UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: January 23, 2018
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
The information, including the exhibits attached hereto, in this Current Report on Form 8-K is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed by the Company pursuant to the Securities Act of 1933, as amended, or into any other filing or document made by the Company pursuant to the Securities Exchange Act of 1934, as amended, except as otherwise expressly stated in any such filing.
Attached and incorporated herein by reference as Exhibit 99.1 is a copy of the press release of Auburn National Bancorporation, Inc., dated January 23, 2018, reporting the Companys financial results for the quarter and year ended December 31, 2017.
Item 9.01. | Financial Statements, Pro Forma Financial Information and Exhibits. |
(c) Exhibits. The following exhibit is furnished herewith:
Exhibit No. |
Exhibit Description | |
99.1 | Press Release, dated January 23, 2018 |
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 |
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Robert W. Dumas | ||||
President and Chief Executive Officer |
Date: January 23, 2018
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For additional information, contact: Robert W. Dumas President and CEO (334) 821-9200 | |||
Press Release January 23, 2018 |
Auburn National Bancorporation, Inc. Reports
Full Year Net Earnings of $7.8 million, or $2.15 per share
Full Year 2017 Results Compared to Full Year 2016:
| Net earnings of $8.2 million, or $2.25 per share (excluding the tax remeasurement adjustment) |
| Net interest income (tax-equivalent) increased 7% |
| Net interest margin of 3.29% compared to 3.05% for 2016 |
| Average loans increased $10.3 million or 2% |
| Tax remeasurement adjustment of $0.4 million |
AUBURN, Alabama Auburn National Bancorporation (Nasdaq: AUBN) reported net earnings of $7.8 million, or $2.15 per share for the full year 2017, compared to $8.2 million, or $2.24 per share, for the full year 2016. For the fourth quarter of 2017, the Company reported net earnings of $1.8 million, or $0.50 per share, compared to $2.1 million, or $0.57 per share, for the fourth quarter of 2016.
The decrease in the Companys 2017 earnings was primarily due to a deferred tax asset remeasurement adjustment of $0.4 million as a result of a lower enacted corporate tax rate. The Tax Cuts and Jobs Act, signed into law December 22, 2017, lowered the Companys federal corporate tax rate from 34% to 21%, which will lower the Companys provision for federal income taxes in future years. However, the Company was required to remeasure the value of its net deferred tax assets by $0.4 million as of December 31, 2017. Our net deferred tax assets result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Excluding the impact of the tax remeasurement adjustment, net earnings would have been $8.2 million, or $2.25 per share, for the full year 2017, compared to $8.2 million, or $2.24 per share for the full year 2016, while fourth quarter of 2017 net earnings would have been $2.2 million, or $0.60 per share, compared to $2.1 million or $0.57 per share for the fourth quarter 2016.
Robert W. Dumas, President and CEO, commented: Despite a tax remeasurement adjustment in the fourth quarter of 2017 the Company was able to report net earnings for the full year of $7.8 million. Excluding this tax remeasurement, the Company would have reported record net earnings for the eighth consecutive year.
Net interest income (tax-equivalent) was $6.6 million for the fourth quarter of 2017, a 9% increase compared to $6.1 million for the fourth quarter of 2016. This increase was primarily due to loan growth and management reducing its investment in federal funds sold and interest bearing bank deposits and increasing its investment in securities as market yields improved. Average loans were $453.7 million in the fourth quarter of 2017, an increase of $24.3 million, or 6%, from the fourth quarter of 2016. The Companys net interest margin (tax-equivalent) increased to 3.37% in the fourth quarter of 2017, compared to 3.05% for the fourth quarter of 2016 as earning asset yields and cost of funds both improved.
The Company recorded a negative provision for loan losses of $0.4 million for the fourth quarter of 2017, compared to a provision for loan losses of $0.1 million for the fourth quarter of 2016. Annualized net recoveries as a percent of average loans were 0.43% for the fourth quarter of 2017, compared to annualized net charge-offs as a percent of average loans of 0.05% for the fourth quarter of 2016. The Company recognized a recovery of $0.4 million from the payoff of two commercial loans during the fourth quarter of 2017.
Noninterest income was $0.8 million in the fourth quarter of 2017, compared to $0.5 million in the fourth quarter of 2016. The increase was primarily due to losses realized on sales of securities of $0.4 million in the fourth quarter of 2016.
Noninterest expense was $4.4 million in the fourth quarter of 2017, compared to $3.2 million in fourth quarter of 2016, primarily due to a $0.2 million increase in salaries and benefits and a $0.1 million increase in charitable contributions in 2017, and a gain on early extinguishment of debt of $0.8 million in 2016.
Income tax expense was approximately $1.3 million for the fourth quarter of 2017, compared to $0.8 million for the fourth quarter of 2016. The Companys income tax expense for the fourth quarter of 2017 reflects an effective tax rate of 41.00%, compared to 27.76% in the fourth quarter of 2016. The increase in the annualized effective tax rate was primarily attributable to the $0.4 million tax remeasurement adjustment, discussed above. Excluding the tax remeasurement adjustment, the Companys effective tax rate would have been 29.04% in the fourth quarter of 2017 reflecting an increase in the level of earnings before taxes and a decrease in tax exempt earnings from bank-owned life insurance.
The Company paid cash dividends of $0.23 per share in the fourth quarter of 2017. At December 31, 2017, the Banks 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 $853 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 8 full-service branches in Auburn, Opelika, Valley and Notasulga, Alabama. The Bank also operates a 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, 2016 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 Full Year and Fourth Quarter Net Earnings/page 3 |
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Financial Highlights (unaudited) |
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Quarter ended December 31, | Years ended December 31, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
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Results of Operations |
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Net interest income (a) |
$ | 6,575 | $ | 6,051 | $ | 25,731 | $ | 24,008 | ||||||||
Less: tax-equivalent adjustment |
300 | 316 | 1,205 | 1,276 | ||||||||||||
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Net interest income (GAAP) |
6,275 | 5,735 | 24,526 | 22,732 | ||||||||||||
Noninterest income |
844 | 493 | 3,441 | 3,383 | ||||||||||||
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Total revenue |
7,119 | 6,228 | 27,967 | 26,115 | ||||||||||||
Provision for loan losses |
(400 | ) | 115 | (300 | ) | (485) | ||||||||||
Noninterest expense |
4,426 | 3,238 | 16,784 | 15,348 | ||||||||||||
Income tax expense |
1,268 | 798 | 3,637 | 3,102 | ||||||||||||
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Net earnings |
$ | 1,825 | $ | 2,077 | $ | 7,846 | $ | 8,150 | ||||||||
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Per share data: |
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Basic and diluted net earnings: |
$ | 0.50 | $ | 0.57 | $ | 2.15 | $ | 2.24 | ||||||||
Cash dividends declared |
$ | 0.23 | $ | 0.225 | $ | 0.92 | $ | 0.90 | ||||||||
Weighted average shares outstanding: |
3,643,668 | 3,643,523 | 3,643,616 | 3,643,504 | ||||||||||||
Shares outstanding, at period end |
3,643,668 | 3,643,523 | 3,643,668 | 3,643,523 | ||||||||||||
Book value |
$ | 23.85 | $ | 22.55 | $ | 23.85 | $ | 22.55 | ||||||||
Common stock price: |
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High |
$ | 40.25 | $ | 31.31 | $ | 40.25 | $ | 31.31 | ||||||||
Low |
33.25 | 27.45 | 30.75 | 24.56 | ||||||||||||
Period-end |
$ | 38.90 | $ | 31.31 | $ | 38.90 | $ | 31.31 | ||||||||
To earnings ratio |
18.09 | x | 13.98 | x | 18.09 | x | 13.98 x | |||||||||
To book value |
163 | % | 139 | % | 163 | % | 139 % | |||||||||
Performance ratios: |
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Return on average equity (annualized): |
8.31 | % | 9.61 | % | 9.17 | % | 9.65 % | |||||||||
Return on average assets (annualized): |
0.89 | % | 1.00 | % | 0.94 | % | 0.98 % | |||||||||
Dividend payout ratio |
46.00 | % | 39.47 | % | 42.79 | % | 40.18 % | |||||||||
Other financial data: |
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Net interest margin (a) |
3.37 | % | 3.05 | % | 3.29 | % | 3.05 % | |||||||||
Effective income tax rate |
41.00 | % | 27.76 | % | 31.67 | % | 27.57 % | |||||||||
Efficiency ratio (b) |
59.66 | % | 49.48 | % | 57.53 | % | 56.03 % | |||||||||
Asset Quality: |
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Nonperforming assets: |
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Nonperforming (nonaccrual) loans |
$ | 2,972 | $ | 2,370 | $ | 2,972 | $ | 2,370 | ||||||||
Other real estate owned |
| 152 | | 152 | ||||||||||||
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Total nonperforming assets |
$ | 2,972 | $ | 2,522 | $ | 2,972 | $ | 2,522 | ||||||||
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Net (recoveries) charge-offs |
$ | (487 | ) | $ | 50 | $ | (414 | ) | $ | (839) | ||||||
Allowance for loan losses as a % of: |
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Loans |
1.05 | % | 1.08 | % | 1.05 | % | 1.08 % | |||||||||
Nonperforming loans |
160 | % | 196 | % | 160 | % | 196 % | |||||||||
Nonperforming assets as a % of: |
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Loans and other real estate owned |
0.66 | % | 0.59 | % | 0.66 | % | 0.59 % | |||||||||
Total assets |
0.35 | % | 0.30 | % | 0.35 | % | 0.30 % | |||||||||
Nonperforming loans as a % of total loans |
0.66 | % | 0.55 | % | 0.66 | % | 0.55 % | |||||||||
Net (recoveries) charge-offs as a % of average loans (c) |
(0.43 | )% | 0.05 | % | (0.09 | )% | (0.19)% |
Selected average balances: |
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Securities |
$ | 262,171 | $ | 253,820 | $ | 266,988 | $ | 235,377 | ||||||||
Loans, net of unearned income |
453,744 | 429,451 | 441,026 | 430,770 | ||||||||||||
Total assets |
823,864 | 834,291 | 830,426 | 832,321 | ||||||||||||
Total deposits |
726,945 | 735,991 | 735,404 | 734,681 | ||||||||||||
Long-term debt |
3,217 | 4,260 | 3,217 | 6,474 | ||||||||||||
Total stockholders equity |
87,800 | 86,493 | 85,541 | 84,432 | ||||||||||||
Selected period end balances: |
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Securities |
$ | 257,697 | $ | 243,572 | $ | 257,697 | $ | 243,572 | ||||||||
Loans, net of unearned income |
453,651 | 430,946 | 453,651 | 430,946 | ||||||||||||
Allowance for loan losses |
4,757 | 4,643 | 4,757 | 4,643 | ||||||||||||
Total assets |
853,381 | 831,943 | 853,381 | 831,943 | ||||||||||||
Total deposits |
757,659 | 739,143 | 757,659 | 739,143 | ||||||||||||
Long-term debt |
3,217 | 3,217 | 3,217 | 3,217 | ||||||||||||
Total stockholders equity
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86,906
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82,177
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86,906
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82,177
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(a) | Tax equivalent. See Explanation of Certain Unaudited Non-GAAP Financial Measures and Reconciliation of GAAP to non-GAAP Measures (unaudited). |
(b) | Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and tax-equivalent net interest income. |
(c) | Net (recoveries) charge-offs are annualized. |
Reports Full Year and Fourth Quarter Net Earnings/page 4
Reconciliation of GAAP to non-GAAP Measures (unaudited):
Quarter ended December 31, | Years ended December 31, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
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Net interest income, as reported (GAAP) |
$ | 6,275 | $ | 5,735 | $ | 24,526 | $ | 22,732 | ||||||||
Tax-equivalent adjustment |
300 | 316 | 1,205 | 1,276 | ||||||||||||
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Net interest income (tax-equivalent) |
$ | 6,575 | $ | 6,051 | $ | 25,731 | $ | 24,008 | ||||||||
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