Part 1: Analysis of Performance During the Period
Alerus Financial Corp reported strong financial performance during the review period. The company's business model, consisting of diversified revenue streams such as banking, retirement, and benefit services, wealth management, and mortgage services, generated high financial performance. Despite the pandemic's challenging financial conditions, the company's revenues were $269.7 million in 2022, a significant increase from the previous year's $232.4 million. The company experienced growth in its net interest income, non-interest income, and total deposits. The company's net interest income was $87.9 million in 2022, compared to $74.3 million in 2021. Non-interest income increased to $181.8 million, compared to last year's $158.1 million.
The retirement and benefit services business remained the company's largest source of non-interest income, with a revenue contribution of $108.7 million in 2022, supported by transaction or participant-based fees. The company's non-interest income was further boosted by the wealth management and mortgage business lines. The mortgage loan originations for 2022 were $812.3 million, an increase from $693.8 million reported in the previous year. The company's AUM in the wealth management segment increased to $3.6 billion in 2022 compared to $3.2 billion in the previous year, primarily driven by market valuation and new business.
The company's expense management was optimal as evidenced by the decrease in non-interest expense by 1.6% year-over-year to $215.8 million. Fee expenses, occupancy, and equipment costs remained the highest elements of non-interest expense. The company's credit quality remained stable as evidenced by a loan portfolio with a low level of delinquencies and charge-offs. Alerus Financial Corp's strong financial performance, efficient expense management, and sound credit quality indicate that the company is well-positioned to deliver long-term value to its customers and shareholders.
Part 2: Forward-looking Analysis
Alerus Financial Corp's management believes that the company's diversified revenue streams and client-first philosophy provides a unique value proposition. In the forward-looking view, management expressed their intent to continue investing in growth areas such as tech infrastructure, modern electronic banking services, and expanding its range of services.
The company's retirement and benefits services business continues to exhibit potential for growth as businesses and individuals have an increasing need for retirement planning and management. The wealth management business is also expected to contribute positively to future revenue, given the recent growth in AUM. The management expects that the current economic conditions, coupled with effective marketing strategies, will increase AUM and AUA, which supports the expansion of other Alerus business lines.
Alerus Financial Corp intends to invest in technology infrastructure to improve its internal operations and enhance customer experience, given the changing landscape of digitally driven financial services. The company's technology contributes to customer satisfaction and efficient services while also helping the company to remain competitive in the market.
The management remains mindful of purchasing other financial companies, which have the potential to contribute to high financial performance. The expansion of the banks' footprint through acquisitions of smaller banks is being given careful consideration.
In conclusion, Alerus Financial Corp has a solid foundation, driven by the company's client-first philosophy, diversified revenue streams, and good expense management. Management's focus on continued investment in technology services, the expansion of business lines and AUM, and prudent investments and maintain a stable credit quality is expected to drive future growth.