Good morning, and welcome to the Alerus Financial Corporation earnings conference call. All participants will be in listen-only mode. Should you need assistance, please see 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 in the company's SEC filings. I would now like to turn the conference over to Alerus Financial Corporation Chairman, President, and CEO, Randy Newman. Please go ahead. Thank you. Good morning, and welcome to everyone who is joining our call today. Today, I am joined by Karin Taylor, our Chief Risk Officer, and Katie Lorenson, our current CFO, and as we recently announced, our future President and CEO. In addition to announcing the transition of leadership to Katie in 2022, we also announced the addition of three new Corporate Directors to our Board, Janet Estep, Jill Schurtz, and Mary Zimmer. Alerus's ability to attract and retain talent from the Boardroom to the entry-level professional is a key differentiator in our ability to grow and execute our strategic plan. The third quarter was another quarter of impressive financial results. Our diversified business model continues to drive strong financial performance as we ended the third quarter with a return on tangible common equity of over 18%. We generated $57.2 million of revenue through continued momentum in our retirement, wealth management, and mortgage businesses, while net interest income and loan growth, excluding Paycheck Protection Program or PPP loans, showed incremental improvement with average total earning assets growing 10.6% year-over-year. Credit quality was better than expected with another net recovery quarter, driving a negative provision for the quarter. Tangible book value grew over 7% from a year ago, which includes the intangibles recognized in the December 2020 acquisition of the Denver-based 24HourFlex RPS. During the quarter, we converted 24HourFlex clients to Alerus, and we are pleased to see exceptional client retention and growth. We greatly appreciate all of our employees for their continued hard work, remarkable ongoing client engagement, and dedication to serving our clients, and their ability to help us produce strong returns for our shareholders. I am so proud of the company's historical and current levels of performance. Next April 2022 is the 25th anniversary of the devastating flood and fire in Grand Forks, North Dakota, that created a crisis situation for both the community and for our company. I'm famous for the line that I use when I state that while I'm immensely proud of the financial performance of Alerus, the non-financial achievements of Alerus define and separate us from our competitors, and I believe will drive this company to continued outperformance of our peers well into the future. Alerus is a purpose-driven company that performs exceptionally well and is blessed with enormous professional talent that has a strong pride and passion in what we do and how well we focus on client success and satisfaction. Before I turn it over to Katie and Karin, I'd like to just say that over the past several years, Alerus and our Board successfully became a public company and significantly improved the leadership of our company. This seamless transition occurred during a pandemic and has not interfered with our earnings in the past several years. In 2016, we created the Alerus Leadership Council, which includes our top 20 product staff, market leaders, in addition to our C-suite Executives. As needed, we also successfully recruited and brought in new leadership to supplement our internal talent, and in every case, we were able to attract our number one candidate. In addition, as I mentioned earlier, we are adding three high-quality industry experienced corporate directors to our leadership team. Finally, the Board decided to name Katie Lorenson as my successor. I'm very proud of how the Board followed a process to identify candidates based on performance and cultural fit and ultimately chose Katie. No one has contributed more to Alerus's success than Katie over the past several years. I didn't think that we would ever find anyone who mirrored my pride and passion in Alerus, but we have found that person in Katie. The response from advisors, investors, and employees to the announcement of Katie has been overwhelmingly positive and has reinforced the decision of the Board. Alerus is making these leadership changes during a position of strength. Katie has Karin Taylor and Karen, experienced and engaged corporate directors and a very talented and experienced Alerus Leadership Council to call upon as she builds her team and focuses on executing strategies to keep Alerus successful in the future and to meet the never-ending challenges of our industry. I strongly support the decision of the Board, and I couldn't be happier for Katie or for Alerus. I have the greatest confidence in her abilities, and she has my unequivocal support. She is the right person at the right time. I will now turn it over to Katie, currently our Chief Financial Officer and our new Chief Executive Officer on January 1, 2022. Katie? Well, thank you, Randy, and thank you for your many, many years of leading this exceptional company. I will spend just a couple of minutes today touching on the highlights of another excellent quarter of results and the continued momentum that we have building within Alerus today. First, I'll spotlight the incredible efforts of our revenue-generating team members. Our business advisors and financial guides continue to put up impressive numbers, and pipelines remain strong across all product offerings. I believe we have turned the corner on loan growth, ending the quarter with balances up for the first time this year. The SBA team continues to be a welcome addition to our company. With our significant commercial base of clients and the expertise and experience of this team, we believe this product offering will continue to help differentiate Alerus and the value we bring to our business clients. The team has integrated so quickly and so well into our organization. We've closed a couple of deals already, and we have a solid pipeline and good opportunity flow. Our business model continues to prove out with client expansion opportunities growing and upsell of treasury management and synergistic product sales in our retirement business remaining strong. Within our consumer segment, our wealth management business had another strong quarter, and new revenue for the quarter kept pace with last quarter at exceptional levels. We rolled out a wealth management digital account opening, which has not only provided a big efficiency lift for our team members but has delivered a seamless and simplified process for our clients. Our mortgage units had another great quarter, serving over 1,200 consumer clients. Our business continues to evolve back to our historical mix, with purchase volume averaging approximately 67% of the production in the quarter. As expected, we did see the continued unwinding of the value of the hedge this quarter. The revenue headwind was about $1.8 million. We estimate a seasonal drop in volume of about 20% in the fourth quarter and the hedge to unwind an additional $1.7 million. Briefly on the margin, we saw more of the same with stimulus-driven liquidity remaining heightened. Our deposit balances have consistently held at $2.7 billion for the first nine months of 2021, an incredible 48% increase from pre-COVID Q3 2019 ending balances. We did see net interest income ex-PPP increase this quarter, a trend we expect to continue as we've built a billion-dollar investment portfolio and continue to put on loan growth. We've seen some significant deposit balance inflow in October with some big clients. This could lead to further pressure on the margin. Once we see outflow of these funds, which we expect to be intra-quarter, we would expect to stabilize and in the longer term, improve from here as we shift investment into loan growth. Last but not least, expense management. From an expense standpoint, our execution in controlling costs continues, and we delivered another solid quarter of managed expenses. We continue to extract efficiencies in processes, operations, and facility closures while growing our client base and engaging clients in our digital technology investments. All of this while employee satisfaction scores and recognitions continue to distinguish Alerus as an employer of choice. That's a wrap for my remarks. I'll turn it over to Karin for some brief comments on credit and the allowance. Thank you, Katie, and good morning, everyone. Our COVID-related lending programs continued to wind down during the quarter. As of October 25, we'd received forgiveness on approximately $396 million or 90% of our PPP loans. Just $19 million of first-round loans remain on the books. Remaining loan balances on deferral total $3.4 million, comprised primarily of eight residential real estate loans. Credit quality remained strong during the quarter. Non-performing assets to total assets was 22 basis points, excluding PPP loans. We recorded net recoveries of $302 thousand for the quarter. This is the fourth quarter out of the last five in which we've recorded a net recovery. That, combined with continued strong credit metrics and improving economic conditions in all of our markets, resulted in a reserve release of $2 million during the quarter. As of November 9, 30, the ratio of the allowance to total loans was 1.89%, excluding PPP loans, and the ratio of the allowance to non-performing loans was 515%. That concludes our prepared comments, and we will now open it up for questions. We will now begin the question- and- answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, press star then two. We will pause momentarily to assemble our roster. The first question will come from Nathan Race of Piper Sandler. Please go ahead. Yep. Hi, everyone. Good morning. Morning, Nate. Morning. Maybe just to start off on just kind of the overall balance sheet growth expectations. You know, you guys, like most others in the industry, have had a lot of deposit inflows over the last several quarters. But I suppose I could argue that, you know, some of your deposit is a function more so of what you guys are doing across the One Alerus strategy. So just curious, you know, as we kind of look out to next year and into the fourth quarter as well, how we should kind of think about just the overall balance sheet growing from here. Should we expect any kind of deposit outflows, or should we kind of assume, you know, kind of low-single-digit growth in the overall earning asset base and that of loans as well? Good question, Nate. I believe that is a sound assumption in that regard. We are not at this point anticipating significant declines in the deposit base. What we do believe will flow out, we will replace with continued growth on the treasury management side and in significant deposits. Great. That's very helpful. I appreciate your thoughts on the decline in mortgage volumes expected through third quarter. I was actually kind of thinking about also the potential compression on your gain-on-sale margin. I think you held up relatively well as indicated in the slide deck. Are you seeing that pressure accelerate thus far in the fourth quarter? How should we think about that component of the mortgage fee and gain revenue line near term? We do expect to see those margins compress from where they have held very well obviously. We would expect them to settle in somewhere between 2.80% and 3%. Okay, great. Very helpful. Maybe just last one on fees. You know, wealth management and retirement and benefit services revenue, you know, continuing in the quarter, perhaps a little bit above kind of what we were expecting and perhaps what you maybe guided to within the RB&S line, last quarter. How are you kind of thinking about the trajectory of those business lines into the fourth quarter in 2022 as well? It's a good question. We did have some accelerated document restatement fees in the quarter, which we disclosed in the earnings release. That helped pull the numbers up a little for the quarter. I would expect for the fourth quarter to be similar to where we ended up this quarter. In the run rates for 2022, we'll end 2021 with about $2 million of document restatement revenue. That's recurring revenue, but not on an annual basis. That'll be a bit of a headwind for us into 2022. As we think about it, you know, assuming the market is at historical levels, you know, we would expect revenue for the year to look fairly consistent with where we land in 2021. Okay. Got it. I think you mentioned also in the release around expenses that there was some perhaps one-time costs in the quarter around some investments in automated processing and integration. Is that a significant dollar amount in the quarter? Kind of what do those investments perhaps generate in terms of additional efficiency improvement cost base as well over the near to intermediate term? Yeah. Those expenses relate to pulling in some consultants to help with our technology investments. It's really just a shift in expenses from 2022 to 2021. Okay, great. I will step back from now on and congrats to Katie on the promotion. Thanks, everyone. The next question is from Jeff Rulis of D.A. Davidson. Please go ahead. Thanks. Good morning. Yes. Question on the loan growth outlook. I just wanna in terms of the payoffs, are you seeing anything. Was that higher in the quarter or do you and maybe even expectations for the coming year? We did have a couple of significant payoffs this quarter, like $25 billion, in one of our markets. For the fourth quarter loan growth, we would expect to look similar to the third quarter. With the pipelines and the momentum that we're seeing building, we would expect to return to mid- to upper-single-digit% growth next year. Gotcha. Katie, I may have missed the spread income comment in terms of management of investment securities. Did you say that you think NII can stay up here or what was that expectation? Yes. We do expect that NII without PPP will continue to grow on a quarterly and annual basis. Okay. Last one, just on that M&A landscape and if you can capital plan it's been a bit since the last transaction and just interested in those discussions and thoughts about, you know, where you stand on being opportunistic on anything that's out there strategically? Yes. Yes, we like where we're at today in regards to the stage of the conversations that we're having. We continue to focus on building those pipelines and really through various sources as we've touched upon before. Really establishing relationships wherever, you know, wherever it makes sense and across business units as well as across geographies. Got it. Randy, all the best in retirement. You've been a great ambassador and certainly looking forward to Katie's leadership. Thank you. Thanks, Jeff. The next question comes from William Wallace of Raymond James. Please go ahead. Yeah. Hi. I was hoping to maybe circle back on the expense commentary. It sounded like you were suggesting that you pulled forward some expenses in the quarter. You know, we've been hearing a lot about wage inflations and pressures on the expense base, maybe not being so transitory. I'm just kind of curious if you can help us think about where you think a run rate expense might be going into next year, and then what kind of inflation you might anticipate on the base, you know, relative to the commentary that you pulled some expense forward. Right. It's a good question. Obviously, a big piece of our expense run rate is variable with mortgage volume, which we do expect to trend down next year. If you apply the industry what the industry is saying about what's going to happen next year with purchase and refi volumes out, that would pull down our business about 30%. We absolutely believe we will do much better than the industry. That certainly impacts our expense side. We do expect compensation related to mortgage to come down, but we believe that won't hit the bottom line as we continue to invest in our current talent as well as recruiting new talent for the revenue producing side of the business. Our outlook today from an expense side is probably within the $40 million or so run rate on average. Give or take a couple million on either side, depending on what happens with mortgage and unforeseen items. That $42 million run rate is, that contemplates that your variable compensation related to mortgage will be declining. It does. If it's not by 30%. Right. Okay. I think I misunderstood or misheard what you're talking about on the fee, on the fee income side. Are you suggesting that investments, like for the sample in the SBA platform and then, what you're seeing in employment business, et cetera, you think will offset any mortgage pressures? What I would say is that we believe our mortgage business will do better than the industry, and we don't anticipate the headwind that we have in mortgage this year in regards to the hedge unwinding, which, you know, we think it'll probably be about an $8 million year-to-date headwind in mortgage. That is not something that we will be having to deal with next year. We expect continued growth in wealth. As we look at just net revenue, I believe that we will be able to stay pretty close to where we were this year. Okay. On net interest margin, understanding that obviously liquidity is pressuring the reported NIM, can you just talk about what pressures you're seeing on loan pricing and whether or not you feel like if we were to just keep liquidity flat and not worry, you know, not worrying about that improving or continuing to pressure NIM, what would you think kind of a core NIM trajectory would be? Do you think you've got stability in pricing, or do you think we still have pressures on the pricing side from the loan portfolio that will be a pressure? No, I think we've. Katie I think we've got some stability. Go ahead, Karin. Yeah. I was just gonna say that, you know, we continue to see pressure certainly on pricing. You know, it has been fairly stable over the quarter. Okay. That's all I had. I really appreciate your time, and I'll echo all the other sentiment. Katie, it's exciting working with you and Randy. I hope you're able to enjoy your free time. Thanks, William. This concludes our question and answer session. I would now like to turn the conference back over to Randy Newman for any closing remarks. All right. Thank you to everyone for joining our call this morning. Thank you for listening and also asking questions. Our performance through the first nine months continues to position us well for future success. Our diversified business model and significant client base continues to create opportunities to grow and outperform our peers. We are a purpose-driven organization, which differentiates our ability to attract and retain our talented professionals. We have made significant investments in sales training and technology, which has led to a high level of engagement in our team and is driving production and new business across all product lines. We remain focused on our culture, our communities, and our clients. We are very pleased with our performance year to date, and thank all of you and all of our shareholders for your investments and our team members who work daily to positively impact our clients' financial potential. We thank you for your continued support and interest in our company. Again, thank you for joining and listening to today's call.