May 15—ROCHESTER — Home Federal Savings Bank, a 90-year-old Rochester institution, announced Wednesday that it will be merging with Alerus Financial Corp. of Grand Forks, N.D. in a deal valued at about approximately $116.4 million.

HMN Financial, Inc., the parent company of Home Federal, signed an agreement for the bank to merge with Alerus. Founded in 1934, Home Federal operates four branches in Rochester with 12 total in Minnesota. It also has a branch in Iowa and a branch in Wisconsin.

As of March 31, 2024, HMN/Home Federal reported $1.2 billion in total assets, which included about $872.3 million in loans and $1.0 billion in total deposits. Once the merger is complete, one HMN director will join the Alerus Board of Directors.

"We believe we have found an exceptional partner in Alerus. They have a proven track record of diversification, profitable growth, and the ability to execute acquisitions. We are confident this merger will serve all our constituents well, including our stockholders, clients, employees, and communities," stated Home Federal President and CEO Brad Krehbiel in the announcement of the merger.

The merger deal is expected to close in the fourth quarter.

This merger will expand the footprint of Alerus, which has six Minnesota branches in the Twin Cities area. It has a total 17 branches in the Midwest and Arizona. Once the deal is complete, Alerus will hold approximately $5.5 billion in assets, $3.7 billion in loans and $4.3 billion in deposits.

"We are pleased with this partnership and the strategic expansion into the growing and vibrant Rochester, Minnesota, market and other communities Home Federal serves. Home Federal 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," stated Alerus President and CEO Katie Lorenson in the announcement. "We look forward to welcoming our new team members and supporting their ongoing efforts in providing excellent client service, developing new business, and expanding relationships with a larger balance sheet, robust treasury management and diversified financial services."