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For additional information, contact:
David A. Hedges
President and CEO
(334) 821-9200 |
Press Release January 29, 2024
Auburn National Bancorporation, Inc. Reports
Fourth Quarter and Full Year Results
AUBURN, Alabama Auburn National Bancorporation (Nasdaq: AUBN) reported a net loss of $4.0 million, or $1.14 per share, for the fourth quarter of
2023. The quarterly loss reflects the sale of $117.6 million of available-for-sale securities for an after-tax loss of
$4.7 million or $1.36 per share. Proceeds of $111.3 million from the securities sale were used to repay high-cost wholesale funding and sell high-cost reciprocal deposits, with the remaining amounts held in cash to fund future loan growth,
the purchase of higher-yielding securities, and other banking operations. Although this balance sheet repositioning strategy resulted in a loss for the fourth quarter of 2023, it immediately improved the Companys tangible common equity ratio
or total equity to total asset ratio due to a smaller balance sheet and is expected to improve the Companys interest rate risk profile and future earnings. The Company estimates the earn-back period for the balance sheet repositioning to be
approximately 2.3 years.
By taking proactive measures to reposition our balance sheet, the Company will benefit from improved earnings in 2024 and
should recover the loss on sale of securities over a reasonable time period said David A. Hedges, President and CEO. While the interest rate environment remains challenging for the banking industry, our capital and liquidity remains
strong and we have reduced our risks to changes in market interest rates, and are well positioned to meet the needs of our customers said Mr. Hedges.
Net earnings for the fourth quarter of 2022 were $4.5 million or $1.27 per share. Non-routine items affecting the
fourth quarter of 2022 included a gain on sale of land and a one-time payroll tax credit provided by the CARES Act. The after-tax impact of these non-routine items improved net earnings by $3.6 million, or $1.02 per share.
Excluding the loss on sale of
securities related to the balance sheet repositioning strategy and the non-routine items described above, net earnings would have been $0.7 million, or $0.21 per share for the fourth quarter of 2023,
compared to net earnings of $0.9 million, or $0.25 per share, for the fourth quarter of 2022.
For the full year 2023, the Company reported net
earnings of $1.4 million, or $0.40 per share, compared to $10.3 million, or $2.95 per share, for 2022. Excluding the loss on sale of securities related to the balance sheet repositioning strategy and the
non-routine items described above, net earnings for the full year 2023 would have been $6.1 million, or $1.75 per share, compared to $6.7 million, or $1.92 per share for the full year 2022.
Net interest income (tax-equivalent) was $6.2 million for the fourth quarter of 2023, a decrease of 19% compared
to $7.6 million for the fourth quarter of 2022. This decrease was primarily due to a decline in the Companys net interest margin. The Companys net interest margin (tax-equivalent) was 2.65% in
the fourth quarter of 2023 compared to 3.27% in the fourth quarter of 2022. This decrease was primarily due to higher market interest rates, which increased our cost of funds, generally, and changes in our deposit mix to higher-cost interest bearing
deposits, which was partially offset by a more favorable asset mix and higher yields on interest earning assets. Average loans for the fourth quarter of 2023 were $550.9 million, a 12% increase from the fourth quarter of 2022.
Nonperforming assets were $0.9 million, or 0.09% of total assets, at December 31, 2023, compared to $1.2 million, or 0.12% of total assets, at
September 30, 2023 and $2.7 million, or 0.27% of total assets, at December 31, 2022. The decrease is primarily due to the resolution of one nonperforming loan during 2023, which was paid in full.
At December 31, 2023, the Companys allowance for credit losses was $6.9 million, or 1.23% of total loans, compared to $6.8 million, or
1.24% at September 30, 2023 and $5.8 million, or 1.14% of total loans, at December 31, 2022. The implementation of the accounting standard for current expected credit losses (CECL), increased our allowance for credit
losses by $1.0 million on January 1, 2023, or 0.20% of total loans, as a day one transition adjustment to the new accounting standard. For the full year 2023, increases in the allowance for credit losses due to changes in the composition
and balance of loans during 2023 were largely offset by reductions in the allowance for credit losses due to the resolution of collateral dependent nonperforming loans.