Loading...
Docoh

Alerus Financial (ALRS)

Participants
Randy Newman Chairman, President and CEO
Katie Lorenson CFO
Karin Taylor EVP and Chief Risk Officer
Jeff Rulis D.A. Davidson
Bob Shone Piper Sandler
William Wallace Raymond James
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good morning, and welcome to the Alerus Financial Corporation Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note that 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.

to President conference and like Financial to now Chairman, Corporation CEO, would turn over the Alerus I Randy Newman. sir. ahead, go Please

Randy Newman

Katie Thank Chief in IPO the I'm morning, and earnings good Risk discuss impact our Lorenson; morning, you, of is XXXX to Financial to Chuck, third financial joined Officer, and quarter our current results we everyone. intend Today, call response Chief September by COVID-XX Taylor. in This our Officer, pandemic. first our XXXX. our This our since Karin and the

appreciate We serve our will we investors. Investor updated always, This your released for and website as As interest a in company. presentation on Relations recently supplement our presentation to available is remarks. an today's

our turning response points Karin. pandemic key questions. welcome and Katie highlight it to that, other before we After would your and will I over first

like Before are facing together. we I acknowledge begin, challenges I'd the incredible all to first

and by thoughts with hearts communities too who pandemic felt the impact you, individuals uncertainty crisis. many are operate our all economic we do of coronavirus experiencing and we is company, and as subsequent clients of the Our in being pandemic where Like in the been affected are this business. have our and

fully crisis, apply from past these Although prepare experience for one you can and lessons never a can learn moving forward.

corporate fire It's center XX our quickly, experience in Our and years. happen. allowed time. and over of proactively respond headquarters the move over were agile. and frankly, destroyed. adversity the remain at company's devastating discipline it's to Coming Alerus last with just built past us been operations XXXX, Quite This doesn't has flood out built

community our most were were and down faced of economic employees Businesses challenge displaced. Grand clients completely time. its Our the shut significant and Forks

this company and risk, learned balance We just infrastructure coming of importance learned We and balance the the didn't growth, of profitability learned to we fortress sheet. of out We diversification. survive from event, learned importance it. thrive Our a investments.

the to the and learned in respond tragic build culture a to discipline a on needs since our Again, nimble. management fully others us and our has on importantly, employees, focused made be our in stronger than going communities helped allowing structure, clients, I innovative balancing for better the to X prepared do last while decades This devastating the a shareholders. believe through history pandemic. multiple past the fire, us organized, tragedy and one company of and agile, our This current prepare to a fluid worst, can resulted such notice. no of project unique respond team our Most be to how be to moment's time

stand to our clients. prepared by are We

We employees. continue to our support

right evolve. are to to as will focused not accordingly but also And doing doing thing, respond only We way. continue right we on the continues pandemic the it the

Now financial our and steps highlight more are to support clients. the the I'd clients and we as like employees specifically, our as the taking to response the safety well and well-being COVID-XX ensure our of of pandemic to

investor our response highlighted allowing guidepost, Again, served investor continuity we to both business escalating presentation these the had our swiftly Both us policy within place. pandemic in move a is a as to and posted Prior website. COVID-XX the also in response to environment. rapidly our of recently pandemic, plan to

in meetings Our March. daily early began team BCP

and At pandemic our this response both time, activated plan policy we protocol. our BCP

the we and meetings had have team, past Council of Alerus BCP daily the X Leadership C-suite. weeks, For our the

our checkpoints wide Each We viewpoint environment, responding instrumental to of we because corporate impacts abrupt Board were and all had disasters, responding to allowed these Risk a transition while management weekly committee. with our with challenges. community, have leadership discipline the quickly of reaching of meetings were to ever-changing our COVID-XX to and across company us project ensure also our team our the experience our COVID-XX. the Again, past seamless in maintaining

the was establishment environment. our staff of over the working or concerns. work due fully safe safety We remote to not transitioned pay environment able and branch employees care of a our operational XXX first X employees to closures employees introduced XX% working The for who child to our of relief week, priority. we full-time are Within and/or

the employees who or to on-site critical established were also on needed who drive We clients serving pay up tasks office for remained locations in site. perform in

of working our team, hosted safe calls began a wellness by we webinars. mental creating all to health environment all employee leadership and weekly offered our addition In C-suite for team

of it and is XX% engaging help support report with team, our supporting, our clients. then care webinars. and We to employees support live our these engaging over to mental take prioritize meetings and are physical, and pleased By their of important entire care of our employees taking financial are can continue believe they to well-being. We and

second Serving and our out the proactively reaching of and then needs, to introduced up several impacted efforts clients we and these ultimately mid-March, was their crisis our priority. our times as In Act was passed them and lines. ramped advising on of especially financial began CARES clients during business

over In in following the logged advisers initial this financial X,XXX total, month calls effort. our have

important Paycheck these topics to the markets addition financial Protection to Act, hosted In the Program. dealing and webinars X with we relative calls, a of CARES client financial proactive host specifically

organization our now the help is trusted can had adviser, in best way as ever financial than a belief this have more a to a partner clients. operating and we capacity long-held serving as serve We in

with invested applications continue lobbies, couple banking with past the our encourage mid-March economic we clients logins the and we With advantage as We first the month. clients We payments. to have client financial engage saw our of to efforts spike increased years. impact in financial digitally technology engagement the to XX%, us of immediately past interact digital over with of closing take wellness this this in our increased increase coinciding workouts technology and

and XXX Next, new funded we over existing over $XXX PPP move clients. quickly borrowers, program and for applications loans taken with million and the of including both SBA have

payment various have early waived loan withdrawal offered modifications and penalties. CD we Finally,

ready continue to support to situations work with have a whose clients of and We from impacted coronavirus our financial one-on-one adversely strength. stand by been clients position the

Over several half has to our laptops, to already this past years, client and we was response. continue Prior already able had they meet relevant. to COVID-XX, COVID-XX could in the foundational company needs work were team invested ensure these Because during complete, meaning several work can we over remain technologies investments leverage remotely. our to of our

one to license our users XX% our staff Citrix Both quickly ensure of operational a to remote within transitioned from work for to we move Additionally, allowed to us investments workforce. fully non-laptop employees week. home

force PPP this technology CRM system. company's in our adjust leverage proactively reach and measure communication we clients, We ago, invested clients' as closely years sales the program. our our monitor strategy to Several to

help to digital a decisions. addition technology to also hub investments for designed MY financial In for make our employees, the better our in these we've includes financial wellness invested clients. ALERUS, in clients technology This

operational remain we needs. to clients' and our respond clients to in with also integrated investments, and us Each made account We online our proactively leading have banking, online opening, inform infrastructure able alerus.com marketing experience, these closed. business allowed of to applications, lobbies financial of clients launched recently it to for new virtual automation an a website, serving while banking fully these software, are robust and digital remain meeting technology. us meet even mobile timely applications interact easier secure user-friendly Because and our

key earlier, added greatly strategic client XXXX, the and mentioned growth diversified As fee-based invested leadership Since technology markets, decisions. experiences we infrastructure, past our in and applications new needed. have our our services, new have added influenced in where

resulted guiding company a the a and in believe peer philosophy principles, groups, constancy public has return we to shared risk-adjusted When risk the to ourselves compare purpose we leadership and we that and direction Our our of our balance return. infrastructure growth, SNL have higher investments. of consistency

sheet peer have Our less average last income. risk of with SNL margin the on X-year and financial dependency the performance groups less balance outperformed

at and retirement company that our need administration mortgage end opportunities TARP. fee-based they strong synergistic foundation, plan allows to sheet only strong of and but meet XXXX, administration grown Our to preserve, strong we other because conservative and of XXXX, And advantage Twin to into able in value million served protect us HSA. FSA the us did of $XXX XXXX with has expanded Scottsdale strong philosophies by as in marketplaces. bought the enter velocity when challenge shareholder these were Solutions, themselves. we under and take we well X/XX, by management that strategic into payroll, position with billion opportunities not to Phoenix crisis earnings, present of balance Cities and expanding In Pension times banking, capital operating by years such in conservative the taking operating of advantage assets crisis a strategic not enhance past core After a the XX and us quality to credit take $XX of of services allowing has

we economic We strong includes a believe entering when crisis professional are into opportunities to is foundation, strategic advantage take of right. with Alerus business timing of strong ready a diversified the this foundation This services similar model.

has not is coming is core retirement benefits, professional dependent earnings. noninterest revenue from upon and management and its interest generate of fee-based us competitors. of XX% close our The model wealth which low today's business consistent in of amongst we stream Alerus rate gives primarily diverse Our operating annuity services. revenue an level income, rare environment, to areas of through mortgage

our positions company to in With to high of our have we eggs perform our better stream levels. all learned continue revenue diverse past basket. not to This at experiences, X

in about the different growth different and X% challenges is revenue of in oil we grow expectations. markets. During well across organically Today, nothing had our agricultural enhance shareholder in a we value cyclical across like Strategically, dispersed expanded we allow 'XXs, And that the and revenue gas. just products, into also and industry. XX% community concentration our to dispersed ag have markets over virtually agricultural us is the

and very have passionate, to fortunate employees. are loyal, professional committed We

advice company its and The its work company. thing, that communities, does guidance employer and is Alerus of emphasizes to to the for want reputable the doing its a employees right Professional an that serving right being and with for choice. clients culture Alerus employees, clients thing

As we have strong diversified mentioned, earnings. operating and core

$X.XX strong quarterly commitment dividend. by maintaining earnings us continue allow our to and cash consistent Our per to our to our share honor shareholders

we have diversified balance strong mentioned, As sheet. a

At our quality, the heart first credit of COVID-XX. the strong end assets the credit metrics ratio equaled quarter, X.XX%. Our into very to nonperforming of capital assets are ratios heading and

reserves nonperforming assets reserve equaled ratio and X.XX%, loans coverage XXX%. Our to to our equaled of

the reported We in net first recovery a quarter. $XXX,XXX also of

our with In in a have addition Chief past underwriting credit credit conservative Risk financial our pride to the to new legal reviewed discipline staff advisers. strengthened our and philosophy of Officer policy, and We X and metrics and quality rewrote ourselves Credit Officer. strong on new added regulators our relationships our our credit and our response years, in we and Chief

team. We diverse, has person leadership and a includes that Council strong and C-suite, have a diversified and board. engaged strong professional engaged very leadership our a XX Alerus Alerus corporate Leadership

Our and responsibility and only in professional for but leadership for development, is source collaborative high what perform, high great how and and pride, personal we more of results serve a passion leadership engagement, strong and culture clients we do, and Alerus ourselves. strength not importantly, accountability ownership conduct

to and sound internal talent strong of fact also collaborative develop developed other revenue foundation Alerus our of of The company benefit diversification just combination newer from over recognize existing top But top that with by don't consistency, we always leadership culture, within, our has attracting been attract enhances our promote internally over unique and and has Because organizations. half and double-digit talent Leadership culture. leaders the of talent years. business the able of from the we're evidenced we model, Council Alerus talent.

company contributing challenging better team of perspective. and We leadership engaged because greatly this Everyone to company our highly times. during are a and on our team leadership blended is these

disaster serve believe past and operating let me financial and our we believe will and engage We from past successes. achievement a history themselves. enhance believe performance in of again, than needs of downturn protect peers. balance results and professional We sheet of staff, meet We strength. believe into and are economic mention value. our Finally, our clients' and for financial, our We in speak better next we our strength source headed shareholder acquisition this earnings most

and this Our We been when and our and us focus position clients strategic on organic time has growth to believe opportunities and in consider is at the result strong opportunities that themselves. our our employees today present built. growth foundation will maintaining they right

CFO, to now Katie I'll turn first it results in over quarter Lorenson, discuss to our more financial our detail.

Katie Lorenson

color incredible a Randy. Good you quarter. you, of expectations. some very of will everyone, uncertainty Thank on the the were given call today crisis, first In of our quarter. additional is confidence duration spend providing speak I it morning, about Obviously, the to thank we financial summary, the today. health with the difficult the forward-looking or the few for for results and minutes with earnings joining results pleased

Let financial our in institution believe of with what today, is balance sheet. we me the start a and attribute first important soundness most safety

As recent previously, crisis capital position entered a our of mentioned to we from strength due Randy this raise. significant

Our exceeded XX%, loan loans first TCE the our total nearly With ratio and the quarter allowance of at of was Xx end coverage the X.XX%. XX. nonperforming amount our allowance at March to

sticky growth was from funding position X.X% as going came a growth stable division linked this quarter core deposits, quarter a Approximately we our repricing first strengthened forward. the $XXX liquidity and retirement and with million of quarterly represents further in Our wealth and half rate. added of

by other The balances. in increases business commercial growth new driven of and was half this

and Generally quarter the due from deposits ended see see, second accounts up deposit quarter fund first the savings year-end. public speaking, we all decreasing products seasonality. We health generally to consumer in

This operating However, left strong are because standpoint interest of position see us accounts limited and we better liquidity in we only position public bidding those fluctuation seasonal from funds. quarter, public quarter has holding entities. from the should expense we furthermore, the in in an second were less generally first in our as for a our

declines CRE as Our solid the quarter was just X% under which consumer at portfolios. the loan-to-deposit March real growth loans was a offset and grew estate C&I by ratio for in residential loans XX grew X%, XX% and X%. was loan

deposit will first April round while approximately sheet $XXX Alerus add The accounts. of the balance $XXX million PPP loans million initial the in of went to nearly disbursements into

to Usage the first line XX credit closely HELOC on Usage for our ago. and with of our in portfolio March of of a borrowers. year fell quarter. XX% compared lines are at our to decline continued We was the usage monitoring commercial XX% XX% end

typical it second historically line quarter the We has Of continue the with see XX% consistent April, trends. seasonal to range. remains in utilization and usage note, line in into peaked lower

are We for Officer, Q&A business during Mae session. the well following Risk Karin the payment both to and and our clients, line mortgages. as relief, Randy on Fannie is will as residential as providing guidelines the consumer volumes Taylor, speak mentioned, to the numbers Chief and

to our Turning portfolio. investment

available that needed. to It million XX% toward years XX-month increasing $XX moved puts for year, to high-quality duration have XX-year sensitivity. $XXX asset lastly, from past a to have over yield. pledging, worked to the munis from yield. purchased We today. approximately to taxable portfolio, reinvest Duration investment we continue to high-quality the $XXX increased continue portfolio Fed's in building a over prior restructured while our to cash portfolio been period. the securities. investment has of portfolio of been plan actions. course The and mortgage-backed flow million million the Over in but we have first is X approximately reduce $XX about slowly This And quarter and million X includes us the has which add to in if We

in Next, basis the dropped transition Most deposit mix I'll due earning change the in quarter. and net which decreases to the yields, XX lower by the drop asset margin, offset interest costs. was in of to points asset

quarter. in Fed credit the likely in business interest related or also not low rate our first plus and forward, March of we divisions add variable revenue a beginning environment, generate -- the we the this look until least we coming risk impressive margin we in in of the PPP rate is impact income. portfolio pressure have ability on truly the importance significant our at was expect months. continue the April. Performance and really loans of balance X% without NIM environment fees drive cuts mortgage, as continued The additional the retirement to emphasize diversified emphasize net will the model always and uncertain rate wealth see at the down volatility our impact As in In to did noninterest to sheet management loan

total first really record-breaking operational technology investments amazing the $XXX over and have a officers with and mortgage by simply quarter was critically supported past loan of with originations volume teams XX% and increase. million is the over X.X and made start our The year-over-year I'll handled years.

a division, earlier, XX% over our which but percentage using applications the month. mid mentioned to completed previous further employees throughout of in use Randy from huge March from of transitioned XX% As in of home mortgage drove technology even the company, specifically technology, up work omni had which the

days. decline happened The from basis be change purchase a of a goal item addition, of to XX notable transition paperless the mark-to-market of mix on the at Purchase division the quarter average course an to XXXX to historical mandatory by of in hedge margins in mortgage end early March, did end refi to loan the include to activity division's pipeline. have trend line XX revenue of XX-XX. In the approximately quarter, a matter in increased the first the mortgage the finished at related note began in delivery points XX-XX, loss our the of unrealized Please our over the $XXX,XXX XXXX. the months nearly due

Fed able in through stabilized the April, were mortgage-backed purchasing the positions. market to reduced their we As and the work daily unfavorable

retirement the of benefit and Moving on to side business.

$XX end end under declined the administration to billion of at to compared of XXXX. Assets nearly March $XX at billion the

record decline or Total direct to were fees of with due total at a to market future first significant Assets in were The billion impact asset-based of first in quarters. for million down daily correlation the part revenue fees $XX to more be with XX% sustained The negative or the $X in average tied fees asset-based will QX. quarter. billion highs S&P was value, of X. through fees these XX% asset-based dropped from which decrease $XX March primarily the

our revenue some there noted January, in about in revenue. $XXX,XXX. drives participants, led which nature administrative call fees, we the an the in plans and in nearly up As transaction ease a and as infrequent revenue well in Year-over-year the in increased is And number increase in some, revenue. as due fourth which to decrease seasonality is always that of some and distributions linked-quarter totaled there X% project there to was quarter record-keeping fee

on to landed where linked-quarter management revenue due March declined basis wealth Our S&P on XX. the a

A based not nearly I quarter however, revenue to year-over-year remiss a and Dimension advisers increase the products. majority in be who of on of highlight, delivered division's the percent end the value. would is revenue performance XX% our XX-plus in Blueprint the and increase

line $XXX,XXX. a expense quick of about noninterest which swap Lastly, to bumped on fee note due up a of slightly recognition item, the a

accrual run as quarter. travel is first adjustments Marketing to of on in Moving we in limited returned personnel a more the expenses largely expenses the typical March rate and to quarter normalized decreased, line in taxes. which expectations, expenses. payroll travel with Professional expense after with and increases especially in were fourth our declined, some in XXX(k) fees related advertising expected, employees. Noninterest and to as

loans As included for noted line, million of earnings $XXX,XXX mortgage asset, and to mortgage Mae $X.X the item line tied impairment in primarily a our servicing which same. retain the and is originate lending release, Fannie we our expense

provision expense. duration least, expense call, the in the there expense regards $XXX,XXX in can't other for for bit commitment QX There in crisis Last the nearly of provision extremely lumpy was Lastly, the linked and a unfunded item increase stuff, lot we to that quality. quarter. not a to to credit remains which be line includes impact It regards expense, commitments. provision to high the quarter, XXXX, the uncertainty a disclose in credit the of noninterest on although inputs where land Again, in significant expense. but was this was level of due on difficult of incredibly can enough to determine the the but a little not to provision

we been reserves. have and as we our of We XXXX, ended since building million $X.X nearly allowance of XXXX had level unallocated

is position that total over to We in loans. a XXX points today pleased we are at be basis the are reserve very to that

first to we over quality During credit the net $XXX,XXX. improvement, ended our of few with and a recovery months of XXXX, the continued show quarter

continue methodology economic ratings. our added and evaluated made throughout we to the all into credits. of prudently watch Those We allocations to conditions to our factors risk million credits, to qualitative unallocated allowed provision additional and basis We April, to XX As we maintain additional near XX us the mark. to our types build has decision for reserves. additions added quarter, loan of and $X basis level our points March X% an to we us drove the million added business and for $X.X our a which points small

of credit allocating and be will we through the move anticipate we more crisis We that as impact. the gain understanding

that, Chuck With for up turn open I'll to Q&A. to it it back

Operator

[Operator Instructions] come our from will Rulis first question D.A. Davidson. Jeff of And

Jeff Rulis

portfolios, exposure maybe ag most and Randy, risk a assigned hospitality exposure that you had is refencing at you've most far as retail, have the oil risk? as limited or perhaps detailed to portfolio, speaking, to looking in the figure total those you looked at pretty broadly and at the there sort in at More gas. of

Randy Newman

answer Yes. that. Taylor I'll let Karin

Karin Taylor

Yes, Jeff.

in segments in commercial facilities, course, and and food million our service, million of risk. have retail we in C&I are real it and gas underlying highest have have accommodation, We which includes the then, oil nursing have And retail businesses. at in medical estate, about and think $X.X a about trade, $XXX In $XX we some portfolio, million we is And just taken entertainment, type. look do our smaller we property other our that hotels. the at is of

summarizes And that posted website, is a investor so in information. that we the on our there presentation slide

put give in great risk overall, that, based I retail would is caveat variability The $XXX about of underlying the estate what has of on degree that entire at terms we million. just like. a look real So that would commercial tenants

Jeff Rulis

Got it.

quite to have expected guess in call, obviously, the bit. the bucket. last be detail the Previously, But missed have deck number there. the I in may line retirement a moving think fee 'XX. changed to you in Thanks the things I there. for benefits mentioned item slide I Sorry, income the flattish

jump-start pretty obviously terms income through on production of on we how year solid year. a Any the got a mortgage a this thoughts fee You've navigate in contribution?

Katie Lorenson

we This that in fee continuing can't Katie. high is Thanks, as break Really our income are seeing Certainly, provision Jeff. as extremely we're again our well will, that each emphasize applications we I uncertainty May. see levels margin the component, of mortgage to down as at operate and in expense. we through April and

actually, We purchase are XX% transition a was seeing recent versus now to, the most refi. I think

And to something think, we're really said, any that, so the exactly active I not clients. marketing not sustainability out That done of is or that of. have sure our we reach being

So of I the we'll quarter the and uncertainty again, crisis impact. long second strong just how then see will have mortgage. of And for after that, an duration the a think

On be market. be There -- the will revenue. which sustained a the revenue a retirement attributes and certainly side, we're other just the uncertainty the down that's impacted portion very year-over-year those And would fees surrounding be of some the loan today. bears and would pleased are the -- but The with That around revenue, those. in market-sensitive distribution of that growth.

there on only any into are modest not loans and seen some waiving fees of who distributions is our and April, competitors that. doing increase a we in those though have We have coming been

typically too. which are hold, are the those but transactions fourth of on fees, other would The our retirement transaction weighted piece toward heavily the most ESOP of quarter, revenue be

there. by management dependent wealth again, about really really side, the on just growth, volatility highly and advisers -- and our market So on the reach impressive impressed

we second I think results the So I least that's lot. first into I at quarter. and can would for sustained quarter today is where that I a second the think -- see what But guess quarter, see be our where we say the

Jeff Rulis

times, -- that a one, that that Fair the sort X on is Randy, enough. put for trying of of the -- setting acknowledging being last just Thanks. spent part yourself And and I guess guess, you side, detailing is you good position should from as diversity in some that's things are that how amount the Alerus kind we you the of almost conversations return just on kind but Thanks. maybe opportunistic, up and of M&A maybe on of on I to form those item, some having but normalcy. emerge view M&A? do looking at burner and What you should anything this? back a the about thinking you're

Randy Newman

of offer thoughts. have we your a is choice couple Right which put I'll definitely on true. back words, In of that the now, burner.

is that of those think X/XX, one speaks as expressed, philosophies our Our the a balance the then that strength, fortress I have and XXXX. I strength of those take focus our experience, think culture We with sure which the real, of of we source is, of employees, very we being that and we balance advantage said, entered were every entered making company a That is I clients is just periods, financial we guidelines good I to in think sheet sheet. again great very and do to I very, from operate a that of company, our opportunities. conservative past which able part much the think

IPO -- the deployment with we'll our visited and of XXXX, heading on result in some last of Board them a was reengage mind that of with top we at right And as them and or really have with discussions the were hold put And we into time. So key year, some capital. companies. key the

Jeff Rulis

you. Great. Thank

Operator

question will ahead. Piper go next Nathan Please come Race Our Sandler. with from

Bob Shone

first is around strong growth quarter. Nathan. This morning. for the Bob you deposit saw in the on My Shone is actually Good question

$XXX forward? going loans excess the and maybe of margin talk You mentioned had that you liquidity how you about Can go that PPP the impacts million directly accounts. into operating the

Katie Lorenson

Yes. question. Katie. is This Great Sure.

course, in-house. pay those the is know, margin the to be But off margin, which impacts the So also it recognition there if of were keep and lumpiness margin. PPP significant fundings speed April, the loans, which in upon at we What is, on can those those off. will of the in impact the we disbursed, continue fees don't which paying

think I the will the a guess because we how off at it's think within anybody's kind X anticipate majority of the so that point I So or it of months of and, as this pay fees to But loans out. do disbursement. because of plays first

I quickly, actually fee pay the stabilize those see or margin margin kind with potentially interest we again of will income a increase off majority of that all assuming and within the income in recognize the net the think the in that margin. where fairly XXXX, fee and we loans

Bob Shone

in approved granted chance loans, commercial do the PPP were of regards loans? by for payment you percentage then the And that Okay. to relief also loans been have PPP know that

Katie Lorenson

is Karin. there exact percentage, has been I between This don't correlation the Yes. the X. but a have

Bob Shone

Okay. approving and PPP existing new Were to on the clients? customers. by how clients calling you existing new have provide came they spoke And existing bank? Do maybe chance in? you them loans between the color then to could prospects those for new if breakdown then And you guys some or both and

Katie Lorenson

Sure.

that have $XXX relationship the existing million first $XXX who a us. was over during million. lending loans clients About to of the previous either didn't round, just So did million for we with initially XXX $XX that

through in first prospects. more So our second focused we on our a from clients had order a clients. round. new business. primarily the in some applications few their existing And different to are that those with tell they round, or through for We working prioritizing we've prospects been that have win markets relationship kind you I seen time that can of really were

Bob Shone

risk, deem the the you In deck, real that CRE values residential and to loan do But last by provided I that average LTVs have slide saw for hotel? portfolios the for the then me. more medical estate portfolio. And of you the at one the average retail, you Okay. chance

Katie Lorenson

tell our LTV are retail, And that. I on the lower don't sometimes have it's can than that generally actual XX%. I you LTVs. limits

the is terms have target X books, on hotels those some of and aged the books been the for time. In been the would have on relationship larger within newer others limits,

Operator

Our William Raymond from next come with question will James. Wallace

William Wallace

in the were wrong, million, million another almost I but a works this or $XX as all of quick but customers, of were, questioning. of million lines Correct to Is in me $XX all form. Maybe heard you're customers bank non-lending saying $XXX PPP million correct? that if the follow-up the $XX

Karin Taylor

new There many. correct. bank not That's but a were to few the customers

William Wallace

that Okay. are fees the on And what $XXX million? average

Karin Taylor

In of terms amount? dollar

William Wallace

yes the or the you, of fine. the percentage, is if way amount know you either expected Or dollar Yes. if fees

Katie Lorenson

total average. about on $X.X the in about round million X.X total in first, X.XX% on fee, fees

William Wallace

kind And the the pipeline on then second here? of wave is the what

Karin Taylor

received we amounts. over lower tending XXX are And those applications. be to So dollar loan

looking And so we're at in pipeline. $XX million $XX the million about or

William Wallace

on it's assume I probably the... that, fees average higher given The

Karin Taylor

The size will loan yes. be the is higher smaller, percentage somewhat because

William Wallace

question way. going So margin a ask okay, to I'm the in different

net PPP the in interest Let's all equation. just that What you a to anticipate out second the of of margin on see noise? ex would quarter take

Katie Lorenson

we Certainly yield. a decline. portfolio dropped expect, about the would excluding commercial basis XX points in The PPP loans, have probably

on very been Now we has cuts. done deposit have our aggressive what

moving moving of moving down We expect we product that so March. as through cuts pools into couple points reprice second the year, of at of the quarter by the of anticipate an And the hundred into below about those and that the basis by that the, of X% on end every quarter, XX to end average well we a deposits continuing talk million year. X.XX% was that

there, we loans. some without So within NIM compression the the have would yield continued but balance expected PPP see there the is the, without in to

William Wallace

if wondering give points to XXX cuts the could So don't might will sense of If pressure would could of scenarios XX it. it what much your kind I at putting level look the, together that be as us you your those pressure I'm all basis implies NIM. wondered in I anticipate of to great. just help I a quantify if as points pieces close be. you maybe that of of basis K, within

Katie Lorenson

think on basis about NIM, probably with XX all points I be together deposit think the could pressure. it the I cuts,

William Wallace

your then level sense you talking and wealth quarter? in left preamble of fees about average Are daily mentioned retirement the at the you in Can XX%? And businesses, second us a on a the about kind give of probably of starting we basis. calculated what's down

Katie Lorenson

Right.

William Wallace

Okay.

Katie Lorenson

Right.

recovery. I yes, that's some certainly got yes, think So -- we

to XX% saw March. see weeks that impact going in of not those the we we're So couple

William Wallace

Yes. Great.

And inform didn't In dollar loss. there I two prepared about the pipeline catch Okay. a can give think impairment, that said you And And you amount you the dollar there also as I line? MSR. for income that did there. I loss? does through that amount me then was hedge then a ultimate $XXX,XXX this $XXX,XXX obviously, quarter remarks, Is the the then And whatever us believe impairment happens then will said the on was hedge the flow that fee of mortgage. result. comments

Katie Lorenson

Yes, no problem.

in there impairment. the So the end related an approximately line of that the the And mortgage expense and expense line was at revenue lending the item in of to $XXX,XXX mortgage of first approximately $XXX,XXX unrealized loss then MSR item quarter.

William Wallace

Okay. expense. I went through it thought maybe

Is other So roll consolidated in up where to? does financials? that the on that

Katie Lorenson

mortgage is it own separate item That line on expense. lending gets and

William Wallace

the can of Okay. kind moves, businesses Thank Yes. -- of just kind what if if disrupts -- this back talk shutdown customer to kind -- get is could about picture of it And side us to how retention of segment, the And how All maybe through talking you. acquisition you, Thanks. I'm customer disrupts on it Randy, you it? but "normal"? this retirement of you for it? right. that and -- bigger just market business Not and takes just sort

Randy Newman

Wally, on what is business that?

William Wallace

retirement The benefits business. and

Katie Lorenson

Yes. I'll supplement. you Randy, that you to start, can one take and maybe then

Randy Newman

go Sure, ahead.

Katie Lorenson

me terms start retirement -- in with clients. on So of the let business,

a First of call, business but talked of Act that new have outreach second our clients the increase CARES increase in all, coming the we quarter put a pipeline on of Randy about first quarter. there's the year solid coming had the us a loans. to of From the and really notice could to pause. and Most could obviously standpoint, into those it clients. in distributions, lot

business. are clients it on But they certainly that pushing for and one attrition positive another, is course, or to notified when that new strain of had out, it's were reason a comes us that So leaving too. a that

small weather in terminations I that think the of clients. could because mean matches. fair mean this It don't with it's we stop uncertainty XXXX they closures comes companies how impact, that planned think And a could do service also small and amount but businesses, form that the of future. providing headwind a this, I becomes a

And would provide the exceeding That's we just those business. where levels. on that risk couldn't of of distributions inflows overall of outflows some exceeding color landscape be terms I the so a of contribution at in the are

William Wallace

other the business? have Okay. Thanks. customers guess the in stick extent turnover And you side, then to be around guys that that they I as may that leaving, on well. What's the like

Katie Lorenson

We about usually of see attrition X%.

as has defensive well that an play. was, about introduced But So X%. both been were declining a new technology as investments rate as the that's offensive been a historically, we've technology that

Operator

This Instructions] question-and-answer [Operator Please session. closing for would our to Randy the turn I over concludes any remarks. back like to conference Newman ahead. go

Randy Newman

Okay.

initiatives. both Alerus IPO growth had the We We year strategic appreciation were this who First, strategic call year me XXXX you the asking morning. record let of that fortunate opportunities to for our were XXXX franchise. have everyone for of to in Alerus, questions. many very terms terms and optimistic financial performance our of and we to of capital solid achieving our sourcing the deploy was last raised listening quarter first and joined the reasons. our Thank of for extend a also continue to nonfinancial in in

is paused safety, making on clients prudently we efforts focused sure our these our fortress employee have and serving strong. sheet our Due to that and balance COVID-XX,

ready time, when are at health-related the resultant effects strategic our they we and virus borrowers, While the economy we are patient, pursue concerned opportunities the on and about impact of right to the themselves. present focused and

expressed and Thank reason economic crisis our and again we are you of balance period perform to us the through to core strong joining leadership our manage confident call, we believe today's the for during in operating today's sheet this that earnings will For enable during uncertainty. well abilities call.

Operator

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

You may now disconnect.