Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net
earnings of $1.5 million, or $0.43 per share, for the third quarter
of 2023, compared to $1.9 million, or $0.55 per share, for the
second quarter of 2023 and $2.0 million, or $0.57 per share, for
the third quarter of 2022. Net earnings for the first nine months
of 2023 were $5.4 million, or $1.54 per share, compared to $5.9
million, or $1.67 per share, for the first nine months of 2022.
“The Company’s third quarter results reflect a
challenging operating environment as rising market interest rates
and competition for deposits continued,” said David A. Hedges,
President and CEO. “Despite experiencing much higher deposit costs
during the third quarter of 2023, we continue to benefit from solid
loan growth, strong asset quality, and lower deposit costs
generally compared to our peers,” continued Mr. Hedges.
Net interest income (tax-equivalent) was $6.4 million for the
third quarter of 2023, a decrease of 13% compared to $7.4 million
for the third quarter of 2022. This decrease was primarily due to a
decline in the Company’s net interest margin. The Company’s net
interest margin (tax-equivalent) was 2.73% in the third quarter of
2023 compared to 3.00% in the third quarter of 2022. This decrease
was primarily due to increased cost of funds, generally and changes
in our deposit mix, which was partially offset by a more favorable
asset mix and higher yields on interest earning assets. Average
loans for the third quarter of 2023 were $529.4 million, a 16%
increase from the third quarter of 2022.
Nonperforming assets were $1.2 million, or 0.12% of total
assets, at September 30, 2023, compared to $1.1 million, or 0.11%
of total assets, at June 30, 2023 and $0.3 million or 0.03% of
total assets, at September 30, 2022.
At September 30, 2023, the Company’s allowance for credit losses
was $6.8 million, or 1.24% of total loans, compared to $6.6
million, or 1.27% of total loans, at June 30, 2023, and $5.0
million, or 1.05% of total loans, at September 30, 2022.
The Company recorded a provision for credit losses of $0.1 in
the third quarter of 2023, compared to $0.3 million for the third
quarter of 2022. The provision for credit losses was primarily
related to loan growth during the third quarter of 2023 and
2022.
Noninterest income was $0.9 million for both the third quarter
of 2023 and 2022. Although mortgage lending income was largely
unchanged, mortgage servicing income generally offset decreases in
origination income as market interest rates have increased and
prepayment speeds on serviced mortgage loans have slowed.
Noninterest expense was $5.4 million for the third quarter of
2023 and 2022. Our efficiency ratio of 74.01% in the third quarter
of 2023 was down slightly from 74.82% in the second quarter of
2023, but up from 65.94% in the third quarter of 2022 primarily due
to a decrease in total revenue.
Income tax expense was $0.2 million for the third quarter of
2023, compared to $0.4 million for the third quarter of 2022. This
decrease was due to a decline in the level of earnings before taxes
and the Company’s effective tax rate. The Company's effective tax
rate for the third quarter of 2023 was 10.90%, compared to 17.78%
in the third quarter of 2022. The Company’s effective income tax
rate is principally affected by tax-exempt earnings from the
Company’s investments in municipal securities and bank-owned life
insurance, and the benefits of New Markets Tax Credits.
Total assets were $1.0 billion at September 30, 2023, June 30,
2023, and September 30, 2022. Loans, net of unearned income were
$545.6 million at September 30, 2023, compared to $520.4 million at
June 30, 2023 and $474.0 million at September 30, 2022. This
increase in loans reflects growth across all major loan categories,
except commercial and industrial loans. Total deposits were $964.6
million at September 30, 2023, compared to $950.7 million at June
30, 2023, and $977.9 million at September 30, 2022. The Company had
$46.1 million in brokered deposits at September 30, 2023, compared
to $16.0 million at June 30, 2023 and none at September 30, 2022.
The Company had no FHLB advances or other wholesale borrowings
outstanding at September 30, 2023, June 30, 2023, or September 30,
2022.
At September 30, 2023, the Company's consolidated stockholders'
equity was $61.5 million or $17.59 per share, compared to $59.8
million, or $17.06 per share, at September 30, 2022. The increase
from September 30, 2022 was primarily driven by net earnings of
$9.8 million, partially offset by cash dividends paid of $3.8
million, other comprehensive loss due to the $3.3 million increase
in unrealized losses on securities available-for-sale, net of tax,
a $0.8 million one time charge for the cumulative effect to adopt
the CECL accounting standard on January 1, 2023, and $0.3 million
in repurchases of the Company’s common stock. Total unrealized
losses on available-for-sale securities increased 7% from $61.0
million on September 30, 2022 to $65.5 million on September 30,
2023, as market rates increased in the latest period. These
unrealized losses do not affect the Bank’s capital for regulatory
capital purposes. At September 30, 2023, the Company’s equity to
total assets ratio was 5.96%, compared to 5.74% at September 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 third
quarter of 2023, an increase of 2% from the same period in 2022.
The Company’s share repurchases of $0.2 million since December 31,
2022 resulted in 10,108 fewer outstanding common shares at
September 30, 2023. At September 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 deposits and wholesale
liabilities, net interest margin, yields on earning assets,
securities valuations and performance, effects of inflation,
including Federal Reserve monetary policy 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 our asset values, especially investment
securities, 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 September 30, |
|
|
Nine months ended September 30, |
|
(Dollars in thousands, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
|
2022 |
|
|
Results of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (a) |
$ |
6,380 |
|
|
$ |
7,360 |
|
|
$ |
20,591 |
|
|
|
$ |
20,034 |
|
|
Less: tax-equivalent adjustment |
|
108 |
|
|
|
117 |
|
|
|
322 |
|
|
|
|
339 |
|
|
|
Net interest income (GAAP) |
|
6,272 |
|
|
|
7,243 |
|
|
|
20,269 |
|
|
|
|
19,695 |
|
|
Noninterest income |
|
865 |
|
|
|
852 |
|
|
|
2,448 |
|
|
|
|
2,608 |
|
|
|
Total revenue |
|
7,137 |
|
|
|
8,095 |
|
|
|
22,717 |
|
|
|
|
22,303 |
|
|
Provision for credit losses |
|
105 |
|
|
|
250 |
|
|
|
(191 |
) |
|
|
|
— |
|
|
Noninterest expense |
|
5,362 |
|
|
|
5,415 |
|
|
|
16,791 |
|
|
|
|
15,374 |
|
|
Income tax expense |
|
182 |
|
|
|
432 |
|
|
|
737 |
|
|
|
|
1,049 |
|
|
Net earnings |
$ |
1,488 |
|
|
$ |
1,998 |
|
|
$ |
5,380 |
|
|
|
$ |
5,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings: |
$ |
0.43 |
|
|
$ |
0.57 |
|
|
$ |
1.54 |
|
|
|
$ |
1.67 |
|
|
Cash dividends declared |
$ |
0.27 |
|
|
$ |
0.265 |
|
|
$ |
0.81 |
|
|
|
$ |
0.795 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
3,496,411 |
|
|
|
3,507,318 |
|
|
|
3,499,518 |
|
|
|
|
3,513,068 |
|
|
Shares outstanding, at period end |
|
3,493,614 |
|
|
|
3,505,355 |
|
|
|
3,493,614 |
|
|
|
|
3,505,355 |
|
|
Book value |
$ |
17.59 |
|
|
$ |
17.06 |
|
|
$ |
17.59 |
|
|
|
$ |
17.06 |
|
|
Common stock price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
$ |
22.80 |
|
|
$ |
29.02 |
|
|
$ |
24.50 |
|
|
|
$ |
34.49 |
|
|
|
Low |
|
20.85 |
|
|
|
23.02 |
|
|
|
18.80 |
|
|
|
|
23.02 |
|
|
|
Period-end: |
|
21.50 |
|
|
|
23.02 |
|
|
|
21.50 |
|
|
|
|
23.02 |
|
|
|
|
To earnings ratio |
|
7.65 |
x |
|
|
10.46 |
x |
|
|
7.65 |
x |
|
|
|
10.46 |
x |
|
|
|
To book value |
|
122 |
% |
|
|
135 |
% |
|
|
122 |
% |
|
|
|
135 |
% |
|
Performance ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity (annualized) |
|
8.59 |
% |
|
|
10.35 |
% |
|
|
10.15 |
% |
|
|
|
8.76 |
% |
|
Return on average assets (annualized) |
|
0.58 |
% |
|
|
0.75 |
% |
|
|
0.70 |
% |
|
|
|
0.72 |
% |
|
Dividend payout ratio |
|
62.79 |
% |
|
|
46.49 |
% |
|
|
52.60 |
% |
|
|
|
47.60 |
% |
|
Other financial data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (a) |
|
2.73 |
% |
|
|
3.00 |
% |
|
|
2.97 |
% |
|
|
|
2.67 |
% |
|
Effective income tax rate |
|
10.90 |
% |
|
|
17.78 |
% |
|
|
12.05 |
% |
|
|
|
15.14 |
% |
|
Efficiency ratio (b) |
|
74.01 |
% |
|
|
65.94 |
% |
|
|
72.88 |
% |
|
|
|
67.90 |
% |
|
Asset Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
1,213 |
|
|
$ |
347 |
|
|
$ |
1,213 |
|
|
|
$ |
347 |
|
|
|
|
Total nonperforming assets |
$ |
1,213 |
|
|
$ |
347 |
|
|
$ |
1,213 |
|
|
|
$ |
347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) |
$ |
14 |
|
|
$ |
— |
|
|
$ |
(127 |
) |
|
|
$ |
(27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
1.24 |
% |
|
|
1.05 |
% |
|
|
1.24 |
% |
|
|
|
1.05 |
% |
|
|
Nonperforming loans |
|
559 |
% |
|
|
1,431 |
% |
|
|
559 |
% |
|
|
|
1,431 |
% |
|
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.22 |
% |
|
|
0.07 |
% |
|
|
0.22 |
% |
|
|
|
0.07 |
% |
|
|
Total assets |
|
0.12 |
% |
|
|
0.03 |
% |
|
|
0.12 |
% |
|
|
|
0.03 |
% |
|
Nonperforming loans as a % of total loans |
|
0.22 |
% |
|
|
0.07 |
% |
|
|
0.22 |
% |
|
|
|
0.07 |
% |
|
Annualized net charge-offs (recoveries) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a % of average loans |
|
0.01 |
% |
|
|
— |
% |
|
|
(0.03 |
)% |
|
|
|
(0.01 |
)% |
|
Selected average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
390,772 |
|
|
$ |
432,393 |
|
|
$ |
398,751 |
|
|
|
$ |
431,629 |
|
|
Loans, net of unearned income |
|
529,382 |
|
|
|
457,722 |
|
|
|
514,635 |
|
|
|
|
442,081 |
|
|
Total assets |
|
1,020,980 |
|
|
|
1,069,973 |
|
|
|
1,022,257 |
|
|
|
|
1,092,216 |
|
|
Total deposits |
|
942,533 |
|
|
|
987,614 |
|
|
|
944,471 |
|
|
|
|
996,900 |
|
|
Total stockholders' equity |
$ |
69,269 |
|
|
$ |
77,191 |
|
|
$ |
70,659 |
|
|
|
$ |
89,544 |
|
|
Selected period end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
373,286 |
|
|
$ |
411,538 |
|
|
$ |
373,286 |
|
|
|
$ |
411,538 |
|
|
Loans, net of unearned income |
|
545,610 |
|
|
|
474,035 |
|
|
|
545,610 |
|
|
|
|
474,035 |
|
|
Allowance for credit losses |
|
6,778 |
|
|
|
4,966 |
|
|
|
6,778 |
|
|
|
|
4,966 |
|
|
Total assets |
|
1,030,724 |
|
|
|
1,042,559 |
|
|
|
1,030,724 |
|
|
|
|
1,042,559 |
|
|
Total deposits |
|
964,602 |
|
|
|
977,938 |
|
|
|
964,602 |
|
|
|
|
977,938 |
|
|
Total stockholders' equity |
$ |
61,451 |
|
|
$ |
59,793 |
|
|
$ |
61,451 |
|
|
|
$ |
59,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 September 30, |
|
Nine months ended September 30, |
|
(Dollars in thousands, except per share amounts) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net interest income, as reported (GAAP) |
$ |
6,272 |
|
$ |
7,243 |
|
$ |
20,269 |
|
$ |
19,695 |
|
Tax-equivalent adjustment |
|
108 |
|
|
117 |
|
|
322 |
|
|
339 |
|
Net interest income (tax-equivalent) |
$ |
6,380 |
|
$ |
7,360 |
|
$ |
20,591 |
|
$ |
20,034 |
|
For additional information, contact:David A. HedgesPresident and
CEO(334) 821-9200
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