Full Year 2016 Results – Compared to Full Year 2015:
Auburn National Bancorporation (Nasdaq:AUBN) reported record net
earnings of $8.2 million, or $2.24 per share for the full year
2016, compared to $7.9 million, or $2.16 per share, for the full
year 2015. For the fourth quarter of 2016, the Company
reported net earnings of $2.1 million, or $0.57 per share, compared
to $1.9 million, or $0.53 per share, for the fourth quarter of
2015.
E.L. Spencer, Jr., President, CEO and Chairman of
the Board, commented: “We are pleased to report record earnings for
the full year 2016. Despite a challenging low rate
environment for most of 2016, the Company was able to report its
seventh consecutive annual increase in earnings per share.
This achievement is a testament to our directors, officers, and
employees and their continued dedication and service to our
customers and communities.”
Net interest income (tax-equivalent) was $6.1
million for the fourth quarter of 2016 and 2015. Although net
interest income (tax-equivalent) was unchanged in the latest
quarter, management continues to seek to increase earnings by
growing the Company’s loan portfolio (in total and as a percentage
of our earning assets), focusing on deposit pricing, and repaying
higher-cost wholesale funding sources. These efforts to
increase earnings were offset by declining yields in the securities
portfolio due to maturities and calls and management’s decision to
carry higher levels of short-term interest earning assets such as
deposits at other banks. Average loans were $429.5 million in
the fourth quarter of 2016, an increase of $3.3 million, or 1%,
from the fourth quarter of 2015. Average deposits were $736.0
million in the fourth quarter of 2016, an increase of $15.1
million, or 2%, from the fourth quarter of 2015.
Nonperforming assets were $2.5 million, or 0.30% of
total assets, at December 31, 2016, compared to $3.0 million, or
0.36% of total assets, at December 31, 2015. The provision
for loan losses expense reflects the absolute level of loans, loan
growth, the credit quality of the loan portfolio, and the amount of
net charge-offs or recoveries. The Company recorded a
provision for loan losses of $0.1 million in the fourth quarter of
2016, compared to none in the fourth quarter of 2015.
Although net charge-offs decreased by $0.7 million, or 0.74% of
average loans on an annualized basis in the fourth quarter of 2016,
compared to the same period in 2015, net charge-offs recognized in
the fourth quarter of 2015 were primarily related to two impaired
loans with corresponding valuation allowances that were established
in prior periods. As a result, no provision was required in
the fourth quarter of 2015.
Noninterest income was $0.5 million in the fourth
quarter of 2016, compared to $1.0 million in the fourth quarter of
2015, primarily due to losses realized on sales of securities of
$0.4 million. In November 2016, the Company sold
available-for-sale agency residential mortgage-backed securities
with a fair value of $21.0 million.
Noninterest expense was $3.2 million in the fourth
quarter of 2016, compared to $4.1 million in fourth quarter of
2015, primarily due to a gain on early extinguishment of debt of
$0.8 million. In October 2016, the Company repurchased $4.0
million of its $7.0 million in trust preferred securities
outstanding.
Income tax expense was approximately $0.8 million
for the fourth quarter of 2016, compared to $0.7 million for the
fourth quarter of 2015. The Company’s income tax expense for the
fourth quarter of 2016 reflects an effective tax rate of 27.76%,
compared to 25.19% in the fourth quarter of 2015. The increase in
the annualized effective tax rate was primarily attributable to an
increase in the level of earnings before taxes and a decrease in
tax exempt earnings from bank-owned life insurance.
The Company paid cash dividends of $0.225 per share
in the fourth quarter of 2016. At December 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
Auburn National Bancorporation, Inc. (the
“Company”) is the parent company of AuburnBank (the “Bank”), with
total assets of approximately $832 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.
|
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|
Financial Highlights (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31, |
|
|
Years ended December 31, |
|
(Dollars in thousands, except per share amounts) |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
|
2015 |
|
Results of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income (a) |
$ |
6,051 |
|
|
$ |
6,065 |
|
|
$ |
24,008 |
|
|
|
$ |
24,060 |
|
Less: tax-equivalent adjustment |
|
316 |
|
|
|
328 |
|
|
|
1,276 |
|
|
|
|
1,342 |
|
|
Net interest income (GAAP) |
|
5,735 |
|
|
|
5,737 |
|
|
|
22,732 |
|
|
|
|
22,718 |
|
Noninterest income |
|
493 |
|
|
|
988 |
|
|
|
3,383 |
|
|
|
|
4,532 |
|
|
Total revenue |
|
6,228 |
|
|
|
6,725 |
|
|
|
26,115 |
|
|
|
|
27,250 |
|
Provision
for loan losses |
|
115 |
|
|
|
— |
|
|
|
(485 |
) |
|
|
|
200 |
|
Noninterest
expense |
|
3,238 |
|
|
|
4,137 |
|
|
|
15,348 |
|
|
|
|
16,372 |
|
Income tax expense |
|
798 |
|
|
|
652 |
|
|
|
3,102 |
|
|
|
|
2,820 |
|
Net earnings |
$ |
2,077 |
|
|
$ |
1,936 |
|
|
$ |
8,150 |
|
|
|
$ |
7,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Per
share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings: |
$ |
0.57 |
|
|
$ |
0.53 |
|
|
$ |
2.24 |
|
|
|
$ |
2.16 |
|
Cash
dividends declared |
$ |
0.225 |
|
|
$ |
0.220 |
|
|
$ |
0.90 |
|
|
|
$ |
0.88 |
|
Weighted
average shares outstanding: |
|
3,643,523 |
|
|
|
3,643,478 |
|
|
|
3,643,504 |
|
|
|
|
3,643,428 |
|
Shares
outstanding, at period end |
|
3,643,523 |
|
|
|
3,643,478 |
|
|
|
3,643,523 |
|
|
|
|
3,643,478 |
|
Book
value |
$ |
22.55 |
|
|
$ |
21.94 |
|
|
$ |
22.55 |
|
|
|
$ |
21.94 |
|
Common stock price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
$ |
31.31 |
|
|
$ |
30.39 |
|
|
$ |
31.31 |
|
|
|
$ |
30.39 |
|
|
Low |
|
27.45 |
|
|
|
26.14 |
|
|
|
24.56 |
|
|
|
|
23.15 |
|
|
Period-end |
$ |
31.31 |
|
|
$ |
29.62 |
|
|
$ |
31.31 |
|
|
|
$ |
29.62 |
|
|
|
To earnings ratio |
|
13.98 |
x |
|
|
13.78 |
x |
|
|
13.98 |
|
x |
|
|
13.78 |
x |
|
|
To book value |
|
139 |
% |
|
|
135 |
% |
|
|
139 |
|
% |
|
|
135 |
% |
Performance ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average equity (annualized): |
|
9.61 |
% |
|
9.59 |
% |
|
|
9.65 |
|
% |
|
|
9.98 |
% |
Return on
average assets (annualized): |
|
1.00 |
% |
|
|
0.95 |
% |
|
|
0.98 |
|
% |
|
|
0.98 |
% |
Dividend
payout ratio |
|
39.47 |
% |
|
|
41.51 |
% |
|
|
40.18 |
|
% |
|
|
40.74 |
% |
Other financial data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest margin (a) |
|
3.05 |
% |
|
|
3.12 |
% |
|
|
3.05 |
|
% |
|
|
3.17 |
% |
Effective
income tax rate |
|
27.76 |
% |
|
|
25.19 |
% |
|
|
27.57 |
|
% |
|
|
26.41 |
% |
Efficiency
ratio (b) |
|
49.48 |
% |
|
|
58.66 |
% |
|
|
56.03 |
|
% |
|
|
57.26 |
% |
Asset Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
2,370 |
|
|
$ |
2,714 |
|
|
$ |
2,370 |
|
|
|
$ |
2,714 |
|
|
Other real estate owned |
|
152 |
|
|
|
252 |
|
|
|
152 |
|
|
|
|
252 |
|
|
|
Total nonperforming assets |
$ |
2,522 |
|
|
$ |
2,966 |
|
|
$ |
2,522 |
|
|
|
$ |
2,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs |
$ |
50 |
|
|
$ |
838 |
|
|
$ |
(839 |
) |
|
|
$ |
747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
1.08 |
% |
|
|
1.01 |
% |
|
|
1.08 |
|
% |
|
|
1.01 |
% |
|
Nonperforming loans |
|
196 |
% |
|
|
158 |
% |
|
|
196 |
|
% |
|
|
158 |
% |
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.59 |
% |
|
|
0.70 |
% |
|
|
0.59 |
|
% |
|
|
0.70 |
% |
|
Total assets |
|
0.30 |
% |
|
|
0.36 |
% |
|
|
0.30 |
|
% |
|
|
0.36 |
% |
Nonperforming loans as a % of total loans |
|
0.55 |
% |
|
|
0.64 |
% |
|
|
0.55 |
|
% |
|
|
0.64 |
% |
Net
charge-offs as a % of average loans (c) |
0.05 |
% |
|
|
0.79 |
% |
|
|
(0.19 |
) |
% |
|
|
0.18 |
% |
Selected average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
253,820 |
|
|
$ |
246,130 |
|
|
$ |
235,377 |
|
|
|
$ |
255,231 |
|
Loans, net
of unearned income |
|
429,451 |
|
|
|
426,192 |
|
|
|
430,770 |
|
|
|
|
411,346 |
|
Total
assets |
|
834,291 |
|
|
|
815,616 |
|
|
|
832,321 |
|
|
|
|
804,127 |
|
Total
deposits |
|
735,991 |
|
|
|
720,854 |
|
|
|
734,681 |
|
|
|
|
710,308 |
|
Long-term
debt |
|
4,260 |
|
|
|
7,217 |
|
|
|
6,474 |
|
|
|
|
8,285 |
|
Total
stockholders' equity |
|
86,493 |
|
|
|
80,764 |
|
|
|
84,432 |
|
|
|
|
78,724 |
|
Selected period end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
243,572 |
|
|
$ |
241,687 |
|
|
$ |
243,572 |
|
|
|
$ |
241,687 |
|
Loans, net
of unearned income |
|
430,946 |
|
|
|
426,410 |
|
|
|
430,946 |
|
|
|
|
426,410 |
|
Allowance
for loan losses |
|
4,643 |
|
|
|
4,289 |
|
|
|
4,643 |
|
|
|
|
4,289 |
|
Total
assets |
|
831,943 |
|
|
|
817,189 |
|
|
|
831,943 |
|
|
|
|
817,189 |
|
Total
deposits |
|
739,143 |
|
|
|
723,627 |
|
|
|
739,143 |
|
|
|
|
723,627 |
|
Long-term
debt |
|
3,217 |
|
|
|
7,217 |
|
|
|
3,217 |
|
|
|
|
7,217 |
|
Total
stockholders' equity |
|
82,177 |
|
|
|
79,949 |
|
|
|
82,177 |
|
|
|
|
79,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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) |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net interest income, as reported
(GAAP) |
$ |
5,735 |
$ |
5,737 |
$ |
22,732 |
$ |
22,718 |
Tax-equivalent adjustment |
|
316 |
|
328 |
|
1,276 |
|
1,342 |
Net interest income
(tax-equivalent) |
$ |
6,051 |
$ |
6,065 |
$ |
24,008 |
$ |
24,060 |
|
|
|
|
|
|
|
|
|
|
For additional information, contact:
E.L. Spencer, Jr.
President, CEO and
Chairman of the Board
(334) 821-9200
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