77.60000750574--12-312020Q3False0.010.01200000--0.010.01850000039571350.2550.75YesYes0.250.765 0000750574 2020-09-30 0000750574 2019-12-31 0000750574 2020-01-01 2020-09-30 0000750574 2019-01-01 2019-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2020-06-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2020-06-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-06-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-06-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2020-06-30 0000750574 2020-06-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2019-01-01 2019-09-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2019-01-01 2019-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2019-01-01 2019-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2019-01-01 2019-09-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2019-01-01 2019-09-30 0000750574 2020-07-01 2020-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2020-07-01 2020-09-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2020-07-01 2020-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-07-01 2020-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-07-01 2020-09-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2020-07-01 2020-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2020-09-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2020-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-09-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2020-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2019-09-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2019-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2019-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2019-09-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2019-09-30 0000750574 2019-09-30 0000750574 us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000750574 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-09-30 0000750574 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-09-30 0000750574 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-09-30 0000750574 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000750574 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0000750574 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0000750574 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0000750574 aubn:CommercialAndIndustrialLoansMember 2019-12-31 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2019-12-31 0000750574 aubn:CommercialRealEstateOwnerOccupiedLoansMember 2019-12-31 0000750574 aubn:CommercialRealEstateMultifamilyMember 2019-12-31 0000750574 aubn:CommercialRealEstateOtherLoansMember 2019-12-31 0000750574 aubn:CommercialRealEstateLoansTotalMember 2019-12-31 0000750574 aubn:ResidentialRealEstateConsumerMortgageLoansMember 2019-12-31 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2019-12-31 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2019-12-31 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2019-12-31 0000750574 aubn:CommercialRealEstateOwnerOccupiedLoansMember 2020-09-30 0000750574 aubn:CommercialRealEstateMultifamilyMember 2020-09-30 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-09-30 0000750574 aubn:ResidentialRealEstateConsumerMortgageLoansMember 2020-09-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-09-30 0000750574 us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000750574 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000750574 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000750574 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000750574 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-09-30 0000750574 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-31 0000750574 us-gaap:FairValueMeasurementsNonrecurringMember aubn:MortgageServicingRightsMember 2020-09-30 0000750574 us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000750574 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000750574 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000750574 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000750574 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-09-30 0000750574 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-09-30 0000750574 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-09-30 0000750574 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-09-30 0000750574 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000750574 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000750574 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000750574 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000750574 2019-07-01 2019-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2018-12-31 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2018-12-31 0000750574 aubn:CommercialRealEstateLoansTotalMember 2018-12-31 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2018-12-31 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2018-12-31 0000750574 2018-12-31 0000750574 2019-01-01 2019-06-30 0000750574 aubn:CommercialRealEstateOwnerOccupiedLoansMember 2019-01-01 2019-06-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2019-01-01 2019-06-30 0000750574 us-gaap:CommonStockMember 2018-12-31 0000750574 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000750574 us-gaap:RetainedEarningsMember 2018-12-31 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000750574 us-gaap:TreasuryStockMember 2018-12-31 0000750574 us-gaap:CommonStockMember 2019-06-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000750574 us-gaap:RetainedEarningsMember 2019-06-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000750574 us-gaap:TreasuryStockMember 2019-06-30 0000750574 us-gaap:CommonStockMember 2019-12-31 0000750574 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000750574 us-gaap:RetainedEarningsMember 2019-12-31 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000750574 us-gaap:TreasuryStockMember 2019-12-31 0000750574 us-gaap:CommonStockMember 2020-06-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0000750574 us-gaap:RetainedEarningsMember 2020-06-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0000750574 us-gaap:TreasuryStockMember 2020-06-30 0000750574 aubn:CommercialRealEstateHotelMotelMember 2020-09-30 0000750574 aubn:CommercialRealEstateHotelMotelMember 2019-12-31 0000750574 us-gaap:FairValueMeasurementsNonrecurringMember aubn:ImpairedLoansMember 2019-12-31 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember aubn:DiscountedCashFlowDiscountRateMember srt:WeightedAverageMember 2019-12-31 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember srt:WeightedAverageMember aubn:DiscountedCashFlowPrepaymentSpeedMember 2019-12-31 0000750574 us-gaap:FairValueMeasurementsNonrecurringMember aubn:ImpairedLoansMember srt:WeightedAverageMember aubn:AppraisalAppraisalDiscountMember 2019-12-31 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember aubn:DiscountedCashFlowDiscountRateMember srt:MinimumMember 2020-09-30 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember aubn:DiscountedCashFlowDiscountRateMember srt:MaximumMember 2020-09-30 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember aubn:DiscountedCashFlowDiscountRateMember srt:WeightedAverageMember 2020-09-30 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember aubn:DiscountedCashFlowPrepaymentSpeedMember srt:MinimumMember 2020-09-30 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember aubn:DiscountedCashFlowPrepaymentSpeedMember srt:MaximumMember 2020-09-30 0000750574 aubn:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember srt:WeightedAverageMember aubn:DiscountedCashFlowPrepaymentSpeedMember 2020-09-30 0000750574 2019-06-30 0000750574 aubn:CommercialRealEstateOwnerOccupiedLoansMember 2019-07-01 2019-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2019-07-01 2019-09-30 0000750574 us-gaap:CommonStockMember 2020-09-30 0000750574 us-gaap:USTreasuryAndGovernmentMember 2020-09-30 0000750574 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2020-09-30 0000750574 us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-09-30 0000750574 us-gaap:USTreasuryAndGovernmentMember 2019-12-31 0000750574 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-12-31 0000750574 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-12-31 0000750574 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0000750574 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0000750574 us-gaap:TreasuryStockMember 2020-07-01 2020-09-30 0000750574 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000750574 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000750574 us-gaap:TreasuryStockMember 2019-07-01 2019-09-30 0000750574 us-gaap:CommonStockMember 2019-09-30 0000750574 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0000750574 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0000750574 us-gaap:TreasuryStockMember 2020-01-01 2020-09-30 0000750574 us-gaap:CommonStockMember 2019-01-01 2019-09-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0000750574 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0000750574 us-gaap:TreasuryStockMember 2019-01-01 2019-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2020-01-01 2020-09-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2020-01-01 2020-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-01-01 2020-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-01-01 2020-09-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2020-01-01 2020-09-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2019-06-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2019-06-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2019-06-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2019-06-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2019-06-30 0000750574 aubn:CommercialAndIndustrialLoansMember 2019-07-01 2019-09-30 0000750574 aubn:ConstructionAndLandDevelopmentLoansMember 2019-07-01 2019-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2019-07-01 2019-09-30 0000750574 aubn:ConsumerInstallmentAndRevolvingLoansMember 2019-07-01 2019-09-30 0000750574 aubn:ImpairedLoansMember aubn:DiscountedCashFlowDiscountRateMember us-gaap:FairValueMeasurementsNonrecurringMember srt:MinimumMember 2020-09-30 0000750574 aubn:ImpairedLoansMember aubn:DiscountedCashFlowDiscountRateMember us-gaap:FairValueMeasurementsNonrecurringMember srt:MaximumMember 2020-09-30 0000750574 aubn:ImpairedLoansMember aubn:DiscountedCashFlowDiscountRateMember us-gaap:FairValueMeasurementsNonrecurringMember srt:WeightedAverageMember 2020-09-30 0000750574 aubn:ImpairedLoansMember us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000750574 2020-10-29 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-06-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-06-30 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-07-01 2020-09-30 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-01-01 2020-06-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-01-01 2020-06-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-07-01 2020-09-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-01-01 2020-06-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-01-01 2020-06-30 0000750574 2020-01-01 2020-06-30 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-06-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-06-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-06-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-06-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0000750574 us-gaap:RetainedEarningsMember 2019-09-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000750574 us-gaap:TreasuryStockMember 2019-09-30 0000750574 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0000750574 us-gaap:RetainedEarningsMember 2020-09-30 0000750574 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0000750574 us-gaap:TreasuryStockMember 2020-09-30 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-07-01 2020-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-07-01 2020-09-30 0000750574 aubn:CommercialRealEstateOtherLoansMember 2020-01-01 2020-09-30 0000750574 aubn:CommercialRealEstateLoansTotalMember 2020-01-01 2020-09-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-01-01 2020-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-01-01 2020-09-30 0000750574 aubn:ResidentialRealEstateInvestmentPropertyLoansMember 2020-07-01 2020-09-30 0000750574 aubn:ResidentialRealEstateLoansTotalMember 2020-07-01 2020-09-30 iso4217:USD xbrli:pure xbrli:shares iso4217:USD xbrli:shares

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

                                            

  

FORM 10-Q

                                         

 

(Mark One)

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended September 30, 2020

 

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period __________ to __________

 

Commission File Number: 0-26486

                                            

Auburn National Bancorporation, Inc.

(Exact Name of Registrant as Specified in Its Charter)

                                            

 

Delaware

(State or other jurisdiction of

incorporation or organization)

 

63-0885779

(I.R.S. Employer

Identification No.)

 

100 N. Gay Street

Auburn, Alabama 36830

(334) 821-9200

 

(Address and telephone number of principal executive offices)

 

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

                                            

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated filer ☐

Accelerated filer

Non-accelerated filer ☐

Smaller reporting company

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No

 

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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at October 29,

Common Stock, $0.01 par value per share

 

3,566,276 shares

 

 


Table of Contents

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION                                                             

PAGE

 

 

 

 

 

Item 1

Financial Statement

 

 

 

 

 

Consolidated Balance Sheets (Unaudited) as of September 30, 2020 and December 31, 2019

 

3

 

 

Consolidated Statements of Earnings (Unaudited) for the quarter and nine months ended September 30, 2020 and 2019

 

4

 

 

Consolidated Statements of Comprehensive Income (Unaudited) for the quarter and nine months ended September 30, 2020 and 2019

 

5

 

 

Consolidated Statements of Stockholders’ Equity (Unaudited) for the quarter and nine months ended September 30, 2020 and 2019

 

6

 

 

Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2020 and 2019

 

7

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

8

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29

 

 

Table 1 – Explanation of Non-GAAP Financial Measures

 

50

 

 

Table 2 – Selected Quarterly Financial Data

 

51

 

 

Table 3 – Selected Financial Data

 

52

 

 

Table 4 – Average Balances and Net Interest Income Analysis – for the quarter ended September 30, 2020 and 2019

 

53

 

 

Table 5 – Average Balances and Net Interest Income Analysis – for the nine months ended September 30, 2020 and 2019

 

54

 

 

Table 6 – Loan Portfolio Composition

 

55

 

 

Table 7 – Allowance for Loan Losses and Nonperforming Assets

 

56

 

 

Table 8 – Allocation of Allowance for Loan Losses

 

57

 

 

Table 9 – CDs and Other Time Deposits of $100,000 or more

 

58

Item 3

Quantitative and Qualitative Disclosures About Market Risk

 

59

Item 4

Controls and Procedures

 

59

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

 

Item 1

Legal Proceedings

 

59

Item 1A

Risk Factors

 

59

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

63

Item 3

Defaults Upon Senior Securities

 

63

Item 4

Mine Safety Disclosures

 

63

Item 5

Other Information

 

63

Item 6

Exhibits

 

64

 

 


Table of Contents

 

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

 

 

 

 

 

 

September 30,

 

 

December 31,

(Dollars in thousands, except share data)

 

2020

 

 

2019

Assets:

 

 

 

 

 

Cash and due from banks

$

17,079

 

$

15,172

Federal funds sold

 

29,182

 

 

25,944

Interest-bearing bank deposits

 

56,412

 

 

51,327

 

 

Cash and cash equivalents

 

102,673

 

 

92,443

Securities available-for-sale

 

320,922

 

 

235,902

Loans held for sale

 

4,765

 

 

2,202

Loans, net of unearned income

 

472,453

 

 

460,901

 

Allowance for loan losses

 

(5,575)

 

 

(4,386)

 

 

Loans, net

 

466,878

 

 

456,515

Premises and equipment, net

 

15,473

 

 

14,743

Bank-owned life insurance

 

19,124

 

 

19,202

Other assets

 

8,055

 

 

6,872

 

 

Total assets

$

937,890

 

$

827,879

Liabilities:

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing

$

238,482

 

$

196,218

 

Interest-bearing

 

585,498

 

 

527,934

 

 

Total deposits

 

823,980

 

 

724,152

Federal funds purchased and securities sold under agreements to repurchase

 

2,070

 

 

1,069

Accrued expenses and other liabilities

 

5,526

 

 

4,330

 

 

Total liabilities

 

831,576

 

 

729,551

Stockholders' equity:

 

 

 

 

 

Preferred stock of $.01 par value; authorized 200,000 shares;

 

 

 

 

 

 

no shares issued

 

 

 

Common stock of $.01 par value; authorized 8,500,000 shares;

 

 

 

 

 

 

issued 3,957,135 shares

 

39

 

 

39

Additional paid-in capital

 

3,789

 

 

3,784

Retained earnings

 

104,471

 

 

101,801

Accumulated other comprehensive income, net

 

7,369

 

 

2,059

Less treasury stock, at cost - 390,859 shares and 390,989 at September 30, 2020

 

 

 

 

 

 

and December 31, 2019, respectively

 

(9,354)

 

 

(9,355)

 

 

Total stockholders’ equity

 

106,314

 

 

98,328

 

 

Total liabilities and stockholders’ equity

$

937,890

 

$

827,879

See accompanying notes to consolidated financial statements

 

 

 

 

 

3


Table of Contents

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(Unaudited)

 

 

 

 

 

Quarter ended September 30,

 

 

Nine months ended September 30,

(Dollars in thousands, except share and per share data)

 

2020

 

 

2019

 

 

2020

 

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

5,453

 

$

5,787

 

$

16,359

 

$

17,277

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

913

 

 

997

 

 

3,080

 

 

2,997

 

 

Tax-exempt

 

461

 

 

526

 

 

1,390

 

 

1,619

 

Federal funds sold and interest-bearing bank deposits

 

26

 

 

335

 

 

332

 

 

998

 

 

 

 

Total interest income

 

6,853

 

 

7,645

 

 

21,161

 

 

22,891

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

983

 

 

1,076

 

 

3,005

 

 

3,101

 

Short-term borrowings

 

2

 

 

2

 

 

6

 

 

6

 

 

 

 

Total interest expense

 

985

 

 

1,078

 

 

3,011

 

 

3,107

 

Net interest income

 

5,868

 

 

6,567

 

 

18,150

 

 

19,784

Provision for loan losses

 

250

 

 

 

 

1,100

 

 

 

 

Net interest income after provision for loan losses

 

5,618

 

 

6,567

 

 

17,050

 

 

19,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

139

 

 

182

 

 

437

 

 

542

 

Mortgage lending

 

702

 

 

263

 

 

1,615

 

 

639

 

Bank-owned life insurance

 

109

 

 

109

 

 

615

 

 

326

 

Other

 

408

 

 

393

 

 

1,202

 

 

1,472

 

Securities gains, net

 

16

 

 

44

 

 

103

 

 

57

 

 

Total noninterest income

 

1,374

 

 

991

 

 

3,972

 

 

3,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

2,802

 

 

2,894

 

 

8,230

 

 

8,631

 

Net occupancy and equipment

 

457

 

 

387

 

 

1,974

 

 

1,152

 

Professional fees

 

230

 

 

195

 

 

877

 

 

698

 

Other

 

1,164

 

 

1,348

 

 

3,387

 

 

3,583

 

 

Total noninterest expense

 

4,653

 

 

4,824

 

 

14,468

 

 

14,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

2,339

 

 

2,734

 

 

6,554

 

 

8,756

Income tax expense

 

403

 

 

527

 

 

1,156

 

 

1,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

$

1,936

 

$

2,207

 

$

5,398

 

$

7,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

0.54

 

$

0.62

 

$

1.51

 

$

1.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

3,566,239

 

 

3,568,287

 

 

3,566,184

 

 

3,586,642

See accompanying notes to consolidated financial statements

4


Table of Contents

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended September 30,

 

 

Nine months ended September 30,

(Dollars in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

Net earnings

$

1,936

 

$

2,207

 

$

5,398

 

$

7,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net holding (loss) gain on securities

 

(5)

 

 

1,596

 

 

5,387

 

 

6,049

 

Reclassification adjustment for net gain on securities

 

 

 

 

 

 

 

 

 

 

 

 

 

recognized in net earnings

 

(12)

 

 

(33)

 

 

(77)

 

 

(43)

Other comprehensive (loss) income

 

(17)

 

 

1,563

 

 

5,310

 

 

6,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

1,919

 

$

3,770

 

$

10,708

 

$

13,063

See accompanying notes to consolidated financial statements

5


Table of Contents

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common

 

 

 

 

Additional

 

 

 

other

 

 

 

 

 

 

 

 

 

Shares

 

 

Common

 

paid-in

 

Retained

comprehensive

Treasury

 

 

 

(Dollars in thousands, except share data)

Outstanding

 

 

Stock

 

capital

 

earnings

income (loss)

stock

 

Total

Quarter ended September 30, 2020

Balance, June 30, 2020

3,566,176

 

$

39

 

$

3,785

 

$

103,444

 

$

7,386

 

$

(9,355)

 

$

105,299

Net earnings

 

 

 

 

 

 

1,936

 

 

 

 

 

 

1,936

Other comprehensive loss

 

 

 

 

 

 

 

 

(17)

 

 

 

 

(17)

Cash dividends paid ($.255 per share)

 

 

 

 

 

 

(909)

 

 

 

 

 

 

(909)

Sale of treasury stock

100

 

 

 

 

4

 

 

 

 

 

 

1

 

 

5

Balance, September 30, 2020

3,566,276

 

$

39

 

$

3,789

 

$

104,471

 

$

7,369

 

$

(9,354)

 

$

106,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended September 30, 2019

Balance, June 30, 2019

3,571,828

 

$

39

 

$

3,783

 

$

98,694

 

$

680

 

$

(9,131)

 

$

94,065

Net earnings

 

 

 

 

 

 

2,207

 

 

 

 

 

 

2,207

Other comprehensive income

 

 

 

 

 

 

 

 

1,563

 

 

 

 

1,563

Cash dividends paid ($.25 per share)

 

 

 

 

 

 

(892)

 

 

 

 

 

 

(892)

Stock repurchases

(5,702)

 

 

 

 

 

 

 

 

 

 

(224)

 

 

(224)

Sale of treasury stock

20

 

 

 

 

1

 

 

 

 

 

 

 

 

1

Balance, September 30, 2019

3,566,146

 

$

39

 

$

3,784

 

$

100,009

 

$

2,243

 

$

(9,355)

 

$

96,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2020

Balance, December 31, 2019

3,566,146

 

$

39

 

$

3,784

 

$

101,801

 

$

2,059

 

$

(9,355)

 

$

98,328

Net earnings

 

 

 

 

 

 

5,398

 

 

 

 

 

 

5,398

Other comprehensive income

 

 

 

 

 

 

 

 

5,310

 

 

 

 

5,310

Cash dividends paid ($.765 per share)

 

 

 

 

 

 

(2,728)

 

 

 

 

 

 

(2,728)

Sale of treasury stock

130

 

 

 

 

5

 

 

 

 

 

 

1

 

 

6

Balance, September 30, 2020

3,566,276

 

$

39

 

$

3,789

 

$

104,471

 

$

7,369

 

$

(9,354)

 

$

106,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2019

Balance, December 31, 2018

3,643,868

 

$

39

 

$

3,779

 

$

95,635

 

$

(3,763)

 

$

(6,635)

 

$

89,055

Net earnings

 

 

 

 

 

 

7,057

 

 

 

 

 

 

7,057

Other comprehensive income

 

 

 

 

 

 

 

 

6,006

 

 

 

 

6,006

Cash dividends paid ($.75 per share)

 

 

 

 

 

 

(2,683)

 

 

 

 

 

 

(2,683)

Stock repurchases

(77,907)

 

 

 

 

 

 

 

 

 

 

(2,721)

 

 

(2,721)

Sale of treasury stock

185

 

 

 

 

5

 

 

 

 

 

 

1

 

 

6

Balance, September 30, 2019

3,566,146

 

$

39

 

$

3,784

 

$

100,009

 

$

2,243

 

$

(9,355)

 

$

96,720

See accompanying notes to consolidated financial statements

6


Table of Contents

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

Nine months ended September 30,

(Dollars in thousands)

 

2020

 

 

2019

Cash flows from operating activities:

 

 

 

 

 

Net earnings

$

5,398

 

$

7,057

Adjustments to reconcile net earnings to net cash provided by

 

 

 

 

 

operating activities:

 

 

 

 

 

 

Provision for loan losses

 

1,100

 

 

 

Depreciation and amortization

 

1,336

 

 

705

 

Premium amortization and discount accretion, net

 

1,950

 

 

1,365

 

Net gain on securities available-for-sale

 

(103)

 

 

(57)

 

Net gain on sale of loans held for sale

 

(1,569)

 

 

(382)

 

Net gain on other real estate owned

 

(52)

 

 

(59)

 

Loans originated for sale

 

(60,173)

 

 

(22,051)

 

Proceeds from sale of loans

 

58,707

 

 

21,585

 

Increase in cash surrender value of bank-owned life insurance

 

(334)

 

 

(326)

 

Income recognized from death benefit on bank-owned life insurance

 

(282)

 

 

 

Net increase in other assets

 

(1,241)

 

 

(1,009)

 

Net (decrease) increase in accrued expenses and other liabilities

 

(585)

 

 

1,671

 

 

 

Net cash provided by operating activities

 

4,152

 

 

8,499

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Proceeds from sales of securities available-for-sale

 

21,029

 

 

12,159

Proceeds from prepayments and maturities of securities available-for-sale

 

39,909

 

 

38,413

Purchase of securities available-for-sale

 

(140,714)

 

 

(55,212)

(Increase) decrease in loans, net

 

(11,562)

 

 

11,735

Net purchases of premises and equipment

 

(1,527)

 

 

(1,604)

Proceeds from bank-owned life insurance death benefit

 

694

 

 

(Increase) decrease in FHLB stock

 

(9)

 

 

32

Proceeds from sale of other real estate owned

 

151

 

 

394

 

 

 

Net cash (used in) provided by investing activities

 

(92,029)

 

 

5,917

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Net increase in noninterest-bearing deposits

 

42,264

 

 

1,630

Net increase (decrease) in interest-bearing deposits

 

57,564

 

 

(2,752)

Net increase (decrease) in federal funds purchased and securities sold

 

 

 

 

 

 

under agreements to repurchase

 

1,001

 

 

(1,328)

Proceeds from sale of treasury stock

 

6

 

 

6

Stock repurchases

 

 

 

(2,721)

Dividends paid

 

(2,728)

 

 

(2,683)

 

 

 

Net cash provided by (used in) financing activities

 

98,107

 

 

(7,848)

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

10,230

 

 

6,568

Cash and cash equivalents at beginning of period

 

92,443

 

 

65,076

Cash and cash equivalents at end of period

$

102,673

 

$

71,644

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

$

3,011

 

$

3,037

Income taxes

 

678

 

 

1,499

Supplemental disclosure of non-cash transactions:

 

 

 

 

 

Initial recognition of operating lease right of use assets

 

 

 

891

Initial recognition of operating lease liabilities

 

 

 

889

Real estate acquired through foreclosure

 

99

 

 

82

See accompanying notes to consolidated financial statements

7


Table of Contents

 

 

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General

 

Auburn National Bancorporation, Inc. (the “Company”) provides a full range of banking services to individual and corporate customers in Lee County, Alabama and surrounding counties through its wholly owned subsidiary, AuburnBank (the “Bank”). The Company does not have any segments other than banking that are considered material.

 

Basis of Presentation and Use of Estimates

 

The unaudited consolidated financial statements in this report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair statement of the financial position and the results of operations for all periods presented. All such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results of operations that the Company and its subsidiaries may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

 

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany transactions and accounts are eliminated in consolidation.

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include other-than-temporary impairment on investment securities, the determination of the allowance for loan losses, fair value of financial instruments, and the valuation of deferred tax assets and other real estate owned (“OREO”).

 

Revenue Recognition

 

On January 1, 2018, the Company implemented Accounting Standards Update (“ASU” or “updates”) 2014-09, Revenue from Contracts with Customers, codified at Accounting Standards Codification (“ASC”) 606. The Company adopted ASC 606 using the modified retrospective transition method. The majority of the Company’s revenue stream is generated from interest income on loans and deposits which are outside the scope of ASC 606.

 

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, investment services, interchange fees and gains and losses on sales of other real estate, all of which are presented as components of noninterest income. The following is a summary of the revenue streams that fall within the scope of ASC 606:

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either transaction-based, for which the performance obligations are satisfied when the individual transaction is processed, or set periodic service charges, for which the performance obligations are satisfied over the period the service is provided. Transaction-based fees are recognized at the time the transaction is processed, and periodic service charges are recognized over the service period.

Gains on sales of OREOA gain on sale should be recognized when a contract for sale exists and control of the asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale exists, including a determination that the institution will collect substantially all of the consideration to which it is entitled. In addition to the loan-to-value, the analysis is based on various other factors, including the credit quality of the borrower, the structure of the loan, and any other factors that may affect collectability.

8


Table of Contents

 

 

Reclassifications

 

Certain amounts reported in the prior period have been reclassified to conform to the current-period presentation. These reclassifications had no impact on the Company’s previously reported net earnings or total stockholders’ equity.

 

Subsequent Events

 

The Company has evaluated the effects of events and transactions through the date of this filing that have occurred subsequent to September 30, 2020. The Company does not believe there were any material subsequent events during this period that would have required further recognition or disclosure in the unaudited consolidated financial statements included in this report.

 

Accounting Developments

 

In the first nine months of 2020, the Company adopted new guidance related to the following ASUs:

 

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement; and

 

ASU 2018-15, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.

 

Information about these pronouncements is described in more detail below.

 

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, improves the disclosure requirements on fair value measurements by eliminating the requirements to disclose (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (ii) the policy for timing of transfers between levels; and (iii) the valuation processes for Level 3 fair value measurements. This ASU also added specific disclosure requirements for fair value measurements for public entities including the requirement to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

 

The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2019, and all interim periods within those fiscal years. Early adoption was permitted upon issuance of the ASU. Entities are permitted to early adopt amendments that remove or modify disclosures and delay the adoption of the additional disclosures until their effective date. The Company adopted this ASU on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

ASU 2018- 15, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include internal-use software license). This ASU requires entities to use the guidance in FASB ASC 350-40, Intangibles - Goodwill and Other - Internal Use Software, to determine whether to capitalize or expense implementation costs related to the service contract. This ASU also requires entities to (i) expense capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement; (ii) present the expense related to the capitalized implementation costs in the same line item on the income statement as fees associated with the hosting element of the arrangement; (iii) classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element; and (iv) present the capitalized implementation costs in the same balance sheet line item that a prepayment for the fees associated with the hosting arrangement would be presented.

 

The amendments in this ASU are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption was permitted. The Company adopted this ASU on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

9


Table of Contents

 

NOTE 2: BASIC AND DILUTED NET EARNINGS PER SHARE

 

Basic net earnings per share is computed by dividing net earnings by the weighted average common shares outstanding for the respective period. Diluted net earnings per share reflect the potential dilution that could occur upon exercise of securities or other rights for, or convertible into, shares of the Company’s common stock. At September 30, 2020 and 2019, respectively, the Company had no such securities or rights issued or outstanding, and therefore, no dilutive effect to consider for the diluted net earnings per share calculation.

 

The basic and diluted net earnings per share computations for the respective periods are presented below.

 

 

 

 

 

Quarter ended September 30,

 

 

Nine months ended September 30,

(Dollars in thousands, except share and per share data)

 

 

2020

 

 

2019

 

 

2020

 

 

2019

Basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

1,936

 

$

2,207

 

$

5,398

 

$

7,057

 

Weighted average common shares outstanding

 

 

3,566,239

 

 

3,568,287

 

 

3,566,184

 

 

3,586,642

 

 

Net earnings per share

 

$

0.54

 

$

0.62

 

$

1.51

 

$

1.97