ALERUS FINANCIAL CORP

Previous wording

The following discussion explains the Company’s financial condition and results of operations as of and for the three and six months ended June 30, 2025 and 2024*. Annualized results for this interim period may not be indicative of results for the full year or future periods. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes presented elsewhere in this report and the Company*’s Annual Report on Form 10-K for the year ended December 31, 2024*, filed with the SEC on March 14, 2025.*

Current wording

The following discussion explains the Company’s financial condition and results of operations as of and for the three and nine months ended September 30, 2025 and 2024*. Annualized results for this interim period may not be indicative of results for the full year or future periods. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes presented elsewhere in this report and the Company*’s Annual Report on Form 10-K for the year ended December 31, 2024*, filed with the SEC on March 14, 2025.*

Previous wording

Net income for the three months ended June 30, 2025, was $20.3 million, or $0.78 per diluted common share, a $14.0 million, or 226.2%, increase compared to $6.2 million, or $0.31 per diluted common share, for the three months ended June 30, 2024. Earnings for the second quarter of 2025 compared to the second quarter of 2024 increased primarily due to a $19.0 million increase in net interest income and a $4.4 million increase in noninterest income. This positive result was partially offset by a $9.6 million increase in noninterest expense.

Current wording

Net income for the three months ended September 30, 2025, was $16.9 million, or $0.65 per diluted common share, a $11.7 million, or 225.0%, increase compared to $5.2 million, or $0.26 per diluted common share, for the three months ended September 30, 2024. Earnings for the third quarter of 2025 compared to the third quarter of 2024 increased primarily due to a $20.6 million increase in net interest income, partially offset by an $8.1 million increase in noninterest expense.

Previous wording

Net income for the six months ended June 30, 2025, was $33.6 million, or $1.30 per diluted common share, a $20.9 million, or 165.6%, increase compared to $12.6 million, or $0.63 per diluted common share, for the six months ended June 30, 2024. Earnings for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 increased primarily due to a $38.0 million increase in net interest income and a $6.7 million increase in noninterest income. This positive result was partially offset by a $21.0 million increase in noninterest expense.

Current wording

Net income for the nine months ended September 30, 2025, was $50.5 million, or $1.95 per diluted common share, a $32.6 million, or 182.9%, increase compared to $17.8 million, or $0.89 per diluted common share, for the nine months ended September 30, 2024. Earnings for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 increased primarily due to a $58.6 million increase in net interest income, partially offset by a $29.1 million increase in noninterest expense.

Previous wording

Net interest income is the difference between interest income and yield related fees earned on assets and interest expense paid on liabilities. Net interest margin is the difference between the yield on interest earning assets and the cost of interest-bearing liabilities as a percentage of interest earning assets. Net interest margin is presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to a pre-tax-equivalent income, assuming a federal income tax rate of 21% for the three and six months ended June 30, 2025 and 2024.

Current wording

Net interest income is the difference between interest income and yield related fees earned on assets and interest expense paid on liabilities. Net interest margin is the difference between the yield on interest earning assets and the cost of interest-bearing liabilities as a percentage of interest earning assets. Net interest margin is presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to a pre-tax-equivalent income, assuming a federal income tax rate of 21% for the three and nine months ended September 30, 2025 and 2024.

Previous wording

Net interest income for the three months ended June 30, 2025 was $43.0 million, an increase of $19.0 million, or 79.3%, compared to $24.0 million for the three months ended June 30, 2024. Net interest income for the second quarter of 2025 increased compared to the second quarter of 2024 primarily due to a $17.4 million increase in interest income, as average earning assets increased $1.0 billion while the average interest earning asset yield increased 43 basis points. Additionally, interest expense decreased $1.6 million due primarily to an 85 basis point decline in the average rate paid on interest-bearing liabilities partially offset by a $714.9 million increase in the average balance of interest-bearing liabilities. The increase in interest earning assets and interest-bearing liabilities balances was primarily due to assets and liabilities acquired in the HMNF transaction and organic loan and deposit growth. The increase in interest earning asset yields was primarily due to organic loan growth at higher yields and purchase accounting accretion. The decrease in average rate paid on interest-bearing liabilities was due to the impact of the HMNF transaction as well as lower rates paid on interest-bearing deposits following rate cuts in 2024.

Current wording

Net interest income for the three months ended September 30, 2025 was $43.1 million, an increase of $20.6 million, or 91.4%, compared to $22.5 million for the three months ended September 30, 2024. The increase in net interest income for the third quarter of 2025 compared to the third quarter of 2024 was primarily due to the earning assets acquired in the HMNF transaction, strong organic loan growth at higher yields, and purchase accounting accretion. Interest expense decreased $2.2 million, or 7.3%, from the third quarter of 2024, as average borrowing balances declined, alongside a decrease in the average rate paid on deposits, more than offset the increase in interest-bearing deposits stemming from the HMNF transaction and organic deposit growth.

Previous wording

Net interest margin (on a tax-equivalent basis) for the three months ended June 30, 2025 was 3.51%, compared to 2.39% for the same period in 2024. The increase in net interest margin (on a tax-equivalent basis) was mainly attributable to higher rates on interest earning assets from organic loan growth and the HMNF transaction, purchase accounting accretion, and lower rates paid on deposits.

Current wording

Net interest margin (on a tax-equivalent basis) for the three months ended September 30, 2025 was 3.50%, compared to 2.23% for the same period in 2024. The increase in net interest margin (on a tax-equivalent basis) was mainly attributable to higher rates on interest earning assets from organic loan growth and the HMNF transaction, purchase accounting accretion, lower rates paid on deposits and lower borrowing balances.

Previous wording

The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields on assets, average yields earned, and rates paid for the three and six months ended June 30, 2025 and 2024. The Company derived these yields and rates by dividing income or expense by the average balance of the corresponding assets or liabilities. The Company derived average balances from the daily balances throughout the periods indicated. Average loan balances include loans that have been placed on nonaccrual status, while interest previously accrued on these loans is reversed against interest income. In these tables, adjustments are made to the yields on tax‑exempt assets in order to present tax‑exempt income and fully taxable income on a fully taxable equivalent (“FTE”) basis.

Current wording

The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields on assets, average yields earned, and rates paid for the three and nine months ended September 30, 2025 and 2024. The Company derived these yields and rates by dividing income or expense by the average balance of the corresponding assets or liabilities. The Company derived average balances from the daily balances throughout the periods indicated. Average loan balances include loans that have been placed on nonaccrual status, while interest previously accrued on these loans is reversed against interest income. In these tables, adjustments are made to the yields on tax‑exempt assets in order to present tax‑exempt income and fully taxable income on a fully taxable equivalent (“FTE”) basis.

Previous wording

The Company recorded a provision for credit losses of $0.0 million for the second quarter of 2025, compared to a provision for credit losses of $4.5 million for the second quarter of 2024. The decrease in the provision for credit losses was primarily driven by the change in net loans, and the decrease in provision for credit losses on unfunded commitments was primarily driven by a decrease in the required reserve for unfunded commitments.

Current wording

The Company did not record a provision for credit losses for the third quarter of 2025, compared to a provision for credit losses of $1.7 million for the third quarter of 2024. The decrease in the provision for credit losses was primarily driven by the decrease in the provision for credit losses on unfunded commitments.

Previous wording

The Company recorded a provision for credit losses of $0.9 million for the six months ended June 30, 2025 compared to a provision for credit losses of $4.5 for the six months ended June 30, 2024. The decrease in the provision for credit losses was primarily driven by the change in net loans, and the decrease in provision for credit losses on unfunded commitments was primarily driven by a decrease in the required reserve for unfunded commitments.

Current wording

The Company recorded a provision for credit losses of $0.9 million for the nine months ended September 30, 2025 compared to a provision for credit losses of $6.2 million for the nine months ended September 30, 2024. The decrease in the provision for credit losses was primarily driven by the decrease in the provision for credit losses on unfunded commitments.

Previous wording

The following table presents the Company’s noninterest income for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents the Company’s noninterest income for the three and nine months ended September 30, 2025 and 2024:

Previous wording

Total noninterest income for the three months ended June 30, 2025 was $31.8 million, an increase of $4.4 million, or 16.0%, from the three months ended June 30, 2024. The increase in noninterest income was primarily driven by a $2.1 million gain on the sale of a PCD hospitality loan during the second quarter of 2025. Wealth revenue increased $1.0 million, or 15.8%, in the second quarter of 2025 compared to the second quarter of 2024, primarily driven by an increase in assets under administration/management during that same period as a result of improved bond and equity markets as well as the HMNF transaction. Mortgage banking revenue increased $1.1 million, or 43.0%, in the second quarter of 2025 compared to the second quarter of 2024, primarily driven by a higher gain on sale rate and increased mortgage servicing revenue driven by the HMNF transaction.

Current wording

Total noninterest income for the three months ended September 30, 2025 was $29.4 million, an increase of $1.1 million, or 3.8%, from the three months ended September 30, 2024. The increase in noninterest income was primarily driven by an increase of $0.9 million, or 35.0%, in mortgage banking revenue in the third quarter of 2025 compared to the third quarter of 2024, primarily driven by higher mortgage originations as a result of expansion into HMNF legacy markets. Retirement and benefit services revenue increased $0.4 million, or 2.2%, in the third quarter of 2025 compared to the third quarter of 2024, primarily driven by a 6.7% increase in assets under administration/management during that same period.

Previous wording

Total noninterest income for the six months ended June 30, 2025 was $59.4 million, an increase of $6.7 million, or 12.7%, from the six months ended June 30, 2024. The increase in noninterest income was primarily driven by a $2.1 million gain on the sale of a PCD hospitality loan during the second quarter of 2025. Wealth revenue increased $1.8 million, or 14.3%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by an increase in assets under administration/management during that same period as a result of improved bond and equity markets as well as the HMNF transaction. Mortgage banking revenue increased $1.1 million, or 27.2%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a higher gain on sale rate and increased mortgage servicing revenue driven by the HMNF transaction.

Current wording

Total noninterest income for the nine months ended September 30, 2025 was $88.8 million, an increase of $7.8 million, or 9.6%, from the nine months ended September 30, 2024. The increase in noninterest income was primarily driven by a $2.1 million gain on the sale of a PCD hospitality loan during the second quarter of 2025. Mortgage banking revenue increased $1.9 million, or 27.3%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by a higher gain on sale rate and increased mortgage servicing revenue from the HMNF transaction. Wealth revenue increased $1.7 million, or 8.7%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by an increase in assets under administration/management during that same period as a result of improved bond and equity markets as well as the HMNF transaction.

Previous wording

The following table presents noninterest expense for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents noninterest expense for the three and nine months ended September 30, 2025 and 2024:

Previous wording

Total noninterest expense for the three months ended June 30, 2025 was $48.4 million, a $9.7 million, or 25.0%, increase compared to $38.8 million for the three months ended June 30, 2024. The year over year increase was primarily driven by higher compensation expense, employee taxes and benefits expense, intangible amortization expense, and occupancy and equipment expense. Compensation expense and employee taxes and benefits expense increased primarily due to increased head count resulting from the HMNF transaction. Intangible amortization expense increased primarily due to the $33.5 million core deposit intangible recorded in connection with the HMNF transaction. Occupancy and equipment expense increased primarily due to increased branch footprint resulting from the HMNF transaction.

Current wording

Total noninterest expense for the three months ended September 30, 2025 was $50.5 million, an $8.1 million, or 19.1%, increase compared to $42.4 million for the three months ended September 30, 2024. The year over year increase was primarily driven by higher compensation expense, business services, software and technology expense, intangible amortization expense, occupancy and equipment expense, and employee taxes and benefits expense. Compensation expense and employee taxes and benefits expense increased primarily due to increased head count resulting from the HMNF transaction. Business services, software and technology expense increased primarily due to the increased company size following the HMNF transaction along with multiple platform upgrades. Intangible amortization expense increased primarily due to the $33.5 million core deposit intangible recorded in connection with the HMNF transaction. Occupancy and equipment expense increased primarily due to the increased branch footprint resulting from the HMNF transaction.

Previous wording

Total noninterest expense for the six months ended June 30, 2025 was $98.8 million, a $21.0 million, or 27.0%, increase compared to $77.8 million for the six months ended June 30, 2024. The year over year increase was primarily driven by higher compensation expense, employee taxes and benefits expense, intangible amortization expense, and occupancy and equipment expense. Compensation expense and employee taxes and benefits expense increased primarily due to increased head count resulting from the HMNF transaction. Intangible amortization expense increased primarily due to the $33.5 million core deposit intangible recorded in connection with the HMNF transaction. Occupancy and equipment expense increased primarily due to increased branch footprint resulting from the HMNF transaction.

Current wording

Total noninterest expense for the nine months ended September 30, 2025 was $149.3 million, a $29.1 million, or 24.2%, increase compared to $120.2 million for the nine months ended September 30, 2024. The year over year increase was primarily driven by higher compensation expense, intangible amortization expense, employee taxes and benefits expense, business services, software and technology expense, other expense, and occupancy and equipment expense. Compensation expense and employee taxes and benefits expense increased primarily due to increased head count resulting from the HMNF transaction. Intangible amortization expense increased primarily due to the $33.5 million core deposit intangible recorded in connection with the HMNF transaction. Business services, software and technology expense increased primarily due to platform upgrades. Other expense increased primarily due to an insurance reimbursement. Occupancy and equipment expense increased primarily due to the increased branch footprint resulting from the HMNF transaction.

Previous wording

For the three months ended June 30, 2025, the Company recognized income tax expense of $6.1 million on $26.4 million of pre-tax income, resulting in an effective tax rate of 23.2%, compared to income tax expense of $1.9 million on $8.1 million of pre-tax income for the three months ended June 30, 2024, resulting in an effective tax rate of 23.7%.

Current wording

For the three months ended September 30, 2025, the Company recognized income tax expense of $5.1 million on $22.0 million of pre-tax income, resulting in an effective tax rate of 23.2%, compared to income tax expense of $1.6 million on $6.8 million of pre-tax income for the three months ended September 30, 2024, resulting in an effective tax rate of 23.4%.

Previous wording

For the six months ended June 30, 2025, the Company recognized income tax expense of $10.3 million on $43.9 million of pre-tax income, resulting in an effective tax rate of 23.6%, compared to income tax expense of $4.0 million on $16.7 million of pre-tax income for the six months ended June 30, 2024, resulting in an effective tax rate of 24.1%.

Current wording

For the nine months ended September 30, 2025, the Company recognized income tax expense of $15.5 million on $65.9 million of pre-tax income, resulting in an effective tax rate of 23.4%, compared to income tax expense of $5.6 million on $23.5 million of pre-tax income for the nine months ended September 30, 2024, resulting in an effective tax rate of 23.9%.

Previous wording

The banking segment offers a complete line of loan, deposit, cash management, and treasury services through 29 offices in North Dakota, Minnesota, Wisconsin, Iowa, and Arizona, including 15 banking offices acquired in the HMNF transaction. These products and services are supported through web and mobile based applications. The majority of the Company’s assets and liabilities are in the banking segment’s balance sheet.

Current wording

The banking segment offers a complete line of loan, deposit, cash management, and treasury services through 28 offices in North Dakota, Minnesota, Wisconsin, Iowa, and Arizona, including 15 banking offices acquired in the HMNF transaction. These products and services are supported through web and mobile based applications. The majority of the Company’s assets and liabilities are in the banking segment’s balance sheet.

Previous wording

The following table presents the banking segment income statement, net of corporate administration, for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents the banking segment income statement, net of corporate administration, for the three and nine months ended September 30, 2025 and 2024:

Previous wording

The following table presents the retirement and benefits services segment income statement for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents the retirement and benefits services segment income statement for the three and nine months ended September 30, 2025 and 2024:

Previous wording

The following table presents the wealth segment income statement for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents the wealth segment income statement for the three and nine months ended September 30, 2025 and 2024:

Previous wording

Total assets were $5.3 billion as of June 30, 2025, an increase of $62.1 million, or 1.2%, compared to December 31, 2024. The increase was primarily due to a $52.1 million increase in loans held for investment and a non-cash transfer of $50.2 million to non-mortgage loans held for sale, partially offset by a decrease of $46.9 million in available-for-sale investment securities and a decrease of $11.9 million in held-to-maturity investment securities.

Current wording

Total assets were $5.3 billion as of September 30, 2025, an increase of $68.9 million, or 1.3%, compared to December 31, 2024. The increase was primarily due to a $109.5 million increase in loans held for investment, partially offset by a decrease of $57.0 million in available-for-sale investment securities.

Previous wording

Total loans outstanding were $4.0 billion as of June 30, 2025, an increase of $52.1 million, or 1.3%, from December 31, 2024. The increase was primarily driven by a $17.6 million increase in CRE loans, a $15.3 million increase in consumer loans, a $10.0 million increase in agricultural loans, and a $9.2 million increase in commercial and industrial loans.

Current wording

Total loans outstanding were $4.1 billion as of September 30, 2025, an increase of $109.5 million, or 2.7%, from December 31, 2024. The increase was primarily driven by a $40.1 million increase in consumer loans, a $35.4 million increase in commercial and industrial loans, and a $29.4 million increase in CRE loans.

Previous wording

The Company’s RRE loans have minimal direct exposure to subprime mortgages as the loans are underwritten to conform to secondary market standards. As of June 30, 2025, the Company’s RRE portfolio was $1.2 billion, representing a $18.4 million, or 1.6%, increase from December 31, 2024. Market interest rates, expected duration, and the Company’s overall interest rate sensitivity profile continue to be the most significant factors in determining whether the Company chooses to retain versus sell portions of new consumer mortgage originations.

Current wording

The Company’s RRE loans have minimal direct exposure to subprime mortgages as the loans are underwritten to conform to secondary market standards. As of September 30, 2025, the Company’s RRE portfolio was $1.2 billion, representing a $42.5 million, or 3.7%, increase from December 31, 2024. Market interest rates, expected duration, and the Company’s overall interest rate sensitivity profile continue to be the most significant factors in determining whether the Company chooses to retain versus sell portions of new consumer mortgage originations.

Previous wording

Interest income lost on nonaccrual loans was approximately $2.3 million and $0.8 million for the six months ended June 30, 2025 and 2024, respectively. There was no interest income included in net interest income related to nonaccrual loans for the six months ended June 30, 2025 and 2024.

Current wording

Interest income lost on nonaccrual loans was approximately $3.8 million and $2.8 million for the nine months ended September 30, 2025 and 2024, respectively. There was no interest income included in net interest income related to nonaccrual loans for the nine months ended September 30, 2025 and 2024.

Previous wording

In the ordinary course of business, the Company enters into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded. An ACL on off-balance sheet credit exposures is measured using similar internal and external assumptions as the ACL on loans. This allowance is located in accrued expenses and other liabilities on the consolidated balance sheets. The ACL for unfunded commitments was $4.8 million and $6.9 million as of June 30, 2025 and 2024, respectively.

Current wording

In the ordinary course of business, the Company enters into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded. An ACL on off-balance sheet credit exposures is measured using similar internal and external assumptions as the ACL on loans. This allowance is located in accrued expenses and other liabilities on the consolidated balance sheets. The ACL for unfunded commitments was $3.7 million and $7.4 million as of September 30, 2025 and 2024, respectively.

Previous wording

Total deposits were $4.3 billion as of June 30, 2025, a decrease of $40.9 million, or 0.9%, from December 31, 2024. Interest-bearing deposits increased $72.2 million during this period, while noninterest-bearing deposits decreased $113.2 million. The decrease in total deposits was due primarily to seasonal outflows from public funds depositors as well as a decrease in clearing and synergistic deposits. The decrease was partially offset by an increase in brokered deposit balances as callable brokered certificates of deposit were raised to diversify the funding structure while retaining optionality.

Current wording

Total deposits were $4.4 billion as of September 30, 2025, an increase of $34.2 million, or 0.8%, from December 31, 2024. Interest-bearing deposits increased $160.9 million during this period, while noninterest-bearing deposits decreased $126.7 million. The increase in total deposits was driven by growth in commercial deposits due to new and expanded client relationships and funding structure diversification through the utilization of callable brokered CDs. This growth was partially offset by outflows from our public funds depositors, which reached a typical seasonal low in the third quarter of 2025.

Previous wording

The Company’s total uninsured deposits, which are amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.4 billion at June 30, 2025 and approximately $1.5 billion at December 31, 2024. These amounts were estimated based on the same methodologies used for regulatory reporting purposes.

Current wording

The Company’s total uninsured deposits, which are amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.5 billion at both September 30, 2025 and December 31, 2024. These amounts were estimated based on the same methodologies used for regulatory reporting purposes.

Previous wording

Stockholders’ equity increased $37.7 million, or 7.6%, to $533.2 million as of June 30, 2025, compared to $495.4 million as of December 31, 2024. Tangible common equity to tangible assets, a non-GAAP financial measure, increased to 7.87% as of June 30, 2025, from 7.13% as of December 31, 2024. Common equity tier 1 capital to risk weighted assets increased to 10.54% as of June 30, 2025, from 9.91% as of December 31, 2024.

Current wording

Stockholders’ equity increased $55.3 million, or 11.2%, to $550.7 million as of September 30, 2025, compared to $495.4 million as of December 31, 2024. Tangible common equity to tangible assets, a non-GAAP financial measure, increased to 8.24% as of September 30, 2025, from 7.13% as of December 31, 2024. Common equity tier 1 capital to risk weighted assets increased to 10.84% as of September 30, 2025, from 9.91% as of December 31, 2024.

Previous wording

As of June 30, 2025, the Company had on balance sheet liquidity of $505.9 million, compared to $579.0 million as of December 31, 2024. On balance sheet liquidity includes cash and cash equivalents, federal funds sold, unencumbered securities available‑for‑sale, and over collateralized securities pledging positions available-for-sale.

Current wording

As of September 30, 2025, the Company had on balance sheet liquidity of $566.9 million, compared to $579.0 million as of December 31, 2024. On balance sheet liquidity includes cash and cash equivalents, federal funds sold, unencumbered securities available‑for‑sale, and over collateralized securities pledging positions available-for-sale.

Previous wording

The Bank is a member of the FHLB, which provides short‑ and long‑term funding to its members through advances collateralized by real estate related assets and other select collateral, most typically in the form of debt securities. Actual borrowing capacity is contingent on the amount of collateral available to be pledged to the FHLB. As of June 30, 2025, the Company had $114.6 million in federal funds purchased and $200.0 million in short-term borrowings from the FHLB. As of June 30, 2025, the Company had $2.4 billion of collateral pledged to the FHLB and, based on this collateral, the Company was eligible to borrow up to an additional $1.1 billion from the FHLB. In addition, the Company can borrow up to $127.0 million through the unsecured lines of credit the Company has established with five other correspondent banks.

Current wording

The Bank is a member of the FHLB, which provides short‑ and long‑term funding to its members through advances collateralized by real estate related assets and other select collateral, most typically in the form of debt securities. Actual borrowing capacity is contingent on the amount of collateral available to be pledged to the FHLB. As of September 30, 2025, the Company did not have any federal funds purchased, and had $200.0 million in short-term borrowings from the FHLB. As of September 30, 2025, the Company had $2.1 billion of collateral pledged to the FHLB and, based on this collateral, the Company was eligible to borrow up to an additional $1.1 billion from the FHLB. In addition, the Company can borrow up to $127.0 million through the unsecured lines of credit the Company has established with five other correspondent banks.