ALRS - Earnings call transcript Q1 2024 | Alerus Financial Corporation

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Operator

Good afternoon, and welcome to the Alerus Financial Corporation Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. This call may include forward-looking statements, and the company's actual results may differ materially from those indicated in any forward-looking statements. Important factors that could cause actual results to differ materially from those indicated in the forward-looking statements are listed in the earnings release and the company's SEC filings. I would now like to turn the conference over to Alerus Financial Corporation President and CEO, Katie Lorenson. Please go ahead.

Katie Lorenson

All right. Angela. you, Thank it. I appreciate and Call. welcome XXXX all, the to Earnings Alerus Greetings QX We to the taking appreciate all you time join today. us

franchise. Earnings through in matched Chief widely here Officer, Revenue expectations executing me making in Al Karin all the today Minneapolis came our Operating Alerus as again our Taylor; growth is Officer, and quarter strong call full Banking Jim debut and Collins; wealth relationships. organic wins professionals client wins am delivered and One of as Joining most and and Chief parts be of surrounded to We members for of Risk our strategy. earnings with in came Alerus' in today our first Retirement Chief proud treasury Alerus came and the our -- is his and across XXXX room, Client Villalon; which Services these team deeply incredibly resulted notably here lending saw and deposit CFO, inflows. with talented business us well this opportunities management as Officer, in Forrest new and Wilson. I growth in management by the C&I, across

showing from Fee were deposit loans the X% income, clients to Our inflows impact events increasing even we results these team impressive as quarter. Highlights the and margin growth. for of the the balances approach the One of by for continue over growing between XX% as robust in support of grew benefits which members retirement as our liquidity revenues, ability well consecutive owner private the and core delivered as driven mortgage liquidity. across businesses. Alerus with The our commercial business evident, included wealth expected. holistic saw division. The to during and position Alerus an new for consecutive grow net strong balances our deposit repositioning company synergies quarter as well faster positive to clients. efforts quarter, each organic while of than the rollover loan the banking with attract wealth, a over X% total balances growth commercial services sheet management momentum quarter emerge to banking, from in strong improving interest over quarter business our and by in continue serving accounts and balance displaying differentiate for net sourced remains business model an of production fourth robust to grow fee-based with the quarter, portfolio increased highly-diversified a ninth and Loan uniquely and ongoing proven was

consistently growth risk client remain market our While flows share continue and remains in and as We industry our retirement nationally banking through and we investments as our selectively our management benefits strong very communities. supporting see businesses. deposit to and infrastructure markets challenged, well with within from clients for synergies our while the disciplined taking

higher aristocrat, period X.X% increasing commitment CETX consistently year, dividend loans dividend continued dividend. to sheet an at same a as prior streak the our fortress and and a is total with our to allowance ratio our than XX.XX%. With balance unwavering of capital Our our shareholders X.XX% our maintained the XX a and of dividend and in history paying our years we of we quarterly

CFO, top the get company our path at and it to to share managing strategic on focus that, loans. charge-offs with in than proceeding will returning Al continue consistently our to expenses, and turn initiatives, quality net our including growth. And earnings building to returns shareholder per We Asset efficiencies, we and basis of confident on I with levels Villalon. remains less remain better strong over point nonperforming low will X of

Alan Villalon

our of posted is commentary I'll Thanks, our Relations of my in on investor that XX part deck start website. the Page Katie. Investor

I basis, by $X.X income we any client loan of Funding segments Let's about decreased income. Despite key linked-quarter Program. Net in primarily quarter linked Term into income. driven represented deposit recognized reported each all our was increase swap million income using the of did interest will approximately basis. by of drivers. current in income across noninterest revenue increase arbitrage X.X% not The income Noninterest quarter a Bank and detail organic having later XX.X% income quarter, fee revenues. Switching and opportunity start net fee was strong our income on income the prior to primarily fee-side see X.X% our interest on driven a on growth, basis, On of a growth swap that increased other segments. an go in income slides.

quarter. X margin, or interest Turning net net Page in an first XX. $XX.X million its We of due the income to with can of date excludes was penalty. Adjusted back arbitrage any basis The the the in quarter. to accretive Net the from BTFP XXXX, time, to interest X.XX%, interest points pay which core prior by BTFP increased $XXX,XXX. increase BTFP impact arbitrage was no the income

helped During lower rates along drive the volumes balances and expansion. higher quarter, margin with loan

show, expect our assets. Should in earning to or in interest improve. due pause, on revert when to to the After margin BTFP, repay net reported primarily our Fed average XXXX. margin expect we margin to the XXXX, continue to our interest net reported will remain interest We continue reduction improve core margin we net to we

rate to sooner modeling to of year of July at While year this the returns to in will with January liability-sensitive, margin swaps for maturing that in especially $XXX rates the margin net uncertain, another with margin X% of the static in of depending of our outlook Fed XXXX. Should being interest interest is and we million current net balance $XXX XXXX. magnitude interest Fed spreads, full as expect exceed timing our million interest and a and swaps get cuts, on sheet X% net our cut the shows sooner, ALM

loans and real in estate. Total our Let's grew assets. XX to X.X% the by growth driven Page earning quarter, from turn commercial C&I to prior about organic talk

declined low-yielding portfolio continue to remix higher-yielding loans. as X.X% investment into we securities Our

we -- modest see to we expect XXXX, For expect loan continue to growth.

of to expect this expected loan to to and X% payoff assets the continue While of grow. runoff offset remainder do earning the contractually during are expect to production our we X% loans year, to

Turning deposits the basis, increased period X.X% to ending momentum quarter. Page On quarter. our in deposit quarter prior from XX. saw the The prior into a we this and growth continued

deposits. Overall grew, deposits businesses, prior and those overall our total quarter. balances increased deposits, now and wealth so X.X% from represent from of While retirement noninterest-bearing decreased X.X% deposits XX% sourced synergistic the

decreased the Given strong growth, XX.X%. to deposit our loan-to-deposit ratio saw we

approximately mainly from quarters do million, our we third and XXXX, outflow funds. expect public second the For of of a seasonal $XXX

year outflows quarters, end than levels ended do to deposit of upcoming in While end pressure expect will balances the year XXXX. these in deposit we of the the we to where at higher rebound the

to XX. Turning business. mortgage about I'll now our Page segment, talk our includes banking also which

lock when and of unpredictable. rate done Rather, on fee our balance relationship not at like prior covered in rate interest already income since swap type floating to $X.X now decline income banking tends a is net from attributed was client loan. the million quarter. the was out these are $XXX,XXX income. noninterest swaps swaps. decline swapping a to Most fixed by that relate swap components down be focus for I've income prior the banking This income quarter. This lumpy in was swap of the to the XX% Our would level sheet Overall does or to recognized income

noninterest expect pickup noninterest expect the the seasonal second X.X% our income of million upcoming quarter. we income quarter, In quarter. to quarter Participants from due not equity in with do bond income this within income increase typical the any stable first under quarter, to current improve highlights mainly income at a the as do we increased grew noninterest swap the mortgage Page level business. the better we and some $X.X XX, rate increased as go-forward level basis, X.X% quarter we quarters. The from For is retirement expect in a management on run X.X%, of the on improved I'll during a retirement to to second markets. client prior third and other that overall of assets be moment. On level provide the level in expect Total

banking since currently are those earning These synergistic deposits expense our top compared credit the retirement are for assets left deposits which segment. segment. broke our the range. table noninterest any include in deposits synergistic allocated to highly not did of when on valuable is does to within low are XX-K, are The X% we the FHLB, those at we out in borrowing the the As that

almost XX% to of around consists HSA are deposits XX of funds which cost While are noninterest-bearing XX% carry XX and indexed, of deposits, XX% only points. retirement basis synergistic

in downturn business retirement at quarter, the fee stable we recent the despite expect from For $XX.X the markets. second to million be income

On Turning basis, revenues we to noninterest in credit X.X% X.X%, of see and improved allocated slide, Over management any the wealth highlights to have revenues XX% net the asset-based prior the also the but due left Page bond for segment increased segment, are a top show equity our excluded our quarter on expenses fees. Similar to this -- management synergistic you we XX, wealth end-of-quarter markets. deposits. linked while for increased to can of assets under business.

deposits As remainder the of see are noninterest-bearing. you can in our wealth synergistic here, XX.X% while are indexed

provides stable impact, the second income of expect be For to market excluding noninterest volatility. Page market expense. the overview fee an XX from our we business any quarter, wealth recent given

increased expense benefits. mainly X.X%, higher noninterest and due quarter, to compensation the During seasonal

continue As when reported XXXX, XXXX basis. low deal we with to expect to on single grow, expenses for to compared continue to pressures, grow we to digits a inflationary

loans charge-offs points loans our nonperforming for And of basis was XXX% continues Credit will XX net XX. point was percentage XX. liquidity over in to credit the Page compared quarter. loans to capital prior our to remain Turning total nonperforming the very losses We total loans. I basis XX X to assets strong. had discuss basis to points on A in or X.XX% on quarter. Page allowance

to basis the subjected Tier stress which equity minimum is XX.X%, required capital Our institution XXX points financial largest risk-weighted almost the test. assets the common above stress by to Dodd-Frank X.X% is X

$X positioned sources a potential capital On both from liquidity. Overall, for you'll growth liquidity standpoint remain the right, billion we bottom and future economic see of in of well weather breakdown uncertainty. to a any continue the or over

The disciplined shares XXbX-X XXbX-X our share out recent in levels approach. active did we repurchase not there our we price quarter, we repurchase have sharp share the our an being the any in ended share run-up plan. set very above repurchase While repurchase that is in up in plan

remains today. plan XXbX-X in Our currently place

XX, fourth XXXX the So to had Page on XXXX. the in continued momentum into summarize we quarter of

and to loan growth. deposit continue organic growth strong see We

to Our to improve to margin over net remains we if the quarter. Fed continue Even see the a X%. pause, on interest margin of in to the continued improve path

differentiator a businesses, us. revenue in for be which Our quarter fee over are continue of XX% and represented nonspread-based the to

we now, Our and capital I'll capital it returning up open for levels remain prudently. With strong that committed remain to Q&A.

Operator

Brendan [Operator Instructions] comes Hovde with from question The Nosal first Group.

Brendan Nosal

keep on is start this for the At months, Maybe the XX just to is and to to safe months? is assume this point, intention funded on for here it that the trade. then full off XX match BTFP it

Alan Villalon

That's Brendan. is the correct, time is be we opportunity repay arbitrage we time. that not probably assumption. That if The a worth BTFP our see safe only

Brendan Nosal

up I whole on quarter. Can kind a X% Yes. see you specifically, for that, the continued guide following Yes, that the guess the longer-term of margin lot and of finer here? that for more assuming the terms point the appreciate a this core makes year, in I doesn't give of outlook sense. Fed And the rest this expansion do then us margin to NIM the on just

Alan Villalon

Yes.

a right now, our sensitive asset position. little swap So we're given bit

a still return as sensitivity So our see we pause, remain in it'll liability if bit NIM July Feds be -- in year. and will improvement January continued swaps next of will off roll a the on little and

So -- deposit us say I wildcard the to the right Brendan. biggest is for now, have would environment,

improvement gradual if see on core trying are on give But through too we of pause XXXX, I'm could NIM X.XX%. a is what expect year. our Fed you do the even between like the we and basis today where is you So to now

gradually out it. about X% getting That's would can an think in average just NIM how I You to map of kind XXXX.

Brendan Nosal

yes. Yes,

X then much Can year? a of year drag those follow-up. rolling And next that Okay. of or us one you just are on off more the later remind early margin how each swaps in this

Alan Villalon

Yes.

say, Right in say, it it's look terms right terms about think now, way I -- it the I disclosed let's interest when when okay, if swaps when in, modeling look right back So would down to that going our you down way in more. down be X% of the we really we our mean, scenario. income the we ALM to didn't is scenario. is our -- we But we roughly on XXX around X% be is this going in a was to the probably, now, at a NII disclosures have look XXXX, our a of about XXX XXX then think at down in at now, scenario drag or where net up

the we've eventually up sensitive. way think gone around this to sorry, kind it, the And -- that X%. impacts then up in return that's is I so sensitive about NII those to scenario XXX asset swaps So of basis -- we from liability down being being around XXX how

Operator

The Jeff Davidson. next from comes Rulis question D.A with

Jeff Rulis

margin of full The quarter QX? specifically up timing in and the about both in does more NII represent on quarter and -- a Just you the follow BTFP. thinking a on that that impact, brought that

Alan Villalon

more No. January. Jeff, we that up there up could because a we bit I pick little late think picked there's

Jeff Rulis

that a little a more accretive to and dilutive little NII be Could then more margin? to now Okay.

Alan Villalon

to That's margin, we When margin. not about Correct. it, core the reported -- to margin way often the take net dilutive think , Jeff. dilutive

Jeff Rulis

-- we just assume that Right. how as we out of there, items? again, gap closes and Right. that and those you point, sort about that track can think that as X reported once To to adjusted kind long of have retired, is

Alan Villalon

to denominator way That's think assets. there's because Correct. a earning our the average effect it about on

$XXX So of $XXX assets we range that. impacting that's average million have earning approximately around to million

that's that impact. a So then off if have great denominator, to you the take going

Jeff Rulis

-- M&A and think of answer this being I And the Forrest but on retirement big benefits any the just to of of also tweak end may a the parts to to on wanted here Okay. and talk the head get I for was strategic line. to I on Maybe know sense one bringing the any I'll or strategy. a the already, things.

line? add got to Forrest while anything on we just So the

Forrest Wilson

Yes. Well, thanks, Jeff.

I to be be there's which I Forrest with impressed and but mean lot for address lot a in. a not have you we and -- really are an be Wilson smart, pickup very But very of the observations It's like out, be glad quick as have with that just here, here been business. market, It's to tenured if MassMutual, which improvement, is a solid team, of would think a But but this is well. Organic there There for partnerships is here. folks opportunity experienced, that here yes. we broke. nice see that can to can growth some second. a I more opportunity paced in over opportunity we time. will, one have going foothold an dedicated, nice

acquisitions As alluded consolidate. you some just as there's the Jeff, of opportunities for to continues definitely to, kind space

them I need we X, at opportunity final I and have throughout to And is the and really to we believe do efficiencies through have looked of It's but X, with the thoughtful as line good is this structure, wasn't that. dug acquisitions, can X, of we of Katie look you to they a we likely There's that. But well. In excited for few with think be there's to and already that, that be that be it going we're at then I We're value, going experience we very was in time, coming on. this. that some push really be technology and looking improvement something and wrong when the we'll that direction the driving -- that just with there in lot thing have years. process to although stepped third of AI there's well. in, out to kind I as a seeing I'm business, And a accretive which platform, over as at get good as as do about first, can of one leverage shareholder we opportunity working to gained can a that lot an done. thoughtful quick

that question, answer kind to of your bit a Jeff. So you little hopefully, gives

Jeff Rulis

of this Great last of think one just Yes. sort you I pretty and out just tamped is thinking that why year, growth kind strong there the that were growth the conservatively Or that for year? sort of a of maybe of down. from first payoffs loan moderates the remind quarter? Could me that balance or -- it Coming gates, pretty anything overview. Appreciate it. the outlook on you And outlook. strong

James Collins

Jeff, this take I'll is Jim Collins. that one.

of really did little of a year, conservative because a going We I little at the on a to multi-housing growth go now think of some lot relationships need and on relationships, don't first it's I'm take a many little we lot bullish markets our we put first flowing staying into develop. but are CRE of we stabilize both to in which been new markets those largest solid end develop. until growth lot books was we quarter. a think some ], into those in higher. I back and in the deposit That had make those and full, growth, sure right how are those that, but C&I see investor to last loans, markets. we've the TM And the rates [ a of conservative, the quarter. We've relationships had floated while too

maybe out some that expect just achieve. growth. can't to we kind we'll definitely the but loan that want we're of exceed we harnessing numbers don't budget So I it, hit throw

Operator

question from with David Raymond next is Feaster The James.

David Feaster

on managing. commentary of some around this Maybe sheet balance following up the just

Al. I this back NIM how cuts to to, We've of have doesn't exclusive you sheet to in swaps and anything and the half got you're managing whether do like resume the you're is balance know curious, I'm about getting sheet. swaps you back and managing environment of sensitivity plus looking And put liability about more the kind been restructuring, the of you the at like about that curious prospects going very considering But just put at how expansion or on at point? higher-for-longer think It of X%. that the impacts to right? guys year, the alluded I'm you active, talked You sheet looking think balance sound balance all? But on. a

Alan Villalon

question, the David. for Thanks

total portfolio targeted about there's think the start think don't is say, as So XX% to sheet I'd to saw bit down though in investment because let's a to because right the in that's just and our now, of there you with we yields of just the investment sell. side, investment like assets. lot even I our low XX% side. do more first, munis much range of HTM balance portfolio a come not yielding under And going which we're tiny there, are our

When it some really much of right to market there's a out the there out our now, side loan loans. to of comes sell just not

of right relationships comes remixing Jim team his So with the and loans now, it's sheet, in as kind just kind balance what's coming with more us. especially of just and higher-yielding commercial for

it's that's of happen definitely So going kind mixing there. to

there's especially severe some offload, but look us that's to to an -- movement take for multifamily, going opportunity in rate maybe for So we'll it, into happen. if to

that that is So see interest standpoint the tail that need a to modeling probably tail only going on it improve do swap about. a as have managing worry XXX as of do -- do just the net our single make I sort want ALM risk interest a we making alluded I that liability and in digits, sure returns that down thing of we any have we the we're to just scenario, to because us still income you'll of mean terms an don't I then from will risk our to, swaps, last that the high on sure risk sense we part the we're -- something, probably rate sensitivity in think

So we might tail on risk. of sort to swaps just some collars tight the employ just end, maybe some manage just that

David Feaster

pickup you X assets earning side do the any following are for guess, the maturing of kind public repricing to you'd loans you be kind details XX on expect have of on think on you're and And funding I maybe and fixed-rate quarter that. that going next? expecting your that or then And that those? or the then about Okay. fund in up fixed do just months how general next so this in the outflows --

Alan Villalon

Yes.

probably what's stuff of going So pickup on mean, a hundred coming going little on of of putting in get the -- of of basis the terms to what's the part couple back first points what's it, bit off here out, on. and of book the rolling I a a we're we're to

the loans. book way to think year it. So we of of X% loan X% about terms And roll book this is And going -- like our are just to that's then about I then... our to said, gross off in

James Collins

of going of to in A over the won't relationships are funds leaving. year. are markets They them say time. the deposits that and they just towards that On fairly the quarter significant then in but side, away, the all lot I end be public those right David, have would the first relationships up X Clearly, back we fund the public deposit that some then of grow those Twin of funds picked in deposits able in Cities. come slowly -- the are C&I and come help fund months for C&I XX teams we they that to all prospect out just drain doing

So all those deposits away. don't come in right

deposit see relationships but good and funds So that fund. of there help we'll to the some differential core leaving, will existing growth have growth, to we new tamper down public will deposit a be

Alan Villalon

One is Al. this more. David, And

what to Just build on there, too. said Jim

the quarter, see in year. our the in public of quarter second seasonal both that in first the we the and third we While back see quarter fourth outflows do in next funds building up and

that in should year. of back half this back now the a outflow So pick seasonal we're doing temporary right up

David Feaster

is gap you plan or gap, kind And -- growth, think there cash how deposit just funding curious just of about the would between Okay. you if using the on any? that

Alan Villalon

borrowings. Yes. some By cash or do if to short-term we need

David Feaster

you said at reputation as step a and in I'm right? I you as conservative focus and You hyper underwriter. mean, credit mean look your touching remains just on have portfolio, pristine, credit As CRE, -- great there's things a you you back stress the a the on curious, then guys in Is maybe I'm more at concern do there that's competitive you market. -- what What be today? landscape you're anything of the point? And that watching front. on bit you this a look are causing just from competitive you Curious standpoint, any rational then and is a And closely? right? market are how you I obviously, seeing? curious, you Perfect. seeing the really kind what front. may look

Karin Taylor

This when a Sure, our is started take in refinance one. that David. I'll our at look Karin, obviously to We We're CRE started risk. growing rates take we increase. fortunate book,

So deals manageable. construction the risk, have and like and just others, refinance stabilization We do feel period. is we're limited books some our watching very on we

we're well, see and certainly stabilization. that performing some are cognizant we deals Our could but strongness

fundamentals the our we're asset market classes for speaking, in Generally in strong. the are very

so not And we're but watching overly certainly it. concerned,

who mean I say more certainly not rational. degree are growth, have of terms would players overly those and we're I We've were. to concentrations. yes, And is back are they aren't pulled In it there not have same lending, but the concentrated. that competition, seen

Operator

from next with Nathan The Piper question comes Race Sandler.

Nathan Race

added the about over guys transitioning from we the of tailwinds in X going update just with added of quarters? what are to last And you have wealth. the been Curious of the onto organic of growth some in expect forward. in AUM terms bankers management thinking private platform can that growth retirements an the outlook wealth Just revenue clients terms the success get having terms

James Collins

I'll that Jim. one. take is this Dave, Yes,

will new time as So We this rolling over is that actually the a group so terminated extremely we're off plans little learn XXX(k) new building going how and that into tracking some increasing our anticipate are of our participant tactics implemented better. we plans, wealth, we've and increase and mechanisms, from well. bit the that that, only some out

that, I So continue. that will suspect

also active some are capacity. a bit in advisers more in more need wealth we We that space additional recruiting little because

we're recruiting those actively pretty we're that good recruiting, some of space. So in individuals I some success and think finding in

will that as well. So help

success team, businesses private end wealth they private business with that and early the early and event and big lot in group the success banking capturing We're commercial the as and at the getting that really banking group year, that this sale banking as well of selling, good pretty department private mortgage last announcement liquidity. had are having a team the of also of far some the the As launched the as before with a chunk year. that of liquidity wealth team. We've with

specific have this harness event in X/X probably of wealth that that liquidity one We quarter. large event we'll That's about department. example, and our

continues Twin Cities. So private we're the to the focused and all markets, in really, as that banking on build

second Arizona later that. third we of Now should I out be launching continued on quarter, only early quarter and positives see and traction,

Nathan Race

curious at give end spot rate of trajectory the of Okay. the about on could the Great. deposit think Very the to the just March. of helpful. kind costs of And then you costs deposit over kind if course of quarter. And

Alan Villalon

Yes.

the way noninterest-bearing think we from see Nate, migration now continue it to is to right I So about interest-bearing.

slowed But pushing So our mean going see to dramatically. I'd down our it's continue overall we slightly. deposit beta probably right I that to up is pressure, be deposit now, -- which that say is cost

I'd bigger our noninterest-bearing we side in marginal comes levels. going these much that see just as right continue. deposit is the interest-bearing. there's But move probably still overall people now pressure is forward pressure be increases in The now pressure into say how from question So will and costs the just

Nathan Race

pace deposit competitive cost least increases as mean, on or is it magnitude at expect I the slows of to stands today pricing, the I Yes. and that fair here? your guess from based environment

Alan Villalon

think I back and rolled our mean competitors. fair. -- seeing from some so we're They that's do Yes, rates, I we. we've seen CD especially

XX Fed the XXX beyond especially call basis those deposits curve. to anything like to So we've with overall, still inversion especially in our minus on funds down, today points. the XX those seen at that say in least I'd -- somewhere have months are come But the

Nathan Race

at Got Okay. loan lastly, apologize on modest near growth guys just on but term. I touched And got I I you it. then late, least so think had you this, already if

for here the have exceeded You similar quarter. that first guys based the guidance on

weighing So payoff of just over just XQ? into we that outlook expectations XXXX? that's about there should other remainder it is curious, thoughts the coming potentially elevated on Or growth loan how is any on think

Alan Villalon

No off Nate, to I'll in Jim here it turn problem, a second.

so loans on. that of the And color the then the payoff on Just X% going of are year. what's remainder X% the you Jim can know of comment around for about of to total expecting we

James Collins

Yes.

of on So some tail There's C&I this a we around was right year those be but And transactional last CRE CRE. focus aren't in a centered relationships more in the a away. had larger end that of the little automatically, funding heightened really deal markets. year take lines of growth that bit versus investor credit, funds that all to and growth tends time and

what's we're bullish for year. in relationships very So our rest the that But tampering on the that's new bringing of forecast. still in

Nathan Race

tax for Sorry, more the if could ask [indiscernible] I ]? one [ on rate the quarter

Alan Villalon

states, We tax expect would a changes. up our I Yes. bit little see did recent taxes, other just some of in rate. gravitating some

So on basis. good I would rate XX% go-forward use to tax say is possibly somewhere around a a

Operator

with question Damon from is DelMonte KBW. next The

Damon Del Monte

may the second has as it typical might Just been banking stubbornly curious not be the the in that or outlook mortgage of be there quarter third rates concern past Is increase you expecting? and high that favorable here. with as in seasonal kind on here the remaining any

James Collins

is still that we're going And lower pretty we'll for then and look the quarter fourth quarter. second markets but largest in see the the the tracking on rates little third inventory are light second that quarter, We're like. given follow that won't to higher little surprised a our what and be a close for we

we quarter to and should see third really -- where see quarter going The second we're are growth. that some

pretty budgeted -- number, confident that keeping close So number can we can to that. I'm we still because come our we're

the little The quarter might second and based demand. light on be rates a

Damon Del Monte

it. Got

the And with opportunities, by factor helpful. That's the driven and it Arizona is the overall then a contributor being to how your the Twin Cities? growth? Okay. that regards to Or still meaningful Is growth does primarily loan outlook? into

James Collins

-- very their there. Twin added by team be this the of number driven the As the curve. that last expectations getting fair now, we than we existing there down through it's year Cities bankers right and have is pipeline a advantageous. our to year more are of in learning then seems And Certainly, but what Arizona,

contribution a going years think see time, seen versus them but year, what this they're more past. over So -- larger a in significant contributor be we'll to a from we've I

Damon Del Monte

ones question, then and With incorporate what Al, it margin level into And decent for to was expected the other answered. be quarter. Great. my bit little accretion, Okay. would the fair were all we lighter this last regards that? value could asked a just I think a

Alan Villalon

missed I time? one question there, sorry, I'm Damon, more the

Damon Del Monte

seen had level later expect value believe of you last but I kind there accretion in a came we than expectations, quarter scheduled Fair going of quarters, the it is that couple in this forward? would

Alan Villalon

No. way I'd think probably just going this that's to the I using forward, it. about say mean level

Operator

from is question next with The Brendan Nosal Group. Hovde

Brendan Nosal

my the I realize, way. Just wanted on I but probably swaps, back question circle didn't to best phrase the

haven't receive You the and benefiting the now the they're rates. not cut so had margin on would but chunks, pay Fed rate be if those both

Alan Villalon

Yes.

in what and on the our to books Qs, thing see could can we where point one disclosures and could are our you see swaps, the I latest put So there. K or Q, the for you you K there Brendan,

a pickup -- is out But So swapped the but on what us has we've there. done made put haven't why there. which fixed really we really moved asset sensitive more we've hence we some floating, and little basically, bit some disclosed

Operator

question-and-answer turn over conference to like Katie I would our concludes closing session. back the This any for remarks. Lorenson to

Katie Lorenson

appreciate to We it. you today. All right. our Thank you for everyone you. Thank questions. joining Thank call the

pivotal we history a to top return delivering shareholder of transformation end of our in company's turned the quarter long returns. At XXXX, to our

momentum Alerus on quarter, During path first beyond. XXXX and strong and for grew put a has the the

opportunities improvements positively impact see interest in will to our earnings which margin, forward. going continue and organic our net We

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Operator

Thank you. concluded. now has today's Thank The conference you for attending presentation.

disconnect. You may now

Alerus Financial (ALRS) 25 Apr 242024 Q1 Earnings call transcript