Auburn National Bancorporation (Nasdaq: AUBN) reported quarterly
net earnings of $1.9 million, or $0.53 per share, for the fourth
quarter of 2021, compared to $2.1 million, or $0.58 per share, for
the fourth quarter of 2020. For the full year 2021, the Company
reported net earnings of $8.0 million, or $2.27, compared to $7.5
million, or $2.09 per share, for 2020.
“I am very proud of all we accomplished in 2021 and
would like to thank our entire team for going above and beyond to
meet the needs of our customers despite the many challenges posed
by the ongoing pandemic, including funding 254 loans totaling $20.3
million in the second round of PPP,” said Robert W. Dumas,
Chairman, President and CEO. “The Company’s strong balance
sheet has allowed us to continue to support our communities through
the pandemic and is well positioned to capitalize on rising rates
as we look towards 2022. Most importantly, we remain
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,” said Mr. Dumas.
Total revenue decreased by $0.5 million, or 7%, in
the fourth quarter of 2021, compared to the fourth quarter of
2020.
Net interest income (tax-equivalent) was $6.2
million for the fourth quarter of 2021, a decrease of 3% compared
to $6.3 million for the fourth quarter of 2020. This decrease was
primarily due to net interest margin compression, partially offset
by balance sheet growth. Net interest margin (tax-equivalent)
decreased to 2.45% in the fourth quarter of 2021, compared to 2.81%
for the fourth quarter of 2020 primarily due to the lower interest
rate environment and changes in our asset mix resulting from the
significant increase in deposits from government stimulus and
relief programs and customers’ increased savings.
At December 31, 2021, the Company’s allowance for loan losses
was $4.9 million, or 1.08% of total loans, compared to $5.6
million, or 1.22% of total loans, at December 31, 2020. The Company
recorded no provision for loan losses in the fourth quarter of 2021
and 2020. The provision for loan losses is based upon various
estimates and judgments, including the absolute level of loans,
loan growth, credit quality and the amount of net charge-offs.
Except for one residential mortgage loan of $0.1 million at
December 31, 2021, we had no loans where we had granted loan
payment deferrals or other loan modifications, compared to $112.7
million, or 24% of total loans at June 30, 2020, the first
quarterly period we began offering loan modifications to assist
customers through the COVID-19 pandemic, and $32.3 million, or 7%
of total loans, at December 31, 2020.
Noninterest income was $1.0 million in the fourth quarter of
2021, a 27% decrease compared to $1.4 million for the fourth
quarter of 2020. The decrease in noninterest income was primarily
due to a decrease in mortgage lending income of $0.4 million as
refinance activity slowed in our primary market area.
Noninterest expense was $5.1 million in the fourth quarter of
2021 and 2020, reflecting a decrease of $0.3 million in various
expenses related to the redevelopment of the Company’s headquarters
in downtown Auburn. This decrease was offset by an increase in
other noninterest expense of $0.3 million.
Income tax expense was $0.1 million for the fourth quarter of
2021, compared to $0.4 million during fourth quarter of 2020. The
Company's effective tax rate for the fourth quarter of 2021 was
4.74%, compared to 17.92% in the fourth quarter of 2020. 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.
The Company paid cash dividends of $0.26 per share in the fourth
quarter of 2021, an increase of 2% from the same period in 2020.
The Company’s share repurchases of $1.6 million since December 31,
2020 resulted in 45,946 fewer outstanding common shares at December
31, 2021. At December 31, 2021, 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 effects of the COVID-19 pandemic and related government,
Federal Reserve monetary and regulatory actions, including the
effects of 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, interest rates (generally
and those applicable to our assets and liabilities), 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,
2020 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.
Reports Full
Year and Fourth Quarter Net Earnings |
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Financial Highlights (unaudited) |
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Quarter ended December 31, |
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Years ended December 31, |
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(Dollars in thousands, except per share amounts) |
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2021 |
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2020 |
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2021 |
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2020 |
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Results of Operations |
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Net interest income (a) |
$ |
6,152 |
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$ |
6,311 |
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$ |
24,460 |
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$ |
24,830 |
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Less: tax-equivalent adjustment |
|
115 |
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|
123 |
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|
470 |
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|
492 |
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Net interest income (GAAP) |
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6,037 |
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|
6,188 |
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23,990 |
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24,338 |
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Noninterest income |
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1,019 |
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|
1,403 |
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4,288 |
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|
5,375 |
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Total revenue |
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7,056 |
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|
7,591 |
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28,278 |
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29,713 |
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Provision for loan losses |
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— |
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— |
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(600 |
) |
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1,100 |
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Noninterest expense |
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5,092 |
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5,086 |
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19,433 |
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19,554 |
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Income tax expense |
|
93 |
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|
449 |
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|
1,406 |
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|
1,605 |
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Net earnings |
$ |
1,871 |
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$ |
2,056 |
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$ |
8,039 |
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$ |
7,454 |
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Per share data: |
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Basic and diluted net earnings: |
$ |
0.53 |
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$ |
0.58 |
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$ |
2.27 |
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$ |
2.09 |
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Cash dividends declared |
$ |
0.26 |
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$ |
0.255 |
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$ |
1.04 |
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$ |
1.02 |
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Weighted average shares outstanding: |
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3,524,311 |
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3,566,276 |
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3,545,310 |
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3,566,207 |
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Shares outstanding, at period end |
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3,520,485 |
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3,566,276 |
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3,520,485 |
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3,566,276 |
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Book value |
$ |
29.46 |
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$ |
30.20 |
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$ |
29.46 |
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$ |
30.20 |
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Common stock price: |
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High |
$ |
34.79 |
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$ |
43.00 |
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$ |
48.00 |
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$ |
63.40 |
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Low |
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31.32 |
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36.75 |
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31.32 |
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24.11 |
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Period-end |
$ |
32.30 |
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$ |
42.29 |
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$ |
32.30 |
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$ |
42.29 |
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To earnings ratio |
|
14.23 |
x |
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20.23 |
x |
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|
14.23 |
x |
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|
20.23 |
x |
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|
To book value |
|
110 |
% |
|
140 |
% |
|
110 |
% |
|
140 |
% |
Performance ratios: |
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Return on average equity (annualized): |
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7.07 |
% |
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7.63 |
% |
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7.54 |
% |
|
7.12 |
% |
Return on average assets (annualized): |
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0.70 |
% |
|
0.87 |
% |
|
0.78 |
% |
|
0.83 |
% |
Dividend payout ratio |
|
49.06 |
% |
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43.97 |
% |
|
45.81 |
% |
|
48.80 |
% |
Other financial data: |
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Net interest margin (a) |
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2.45 |
% |
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2.81 |
% |
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2.55 |
% |
|
2.92 |
% |
Effective income tax rate |
|
4.74 |
% |
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17.92 |
% |
|
14.89 |
% |
|
17.72 |
% |
Efficiency ratio (b) |
|
71.01 |
% |
|
65.93 |
% |
|
67.60 |
% |
|
64.74 |
% |
Asset Quality: |
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Nonperforming assets: |
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Nonperforming (nonaccrual) loans |
$ |
444 |
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$ |
534 |
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$ |
444 |
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$ |
534 |
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Total nonperforming assets |
$ |
444 |
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$ |
534 |
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$ |
444 |
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$ |
534 |
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Net charge-offs (recoveries) |
$ |
180 |
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|
$ |
(43 |
) |
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$ |
79 |
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|
$ |
(132 |
) |
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Allowance for loan losses as a % of: |
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Loans |
|
1.08 |
% |
|
1.22 |
% |
|
1.08 |
% |
|
1.22 |
% |
|
Nonperforming loans |
|
1,112 |
% |
|
1,052 |
% |
|
1,112 |
% |
|
1,052 |
% |
Nonperforming assets as a % of: |
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Loans and other real estate owned |
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0.10 |
% |
|
0.12 |
% |
|
0.10 |
% |
|
0.12 |
% |
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Total assets |
|
0.04 |
% |
|
0.06 |
% |
|
0.04 |
% |
|
0.06 |
% |
Nonperforming loans as a % of total loans |
|
0.10 |
% |
|
0.12 |
% |
|
0.10 |
% |
|
0.12 |
% |
Net charge-offs (recoveries) as a % of average loans |
|
0.16 |
% |
|
(0.04 |
)% |
|
0.02 |
% |
|
(0.03 |
)% |
Selected average balances: |
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|
|
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|
Securities |
$ |
414,061 |
|
|
$ |
325,102 |
|
|
$ |
383,502 |
|
|
$ |
297,449 |
|
Loans, net of unearned income |
|
455,726 |
|
|
|
466,704 |
|
|
|
458,087 |
|
|
|
462,561 |
|
Total assets |
|
1,073,564 |
|
|
|
944,439 |
|
|
|
1,025,348 |
|
|
|
900,645 |
|
Total deposits |
|
961,544 |
|
|
|
828,801 |
|
|
|
912,028 |
|
|
|
789,163 |
|
Total stockholders' equity |
|
105,925 |
|
|
|
107,791 |
|
|
|
106,578 |
|
|
|
104,734 |
|
Selected period end balances: |
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Securities |
$ |
421,891 |
|
|
$ |
335,177 |
|
|
$ |
421,891 |
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|
$ |
335,177 |
|
Loans, net of unearned income |
|
458,364 |
|
|
|
461,700 |
|
|
|
458,364 |
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|
|
461,700 |
|
Allowance for loan losses |
|
4,939 |
|
|
|
5,618 |
|
|
|
4,939 |
|
|
|
5,618 |
|
Total assets |
|
1,105,150 |
|
|
|
956,597 |
|
|
|
1,105,150 |
|
|
|
956,597 |
|
Total deposits |
|
994,243 |
|
|
|
839,792 |
|
|
|
994,243 |
|
|
|
839,792 |
|
Total stockholders' equity |
|
103,726 |
|
|
|
107,689 |
|
|
|
103,726 |
|
|
|
107,689 |
|
|
|
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|
(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. |
|
Reports Full
Year and Fourth Quarter Net Earnings |
|
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|
|
|
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|
|
Reconciliation
of GAAP to non-GAAP Measures (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended December 31, |
|
Years ended December 31, |
|
(Dollars in thousands, except per share amounts) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Net interest income, as reported (GAAP) |
$ |
6,037 |
$ |
6,188 |
$ |
23,990 |
$ |
24,338 |
|
Tax-equivalent adjustment |
|
115 |
|
123 |
|
470 |
|
492 |
|
Net interest income (tax-equivalent) |
$ |
6,152 |
$ |
6,311 |
$ |
24,460 |
$ |
24,830 |
|
|
|
|
|
|
|
|
|
|
|
|
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