Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net
earnings of $2.0 million, or $0.57 per share, for the third quarter
of 2022, compared to $1.9 million, or $0.53 per share, for the
third quarter of 2021. Net earnings for the first nine months of
2022 were $5.9 million, or $1.67 per share, compared to $6.2
million, or $1.74 per share, for the first nine months of 2021.
“The Company’s third quarter results reflect
strong growth in total revenue driven by increased net interest
income. The 20% increase in net interest income on a tax-equivalent
basis, compared to the third quarter of 2021, was primarily due to
improvement in net interest margin,” said Robert W. Dumas,
Chairman, President and CEO.
“The Company experienced improved loan growth
during the third quarter of 2022 as loans increased 8% compared to
June 30, 2022. We also grew our unfunded loan commitments in the
third quarter, which we expect to support funded loan growth in
future quarters,” continued Mr. Dumas.
Total revenue increased approximately 15% in the
third quarter of 2022, compared to the third quarter of 2021,
primarily due to net interest income growth.
Net interest income (tax-equivalent) was $7.4 million for the
third quarter of 2022, a 20% increase compared to $6.2 million for
the third quarter of 2021. This increase was primarily due to
recent increases in market interest rates, and also by loan growth.
Since February of 2022, the Federal Reserve has increased the
target federal funds range by 300 basis points. Further increases
in the target federal funds rate are currently expected due to
inflation above the Federal Reserve’s target. The Company’s net
interest margin (tax-equivalent) was 3.00% in the third quarter of
2022 compared to 2.51% in the third quarter of 2021.
At September 30, 2022, the Company’s allowance for loan losses
was $5.0 million, or 1.05% of total loans, compared to $4.9
million, or 1.08% of total loans, at December 31, 2021, and $5.1
million, or 1.13% of total loans, at September 30, 2021.
The Company recorded a provision for loan losses during the
third quarter of 2022 of $0.3 million, compared to no provision for
loan losses during the third quarter 2021. The provision for loan
losses was primarily related to loan growth during the third
quarter of 2022.
Noninterest income was $0.9 million in the third quarter of
2022, compared to $1.0 million in the third quarter of 2021. The
decrease in noninterest income was primarily due to a decrease in
mortgage lending income of $0.1 million as market interest rates on
mortgage loans reduced mortgage originations.
Noninterest expense was $5.4 million in the third quarter of
2022, compared to $4.8 million for the third quarter of 2021. The
increase in noninterest expense was primarily due to an increase in
net occupancy and equipment expense of $0.3 million related to the
Company’s new headquarters, which opened in June 2022, and other
noninterest expenses of $0.2 million.
Income tax expense was $0.4 million for the third quarter of
2022 and 2021, respectively. The Company's effective tax rate for
the third quarter of 2022 was 17.78%, compared to 17.07% in the
third quarter of 2021. The Company’s effective income tax rate is
principally affected by tax-exempt earnings from the Company’s
investment in municipal securities, bank-owned life insurance, and
New Markets Tax Credits.
At September 30, 2022, the Company's consolidated stockholders'
equity was $59.8 million or $17.06 per share, compared to $103.7
million, or $29.46 per share, at December 31, 2021, and $104.9
million, or $29.73 per share, at September 30, 2021. The decrease
from December 31, 2021 was primarily driven by an other
comprehensive loss due to the change in unrealized gains/losses on
securities available-for-sale, net of tax, in the first nine months
of 2022, of $46.6 million. The increase in the unrealized loss on
securities was primarily due to increases in market interest rates
driven by changes in the Federal Reserve’s target federal funds
rate. These unrealized losses do not affect the Bank’s capital for
regulatory capital purposes. At September 30, 2022, the Company’s
equity to total assets ratio was 5.74%, compared to 9.39% at
December 31, 2021, and 9.84% at September 30, 2021.
The Company paid cash dividends of $0.265 per share in the third
quarter of 2022, an increase of 2% from the same period in 2021.
The Company repurchased 24,133 shares since September 30, 2021,
including 15,280 shares repurchased for $0.5 million in 2022. At
September 30, 2022, 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 deposit and wholesale liabilities, net
interest margin, yields on earning assets, securities valuations
and performance, effects of inflation, including Federal Reserve
tightening 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 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, 2021 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.
|
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|
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Financial Highlights (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended September 30, |
|
|
Nine months ended September 30, |
|
(Dollars in thousands, except per share amounts) |
|
2022 |
|
|
|
2021 |
|
|
|
|
2022 |
|
|
|
|
2021 |
|
|
Results of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (a) |
$ |
7,360 |
|
|
$ |
6,158 |
|
|
|
$ |
20,034 |
|
|
|
$ |
18,308 |
|
|
Less: tax-equivalent adjustment |
|
117 |
|
|
|
117 |
|
|
|
|
339 |
|
|
|
|
355 |
|
|
|
Net interest income (GAAP) |
|
7,243 |
|
|
|
6,041 |
|
|
|
|
19,695 |
|
|
|
|
17,953 |
|
|
Noninterest income |
|
852 |
|
|
|
975 |
|
|
|
|
2,608 |
|
|
|
|
3,288 |
|
|
|
Total revenue |
|
8,095 |
|
|
|
7,016 |
|
|
|
|
22,303 |
|
|
|
|
21,241 |
|
|
Provision for loan losses |
|
250 |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(600 |
) |
|
Noninterest expense |
|
5,415 |
|
|
|
4,755 |
|
|
|
|
15,374 |
|
|
|
|
14,361 |
|
|
Income tax expense |
|
432 |
|
|
|
386 |
|
|
|
|
1,049 |
|
|
|
|
1,313 |
|
|
Net earnings |
$ |
1,998 |
|
|
$ |
1,875 |
|
|
|
$ |
5,880 |
|
|
|
$ |
6,167 |
|
|
|
|
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|
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Per share data: |
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|
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|
|
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Basic and diluted net earnings: |
$ |
0.57 |
|
|
$ |
0.53 |
|
|
|
$ |
1.67 |
|
|
|
$ |
1.74 |
|
|
Cash dividends declared |
$ |
0.265 |
|
|
$ |
0.26 |
|
|
|
$ |
0.795 |
|
|
|
$ |
0.78 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
3,507,318 |
|
|
|
3,536,320 |
|
|
|
|
3,513,068 |
|
|
|
|
3,552,387 |
|
|
Shares outstanding, at period end |
|
3,505,355 |
|
|
|
3,529,338 |
|
|
|
|
3,505,355 |
|
|
|
|
3,529,338 |
|
|
Book value |
$ |
17.06 |
|
|
$ |
29.73 |
|
|
|
$ |
17.06 |
|
|
|
$ |
29.73 |
|
|
Common stock price: |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
High |
$ |
29.02 |
|
|
$ |
35.36 |
|
|
|
$ |
34.49 |
|
|
|
$ |
48.00 |
|
|
|
Low |
|
23.02 |
|
|
|
33.25 |
|
|
|
|
23.02 |
|
|
|
|
33.25 |
|
|
|
Period-end: |
|
23.02 |
|
|
|
33.80 |
|
|
|
|
23.02 |
|
|
|
|
33.80 |
|
|
|
|
To earnings ratio |
|
10.46 |
x |
|
|
14.57 |
|
x |
|
|
10.46 |
|
x |
|
|
14.57 |
|
x |
|
|
To book value |
|
135 |
% |
|
114 |
|
% |
|
135 |
|
% |
|
114 |
|
% |
Performance ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity (annualized) |
|
10.35 |
% |
|
7.01 |
|
% |
|
8.76 |
|
% |
|
7.70 |
|
% |
Return on average assets (annualized) |
|
0.75 |
% |
|
0.72 |
|
% |
|
0.72 |
|
% |
|
0.81 |
|
% |
Dividend payout ratio |
|
46.49 |
% |
|
49.06 |
|
% |
|
47.60 |
|
% |
|
44.83 |
|
% |
Other financial data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (a) |
|
3.00 |
% |
|
2.51 |
|
% |
|
2.67 |
|
% |
|
2.59 |
|
% |
Effective income tax rate |
|
17.78 |
% |
|
17.07 |
|
% |
|
15.14 |
|
% |
|
17.55 |
|
% |
Efficiency ratio (b) |
|
65.94 |
% |
|
66.66 |
|
% |
|
67.90 |
|
% |
|
66.50 |
|
% |
Asset Quality: |
|
|
|
|
|
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|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
347 |
|
|
$ |
486 |
|
|
|
$ |
347 |
|
|
|
$ |
486 |
|
|
|
|
Total nonperforming assets |
$ |
347 |
|
|
$ |
486 |
|
|
|
$ |
347 |
|
|
|
$ |
486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Net recoveries |
$ |
— |
|
|
$ |
(12 |
) |
|
|
$ |
(27 |
) |
|
|
$ |
(101 |
) |
|
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Allowance for loan losses as a % of: |
|
|
|
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|
|
|
|
|
|
|
|
Loans |
|
1.05 |
% |
|
1.13 |
|
% |
|
1.05 |
|
% |
|
1.13 |
|
% |
|
Nonperforming loans |
|
1,431 |
% |
|
1,053 |
|
% |
|
1,431 |
|
% |
|
1,053 |
|
% |
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.07 |
% |
|
0.11 |
|
% |
|
0.07 |
|
% |
|
0.11 |
|
% |
|
Total assets |
|
0.03 |
% |
|
0.05 |
|
% |
|
0.03 |
|
% |
|
0.05 |
|
% |
Nonperforming loans as a % of total loans |
|
0.07 |
% |
|
0.11 |
|
% |
|
0.07 |
|
% |
|
0.11 |
|
% |
Annualized net recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a % of average loans |
|
— |
% |
|
(0.01 |
) |
% |
|
(0.01 |
) |
% |
|
(0.03 |
) |
% |
Selected average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
432,393 |
|
|
$ |
395,529 |
|
|
|
$ |
431,629 |
|
|
|
$ |
373,203 |
|
|
Loans, net of unearned income |
|
457,722 |
|
|
|
452,668 |
|
|
|
|
442,081 |
|
|
|
|
458,882 |
|
|
Total assets |
|
1,069,973 |
|
|
|
1,040,985 |
|
|
|
|
1,092,216 |
|
|
|
|
1,009,131 |
|
|
Total deposits |
|
987,614 |
|
|
|
927,368 |
|
|
|
|
996,900 |
|
|
|
|
895,342 |
|
|
Total stockholders' equity |
$ |
77,191 |
|
|
$ |
106,936 |
|
|
|
$ |
89,544 |
|
|
|
$ |
106,798 |
|
|
Selected period end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
411,538 |
|
|
$ |
407,474 |
|
|
|
$ |
411,538 |
|
|
|
$ |
407,474 |
|
|
Loans, net of unearned income |
|
474,035 |
|
|
|
453,232 |
|
|
|
|
474,035 |
|
|
|
|
453,232 |
|
|
Allowance for loan losses |
|
4,966 |
|
|
|
5,119 |
|
|
|
|
4,966 |
|
|
|
|
5,119 |
|
|
Total assets |
|
1,042,559 |
|
|
|
1,065,871 |
|
|
|
|
1,042,559 |
|
|
|
|
1,065,871 |
|
|
Total deposits |
|
977,938 |
|
|
|
954,971 |
|
|
|
|
977,938 |
|
|
|
|
954,971 |
|
|
Total stockholders' equity |
$ |
59,793 |
|
|
$ |
104,929 |
|
|
|
$ |
59,793 |
|
|
|
$ |
104,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net interest income, as reported (GAAP) |
$ |
7,243 |
|
$ |
6,041 |
|
$ |
19,695 |
|
$ |
17,953 |
|
Tax-equivalent adjustment |
|
117 |
|
|
117 |
|
|
339 |
|
|
355 |
|
Net interest income (tax-equivalent) |
$ |
7,360 |
|
$ |
6,158 |
|
$ |
20,034 |
|
$ |
18,308 |
|
For additional information, contact:Robert W. DumasChairman,
President and CEO(334) 821-9200
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