Auburn National Bancorporation (Nasdaq: AUBN) reported record
quarterly net earnings of $2.7 million, or $0.75 per share, for the
fourth quarter of 2019, compared to $2.4 million, or $0.66 per
share, for the fourth quarter of 2018. For the full year
2019, the Company reported record net earnings of $9.7 million, or
$2.72 per share for 2019, compared to $8.8 million, or $2.42 per
share, for 2018.
“We are very pleased with the Company’s overall
financial performance in 2019,” said Robert W. Dumas, Chairman,
President, and CEO. “While we expect a challenging interest
rate and competitive environment in 2020, economic conditions in
our markets remain robust and we are optimistic that credit quality
will continue to be relatively strong in 2020. Regardless of the
operating environment, we are confident that our long-term approach
and philosophy of knowing and caring for our customers, maintaining
exceptional asset quality, and supporting our communities will
enable us to continue to generate value for our shareholders in
2020 and beyond.”
Net interest income (tax-equivalent) was $6.4
million for the fourth quarter of 2019, a 4% decrease compared to
$6.7 million for the fourth quarter of 2018. This decrease
was primarily due to recent decreases in market interest
rates. Average loans were relatively stable in the fourth
quarter of 2019 when compared to the fourth quarter of 2018. The
Company’s net interest margin (tax-equivalent) decreased to 3.27%
in the fourth quarter of 2019, compared to 3.54% for the fourth
quarter of 2018, as earning asset yields declined. Management
anticipates this challenging rate environment will continue and the
Company’s net interest income and margin will likely decrease in
2020 compared to 2019 as the Company’s ability to lower its deposit
costs will likely continue to lag the current decrease in earning
asset yields.
The Company recorded a negative provision for
loan losses of $250 thousand for the fourth quarter of 2019,
compared to no provision for loan losses for the fourth quarter of
2018. The negative provision was primarily related to a
decline in total loans outstanding at December 31, 2019 and more
specifically the construction and land development loan portfolio
segment.
Noninterest income was $2.5 million in the
fourth quarter of 2019, compared to $0.8 million for the fourth
quarter of 2018. The increase was due to a $1.7 million
payment received by the Company that resulted from the termination
of a loan guarantee program operated by the State of Alabama.
Noninterest expense was $5.6 million in the
fourth quarter of 2019, compared to $4.4 million for the fourth
quarter of 2018. The increase was due to a $0.6 million
increase in salaries and benefits expense and $0.5 million of
various expenses related to the planned redevelopment of the
Company’s headquarters in downtown Auburn, including professional
fees, temporary relocation costs, and revised depreciation
estimates. The Company expects it will incur additional
expenses in 2020 related to this redevelopment project.
Income tax expense was $0.7 million for the
fourth quarter of 2019, compared to $0.6 million for the fourth
quarter of 2018 primarily due to increased earnings before taxes.
The Company’s income tax expense for the fourth quarter of 2019
reflects an effective tax rate of 20.00%, compared to 19.81% in the
fourth quarter of 2018.
The Company paid cash dividends of $0.25 per
share in the fourth quarter of 2019. At December 31, 2019, our
regulatory capital was well above the minimum amounts required to
be “well capitalized” under regulatory standards.
About Auburn National
Bancorporation
Auburn National Bancorporation, Inc. (the
“Company”) is the parent company of AuburnBank (the “Bank”), with
total assets of approximately $829 million. The Bank is an Alabama
state-chartered bank that is a member of the Federal Reserve System
and has operated continuously since 1907. Both the Company and the
Bank are headquartered in Auburn, Alabama. The Bank conducts its
business in East Alabama, including Lee County and surrounding
areas. The Bank operates eight full-service branches in Auburn,
Opelika, Valley and Notasulga, Alabama. The Bank also
operates loan production offices in Auburn and Phenix City,
Alabama. Additional information about the Company and the Bank may
be found by visiting www.auburnbank.com.
Cautionary Notice Regarding Forward-Looking
Statements
This press release contains “forward-looking
statements” within the meaning of the Securities Act of 1933 and
the Securities Exchange Act of 1934, including, without limitation,
statements about future financial and operating results, costs and
revenues, including the costs of redeveloping our headquarters and
the timing and receipt of rental income upon completion of the
project, economic conditions in our markets, loan demand, mortgage
lending activity, changes in the mix of our earning assets
(including those generating tax exempt income) and our deposit and
wholesale liabilities, net interest margin, yields on earning
assets, securities valuations and performance, interest rates
(generally and those applicable to our assets and liabilities),
loan performance, nonperforming assets, other real estate owned,
loan losses, charge-offs and recoveries, other-than-temporary
impairments, collateral values, credit quality, asset sales, and
market trends, as well as statements with respect to our
objectives, expectations and intentions and other statements that
are not historical facts. Actual results may differ from those
set forth in the forward-looking statements.
Forward-looking statements, with respect to our
beliefs, plans, objectives, goals, expectations, anticipations,
estimates and intentions, involve known and unknown risks,
uncertainties and other factors, which may be beyond our control,
and which may cause the actual results, performance, achievements,
or financial condition of the Company or the Bank to be materially
different from future results, performance, achievements, or
financial condition expressed or implied by such forward-looking
statements. You should not expect us to update any
forward-looking statements.
All written or oral forward-looking statements
attributable to us are expressly qualified in their entirety by
this cautionary notice, together with those risks and uncertainties
described in our annual report on Form 10-K for the year ended
December 31, 2019 and otherwise in our other SEC reports and
filings.
Explanation of Certain Unaudited Non-GAAP Financial
Measures
This press release contains financial
information determined by methods other than U.S. generally
accepted accounting principles (“GAAP”). The attached
financial highlights include certain designated net interest income
amounts presented on a tax-equivalent basis, a non-GAAP financial
measure, including the presentation and calculation of the
efficiency ratio. Management uses these non-GAAP financial measures
in its analysis of the Company’s performance and believes the
presentation of net interest income on a tax-equivalent basis
provides comparability of net interest income from both taxable and
tax-exempt sources and facilitates comparability within the
industry. Although the Company believes these non-GAAP financial
measures enhance investors’ understanding of its business and
performance, these non-GAAP financial measures should not be
considered an alternative to GAAP. Along with the attached
financial highlights, the Company provides reconciliations between
the GAAP financial measures and these non-GAAP financial
measures.
Financial Highlights (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31, |
|
|
Years ended December 31, |
|
(Dollars in thousands, except per share amounts) |
|
2019 |
|
|
|
|
2018 |
|
|
|
|
2019 |
|
|
|
|
2018 |
|
|
Results of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (a) |
$ |
6,406 |
|
|
|
$ |
6,699 |
|
|
|
$ |
26,621 |
|
|
|
$ |
26,183 |
|
|
Less: tax-equivalent adjustment |
|
126 |
|
|
|
|
152 |
|
|
|
|
557 |
|
|
|
|
613 |
|
|
|
Net interest income (GAAP) |
|
6,280 |
|
|
|
|
6,547 |
|
|
|
|
26,064 |
|
|
|
|
25,570 |
|
|
Noninterest income |
|
2,458 |
|
|
|
|
842 |
|
|
|
|
5,494 |
|
|
|
|
3,325 |
|
|
|
Total revenue |
|
8,738 |
|
|
|
|
7,389 |
|
|
|
|
31,558 |
|
|
|
|
28,895 |
|
|
Provision for loan losses |
|
(250 |
) |
|
|
|
— |
|
|
|
|
(250 |
) |
|
|
|
— |
|
|
Noninterest expense |
|
5,633 |
|
|
|
|
4,396 |
|
|
|
|
19,697 |
|
|
|
|
17,874 |
|
|
Income tax expense |
|
671 |
|
|
|
|
593 |
|
|
|
|
2,370 |
|
|
|
|
2,187 |
|
|
Net earnings |
$ |
2,684 |
|
|
|
$ |
2,400 |
|
|
|
$ |
9,741 |
|
|
|
$ |
8,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings: |
$ |
0.75 |
|
|
|
$ |
0.66 |
|
|
|
$ |
2.72 |
|
|
|
$ |
2.42 |
|
|
Cash dividends declared |
$ |
0.25 |
|
|
|
$ |
0.24 |
|
|
|
$ |
1.00 |
|
|
|
$ |
0.96 |
|
|
Weighted average shares outstanding: |
|
3,566,146 |
|
|
|
|
3,643,868 |
|
|
|
|
3,581,476 |
|
|
|
|
3,643,780 |
|
|
Shares outstanding, at period end |
|
3,566,146 |
|
|
|
|
3,643,868 |
|
|
|
|
3,566,146 |
|
|
|
|
3,643,868 |
|
|
Book value |
$ |
27.57 |
|
|
|
$ |
24.44 |
|
|
|
$ |
27.57 |
|
|
|
$ |
24.44 |
|
|
Common stock price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
$ |
53.90 |
|
|
|
$ |
41.50 |
|
|
|
$ |
53.90 |
|
|
|
$ |
53.50 |
|
|
|
Low |
|
40.00 |
|
|
|
|
28.88 |
|
|
|
|
30.61 |
|
|
|
|
28.88 |
|
|
|
Period-end |
$ |
53.00 |
|
|
|
$ |
31.66 |
|
|
|
$ |
53.00 |
|
|
|
$ |
31.66 |
|
|
|
|
To earnings ratio |
|
19.49 |
|
x |
|
|
13.08 |
|
x |
|
|
19.49 |
|
x |
|
|
13.08 |
|
x |
|
|
To book value |
|
192 |
|
% |
|
130 |
|
% |
|
192 |
|
% |
|
130 |
|
% |
Performance ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity (annualized): |
|
10.86 |
|
% |
|
11.05 |
|
% |
|
10.35 |
|
% |
|
10.14 |
|
% |
Return on average assets (annualized): |
|
1.30 |
|
% |
|
1.20 |
|
% |
|
1.18 |
|
% |
|
1.08 |
|
% |
Dividend payout ratio |
|
33.33 |
|
% |
|
36.36 |
|
% |
|
36.76 |
|
% |
|
39.67 |
|
% |
Other financial data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (a) |
|
3.27 |
|
% |
|
3.54 |
|
% |
|
3.43 |
|
% |
|
3.40 |
|
% |
Effective income tax rate |
|
20.00 |
|
% |
|
19.81 |
|
% |
|
19.57 |
|
% |
|
19.84 |
|
% |
Efficiency ratio (b) |
|
63.55 |
|
% |
|
58.29 |
|
% |
|
61.33 |
|
% |
|
60.57 |
|
% |
Asset Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
186 |
|
|
|
$ |
178 |
|
|
|
$ |
186 |
|
|
|
$ |
178 |
|
|
|
Other real estate owned |
|
— |
|
|
|
|
172 |
|
|
|
|
— |
|
|
|
|
172 |
|
|
|
|
Total nonperforming assets |
$ |
186 |
|
|
|
$ |
350 |
|
|
|
$ |
186 |
|
|
|
$ |
350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) |
$ |
154 |
|
|
|
$ |
(5 |
) |
|
|
$ |
137 |
|
|
|
$ |
(33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
0.95 |
|
% |
|
1.00 |
|
% |
|
0.95 |
|
% |
|
1.00 |
|
% |
|
Nonperforming loans |
|
2,358 |
|
% |
|
2,691 |
|
% |
|
2,358 |
|
% |
|
2,691 |
|
% |
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.04 |
|
% |
|
0.07 |
|
% |
|
0.04 |
|
% |
|
0.07 |
|
% |
|
Total assets |
|
0.02 |
|
% |
|
0.04 |
|
% |
|
0.02 |
|
% |
|
0.04 |
|
% |
Nonperforming loans as a % of total loans |
|
0.04 |
|
% |
|
0.04 |
|
% |
|
0.04 |
|
% |
|
0.04 |
|
% |
Net charge-offs (recoveries) as a % of average loans (c) |
|
0.13 |
|
% |
|
— |
|
% |
|
0.03 |
|
% |
|
(0.01 |
) |
% |
Selected average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
249,106 |
|
|
|
$ |
240,334 |
|
|
|
$ |
245,038 |
|
|
|
$ |
252,550 |
|
|
Loans, net of unearned income |
|
469,579 |
|
|
|
|
467,380 |
|
|
|
|
473,213 |
|
|
|
|
456,345 |
|
|
Total assets |
|
827,684 |
|
|
|
|
802,555 |
|
|
|
|
826,545 |
|
|
|
|
819,529 |
|
|
Total deposits |
|
723,557 |
|
|
|
|
711,043 |
|
|
|
|
727,723 |
|
|
|
|
726,277 |
|
|
Long-term debt |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,022 |
|
|
Total stockholders' equity |
|
98,887 |
|
|
|
|
86,881 |
|
|
|
|
94,151 |
|
|
|
|
87,107 |
|
|
Selected period end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
235,902 |
|
|
|
$ |
239,801 |
|
|
|
$ |
235,902 |
|
|
|
$ |
239,801 |
|
|
Loans, net of unearned income |
|
460,901 |
|
|
|
|
476,908 |
|
|
|
|
460,901 |
|
|
|
|
476,908 |
|
|
Allowance for loan losses |
|
4,386 |
|
|
|
|
4,790 |
|
|
|
|
4,386 |
|
|
|
|
4,790 |
|
|
Total assets |
|
828,570 |
|
|
|
|
818,077 |
|
|
|
|
828,570 |
|
|
|
|
818,077 |
|
|
Total deposits |
|
724,152 |
|
|
|
|
724,193 |
|
|
|
|
724,152 |
|
|
|
|
724,193 |
|
|
Total stockholders' equity |
|
98,328 |
|
|
|
|
89,055 |
|
|
|
|
98,328 |
|
|
|
|
89,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Tax equivalent. See “Explanation of Certain Unaudited Non-GAAP
Financial Measures” and “Reconciliation of GAAP to non-GAAP
Measures (unaudited).” |
|
(b) |
Efficiency ratio is
the result of noninterest expense divided by the sum of noninterest
income and tax-equivalent net interest income. |
|
(c) |
Net charge-offs
(recoveries) are annualized. |
|
Reconciliation
of GAAP to non-GAAP Measures (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31, |
|
Years ended December 31, |
|
(Dollars in thousands, except per share amounts) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net interest income, as reported (GAAP) |
$ |
6,280 |
$ |
6,547 |
$ |
26,064 |
$ |
25,570 |
|
Tax-equivalent adjustment |
|
126 |
|
152 |
|
557 |
|
613 |
|
Net interest income (tax-equivalent) |
$ |
6,406 |
$ |
6,699 |
$ |
26,621 |
$ |
26,183 |
|
|
|
|
|
|
|
|
|
|
|
|
For additional information, contact:Robert W. DumasChairman,
President, and CEO(334) 821-9200
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