Third Quarter 2009 Results - Compared to Third Quarter 2008:
- Solid loan growth - 8% increase in average loan balances
- Double-digit growth in deposits
- Strengthened reserves during third quarter 2009 with a $1.1 million loan loss provision
- Credit quality continues to compare favorably to industry peers
- Maintained strong balance sheet with a tangible common equity ratio of 7.20%
AUBURN, Ala., Oct. 22, 2009 (GLOBE NEWSWIRE) -- Auburn National Bancorporation (Nasdaq:AUBN) reported net earnings of approximately $1.0 million, or $0.28 per share, for the third quarter of 2009, compared to $2.0 million, or $0.54 per share, for the third quarter of 2008.
Excluding the effects of non-operating items such as securities gains and other-than-temporary impairment charges, third quarter 2009 operating net earnings were approximately $1.1 million, or $0.31 per share, compared to third quarter 2008 operating net earnings of approximately $1.6 million, or $0.43 per share.
E.L. Spencer, Jr., President, CEO and Chairman of the Board, commented: "The Company's third quarter results were primarily impacted by increased loan loss provisions as the Company strengthened its reserves. Our continued profitability during the current credit cycle is a testament to the Company's focus on sound underwriting practices and quality growth."
Net interest income (tax-equivalent) was approximately $5.1 million for the third quarter of 2009, compared to $4.9 million from the third quarter of 2008. Average loans were up to $377.2 million in the third quarter of 2009, an increase of $29.1 million, or 8%, from the third quarter of 2008. Average deposits were up to $604.0 million in the third quarter of 2009, an increase of $89.2 million, or 17%, from the third quarter of 2008.
The provision for loan losses during the third quarter of 2009 was $1.1 million, compared to $380 thousand in the third quarter of 2008. The increase in provision for loan losses reflects an increase in past due and nonperforming loans and an increase in net charge-offs. Nonperforming assets increased on a linked-quarter basis. Nonperforming assets were 1.75% of total assets at September 30, 2009, compared to 0.75% at June 30, 2009. The Company's annualized net charge-off ratio increased to 0.31% in the third quarter of 2009 from 0.23% in the third quarter of 2008. However, the Company's credit quality continues to compare favorably to industry peers.
Mr. Spencer continued, "Despite an increase in the Company's level of nonperforming assets, total nonperforming assets remain less than two percent of total assets. In addition, based on current appraisals and comparable sales data, we believe that the majority of our nonperforming assets are well-collateralized. We remain focused on maintaining strong asset quality and believe the Company is well-positioned to manage the current economic environment."
Operating noninterest income (which excludes non-operating items mentioned below) was approximately $1.3 million in the third quarter of 2009, compared to $1.1 million in the third quarter of 2008. This increase is largely due to an increase in mortgage lending income.
Total noninterest income, including non-operating items, was $1.2 million in the third quarter of 2009, compared to $1.7 million in the third quarter of 2008. Non-operating noninterest income in the third quarter of 2008 included a non-recurring $1.1 million gain on the sale of real property, which was offset by a $452 thousand charge related to an investment in an affordable housing limited partnership. Non-operating noninterest income in the third quarter of 2009 included a $189 thousand net loss on securities. The net loss on securities was attributable to other-than-temporary impairment charges recognized in earnings of $755 thousand, offset by $566 thousand in gains on the sale of securities. Of the other-than-temporary impairment charges recognized in earnings during the third quarter of 2009, $705 thousand related to additional credit losses on the Company's investments in pooled trust preferred securities.
Noninterest expense was approximately $3.4 million in the third quarter of 2009, an increase of approximately 4% from the third quarter of 2008.
In the third quarter of 2009, the Company paid cash dividends of $0.19 per share. At September 30, 2009, the Bank's regulatory capital was well above the minimum amounts required to be "well capitalized."
About Auburn National Bancorporation
Auburn National Bancorporation, Inc. (the "Company") is the parent company of AuburnBank (the "Bank"), with total assets of approximately $786 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, Hurtsboro and Notasulga, Alabama. In addition, the Bank opened a new full-service branch in Auburn during the first quarter of 2009. 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. Mortgage loan offices are located in Phenix City, Valley and Mountain Brook, 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
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, net interest margin, securities valuations and performance, loan performance, collateral values, and credit quality conditions, 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, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2008, and otherwise in our SEC reports and filings.
Explanation of Certain Unaudited Non-GAAP Financial Measures
This press release contains financial information determined by methods other than 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. 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, a clearer understanding of the Company's performance, and that operating net earnings better reflect the Company's core operating activities. Management utilizes 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 operating 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.
Financial Highlights (unaudited)* Quarter ended Nine months ended September 30, September 30, ---------------------- ---------------------- (Dollars in thousands, except per share amounts) 2009 2008 2009 2008 --------------------------------------------------------------------- Results of Operations Net interest income (a) $ 5,094 $ 4,939 $ 14,901 $ 14,394 Less: tax-equivalent adjustment 432 346 1,195 1,008 --------------------------------------------------------------------- Net interest income (GAAP) 4,662 4,593 13,706 13,386 Noninterest income 1,159 1,737 2,333 4,426 --------------------------------------------------------------------- Total revenue 5,821 6,330 16,039 17,812 Provision for loan losses 1,100 380 2,350 620 Noninterest expense 3,421 3,296 10,898 9,550 Income tax expense 277 682 590 1,952 --------------------------------------------------------------------- Net earnings $ 1,023 $ 1,972 $ 2,201 $ 5,690 ===================================================================== Per share data: Basic and diluted net earnings: GAAP $ 0.28 $ 0.54 $ 0.60 $ 1.55 Operating (b) 0.31 0.43 1.27 1.42 Cash dividends declared $ 0.190 $ 0.185 $ 0.570 $ 0.555 Weighted average shares outstanding: Basic and diluted 3,644,097 3,677,509 3,645,128 3,679,820 Shares outstanding, at period end 3,644,097 3,676,836 3,644,097 3,676,836 Book value $ 16.03 $ 14.09 $ 16.03 $ 14.09 Common stock price: High $ 29.99 $ 25.00 $ 30.00 $ 25.00 Low 22.50 22.10 18.07 19.00 Period-end: $ 24.40 $ 24.00 $ 24.40 $ 24.00 To earnings ratio 28.05x 11.82x 28.05x 11.82x To book value 152% 170% 152% 170% Performance ratios: Return on average equity: GAAP 7.64% 14.42% 5.25% 13.74% Operating (b) 8.52% 11.56% 11.06% 12.65% Return on average assets: GAAP 0.52% 1.09% 0.37% 1.06% Operating (b) 0.58% 0.88% 0.78% 0.98% Dividend payout ratio 67.86% 34.26% 95.00% 35.81% Asset Quality: Allowance for loan losses as a % of: Loans 1.42% 1.19% 1.42% 1.19% Nonperforming loans 64% 90% 64% 90% Nonperforming assets as a % of: Loans and foreclosed properties 3.52% 1.50% 3.52% 1.50% Total assets 1.75% 0.72% 1.75% 0.72% Nonaccrual loans as a % of total loans 2.20% 1.33% 2.20% 1.33% Net charge-offs as a % of average loans 0.31% 0.23% 0.46% 0.20% Other financial data: Net interest margin (a) 2.74% 2.91% 2.70% 2.87% Effective income tax rate 21.31% 25.70% 21.14% 25.54% Efficiency ratio: GAAP 58.77% 52.07% 67.95% 53.62% Operating (b) 53.10% 54.42% 53.67% 52.74% Selected average balances: Securities $ 346,353 $ 322,369 $ 346,014 $ 323,556 Loans, net of unearned income 377,170 348,093 374,795 339,158 Total assets 790,885 722,303 791,403 714,191 Total deposits 604,005 514,840 598,802 518,348 Long-term debt 118,355 125,906 120,887 121,969 Total stockholders' equity 53,584 54,720 55,949 55,221 Selected period end balances: Securities $ 338,924 $ 316,148 $ 338,924 $ 316,148 Loans, net of unearned income 385,448 354,908 385,448 354,908 Allowance for loan losses 5,458 4,226 5,458 4,226 Total assets 786,042 734,989 786,042 734,989 Total deposits 597,591 525,353 597,591 525,353 Long-term debt 118,355 128,372 118,355 128,372 Total stockholders' equity 58,405 51,810 58,405 51,810 --------------------------------------------------------------------- * Certain amounts reported in prior periods have been reclassified to conform to the current-period presentation. (a) Tax equivalent. See "Explanation of Certain Unaudited Non-GAAP Financial Measures." (b) Operating measures. See "Explanation of Certain Unaudited Non-GAAP Financial Measures."
Reconciliation of GAAP to non-GAAP Measures (unaudited): Quarter ended Nine months ended (Dollars in thousands, September 30, June 30, except per ---------------------- ---------------------- share amounts) 2009 2008 2009 2008 --------------------------------------------------------------------- Net earnings, as reported (GAAP) $ 1,023 $ 1,972 $ 2,201 $ 5,690 Non-operating items (net of 37% tax): Securities losses (gains), net 119 -- 2,440 (60) Gain on sale of premises and equipment -- (675) -- (675) Correction of prior period accounting error -- 285 -- 285 --------------------------------------------------------------------- Operating net earnings $ 1,142 $ 1,582 $ 4,641 $ 5,240 --------------------------------------------------------------------- Noninterest income, as reported (GAAP) $ 1,159 $ 1,737 $ 2,333 $ 4,426 Non-operating items: Securities losses (gains), net 189 -- 3,070 (95) Gain on sale of premises and equipment -- (1,071) -- (1,071) Correction of prior period accounting error -- 452 -- 452 --------------------------------------------------------------------- Operating noninterest income $ 1,348 $ 1,118 $ 5,403 $ 3,712 --------------------------------------------------------------------- Total Revenue, as reported (GAAP) $ 5,821 $ 6,330 $ 16,039 $ 17,812 Tax-equivalent adjustment 432 346 1,195 1,008 Non-operating items: Securities losses (gains), net 189 -- 3,070 (95) Gain on sale of premises and equipment -- (1,071) -- (1,071) Correction of prior period accounting error -- 452 -- 452 --------------------------------------------------------------------- Total Operating Revenue (tax-equivalent) $ 6,442 $ 6,057 $ 20,304 $ 18,106 --------------------------------------------------------------------- Net interest income, as reported (GAAP) $ 4,662 $ 4,593 $ 13,706 $ 13,386 Tax-equivalent adjustment 432 346 1,195 1,008 --------------------------------------------------------------------- Net interest income (tax-equivalent) $ 5,094 $ 4,939 $ 14,901 $ 14,394 --------------------------------------------------------------------- Total stockholders' equity (GAAP) $ 58,405 $ 51,810 $ 58,405 $ 51,810 Unrealized (gains) losses on available for sale securities, net of tax (1,821) 5,141 (1,821) 5,141 --------------------------------------------------------------------- Tangible Common Equity $ 56,584 $ 56,951 $ 56,584 $ 56,951 ---------------------------------------------------------------------