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Auburn National Bancorporation, Inc. Reports Record Quarterly
Net Earnings
GlobeNewswire
2012-07-20
Second Quarter 2012 Highlights:
-- Record quarterly net earnings of $2.0 million, or $0.56 per share
-- Net interest margin increases 17 basis points compared to Q2 2011
-- Average loans up $20.1 million, or 5% compared to Q2 2011
-- Mortgage lending income more than doubles over Q2 2011
-- Credit quality continued to compare favorably to industry peers;
nonperforming assets to total assets of 1.75%
-- Maintained strong balance sheet with a tangible common equity ratio to
total assets of 8.25%
AUBURN, Ala., July 20, 2012 (GLOBE NEWSWIRE) -- Auburn National
Bancorporation (Nasdaq:AUBN) reported record net earnings of
approximately $2.0 million, or $0.56 per share, for the second quarter
of 2012, compared to $1.5 million, or $0.40 per share, for the second
quarter of 2011. Net earnings for the first six months of 2012 were
$3.5 million, or $0.96 per share, compared to $3.0 million, or $0.83
per share, for the first six months of 2011.
Excluding the effects of non-operating items such as securities gains
(losses), gain on sale of affordable housing investments, net expenses
related to other real estate owned ("OREO"), and prepayment penalties
on long-term debt, second quarter 2012 operating net earnings were
approximately $1.9 million, or $0.51 per share, compared to second
quarter 2011 operating net earnings of $1.7 million, or $0.46 per
share. Operating net earnings for the first six months of 2012 were
$3.5 million, or $0.97 per share, compared to $3.2 million, or $0.89
per share, for the first six months of 2011.
"Net interest margin expansion, increased mortgage lending income, and
improving asset quality were key drivers of our record quarterly
earnings," said E.L. Spencer, Jr., President, CEO and Chairman of the
Board. "While we remain optimistic about the opportunity for loan
growth and further resolutions of nonperforming assets in 2012, we
expect ongoing challenges given the continued uncertainty in the
national economy."
Net interest income (tax-equivalent) was $5.7 million for the second
quarter of 2012, an increase of 4% compared to the second quarter 2011.
The increase primarily reflected improvement in the Company's net
interest margin as average total interest-earning assets decreased 1%
in the second quarter of 2012 compared to the second quarter of 2011.
Average loans were $395.3 million in the second quarter of 2012, an
increase of $20.1 million, or 5%, from second quarter of 2011. Average
deposits were $639.2 million in the second quarter of 2012, an increase
of $13.2 million, or 2%, from the second quarter of 2011.
Nonperforming assets decreased to 1.75% of total assets at June 30,
2012, compared to 2.35% of total assets at March 31, 2012. Total
nonperforming assets were $13.4 million, a decrease of $4.2 million, or
24% from March 31, 2012. The decrease was primarily due to disposals of
certain OREO properties and charge-offs on nonperforming loans.
Mr. Spencer continued, "We made significant progress in reducing our
nonperforming assets during the second quarter of 2012, including the
sale of our largest OREO property."
The Company's annualized net charge-off ratio was 1.61% in the second
quarter of 2012, compared to 0.76% in the second quarter of 2011.
Although the annualized net charge-off ratio increased significantly in
the second quarter of 2012, approximately $1.3 million, or 75%, of the
$1.6 million in net charge-offs recognized in the second quarter of
2012 related to impaired loans that were already reserved for at March
31, 2012. The provision for loan losses remained $0.6 million for the
second quarter of both 2012 and 2011.
Total noninterest income was approximately $1.8 million in the second
quarter of 2012, compared to $1.3 million in the second quarter of
2011. The increase in total noninterest income was primarily due to a
$0.4 million increase in mortgage lending income, reflecting increased
origination volume and improved pricing.
Total noninterest expense was approximately $4.0 million in the second
quarter of 2012 compared to $4.3 million in second quarter of 2011. A
decrease in net expenses related to OREO were partially offset by
increases in salaries and benefits expense and other noninterest
expense. The decrease in net expenses of $0.7 million related to OREO
primarily related to a decline in holding losses and write-downs on the
valuations of certain OREO properties.
The Company paid cash dividends of $0.205 per share in the second
quarter of 2012. At June 30, 2012, the Bank's regulatory capital was
well above the minimum amounts required to be "well capitalized" under
current 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
$761 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 full-service branches
in Auburn, Opelika, Valley, Hurtsboro and Notasulga, Alabama. In-store
branches are located in the Auburn and Opelika Kroger stores, as well
as in the Wal-Mart SuperCenter stores in Auburn, Opelika, and Phenix
City, Alabama. The Bank also operates commercial loan production
offices in Montgomery and Phenix City, Alabama. Additional information
about the Company and the Bank may be found by visiting
www.auburnbank.com.
The Auburn National Bancorporation, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4903
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, economic
conditions in our markets, loan demand, mortgage lending activity, net
interest margin, yields on earning assets, securities valuations and
performance, loan performance, nonperforming assets, other real estate
owned, loan losses, charge-offs, other-than-temporary impairments,
collateral values, and credit quality, 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 or achievements of the Company or the Bank
to be materially different from future results, performance or
achievements 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, 2011 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 provide reconciliations between GAAP net
earnings and operating net earnings, which exclude gains or losses on
items deemed not to reflect core operations, as well as tax-equivalent
net interest income and net interest margin, including the presentation
of total revenue and the calculation of the efficiency ratio.
Management uses these non-GAAP financial measures in its analysis of
the Company's performance and believes presentations of "operating" and
tax-equivalent financial measures provide useful supplemental
information regarding the Company's performance, and that operating net
earnings better reflect the Company's core operating activities.
Management utilizes these non-GAAP measures in the calculation of
certain of the Company's ratios, in particular, to analyze on a
consistent basis over time the performance of what it considers to be
its core operations. The Company believes the non-GAAP measures enhance
investors' understanding of the Company's business and performance.
These measures are also useful in understanding performance trends and
facilitate comparisons with the performance of other financial
institutions. The limitations associated with these measures are the
risk that persons might disagree as to the appropriateness of items
comprising these measures and that different companies might calculate
these measures differently. The Company provides reconciliations
between GAAP and these non-GAAP measures. These disclosures should not
be considered an alternative to GAAP.
Reports Record Quarterly Net Earnings/page 4
Financial Highlights
(unaudited)
Six months ended June
Quarter ended June 30, 30,
---------------------- ----------------------
(Dollars in thousands,
except per share amounts) 2012 2011 2012 2011
-------------------------- ---------- ---------- ---------- ----------
Results of Operations
Net interest income (a) $ 5,728 $ 5,497 $ 11,143 $ 10,746
Less: tax-equivalent
adjustment 416 440 830 875
-------------------------- ---------- ---------- ---------- ----------
Net interest income
(GAAP) 5,312 5,057 10,313 9,871
Noninterest income 1,814 1,300 6,678 2,389
-------------------------- ---------- ---------- ---------- ----------
Total revenue 7,126 6,357 16,991 12,260
Provision for loan losses 600 600 1,200 1,200
Noninterest expense 4,048 4,308 11,590 7,902
Income tax expense
(benefit) 449 (8) 707 152
-------------------------- ---------- ---------- ---------- ----------
Net earnings $ 2,029 $ 1,457 $ 3,494 $ 3,006
========================== ========== ========== ========== ==========
Per share data:
Basic and diluted net
earnings:
GAAP $ 0.56 $ 0.40 $ 0.96 $ 0.83
Operating (b) 0.51 0.46 0.97 0.89
Cash dividends declared $ 0.205 $ 0.20 $ 0.41 $ 0.40
Weighted average shares
outstanding:
Basic and diluted 3,642,826 3,642,738 3,642,782 3,642,733
Shares outstanding, at
period end 3,642,843 3,642,738 3,642,843 3,642,738
Book value $ 18.75 $ 16.77 $ 18.75 $ 16.77
Common stock price:
High $ 26.65 $ 19.91 $ 26.65 $ 20.37
Low 21.50 19.40 18.23 19.40
Period-end: 21.50 19.75 21.50 19.75
To earnings ratio 12.95 x 14.01 x 12.95 x 14.01 x
To book value 115% 118% 115% 118%
Performance ratios:
Return on average equity:
GAAP 12.06% 9.90% 10.48% 10.36%
Operating (b) 11.14% 11.28% 10.63% 11.20%
Return on average assets:
GAAP 1.07% 0.75% 0.92% 0.77%
Operating (b) 0.99% 0.85% 0.94% 0.84%
Dividend payout ratio 36.61% 50.00% 42.71% 48.19%
Other financial data:
Net interest margin (a) 3.26% 3.09% 3.19% 3.03%
Effective income tax rate 18.12% NM% 16.83% 4.81%
Efficiency ratio (c) 55.44% 56.07% 55.28% 56.32%
Asset Quality:
Nonperforming assets:
Nonperforming
(nonaccrual) loans $ 8,228 $ 8,151 $ 8,228 $ 8,151
Other real estate owned 5,157 9,361 5,157 9,361
-------------------------- ---------- ---------- ---------- ----------
Total nonperforming
assets $ 13,385 $ 17,512 $ 13,385 $ 17,512
========================== ========== ========== ========== ==========
Net charge-offs $ 1,593 $ 709 $ 1,616 $ 1,130
Allowance for loan losses
as a % of:
Loans 1.63% 2.07% 1.63% 2.07%
Nonperforming loans 79% 95% 79% 95%
Nonperforming assets as a
% of:
Loans and other real
estate owned 3.31% 4.57% 3.31% 4.57%
Total assets 1.75% 2.25% 1.75% 2.25%
Nonperforming loans as a %
of total loans 2.06% 2.18% 2.06% 2.18%
Net charge-offs
(annualized) as a % of
average loans 1.61% 0.76% 0.84% 0.60%
Selected average balances:
Securities $ 293,072 $ 305,564 $ 294,955 $ 312,839
Loans, net of unearned
income 395,261 375,192 386,212 373,763
Total assets 760,413 777,181 758,623 776,989
Total deposits 639,182 625,941 634,418 624,338
Long-term debt 47,241 85,323 51,033 88,508
Total stockholders' equity 67,296 58,888 66,707 58,034
Selected period end
balances:
Securities $ 277,246 $ 296,443 $ 277,246 $ 296,443
Loans, net of unearned
income 399,370 373,795 399,370 373,795
Allowance for loan losses 6,503 7,746 6,503 7,746
Total assets 766,161 779,725 766,161 779,725
Total deposits 643,929 627,969 643,929 627,969
Long-term debt 47,217 85,322 47,217 85,322
Total stockholders' equity 68,292 61,100 68,292 61,100
--------------------------------------------------------------------------
(a) Tax equivalent. See "Explanation of Certain Unaudited Non-GAAP
Financial Measures" and "Reconciliation of GAAP to non-GAAP Measures
(unaudited)."
(b) Operating measures. See "Explanation of Certain Unaudited Non-GAAP
Financial Measures" and "Reconciliation of GAAP to non-GAAP Measures
(unaudited)."
(c) Efficiency ratio is the result of operating noninterest expense
divided by the sum of operating noninterest income and tax-equivalent net
interest income.
NM - not meaningful
Reports Record Quarterly Net Earnings/page 5
Reconciliation of GAAP to non-GAAP Measures (unaudited):
Six months ended
Quarter ended June 30, June 30,
---------------------- ----------------------
(Dollars in thousands, except per share
amounts) 2012 2011 2012 2011
----------------------------------------- ---------- ---------- ---------- ----------
Net earnings, as reported (GAAP) $ 2,029 $ 1,457 $ 3,494 $ 3,006
Non-operating items (net of 37% statutory
tax rate):
Securities gains, net (158) (248) (271) (219)
Gain on sale of affordable housing
investments -- -- (2,059) --
Other real estate owned expense, net (4) 452 40 442
Prepayment penalty on long-term debt 8 -- 2,344 --
----------------------------------------- ---------- ---------- ---------- ----------
Operating net earnings $ 1,875 $ 1,661 $ 3,548 $ 3,229
========================================= ========== ========== ========== ==========
Basic and diluted earnings per share, as
reported (GAAP) $ 0.56 $ 0.40 $ 0.96 $ 0.83
Non-operating items (net of 37% statutory
tax rate):
Securities gains, net (0.05) (0.07) (0.07) (0.06)
Gain on sale of affordable housing
investments -- -- (0.57) --
Other real estate owned expense, net -- 0.13 0.01 0.12
Prepayment penalty on long-term debt -- -- 0.64 --
----------------------------------------- ---------- ---------- ---------- ----------
Operating net earnings per share $ 0.51 $ 0.46 $ 0.97 $ 0.89
========================================= ========== ========== ========== ==========
Net interest income, as reported (GAAP) $ 5,312 $ 5,057 $ 10,313 $ 9,871
Tax-equivalent adjustment 416 440 830 875
----------------------------------------- ---------- ---------- ---------- ----------
Net interest income (tax-equivalent) $ 5,728 $ 5,497 $ 11,143 $ 10,746
========================================= ========== ========== ========== ==========
Noninterest income, as reported (GAAP) $ 1,814 $ 1,300 $ 6,678 $ 2,389
Non-operating items:
Securities gains, net (251) (394) (430) (348)
Gain on sale of affordable housing
investments -- -- (3,268) --
----------------------------------------- ---------- ---------- ---------- ----------
Operating noninterest income $ 1,563 $ 906 $ 2,980 $ 2,041
========================================= ========== ========== ========== ==========
Total Revenue, as reported (GAAP) $ 7,126 $ 6,357 $ 16,991 $ 12,260
Tax-equivalent adjustment 416 440 830 875
Non-operating items:
Securities gains, net (251) (394) (430) (348)
Gain on sale of affordable housing
investments -- -- (3,268) --
----------------------------------------- ---------- ---------- ---------- ----------
Total Operating Revenue (tax-equivalent) $ 7,291 $ 6,403 $ 14,123 $ 12,787
========================================= ========== ========== ========== ==========
Noninterest expense, as reported (GAAP) $ 4,048 $ 4,308 $ 11,590 $ 7,902
Non-operating items:
Other real estate owned expense, net 6 (718) (63) (701)
Prepayment penalty on long-term debt (12) -- (3,720) --
----------------------------------------- ---------- ---------- ---------- ----------
Operating noninterest expense $ 4,042 $ 3,590 $ 7,807 $ 7,201
========================================= ========== ========== ========== ==========
Total stockholders' equity (GAAP) $ 68,292 $ 61,100 $ 68,292 $ 61,100
Unrealized gains on available for sale
securities, net of tax (5,096) (981) (5,096) (981)
----------------------------------------- ---------- ---------- ---------- ----------
Tangible Common Equity $ 63,196 $ 60,119 $ 63,196 $ 60,119
========================================= ========== ========== ========== ==========
CONTACT: E.L. Spencer, Jr.
President, CEO and
Chairman of the Board
(334) 821-9200
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