Alerus Financial Corporation

Good morning and welcome to the Alaris Financial Corporation earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note 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. I would now like to turn the conference over to Alaris Financial Corporation Chairman, President, and CEO, Randy Newman. Please go ahead.

Thank you. Good morning, everyone, and thank you for taking the time to join or listen to our call today. I am very proud to report another quarter of incredible financial results and even more proud of our team members and how they continue to focus on serving our clients through holistic advice and unparalleled service. Our diversified business model, built on decades of execution, continues to set us apart in both performance and total shareholder returns. These key attributes of our company have also become a competitive advantage in attracting talent. During the quarter, we added one of the best SBA teams in the country to our talented employee base. With our strong commercial base of clients and the expertise and experience of this team, we believe this product will continue to help differentiate Alaris and the value we bring to our business clients. Strategically, we are laser-focused on organic growth, led by our Chief Revenue Officer, Ryan Goldberg, who is joining us on the call today. The investments we have made in our sales force, both in training and technology, we believe will set us apart in bringing in new clients as well as expanding relationships with our significant client base of more than 18,000 business clients and over half a million consumer clients. During the second quarter, production levels on all products were strong, and we continue to see momentum building in our pipelines and pre-flights. Low line utilization, higher than historical prepayments, and continued extraordinary levels of liquidity have been a sustained headwind. In addition to growth, we are also concentrating on expense management, process improvement, and driving efficiencies in our organizations. We are so impressed with our talented team members across the company who are reinventing how we do business throughout all areas of product lines, finding ways to replace manual processes with robotics, automation, and soon artificial intelligence. These efforts will improve the profitability of our business units and just as important, provide a better client experience that allows us to scale effectively as we continue to grow both organically and through acquisitions. Speaking to acquisitions, our Colorado transaction continues to go very well from a client and employee integration standpoint. Results are right in line with our modeling. The synergies we can extract in our business model are remarkable and affords us an opportunity to be a player in a very competitive M&A space. We continue to build on our acquisition pipeline on the fee income and banking side with proactive outreach to potential partners, as well as exploring opportunities of companies which are currently looking for a sale or exit. In summary, another great quarter and strong shareholder returns. Our business model, our strategies, and our strong foundation of capital and robust allowance levels have Alaris position for continued success. I will now turn it over to our Chief Revenue Officer, Ryan Goldberg.

Thank you very much, Randy. Second quarter continued to build on the successes our business and financial advisors realized during the first quarter. The team remained focused on proactive client interactions, understanding how Alaris can assist in building a better financial future for each business and consumer client, and then recommending the most appropriate solutions on an individualized basis. Wealth management revenue increases can be attributed to sales of businesses which are creating liquidity events for the owners, offering additional value-added services to retirement plan participants such as 401k rollovers, and remaining focused on having discussions with clients who are seeking more attractive returns in this low interest rate environment. Looking at retirement services, we have been very pleased with the progress we are making in our group with the acquisition of new plans and expanding the services that our clients are obtaining from Alaris in the areas of fiduciary, administrative, and health and welfare solutions. Looking at lending performance, our new consumer and business loan originations are in line with our internal expectations, but the balance sheet benefit has been muted by lower than expected line of credit utilization and larger prepayments and balance reductions, which can be attributed to the excess liquidity that borrowers have access to currently. Second quarter loan volume was stronger than what we saw in the first quarter and continues to trend in a positive direction. The loan pipeline is building. It can be attributed to identifying client opportunities with multiple entry points into our expanding Alaris client base. We're very pleased with the SBA team that has recently joined Alaris during the second quarter. They have integrated well into the company and the impact of their expertise is already being realized with new SBA loan volume being closed. SBA lending is an exceptional opportunity for us. Coming out of the PPP process, there is much more awareness of SBA programs and a willingness of borrowers to consider these options where the previous sentiment was not necessarily as favorable. In addition, for many businesses rebounding after the worst of the COVID pandemic, this provides a set of solutions that can mitigate certain risk components of a lending application, allowing us to provide more options to make loans in our market. Through our focus on segmentation and talent identification strategies, We plan to add advisors and lending segments of focus that have expertise with CNI and CRE relationships in the communities we serve. We plan to continue our aggressive approach in adding revenue-producing individuals in our market. We have recently seen high-quality hires beyond just the SBA team, but also within our mortgage group, wealth management segment, and retirement services group. At this point, I'm going to turn the call over to our CFO, Katie Lawrenson, for some additional financial commentary.