Good morning, and welcome to the Alerus Financial Corporation Earnings Conference Call. All participants will be in a listen-only mode. If you need any 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 in the company's SEC filings. I would now like to pass the conference over to your host, Alerus Financial Corporation President and CEO, Katie Lorenson. Please go ahead. Thank you, and good morning, everyone. Thank you for dialing in to our call today. Joining me today is Karin Taylor, our Chief Risk Officer, and I'm very proud to introduce Al Villalon, our new CFO, who joined our company just about three months ago. Al's background and experience is just what I was looking for as we take Alerus to new heights. We will continue to distinguish ourselves as a uniquely diversified financial services firm via our One Alerus strategy. This strategy sets us apart from others as we deliver higher returns through a highly annuitized revenue mix. This mix will also deliver more consistent returns through longer periods of time and through the ups and downs of business and economic cycles. As I reflect on the first quarter, I'm exceptionally proud of our company's ability to attract and retain talent. We are continually raising the bar with our new additions, and Al is just another example of talented professionals who are looking to be part of a special story and a special future. Alerus has positioned itself with a diversified business model and a strong foundation to grow and create tremendous value for our shareholders. It is a unique story in the Midwest, and people want to be part of it. In addition to Al, we also successfully lifted out a five-person commercial construction lending team and have the privilege of additional Twin Cities talent seeking to join our organization. I'll take this opportunity to thank our Alerus team members for another strong quarter of sales and great service to our clients. It was a quarter of volatile markets and historically low housing inventory levels. However, we excelled where we have control. Alerus reported net income of $10.2 million, driven by strong annualized loan growth, loan growth ex-PPP of 18.7% and supported by a high level of reserves and continued pristine credit quality. I'm proud of the resource and expense management which remains a discipline throughout our company. Our mortgage team members are focused on their realtor relationships and purchase business, which is historically 70%-80% of our origination volume. We also had numerous examples of how our business model wins. As you can see in our numbers, despite being in a down market, we saw a large increase in our AUM based on strong new production and new assets from sale proceeds of one of our long-term commercial clients. Our model is focused on bringing value and advice to our clients all along their financial journey. It's what sets us apart and it's what will continue to drive long-term outperformance compared to our peers. With that, I will hand it off to Al to discuss the financial details of the quarter. Thanks, Katie. I will start my commentary on page 14 of our investor deck, which you can find on our website. For the first quarter of 2022, reported average loans declined 80 basis points on a linked-quarter basis. Excluding the impact of PPP, average core loans increased 1.7% on a linked-quarter basis. The increase in core average loans was driven by 1.8% growth in C&I, 2.2% growth in commercial real estate, and 1.3% growth in consumer. Within C&I, we saw a pickup in loan production along with an uptick in utilization rates as several clients tapped into their existing lines. C&I utilization increased from 17% to 28% during the quarter. At the end of the first quarter, we had approximately $13.1 million of PPP loans outstanding. Average deposits declined 1.9% on a linked-quarter basis due to seasonal declines in non-interest-bearing deposits. We saw seasonal higher deposits rise with synergistic deposits in the fourth quarter of the prior year, but those balances led to the outflow in first quarter. Turn to page 15. Credit continued to remain very strong. We had net recoveries of 3 basis points in the first quarter compared to 22 basis points in net recoveries in the prior quarter. Our non-performing assets was 15 basis points compared to 9 basis points in the prior quarter. Our allowance is 1.74% of period-end loans. As a reminder, we are a non-CECL institution. We're already preparing to implement CECL on January 1, 2023. We'll have more details on CECL as we get closer to implementation date. Turn to page 16. Here are some key revenue metrics. On a reported basis, net interest income declined 4.9% on a linked-quarter basis. Excluding the impact of PPP, net interest income increased 2.5%, mainly due to higher interest income from the investment portfolio. Non-interest income declined 12.6% on a linked-quarter basis due to lower mortgage banking, retirement, and wealth management revenues. I'll go into detail about those declines in the later slides. Turn to page 17. Net interest margin was 2.83% in the first quarter, a decline of 1 basis point from the prior quarter. Excluding the impact of PPP, our core net interest margin was 2.77%. That's an increase of 15 basis points from the prior quarter. Core net interest margin benefited from higher investment portfolio yields along with higher loan yields from our consumer portfolio, offset by lower yields from our C&I portfolio. During the quarter, the reinvestment rate of our investment portfolio was accretive as new investments were at a higher rate compared to investments that were maturing. On page 18, you'll see that we have $698 million or 38% of our loans are flowing, as you can see on the top right of the slide. On the bottom left, you can see a waterfall of the net interest income and net interest margin. A $1.6 million decrease in PPPs negatively impacted both net interest income and margin. Offsetting some of the PPP impact was higher investment portfolio yields and higher yields from consumer portfolio. On page 19, our core funding mix remained very strong. We saw a small increase in our deposit costs due to rising interest rates. Despite the increase in funding costs, the impact of our interest expense is minimal due to decline in deposit balances, as discussed earlier. On page 20, I'll provide some highlights in our retirement business. Assets under management and administration declined 3.2%, mainly due to market volatility and partially to net outflows. While AUM declined, we did see that the number of participants increased to approximately 435,000 versus 430,000 in the prior quarter. Revenues declined 4.9% from the prior quarter, mainly due to lower asset levels. Turning to page 21, you can see highlights of our wealth management business. Despite the market volatility, assets under management and administration saw an increase due to a new custody deal that was brought in during the quarter. We brought in roughly approximately 800 million in assets under administration near the end of the quarter. Revenues declined 5.5% from the prior quarter, mainly due to higher fees recognized at year-end time due to lower average assets and due to lower average assets being impacted by challenging markets during the quarter. Turning to page 22, I'll talk about our mortgage business. Mortgage originations declined approximately 48% from the prior quarter due to lower refinancing and purchase activity. The decline in activity was driven by higher interest rates during the quarter as the 30-year mortgage rate recently hit +5%. Additionally, we saw a lack of housing inventory that negatively impacted our volumes during the quarter. We saw record low housing inventory in our main markets. Despite the challenging markets, our current volumes are still 49% higher than the summertime period in 2019. Lastly, turning to page 23 is an overview of our non-interest expense. During the quarter, non-interest expense declined 7.8% mainly due to lower incentive compensation related to revenue-related activities. We also saw a decrease in professional fees due to lower M&A expenses in the quarter. Other expenses decreased as a result of lower marketing expenses. We view this as more of a timing issue and expect marketing to pick up through the course of the year. Now I'll provide some forward-looking guidance. For 2022, we're still expecting average loan growth to be in the mid to high single digits. We expect overall 2022 revenues to be down low- to mid-single digits when compared to 2021. The biggest variable in our revenue outlook is our mortgage business, where the lack of inventory has caused unforeseen headwinds for us. Also, the recent market volatility has impacted our retirement and wealth businesses. We now expect expenses to be down low single digits when compared to 2021. Lastly, we expect credit to remain strong. I'll now open it up for Q&A. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question is from the line of Jeff Rulis with D.A. Davidson. You may proceed. Thanks. Good morning. Just a question on the loan growth side of things. You know, a bit of a breakout, I guess, if you could kind of talk about any geographic strength. I know you rattled through sort of the segment detail, but just wanted to get a sense for a pretty big start to the year and the sustainability of that. Thanks. Hey, Jeff. It's Al. Thanks for the question. We're seeing pretty much broad-based economic activity in our loan portfolio. You know, it's you know, particularly, especially in our Twin Cities market, we saw some very good growth there too. I would say too that, you know, it's pretty much broad-based across all markets and across all book portfolio, especially both in consumer, you know, C&I and CRE. Hi, Ryan. I'm reaching out to pull you out of your call. The call has requested that we record your telephone number. Is it okay to use the one that you've dialed in ending in 069? Hello, Ryan. Can you hear me? We're looking at the data coming in there, and we're encouraged by what we're seeing. Okay. Pipelines are as good as they were entering the quarter as you are entering Q2? Yes. Okay, thanks. Al, I apologize. I had some audio issues on the call right when you were delivering the fee income outlook. Do you mind just quickly rattling through each of those expectations? Yeah, actually, Jeff, what I did there is that, you know, we talked about overall revenues, and what I said on the call was that we expect overall revenues to be down low- to mid-single digits%. The biggest thing that we're seeing right now is that, you know, in a mortgage business, you know, we're seeing some challenges there because of low inventory in our main markets. That's something we didn't foresee. We're hoping it'll be a seasonal pickup there because just given, you know, winter conditions and just low inventory and hopefully that we expect inventory to pick back up. Then on our, you know, retirement wealth business, what I commented on was that, you know, we just had the market volatility impact that right now. We, you know, didn't expect the quarter to be as volatile as it was in terms of initial outlook. Okay, great. Last one, if I could. Just checking in a bit on the Metro Phoenix on potential deal timing. Is that looking like a May or June? Then if you could kinda maybe update just how they did in Q1 in terms of a growth standpoint, or is it pretty much at announcement those balances will be kinda as expected again at announcement through close? Yes. I mean, I can comment if you want. Go ahead. Go, Katie Lorenson. Sorry about that. I'll take that one. In regards to Metro performance, it was in line with theirs and our expectations, both in terms of net income as well as balance sheet growth. A good strong start to their first quarter. In regards to timing, we have no reason to believe that it won't close in the second quarter. We are going through the regulatory process, out of our control in that regard. Okay, thanks. I'll step back. Thank you. The next question comes from the line of Nathan Race with Piper Sandler. You may proceed. Yeah. Hi, everyone. Good morning. Morning, Nate. Wanted to drill into your fee income with a little bit more. I think last quarter we were thinking about, you know, retirement benefit services revenue, flat year-over-year. Curious if that's still the case. It sounds like you guys had a nice wealth management client win, in the quarter, you know, drove a nice increase in AUM levels. I'm just trying to kind of put the pieces together to get to that kind of low single digits. I'm sorry, mid- to high-single-digit decline in overall fees this quarter. Does that also contemplate kind of the headwind that you guys had coming through mortgage last year? Yeah. Hey, Nate, I just want to make sure, you know, we actually guided to low to mid-single digits, not mid to high. Just make sure we got that down correctly. It's low to mid. Got it. Yeah, you know, the biggest thing when you think about our retirement business right now, so, you know, in the fourth quarter, we did have some, you know, fees that are not annual in nature that impacted. So that's, you know, a decline. And also, we had the volatility in the markets, which impacted our asset levels. So that's gonna be, we're just taking a little bit headwind there right now. You know, how it looks for retirement business, I'd say that, you know, we're trying to keep revenues as high as we can right now, but that might be a little bit challenging given the markets where they are right now. Okay, great. Just kind of in light of your mortgage volume expectations this quarter, just directly in terms of expenses, how should we kind of think about, you know, that run rate over the course of this year? I imagine we'll see an increase in 2Q and 3Q as mortgage volumes presumably pick up. Just kind of any thoughts on just the overall run rate, excluding the deal in Arizona? When it comes to mortgage business right now, you know, we actually had a little bit of a challenging quarter given the low inventory. We're expecting that to pick up in 2Q and through the rest of the year. You know, we do have some leverage there in terms of, you know, as revenues pick up for us in that segment, you know, there'll be a little bit higher expenses because, you know, we have more production coming through. You know, we also, you know, we're trying to do the best we can to manage that environment right now, you know. You saw the comp expense did drop for us in 1Q, which, as you know, we had a negative impact from the revenue decline. Got it. Okay, great. Maybe just turn to kind of the outlook for the reserve. I mean, you guys are still operating with a very, you know, robust reserve-to-loan ratio. It sounds like you guys are expecting mid- to high-single-digit loan growth going forward. I'm just curious in terms of, you know, any need to provide for that growth going forward, or is it likely to just grow into kind of the unallocated excess reserve that exists still? Yeah. I'm gonna let Karin take this one. Good morning, Nate. Thanks, Al. Good morning, Nate. Yeah, you know, we expect similar to previous quarters that increases will be driven by loan growth. A large portion of our reserve at this point is due to qualitative factors. Obviously, we will continue to watch the environment in terms of how we need to be reserved there. As we have loan growth, we could see some provisioning later in the year. Understood. Does that loan growth outlook contemplate, you know, additional increases in line utilization? You know, we've seen nice increases recently, but still below pre-pandemic levels. Just trying to understand how much of an opportunity, in terms of upside or loan growth potential exists, with line utilization continuing to increase. Do you want me to take that, Al? Yes. Go ahead, Karin. Okay. Yeah, Nate, I think it's, you know, looking at our available balances and where our utilization rate has been historically pre-pandemic. I would say there's upside in the $20 million-$30 million range. Okay. Maybe just one last one on capital. You know, you guys had a little bit of a decline in TC with the AOCI coming in the quarter, but you guys are still operating with ample capital levels. You know, stocks pulled back like most of your peers over the last few months. Just curious just to get an update in terms of the buyback appetite, presently and just kind of what you're seeing in terms of acquisition opportunities as well, Katie. Thank you. So our share repurchase plan is, it is suspended, of course, until we close on the Metro deal. We do have in place, but our priority continues to be balance sheet growth, loan growth, as well as on the fee income side. I would reiterate my comments from the prior quarter in regards to, our focus is on building our pipeline, as well as building our sources, for those fee income deals. Okay, great. I apologize if I could just ask for more on the commercial real estate team that you guys added in the Twin Cities. Are there any non-competes or non-solicits in place, or do you expect those guys to kind of hit the ground running now that they're on board? Yeah, Nate, this is Karin again. There are no non-competes or non-solicits, and we're already seeing a high degree of activity from the team. We expect that they'll be building their pipeline through the rest of 2022. Got it. I appreciate all the color and you guys taking the questions. Congratulations. Great quarter. Thanks. Thank you. Thank you. Thank you. Again, if you have a question, please press star then one. This concludes our question-and-answer session. I would like to turn the conference back over to Katie Lorenson for any closing remarks. Thank you. Thank you again to everyone joining our call this morning. Thank you for listening and asking questions. Our industry is facing headwinds. Our company has some of our own, but this company, again, has historically outperformed, and we remain well positioned for future success because of our business model. We continue to see momentum in building our pipelines and our new business and client expansion, as well as a high level of engagement within our team and within our markets and our brand. We have constancy of purpose that is embraced and magnified by our leadership team, and we remain focused on working together to grow. This steady and strong foundation is allowing us to retain and recruit top talent, serve in the best interest of our clients, and deliver long-term value to our shareholders. We thank our shareholders for their investment and all of our team members for doing great work every day. We thank you for your continued support and interest in our company. Have a great day, everyone. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.