Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net
earnings of $1.9 million, or $0.55 per share, for the second
quarter of 2023, compared to $1.8 million, or $0.51 per share, for
the second quarter of 2022. Net earnings for the first six months
of 2023 were $3.9 million, or $1.11 per share, compared to $3.9
million, or $1.10 per share, for the first six months of 2022.
“The Company’s second quarter 2023 results
reflect strong revenue growth and the resolution of a nonperforming
loan that resulted in a negative provision for credit losses,” said
David A. Hedges, President and CEO. “Although we expect our net
interest margin will continue to be pressured by increased deposit
costs in the second half of 2023, we are encouraged by the economic
strength of our local markets and continue to see opportunities for
loan growth,” said Mr. Hedges.
Total revenue increased approximately 6% in the second quarter
of 2023, compared to the second quarter of 2022, primarily due to
net interest income growth.
Net interest income (tax-equivalent) was $7.0 million for the
second quarter of 2023, an increase of 8% compared to $6.5 million
for the second quarter of 2022. This increase was primarily due to
improvements in the Company’s net interest margin. The Company’s
net interest margin (tax-equivalent) was 3.03% in the second
quarter of 2023 compared to 2.60% in the second quarter of 2022.
This increase was primarily due to a more favorable asset mix and
higher yields on interest earning assets. These higher yields on
interest earning assets were partially offset by increased cost of
funds. The cost of funds increased to 93 basis points, compared to
32 basis points in the second quarter of 2022. Average loans for
the second quarter of 2023 were $512.1 million, a 19% increase from
the second quarter of 2022.
Nonperforming assets were $1.1 million, or 0.11% of total
assets, at June 30, 2023, compared to $2.7 million, or 0.27% of
total assets, at December 31, 2022 and $0.4 million or 0.03% of
total assets, at June 30, 2022. The decrease in nonperforming
assets since December 31, 2022 was primarily due to the resolution
of one nonperforming loan during the second quarter of 2023, that
had been downgraded during the fourth quarter of 2022.
At June 30, 2023, the Company’s allowance for credit losses was
$6.6 million, or 1.27% of total loans, compared to $5.8 million, or
1.14% of total loans, at December 31, 2022, and $4.7 million, or
1.07% of total loans, at June 30, 2022.
The Company recorded a negative provision for credit losses
during the second quarter of 2023 of $0.4 million, compared to no
provision for credit losses during the second quarter of 2022. The
negative provision for credit losses was primarily related to the
resolution of a collateral dependent nonperforming loan, with a
recorded investment of $1.3 million and a corresponding allowance
of $0.5 million, which was collected in full during the second
quarter of 2023.
Noninterest income was $0.8 million for both the second quarter
of 2023 and 2022.
Noninterest expense was $5.8 million in the second quarter of
2023, compared to $5.1 million for the second quarter of 2022. The
increase in noninterest expense was primarily due to increases in
other noninterest expense of $0.4 million. Other noninterest
expense increased due to various items including software costs,
ATM and check card expenses, impairment related to a new market tax
credit investment due to the remaining tax credit being less than
the Company’s investment, and a gain on sale of other real estate
owned that was realized in the second quarter of 2022.
Income tax expense was $0.3 million for the second quarter of
2023, compared to $0.4 million for the second quarter of 2022. The
Company's effective tax rate for the second quarter of 2023 was
13.00%, compared to 16.77% in the second quarter of 2022. The
Company’s effective income tax rate is principally affected by
tax-exempt earnings from the Company’s investment in municipal
securities and bank-owned life insurance, and the benefits of New
Markets Tax Credits.
Total assets were $1.0 billion at June 30, 2023 and December 31,
2022, compared with $1.1 billion at June 30, 2022. Loans, net of
unearned income were $520.4 million at June 30, 2023, compared with
$504.5 million and $440.9 million at December 31, 2022 and June 30,
2022, respectively. The increase in loans at June 30, 2023 and
December 31, 2022, as compared with June 30, 2022 reflect growth
across all major loan categories, except commercial and industrial
loans, which included PPP loans. Total deposits were $950.7 million
at June 30, 2023 and $950.3 million at December 31, 2022, compared
with $1.0 billion at June 30, 2022. The Company had $16.0 million
in brokered deposits at June 30, 2023, compared to none at December
31, 2022 and June 30, 2022. The Company had no FHLB advances or
other wholesale borrowings outstanding at June 30, 2023, December
31, 2022, or June 30, 2022.
At June 30, 2023, the Company's consolidated stockholders'
equity was $71.0 million or $20.28 per share, compared to $68.0
million, or $19.42 per share, at December 31, 2022, and $76.1
million, or $21.68 per share, at June 30, 2022. The increase from
December 31, 2022 was primarily driven by net earnings of $3.9
million and other comprehensive income due to the $1.8 million
reduction in unrealized gains/losses on securities
available-for-sale, net of tax, partially offset by cash dividends
of $1.9 million, the $0.8 million cumulative effect of a one time
charge to adopt the CECL accounting standard on January 1, 2023,
and $0.1 million repurchases of Company’s common stock. Total
unrealized losses on available-for-sale securities declined 5% from
$54.7 million on December 31, 2022 to $52.2 million on June 30,
2023. These unrealized losses do not affect the Bank’s capital for
regulatory capital purposes. At June 30, 2023, the Company’s equity
to total assets ratio was 6.92%, compared to 6.65% at December 31,
2022, and 7.02% at June 30, 2022. All of the Company’s securities
are classified as available-for-sale and not held-to-maturity.
Therefore, any changes in the fair value of the Company’s
securities portfolio are fully reflected in total equity under
generally accepted accounting principles.
The Company paid cash dividends of $0.27 per share in the second
quarter of 2023, an increase of 2% from the same period in 2022.
The Company’s share repurchases of $0.1 million since December 31,
2022 resulted in 4,225 fewer outstanding common shares at June 30,
2023. At June 30, 2023, 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 $1.0 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 a 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,
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
or tax credits) and our mix and cost of funds and wholesale
liabilities, net interest margin, yields on earning assets,
securities valuations and performance, effects of inflation,
including Federal Reserve tightening beginning in 2022 of monetary
policies, including reductions in the Federal Reserve’s Treasury
and mortgage-backed securities holdings and increases in the
Federal Reserve’s target federal funds rate, 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 credit losses, including the continuing effects of
the application of the new CECL accounting standard adopted on
January 1, 2023 and our CECL models, including possible adjustments
to the fair values of securities available for sale in lieu of
other-than-temporary impairments, charge-offs, 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, 2022 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.
Financial Highlights (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30, |
|
|
Six months ended June 30, |
|
(Dollars in thousands, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Results of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (a) |
$ |
6,994 |
|
|
$ |
6,484 |
|
|
$ |
14,211 |
|
|
$ |
12,674 |
|
Less: tax-equivalent adjustment |
|
106 |
|
|
|
110 |
|
|
|
214 |
|
|
|
222 |
|
|
Net interest income (GAAP) |
|
6,888 |
|
|
|
6,374 |
|
|
|
13,997 |
|
|
|
12,452 |
|
Noninterest income |
|
791 |
|
|
|
848 |
|
|
|
1,583 |
|
|
|
1,756 |
|
|
Total revenue |
|
7,679 |
|
|
|
7,222 |
|
|
|
15,580 |
|
|
|
14,208 |
|
Provision for credit losses |
|
(362 |
) |
|
|
— |
|
|
|
(296 |
) |
|
|
(250 |
) |
Noninterest expense |
|
5,825 |
|
|
|
5,058 |
|
|
|
11,429 |
|
|
|
9,959 |
|
Income tax expense |
|
288 |
|
|
|
363 |
|
|
|
555 |
|
|
|
617 |
|
Net earnings |
$ |
1,928 |
|
|
$ |
1,801 |
|
|
$ |
3,892 |
|
|
$ |
3,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings: |
$ |
0.55 |
|
|
$ |
0.51 |
|
|
$ |
1.11 |
|
|
$ |
1.10 |
|
Cash dividends declared |
$ |
0.27 |
|
|
$ |
0.265 |
|
|
$ |
0.54 |
|
|
$ |
0.53 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
3,500,267 |
|
|
|
3,513,353 |
|
|
|
3,501,200 |
|
|
|
3,515,991 |
|
Shares outstanding, at period end |
|
3,499,715 |
|
|
|
3,509,940 |
|
|
|
3,499,715 |
|
|
|
3,509,940 |
|
Book value |
$ |
20.28 |
|
|
$ |
21.68 |
|
|
$ |
20.28 |
|
|
$ |
21.68 |
|
Common stock price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
$ |
24.32 |
|
|
$ |
33.57 |
|
|
$ |
24.50 |
|
|
$ |
34.49 |
|
|
Low |
|
18.80 |
|
|
|
27.04 |
|
|
|
18.80 |
|
|
|
27.04 |
|
|
Period-end: |
|
21.26 |
|
|
|
27.04 |
|
|
|
21.26 |
|
|
|
27.04 |
|
|
|
To earnings ratio |
|
7.21 |
x |
|
|
12.52 |
x |
|
|
7.21 |
x |
|
|
12.52 |
x |
|
|
To book value |
|
105 |
% |
|
125 |
% |
|
105 |
% |
|
125 |
% |
Performance ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity (annualized) |
|
10.37 |
% |
|
8.26 |
% |
|
10.91 |
% |
|
8.10 |
% |
Return on average assets (annualized) |
|
0.75 |
% |
|
0.66 |
% |
|
0.76 |
% |
|
0.70 |
% |
Dividend payout ratio |
|
49.09 |
% |
|
51.96 |
% |
|
48.65 |
% |
|
48.18 |
% |
Other financial data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (a) |
|
3.03 |
% |
|
2.60 |
% |
|
3.10 |
% |
|
2.51 |
% |
Effective income tax rate |
|
13.00 |
% |
|
16.77 |
% |
|
12.48 |
% |
|
13.71 |
% |
Efficiency ratio (b) |
|
74.82 |
% |
|
68.99 |
% |
|
72.36 |
% |
|
69.02 |
% |
Asset Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
1,149 |
|
|
$ |
359 |
|
|
$ |
1,149 |
|
|
$ |
359 |
|
|
|
Total nonperforming assets |
$ |
1,149 |
|
|
$ |
359 |
|
|
$ |
1,149 |
|
|
$ |
359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net recoveries |
$ |
(144 |
) |
|
$ |
(58 |
) |
|
$ |
(141 |
) |
|
$ |
(27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
1.27 |
% |
|
1.07 |
% |
|
1.27 |
% |
|
1.07 |
% |
|
Nonperforming loans |
|
577 |
% |
|
1,314 |
% |
|
577 |
% |
|
1,314 |
% |
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.22 |
% |
|
0.08 |
% |
|
0.22 |
% |
|
0.08 |
% |
|
Total assets |
|
0.11 |
% |
|
0.03 |
% |
|
0.11 |
% |
|
0.03 |
% |
Nonperforming loans as a % of total loans |
|
0.22 |
% |
|
0.08 |
% |
|
0.22 |
% |
|
0.08 |
% |
Annualized net recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a % of average loans |
|
(0.11 |
)% |
|
(0.05 |
)% |
|
(0.06 |
)% |
|
(0.01 |
)% |
Selected average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
402,929 |
|
|
$ |
427,426 |
|
|
$ |
402,807 |
|
|
$ |
431,240 |
|
Loans, net of unearned income |
|
512,066 |
|
|
|
428,612 |
|
|
|
507,139 |
|
|
|
434,131 |
|
Total assets |
|
1,022,874 |
|
|
|
1,092,759 |
|
|
|
1,022,906 |
|
|
|
1,103,523 |
|
Total deposits |
|
942,552 |
|
|
|
999,867 |
|
|
|
945,456 |
|
|
|
1,001,620 |
|
Total stockholders' equity |
$ |
74,404 |
|
|
$ |
87,247 |
|
|
$ |
71,365 |
|
|
$ |
95,822 |
|
Selected period end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
394,079 |
|
|
$ |
429,220 |
|
|
$ |
394,079 |
|
|
$ |
429,220 |
|
Loans, net of unearned income |
|
520,411 |
|
|
|
440,872 |
|
|
|
520,411 |
|
|
|
440,872 |
|
Allowance for loan losses |
|
6,634 |
|
|
|
4,716 |
|
|
|
6,634 |
|
|
|
4,716 |
|
Total assets |
|
1,026,130 |
|
|
|
1,084,251 |
|
|
|
1,026,130 |
|
|
|
1,084,251 |
|
Total deposits |
|
950,742 |
|
|
|
1,002,698 |
|
|
|
950,742 |
|
|
|
1,002,698 |
|
Total stockholders' equity |
$ |
70,976 |
|
|
$ |
76,107 |
|
|
$ |
70,976 |
|
|
$ |
76,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 June 30, |
|
Six months ended June 30, |
|
(Dollars in thousands, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Net interest income, as reported (GAAP) |
$ |
6,888 |
|
|
$ |
6,374 |
|
|
$ |
13,997 |
|
|
$ |
12,452 |
|
|
Tax-equivalent adjustment |
|
106 |
|
|
|
110 |
|
|
|
214 |
|
|
|
222 |
|
|
Net interest income (tax-equivalent) |
$ |
6,994 |
|
|
$ |
6,484 |
|
|
$ |
14,211 |
|
|
$ |
12,674 |
|
|
Grafico Azioni Auburn National Bancorpo... (NASDAQ:AUBN)
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Grafico Azioni Auburn National Bancorpo... (NASDAQ:AUBN)
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