UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
The information, including the exhibits attached hereto, in this Current Report on Form 8-K is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed by the Company pursuant to the Securities Act of 1933, as amended, or into any other filing or document made by the Company pursuant to the Securities Exchange Act of 1934, as amended, except as otherwise expressly stated in any such filing.
Attached and incorporated herein by reference as Exhibit 99.1 is a copy of the press release of Auburn National Bancorporation, Inc., dated July 25, 2023, reporting the Company’s financial results for the quarter and six months ended June 30, 2023.
Item 9.01. | Financial Statements, Pro Forma Financial Information and Exhibits. |
(c) Exhibits. The following exhibit is furnished herewith:
Exhibit No. |
Exhibit Description | |
99.1 | Press Release, dated July 25, 2023 | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AUBURN NATIONAL BANCORPORATION, INC. |
(Registrant) |
/s/ David A. Hedges |
David A. Hedges |
President and CEO |
Date: July 25, 2023
Exhibit 99.1
For additional information, contact: | ||||
David A. Hedges | ||||
President and CEO | ||||
(334) 821-9200 | ||||
Press Release July 25, 2023 |
Auburn National Bancorporation, Inc. Reports Second Quarter Net Earnings
Second Quarter 2023 Highlights:
| Total revenues increased 6% from Q2 2022 |
| Net interest income (tax-equivalent) increased 8% from Q2 2022 |
| Net interest margin (tax-equivalent) was 3.03%, compared to 3.17% in Q1 2023 and 2.60% in Q2 2022 |
| Cost of funds was 93 basis points, compared to 71 basis points in Q1 2023 and 32 basis points in Q2 2022 |
| Average loans were $512.1 million, a 19% increase from Q2 2022 |
| Negative provision for credit losses was $0.4 million compared to none in Q2 2022 |
| Period end total deposits were $950.7 million, compared to $939.2 for Q1 2023, and $950.3 million for Q4 2022 |
AUBURN, Alabama 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 Companys 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 Companys net interest margin. The Companys 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 Companys 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 Companys 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 Companys effective tax rate for the second quarter of 2023 was 13.00%, compared to 16.77% in the second quarter of 2022. The Companys effective income tax rate is principally affected by tax-exempt earnings from the Companys 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 Companys 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 Companys 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 Banks capital for regulatory capital purposes. At June 30, 2023, the Companys 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 Companys securities are classified as available-for-sale and not held-to-maturity. Therefore, any changes in the fair value of the Companys 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 Companys 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 Banks 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 Reserves Treasury and mortgage-backed securities holdings and increases in the Federal Reserves 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 Companys 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 Second Quarter Net Earnings/page 4
Financial Highlights (unaudited)
Quarter ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
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Results of Operations |
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Net interest income (a) |
$ | 6,994 | $ | 6,484 | $ | 14,211 | $ | 12,674 | ||||||||
Less: tax-equivalent adjustment |
106 | 110 | 214 | 222 | ||||||||||||
|
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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 | ||||||||||||
|
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Net earnings |
$ | 1,928 | $ | 1,801 | $ | 3,892 | $ | 3,882 | ||||||||
|
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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 | ||||||||
|
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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. |
Reports Second Quarter Net Earnings/page 5
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 | ||||||||
Document and Entity Information |
Jul. 25, 2023 |
---|---|
Cover [Abstract] | |
Entity Registrant Name | AUBURN NATIONAL BANCORPORATION, INC |
Amendment Flag | false |
Entity Central Index Key | 0000750574 |
Document Type | 8-K |
Document Period End Date | Jul. 25, 2023 |
Entity Incorporation State Country Code | DE |
Entity File Number | 0-26486 |
Entity Tax Identification Number | 63-0885779 |
Entity Address, Address Line One | 100 North Gay Street |
Entity Address, Address Line Two | P.O. Drawer 3110 |
Entity Address, City or Town | Auburn |
Entity Address, State or Province | AL |
Entity Address, Postal Zip Code | 36831-3110 |
City Area Code | (334) |
Local Phone Number | 821-9200 |
Written Communications | false |
Soliciting Material | false |
Pre Commencement Tender Offer | false |
Pre Commencement Issuer Tender Offer | false |
Security 12b Title | Common Stock, par value $0.01 |
Trading Symbol | AUBN |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
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