GRAND FORKS, N.D. - Alerus Financial (NASDAQ:ALRS) Corporation (NASDAQ:ALRS) has finalized its acquisition of HMN Financial, Inc. (NASDAQ:HMNF) and its subsidiary, Home Federal Savings Bank, marking the largest bank acquisition in Alerus's history. The all-stock deal, valued at approximately $128.8 million, was completed today, expanding Alerus's footprint into the Rochester, Minnesota market.
The acquisition brings 12 additional branches in Minnesota and one each in Iowa and Wisconsin under Alerus's wing, adding to its Midwest presence. As of June 30, 2024, HMN Financial reported consolidated assets of $1.1 billion, including around $876.6 million in loans and $983.2 million in deposits.
Alerus's total assets now stand at roughly $5.5 billion, with total loans of $3.8 billion, total deposits of $4.3 billion, and assets under administration and management of approximately $43.6 billion. The company now operates 29 locations across the Midwest and Arizona.
Alerus President and CEO Katie Lorenson expressed optimism about the merger, highlighting the company's history of successful acquisitions and diversified financial services. She anticipates the merger will deliver enhanced products and services to clients in the newly expanded market area.
Clients of Home Federal will continue to be served through their existing channels until the transition to Alerus systems, which is expected in the fourth quarter of 2024. Alerus has pledged to provide additional information to ensure a seamless transition for clients.
In conjunction with the acquisition's closure, Alerus announced that Jeffrey Bolton, a board member from HMN Financial, has joined the Alerus Financial Corporation Board of Directors. Bolton's extensive experience in healthcare administration and finance is expected to be a valuable asset to the board.
Raymond James & Associates, Inc. and Barack Ferrazzano Kirschbaum & Nagelberg LLP advised Alerus on the transaction, while D.A. Davidson & Co. and Ballard (TSX:BLDP) Spahr LLP served as advisors to HMN Financial, Inc.
This expansion is part of Alerus's long-term strategy to grow its banking, wealth services, and retirement and benefits plans and services. The company has completed twenty-six acquisitions since 2000, reinforcing its commitment to growth and client service.
The information for this report is based on a press release statement from Alerus Financial Corporation.
In other recent news, Alerus Financial Corporation has increased its regular quarterly cash dividend to $0.20 per share, marking a 5.26% increase from the previous year. The firm also reported a net income of $6.2 million in its second quarter earnings, a 48% increase in pre-provision net revenue, attributed to its diversified revenue streams. The company's retirement and wealth management divisions exceeded expectations, contributing to the strong performance.
Following these results, Piper Sandler adjusted its price target for Alerus Financial, increasing it to $24 from $22.50 while maintaining a neutral rating. The firm adjusted its earnings per share (EPS) estimates for Alerus Financial, decreasing its 2024 operating EPS forecast to $1.75, due to a higher loan loss provision, and increasing the 2025 EPS estimate to $2.55, based on anticipated improvements in core fee income.
In addition to these financial developments, Alerus Financial is actively seeking acquisition opportunities, particularly in the retirement sector. The company anticipates finalizing the acquisition of HMN Financial in the fourth quarter. These recent developments underscore Alerus Financial Corporation's ongoing commitment to enhancing shareholder returns and its strategic focus on growth and profitability.
InvestingPro Insights
As Alerus Financial Corporation (NASDAQ:ALRS) completes its largest bank acquisition to date, InvestingPro data provides additional context to this significant move. The company's market capitalization stands at $456.27 million, reflecting its growing presence in the financial services sector.
Alerus's commitment to shareholder value is evident in its dividend history. According to InvestingPro Tips, the company has raised its dividend for 19 consecutive years and has maintained dividend payments for an impressive 40 consecutive years. This consistent dividend growth aligns with the company's expansion strategy and may appeal to income-focused investors.
The acquisition comes at a time when Alerus is trading at a relatively high earnings multiple, with a P/E ratio of 64.3. This valuation suggests that investors have high expectations for the company's future growth, potentially factoring in the anticipated benefits of the HMN Financial acquisition.
Despite the high valuation, InvestingPro Tips indicate that net income is expected to grow this year, and analysts predict the company will be profitable. This positive outlook could be attributed to the expanded market presence and increased assets resulting from the acquisition.
It's worth noting that Alerus has shown strong recent performance, with a 22.19% price total return over the last three months. This upward trend may reflect market optimism about the company's growth strategy and its ability to integrate acquisitions successfully.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Alerus's financial health and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.