Alerus Financial Corporation (NASDAQ:ALRS) Q3 2023 Earnings Conference Call October 26, 2023 12:00 PM ET
Company Participants
Katie Lorenson - President, Chief Executive Officer
Alan Villalon - Chief Financial Officer
Karin Taylor - Chief Risk & Operating Officer
Jim Collins - Chief Baking and Revenue Officer
Conference Call Participants
Jeff Rulis - D.A. Davidson
David Feaster - Raymond James
Nathan Race - Piper Sandler
Matt Renck - KBW
Operator
Hello everyone, and welcome to the Alerus Financial Corporation Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please also remember that this call is being recorded.
This call may include forward-looking statements and the company's actual results may differ materially from those indicated in the 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 call over to Alerus Financial Corporation President and CEO, Katie Lorenson. Please go ahead.
Katie Lorenson
Good morning. Thank you, Bruno and thank you to everyone joining our call today. We appreciate your interest and investment in Alerus.
Joining me today is Alerus' CFO, Al Villalon who will discuss our financial performance and results for the quarter. Also on the call is Karin Taylor, our Chief Risk and Operating Officer; and Jim Collins, our Chief Banking and Revenue Officer.
This morning I will provide some commentary on the continued execution of our strategic initiatives and ongoing momentum in building a highly valued franchise. During the quarter, we continue to feel the impacts of the challenging interest rate environment and intense deposit competition. However, the NIM improved during the quarter and overall the deposit balances held steady. As our team members constant focus on clients and our relationship banking model was evident as commercial consumer and synergistic deposit categories all grew in the quarter and new accounts open again surpassed closed accounts.
Notably, non-interest-bearing balances remained steady at 25% of our overall deposit portfolio and highly selective disciplined modest loan growth also continued during the quarter, as we added high-quality franchise building clients to our portfolio. The loan-to-deposit ratio remained manageable at just over 90% and I'd emphasize again that this is with no broker deposits at this time.
Our uniquely diversified revenue mix of 58% fee income helped to stabilize the revenue headwinds caused by the net interest margin compression. As a reminder within this fee income mix, approximately 90% is highly annuitized recurring and non-cyclical revenue with minimal capital allocation and balance sheet risk. Specifically, Alerus' top 25 ranked national retirement services business delivers the majority of this fee income. The business is highly valuable and we remain committed to extracting this value by growing our scaled and highly profitable product lines of the business.