Full Year 2014 Results – Compared to Full Year 2013:
- Net earnings increased 5%
- Improved profitability – return on average assets of 0.97%,
compared to 0.94% in 2013
- Loan growth – increase of $19.6 million, or 5%, compared to
December 31, 2013
- NPAs declined by 80%; NPAs to total assets of 0.21% at December
31, 2014, compared to 1.08% in 2013
- Strong capital position – Tier 1 common equity to total assets
of 9.29%
Auburn National Bancorporation (Nasdaq:AUBN) reported net earnings
of $1.9 million, or $0.52 per share, for the fourth quarter of
2014, compared to $1.7 million, or $0.47 per share, for the fourth
quarter of 2013. For the full year 2014, the Company reported
record net earnings of $7.4 million, or $2.04 per share, compared
to $7.1 million, or $1.95 per share, for the full year 2013.
Fourth quarter 2014 operating net earnings, which exclude the
effects of non-operating items such as net securities gains and
losses, gain on sale of premises and equipment, and prepayment
penalties on long-term debt, were approximately $1.9 million, or
$0.52 per share, compared to fourth quarter 2013 operating net
earnings of approximately $1.7 million, or $0.47 per share. For the
full year 2014, operating net earnings were $7.8 million, or $2.14
per share, compared to $8.0 million, or $2.19 per share, for the
full year 2013.
E.L. Spencer, Jr., President, CEO and Chairman of the Board,
commented: "We are pleased to report record earnings for the full
year 2014. Our full year and fourth quarter results reflect
improved asset quality, as net charge-offs declined and we
successfully resolved a significant portion of our nonperforming
assets. In addition to maintaining a strong capital position, the
Company paid cash dividends of $0.86 per share during 2014."
Net interest income (tax-equivalent) was $5.8 million for the
fourth quarter of 2014, an increase of 3% compared
to the fourth quarter of 2013. This increase reflects management's
efforts to increase earnings by shifting the Company's asset mix
through loan growth, focusing on deposit pricing, and repaying
higher-cost wholesale funding. Average loans were $397.9 million in
the fourth quarter of 2014, an increase of $18.4 million, or 5%,
from the fourth quarter of 2013. Average deposits were $682.8
million in the fourth quarter of 2014, an increase of $29.0
million, or 4%, from the fourth quarter of 2013.
Nonperforming assets were $1.7 million, or 0.21% of total
assets, at December 31, 2014, compared to $2.9 million, or 0.37% of
total assets, at September 30, 2014. The provision for loan losses
was $0.2 million in the fourth quarter of 2014, compared to none in
the fourth quarter 2013. Provision for loan loss expense is
impacted by the absolute level of loans, loan growth, the credit
quality of the loan portfolio, and the amount of net
charge-offs.
Total noninterest income was $1.1 million in the fourth quarter
of 2014, compared to $2.1 million in the fourth quarter of 2013.
The decrease in total noninterest income was primarily due to a
$1.0 million gain on sale of premises and equipment realized in the
fourth quarter of 2013.
Total noninterest expense was $3.8 million in the fourth quarter
of 2014 compared to $5.2 million in fourth quarter of 2013. The
decrease was primarily due to $1.0 million of prepayment penalties
incurred on long-term debt during the fourth quarter of 2013 and a
decrease of $0.7 million in net expenses related to other real
estate owned (OREO). In the fourth quarter of 2014, the Company
realized net gains of $0.2 million from the sale of OREO, compared
to $0.5 million of net losses from the sale or write-down of OREO
in the fourth quarter of 2013. These decreases in noninterest
expense were offset by a combined increase in net occupancy and
equipment, professional fees, and other noninterest expense of $0.4
million.
Income tax expense was approximately $0.7 million for the fourth
quarter of 2014, compared to $0.5 million for the fourth quarter of
2013. The Company's effective tax rate for the fourth quarter of
2014 was 27.94%, compared to 22.46% in the fourth quarter of 2013.
This increase was primarily attributable to an increase in earnings
before income taxes of 18% and a decrease in tax exempt interest
income on municipal securities. As earnings before income
taxes increases, the impact of tax preference items, such as tax
exempt interest income, on the Company's effective tax rate is
reduced.
The Company paid cash dividends of $0.215 per share in the
fourth quarter of 2014. At December 31, 2014, the Bank's regulatory
capital was well above the minimum amounts required to be "well
capitalized" under current 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 $789 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,
Hurtsboro and Notasulga, Alabama. In-store branches are
located in the Kroger and Wal-Mart SuperCenter stores in both
Auburn and 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, 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, 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,
2013 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 provide
reconciliations between GAAP net earnings and operating net
earnings, which exclude gains or losses on items deemed not to
reflect core operations, as well as tax-equivalent net interest
income and net interest margin, including the presentation of total
revenue and the calculation of the efficiency
ratio. Management uses these non-GAAP financial measures in
its analysis of the Company's performance and believes
presentations of "operating" and tax-equivalent financial measures
provide useful supplemental information regarding the Company's
performance, and that operating net earnings better reflect the
Company's core operating activities. Management utilizes these
non-GAAP measures in the calculation of certain of the Company's
ratios, in particular, to analyze on a consistent basis over time
the performance of what it considers to be its core
operations. The Company believes the non-GAAP measures enhance
investors' understanding of the Company's business and
performance. These measures are also useful in understanding
performance trends and facilitate comparisons with the performance
of other financial institutions. The limitations associated
with these measures are the risk that persons might disagree as to
the appropriateness of items comprising these measures and that
different companies might calculate these measures
differently. The Company provides reconciliations between GAAP
and these non-GAAP measures. These disclosures should not be
considered an alternative to GAAP.
|
|
|
|
|
Financial Highlights
(unaudited) |
|
Quarter ended
December 31, |
Years ended
December 31, |
(Dollars in thousands, except per share
amounts) |
2014 |
2013 |
2014 |
2013 |
Results of Operations |
|
|
|
|
Net interest income (a) |
$ 5,813 |
$ 5,621 |
$ 22,741 |
$ 22,362 |
Less: tax-equivalent adjustment |
331 |
342 |
1,288 |
1,440 |
Net interest income (GAAP) |
5,482 |
5,279 |
21,453 |
20,922 |
Noninterest income |
1,079 |
2,140 |
3,933 |
7,298 |
Total revenue |
6,561 |
7,419 |
25,386 |
28,220 |
Provision for loan losses |
150 |
— |
50 |
400 |
Noninterest expense |
3,780 |
5,188 |
15,104 |
18,412 |
Income tax expense |
735 |
501 |
2,784 |
2,290 |
Net earnings |
$ 1,896 |
$ 1,730 |
$ 7,448 |
$ 7,118 |
|
|
|
|
|
Per share data: |
|
|
|
|
Basic and diluted net earnings: |
|
|
|
|
GAAP |
$ 0.52 |
$ 0.47 |
$ 2.04 |
$ 1.95 |
Operating (b) |
0.52 |
0.47 |
2.14 |
2.19 |
Cash dividends declared |
$ 0.215 |
$ 0.21 |
$ 0.86 |
$ 0.84 |
Weighted average shares outstanding: |
|
|
|
|
Basic and diluted |
3,643,328 |
3,643,110 |
3,643,278 |
3,643,003 |
Shares outstanding, at period end |
3,643,328 |
3,643,118 |
3,643,328 |
3,643,118 |
Book value |
$ 20.80 |
$ 17.70 |
$ 20.80 |
$ 17.70 |
Common stock price: |
|
|
|
|
High |
$ 24.64 |
$ 25.75 |
$ 25.80 |
$ 25.75 |
Low |
22.10 |
23.93 |
22.10 |
20.80 |
Period-end: |
23.64 |
25.00 |
23.64 |
25.00 |
To earnings ratio |
11.59 x |
12.89 x |
11.59 x |
12.89 x |
To book value |
114% |
141% |
114% |
141% |
Performance ratios: |
|
|
|
|
Return on average equity (annualized): |
|
|
|
|
GAAP |
10.21% |
10.33% |
10.53% |
10.33% |
Operating (b) |
10.21% |
10.43% |
11.00% |
11.57% |
Return on average assets (annualized): |
|
|
|
|
GAAP |
0.98% |
0.92% |
0.97% |
0.94% |
Operating (b) |
0.98% |
0.93% |
1.01% |
1.05% |
Dividend payout ratio |
41.35% |
44.68% |
42.16% |
43.08% |
Other financial data: |
|
|
|
|
Net interest margin (a) |
3.14% |
3.20% |
3.15% |
3.16% |
Effective income tax rate |
27.94% |
22.46% |
27.21% |
24.34% |
Efficiency ratio (c) |
54.85% |
61.62% |
55.52% |
54.96% |
Asset Quality: |
|
|
|
|
Nonperforming assets: |
|
|
|
|
Nonperforming (nonaccrual)
loans |
$ 1,117 |
$ 4,261 |
$ 1,117 |
$ 4,261 |
Other real estate
owned |
534 |
3,884 |
534 |
3,884 |
Total nonperforming
assets |
$ 1,651 |
$ 8,145 |
$ 1,651 |
$ 8,145 |
Net charge-offs |
$ 68 |
$ 678 |
$ 482 |
$ 1,855 |
|
|
|
|
|
Allowance for loan losses as a % of: |
|
|
|
|
Loans |
1.20% |
1.37% |
1.20% |
1.37% |
Nonperforming loans |
433% |
124% |
433% |
124% |
Nonperforming assets as a % of: |
|
|
|
|
Loans and other real estate
owned |
0.41% |
2.10% |
0.41% |
2.10% |
Total assets |
0.21% |
1.08% |
0.21% |
1.08% |
Nonperforming loans as a % of total
loans |
0.28% |
1.11% |
0.28% |
1.11% |
Net charge-offs (annualized) as a % of
average loans |
0.07% |
0.71% |
0.12% |
0.48% |
Selected average
balances: |
|
|
|
|
Securities |
$ 265,616 |
$ 260,091 |
$ 270,526 |
$ 263,647 |
Loans, net of unearned income |
397,875 |
379,450 |
385,962 |
387,130 |
Total assets |
777,548 |
748,894 |
770,972 |
759,770 |
Total deposits |
682,812 |
653,825 |
681,127 |
652,995 |
Long-term debt |
12,217 |
21,347 |
12,217 |
31,518 |
Total stockholders' equity |
74,307 |
67,015 |
70,714 |
68,918 |
Selected period end
balances: |
|
|
|
|
Securities |
$ 267,603 |
$ 271,219 |
$ 267,603 |
$ 271,219 |
Loans, net of unearned income |
402,954 |
383,339 |
402,954 |
383,339 |
Allowance for loan losses |
4,836 |
5,268 |
4,836 |
5,268 |
Total assets |
789,231 |
751,343 |
789,231 |
751,343 |
Total deposits |
693,390 |
668,844 |
693,390 |
668,844 |
Long-term debt |
12,217 |
12,217 |
12,217 |
12,217 |
Total stockholders' equity |
75,799 |
64,485 |
75,799 |
64,485 |
|
(a) Tax equivalent. See
"Explanation of Certain Unaudited Non-GAAP Financial Measures" and
"Reconciliation of GAAP to non-GAAP Measures (unaudited)." |
(b) Operating measures. See
"Explanation of Certain Unaudited Non-GAAP Financial Measures" and
"Reconciliation of GAAP to non-GAAP Measures (unaudited)." |
(c) Efficiency ratio is the
result of operating noninterest expense divided by the sum of
operating noninterest income and tax-equivalent net interest
income. |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to
non-GAAP Measures (unaudited): |
|
|
|
|
|
|
Quarter ended
December 31, |
Years ended
December 31, |
(Dollars in thousands, except per share
amounts) |
2014 |
2013 |
2014 |
2013 |
Net earnings, as reported
(GAAP) |
$ 1,896 |
$ 1,730 |
$ 7,448 |
$ 7,118 |
Non-operating items (net of 37% statutory tax
rate): |
|
|
|
|
Securities losses (gains),
net |
— |
18 |
334 |
(410) |
Gain on sale of premises and
equipment |
— |
(641) |
— |
(641) |
Prepayment
penalties on long-term debt |
— |
640 |
— |
1,909 |
Operating net
earnings |
$ 1,896 |
$ 1,747 |
$ 7,782 |
$ 7,976 |
|
|
|
|
|
Basic and diluted earnings per share,
as reported (GAAP) |
$ 0.52 |
$ 0.47 |
$ 2.04 |
$ 1.95 |
Non-operating items (net of 37% statutory tax
rate): |
|
|
|
|
Securities losses (gains),
net |
— |
— |
0.10 |
(0.11) |
Gain on sale of premises and
equipment |
— |
(0.18) |
— |
(0.18) |
Prepayment
penalties on long-term debt |
— |
0.18 |
— |
0.53 |
Operating net earnings per
share |
$ 0.52 |
$ 0.47 |
$ 2.14 |
$ 2.19 |
|
|
|
|
|
Net interest income, as reported
(GAAP) |
$ 5,482 |
$ 5,279 |
$ 21,453 |
$ 20,922 |
Tax-equivalent adjustment |
331 |
342 |
1,288 |
1,440 |
Net interest income
(tax-equivalent) |
$ 5,813 |
$ 5,621 |
$ 22,741 |
$ 22,362 |
|
|
|
|
|
Noninterest income, as reported
(GAAP) |
$ 1,079 |
$ 2,140 |
$ 3,933 |
$ 7,298 |
Non-operating items: |
|
|
|
|
Securities losses (gains),
net |
— |
28 |
530 |
(651) |
Gain on sale of
premises and equipment |
— |
(1,018) |
— |
(1,018) |
Operating noninterest
income |
$ 1,079 |
$ 1,150 |
$ 4,463 |
$ 5,629 |
|
|
|
|
|
Total Revenue, as reported
(GAAP) |
$ 6,561 |
$ 7,419 |
$ 25,386 |
$ 28,220 |
Tax-equivalent adjustment |
331 |
342 |
1,288 |
1,440 |
Non-operating items: |
|
|
|
|
Securities losses (gains),
net |
— |
28 |
530 |
(651) |
Gain on sale of
premises and equipment |
— |
(1,018) |
— |
(1,018) |
Total Operating Revenue
(tax-equivalent) |
$ 6,892 |
$ 6,771 |
$ 27,204 |
$ 27,991 |
|
|
|
|
|
Noninterest expense, as reported
(GAAP) |
$ 3,780 |
$ 5,188 |
$ 15,104 |
$ 18,412 |
Non-operating items: |
|
|
|
|
Prepayment
penalties on long-term debt |
— |
(1,016) |
— |
(3,028) |
Operating noninterest
expense |
$ 3,780 |
$ 4,172 |
$ 15,104 |
$ 15,384 |
|
|
|
|
|
Total stockholders' equity
(GAAP) |
$ 75,799 |
$ 64,485 |
$ 75,799 |
$ 64,485 |
Unrealized losses (gains) on available
for sale securities, net of tax |
(2,443) |
4,552 |
(2,443) |
4,552 |
Other deductions |
— |
— |
— |
— |
Tier 1 Common Equity
(1) |
$ 73,356 |
$ 69,037 |
$ 73,356 |
$ 69,037 |
(1) December 31, 2014 is
preliminary. |
|
|
|
|
|
CONTACT: For additional information, contact:
E.L. Spencer, Jr.
President, CEO and
Chairman of the Board
(334) 821-9200
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