Second Quarter 2024 Presentation
INVESTOR PRESENTATION
2Q 2024
NASDAQ: ALRS
DISCLAIMERS (CONTINUED)
AlerusdditionalFinancialInformationCorporation (theand"Company")Where to filedFindaItRegistration Statement on Form S-4 (Registration Statement No. 333-280815) with the
Before making any voting decision, the stockholders of the Company and HMNF are advised to read the joint proxy statement/prospectus, because it contains important information about the Company, HMNF and the proposed transaction.
This document and other documents relating to the proposed transaction filed by the Company can be obtained free of charge from the
ThisParticipantspresentationindoesthe Snotlicitationconstitute a solicitation of proxy, an offer to purchase or a solicitation of an offer to sell any securities. The Company, HMNF, and certain of their directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of the Company and HMNF in connection with the proposed transaction under
2
COMPANY PROFILE
Alerus is a commercial wealth bank and a national retirement plan provider
DIVERSIFIED REVENUE(1)
Last Twelve Months Ended |
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Net Interest Income: |
Retirement & |
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Benefits |
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Net Interest |
Revenue |
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45.3% of revenue |
Income |
33.7% |
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45.3% |
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Noninterest Income: |
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Wealth Advisory |
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54.7% of revenue |
Banking Fees & |
Revenue |
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12.2% |
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Other Revenue(2) |
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8.8% |
RETIREMENT AND BENEFITS
Retirement |
Benefits |
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Plan administration |
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Health savings accounts |
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Trust and custodial offerings |
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Flexible spending accounts |
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Record keeping |
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COBRA |
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AUA / AUM: |
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$ in billions |
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2019 |
2020 |
2021 |
2022 |
2023 |
2Q 2024 |
BANKING |
WEALTH ADVISORY |
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Business Services |
Consumer Services |
Financial Planning: Retirement | Tax | Estate planning |
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Commercial and small business |
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Private banking |
Investment Management: Managed investments | Brokerage |
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offerings |
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Savings, money markets, CDs |
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Trust and Fiduciary: |
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Treasury Management services |
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Mortgage services |
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SBA & CRE Lending |
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Assets: |
AUA / AUM: |
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$ in billions |
$ in billions |
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2019 |
2020 |
2021 |
2022 |
2023 |
2Q 2024 |
2019 |
2020 |
2021 |
2022 |
2023 |
2Q 2024 |
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3 | |
1. Excludes net losses on investment securities of |
2. Banking and other revenue consists of service charges on deposit accounts, mortgage income, interchange income and other noninterest income. |
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FRANCHISE FOOTPRINT |
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4 offices |
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FULL-SERVICE BANKING |
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Twin |
3 offices |
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6 offices |
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2 offices |
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Cities, MN: |
, |
, |
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Offices in |
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RETIREMENT AND BENEFIT SERVICES |
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and |
50 states |
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Minnesota |
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Retirement plan service clients in all |
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Market Distribution and Client Base |
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16,700 |
Consumer banking clients |
Employer-sponsored retirement and benefit |
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8,400 |
Commercial banking clients |
plan participants and health savings account participants |
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37,300 |
485,000 |
Flexible spending account and health |
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10,900 |
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Employer-sponsored retirement plans |
reimbursement arrangement participants |
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Wealth clients |
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34,100 |
BANKING
LOANS: |
DEPOSITS: |
14.4%
28.2%26.5%
39.2%
57.4%9.9%
24.4%
WEALTH ADVISORY
AUA / AUM:
4.3% 11.6%
8.8%
75.3%
RETIREMENT AND BENEFITS
AUA / AUM:
9.3%
13.1%
77.6%
Data as of 6/30/2024. |
LEGEND: |
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National |
Synergistic | ($ in millions) |
4 |
STRATEGIC GROWTH
To supplement our organic growth, we have executed 25 acquisitions throughout the history of our company
including: 15 in Banking, 10 in Retirement and Benefits.
Rebranded to |
Expanded to |
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1879 |
Alerus |
2007 |
Arizona Market |
2019
Acquired Metro
2024
Began asthe Bank 2000 |
Expanded to |
2009 |
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of |
Minnesota Market |
Completed Initial Public Offering (IPO)
2022 Announced
acquisition of HMN
ROE(1) (5 Year History: 2019 - 2023) |
ROA(1) (5 Year History: 2019 - 2023) |
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12.5% |
1.28% |
1.31% |
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11.2% |
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9.2% |
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1.08% |
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Bank Index |
Bank Index |
Bank Index |
Bank Index |
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(Average) |
(Top Quartile) |
(Average) |
(Top Quartile) |
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5 | |
1. Source |
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2. Excludes net losses on investment securities (after-tax) of |
Natural Expansion of the Alerus Franchise
Strategic Expansion
Complementary mission and values with a strong
corporate and credit culture
Franchise-enhancing strategic expansion into the
vibrant
Benefits of additional scale
Assets(1)Loans(1)Deposits(1)
Financially Attractive(2)
Deal Value Per Share / TBVPS |
2.2 years |
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TBV Earnback |
107% |
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TBV Earnback |
(3) |
Accretive |
(Excl. int. rate markets & AOCI) |
0.9% |
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Core Deposit Premium |
45%+ |
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'25 EPS Accretion |
25%+ |
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Internal Rate of Return |
1.15%+ |
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'25 ROAA |
12.5%+ |
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'25 ROAE |
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'25 Efficiency Ratio Improvement |
615+ bps |
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Pro Forma Loans / Deposits |
85% |
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(MRQ) |
Low Risk
High-quality, granular and long tenured loans and core deposit base
Excellent credit discipline
and asset quality
Seamless integration of straight-forward business lines
Leverages management's
transaction and
integration expertise
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Strong pro forma capital ratios; creation of |
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capacity for continued growth |
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Proven ability to create revenue synergies |
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across Alerus' diverse business lines |
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$ in Billions |
ALRS |
HMNF |
Pro-forma |
(not modeled) |
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6 | |
1. Data as of 6/30/2024. |
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2. Metrics disclosed with deal announcement on 5/15/2024. Metrics based on ALRS closing price of |
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3. No rate mark scenario assumes no loan interest rate mark, AOCI mark, MSR mark or time deposit mark |
Extensive operational and
credit due diligence
STRATEGIC INITIATIVES
One Alerus = Working Better Together to Grow
Client |
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Oriented |
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Reinvention |
Diversified |
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of Processes |
Services |
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One |
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Alerus |
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Technology |
Synergistic |
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Investment |
Growth |
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Tailored |
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Advice |
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Our Purpose Powers |
Culture |
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Passion for Excellence |
Success is Never Final |
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Act with accountability and |
Embrace opportunities to |
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sense of urgency to best serve |
adapt and growth with our |
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clients and achieve |
industry and our clients |
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exceptional results |
One Alerus |
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Do the Right Thing |
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Lead with integrity and |
Work together to provide |
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provide valued advice and |
purpose-driven products |
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guidance |
and services for our |
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clients |
7
ORGANIC GROWTH |
acquisition, |
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Collaborative leadership team focused on |
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retention, and |
with existing clients |
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new client |
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focused on bringing value to clients |
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deepening relationships |
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through advice and specialty solutions to help clients grow |
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Diversified busi |
ess model |
unavailable to traditional banking |
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Leveraging |
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organizations |
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product synergies |
TALENT ACQUISIT ONS |
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Recruiting top talent in mid-market C&I banking and specialty |
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niches to |
in our existing markets |
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accelerate growth |
into new markets with new talent |
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Proactively positioning ourselves as an |
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Jumpstarting our entrance |
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of choice |
acquirer and employer |
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STRATEGIC ACQUISITION |
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Capitalizing on str tegic opportunities to grow in our existing |
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markets or new markets |
banks |
and nationwide |
fee income |
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Acquisition targets include |
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with complementary business models, cultural |
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similarities, and synergy and growth opportunities |
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compan |
PRODUCTIVITY AND EFFICIENCY |
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Providing secure and reliable technology that meets evolving |
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client expectations |
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Integrating our full product and service offerings through our |
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fast-follower |
technology strategy |
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OFFICERS AND DIRECTORS
EXECUTIVE MANAGEMENT
Director, President and
Chief Executive Officer
7 years with Alerus
BOARD OF DIRECTORS
Since 2016
Chairman,
Former MD & Co-Head - Fin'l Services
Inv. Banking,
Chairman & CEO,
& Arnett
8
Executive Vice President and Chief Financial Officer
2 years with Alerus
Executive Vice President and Chief Banking and Revenue Officer 2 years with Alerus
Executive Vice President and
Chief Retirement Services Officer
Joined Alerus in 2024
Since 1987
Former President and CEO, Alerus
Since 2013
Former Global CFO,
Investments; Former Partner-in-Charge,
Since 2021
Former Director of Diverse Client Segments and Former NortheRegional President,
Executive Vice President and
Executive Vice President and
Executive Vice President and Chief Technology Officer 40 years with Alerus
Since 2021
Former President and CEO, Nacha; Former EVP, US Bank Transaction Division; Former VP,
Since 2023
Chief Financial Officer
Since 2023
Former Head of Sales and Distribution, Thrivent;
Former SVP,
RBC Wealth Management
SECOND QUARTER
HIGHLIGHTS
Office in
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