Third Quarter 2016 Highlights
Auburn National Bancorporation, Inc. (Nasdaq:AUBN) reported net
earnings of $2.0 million, or $0.54 per share, for the third quarter
of 2016, compared to $1.9 million, or $0.52 per share, for the
third quarter of 2015.
“The Company’s third quarter 2016 results reflect
modest loan growth, strong asset quality, and continued pressure on
our net interest margin as rates remain lower for longer,” said
E.L. Spencer, Jr., President, CEO and Chairman of the Board.
Net interest income (tax-equivalent) was $5.9
million for the third quarter of 2016, compared to $6.0 million for
the third quarter of 2015. Although net interest income
(tax-equivalent) declined, 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 (e.g.
interest bearing bank deposits). As a result, the Company’s
net interest margin (tax-equivalent) declined to 2.94% in the third
quarter of 2016, compared to 3.13% for the third quarter of
2015. Average loans were $429.2 million in the third quarter
of 2016, an increase of $13.0 million or 3%, from the third quarter
of 2015. Average deposits were $748.2 million in the third quarter
of 2016, an increase of $33.3 million or 5%.
Nonperforming assets were $1.7 million, or 0.19% of total
assets, at September 30, 2016, compared to $3.9 million, or 0.48%
of total assets, at September 30, 2015. The allowance for loan
losses was 284% of nonperforming loans and 1.07% of total loans at
September 30, 2016, compared to 140% of nonperforming loans and
1.21% of total loans at September 30, 2015. The Company
recorded no provision for loan losses in the third quarter of 2016,
compared to $0.2 million in third quarter of 2015. Provision
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.
Noninterest income was $1.1 million for the third
quarter of 2016, unchanged from the third quarter of 2015.
This was primarily due to a decrease in mortgage lending income of
$0.1 million, offset by securities gains of $0.1 million.
Noninterest expense was $4.0 million for the third quarter of
2016, compared to $3.9 million in the third quarter of 2015.
Increases in salaries and benefits expense and other noninterest
expense of $0.2 million and $0.1 million, respectively, were offset
by a decrease in other real estate owned expenses of $0.2
million.
Income tax expense was $0.7 million for the third quarter of
2016 unchanged from the third quarter of 2015. The Company’s
effective tax rate for the third quarter of 2016 was 27.50%,
compared to 27.49% in the third quarter of 2015.
The Company paid cash dividends of $0.225 per share in the third
quarter of 2016, an increase of 2.3% from the same period in 2015.
At September 30, 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 $852 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.
Financial Highlights (unaudited) |
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Quarter ended September 30, |
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Nine months ended September 30, |
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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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2016 |
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2015 |
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Results of Operations |
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Net
interest income (a) |
$ |
|
5,924 |
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|
|
$ |
|
6,011 |
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|
|
$ |
|
17,957 |
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|
$ |
|
17,995 |
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Less: tax-equivalent adjustment |
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|
316 |
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|
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|
341 |
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|
960 |
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1,014 |
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Net interest income (GAAP) |
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5,608 |
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5,670 |
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16,997 |
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16,981 |
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Noninterest income |
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1,063 |
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1,056 |
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2,890 |
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3,544 |
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Total revenue |
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6,671 |
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6,726 |
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19,887 |
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20,525 |
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Provision
for loan losses |
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— |
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|
200 |
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|
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(600 |
) |
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|
|
200 |
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Noninterest
expense |
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3,980 |
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|
3,892 |
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|
|
|
|
12,110 |
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12,235 |
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Income tax expense |
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|
740 |
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|
724 |
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2,304 |
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2,168 |
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Net earnings |
$ |
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1,951 |
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$ |
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1,910 |
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$ |
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6,073 |
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$ |
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5,922 |
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Per
share data: |
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Basic and
diluted net earnings: |
$ |
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0.54 |
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$ |
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0.52 |
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$ |
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1.67 |
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$ |
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1.63 |
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Cash
dividends declared |
$ |
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0.225 |
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$ |
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0.22 |
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$ |
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0.675 |
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$ |
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0.66 |
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Weighted
average shares outstanding: |
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Basic and diluted |
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3,643,506 |
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3,643,455 |
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|
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3,643,498 |
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|
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|
3,643,411 |
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Shares
outstanding, at period end |
|
|
3,643,523 |
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|
|
|
|
3,643,478 |
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|
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|
3,643,523 |
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|
3,643,478 |
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Book
value |
$ |
|
23.34 |
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|
$ |
|
21.85 |
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$ |
|
23.34 |
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$ |
|
21.85 |
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Common
stock price: |
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High |
$ |
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28.91 |
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$ |
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27.80 |
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$ |
|
30.49 |
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$ |
|
27.80 |
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Low |
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27.45 |
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25.78 |
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24.56 |
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23.15 |
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Period-end: |
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27.45 |
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26.47 |
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27.45 |
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26.47 |
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To earnings ratio |
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12.48 |
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x |
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|
12.37 |
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x |
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12.48 |
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x |
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12.37 |
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x |
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To book value |
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|
118 |
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% |
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|
121 |
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% |
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|
118 |
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% |
|
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|
121 |
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% |
Performance ratios: |
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Return on
average equity (annualized) |
|
|
9.06 |
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% |
|
|
|
9.75 |
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% |
|
|
|
9.67 |
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% |
|
|
|
10.12 |
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% |
Return on
average assets (annualized) |
|
|
0.92 |
|
% |
|
|
|
0.95 |
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% |
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|
|
0.97 |
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% |
|
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|
0.99 |
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% |
Dividend
payout ratio |
|
|
41.67 |
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% |
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|
42.31 |
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% |
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|
40.42 |
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% |
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|
40.49 |
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% |
Other financial data: |
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Net
interest margin (a) |
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2.94 |
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% |
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|
3.13 |
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% |
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|
3.05 |
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% |
|
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|
3.19 |
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% |
Effective
income tax rate |
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|
27.50 |
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% |
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|
27.49 |
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% |
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|
27.50 |
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% |
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|
26.80 |
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% |
Efficiency
ratio (b) |
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56.96 |
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% |
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55.07 |
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% |
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|
58.09 |
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% |
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|
56.80 |
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% |
Asset Quality: |
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Nonperforming assets: |
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Nonperforming (nonaccrual) loans |
$ |
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1,614 |
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$ |
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3,650 |
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$ |
|
1,614 |
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$ |
|
3,650 |
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Other real estate owned |
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|
37 |
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|
278 |
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|
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|
37 |
|
|
|
|
|
278 |
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|
|
Total nonperforming assets |
$ |
|
1,651 |
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|
|
$ |
|
3,928 |
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|
|
$ |
|
1,651 |
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|
|
$ |
|
3,928 |
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Net
recoveries |
$ |
|
(50 |
) |
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|
$ |
|
(41 |
) |
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$ |
|
(889 |
) |
|
|
$ |
|
(91 |
) |
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Allowance for loan losses as a % of: |
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Loans |
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1.07 |
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% |
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|
1.21 |
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% |
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|
1.07 |
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% |
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|
1.21 |
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% |
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Nonperforming loans |
|
|
284 |
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% |
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|
140 |
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% |
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|
284 |
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% |
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|
140 |
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% |
Nonperforming assets as a % of: |
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Loans and other real estate owned |
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0.39 |
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% |
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|
0.93 |
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% |
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|
0.39 |
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% |
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|
0.93 |
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% |
|
Total assets |
|
|
0.19 |
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% |
|
|
|
0.48 |
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% |
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|
0.19 |
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% |
|
|
|
0.48 |
|
% |
Nonperforming loans as a % of total loans |
|
|
0.38 |
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% |
|
|
|
0.86 |
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% |
|
|
|
0.38 |
|
% |
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|
|
0.86 |
|
% |
Annualized
net recoveries as % of avg. loans |
|
(0.05 |
) |
% |
|
|
|
(0.04 |
) |
% |
|
|
|
(0.27 |
) |
% |
|
|
|
(0.03 |
) |
% |
Selected average balances: |
|
|
|
|
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|
|
|
|
|
|
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|
|
Securities |
$ |
|
227,076 |
|
|
|
$ |
|
251,393 |
|
|
|
$ |
|
229,185 |
|
|
|
$ |
|
258,299 |
|
|
Loans, net
of unearned income |
|
|
429,201 |
|
|
|
|
|
416,210 |
|
|
|
|
|
431,213 |
|
|
|
|
|
406,343 |
|
|
Total
assets |
|
|
851,409 |
|
|
|
|
|
806,764 |
|
|
|
|
|
834,721 |
|
|
|
|
|
800,255 |
|
|
Total
deposits |
|
|
748,229 |
|
|
|
|
|
714,960 |
|
|
|
|
|
734,241 |
|
|
|
|
|
706,754 |
|
|
Long-term
debt |
|
|
7,217 |
|
|
|
|
|
7,217 |
|
|
|
|
|
7,217 |
|
|
|
|
|
8,645 |
|
|
Total
stockholders' equity |
|
|
86,103 |
|
|
|
|
|
78,387 |
|
|
|
|
|
83,740 |
|
|
|
|
|
78,037 |
|
|
Selected period end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
|
249,556 |
|
|
|
$ |
|
250,142 |
|
|
|
$ |
|
249,556 |
|
|
|
$ |
|
250,142 |
|
|
Loans, net
of unearned income |
|
|
427,203 |
|
|
|
|
|
422,572 |
|
|
|
|
|
427,203 |
|
|
|
|
|
422,572 |
|
|
Allowance
for loan losses |
|
|
4,578 |
|
|
|
|
|
5,127 |
|
|
|
|
|
4,578 |
|
|
|
|
|
5,127 |
|
|
Total
assets |
|
|
851,672 |
|
|
|
|
|
817,994 |
|
|
|
|
|
851,672 |
|
|
|
|
|
817,994 |
|
|
Total
deposits |
|
|
751,915 |
|
|
|
|
|
724,311 |
|
|
|
|
|
751,915 |
|
|
|
|
|
724,311 |
|
|
Long-term
debt |
|
|
7,217 |
|
|
|
|
|
7,217 |
|
|
|
|
|
7,217 |
|
|
|
|
|
7,217 |
|
|
Total
stockholders' equity |
|
|
85,055 |
|
|
|
|
|
79,599 |
|
|
|
|
|
85,055 |
|
|
|
|
|
79,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
Reconciliation of GAAP to non-GAAP Measures
(unaudited): |
|
|
|
|
|
|
|
|
|
|
|
Quarter ended September 30, |
|
Nine months ended September 30, |
|
(Dollars in thousands, except per share amounts) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Net interest income, as reported
(GAAP) |
$ |
5,608 |
|
$ |
5,670 |
|
$ |
16,997 |
|
$ |
16,981 |
|
Tax-equivalent adjustment |
|
316 |
|
|
341 |
|
|
960 |
|
|
1,014 |
|
Net interest income
(tax-equivalent) |
$ |
5,924 |
|
$ |
6,011 |
|
$ |
17,957 |
|
$ |
17,995 |
|
For additional information, contact:
E.L. Spencer, Jr.
President, CEO and
Chairman of the Board
(334) 821-9200
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