Auburn National Bancorporation, Inc. (Nasdaq:AUBN) reported
net earnings of $2.2 million, or $0.60 per share, for the first
quarter of 2016, compared to $1.9 million, or $0.51 per share, for
the first quarter of 2015.
“The Company’s first quarter results reflect a
significant recovery on one nonperforming loan and continued growth
in net interest income,” said E.L. Spencer, Jr., President, CEO and
Chairman of the Board.
Net interest income (tax-equivalent) was $6.0
million for the first quarter of 2016, an increase of 3% compared
to the first quarter of 2015. This increase was primarily due
to a reduction in interest expense as the Company repaid
higher-cost wholesale funding sources and lowered its deposit
costs. Additionally, the Company continued its efforts to
increase earnings by shifting its asset mix through loan
growth. Average loans were $429.5 million in the first
quarter of 2016, an increase of $29.4 million or 7%, from the first
quarter of 2015. Average deposits were $726.4 million in the
first quarter of 2016, an increase of $20.6 million or 3%, from the
first quarter of 2015.
The Company recorded a negative provision for
loan losses of $0.6 million for the first quarter of 2016, compared
to no provision for loan losses for the first quarter of
2015. Annualized net recoveries as a percent of average loans
were 1.01% for the first quarter of 2016, compared to net
charge-offs as a percent of average loans of 0.11% for the first
quarter of 2015. The Company recognized a recovery of $1.2 million
from the payoff of one nonperforming construction and land
development loan during the first quarter of 2016.
Noninterest income was $0.8 million for the
first quarter of 2016, compared to $1.3 million in the first
quarter of 2015. The decrease was primarily due to $0.3
million in non-taxable death benefits from bank-owned life
insurance that were received in the first quarter of 2015, compared
to none in the first quarter of 2016, and a decrease in mortgage
lending of $0.2 million as mortgage loan production declined.
Noninterest expense was $4.1 million in the
first quarter of 2016, compared to $4.3 million in the first
quarter of 2015. The decrease was primarily due to no
prepayment penalties on long-term debt incurred in the first
quarter of 2016 compared to $0.4 million incurred in the first
quarter of 2015 when the Company repaid $5.0 million of long-term
debt with an interest rate of 3.59%. This decrease was
partially offset by a $0.2 million increase in salaries and
benefits due to normal annual increases.
Income tax expense was $0.8 million for the
first quarter of 2016, compared to $0.7 million in the first
quarter of 2015. The Company's income tax expense for the first
quarter of 2016 reflects an effective income tax rate of 27.50%,
compared to 26.40% for the first quarter of 2015. The
increase in the effective tax rate is primarily due to a decrease
in tax preference items such as income from bank-owned life
insurance. The Company’s income tax expense is principally
affected by tax-exempt earnings on municipal securities investments
and bank-owned life insurance.
In the first quarter of 2016, the Company paid
cash dividends of $0.8 million, or $0.225 per share. At March
31, 2016, the Bank’s regulatory capital was 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 $833 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 full-service branches in Auburn, Opelika,
Valley, and Notasulga, Alabama. In-store branches are located
in the Kroger and Wal-Mart SuperCenter stores in Opelika. The Bank
also operates a commercial 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, 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, 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, 2015 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.
Reports First Quarter Net
Earnings/page 3 |
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Financial Highlights (unaudited) |
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Quarter ended March 31, |
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(Dollars in thousands, except per share amounts) |
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2016 |
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2015 |
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Results of Operations |
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Net
interest income (a) |
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$ |
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6,019 |
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$ |
5,858 |
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Less: tax-equivalent adjustment |
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322 |
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335 |
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Net interest income (GAAP) |
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5,697 |
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5,523 |
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Noninterest income |
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834 |
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1,321 |
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Total revenue |
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6,531 |
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6,844 |
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Provision
for loan losses |
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(600 |
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— |
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Noninterest
expense |
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4,109 |
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4,314 |
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Income tax expense |
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831 |
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668 |
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Net earnings |
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$ |
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2,191 |
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$ |
1,862 |
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Per
share data: |
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Basic and
diluted net earnings |
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$ |
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0.60 |
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$ |
0.51 |
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Cash
dividends declared |
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$ |
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0.225 |
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$ |
0.22 |
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Weighted
average shares outstanding: |
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Basic and diluted |
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3,643,484 |
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3,643,365 |
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Shares
outstanding, at period end |
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3,643,503 |
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3,643,378 |
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Book
value |
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$ |
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22.75 |
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$ |
21.28 |
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Common
stock price: |
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High |
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$ |
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30.49 |
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$ |
25.25 |
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Low |
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24.56 |
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23.15 |
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Period-end |
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28.25 |
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24.85 |
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To earnings ratio |
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12.61 |
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x |
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12.12 |
x |
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To book value |
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124 |
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% |
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117 |
% |
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Performance ratios: |
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Return on
average equity (annualized) |
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10.82 |
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% |
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9.68 |
% |
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Return on
average assets (annualized) |
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1.07 |
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% |
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0.93 |
% |
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Dividend
payout ratio |
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37.50 |
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% |
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43.14 |
% |
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Other financial data: |
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Net
interest margin (a) |
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3.12 |
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% |
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3.15 |
% |
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Effective
income tax rate |
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27.50 |
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% |
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26.40 |
% |
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Efficiency
ratio (b) |
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59.96 |
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% |
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60.09 |
% |
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Asset Quality: |
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Nonperforming assets: |
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Nonperforming (nonaccrual) loans |
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$ |
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1,938 |
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$ |
1,251 |
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Other real estate owned |
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397 |
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499 |
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Total nonperforming assets |
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$ |
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2,335 |
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$ |
1,750 |
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Net
(recoveries) charge-offs |
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$ |
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(1,085 |
) |
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$ |
114 |
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Allowance for loan losses as a % of: |
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Loans |
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1.11 |
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% |
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1.19 |
% |
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Nonperforming loans |
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246 |
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% |
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377 |
% |
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Nonperforming assets as a % of: |
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Loans and other real estate owned |
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0.54 |
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% |
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0.44 |
% |
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Total assets |
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0.28 |
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% |
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0.22 |
% |
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Nonperforming loans as a % of total loans |
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0.45 |
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% |
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0.32 |
% |
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Annualized
net (recoveries) charge-offs as a % of average loans |
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(1.01 |
) |
% |
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0.11 |
% |
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Selected average balances: |
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Securities |
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$ |
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237,087 |
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$ |
264,268 |
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Loans, net
of unearned income |
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429,528 |
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400,161 |
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Total
assets |
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821,382 |
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802,062 |
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Total
deposits |
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726,354 |
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705,746 |
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Long-term
debt |
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7,217 |
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11,550 |
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Total
stockholders' equity |
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80,965 |
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76,915 |
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Selected period end balances: |
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Securities |
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$ |
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234,109 |
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$ |
262,141 |
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Loans, net
of unearned income |
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431,763 |
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396,613 |
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Allowance
for loan losses |
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4,774 |
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4,722 |
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Total
assets |
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833,328 |
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790,224 |
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Total
deposits |
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737,361 |
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698,336 |
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Long-term
debt |
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7,217 |
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7,217 |
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Total
stockholders' equity |
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82,887 |
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77,544 |
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(a) Tax equivalent. See “Explanation of Certain Unaudited
Non-GAAP Financial Measures” and “Reconciliation |
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of GAAP to non-GAAP Measures (unaudited).” |
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(b) Efficiency ratio is the result of noninterest expense
divided by the sum of noninterest income and |
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tax-equivalent net interest income. |
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Reports First Quarter Net
Earnings/page 4 |
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Reconciliation of GAAP to non-GAAP Measures
(unaudited): |
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Quarter ended March 31, |
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(Dollars in thousands, except per share amounts) |
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|
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2016 |
|
2015 |
|
Net interest income, as reported
(GAAP) |
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|
|
|
$ |
5,697 |
$ |
5,523 |
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Tax-equivalent adjustment |
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|
|
|
|
322 |
|
335 |
|
Net interest income
(tax-equivalent) |
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$ |
6,019 |
$ |
5,858 |
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For additional information, contact:
E.L. Spencer, Jr.
President, CEO and
Chairman of the Board
(334) 821-9200
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