Third Quarter 2015 Highlights:
Auburn National Bancorporation, Inc. (Nasdaq:AUBN) reported net
earnings of $1.9 million, or $0.52 per share, for the third quarter
of 2015, compared to $1.9 million, or $0.51 per share, for the
third quarter of 2014. Net earnings for the first nine months
of 2015 were $5.9 million, or $1.63 per share, compared to $5.6
million, or $1.52 per share, for the first nine months of 2014.
“The Company’s third quarter results reflect
solid loan growth and continued improvements in our cost of funds,”
said E.L. Spencer, Jr., President, CEO and Chairman of the
Board.
Net interest income (tax-equivalent) was $6.0
million for the third quarter of 2015, an increase of 4% compared
to the third quarter of 2014. This increase reflects
management’s efforts to increase earnings by shifting the Company’s
asset mix through loan growth, focusing on deposit pricing, and
reducing higher-cost wholesale funding. Average loans
were $416.2 million in the third quarter of 2015, an increase of
$26.8 million or 7%, from the third quarter of 2014. Average
deposits were $715.0 million in the third quarter of 2015, an
increase of $36.2 million or 5%, from the first nine months of
2014.
Nonperforming assets were $3.9 million, or 0.48%
of total assets, at September 30, 2015, compared to $2.9 million,
or 0.37% of total assets, at September 30, 2014. Annualized
net recoveries were 0.04% of average loans for the third quarter of
2015, compared to annualized net charge-offs of 0.28% of average
loans for the third quarter of 2014. The Company recorded $0.2
million in provision for loan losses in the third quarter of 2015,
compared to $0.3 million in the third quarter of 2014.
Provision expense reflects the absolute level of loans, loan
growth, the credit quality of the loan portfolio, and the amount of
net charge-offs. Our allowance for loan losses was 1.21% of
total loans at September 30, 2015, compared to 1.20% of total loans
at September 30,
2014.
Noninterest income was $1.1 million for the third quarter of
2015, compared to $1.0 million in the third quarter of 2014.
Mortgage lending income decreased by $0.2 million due to a decrease
in origination income of $0.1 million and a decrease of $0.1
million in servicing fees, net of related amortization
expense. Although servicing fees were unchanged, amortization
expense increased due to faster prepayment speeds. The
decrease in mortgage lending income was largely offset by an
increase in securities gains and (losses), net of $0.2
million. The Company had no realized losses on the sale of
securities in the third quarter of 2015, compared to $0.2 million
in the third quarter of 2014. Losses realized on the sale of
securities in the third quarter of 2014 were solely due to changes
in interest rates and not the credit quality of the securities.
Noninterest expense was $3.9 million in the
third quarter of 2015, compared to $3.6 million in the third
quarter of 2014. The increase was primarily due to an
increase in net expenses related to OREO of $0.2 million. Net
expenses related to OREO increased compared to the third quarter of
2014 primarily due to gains realized on the sale of certain OREO
properties in the third quarter of 2014.
Income tax expense was $0.7 million for the
third quarter of 2015 and 2014. The Company's income tax expense
for the third quarter of 2015 reflects an effective income tax rate
of 27.49%, compared to 27.47% for the third quarter of 2014. The
Company’s income tax expense is principally affected by tax-exempt
earnings on municipal securities investments and bank-owned life
insurance.
The Company paid cash dividends of $0.22 per
share in the third quarter of 2015, an increase of 2.3% from the
same period in 2014. At September 30, 2015, 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 $818 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 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,
2014 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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Reports Third Quarter Net Earnings |
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Financial
Highlights (unaudited) |
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|
Quarter ended September 30, |
Nine
Months Ended September 30, |
|
|
(Dollars
in thousands, except per share amounts) |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
Results of
Operations |
|
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|
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|
|
|
|
|
|
Net interest income
(a) |
$ |
|
6,011 |
|
|
$ |
5,769 |
|
$ |
|
17,995 |
|
|
$ |
|
16,928 |
|
|
|
Less:
tax-equivalent adjustment |
|
|
341 |
|
|
|
321 |
|
|
|
1,014 |
|
|
|
|
957 |
|
|
|
Net interest income (GAAP) |
|
|
5,670 |
|
|
|
5,448 |
|
|
|
16,981 |
|
|
|
|
15,971 |
|
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|
Noninterest income |
|
|
1,056 |
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|
1,017 |
|
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|
3,544 |
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|
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|
2,854 |
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Total revenue |
|
|
6,726 |
|
|
|
6,465 |
|
|
|
20,525 |
|
|
|
|
18,825 |
|
|
|
Provision for loan
losses |
|
|
200 |
|
|
|
300 |
|
|
|
200 |
|
|
|
|
(100 |
) |
|
|
Noninterest
expense |
|
|
3,892 |
|
|
|
3,584 |
|
|
|
12,235 |
|
|
|
|
11,324 |
|
|
|
Income
tax expense |
|
|
724 |
|
|
|
709 |
|
|
|
2,168 |
|
|
|
|
2,049 |
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|
|
Net
earnings |
$ |
|
1,910 |
|
|
$ |
1,872 |
|
$ |
|
5,922 |
|
|
$ |
|
5,552 |
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Per share
data: |
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Basic and diluted net earnings: |
$ |
|
0.52 |
|
|
$ |
0.51 |
|
$ |
|
1.63 |
|
|
$ |
|
1.52 |
|
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|
Cash dividends
declared |
$ |
|
0.22 |
|
|
$ |
0.215 |
|
$ |
|
0.66 |
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|
$ |
|
0.645 |
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|
|
Weighted average shares
outstanding: |
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Basic and diluted |
|
|
3,643,416 |
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|
|
3,643,328 |
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|
|
3,643,392 |
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|
|
|
3,643,262 |
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|
Shares outstanding, at
period end |
|
|
3,643,465 |
|
|
|
3,643,328 |
|
|
|
3,643,465 |
|
|
|
|
3,643,328 |
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|
Book value |
$ |
|
21.85 |
|
|
$ |
20.09 |
|
$ |
|
21.85 |
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|
$ |
|
20.09 |
|
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|
Common stock
price: |
|
|
|
|
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|
|
|
|
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|
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|
High |
$ |
|
27.80 |
|
|
$ |
24.92 |
|
$ |
|
27.80 |
|
|
$ |
|
25.80 |
|
|
|
Low |
|
|
25.78 |
|
|
|
23.17 |
|
|
|
23.15 |
|
|
|
|
22.90 |
|
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|
Period-end: |
|
|
26.47 |
|
|
|
24.64 |
|
|
|
26.47 |
|
|
|
|
24.64 |
|
|
|
To earnings ratio |
|
|
12.37 |
|
x |
|
12.38 |
x |
|
|
12.37 |
|
x |
|
|
12.38 |
|
x |
|
To book value |
|
|
121 |
|
% |
|
123 |
% |
|
|
121 |
|
% |
|
|
123 |
|
% |
|
Performance
ratios: |
|
|
|
|
|
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|
|
|
|
|
|
Return on average
equity (annualized) |
|
|
9.75 |
|
% |
|
10.19 |
% |
|
|
10.12 |
|
% |
|
|
10.65 |
|
% |
|
Return on average
assets (annualized) |
|
|
0.95 |
|
% |
|
0.97 |
% |
|
|
0.99 |
|
% |
|
|
0.96 |
|
% |
|
Dividend payout
ratio |
|
|
42.31 |
|
% |
|
42.16 |
% |
|
|
40.49 |
|
% |
|
|
42.43 |
|
% |
|
Other financial
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a) |
|
|
3.13 |
|
% |
|
3.16 |
% |
|
|
3.19 |
|
% |
|
|
3.15 |
|
% |
|
Effective income tax
rate |
|
|
27.49 |
|
% |
|
27.47 |
% |
|
|
26.80 |
|
% |
|
|
26.96 |
|
% |
|
Efficiency ratio
(b) |
|
|
55.07 |
|
% |
|
52.81 |
% |
|
|
56.80 |
|
% |
|
|
57.24 |
|
% |
|
Asset
Quality: |
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|
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Nonperforming
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual)
loans |
$ |
|
3,650 |
|
|
$ |
1,690 |
|
$ |
|
3,650 |
|
|
$ |
|
1,690 |
|
|
|
Other real estate owned |
|
|
278 |
|
|
|
1,215 |
|
|
|
278 |
|
|
|
|
1,215 |
|
|
|
Total nonperforming
assets |
$ |
|
3,928 |
|
|
$ |
2,905 |
|
$ |
|
3,928 |
|
|
$ |
|
2,905 |
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
Net (recoveries)
charge-offs |
$ |
|
(41 |
) |
|
$ |
274 |
|
$ |
|
(91 |
) |
|
$ |
|
414 |
|
|
|
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|
|
|
|
|
|
|
Allowance for loan losses as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
1.21 |
|
% |
|
1.20 |
% |
|
|
1.21 |
|
% |
|
|
1.20 |
|
% |
|
Nonperforming loans |
|
|
140 |
|
% |
|
281 |
% |
|
|
140 |
|
% |
|
|
281 |
|
% |
|
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate
owned |
|
|
0.93 |
|
% |
|
0.73 |
% |
|
|
0.93 |
|
% |
|
|
0.73 |
|
% |
|
Total assets |
|
|
0.48 |
|
% |
|
0.37 |
% |
|
|
0.48 |
|
% |
|
|
0.37 |
|
% |
|
Nonperforming loans as a % of total loans |
|
|
0.86 |
|
% |
|
0.43 |
% |
|
|
0.86 |
|
% |
|
|
0.43 |
|
% |
|
Net (recoveries)
charge-offs as % of avg. loans (c) |
|
|
(0.04 |
) |
% |
|
0.28 |
% |
|
|
(0.03 |
) |
% |
|
|
0.14 |
|
% |
|
Selected
average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
|
251,393 |
|
|
$ |
274,155 |
|
$ |
|
258,299 |
|
|
$ |
|
272,180 |
|
|
|
Loans, net of unearned
income |
|
|
416,210 |
|
|
|
389,392 |
|
|
|
406,343 |
|
|
|
|
381,947 |
|
|
|
Total assets |
|
|
806,764 |
|
|
|
771,685 |
|
|
|
800,255 |
|
|
|
|
768,756 |
|
|
|
Total deposits |
|
|
714,960 |
|
|
|
678,738 |
|
|
|
706,754 |
|
|
|
|
680,560 |
|
|
|
Long-term debt |
|
|
7,217 |
|
|
|
12,217 |
|
|
|
8,646 |
|
|
|
|
12,217 |
|
|
|
Total stockholders'
equity |
|
|
78,387 |
|
|
|
73,499 |
|
|
|
78,037 |
|
|
|
|
69,503 |
|
|
|
Selected period
end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
|
250,142 |
|
|
$ |
264,827 |
|
$ |
|
250,142 |
|
|
$ |
|
264,827 |
|
|
|
Loans, net of unearned
income |
|
|
422,572 |
|
|
|
394,602 |
|
|
|
422,572 |
|
|
|
|
394,602 |
|
|
|
Allowance for loan
losses |
|
|
5,127 |
|
|
|
4,754 |
|
|
|
5,127 |
|
|
|
|
4,754 |
|
|
|
Total assets |
|
|
817,994 |
|
|
|
781,136 |
|
|
|
817,994 |
|
|
|
|
781,136 |
|
|
|
Total deposits |
|
|
724,311 |
|
|
|
680,763 |
|
|
|
724,311 |
|
|
|
|
680,763 |
|
|
|
Long-term debt |
|
|
7,217 |
|
|
|
12,217 |
|
|
|
7,217 |
|
|
|
|
12,217 |
|
|
|
Total stockholders'
equity |
|
|
79,599 |
|
|
|
73,193 |
|
|
|
79,599 |
|
|
|
|
73,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Tax equivalent. See “Explanation of Certain Unaudited
Non-GAAP Financial Measures” and “Reconciliation 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 tax-equivalent net
interest income. |
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(c) Net
(recoveries) charge-offs are annualized. |
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Reports Third Quarter Net Earnings |
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Reconciliation
of GAAP to non-GAAP Measures (unaudited): |
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
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|
Quarter ended September 30, |
|
Nine Months Ended September 30, |
|
(Dollars
in thousands, except per share amounts) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net interest
income, as reported (GAAP) |
$ |
5,670 |
|
$ |
5,448 |
|
$ |
16,981 |
|
$ |
15,971 |
|
Tax-equivalent adjustment |
|
341 |
|
|
321 |
|
|
1,014 |
|
|
957 |
|
Net interest income (tax-equivalent) |
$ |
6,011 |
|
$ |
5,769 |
|
$ |
17,995 |
|
$ |
16,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information, contact:
E.L. Spencer, Jr.
President, CEO and
Chairman of the Board
(334) 821-9200
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