Alerus Financial Corp (NASDAQ:ALRS) Q4 2019 Earnings Conference Call - Final Transcript

Jan 29, 2020 • 10:00 am ET

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Alerus Financial Corp (NASDAQ:ALRS) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Alerus Financial Corporation's Earnings Conference Call. [Operator Instructions]

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

Executive
Randy Louis Newman

Thank you, and good morning, everyone. Let me first begin by giving a high-level overview of the fourth quarter, as well as some overall comments about 2019. We are pleased to report net income of $7.652 million for the fourth quarter and record net income for Alerus of $29.54 million, an increase of 14.2% over the $25.87 million reported in 2018. Our CFO, Katie Lorenson, will explain our results in more detail later, but there was about a $2 million in non-recurring income in 2019. If you take that out, our core earnings increased $1.8 million over 2018 or a 7% increase.

Year-to-date ROA was 1.34%, ROE was 12.78%, and ROTCE was 17.46% for 2019. The ROE and ROTC ratios were influenced both by the increase in earnings, but also by the increase in shareholders' equity from the capital raise in September. Dividends per share increased $0.04 per share to $0.57, and EPS on a fully diluted basis increased from $1.84 in 2018 to $1.91 share in 2019. Earnings per share in 2019 was affected by both the increase in earnings and also by the 3.6 million increase in outstanding shares as a result of the IPO.

2019 was a very successful year for Alerus, both with record financial results, as well as with the achievement of several key strategic objectives. With disciplined planning and focused execution, we have significantly improved the foundation of Alerus and established great momentum for us as we begin 2020 and a new decade.

In 2019, we exercised a sense of urgency as we made improvements in both our credit quality and credit leadership. We successfully completed an IPO that improved our capital ratios and positioned us well to grow both organically and selectively by acquisitions. We became NASDAQ-listed, which improves our shareholder liquidity and gives us the option of potentially offering our stock as an alternative currency for potential acquisition opportunities.

In addition, we completed several technology projects, all aimed at enhancing our clients' experiences and improving our ability to grow organically. These projects do more than just move the needle in terms of client experience. They also help us advance revenue synergies from our high-value professional services business model and from the numerous acquisitions we have completed over the last decade.

In the past year, we have completed a number of client application technologies. Our strong and diversified core operating earning have allowed us to achieve better-than-average financial results, while still meeting the needs of our clients by investing in