The Bank Slate


Alerus in N.D. to buy HMN Financial in Minn. for $116 million

Alerus Financial in Grand Forks, N.D., has agreed to buy HMN Financial in Rochester, Minn.

The $4.3 billion-asset Alerus said in a press release that it will pay $116.4 million in stock for the $1.2 billion-asset HMN. The deal, which is expected to close in the fourth quarter, priced HMN at 107% of its tangible book value.

HMN has 12 branches in Minnesota and single branches in Iowa and Wisconsin. It has $872.3 million of loans and $1 billion of deposits.

“We are pleased with this partnership and the strategic expansion,” Katie Lorenson, Alerus’ president and CEO, said in the release.

HMN “has built a valuable core deposit franchise based on long-standing client relationships, and we believe their culture, vision, and purpose align remarkably well with ours,” she added.

The deal is expected to be 45% accretive to Alerus’ 2025 earnings per share, excluding one-time costs. It should take a little over two years to earn back any dilution to Alerus’ tangible book value.

Alerus expects to cut about 30% of HMN’s annual noninterest expenses. It expects to incur $21.7 million in pretax merger-related charges.

One HMN director will join the Alerus board.

Raymond James and Barack Ferrazzano Kirschbaum & Nagelberg advised Alerus. D.A. Davidson and Ballard Spahr advised HMN.

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