Auburn National Bancorporation Reports Third Quarter Net Earnings

• Press Release
• Source: Auburn National Bancorporation, Inc.
• On 4:10 pm EDT, Thursday October 22, 2009

  Third Quarter 2009 Results - Compared to Third Quarter 2008:

Related Quotes

Symbol	Price	Change
AUBN	19.72	-0.21

{"s" : "aubn","k" : "c10,l10,p20,t10","o" : "","j" : ""}

• 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 - News) 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
 ---------------------------------------------------------------------

Auburn National Bancorporation
E.L. Spencer, Jr., President, CEO and Chairman of the Board
(334) 821-9200