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: July 30, 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 July 30, 2020, reporting the Company’s financial results for the quarter and six months ended June 30, 2020.

 

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 30, 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.

 

AUBURN NATIONAL BANCORPORATION, INC.
(Registrant)
/s/ Robert W. Dumas    
Robert W. Dumas    
Chairman, President and CEO    

Date: July 30, 2020

EX-99.1

Exhibit 99.1

 

LOGO  

For additional information, contact:

Robert W. Dumas

Chairman, President and CEO

(334) 821-9200

Press Release – July 30, 2020

Auburn National Bancorporation, Inc. Reports Second Quarter Net Earnings

Second Quarter 2020 Results:

 

   

Net earnings of $1.7 million, compared to $2.3 million for Q2 2019

 

   

Earnings per share of $0.47 per share, compared to $0.64 per share for Q2 2019

 

   

Provision for loan losses of $450 thousand, compared to none for Q2 2019

 

   

Allowance for loan losses to total loans of 1.14%, compared to 0.95% at year-end 2019

 

   

$36.5 million in Paycheck Protection Program loans as of June 30, 2020

AUBURN, Alabama – Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net earnings of $1.7 million, or $0.47 per share, for the second quarter of 2020, compared to $2.3 million, or $0.64 per share, for the second quarter of 2019. Net earnings for the first six months of 2020 were $3.5 million, or $0.97 per share, compared to $4.9 million, or $1.35 per share, for the first six months of 2019.

“Our immediate focus remains on the health, wellbeing, and safety of our employees, customers, and our communities. We continue to serve customers through drive-thru locations and have begun a phased approach to opening previously closed branches by guidance from the CDC, State Departments of Health and other governing bodies. Despite a challenging operating environment due to COVID-19, I am very pleased with our organization’s response,” said Robert W. Dumas, Chairman, President, and CEO.

“Our participation in the Paycheck Protection Program was a valuable source of support for our customers and communities. Through June 30, 2020, we funded $36.5 million in loans for our customers, which helped support approximately 5,500 employees in our markets.

“While a great deal of uncertainty remains regarding the duration of the pandemic, we believe the Company’s strong balance sheet is well positioned to continue supporting our customers and communities through this crisis,” said Mr. Dumas.

Net interest income (tax-equivalent) was $6.2 million for the second quarter of 2020, a decrease of 8% compared to $6.7 million for the second quarter of 2019. This decrease was primarily due to the lower rate environment, including a 150 basis point reduction in the Fed Funds rate that occurred late in the first quarter of 2020.

Net interest margin (tax-equivalent) decreased to 2.95% in the second quarter of 2020, compared to 3.50% for the second quarter of 2019 primarily due to the lower interest rate environment and changes in our asset mix resulting from the significant short-term liquidity increase in customer deposits.

At June 30, 2020, the Company’s allowance for loan losses was $5.3 million, or 1.14% of total loans, compared to $4.4 million, or 0.95% of total loans, at December 31, 2019 and $4.9 million, or 1.02% of total loans, at June 30, 2019. At June 30, 2020, the Company’s allowance for loan losses was 1.24% of total loans, excluding PPP loans.


The provision for loan losses was $450 thousand for the second quarter of 2020, compared to no provision for loan losses during the second quarter of 2019. The increase in the provision for loan losses was related to adverse changes in economic conditions driven by the COVID-19 pandemic, including higher unemployment in our primary market area. The provision for loan losses is based upon various estimates and judgments, including the absolute level of loans, economic conditions, loan growth, credit quality and the amount of net charge-offs.

Through June 30, 2020, we have granted loan payment deferrals or payments of interest only on loans totaling $112.7 million, or 24% of total loans. In addition, we have identified certain commercial sectors with enhanced risk resulting from the impact of COVID-19. Loans within these sectors represent 68% of the Company’s total COVID-19 related modifications at June 30, 2020. See table below for a summary of loans outstanding for these sectors at June 30, 2020.

 

     Portfolio Segment                
(In thousands)    Commercial
and industrial
     Construction
and land
development
     Commercial
real estate
     Total      % of Total
Loans
 

June 30, 2020:

              

Hotel/motel

   $ 1,566        8,536        43,183      $ 52,472        11

Shopping centers

     19               33,872        33,891        7  

Retail, excluding shopping centers

     428        161        17,725        18,314        4  

Restaurants

     1,562               13,605        15,167        4  
                                              

Total

   $ 3,575        8,697        108,385      $       119,844        26
                                              

The Company extended a total of $36.5 million in loans to 422 small businesses under the Small Business Administration’s Paycheck Protection Program during the second quarter of 2020. We collected approximately $1.5 million in fees related to our PPP loans, which will be recognized net of related costs, as a yield adjustment over the life of the underlying PPP loans.

Noninterest income was $1.4 million in the second quarter of 2020 and $0.9 million in the second quarter of 2019. The increase was primarily due to an increase in mortgage lending income as lower interest rates for mortgage loans positively affected refinance activity and pricing margins improved.

Noninterest expense was $5.0 million in the second quarter of 2020 compared to $4.6 million during the second quarter of 2019. The increase was mainly due to $0.5 million of various expenses related to the redevelopment of the Company’s headquarters in downtown Auburn, including revised depreciation estimates and temporary relocation costs.

Income tax expense was $0.4 million for the second quarter of 2020 compared to $0.5 million during second quarter of 2019. The Company’s effective tax rate for the second quarter of 2020 was 17.93%, compared to 19.14% in the second quarter of 2019.

The Company paid cash dividends of $0.255 per share in the second quarter of 2020, an increase of 2% from the same period in 2019. At March 31, 2020, 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 $943 million. 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, including 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, interest rates (generally and those applicable to our assets and liabilities), loan performance, loan deferrals, 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, 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, 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 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)

     2020       2019                2020       2019  

Results of Operations

           

Net interest income (a)

   $ 6,197     $ 6,742        $ 12,529     $ 13,508  

Less: tax-equivalent adjustment

     127       145          247       291  
                                           

Net interest income (GAAP)

     6,070       6,597          12,282       13,217  

Noninterest income

     1,363       885          2,598       2,045  
                                           

Total revenue

     7,433       7,482          14,880       15,262  

Provision for loan losses

     450                850        

Noninterest expense

     4,959       4,629          9,815       9,240  

Income tax expense

     363       546          753       1,172  
                                           

Net earnings

   $ 1,661     $ 2,307        $ 3,462     $ 4,850  
                                           

Per share data:

           

Basic and diluted net earnings:

   $ 0.47     $ 0.64        $ 0.97     $ 1.35  

Cash dividends declared

   $ 0.255     $ 0.25        $ 0.51     $ 0.50  

Weighted average shares outstanding:

           

Basic and diluted

     3,566,166       3,577,409          3,566,156       3,595,972  

Shares outstanding, at period end

     3,566,176       3,571,828          3,566,176       3,571,828  

Book value

   $ 29.53     $ 26.34        $ 29.53     $ 26.34  

Common stock price:

           

High

   $ 63.40     $ 39.55        $ 63.40     $ 39.55  

Low

     36.81       31.06          24.11       30.61  

Period-end:

     57.09       33.50          57.09       33.50  

To earnings ratio

     24.29x       13.19x          24.29x       13.19x  

To book value

     193     127        193     127

Performance ratios:

           

Return on average equity (annualized)

     6.34     10.00        6.78     10.65

Return on average assets (annualized)

     0.74     1.12        0.80     1.18

Dividend payout ratio

     54.26     39.06        52.58     37.04

Other financial data:

           

Net interest margin (a)

     2.95     3.50        3.09     3.52

Effective income tax rate

     17.93     19.14        17.86     19.46

Efficiency ratio (b)

     65.60     60.69        64.88     59.41

Asset Quality:

           

Nonperforming assets:

           

Nonperforming (nonaccrual) loans

   $ 678     $ 131        $ 678     $ 131  

Other real estate owned

           303                303  
                                           

Total nonperforming assets

   $ 678     $ 434        $ 678     $ 434  
                                           

Net charge-offs (recoveries)

   $ 9     $ (43      $ (72   $ (61

Allowance for loan losses as a % of:

           

Loans

     1.14     1.02        1.14     1.02

Nonperforming loans

     783     3,703        783     3,703

Nonperforming assets as a % of:

           

Loans and other real estate owned

     0.15     0.09        0.15     0.09

Total assets

     0.07     0.05        0.07     0.05

Nonperforming loans as a % of total loans

     0.15     0.03        0.15     0.03

Annualized net charge-offs (recoveries) as a % of average loans

     0.01     (0.04 )%         (0.03 )%      (0.03 )% 


Selected average balances:

              

Securities

   $     291,333      $     243,784         $     274,325      $     241,914  

Loans, net of unearned income

     466,971        473,281           459,091        475,297  

Total assets

     893,720        821,706           866,222        824,409  

Total deposits

     782,381        725,263           646,899        728,881  

Total stockholders’ equity

   $ 104,820      $ 92,272         $ 102,190      $ 91,110  

Selected period end balances:

              

Securities

   $ 302,193      $ 248,813         $ 302,193      $ 248,813  

Loans, net of unearned income

     464,274        476,061           464,274        476,061  

Allowance for loan losses

     5,308        4,851           5,308        4,851  

Total assets

     942,887        839,178           942,887        839,178  

Total deposits

     829,810        740,501           829,810        740,501  

Total stockholders’ equity

   $ 105,299      $ 94,065         $ 105,299      $ 94,065  
                                              

(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.


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)

     2020        2019                 2020        2019  

Net interest income, as reported (GAAP)

   $ 6,070      $ 6,597         $ 12,282      $ 13,217  

Tax-equivalent adjustment

     127        145           247        291  
                                              

Net interest income (tax-equivalent)

   $     6,197      $     6,742         $     12,529      $     13,508