate pointNet interest income of $46.7 million fell 2.1% sequentially, despite rising 8.3% year over year.
Moderate pointTax-equivalent net interest margin of 3.84%, a non-GAAP measure, fell from 3.97% sequentially but exceeded 3.50% a year earlier.
Moderate pointNoninterest expense of $53.9 million increased 1.9% sequentially and 6.6% year over year.
Moderate pointReturn on average tangible common equity of 17.35%, a non-GAAP measure, trailed 19.33% sequentially and 18.48% a year earlier.

9 minor points

Minor pointDiluted earnings of $0.76 fell from $0.81 sequentially, but exceeded $0.65 a year earlier.
Minor pointReturn on average assets of 1.45% fell from 1.60% sequentially, but exceeded 1.27% a year earlier.
Minor pointReturn on average common equity of 13.07% fell from 14.56% sequentially, but exceeded 12.80% a year earlier.
Minor pointEfficiency ratio of 63.41%, a non-GAAP measure, worsened from 62.53% sequentially, but improved from 65.34% a year earlier.
Minor pointRochester property transfer to held for sale generated a loss, partially offsetting the Fargo property-sale gain.
Minor pointConsumer loans decreased $52.0 million from December 31, 2025.
Minor pointRetirement services assets under administration/management fell to $44,944,011 thousand from $45,163,767 thousand sequentially.
Minor pointWealth advisory assets under administration/management fell to $5,163,688 thousand sequentially, despite rising 7.3% year over year.
Minor pointMortgage originations of $126,728 thousand exceeded $113,450 thousand sequentially but trailed $142,768 thousand a year earlier.

News Explained

Alerus’s completed third-quarter repurchases reduced common shares outstanding by 250,000 at quarter-end, quantifying the buyback’s effect on the share count.

Key Figures

Net income: $19.2 million Diluted EPS: $0.76 Net interest income: $46.7 million +5 more

Net income: $19.2 million; Q3 2026; compared with $20.9 million in Q2 2026 and $16.9 million in Q3 2025
Diluted EPS: $0.76; Q3 2026; compared with $0.81 in Q2 2026 and $0.65 in Q3 2025
Net interest income: $46.7 million; Q3 2026; down 2.1% from Q2 2026 and up 8.3% from Q3 2025
Noninterest income: $34.4 million; Q3 2026; up 4.3% from Q2 2026
Total loans: $4.2 billion; As of September 30, 2026; up $150.5 million, or 3.7%, from June 30, 2026
Nonperforming assets: $16.4 million; As of September 30, 2026; down $0.7 million, or 4.3%, from June 30, 2026
Common stock repurchase: $8.2 million; Q3 2026; 250,000 shares repurchased at an average price of $32.75 per share
Tangible book value per share: $18.74; As of September 30, 2026; up 10.9% from September 30, 2025

Previous Earnings Reports

1 past event · Latest: Jul 29

Same Type 1 event

Jul 29
Q2 2026 earnings

24h Move

+1.9%

Reported $20.9 million net income and $0.81 diluted EPS, establishing the prior-quarter earnings baseline.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

net interest margin, nonaccrual loan, non-gaap financial measure, tangible common equity

4 terms

net interest margin financial

"Net interest margin (on a tax-equivalent basis)(1) was 3.84%"

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.

nonaccrual loan financial

"a one-time $1.6 million interest income recovery on a nonaccrual loan resolution"

A nonaccrual loan is a loan on which the lender has stopped recording interest income because the borrower is significantly past due or the lender doubts it will collect scheduled payments. It signals a problem with the borrower's ability to pay and is used by banks to avoid recognizing income they may not receive; like turning off a factory’s power when its output is unreliable, it directly affects a lender’s reported earnings and asset quality that investors monitor.

non-gaap financial measure financial

"Represents a non-GAAP financial measure."

A non-GAAP financial measure is a way companies present their financial results that excludes certain expenses or income to show how they believe their core business is performing. It matters because it can give a clearer picture of how the company is really doing, but it can also be used to make results look better than they actually are.

tangible common equity financial

"Return on average tangible common equity(1) of 17.35%."

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.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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10/28/2026 - 04:30 PM EDT

MINNEAPOLIS, Oct. 28, 2026 (GLOBE NEWSWIRE) -- Alerus Financial Corporation (Nasdaq: ALRS), or the Company, reported net income of $19.2 million for the third quarter of 2026, or $0.76 per diluted common share, compared to net income of $20.9 million, or $0.81 per diluted common share, for the second quarter of 2026, and net income of $16.9 million, or $0.65 per diluted common share, for the third quarter of 2025.

CEO Comments

President and Chief Executive Officer Katie O'Neill Lorenson said, "Our third quarter results demonstrate the continued momentum of the Alerus franchise, with strong revenue growth across our diversified business model and strategic organic growth in our banking franchise. Net interest income increased 8.3% from the prior year, while noninterest income grew 16.7%, reflecting the complementary strength of our banking, retirement and benefit services, and wealth advisory businesses.

That growth was driven by the continued transformation of our banking franchise toward commercial and business banking. Commercial and business lending grew 36.5% from a year ago and now represents 37.1% of our loan portfolio, up from 27.7% a year ago. In the third quarter, total loans increased $150.5 million, or 3.7%, and deposits increased $111.2 million, or 2.7%, with noninterest income representing 42.4% of total revenue.

We also maintained favorable credit quality, with nonperforming assets and criticized loans continuing to improve and net recoveries during the quarter. Our strong capital position and 10.9% year-over-year growth in tangible book value per share give us the capacity to keep investing in organic growth while returning capital to shareholders, with $37.2 million returned through dividends and share repurchases in the first nine months of the year.

Most importantly, I want to thank our team members. Their talent, collaboration, and focus on helping clients achieve their goals turn our strategy into results, and we are confident in our continued ability to create sustainable value for clients, communities, team members, and shareholders."

Third Quarter Highlights

	■	Earnings per diluted common share of $0.76.
	■	Return on average total assets of 1.45%.
	■	Return on average tangible common equity⁽¹⁾ of 17.35%.
	■	Noninterest income was $34.4 million in the third quarter of 2026, an increase of 4.3% from the second quarter of 2026. Noninterest income represented 42.4% of total revenue in the third quarter of 2026.
	■	Net interest margin (on a tax-equivalent basis)⁽¹⁾ was 3.84% and net interest income was $46.7 million in the third quarter of 2026.
	■	Total loans were $4.2 billion as of September 30, 2026, an increase of $150.5 million, or 3.7%, from June 30, 2026.
	■	Total deposits were $4.3 billion as of September 30, 2026, an increase of $111.2 million, or 2.7%, from June 30, 2026.
	■	Nonperforming assets were $16.4 million as of September 30, 2026, a decrease of $0.7 million, or 4.3%, from $17.1 million as of June 30, 2026.
	■	Net recoveries to average loans was 0.10%.
	■	Repurchased $8.2 million of the Company's outstanding common stock at an average per share price of $32.75, reducing common shares outstanding by 250,000 shares at quarter-end.
	■	In the first nine months of 2026, the Company returned $37.2 million to shareholders in the form of dividends and share repurchases.
	■	In the first nine months of 2026, adjusted pre-provision net revenue⁽¹⁾ was $78.7 million, an 18.9% increase over the same time period in the prior year.
	■	Total assets under management/administration in the combined retirement and benefit and wealth segments were $50.1 billion, a 2.7% increase from September 30, 2025.
	■	Tangible book value per common share⁽¹⁾ was $18.74 as of September 30, 2026, an increase of 10.9% from $16.90 as of September 30, 2025.
	■	Tangible common equity to tangible assets ratio⁽¹⁾ was 8.77% as of September 30, 2026, an increase from 8.24% as of September 30, 2025.

_________________
(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									Nine months ended
(dollars and shares in thousands, except per share data)	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars and shares in thousands, except per share data)	2026			2026			2025			2026			2025
Performance Ratios
Return on average total assets		1.45	%		1.60	%		1.27	%		1.61	%		1.28	%
Adjusted return on average total assets⁽¹⁾		1.37	%		1.58	%		1.28	%		1.58	%		1.27	%
Return on average common equity		13.07	%		14.56	%		12.80	%		14.66	%		13.17	%
Return on average tangible common equity⁽¹⁾		17.35	%		19.33	%		18.48	%		19.46	%		19.25	%
Adjusted return on average tangible common equity⁽¹⁾		16.43	%		19.04	%		18.55	%		19.08	%		19.08	%
Noninterest income as a % of revenue		42.37	%		40.85	%		40.56	%		41.32	%		41.09	%
Adjusted noninterest income as a % of revenue⁽¹⁾		41.24	%		40.36	%		40.58	%		40.78	%		40.54	%
Net interest margin (on a tax-equivalent basis)⁽¹⁾		3.84	%		3.97	%		3.50	%		3.86	%		3.47	%
Efficiency ratio⁽¹⁾		63.41	%		62.53	%		65.34	%		63.10	%		64.81	%
Adjusted efficiency ratio⁽¹⁾		64.44	%		62.76	%		65.22	%		63.47	%		64.78	%
Net charge-offs (recoveries) to average loans⁽¹⁾		(0.10	)%		0.26	%		(0.17	)%		0.28	%		0.08	%
Dividend payout ratio		28.95	%		27.16	%		32.31	%		26.42	%		31.79	%
Per Common Share
Earnings per common share - basic	$	0.77		$	0.82		$	0.66		$	2.49		$	1.97
Earnings per common share - diluted	$	0.76		$	0.81		$	0.65		$	2.46		$	1.95
Adjusted earnings per common share - diluted⁽¹⁾	$	0.71		$	0.80		$	0.66		$	2.41		$	1.93
Dividends declared per common share	$	0.22		$	0.22		$	0.21		$	0.65		$	0.62
Book value per common share	$	23.31		$	23.34		$	21.68
Tangible book value per common share⁽¹⁾	$	18.74		$	18.73		$	16.90
Average common shares outstanding - basic		24,851			25,081			25,395			25,102			25,374
Average common shares outstanding - diluted		25,161			25,395			25,713			25,410			25,693
Other Data
Retirement and benefit services assets under administration/management	$	44,944,011		$	45,163,767		$	44,005,277
Wealth advisory services assets under administration/management	$	5,163,688		$	5,195,511		$	4,812,250
Mortgage originations	$	126,728		$	113,450		$	142,768		$	334,612		$	347,995

_________________
(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 third quarter of 2026 was $46.7 million, a $1.0 million, or 2.1%, decrease from the second quarter of 2026. Interest income decreased $0.4 million, or 0.6%, primarily due to lower interest income on loans from a one-time $1.6 million interest income recovery on a nonaccrual loan resolution in the second quarter and less purchase accounting accretion, partially offset by higher loan and investment yields. Interest expense increased $0.6 million, or 2.4%, from the second quarter of 2026, as average rates paid on deposits and borrowings increased slightly, mainly driven by the recent increase by the Federal Reserve in the federal funds benchmark rate.

Net interest income increased $3.6 million, or 8.3%, from $43.1 million for the third quarter of 2025. Interest income decreased $0.5 million, or 0.6%, from the third quarter of 2025, primarily driven by less purchase accounting accretion and lower average interest-bearing cash balances, partially offset by higher interest income on investment securities following the strategic balance sheet repositioning in the fourth quarter of 2025. Interest expense decreased $4.0 million, or 14.7%, from the third quarter of 2025, as average rates paid on deposits and borrowings declined primarily driven by Federal Reserve rate cuts in the second half of 2025.

Net interest margin (on a tax-equivalent basis)⁽¹⁾ was 3.84% for the third quarter of 2026, a 13 basis point decrease from 3.97% for the second quarter of 2026, and a 34 basis point increase from 3.50% for the third quarter of 2025. The quarter over quarter decrease was mainly attributable to a one-time $1.6 million interest income recovery on a nonaccrual loan resolution in the second quarter and less purchase accounting accretion, partially offset by higher loan and investment yields. The increase from the third quarter of 2025 was primarily driven by lower cost of funds and higher yields on investment securities, offset by less purchase accounting accretion.

Noninterest Income

Noninterest income for the third quarter of 2026 was $34.4 million, a $1.4 million, or 4.3%, increase from the second quarter of 2026. This increase was driven by increases in other noninterest income, retirement and benefit services revenue, wealth advisory services revenue, and mortgage banking revenue. Other noninterest income increased $0.5 million, or 15.1%, from the second quarter of 2026, primarily driven by a gain on the sale of a property in the Fargo, North Dakota market, partially offset by a loss on a property transferred to held for sale in the Rochester, Minnesota market. Retirement and benefit services revenue increased $0.3 million, or 1.8%, compared to the second quarter of 2026, primarily driven by an increase in recurring annual revenue. Wealth advisory services revenue increased $0.3 million, or 3.8%, from the second quarter of 2026, primarily driven by an increase in transaction-based fees and a slight increase in asset-based revenues. Mortgage banking revenue increased $0.1 million, or 4.2%, from the second quarter of 2026, primarily driven by higher mortgage originations and gain on sale margins.

Noninterest income for the third quarter of 2026 increased by $4.9 million, or 16.7%, from the third quarter of 2025. This increase was driven by increases in other noninterest income, retirement and benefit services revenue, wealth advisory services revenue, and service charges on deposit accounts. Other noninterest income increased $1.9 million, or 85.3%, compared to the third quarter of 2025, primarily driven by a gain on the sale of a property in the Fargo, North Dakota market, partially offset by a loss on a property transferred to held for sale in the Rochester, Minnesota market. Retirement and benefit services revenue increased $1.2 million, or 7.1%, compared to the third quarter of 2025, primarily driven by recurring annual income. Wealth advisory services revenue increased $1.4 million, or 22.0%, from the third quarter of 2025, driven by an increase in both asset-based fees and transaction-based fees. Wealth advisory services assets under administration/management increased $351.4 million, or 7.3% during the same period. Service charges on deposit accounts increased $0.5 million, or 73.7%, compared to the third quarter of 2025, primarily due to a reclassification of fees from other noninterest income to service charges on deposit accounts revenue in the first quarter of 2026.

Noninterest Expense

Noninterest expense for the third quarter of 2026 was $53.9 million, a $1.0 million, or 1.9%, increase from the second quarter of 2026. The increase was primarily due to increases in employee taxes and benefits expense, along with marketing and business development expense, partially offset by a decrease in other noninterest expense. Employee taxes and benefits expense increased $0.6 million, or 9.2%, due to self-funded group insurance costs, and marketing and business development expense increased $0.4 million, or 41.2%, due to seasonal advertising campaigns. Other noninterest expense decreased $0.2 million, or 8.0%, from the second quarter of 2026, due to a decrease in holding costs related to other real estate owned balances, miscellaneous operational losses, as well as a decrease in corporate insurance costs.

Noninterest expense for the third quarter of 2026 increased $3.3 million, or 6.6%, from $50.5 million in the third quarter of 2025, primarily due to increases in employee taxes and benefits, compensation expense, and professional fees and assessments. Employee taxes and benefits increased $1.3 million, or 21.1%, due to self-funded group insurance costs. Compensation expense increased $1.1 million, or 4.5%, from the third quarter of 2025, primarily due to annual merit increases, as well as an increase in employees. Professional fees and assessments increased $1.1 million, or 41.9%, from the third quarter of 2025, primarily due to the reclassification of consulting services and other third-party vendor expenses from business services, software, and technology expense to professional fees and assessments.

_________________
(1)	Represents a non-GAAP financial measure. See “Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures.”

Financial Condition

Total assets were $5.4 billion as of September 30, 2026, an increase of $173.0 million, or 3.3%, from December 31, 2025. The increase was primarily due to a $136.7 million increase in loans held for investment, a $35.5 million increase in available-for-sale investment securities, and an $18.0 million increase in other assets, partially offset by a $21.5 million decrease in held-to-maturity investment securities.

Loans Held for Investment

Total loans held for investment were $4.2 billion as of September 30, 2026, an increase of $136.7 million, or 3.4%, from December 31, 2025. The increase was primarily driven by a $188.8 million increase in commercial loans, partially offset by a $52.0 million decrease in consumer loans.

The following table presents the composition of our loans held for investment portfolio as of the dates indicated:


	September 30,		June 30,		March 31,		December 31,		September 30,
(dollars in thousands)	2026		2026		2026		2025		2025
Commercial
Commercial and business lending
Commercial and industrial	$	861,135	$	759,959	$	747,447	$	736,833	$	702,135
Commercial real estate − Owner occupied		690,988		622,241		444,276		427,260		435,320
Total commercial and business lending		1,552,123		1,382,200		1,191,723		1,164,093		1,137,455
Investor commercial real estate
Construction, land and development		87,615		79,850		146,897		246,238		349,768
Multifamily		332,535		361,875		392,097		383,505		374,761
Non-owner occupied		905,170		893,367		976,339		875,862		865,785
Total investor commercial real estate		1,325,320		1,335,092		1,515,333		1,505,605		1,590,314
Agricultural
Land		53,725		54,202		54,028		64,799		65,900
Production		54,597		53,367		50,983		62,500		63,051
Total agricultural		108,322		107,569		105,011		127,299		128,951
Total commercial		2,985,765		2,824,861		2,812,067		2,796,997		2,856,720
Consumer
Residential real estate
First lien		809,835		828,936		851,551		874,737		894,402
Construction		32,620		31,202		32,872		33,703		34,124
HELOC		280,771		273,124		262,131		260,883		234,681
Junior lien		31,566		31,941		35,783		36,844		40,434
Total residential real estate		1,154,792		1,165,203		1,182,337		1,206,167		1,203,641
Other consumer		44,203		44,180		40,340		44,858		41,715
Total consumer		1,198,995		1,209,383		1,222,677		1,251,025		1,245,356
Total loans	$	4,184,760	$	4,034,244	$	4,034,744	$	4,048,022	$	4,102,076

Deposits

Total deposits were $4.3 billion as of September 30, 2026, an increase of $111.2 million, or 2.7%, from December 31, 2025. Noninterest-bearing deposits increased $5.6 million and interest-bearing deposits increased $105.6 million from December 31, 2025.

The following table presents the composition of the Company’s deposit portfolio as of the dates indicated:

	September 30,		June 30,		March 31,		December 31,		September 30,
(dollars in thousands)	2026		2026		2026		2025		2025
Noninterest-bearing demand	$	813,493	$	759,640	$	857,625	$	807,896	$	776,791
Interest-bearing
Interest-bearing demand		1,430,016		1,429,951		1,449,156		1,296,315		1,256,687
Savings accounts		169,556		173,255		178,347		173,759		174,113
Money market savings		1,307,677		1,252,823		1,291,794		1,337,491		1,460,006
Time deposits		582,435		576,228		570,960		576,542		745,056
Total interest-bearing		3,489,684		3,432,257		3,490,257		3,384,107		3,635,862
Total deposits	$	4,303,177	$	4,191,897	$	4,347,882	$	4,192,003	$	4,412,653

Asset Quality

Total nonperforming assets were $16.4 million as of September 30, 2026, a decrease of $53.0 million, or 76.4%, from December 31, 2025. As of September 30, 2026, the allowance for credit losses on loans was $51.4 million, or 1.23% of total loans, compared to $61.9 million, or 1.53% of total loans, as of December 31, 2025.

The following table presents selected asset quality data as of and for the periods indicated:

	As of and for the three months ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	2026			2026			2026			2025			2025
Nonaccrual loans	$	6,909		$	7,105		$	53,881		$	69,065		$	59,644
Accruing loans 90+ days past due		21			436			—			—			—
Total nonperforming loans		6,930			7,541			53,881			69,065			59,644
OREO and repossessed assets		9,449			9,571			126			308			467
Total nonperforming assets	$	16,379		$	17,112		$	54,007		$	69,373		$	60,111
Criticized loans		81,830			83,090			132,459			149,162			191,331
Net charge-offs (recoveries)		(1,018	)		2,575			7,027			(311	)		(1,715	)
Net charge-offs (recoveries) to average loans⁽¹⁾		(0.10	)%		0.26	%		0.71	%		(0.03	)%		(0.17	)%
Nonperforming loans to total loans		0.17	%		0.19	%		1.34	%		1.71	%		1.45	%
Nonperforming assets to total assets		0.30	%		0.32	%		1.02	%		1.33	%		1.13	%
Criticized loans to total loans		1.96	%		2.06	%		3.28	%		3.68	%		4.66	%
Allowance for credit losses on loans to total loans		1.23	%		1.20	%		1.25	%		1.53	%		1.51	%
Allowance for credit losses on loans to nonperforming loans		742.40	%		641.31	%		93.73	%		89.65	%		104.16	%

For the third quarter of 2026, the Company had net recoveries of $1.0 million, compared to net charge-offs of $2.6 million for the second quarter of 2026 and net recoveries of $1.7 million for the third quarter of 2025. The quarter over quarter decrease in net charge-offs (recoveries) was primarily due to a $1.1 million recovery related to one long-term commercial and industrial client relationship on nonaccrual which was charged-off in the second quarter of 2026. As of September 30, 2026, the relationship had a remaining reserve of $0.9 million, which represented approximately 60.6% of the book balance as of that date. Management does not believe the charge-offs resulting from this relationship are indicative of a broader credit quality trend in the Company's loan portfolio.

The decrease in the allowance for credit losses on loans to total loans from December 31, 2025 to September 30, 2026 was primarily the result of problem loan resolution.

The Company recorded a provision for credit losses of $2.2 million for the third quarter of 2026, compared to a provision of $0.5 million for the second quarter of 2026, and no provision for credit losses for the third quarter of 2025.

OREO and repossessed assets were $9.4 million at September 30, 2026, compared to $0.3 million as of December 31, 2025. The increase was primarily driven by the transfer of one 1-4 family property and one apartment complex to OREO in the second quarter of 2026.

The unearned fair value adjustments on acquired loan portfolios were $33.4 million as of September 30, 2026, $43.8 million as of December 31, 2025, and $47.3 million as of September 30, 2025.

Capital

Total stockholders’ equity was $576.9 million as of September 30, 2026, an increase of $11.9 million from December 31, 2025. The increase was primarily driven by an increase in retained earnings of $46.8 million, partially offset by a decrease in additional paid-in capital of $18.9 million and an increase in accumulated other comprehensive loss of $15.3 million due to recent increases in interest rates. Tangible book value per common share⁽¹⁾ increased to $18.74 as of September 30, 2026, from $17.55 as of December 31, 2025. Tangible common equity to tangible assets⁽¹⁾ increased to 8.77% as of September 30, 2026, from 8.72% as of December 31, 2025. Common equity tier 1 capital to risk weighted assets increased to 10.52% as of September 30, 2026, from 10.28% as of December 31, 2025.

During the third quarter of 2026, the Company repurchased approximately $8.2 million of its outstanding common stock at an average per share price of $32.75, which reduced common shares outstanding by 250,000 at quarter-end.

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

	September 30,			December 31,			September 30,
	2026			2025			2025
Capital Ratios⁽¹⁾
Alerus Financial Corporation Consolidated
Common equity tier 1 capital to risk weighted assets		10.52	%		10.28	%		10.84	%
Tier 1 capital to risk weighted assets		10.72	%		10.48	%		11.05	%
Total capital to risk weighted assets		13.01	%		12.87	%		13.41	%
Tier 1 capital to average assets		9.58	%		8.86	%		9.49	%
Tangible common equity / tangible assets⁽²⁾		8.77	%		8.72	%		8.24	%

Alerus Financial, N.A.
Common equity tier 1 capital to risk weighted assets		10.57	%		10.41	%		11.00	%
Tier 1 capital to risk weighted assets		10.57	%		10.41	%		11.00	%
Total capital to risk weighted assets		11.78	%		11.66	%		12.25	%
Tier 1 capital to average assets		9.35	%		8.62	%		9.31	%

_________________
(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, October 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 advisory services bank and national retirement and benefit 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 advisory 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 25 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 Tempe 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 (loss) 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 (on a tax-equivalent basis), 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by 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 known and unknown uncertainties, risks, changes in circumstances, and other factors 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, such as the recent increase in the benchmark federal funds rate by the Federal Reserve; effects on the U.S. economy resulting from actions taken by the federal government, including the threat or implementation of tariffs, immigration enforcement, executive orders, 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; emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business or customers; 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, Inc; 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 the wars in Iran and Ukraine, ongoing conflicts in the Middle East, and other international military conflicts, or adverse external events and changes in foreign relations that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, affect global supply chains, increase the volatility of financial markets, and other matters beyond our control; the availability of future equity and debt issuances and other capital raising opportunities on favorable terms; 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)

	September 30,			December 31,
	2026			2025
Assets	(Unaudited)
Cash and cash equivalents	$	65,756		$	67,192
Investment securities
Trading, at fair value		818			1,758
Available-for-sale, at fair value		549,584			514,095
Held-to-maturity, at amortized cost (with an allowance for credit losses on investments of $111 and $123, respectively)		232,988			254,448
Loans held for sale		19,829			21,934
Loans held for investment		4,184,760			4,048,022
Allowance for credit losses on loans		(51,448	)		(61,915	)
Net loans		4,133,312			3,986,107
Land, premises and equipment, net		39,530			43,253
Operating lease right-of-use assets		31,528			28,761
Accrued interest receivable		21,011			21,742
Bank-owned life insurance		42,147			39,307
Goodwill		85,634			85,634
Other intangible assets		27,448			33,371
Servicing rights		7,416			6,383
Deferred income taxes, net		25,063			23,080
Other assets		121,039			103,019
Total assets	$	5,403,103		$	5,230,084
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	813,493		$	807,896
Interest-bearing		3,489,684			3,384,107
Total deposits		4,303,177			4,192,003
Short-term borrowings		318,400			308,800
Long-term debt		59,267			59,182
Operating lease liabilities		42,232			36,282
Accrued expenses and other liabilities		103,177			68,883
Total liabilities		4,826,253			4,665,150
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: 24,744,269 and 25,406,278 issued and outstanding		24,744			25,406
Additional paid-in capital		252,754			271,609
Retained earnings		316,826			270,075
Accumulated other comprehensive loss		(17,474	)		(2,156	)
Total stockholders’ equity		576,850			564,934
Total liabilities and stockholders’ equity	$	5,403,103		$	5,230,084

Alerus Financial Corporation and Subsidiaries
Consolidated Statements of Income
(dollars and shares in thousands, except per share data)

	Three months ended							Nine months ended
	September 30,		June 30,		September 30,			September 30,			September 30,
	2026		2026		2025			2026			2025
Interest Income	(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)			(Unaudited)
Loans, including fees	$	61,455	$	62,214	$	63,875		$	182,290		$	189,222
Investment securities
Taxable		7,525		7,258		5,091			21,888			16,108
Exempt from federal income taxes		156		155		160			468			480
Other		1,056		999		1,518			3,149			3,440
Total interest income		70,192		70,626		70,644			207,795			209,250
Interest Expense
Deposits		19,538		18,938		24,350			57,550			70,643
Short-term borrowings		2,886		2,935		2,506			8,178			9,327
Long-term debt		1,045		1,041		652			2,720			1,955
Total interest expense		23,469		22,914		27,508			68,448			81,925
Net interest income		46,723		47,712		43,136			139,347			127,325
Provision for (recovery of) credit losses		2,199		495		—			(2,188	)		863
Net interest income after provision for (recovery of) credit losses		44,524		47,217		43,136			141,535			126,462
Noninterest Income
Retirement and benefit services		17,664		17,347		16,496			52,418			48,625
Wealth advisory services		8,001		7,705		6,560			22,942			20,827
Mortgage banking		3,328		3,195		3,474			10,057			8,651
Service charges on deposit accounts		1,221		1,106		703			3,259			2,034
Gain on sale of non-mortgage loans		—		—		(35	)		—			2,080
Other		4,136		3,592		2,232			9,464			6,607
Total noninterest income		34,350		32,945		29,430			98,140			88,824
Noninterest Expense
Compensation		26,096		26,155		24,984			76,338			72,288
Employee taxes and benefits		7,377		6,755		6,094			20,772			20,490
Occupancy and equipment expense		3,525		3,493		2,849			10,444			8,315
Business services, software and technology expense		5,457		5,440		6,285			16,736			17,905
Intangible amortization expense		1,974		1,974		2,710			5,923			8,129
Professional fees and assessments		3,796		3,781		2,676			11,377			8,010
Marketing and business development		1,227		869		1,069			2,957			2,821
Supplies and postage		573		540		569			1,719			1,690
Travel		464		357		385			1,181			1,019
Mortgage and lending expenses		707		614		1,025			2,030			2,501
Other		2,672		2,905		1,895			7,664			6,176
Total noninterest expense		53,868		52,883		50,541			157,141			149,344
Income before income tax expense		25,006		27,279		22,025			82,534			65,942
Income tax expense		5,806		6,414		5,101			19,499			15,451
Net income	$	19,200	$	20,865	$	16,924		$	63,035		$	50,491
Per Common Share Data
Earnings per common share	$	0.77	$	0.82	$	0.66		$	2.49		$	1.97
Diluted earnings per common share	$	0.76	$	0.81	$	0.65		$	2.46		$	1.95
Dividends declared per common share	$	0.22	$	0.22	$	0.21		$	0.65		$	0.62
Average common shares outstanding		24,851		25,081		25,395			25,102			25,374
Diluted average common shares outstanding		25,161		25,395		25,713			25,410			25,693

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)

	September 30,			June 30,			December 31,			September 30,
	2026			2026			2025			2025
Tangible Common Equity to Tangible Assets
Total common stockholders’ equity	$	576,850		$	583,143		$	564,934		$	550,688
Less: Goodwill		85,634			85,634			85,634			85,634
Less: Other intangible assets		27,448			29,422			33,371			35,753
Tangible common equity (a)		463,768			468,087			445,929			429,301
Total assets		5,403,103			5,288,718			5,230,084			5,330,573
Less: Goodwill		85,634			85,634			85,634			85,634
Less: Other intangible assets		27,448			29,422			33,371			35,753
Tangible assets (b)		5,290,021			5,173,662			5,111,079			5,209,186
Tangible common equity to tangible assets (a)/(b)		8.77	%		9.05	%		8.72	%		8.24	%
Tangible Book Value Per Common Share
Tangible common equity (a)		463,768			468,087			445,929			429,301
Total common shares issued and outstanding (c)		24,744			24,986			25,406			25,397
Tangible book value per common share (a)/(c)	$	18.74		$	18.73		$	17.55		$	16.90

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2026			2026			2025			2026			2025
Return on Average Tangible Common Equity
Net income	$	19,200		$	20,865		$	16,924		$	63,035		$	50,491
Add: Intangible amortization expense (net of tax) (1)		1,559			1,559			2,141			4,679			6,421
Net income, excluding intangible amortization (d)		20,759			22,424			19,065			67,714			56,912
Average total equity		582,770			574,862			524,459			574,789			512,533
Less: Average goodwill		85,634			85,634			85,634			85,634			85,634
Less: Average other intangible assets (net of tax)⁽¹⁾		22,447			24,003			29,540			24,026			31,549
Average tangible common equity (e)		474,689			465,225			409,285			465,129			395,350
Return on average tangible common equity (d)/(e)		17.35	%		19.33	%		18.48	%		19.46	%		19.25	%
Efficiency Ratio
Noninterest expense	$	53,868		$	52,883		$	50,541		$	157,141		$	149,344
Less: Intangible amortization expense		1,974			1,974			2,710			5,923			8,129
Noninterest expense excluding intangible amortization (f)		51,894			50,909			47,831			151,218			141,215
Net interest income (v)		46,723			47,712			43,136			139,347			127,325
Noninterest income		34,350			32,945			29,430			98,140			88,824
Tax equivalent adjustment for loans and securities		771			755			638			2,145			1,748
Total tax-equivalent revenue (g)		81,844			81,412			73,204			239,632			217,897
Efficiency ratio (f)/(g)		63.41	%		62.53	%		65.34	%		63.10	%		64.81	%
Pre-Provision Net Revenue
Net interest income (v)	$	46,723		$	47,712		$	43,136		$	139,347		$	127,325
Add: Noninterest income		34,350			32,945			29,430			98,140			88,824
Less: Noninterest expense		53,868			52,883			50,541			157,141			149,344
Pre-provision net revenue	$	27,205		$	27,774		$	22,025		$	80,346		$	66,805
Adjusted Noninterest Income
Noninterest income	$	34,350		$	32,945		$	29,430		$	98,140		$	88,824
Less: Adjusted noninterest income items
Net gain on sale of loans		—			—			(35	)		—			2,080
Net gain (loss) on sale/disposal of premises and equipment		1,554			653			—			2,186			(84	)
Total adjusted noninterest income (loss) items (h)		1,554			653			(35	)		2,186			1,996
Adjusted noninterest income (i)	$	32,796		$	32,292		$	29,465		$	95,954		$	86,828
Adjusted Noninterest Income as a Percentage of Revenue
Adjusted noninterest income (i)	$	32,796		$	32,292		$	29,465		$	95,954		$	86,828
Net interest income (v)		46,723			47,712			43,136			139,347			127,325
Adjusted revenue (w)	$	79,519		$	80,004		$	72,601		$	235,301		$	214,153
Adjusted noninterest income as a percentage of revenue (i)/(w)		41.24	%		40.36	%		40.58	%		40.78	%		40.54	%
Adjusted Noninterest Expense
Noninterest expense	$	53,868		$	52,883		$	50,541		$	157,141		$	149,344
Less: Adjusted noninterest expense items
HMNF merger- and acquisition-related expenses		15			6			(43	)		(13	)		255
Severance and signing bonus expense		144			216			104			526			1,108
Total adjusted noninterest expense items (j)		159			222			61			513			1,363
Adjusted noninterest expense (k)	$	53,709		$	52,661		$	50,480		$	156,628		$	147,981

_________________
(1	)	Items calculated after-tax utilizing a marginal income tax rate of 21.0%.

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2026			2026			2025			2026			2025
Adjusted Pre-Provision Net Revenue
Net interest income (v)	$	46,723		$	47,712		$	43,136		$	139,347		$	127,325
Add: Adjusted noninterest income (i)		32,796			32,292			29,465			95,954			86,828
Less: Adjusted noninterest expense (k)		53,709			52,661			50,480			156,628			147,981
Adjusted pre-provision net revenue	$	25,810		$	27,343		$	22,121		$	78,673		$	66,172
Adjusted Efficiency Ratio
Adjusted noninterest expense (k)	$	53,709		$	52,661		$	50,480		$	156,628		$	147,981
Less: Intangible amortization expense		1,974			1,974			2,710			5,923			8,129
Adjusted noninterest expense for efficiency ratio^(l)		51,735			50,687			47,770			150,705			139,852
Tax-equivalent revenue
Net interest income (v)		46,723			47,712			43,136			139,347			127,325
Add: Adjusted noninterest income (i)		32,796			32,292			29,465			95,954			86,828
Add: Tax equivalent adjustment for loans and securities⁽¹⁾		771			755			638			2,145			1,748
Total tax-equivalent revenue (m)		80,290			80,759			73,239			237,446			215,901
Adjusted efficiency ratio (l)/(m)		64.44	%		62.76	%		65.22	%		63.47	%		64.78	%
Adjusted Net Income
Net income	$	19,200		$	20,865		$	16,924		$	63,035		$	50,491
Less: Adjusted noninterest (loss) income items (net of tax)⁽¹⁾(h)		1,228			516			(28	)		1,727			1,577
Add: Adjusted noninterest expense items (net of tax)⁽¹⁾(j)		126			175			48			405			1,077
Adjusted net income (n)	$	18,098		$	20,524		$	17,000		$	61,713		$	49,991
Adjusted Return on Average Total Assets
Average total assets (o)	$	5,255,954		$	5,226,319		$	5,273,306		$	5,233,732		$	5,282,798
Adjusted return on average total assets (n)/(o)		1.37	%		1.58	%		1.28	%		1.58	%		1.27	%
Adjusted Return on Average Tangible Common Equity
Adjusted net income (n)	$	18,098		$	20,524		$	17,000		$	61,713		$	49,991
Add: Intangible amortization expense (net of tax)⁽¹⁾		1,559			1,559			2,141			4,679			6,421
Adjusted net income, excluding intangible amortization (p)		19,657			22,083			19,141			66,392			56,412
Average total equity		582,770			574,862			524,459			574,789			512,533
Less: Average goodwill		85,634			85,634			85,634			85,634			85,634
Less: Average other intangible assets (net of tax)		22,447			24,003			29,540			24,026			31,549
Average tangible common equity (q)		474,689			465,225			409,285			465,129			395,350
Adjusted return on average tangible common equity (p)/(q)		16.43	%		19.04	%		18.55	%		19.08	%		19.08	%
Adjusted Earnings Per Common Share - Diluted
Adjusted net income (n)	$	18,098		$	20,524		$	17,000		$	61,713		$	49,991
Less: Dividends and undistributed earnings allocated to participating securities		171			192			148			571			444
Adjusted net income available to common stockholders (r)		17,927			20,332			16,852			61,142			49,547
Weighted-average common shares outstanding for diluted earnings per share (s)		25,161			25,395			25,713			25,410			25,693
Adjusted earnings per common share - diluted (r)/(s)	$	0.71		$	0.80		$	0.66		$	2.41		$	1.93
Net Charge-Offs (Recoveries) to Average Loans
Net charge-offs (recoveries) (t)	$	(1,018	)	$	2,575		$	(1,715	)	$	8,584		$	2,459
Average total loans (u)	$	4,026,351		$	4,032,142		$	4,036,936		$	4,029,390		$	4,046,347
Net charge-offs (recoveries) to average loans (t)/(u)		(0.10	)%		0.26	%		(0.17	)%		0.28	%		0.08	%
Net Interest Margin (on a Tax-Equivalent Basis)
Net interest income (v)	$	46,723		$	47,712		$	43,136		$	139,347		$	127,325
Add: Tax equivalent adjustment for loans and securities		771			755			638			2,145			1,748
Net interest income (on a tax-equivalent basis)⁽¹⁾(y)	$	47,494		$	48,467		$	43,774		$	141,492		$	129,073
Average interest earning assets (x)	$	4,912,782		$	4,896,740		$	4,965,849			4,903,681			4,968,236
Net interest margin (on a tax-equivalent basis)⁽¹⁾(y)/(x)		3.84	%		3.97	%		3.50	%		3.86	%		3.47	%

_________________
(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															Nine months ended
	September 30, 2026					June 30, 2026					September 30, 2025					September 30, 2026					September 30, 2025
			Average					Average					Average					Average					Average
	Average		Yield/			Average		Yield/			Average		Yield/			Average		Yield/			Average		Yield/
	Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate
Interest Earning Assets
Interest-bearing deposits with banks	$	54,390		3.74	%	$	45,777		4.11	%	$	89,568		4.86	%	$	53,591		4.04	%	$	53,187		4.98	%
Investment securities⁽¹⁾		783,165		3.91			773,692		3.86			796,759		2.64			776,289		3.87			826,409		2.70
Loans held for sale		23,245		5.39			18,885		4.50			20,188		4.93			19,277		4.91			17,979		4.80
Loans
Commercial and industrial		778,604		7.00			779,471		7.07			650,787		7.51			760,827		7.06			654,061		7.44
CRE − Owner occupied		649,436		5.98			502,476		6.19			435,469		7.73			528,217		6.09			419,608		6.77
CRE − Construction, land and development		89,571		7.48			103,618		13.08			363,466		5.77			134,534		7.72			348,093		5.85
CRE − Multifamily		341,997		5.97			394,683		6.05			340,709		6.46			376,509		5.94			350,658		6.50
CRE − Non-owner occupied⁽²⁾		858,263		5.95			922,958		6.08			887,935		6.26			898,414		6.00			934,143		6.48
Agricultural − Land		54,978		9.58			53,823		5.78			66,676		5.53			56,178		7.11			66,647		5.71
Agricultural − Production		52,005		6.99			53,351		6.95			64,685		6.80			54,704		6.97			64,357		7.13
RRE − First lien		818,187		5.01			838,819		4.93			898,011		4.83			840,523		4.96			898,910		4.84
RRE − Construction		33,030		7.31			34,981		6.63			33,834		6.61			33,639		6.74			36,798		7.57
RRE − HELOC		275,470		6.03			271,254		6.02			213,232		6.82			269,487		6.03			190,272		6.96
RRE − Junior lien		31,353		6.85			32,676		6.53			40,997		6.40			33,427		6.59			42,498		6.34
Other consumer		43,457		6.53			44,032		6.51			41,135		6.94			42,931		6.45			40,302		6.99
Total loans⁽¹⁾		4,026,351		6.10			4,032,142		6.24			4,036,936		6.31			4,029,390		6.09			4,046,347		6.28
Federal Reserve/FHLB stock		25,631		8.41			26,244		8.10			22,398		7.46			25,134		8.13			24,314		8.01
Total interest earning assets		4,912,782		5.73			4,896,740		5.85			4,965,849		5.70			4,903,681		5.72			4,968,236		5.68
Noninterest earning assets		343,172					329,579					307,457					330,051					314,562
Total assets	$	5,255,954				$	5,226,319				$	5,273,306				$	5,233,732				$	5,282,798
Interest-Bearing Liabilities
Interest-bearing demand deposits	$	1,402,505		1.70	%	$	1,378,394		1.68	%	$	1,227,029		1.80	%	$	1,382,852		1.67	%	$	1,240,589		1.80	%
Money market and savings deposits		1,454,053		2.38			1,441,099		2.34			1,587,694		2.84			1,466,135		2.36			1,580,085		2.83
Time deposits		573,526		3.32			571,276		3.34			772,345		3.81			571,305		3.36			716,421		3.81
Fed funds purchased		24,167		4.05			74,104		3.85			16,636		4.94			44,591		3.93			71,717		4.67
FHLB short-term advances		262,228		3.99			226,703		3.93			200,000		4.56			231,337		3.97			200,000		4.56
Long-term debt		59,253		6.99			59,225		7.04			59,137		4.37			59,225		6.14			59,111		4.42
Total interest-bearing liabilities		3,775,732		2.47			3,750,801		2.45			3,862,841		2.83			3,755,445		2.44			3,867,923		2.83
Noninterest-Bearing Liabilities and Stockholders' Equity
Noninterest-bearing deposits		776,897					790,088					800,028					788,442					819,266
Other noninterest-bearing liabilities		120,555					110,568					85,978					115,056					83,076
Stockholders’ equity		582,770					574,862					524,459					574,789					512,533
Total liabilities and stockholders’ equity	$	5,255,954				$	5,226,319				$	5,273,306				$	5,233,732				$	5,282,798
Net interest rate spread				3.26	%				3.40	%				2.87	%				3.28	%				2.85	%
Net interest margin (on a tax-equivalent basis)⁽¹⁾				3.84	%				3.97	%				3.50	%				3.86	%				3.47	%

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

Alan A. Villalon, Chief Financial Officer
952.417.3733 (Office)

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Alerus Financial's third-quarter 2026 earnings?

Alerus earned $19.2 million, or $0.76 per diluted common share, in the third quarter of 2026. This compares with $20.9 million, or $0.81 per diluted share, in the second quarter of 2026 and $16.9 million, or $0.65 per diluted share, in the third quarter of 2025.

Why did Alerus Financial's net interest margin decline in the third quarter of 2026?

The sequential decline primarily reflected a one-time $1.6 million interest income recovery on a nonaccrual loan resolution in the second quarter and less purchase accounting accretion. Higher loan and investment yields partly offset those effects. Tax-equivalent net interest margin declined to 3.84% from 3.97%.

What drove Alerus Financial's higher third-quarter 2026 expenses?

Higher employee taxes and benefits and marketing costs primarily drove the sequential expense increase. Self-funded group insurance costs raised employee taxes and benefits, while seasonal advertising increased marketing costs. Year-over-year expense growth also reflected higher compensation from annual merit increases and more employees.

Why did Alerus Financial's deposit service charges increase in the third quarter of 2026?

Deposit service charges increased 73.7% year over year, primarily because fees were reclassified from other noninterest income into deposit service charge revenue in the first quarter of 2026. The reported increase was $0.5 million.

How much capital did Alerus Financial return to shareholders in the first nine months of 2026?

Alerus returned $37.2 million through dividends and share repurchases in the first nine months of 2026. Third-quarter repurchases totaled $8.2 million at an average price of $32.75 per share, reducing common shares outstanding by 250,000 at quarter-end.

Alerus Financial Corporation Reports Third Quarter 2026 Net Income of $19.2 Million