Alerus Financial Corp Boosts Profitability with Investment Portfolio Overhaul

By Chris Stiles • Monday, December 29 18:22 • Permanent Link

Alerus Financial Corporation has made significant changes to its investment portfolio in a move to improve its profitability profile. On December 23, 2025, the company sold $360 million of available-for-sale securities, which represented over 68% of its total available-for-sale securities. The securities sold had a weighted average yield of 1.7% and a weighted average duration of 5.1 years, resulting in a one-time pre-tax net loss of $68.5 million.

Following the sale, Alerus Financial Corporation reinvested the cash proceeds into new investment securities with a weighted average yield of 4.7% and a weighted average duration of just over 3 years. This move is expected to have a significant impact on the company's performance, with the 2026 net interest margin now projected to be 3.50% to 3.60%, compared to the previous guidance of 3.35% to 3.45% provided in the company's 3rd quarter earnings presentation.

Additionally, Alerus Financial Corporation expects its risk-based capital measures to be above regulatory limits and internal targets at the end of 2025. The restructuring of the securities portfolio is anticipated to have no impact on tangible capital and positions the company for higher earnings and improved financial returns in 2026 and beyond.

President and CEO Katie Lorenson highlighted that the company's focus in 2025 was to lower risk and improve returns without compromising its long-term strategy. The deliberate steps taken by the company are aimed at positioning Alerus for stronger performance and tangible book value growth in 2026, demonstrating its commitment to creating long-term sustainable value for its clients, communities, and shareholders.

The company operates 27 banking and commercial wealth offices in various locations, providing diversified and comprehensive financial solutions to business and consumer clients, including banking, wealth services, and retirement and benefit plans and services.

The changes in the investment portfolio and the expected impact on financial metrics indicate Alerus Financial Corporation's proactive approach to enhancing its profitability and financial performance in the coming year. Today the company's shares have moved -3.03% to a price of $22.40. For more information, read the company's full 8-K submission here.

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