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: April 26, 2016
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
(Registrants 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)) |
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 April 25, 2016, reporting the Companys financial results for the quarter ended March 31, 2016.
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 April 25, 2016 |
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/ E.L. Spencer, Jr. |
E.L. Spencer, Jr. |
Chairman, President and Chief Executive Officer |
Date: April 26, 2016
EXHIBIT INDEX
Exhibit No. |
Exhibit Description | |
99.1 |
Press Release, dated April 25, 2016 |
Exhibit 99.1
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For additional information, contact: E.L. Spencer, Jr. President, CEO and Chairman of the Board (334) 821-9200 |
Press Release April 25, 2016
Auburn National Bancorporation, Inc. Reports First Quarter Net Earnings
First Quarter 2016 Highlights:
| Record quarterly net earnings of $2.2 million, or $0.60 per share |
| Earnings per share increased 17.6% compared to first quarter 2015 |
| Resolution of nonperforming loan results in $1.2 million recovery to the allowance for loan losses and a negative provision for loan losses of $0.6 million |
| Average loans increased $27.4 million or 7% compared to first quarter 2015 |
AUBURN, Alabama Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net earnings of $2.2 million, or $0.60 per share, for the first quarter of 2016, compared to $1.9 million, or $0.51 per share, for the first quarter of 2015.
The Companys first quarter results reflect a significant recovery on one nonperforming loan and continued growth in net interest income, said E.L. Spencer, Jr., President, CEO and Chairman of the Board.
Net interest income (tax-equivalent) was $6.0 million for the first quarter of 2016, an increase of 3% compared to the first quarter of 2015. This increase was primarily due to a reduction in interest expense as the Company repaid higher-cost wholesale funding sources and lowered its deposit costs. Additionally, the Company continued its efforts to increase earnings by shifting its asset mix through loan growth. Average loans were $429.5 million in the first quarter of 2016, an increase of $29.4 million or 7%, from the first quarter of 2015. Average deposits were $726.4 million in the first quarter of 2016, an increase of $20.6 million or 3%, from the first quarter of 2015.
The Company recorded a negative provision for loan losses of $0.6 million for the first quarter of 2016, compared to no provision for loan losses for the first quarter of 2015. Annualized net recoveries as a percent of average loans were 1.01% for the first quarter of 2016, compared to net charge-offs as a percent of average loans of 0.11% for the first quarter of 2015. The Company recognized a recovery of $1.2 million from the payoff of one nonperforming construction and land development loan during the first quarter of 2016.
Noninterest income was $0.8 million for the first quarter of 2016, compared to $1.3 million in the first quarter of 2015. The decrease was primarily due to $0.3 million in non-taxable death benefits from bank-owned life insurance that were received in the first quarter of 2015, compared to none in the first quarter of 2016, and a decrease in mortgage lending of $0.2 million as mortgage loan production declined.
Noninterest expense was $4.1 million in the first quarter of 2016, compared to $4.3 million in the first quarter of 2015. The decrease was primarily due to no prepayment penalties on long-term debt incurred in the first quarter of 2016 compared to $0.4 million incurred in the first quarter of 2015 when the Company repaid $5.0 million of long-term debt with an interest rate of 3.59%. This decrease was partially offset by a $0.2 million increase in salaries and benefits due to normal annual increases.
Income tax expense was $0.8 million for the first quarter of 2016, compared to $0.7 million in the first quarter of 2015. The Companys income tax expense for the first quarter of 2016 reflects an effective income tax rate of 27.50%, compared to 26.40% for the first quarter of 2015. The increase in the effective tax rate is primarily due to a decrease in tax preference items such as income from bank-owned life insurance. The Companys income tax expense is principally affected by tax-exempt earnings on municipal securities investments and bank-owned life insurance.
In the first quarter of 2016, the Company paid cash dividends of $0.8 million, or $0.225 per share. At March 31, 2016, the Banks regulatory capital was 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 $833 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, and Notasulga, Alabama. In-store branches are located in the Kroger and Wal-Mart SuperCenter stores in Opelika. The Bank also operates a commercial loan production office in Phenix City, Alabama. Additional information about the Company and the Bank may be found by visiting www.auburnbank.com.
Cautionary Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, costs and revenues, 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, 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, 2015 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 Companys performance and believes the presentation of net interest income on a tax-equivalent basis provides comparability of net interest income from both taxable and tax-exempt sources and facilitates comparability within the industry. 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 First Quarter Net Earnings/page 3
Financial Highlights (unaudited)
Quarter ended March 31, | ||||||||
(Dollars in thousands, except per share amounts) | 2016 | 2015 | ||||||
|
||||||||
Results of Operations |
||||||||
Net interest income (a) |
$ | 6,019 | $ | 5,858 | ||||
Less: tax-equivalent adjustment |
322 | 335 | ||||||
|
||||||||
Net interest income (GAAP) |
5,697 | 5,523 | ||||||
Noninterest income |
834 | 1,321 | ||||||
|
||||||||
Total revenue |
6,531 | 6,844 | ||||||
Provision for loan losses |
(600) | | ||||||
Noninterest expense |
4,109 | 4,314 | ||||||
Income tax expense |
831 | 668 | ||||||
|
||||||||
Net earnings |
$ | 2,191 | $ | 1,862 | ||||
|
||||||||
Per share data: |
||||||||
Basic and diluted net earnings |
$ | 0.60 | $ | 0.51 | ||||
Cash dividends declared |
$ | 0.225 | $ | 0.22 | ||||
Weighted average shares outstanding: |
||||||||
Basic and diluted |
3,643,484 | 3,643,365 | ||||||
Shares outstanding, at period end |
3,643,503 | 3,643,378 | ||||||
Book value |
$ | 22.75 | $ | 21.28 | ||||
Common stock price: |
||||||||
High |
$ | 30.49 | $ | 25.25 | ||||
Low |
24.56 | 23.15 | ||||||
Period-end |
28.25 | 24.85 | ||||||
To earnings ratio |
12.61 x | 12.12 x | ||||||
To book value |
124 % | 117 % | ||||||
Performance ratios: |
||||||||
Return on average equity (annualized) |
10.82 % | 9.68 % | ||||||
Return on average assets (annualized) |
1.07 % | 0.93 % | ||||||
Dividend payout ratio |
37.50 % | 43.14 % | ||||||
Other financial data: |
||||||||
Net interest margin (a) |
3.12 % | 3.15 % | ||||||
Effective income tax rate |
27.50 % | 26.40 % | ||||||
Efficiency ratio (b) |
59.96 % | 60.09 % | ||||||
Asset Quality: |
||||||||
Nonperforming assets: |
||||||||
Nonperforming (nonaccrual) loans |
$ | 1,938 | $ | 1,251 | ||||
Other real estate owned |
397 | 499 | ||||||
|
||||||||
Total nonperforming assets |
$ | 2,335 | $ | 1,750 | ||||
|
||||||||
Net (recoveries) charge-offs |
$ | (1,085) | $ | 114 | ||||
Allowance for loan losses as a % of: |
||||||||
Loans |
1.11 % | 1.19 % | ||||||
Nonperforming loans |
246 % | 377 % | ||||||
Nonperforming assets as a % of: |
||||||||
Loans and other real estate owned |
0.54 % | 0.44 % | ||||||
Total assets |
0.28 % | 0.22 % | ||||||
Nonperforming loans as a % of total loans |
0.45 % | 0.32 % | ||||||
Annualized net (recoveries) charge-offs as a % of average loans |
(1.01) % | 0.11 % |
Selected average balances: |
||||||||
Securities |
$ | 237,087 | $ | 264,268 | ||||
Loans, net of unearned income |
429,528 | 400,161 | ||||||
Total assets |
821,382 | 802,062 | ||||||
Total deposits |
726,354 | 705,746 | ||||||
Long-term debt |
7,217 | 11,550 | ||||||
Total stockholders equity |
80,965 | 76,915 | ||||||
Selected period end balances: |
||||||||
Securities |
$ | 234,109 | $ | 262,141 | ||||
Loans, net of unearned income |
431,763 | 396,613 | ||||||
Allowance for loan losses |
4,774 | 4,722 | ||||||
Total assets |
833,328 | 790,224 | ||||||
Total deposits |
737,361 | 698,336 | ||||||
Long-term debt |
7,217 | 7,217 | ||||||
Total stockholders equity
|
|
82,887
|
|
|
77,544
|
| ||
|
(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 First Quarter Net Earnings/page 4
Reconciliation of GAAP to non-GAAP Measures (unaudited):
Quarter ended March 31, | ||||||||
(Dollars in thousands, except per share amounts) | 2016 | 2015 | ||||||
|
||||||||
Net interest income, as reported (GAAP) |
$ | 5,697 | $ | 5,523 | ||||
Tax-equivalent adjustment |
322 | 335 | ||||||
|
||||||||
Net interest income (tax-equivalent) |
$ | 6,019 | $ | 5,858 | ||||
|
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