First Quarter 2011 Results – Compared to First Quarter 2010:
- Improved credit costs drive increase in first quarter operating EPS of $0.18 per share
- Net interest margin increased by 4 basis points
- Credit quality continued to compare favorably to industry peers; nonperforming assets to total assets of 2.51%
- Strengthened loan loss reserve to 2.13% of total loans at March 31, 2011, compared to 1.72% at March 31, 2010
- Maintained strong balance sheet with a tangible common equity to total assets of 7.60%
AUBURN, Ala., April 29, 2011 (GLOBE NEWSWIRE) -- Auburn National Bancorporation (Nasdaq:AUBN) reported net earnings of approximately $1.5 million, or $0.43 per share, for the first quarter of 2011, compared to $1.6 million, or $0.44 per share, for the first quarter of 2010.
Excluding the effects of non-operating items such as securities gains (losses) and net expenses related to other real estate owned, first quarter 2011 operating net earnings were approximately $1.6 million, or $0.44 per share, compared to first quarter 2010 operating net earnings of approximately $1.0 million, or $0.26 per share.
E. L. Spencer, Jr., President, CEO and Chairman of the Board, commented: "The Company's first quarter 2011 results reflect a significant improvement in credit costs and our continued efforts in controlling expense growth. While the Company remains focused on growing high quality loans and improving profitability, we expect a challenging operating environment in 2011 given the persistent level of high unemployment and the uncertain prospects for economic growth nationally."
Net interest income was approximately $4.8 million for the first quarter of 2011 and 2010, respectively. Improvement in the Company's net interest margin offset the decrease in total earning assets during the first quarter of 2011 when compared to the first quarter of 2010. Average total interest-earning assets decreased 2% in the first quarter of 2011 compared to the first quarter of 2010. Average loans were $372.3 million in the first quarter of 2011, a decrease of $6.8 million, or 2%, from the first quarter of 2010. Average deposits were $622.7 million in the first quarter of 2011, an increase of $23.7 million, or 4%, from the first quarter of 2010.
Nonperforming assets decreased to 2.51% of total assets at March 31, 2011, compared to 2.61% of total assets at December 31, 2010. The Company's annualized net charge-off ratio declined to 0.45% in the first quarter of 2011, compared to 1.48% in the first quarter of 2010. As a result, the provision for loan losses decreased to $0.6 million in the first quarter of 2011, compared to $1.5 million in the first quarter of 2010.
Mr. Spencer continued, "We continue to work diligently to resolve and reduce our nonperforming assets. While we are encouraged by the decrease in net charge-offs and the provision for loan losses during the first quarter of 2011, the Company expects nonperforming assets and net charge-offs to remain elevated until broader economic conditions improve further."
Operating noninterest income (which excludes non-operating items mentioned below) was approximately $1.2 million for the first quarter of 2011 and 2010, respectively.
Total noninterest income, including non-operating items, was approximately $1.1 million in the first quarter of 2011, compared to $2.3 million in the first quarter of 2010. The decrease in noninterest income was primarily due to a decrease in net securities gains of $1.1 million.
Total noninterest expense for the first quarter of 2011 was approximately $3.6 million, unchanged from the first quarter of 2010.
Income tax expense was approximately $0.2 million in the first quarter of 2011, compared to $0.4 million in the first quarter of 2010. The Company's effective tax rate in the first quarter of 2011 was approximately 9.36%, compared to 20.77% in the first quarter of 2010. The decrease in the Company's effective tax rate during the first quarter of 2011 when compared to the first quarter of 2010 is due to an increase in federal tax credits related to the Company's investments in affordable housing limited partnerships.
In the first quarter of 2011, the Company paid cash dividends of $0.20 per share. At March 31, 2011, 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 $782 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-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, nonperforming assets, charge-offs, 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, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2010, 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 regarding 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 March 31 | ||
| (Dollars in thousands, except per share amounts) | 2011 | 2010 |
| Results of Operations | ||
| Net interest income (a) | $ 5,249 | $ 5,268 |
| Less: tax-equivalent adjustment | 435 | 437 |
| Net interest income (GAAP) | 4,814 | 4,831 |
| Noninterest income | 1,145 | 2,296 |
| Total revenue | 5,959 | 7,127 |
| Provision for loan losses | 600 | 1,450 |
| Noninterest expense | 3,650 | 3,636 |
| Income tax expense | 160 | 424 |
| Net earnings | $ 1,549 | $ 1,617 |
| Per share data: | ||
| Basic and diluted net earnings: | ||
| GAAP | $ 0.43 | $ 0.44 |
| Operating (b) | 0.44 | 0.26 |
| Cash dividends declared | $ 0.20 | $ 0.195 |
| Weighted average shares outstanding: | ||
| Basic and diluted | 3,642,728 | 3,643,116 |
| Shares outstanding, at period end | 3,642,738 | 3,643,112 |
| Book value | $ 15.87 | $ 15.86 |
| Common stock price: | ||
| High | $ 20.37 | $ 21.95 |
| Low | 19.51 | 17.61 |
| Period-end: | $ 19.56 | $ 20.65 |
| To earnings ratio | 13.49 x | 19.86 x |
| To book value | 123 % | 130 % |
| Performance ratios: | ||
| Return on average equity: | ||
| GAAP | 10.84 % | 11.31 % |
| Operating (b) | 10.96 % | 6.68 % |
| Return on average assets: | ||
| GAAP | 0.80 % | 0.82 % |
| Operating (b) | 0.81 % | 0.49 % |
| Dividend payout ratio | 46.51 % | 44.32 % |
| Other financial data: | ||
| Net interest margin (a) | 2.98 % | 2.94 % |
| Effective income tax rate | 9.36 % | 20.77 % |
| Efficiency ratio (c) | 56.94 % | 48.07 % |
| Asset Quality: | ||
| Nonperforming assets: | ||
| Nonperforming (nonaccrual) loans | $ 11,166 | $ 10,934 |
| Other real estate owned | 8,450 | 7,081 |
| Total nonperforming assets | $ 19,616 | $ 18,015 |
| Net charge-offs | $ 421 | $ 1,399 |
| Allowance for loan losses as a % of: | ||
| Loans | 2.13 % | 1.72 % |
| Nonperforming loans | 70 % | 60 % |
| Nonperforming assets as a % of: | ||
| Loans and other real estate owned | 5.20 % | 4.65 % |
| Total assets | 2.51 % | 2.28 % |
| Nonperforming loans as a % of total loans | 3.03 % | 2.87 % |
| Net charge-offs (annualized) as a % of average loans | 0.45 % | 1.48 % |
| Selected average balances: | ||
| Securities | $ 320,194 | $ 331,098 |
| Loans, net of unearned income | 372,319 | 379,092 |
| Total assets | 776,795 | 784,183 |
| Total deposits | 622,720 | 599,021 |
| Long-term debt | 91,728 | 118,347 |
| Total stockholders' equity | 57,171 | 57,208 |
| Selected period end balances: | ||
| Securities | $ 321,098 | $ 333,660 |
| Loans, net of unearned income | 368,909 | 380,619 |
| Allowance for loan losses | 7,855 | 6,546 |
| Total assets | 781,557 | 791,324 |
| Total deposits | 631,394 | 608,588 |
| Long-term debt | 85,327 | 118,345 |
| Total stockholders' equity | 57,801 | 57,778 |
| *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" 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. | ||
| Reconciliation of GAAP to non-GAAP Measures (unaudited): | |||
| Quarter ended March 31 | |||
| (Dollars in thousands, except per share amounts) | 2011 | 2010 | |
| Net earnings, as reported (GAAP) | $ 1,549 | $ 1,617 | |
| Non-operating items (net of 37% tax): | |||
| Securities losses (gains), net | 29 | (661) | |
| Other real estate owned, net | (11) | 38 | |
| Operating net earnings | $ 1,567 | $ 994 | |
| Net interest income, as reported (GAAP) | $ 4,814 | $ 4,831 | |
| Tax-equivalent adjustment | 435 | 437 | |
| Net interest income (tax-equivalent) | $ 5,249 | $ 5,268 | |
| Noninterest income, as reported (GAAP) | $ 1,145 | $ 2,296 | |
| Non-operating items: | |||
| Securities losses (gains), net | 46 | (1,050) | |
| Operating noninterest income | $ 1,191 | $ 1,246 | |
| Total Revenue, as reported (GAAP) | $ 5,959 | $ 7,127 | |
| Tax-equivalent adjustment | 435 | 437 | |
| Non-operating items: | |||
| Securities losses (gains), net | 46 | (1,050) | |
| Total Operating Revenue (tax-equivalent) | $ 6,440 | $ 6,514 | |
| Noninterest expense, as reported (GAAP) | $ 3,650 | $ 3,636 | |
| Non-operating items: | |||
| Other real estate owned, net | 17 | (61) | |
| Operating noninterest expense | $ 3,667 | $ 3,575 | |
| Total stockholders' equity (GAAP) | $ 57,801 | $ 57,778 | |
| Unrealized losses (gains) on available for sale securities, net of tax | 1,590 | (800) | |
| Tangible Common Equity | $ 59,391 | $ 56,978 | |