UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: January 29, 2020

 

 

AUBURN NATIONAL BANCORPORATION, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware		0-26486		63-0885779
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

100 North Gay Street, P.O. Drawer 3110, Auburn, Alabama 36831-3110

(Addresses of Principal Executive Offices, including Zip Code)

(334) 821-9200

(Registrant’s Telephone Number, including Area Code)

 

 

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)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01		AUBN		Nasdaq Global Market

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 January 29, 2020, reporting the Company’s financial results for the quarter and year ended December 31, 2019.

 

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 January 29, 2020

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.

 

Date: January 29, 2020

Exhibit 99.1

 

				For additional information, contact: Robert W. Dumas Chairman, President, and CEO (334) 821-9200

Press Release – January 29, 2020

Auburn National Bancorporation, Inc. Reports

Record Full Year Net Earnings of $9.7 million, or $2.72 per share

Record Quarterly Net Earnings of $2.7 million, or $0.75 per share

Fourth Quarter 2019 Results:

 

•

Earnings per share increased 14% compared to fourth quarter 2018

 

•

$1.7 million gain from the termination of a loan guarantee program operated by the State of Alabama

 

•

Net interest income (tax-equivalent) decreased by 4% compared to fourth quarter 2018

 

•

Average loans were $469.6 million, compared to $467.4 million in fourth quarter 2018

 

•

Negative provision for loan losses of $250 thousand

 

•

Nonperforming assets to total assets of 0.02%, compared to 0.04% in fourth quarter 2018

 

•

Other notable items include approximately $0.5 million of expense related to the planned redevelopment of the Company’s headquarters in downtown Auburn

AUBURN, Alabama – Auburn National Bancorporation (Nasdaq: AUBN) reported record quarterly net earnings of $2.7 million, or $0.75 per share, for the fourth quarter of 2019, compared to $2.4 million, or $0.66 per share, for the fourth quarter of 2018. For the full year 2019, the Company reported record net earnings of $9.7 million, or $2.72 per share for 2019, compared to $8.8 million, or $2.42 per share, for 2018.

“We are very pleased with the Company’s overall financial performance in 2019,” said Robert W. Dumas, Chairman, President, and CEO. “While we expect a challenging interest rate and competitive environment in 2020, economic conditions in our markets remain robust and we are optimistic that credit quality will continue to be relatively strong in 2020. Regardless of the operating environment, we are 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 in 2020 and beyond.”

Net interest income (tax-equivalent) was $6.4 million for the fourth quarter of 2019, a 4% decrease compared to $6.7 million for the fourth quarter of 2018. This decrease was primarily due to recent decreases in market interest rates. Average loans were relatively stable in the fourth quarter of 2019 when compared to the fourth quarter of 2018. The Company’s net interest margin (tax-equivalent) decreased to 3.27% in the fourth quarter of 2019, compared to 3.54% for the fourth quarter of 2018, as earning asset yields declined. Management anticipates this challenging rate environment will continue and the Company’s net interest income and margin will likely decrease in 2020 compared to 2019 as the Company’s ability to lower its deposit costs will likely continue to lag the current decrease in earning asset yields.

The Company recorded a negative provision for loan losses of $250 thousand for the fourth quarter of 2019, compared to no provision for loan losses for the fourth quarter of 2018. The negative provision was primarily related to a decline in total loans outstanding at December 31, 2019 and more specifically the construction and land development loan portfolio segment.

Noninterest income was $2.5 million in the fourth quarter of 2019, compared to $0.8 million for the fourth quarter of 2018. The increase was due to a $1.7 million payment received by the Company that resulted from the termination of a loan guarantee program operated by the State of Alabama.

Noninterest expense was $5.6 million in the fourth quarter of 2019, compared to $4.4 million for the fourth quarter of 2018. The increase was due to a $0.6 million increase in salaries and benefits expense and $0.5 million of various expenses related to the planned redevelopment of the Company’s headquarters in downtown Auburn, including professional fees, temporary relocation costs, and revised depreciation estimates. The Company expects it will incur additional expenses in 2020 related to this redevelopment project.

Income tax expense was $0.7 million for the fourth quarter of 2019, compared to $0.6 million for the fourth quarter of 2018 primarily due to increased earnings before taxes. The Company’s income tax expense for the fourth quarter of 2019 reflects an effective tax rate of 20.00%, compared to 19.81% in the fourth quarter of 2018.

The Company paid cash dividends of $0.25 per share in the fourth quarter of 2019. At December 31, 2019, our regulatory capital was well above the minimum amounts required to be “well capitalized” under regulatory standards.

About Auburn National Bancorporation

Auburn National Bancorporation, Inc. (the “Company”) is the parent company of AuburnBank (the “Bank”), with total assets of approximately $829 million. The Bank is an Alabama state-chartered bank that is a member of the Federal Reserve System and 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, including the costs of redeveloping our headquarters and the timing and receipt of rental income upon completion of the project, economic conditions 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, interest rates (generally and those applicable to our assets and liabilities), loan performance, nonperforming assets, other real estate owned, loan losses, charge-offs and recoveries, other-than-temporary impairments, collateral values, credit quality, asset sales, 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, 2019 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, including the presentation and calculation of the efficiency ratio. 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. 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/page 3

 

Financial Highlights (unaudited)

 

		Quarter ended December 31,								Years ended December 31,
(Dollars in thousands, except per share amounts)		2019				2018				2019				2018
Results of Operations
Net interest income (a)		$	6,406			$	6,699			$	26,621			$	26,183
Less: tax-equivalent adjustment			126				152				557				613
Net interest income (GAAP)			6,280				6,547				26,064				25,570
Noninterest income			2,458				842				5,494				3,325
Total revenue			8,738				7,389				31,558				28,895
Provision for loan losses			(250	)			—				(250	)			—
Noninterest expense			5,633				4,396				19,697				17,874
Income tax expense			671				593				2,370				2,187
Net earnings		$	2,684			$	2,400			$	9,741			$	8,834
Per share data:
Basic and diluted net earnings:		$	0.75			$	0.66			$	2.72			$	2.42
Cash dividends declared		$	0.25			$	0.24			$	1.00			$	0.96
Weighted average shares outstanding:			3,566,146				3,643,868				3,581,476				3,643,780
Shares outstanding, at period end			3,566,146				3,643,868				3,566,146				3,643,868
Book value		$	27.57			$	24.44			$	27.57			$	24.44
Common stock price:
High		$	53.90			$	41.50			$	53.90			$	53.50
Low			40.00				28.88				30.61				28.88
Period-end		$	53.00			$	31.66			$	53.00			$	31.66
To earnings ratio			19.49	x			13.08	x			19.49	x			13.08	x
To book value			192	%			130	%			192	%			130	%
Performance ratios:
Return on average equity (annualized):			10.86	%			11.05	%			10.35	%			10.14	%
Return on average assets (annualized):			1.30	%			1.20	%			1.18	%			1.08	%
Dividend payout ratio			33.33	%			36.36	%			36.76	%			39.67	%
Other financial data:
Net interest margin (a)			3.27	%			3.54	%			3.43	%			3.40	%
Effective income tax rate			20.00	%			19.81	%			19.57	%			19.84	%
Efficiency ratio (b)			63.55	%			58.29	%			61.33	%			60.57	%
Asset Quality:
Nonperforming assets:
Nonperforming (nonaccrual) loans		$	186			$	178			$	186			$	178
Other real estate owned			—				172				—				172
Total nonperforming assets		$	186			$	350			$	186			$	350
Net charge-offs (recoveries)		$	154			$	(5	)		$	137			$	(33	)
Allowance for loan losses as a % of:
Loans			0.95	%			1.00	%			0.95	%			1.00	%
Nonperforming loans			2,358	%			2,691	%			2,358	%			2,691	%
Nonperforming assets as a % of:
Loans and other real estate owned			0.04	%			0.07	%			0.04	%			0.07	%
Total assets			0.02	%			0.04	%			0.02	%			0.04	%
Nonperforming loans as a % of total loans			0.04	%			0.04	%			0.04	%			0.04	%
Net charge-offs (recoveries) as a % of average loans (c)			0.13	%			—	%			0.03	%			(0.01	)%
Selected average balances:
Securities		$	249,106			$	240,334			$	245,038			$	252,550
Loans, net of unearned income			469,579				467,380				473,213				456,345
Total assets			827,684				802,555				826,545				819,529
Total deposits			723,557				711,043				727,723				726,277
Long-term debt			—				—				—				1,022
Total stockholders’ equity			98,887				86,881				94,151				87,107
Selected period end balances:
Securities		$	235,902			$	239,801			$	235,902			$	239,801
Loans, net of unearned income			460,901				476,908				460,901				476,908
Allowance for loan losses			4,386				4,790				4,386				4,790
Total assets			828,570				818,077				828,570				818,077
Total deposits			724,152				724,193				724,152				724,193
Total stockholders’ equity			98,328				89,055				98,328				89,055

 

 

(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.

(c)	Net charge-offs (recoveries) are annualized.

Reports Full Year and Fourth Quarter Net Earnings/page 4

 

Reconciliation of GAAP to non-GAAP Measures (unaudited):

 

		Quarter ended December 31,								Years ended December 31,
(Dollars in thousands, except per share amounts)		2019				2018				2019				2018
Net interest income, as reported (GAAP)		$	6,280			$	6,547			$	26,064			$	25,570
Tax-equivalent adjustment			126				152				557				613
Net interest income (tax-equivalent)		$	6,406			$	6,699			$	26,621			$	26,183