Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net
earnings of $1.4 million, or $0.39 per share, for the first quarter
of 2024, compared to a net loss of $(4.0) million, or $(1.14) per
share, for the fourth quarter of 2023 and net earnings of $2.0
million, or $0.56 per share, for the first quarter of 2023.
The loss in the fourth quarter of 2023 reflects the
Company’s decision to reposition its balance sheet, which included
the sale of $117.6 million of low-yielding, available-for-sale
securities for an after-tax loss of $(4.7) million or $(1.35) per
share. Proceeds from the securities sale were used to repay
high-cost brokered deposits and sell high-cost reciprocal deposits.
Excluding the loss on sale of securities, net earnings would have
been $0.7 million, or $0.21 per share for the fourth quarter of
2023.
“The Company’s first quarter results reflect
meaningful improvement in our net interest income compared to the
prior quarter and continued strength in our credit quality,
liquidity, and capital,” said David A. Hedges, President and CEO.
“While we expect the interest rate environment will remain
challenging in 2024, we are pleased with the improvement in
earnings following the balance sheet repositioning we executed in
the fourth quarter of 2023,” continued Mr. Hedges.
Net interest income (tax-equivalent) was $6.7
million for the first quarter of 2024, an increase of 8% compared
to the fourth quarter of 2023. This increase was primarily due to
an increase in the Company’s net interest margin. The Company’s net
interest margin (tax-equivalent) was 3.04% in the first quarter of
2024 compared to 2.65% in the fourth quarter of 2023. This increase
was primarily due to decreased deposit costs, a more favorable
asset mix, and higher yields on interest earning assets. Average
loans for the first quarter of 2024 were $560.8 million, a 2%
increase from the fourth quarter of 2023.
Nonperforming assets were $0.9 million, or 0.09% of
total assets, at March 31, 2024 and December 31, 2023, compared to
$2.7 million or 0.26% of total assets, at March 31, 2023. The
decrease was primarily due to the resolution of one nonperforming
loan, which was paid in full.
The Company recorded a provision for credit losses
of $0.3 million in the first quarter of 2024 and the fourth quarter
of 2023, compared to a provision for credit losses of $0.1 million
in the first quarter of 2023.
At March 31, 2024, the Company’s allowance for
credit losses was $7.2 million, or 1.27% of total loans, compared
to $6.9 million, or 1.23% of total loans, at December 31, 2023, and
$6.8 million, or 1.35% of total loans, at March 31, 2023.
Noninterest income was $0.9 million for the first
quarter of 2024, compared to a loss of $(5.4) million for the
fourth quarter of 2023 due to the balance sheet repositioning.
Excluding the pre-tax securities loss of $(6.3) million related to
the balance sheet repositioning, noninterest income would have been
$0.9 million for the fourth quarter of 2023.
Noninterest expense was $5.7 million for the first
quarter of 2024, a decrease of $0.1 million compared to the fourth
quarter of 2023.
Income tax expense was $0.2 million for an
effective tax rate of 10.68% for the first quarter of 2024. The
provision for income taxes was a credit of $1.5 million due to the
loss from the balance sheet repositioning for an effective tax rate
of (27.53%) for the fourth quarter of 2023. This increase was
primarily due to an increase in pre-tax earnings in the first
quarter of 2024 compared to the fourth quarter of 2023 due to the
loss from the balance sheet repositioning.
Total assets were $979.0 million at March 31, 2024,
compared to $975.3 million at December 31, 2023, and $1.0 billion
at March 31, 2023. Loans, net of unearned income were $567.5
million at March 31, 2024, compared to $557.3 million at December
31, 2023 and $505.0 million at March 31, 2023. This increase in
loans reflects growth across all major loan categories, except
construction and land development loans. Total deposits were $899.7
million at March 31, 2024, compared to $896.2 million at December
31, 2023, and $939.2 million at March 31, 2023. The decrease in
deposits since March 31, 2023 was primarily related to the sale of
reciprocal deposits. At March 31, 2024, the Company had $48.9
million of reciprocal deposits, compared to $59.0 million at
December 31, 2023, and none at March 31, 2023. The Company had no
FHLB advances or other wholesale borrowings outstanding at March
31, 2024, December 31, 2023, or March 31, 2023.
At March 31, 2024, the Company's consolidated
stockholders' equity (book value) was $74.5 million or $21.32 per
share, compared to $76.5 million, or $21.90 per share, at December
31, 2023 and $73.6 million, or $21.03 per share, at March 31, 2023.
The decrease from December 31, 2023 was primarily driven by an
other comprehensive loss of $2.2 million due to the change in
unrealized losses on securities available-for-sale, net of tax,
cash dividends paid of $0.9 million, and a $0.3 million one-time
charge for the cumulative effect to adopt a new accounting standard
on January 1, 2024, partially offset by net earnings of $1.4
million. Unrealized losses do not affect the Bank’s capital for
regulatory capital purposes.
The Company’s tangible common equity ratio or total
equity to total assets ratio was 7.63% at March 31, 2024, compared
to 7.84% at December 31, 2023, and 7.24% at March 31, 2023. All of
the Company’s securities are classified as available-for-sale and
not held-to-maturity. Therefore, any changes in the fair value of
the Company’s securities portfolio are fully reflected in total
equity under generally accepted accounting principles.
The Company paid cash dividends of $0.27 per share
in the first quarter of 2024. The Company had no share repurchases
during the first quarter of 2024. At March 31, 2024, the Bank’s
regulatory capital ratios were well above the minimum amounts
required to be “well capitalized” under current regulatory
standards.
About Auburn National Bancorporation,
Inc.
Auburn National Bancorporation, Inc. (the
“Company”) is the parent company of AuburnBank (the “Bank”), with
total assets of approximately $979 million. The Bank is an Alabama
state-chartered bank that is a member of the Federal Reserve
System, which 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 a loan production office in 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, the continuing effects of the COVID-19 pandemic
and related government, Federal Reserve monetary and regulatory
actions, including the continuing effects of pandemic-related
economic stimulus and economic conditions generally and in our
markets, loan demand, mortgage lending activity, changes in the mix
of our earning assets (including those generating tax exempt income
or tax credits) and our mix and cost of deposits and wholesale
liabilities, net interest margin, yields on earning assets, the
market values and performance of securities held, effects of
inflation, including Federal Reserve monetary policies which were
tightened in response to inflation beginning in 2022 through
increases in the target federal funds rate and reductions in the
Federal Reserve’s Treasury and mortgage-backed securities holdings,
interest rates (generally and those applicable to our assets and
liabilities) and changes in our asset values, especially investment
securities, as a result of interest rate changes, noninterest
income, loan performance, loan deferrals and modifications,
nonperforming assets, other real estate owned, provision for credit
losses, including the continuing effects of the application of the
new CECL accounting standard adopted on January 1, 2023 and our
CECL models, including possible adjustments to the fair values of
securities available for sale in lieu of other-than-temporary
impairments, charge-offs, collateral values, credit quality, asset
sales, insurance claims, 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, 2023 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, and the presentation and calculation of the efficiency
ratio, a non-GAAP measure. 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. Similarly, the efficiency ratio is a common
measure that facilitates comparability with other financial
institutions. 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.
1 Comparisons noted in the bullet points are for
the first quarter 2024 versus the prior quarter (fourth quarter
2023), unless otherwise specified.
For additional information, contact:David A.
HedgesPresident and CEO(334) 821-9200
Financial Highlights (unaudited) |
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Quarter ended |
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|
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March 31, |
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|
December 31, |
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March 31, |
|
(Dollars in thousands, except per share amounts) |
|
2024 |
|
|
|
2023 |
|
|
2023 |
|
Results of Operations |
|
|
|
|
|
|
|
|
Net interest income (a) |
$ |
6,677 |
|
|
|
6,154 |
|
|
7,217 |
|
Less: tax-equivalent adjustment |
|
20 |
|
|
|
95 |
|
|
108 |
|
|
Net interest income (GAAP) |
|
6,657 |
|
|
|
6,059 |
|
|
7,109 |
|
Noninterest income |
|
887 |
|
|
|
(5,429 |
) |
|
792 |
|
|
Total revenue |
|
7,544 |
|
|
|
630 |
|
|
7,901 |
|
Provision for credit losses |
|
334 |
|
|
|
326 |
|
|
66 |
+ |
Noninterest expense |
|
5,675 |
|
|
|
5,803 |
|
|
5,604 |
|
Income tax expense |
|
164 |
|
|
|
(1,514 |
) |
|
267 |
|
Net earnings |
$ |
1,371 |
|
|
|
(3,985 |
) |
|
1,964 |
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
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|
|
|
|
Basic and diluted net earnings |
$ |
0.39 |
|
|
|
(1.14 |
) |
|
0.56 |
|
Cash dividends declared |
$ |
0.27 |
|
|
|
0.27 |
|
|
0.27 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
3,493,663 |
|
|
|
3,493,614 |
|
|
3,502,143 |
|
Shares outstanding, at period end |
|
3,493,699 |
|
|
|
3,493,614 |
|
|
3,500,879 |
|
Stockholders' equity (book value) |
$ |
21.32 |
|
|
|
21.90 |
|
|
21.03 |
|
Common stock price: |
|
|
|
|
|
|
|
|
|
High |
$ |
21.55 |
|
|
|
21.99 |
|
|
24.50 |
|
|
Low |
|
18.82 |
|
|
|
19.72 |
|
|
22.55 |
|
|
Period-end |
|
19.27 |
|
|
|
21.28 |
|
|
22.66 |
|
|
|
To earnings ratio |
|
83.78 |
|
x |
|
53.20 |
|
|
7.79 |
|
|
|
To book value |
|
90 |
|
% |
|
97 |
|
|
108 |
|
Performance ratios: |
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|
|
|
|
|
|
|
Return on average equity (annualized) |
|
7.13 |
|
% |
|
(26.40 |
) |
|
11.44 |
|
Return on average assets (annualized) |
|
0.56 |
|
% |
|
(1.56 |
) |
|
0.77 |
|
Dividend payout ratio |
|
69.23 |
|
% |
|
(23.68 |
) |
|
48.21 |
|
Other financial data: |
|
|
|
|
|
|
|
|
Net interest margin (a) |
|
3.04 |
|
% |
|
2.65 |
|
|
3.17 |
|
Effective income tax rate |
|
10.68 |
|
% |
|
(27.53 |
) |
|
11.97 |
|
Efficiency ratio (b) |
|
75.03 |
|
% |
|
800.41 |
|
|
69.97 |
|
Asset Quality: |
|
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
878 |
|
|
|
911 |
|
|
2,679 |
|
|
Other real estate owned |
|
— |
|
|
|
— |
|
|
— |
|
|
|
Total nonperforming assets |
$ |
878 |
|
|
|
911 |
|
|
2,679 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (recoveries) charge-offs |
$ |
(66 |
) |
|
|
173 |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses as a % of: |
|
|
|
|
|
|
|
|
|
Loans |
|
1.27 |
|
% |
|
1.23 |
|
|
1.35 |
|
|
Nonperforming loans |
|
822 |
|
% |
|
753 |
|
|
255 |
|
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.15 |
|
% |
|
0.16 |
|
|
0.53 |
|
|
Total assets |
|
0.09 |
|
% |
|
0.09 |
|
|
0.26 |
|
Nonperforming loans as a % of total loans |
|
0.15 |
|
% |
|
0.16 |
|
|
0.53 |
|
Annualized net (recoveries) charge-offs as a % of average
loans |
|
(0.05 |
) |
% |
|
0.13 |
|
|
— |
|
Selected average balances: |
|
|
|
|
|
|
|
|
Securities |
$ |
267,606 |
|
|
|
354,065 |
|
|
402,684 |
|
Loans, net of unearned income |
|
560,757 |
|
|
|
550,938 |
|
|
502,158 |
|
Total assets |
|
976,930 |
|
|
|
1,020,476 |
|
|
1,022,938 |
|
Total deposits |
|
897,051 |
|
|
|
953,674 |
|
|
948,393 |
|
Total stockholders' equity |
|
76,948 |
|
|
|
60,372 |
|
|
68,655 |
|
Selected period end balances: |
|
|
|
|
|
|
|
|
Securities |
$ |
260,770 |
|
|
|
270,910 |
|
|
405,692 |
|
Loans, net of unearned income |
|
567,520 |
|
|
|
557,294 |
|
|
505,041 |
|
Allowance for credit losses |
|
7,215 |
|
|
|
6,863 |
|
|
6,821 |
|
Total assets |
|
979,039 |
|
|
|
975,255 |
|
|
1,017,746 |
|
Total deposits |
|
899,673 |
|
|
|
896,243 |
|
|
939,190 |
|
Total stockholders' equity |
|
74,489 |
|
|
|
76,507 |
|
|
73,640 |
|
|
|
|
|
|
|
|
|
|
|
|
(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. See “Reconciliation of GAAP to non-GAAP Measures
(unaudited)” below. |
|
|
|
Reconciliation of GAAP to non-GAAP Measures
(unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended |
|
|
|
March 31, |
|
|
December 31, |
|
March 31, |
|
(Dollars in thousands, except per share amounts) |
|
2024 |
|
|
2023 |
|
2023 |
|
Net interest income, as reported (GAAP) |
$ |
6,657 |
|
|
6,059 |
|
7,109 |
|
Tax-equivalent adjustment |
|
20 |
|
|
95 |
|
108 |
|
Net interest income (tax-equivalent) |
$ |
6,677 |
|
|
6,154 |
|
7,217 |
|
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