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Auburn National Bancorporation, Inc. Reports Second Quarter Net Earnings

AUBN

Second Quarter 2019 vs. 2018 Highlights

  • Total revenue increased 5% to $7.5 million
     
  • Net interest margin (tax-equivalent) increased by 14 basis points
     
  • Average loans increased $24.7 million, or 6%
     
  • Strong asset quality – Nonperforming assets were 0.05% of total assets at June 30, 2019

AUBURN, Alabama, July 16, 2019 (GLOBE NEWSWIRE) -- Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net earnings of $2.3 million, or $0.64 per share, for the second quarter of 2019, compared to $2.3 million, or $0.62 per share, for the second quarter of 2018.  Net earnings for the first six months of 2019 were $4.9 million, or $1.35 per share, compared to $4.5 million, or $1.22 per share, for the first six months of 2018.

“The Company's second quarter results reflect solid revenue growth,” said Robert W. Dumas, Chairman, President and CEO.  Mr. Dumas continued, “The Company’s growth in net interest income and margin was driven by loan growth and improvements in our balance sheet mix.”

Net interest income (tax-equivalent) was $6.7 million for the second quarter of 2019, a 4% increase compared to $6.5 million for the second quarter of 2018.  This increase was primarily due to loan growth and improved yields on interest-earning assets.  Average loans were up 6% to $473.2 million in the second quarter of 2019 compared to $448.5 million in the second quarter of 2018.  The Company’s net interest margin (tax-equivalent) increased to 3.50% in the second quarter of 2019, compared to 3.36% for the second quarter of 2018 as earning asset yields improved.

Nonperforming assets were $0.4 million or 0.05% of total assets at June 30, 2019, compared to $1.2 million or 0.15% of total assets at June 30, 2018.  The allowance for loan losses was 1.02% of total loans at June 30, 2019, compared to 1.04% of total loans at June 30, 2018.  The Company recorded no provision for loan losses in the second quarter of 2019 and 2018.  The provision for loan loss is based upon various estimates and judgments, including the absolute level of loans, loan growth, credit quality and the amount of net charge-offs. 

Noninterest income was $0.9 million for the second quarter of 2019, compared to $0.8 million for the second quarter of 2018.  Noninterest expense was $4.6 million for the second quarter of 2019, compared to $4.3 million for the second quarter of 2018.  This increase was primarily due to increases in salaries and benefits expense.

The Company paid cash dividends of $0.25 per share in the second quarter of 2019, an increase of 4.2% from the same period in 2018.  We purchased 9,687 of our shares in the latest quarter and 72,205 shares year to date in 2019.  At June 30, 2019, 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 $839 million. 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, 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, 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, 2018 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 includes 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.

                
Financial Highlights (unaudited)               
 Quarter ended June 30,  Six Months ended June 30, 
(Dollars in thousands, except per share amounts) 2019   2018   2019   2018 
Results of Operations               
Net interest income (a)$6,742  $6,469  $13,508  $12,909 
Less: tax-equivalent adjustment 145   152   291   308 
Net interest income (GAAP) 6,597   6,317   13,217   12,601 
Noninterest income 885   839   2,045   1,692 
Total revenue 7,482   7,156   15,262   14,293 
Provision for loan losses           
Noninterest expense 4,629   4,326   9,240   8,728 
Income tax expense 546   566   1,172   1,106 
Net earnings$2,307  $2,264  $4,850  $4,459 
                
Per share data:               
Basic and diluted net earnings:$0.64  $0.62  $1.35  $1.22 
Cash dividends declared$0.25  $0.24  $0.50  $0.48 
Weighted average shares outstanding:               
Basic and diluted 3,577,409   3,643,731   3,595,972   3,643,707 
Shares outstanding, at period end 3,571,828   3,643,793   3,571,828   3,643,793 
Book value$26.34  $23.53  $26.34  $23.53 
Common stock price:               
High$39.55  $50.99  $39.55  $50.99 
Low 31.06   37.40   30.61   35.50 
Period-end: 33.50   49.61   33.50   49.61 
To earnings ratio 13.19x  21.48x  13.19x  21.48x
To book value 127%  211%  127%  211%
Performance ratios:               
Return on average equity (annualized) 10.00%  10.48%  10.65%  10.22%
Return on average assets (annualized) 1.12%  1.10%  1.18%  1.07%
Dividend payout ratio 39.06%  38.71%  37.04%  39.34%
Other financial data:               
Net interest margin (a) 3.50%  3.36%  3.52%  3.33%
Effective income tax rate 19.14%  20.00%  19.46%  19.87%
Efficiency ratio (b) 60.69%  59.20%  59.41%  59.78%
Asset Quality:               
Nonperforming assets:               
Nonperforming (nonaccrual) loans$131  $1,104  $131  $1,104 
Other real estate owned 303   137   303   137 
Total nonperforming assets$434  $1,241  $434  $1,241 
                
Net (recoveries) charge-offs$(43) $(18) $(61) $7 
                
Allowance for loan losses as a % of:               
Loans 1.02%  1.04%  1.02%  1.04%
Nonperforming loans 3,703%  430%  3,703%  430%
Nonperforming assets as a % of:               
Loans and other real estate owned 0.09%  0.27%  0.09%  0.27%
Total assets 0.05%  0.15%  0.05%  0.15%
Nonperforming loans as a % of total loans 0.03%  0.24%  0.03%  0.24%
Annualized net (recoveries) charge-offs as a % of average loans (0.04)%  (0.02)%  (0.03)%  %
Selected average balances:               
Securities$243,784  $255,877  $241,914  $260,725 
Loans, net of unearned income 473,181   448,493   475,297   449,911 
Total assets 821,706   820,706   824,409   831,205 
Total deposits 725,263   728,457   728,881   736,415 
Long-term debt    919      2,062 
Total stockholders' equity$92,272   86,420   91,110  $87,297 
Selected period end balances:               
Securities$248,813  $251,320  $248,813  $251,320 
Loans, net of unearned income 476,061   456,572   476,061   456,572 
Allowance for loan losses 4,851   4,750   4,851   4,750 
Total assets 839,178   811,791   839,178   811,791 
Total deposits 740,501   721,005   740,501   721,005 
Long-term debt           
Total stockholders' equity$94,065   85,748   94,065  $85,748 
                
(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 June 30, Six Months ended June 30, 
(Dollars in thousands, except per share amounts) 2019  2018  2019  2018 
Net interest income, as reported (GAAP)$6,597 $6,317 $13,217 $12,601 
Tax-equivalent adjustment 145  152  291  308 
Net interest income (tax-equivalent)$6,742 $6,469 $13,508 $12,909 
             

For additional information, contact:
Robert W. Dumas
Chairman, President and CEO
(334) 821-9200

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