Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net
earnings of $2.1 million, or $0.59 per share, for the first quarter
of 2022, compared to $2.0 million, or $0.56 per share, for the
first quarter of 2021.
“The past two years have been extremely
challenging, but we have continued our primary mission of serving
our customers and our communities while strengthening our balance
sheet. The Company’s first quarter results reflect improved net
interest income and strong asset quality as the negative provision
for loan losses largely offset a decline in mortgage lending
income,” said Robert W. Dumas, Chairman, President and CEO.
“Although we experienced larger than normal loan
payoffs during the first quarter of 2022, primarily in multi-family
and hotel loans, we are encouraged by signs that loan demand is
strengthening and the Federal Reserve’s increases in interest rates
to more normal levels. Both of these should positively impact our
net interest margin,” continued Mr. Dumas.
Total revenue declined approximately 2% in the
first quarter of 2022, compared to the first quarter of 2021,
primarily due to reduced mortgage lending income.
Net interest income (tax-equivalent) was $6.2 million for the
first quarter of 2022, a 2% increase compared to $6.1 million for
the first quarter of 2021. This increase was primarily due to
balance sheet growth, partially offset by a decrease in the
Company’s net interest margin (tax-equivalent). Net interest margin
(tax-equivalent) declined to 2.43% in the first quarter of 2022,
compared to 2.66% in the first quarter of 2021 due to the continued
low interest rate environment and changes in our asset mix
resulting from elevated customer deposits.
At March 31, 2022, the Company’s allowance for loan losses was
$4.7 million, or 1.09% of total loans, compared to $4.9 million, or
1.08% of total loans, at December 31, 2021, and $5.7 million, or
1.23% of total loans, at March 31, 2021.
The Company recorded a negative provision for loan losses during
the first quarter of 2022 of $250 thousand, compared to no
provision for loan losses during the first quarter of 2021. The
negative provision for loan losses was primarily related to a
decrease in total loans, excluding PPP, during the first quarter of
2022. Total loans, excluding PPP, were $424.3 million at March 31,
2022, a decrease of $25.9 million, or 6%, compared to December 31,
2021. This decline was primarily due to decreases in multi-family
loans of $17.3 million and hotel loans of $6.5 million due to loan
payoffs. The provision for loan losses is based upon various
estimates and judgments, including the absolute level of loans,
economic conditions, credit quality and the amount of net
charge-offs.
Noninterest income was $0.9 million for the first quarter of
2022, compared to $1.2 million for the first quarter of 2021.
The decrease in noninterest income was primarily due to a decrease
in mortgage lending income of $0.3 million as refinance activity
slowed in our primary market area, as market interest rates on
mortgage loans increased.
Noninterest expense was $4.9 million for the first quarter of
2022, compared to $4.7 million for the first quarter of 2021. The
increase in noninterest expense was due to increases in salaries
and benefits expense and other noninterest expense.
Income tax expense was $0.3 million compared to $0.4 million for
the first quarter of 2021. The Company’s effective tax rate for the
first quarter of 2022 was 10.88%, compared to 17.41% in the first
quarter of 2021. This decrease was primarily due to an income tax
benefit related to a New Markets Tax Credit investment funded in
the fourth quarter of 2021. The Company’s effective income tax rate
is principally impacted by tax-exempt earnings from the Company’s
investments in municipal securities, bank-owned life insurance, and
New Markets Tax Credits.
At March 31, 2022, the Company's consolidated stockholders'
equity was $86.4 million or $24.57 per share, compared to $103.7
million, or $29.46 per share, at December 31, 2021, and $103.6
million, or $29.06 per share, at March 31, 2021. The decrease from
December 31, 2021 was primarily driven by an other comprehensive
loss due to the change in unrealized gains/losses on securities
available-for sale, net of tax, in the quarter ended March 31,
2022, of $17.3 million. The increase in the unrealized loss on
securities was primarily due to an increase in long-term market
interest rates. These unrealized losses do not affect the Bank’s
capital for regulatory capital purposes.
The Company paid cash dividends of $0.265 per share in the first
quarter of 2022, an increase of 2% from the same period in 2021.
The Company’s share repurchases of $0.1 million since December 31,
2021 resulted in 3,559 fewer outstanding common shares at March 31,
2022. At March 31, 2022, the Bank’s regulatory capital ratios were
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 $1.1 billion. The Bank is an Alabama
state-chartered bank that is a member of the Federal Reserve
System, which 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 eight full-service branches in
Auburn, Opelika, Valley, and Notasulga, Alabama. The Bank also
operates loan production offices in Auburn and 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,
the continuing effects of the COVID-19 pandemic and
related government, Federal Reserve monetary and regulatory
actions, including the continuing effects of pandemic-related
economic stimulus and economic conditions generally and 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, effects of inflation, including related tightening of
monetary policies, interest rates (generally and those applicable
to our assets and liabilities) and changes in asset values as a
result of interest rate changes, noninterest income, loan
performance, loan deferrals and modifications, nonperforming
assets, other real estate owned, provision for loan losses,
charge-offs, other-than-temporary impairments, collateral values,
credit quality, asset sales, insurance claims, 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, 2021 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, and the presentation and calculation of the efficiency
ratio, a non-GAAP measure. 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. Similarly, the efficiency ratio is a common
measure that facilitates comparability with other financial
institutions. 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.
For additional information, contact:Robert W. DumasChairman,
President and CEO(334) 821-9200
Financial Highlights (unaudited) |
|
|
|
|
|
|
|
|
Quarter ended March 31, |
(Dollars in thousands, except per share amounts) |
|
2022 |
|
|
|
2021 |
|
Results of Operations |
|
|
|
|
|
|
|
Net interest
income (a) |
$ |
6,190 |
|
|
$ |
6,057 |
|
Less: tax-equivalent adjustment |
|
112 |
|
|
|
120 |
|
Net interest income (GAAP) |
|
6,078 |
|
|
|
5,937 |
|
Noninterest income |
|
908 |
|
|
|
1,182 |
|
Total revenue |
|
6,986 |
|
|
|
7,119 |
|
Provision
for loan losses |
|
(250 |
) |
|
|
— |
|
Noninterest
expense |
|
4,901 |
|
|
|
4,690 |
|
Income tax expense |
|
254 |
|
|
|
423 |
|
Net earnings |
$ |
2,081 |
|
|
$ |
2,006 |
|
|
|
|
|
|
|
|
|
Per
share data: |
|
|
|
|
|
|
|
Basic and
diluted net earnings |
$ |
0.59 |
|
|
$ |
0.56 |
|
Cash
dividends declared |
$ |
0.265 |
|
|
$ |
0.26 |
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
|
3,518,657 |
|
|
|
3,566,299 |
|
Shares
outstanding, at period end |
|
3,516,971 |
|
|
|
3,566,326 |
|
Book
value |
$ |
24.57 |
|
|
$ |
29.06 |
|
Common stock
price: |
|
|
|
|
|
|
|
High |
$ |
34.49 |
|
|
$ |
48.00 |
|
Low |
|
31.75 |
|
|
|
37.55 |
|
Period-end |
|
33.21 |
|
|
|
38.37 |
|
To earnings ratio |
|
14.44 |
x |
|
|
17.85 |
x |
To book value |
|
135 |
% |
|
|
132 |
% |
Performance ratios: |
|
|
|
|
|
|
|
Return on
average equity (annualized) |
|
7.97 |
% |
|
|
7.37 |
% |
Return on
average assets (annualized) |
|
0.75 |
% |
|
|
0.82 |
% |
Dividend
payout ratio |
|
44.92 |
% |
|
|
46.43 |
% |
Other financial data: |
|
|
|
|
|
|
|
Net interest
margin (a) |
|
2.43 |
% |
|
|
2.66 |
% |
Effective
income tax rate |
|
10.88 |
% |
|
|
17.41 |
% |
Efficiency
ratio (b) |
|
69.05 |
% |
|
|
64.79 |
% |
Asset Quality: |
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
371 |
|
|
$ |
783 |
|
Other real estate owned |
|
374 |
|
|
|
— |
|
Total nonperforming assets |
$ |
745 |
|
|
$ |
783 |
|
|
|
|
|
|
|
|
|
Net
charge-offs (recoveries) |
$ |
31 |
|
|
$ |
(64 |
) |
|
|
|
|
|
|
|
|
Allowance
for loan losses as a % of: |
|
|
|
|
|
|
|
Loans |
|
1.09 |
% |
|
|
1.23 |
% |
Nonperforming loans |
|
1,256 |
% |
|
|
726 |
% |
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.17 |
% |
|
|
0.17 |
% |
Total assets |
|
0.07 |
% |
|
|
0.08 |
% |
Nonperforming loans as a % of total loans |
|
0.09 |
% |
|
|
0.17 |
% |
Annualized
net charge-offs (recoveries) as a % of average loans |
|
0.03 |
% |
|
|
(0.06 |
)% |
Selected average balances: |
|
|
|
|
|
|
|
Securities |
$ |
435,097 |
|
|
$ |
353,031 |
|
Loans, net
of unearned income |
|
439,713 |
|
|
|
463,424 |
|
Total
assets |
|
1,114,407 |
|
|
|
980,884 |
|
Total
deposits |
|
1,003,394 |
|
|
|
863,194 |
|
Long-term
debt |
|
— |
|
|
|
— |
|
Total
stockholders' equity |
|
104,493 |
|
|
|
108,890 |
|
Selected period end balances: |
|
|
|
|
|
|
|
Securities |
$ |
417,459 |
|
|
$ |
359,630 |
|
Loans, net
of unearned income |
|
428,417 |
|
|
|
461,879 |
|
Allowance
for loan losses |
|
4,658 |
|
|
|
5,682 |
|
Total
assets |
|
1,109,664 |
|
|
|
993,263 |
|
Total
deposits |
|
1,017,742 |
|
|
|
880,590 |
|
Long-term
debt |
|
— |
|
|
|
— |
|
Total
stockholders' equity |
|
86,411 |
|
|
|
103,639 |
|
|
|
(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. See "Reconciliation of GAAP to non-GAAP Measures
(unaudited)" below. |
|
|
Reconciliation of GAAP to non-GAAP Measures
(unaudited): |
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31, |
(Dollars in thousands, except per share amounts) |
|
2022 |
|
|
|
2021 |
|
Net interest income, as reported (GAAP) |
$ |
6,078 |
|
|
$ |
5,937 |
|
Tax-equivalent adjustment |
|
112 |
|
|
|
120 |
|
Net interest income (tax-equivalent) |
$ |
6,190 |
|
|
$ |
6,057 |
|
|
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