Kroll Bond Rating Agency revised its outlook to negative from stable for all long-term ratings of Grand Forks, N.D.-based Alerus Financial Corp. and unit Alerus Financial NA.

Kroll affirmed the senior unsecured debt rating of BBB+, subordinated debt rating of BBB, and short-term debt rating of K2 for the company.

In addition, the agency assigned a subordinated debt rating of BBB+ to Alerus Financial NA and affirmed the senior unsecured debt and deposit rating of A-, short-term debt rating of K2, and short-term deposit rating of K2 for the bank.

The outlook reflects the notable decline in the company's regulatory capital ratios following acquisitions early in 2016. According to SNL data, Alerus Financial Corp. completed its acquisition of Beacon Bank on Jan. 15 and Alliance Benefit Group North Central States Inc. on Jan. 1.

In addition, the agency noted that the company's leverage has reached one of the highest levels in its coverage universe. Kroll thinks this could significantly limit support for the bank in a stressed scenario.