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Auburn National Bancorporation, Inc. Reports Record Full Year Net Earnings of $9.7 million, or $2.72 per share; Record Quarterly Net Earnings of $2.7 million, or $0.75 per share

AUBN

Fourth Quarter 2019 Results:

  • Earnings per share increased 14% compared to fourth quarter 2018
  • $1.7 million gain from the termination of a loan guarantee program operated by the State of Alabama
  • Net interest income (tax-equivalent) decreased by 4% compared to fourth quarter 2018
  • Average loans were $469.6 million, compared to $467.4 million in fourth quarter 2018
  • Negative provision for loan losses of $250 thousand 
  • Nonperforming assets to total assets of 0.02%, compared to 0.04% in fourth quarter 2018
  • Other notable items include approximately $0.5 million of expense related to the planned redevelopment of the Company’s headquarters in downtown Auburn

AUBURN, Ala., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Auburn National Bancorporation (Nasdaq: AUBN) reported record quarterly net earnings of $2.7 million, or $0.75 per share, for the fourth quarter of 2019, compared to $2.4 million, or $0.66 per share, for the fourth quarter of 2018.  For the full year 2019, the Company reported record net earnings of $9.7 million, or $2.72 per share for 2019, compared to $8.8 million, or $2.42 per share, for 2018. 

“We are very pleased with the Company’s overall financial performance in 2019,” said Robert W. Dumas, Chairman, President, and CEO.  “While we expect a challenging interest rate and competitive environment in 2020, economic conditions in our markets remain robust and we are optimistic that credit quality will continue to be relatively strong in 2020. Regardless of the operating environment, we are confident that our long-term approach and philosophy of knowing and caring for our customers, maintaining exceptional asset quality, and supporting our communities will enable us to continue to generate value for our shareholders in 2020 and beyond.” 

Net interest income (tax-equivalent) was $6.4 million for the fourth quarter of 2019, a 4% decrease compared to $6.7 million for the fourth quarter of 2018.  This decrease was primarily due to recent decreases in market interest rates.  Average loans were relatively stable in the fourth quarter of 2019 when compared to the fourth quarter of 2018. The Company’s net interest margin (tax-equivalent) decreased to 3.27% in the fourth quarter of 2019, compared to 3.54% for the fourth quarter of 2018, as earning asset yields declined.  Management anticipates this challenging rate environment will continue and the Company’s net interest income and margin will likely decrease in 2020 compared to 2019 as the Company’s ability to lower its deposit costs will likely continue to lag the current decrease in earning asset yields.

The Company recorded a negative provision for loan losses of $250 thousand for the fourth quarter of 2019, compared to no provision for loan losses for the fourth quarter of 2018.  The negative provision was primarily related to a decline in total loans outstanding at December 31, 2019 and more specifically the construction and land development loan portfolio segment. 

Noninterest income was $2.5 million in the fourth quarter of 2019, compared to $0.8 million for the fourth quarter of 2018.  The increase was due to a $1.7 million payment received by the Company that resulted from the termination of a loan guarantee program operated by the State of Alabama.

Noninterest expense was $5.6 million in the fourth quarter of 2019, compared to $4.4 million for the fourth quarter of 2018.  The increase was due to a $0.6 million increase in salaries and benefits expense and $0.5 million of various expenses related to the planned redevelopment of the Company’s headquarters in downtown Auburn, including professional fees, temporary relocation costs, and revised depreciation estimates.  The Company expects it will incur additional expenses in 2020 related to this redevelopment project.

Income tax expense was $0.7 million for the fourth quarter of 2019, compared to $0.6 million for the fourth quarter of 2018 primarily due to increased earnings before taxes. The Company’s income tax expense for the fourth quarter of 2019 reflects an effective tax rate of 20.00%, compared to 19.81% in the fourth quarter of 2018.

The Company paid cash dividends of $0.25 per share in the fourth quarter of 2019. At December 31, 2019, our regulatory capital was well above the minimum amounts required to be “well capitalized” under 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 $829 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 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, including the costs of redeveloping our headquarters and the timing and receipt of rental income upon completion of the project, 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 and recoveries, 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, 2019 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)               
    Quarter ended December 31,  Years ended December 31, 
(Dollars in thousands, except per share amounts) 2019    2018    2019    2018  
Results of Operations               
Net interest income (a)$6,406   $6,699   $26,621   $26,183  
Less: tax-equivalent adjustment 126    152    557    613  
 Net interest income (GAAP) 6,280    6,547    26,064    25,570  
Noninterest income 2,458    842    5,494    3,325  
 Total revenue 8,738    7,389    31,558    28,895  
Provision for loan losses (250)   —     (250)   —   
Noninterest expense 5,633    4,396    19,697    17,874  
Income tax expense 671    593    2,370    2,187  
Net earnings$2,684   $2,400   $9,741   $8,834  
                   
Per share data:               
Basic and diluted net earnings:$0.75   $0.66   $2.72   $2.42  
Cash dividends declared$0.25   $0.24   $1.00   $0.96  
Weighted average shares outstanding: 3,566,146    3,643,868    3,581,476    3,643,780  
Shares outstanding, at period end 3,566,146    3,643,868    3,566,146    3,643,868  
Book value$27.57   $24.44   $27.57   $24.44  
Common stock price:               
 High$53.90   $41.50   $53.90   $53.50  
 Low 40.00    28.88    30.61    28.88  
 Period-end$53.00   $31.66   $53.00   $31.66  
  To earnings ratio 19.49 x  13.08 x  19.49 x  13.08 x
  To book value 192 % 130 % 192 % 130 %
Performance ratios:               
Return on average equity (annualized): 10.86 % 11.05 % 10.35 % 10.14 %
Return on average assets (annualized): 1.30 % 1.20 % 1.18 % 1.08 %
Dividend payout ratio 33.33 % 36.36 % 36.76 % 39.67 %
Other financial data:               
Net interest margin (a) 3.27 % 3.54 % 3.43 % 3.40 %
Effective income tax rate 20.00 % 19.81 % 19.57 % 19.84 %
Efficiency ratio (b) 63.55 % 58.29 % 61.33 % 60.57 %
Asset Quality:               
Nonperforming assets:               
 Nonperforming (nonaccrual) loans$186   $178   $186   $178  
 Other real estate owned —     172    —     172  
  Total nonperforming assets$186   $350   $186   $350  
                   
Net charge-offs (recoveries)$154   $(5)  $137   $(33) 
                   
Allowance for loan losses as a % of:               
 Loans 0.95 % 1.00 % 0.95 % 1.00 %
 Nonperforming loans 2,358 % 2,691 % 2,358 % 2,691 %
Nonperforming assets as a % of:               
 Loans and other real estate owned 0.04 % 0.07 % 0.04 % 0.07 %
 Total assets 0.02 % 0.04 % 0.02 % 0.04 %
Nonperforming loans as a % of total loans 0.04 % 0.04 % 0.04 % 0.04 %
Net charge-offs (recoveries) as a % of average loans (c) 0.13 % —  % 0.03 % (0.01)%
Selected average balances:               
Securities$249,106   $240,334   $245,038   $252,550  
Loans, net of unearned income 469,579    467,380    473,213    456,345  
Total assets 827,684    802,555    826,545    819,529  
Total deposits 723,557    711,043    727,723    726,277  
Long-term debt —     —     —     1,022  
Total stockholders' equity 98,887    86,881    94,151    87,107  
Selected period end balances:               
Securities$235,902   $239,801   $235,902   $239,801  
Loans, net of unearned income 460,901    476,908    460,901    476,908  
Allowance for loan losses 4,386    4,790    4,386    4,790  
Total assets 828,570    818,077    828,570    818,077  
Total deposits 724,152    724,193    724,152    724,193  
Total stockholders' equity 98,328    89,055    98,328    89,055  
                   
(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 (recoveries) 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) 2019 2018 2019 2018 
Net interest income, as reported (GAAP)$6,280$6,547$26,064$25,570 
Tax-equivalent adjustment 126 152 557 613 
Net interest income (tax-equivalent)$6,406$6,699$26,621$26,183 
           

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

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