GRAND FORKS, N.D. & ROCHESTER, Minn. - Alerus Financial (NASDAQ:ALRS) Corporation (NASDAQ:ALRS) and HMN Financial, Inc. (NASDAQ:HMNF) announced on Wednesday the signing of a definitive agreement for Alerus to acquire HMN Financial in an all-stock merger. The transaction, valued at approximately $116.4 million, will see HMN Financial merge into Alerus, and Home Federal Savings Bank, a subsidiary of HMN Financial, merge into Alerus Financial, National Association.
The merger, which is the twenty-sixth acquisition by Alerus since 2000, is part of the company's ongoing strategy to expand its banking, wealth services, and retirement and benefits plans and services. The combined company will have roughly $5.5 billion in total assets, $3.7 billion in total loans, and $4.3 billion in total deposits, with assets under administration and management of about $43.1 billion.
Under the terms of the merger agreement, HMN Financial stockholders will receive 1.25 shares of Alerus common stock for each share of HMN Financial common stock they own. This deal is expected to be immediately accretive to Alerus's earnings before one-time costs, with a tangible book value earn back of approximately 2.2 years and an internal rate of return exceeding 25%.
Katie Lorenson, President and CEO of Alerus, remarked on the strategic expansion into the Rochester market and praised the alignment of culture and vision between the two companies. Brad Krehbiel, President and CEO of HMN Financial, expressed confidence in the partnership, citing Alerus's track record of profitable growth and acquisition execution.
The merger, which has been unanimously approved by the Boards of Directors of both companies, is subject to customary closing conditions, including regulatory approvals and approval by the stockholders of both Alerus and HMNF. The transaction is expected to close in the fourth quarter of 2024.
Alerus will host a conference call to discuss the transaction, and the related slide presentation will be available on Alerus's investor website. This news is based on a press release statement.
InvestingPro Insights
As Alerus Financial Corporation (NASDAQ:ALRS) gears up to expand its operations through the acquisition of HMN Financial, it's essential to look at the company's financial health and market performance. According to InvestingPro data, Alerus has a market capitalization of $409.18 million, with a P/E ratio standing at 41.07, reflecting a premium compared to the market average. Despite a challenging revenue growth rate in the last twelve months as of Q1 2024, which saw a decrease of 20.65%, Alerus has maintained a steady dividend yield of 3.67%, showcasing its commitment to shareholder returns.
One of the key InvestingPro Tips for Alerus includes its impressive track record of raising its dividend for 19 consecutive years, which is a testament to the company's financial discipline and shareholder-friendly approach. Additionally, the company has maintained dividend payments for 40 consecutive years, further emphasizing its reliability in providing consistent returns to its investors. It's also noteworthy that analysts predict Alerus will be profitable this year, which aligns with the company's positive performance over the last twelve months.
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