Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2025 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period __________ to __________ Commission File Number: 0-26486 Auburn National Bancorporation, Inc. (Exact Name of Registrant as Specified in Its Charter ...

Core Viewpoint - Auburn National Bancorporation reported improved profitability and revenue growth in Q2 2025, with earnings per share of $0.52 and revenue of $8.1 million, both higher than previous quarters and the same quarter last year [1][5]. Financial Performance - Earnings per share (GAAP) increased to $0.52, up 4.0% from Q2 2024 and 18.2% from Q1 2025 [2]. - Revenue (GAAP) rose to $8.1 million, reflecting a 6.6% increase year-over-year and a 3.8% increase from Q1 2025 [2]. - Net interest income (Non-GAAP) was $7.36 million, a 9.9% increase from Q2 2024 and a 4.2% increase from Q1 2025 [2]. - The net interest margin (Non-GAAP) improved to 3.27%, up 0.21 percentage points from Q2 2024 [2][5]. - Noninterest expense increased to $5.7 million from $5.5 million in Q2 2024, but decreased from $5.9 million in Q1 2025 [2][7]. Asset Quality and Balance Sheet - Total assets were reported at $1.0 billion, with loans at $562.7 million, remaining stable compared to the previous quarter [6]. - Deposit balances increased to $939.9 million, up from $910.5 million in Q1 2025, primarily due to fluctuations in reciprocal customer deposits [6]. - Nonperforming assets fell to 0.03% of total assets, indicating strong asset quality [8]. Dividend and Capital Management - The bank maintained a quarterly dividend of $0.27, representing a 51.9% payout of earnings, down from 61.36% in Q1 2025 [9]. - Tangible common equity rose to 8.36% of assets, up from 7.34% in Q2 2024, reflecting improved capital ratios [6]. Future Outlook - Management expects continued improvement in net interest margin as loans and securities re-price in the current rate cycle, although loan demand has slowed [10][11]. - There is no specific financial guidance for future earnings or revenue, but management acknowledged potential changes in noninterest income due to mortgage lending trends [10][11].

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Auburn National Bancorporation reported strong Q2 2025 results with **$1.8 million** net earnings and **$0.52 EPS**, driven by increased net interest income, expanded net interest margin, and excellent credit quality Quarterly Earnings Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Earnings (million USD) | $1.8 | $1.5 | $1.7 | | EPS (diluted, USD) | $0.52 | $0.44 | $0.50 | Six-Month Earnings Performance | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Earnings (million USD) | $3.4 | $3.1 | | EPS (diluted, USD) | $0.96 | $0.89 | - Key drivers for the quarter included an **18%** QoQ increase in EPS, a **4%** QoQ rise in net interest income, a **7 basis point** QoQ expansion in net interest margin, and a **3%** QoQ decrease in noninterest expense, all supported by strong credit quality with nonperforming assets at only **0.03%** of total assets[7](index=7&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributes strong quarterly results to excellent credit quality and improving net interest margin, anticipating further expansion despite slower loan demand, while maintaining strong capital and liquidity - The CEO emphasized that strong credit quality and continued improvement in the net interest margin were key drivers of the second quarter's performance[3](index=3&type=chunk) - Management remains optimistic about further net interest margin improvement from the re-pricing of loans and securities, even with slower loan demand[3](index=3&type=chunk) - The company's capital and liquidity are described as strong and well-positioned to serve its customers[3](index=3&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) This section provides an in-depth analysis of the company's net interest income, credit quality, noninterest income, and expenses, highlighting key trends and performance drivers [Net Interest Income and Net Interest Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income (tax-equivalent) increased to **$7.4 million** in Q2 2025, with net interest margin expanding to **3.27%** due to lower deposit costs and improved asset yields Net Interest Income (Tax-Equivalent) | Period | Net Interest Income (Tax-Equivalent, million USD) | | :--- | :--- | | Q2 2025 | $7.4 | | Q1 2025 | $7.1 | | Q2 2024 | $6.7 | Net Interest Margin (Tax-Equivalent) | Period | Net Interest Margin (Tax-Equivalent, %) | | :--- | :--- | | Q2 2025 | 3.27% | | Q1 2025 | 3.20% | | Q2 2024 | 3.06% | - The increase in net interest margin was primarily due to a lower cost of interest-bearing deposits compared to Q1 2025, and improved yields on interest-earning assets compared to Q2 2024[5](index=5&type=chunk) [Credit Quality and Provision for Credit Losses](index=1&type=section&id=Credit%20Quality%20and%20Provision%20for%20Credit%20Losses) Credit quality remained exceptionally strong with nonperforming assets at **0.03%** of total assets, while a **$113 thousand** provision for credit losses was recorded, maintaining the allowance for credit losses at **1.24%** of total loans Nonperforming Assets (NPA) | Date | NPA (million USD) | NPA as % of Total Assets (%) | | :--- | :--- | :--- | | June 30, 2025 | $0.3 | 0.03% | | March 31, 2025 | $0.5 | 0.05% | | June 30, 2024 | $0.8 | 0.08% | - The company recorded a provision for credit losses of **$113 thousand** in Q2 2025, compared to a negative provision of **$10 thousand** in Q1 2025 and a negative provision of **$123 thousand** in Q2 2024[6](index=6&type=chunk) Allowance for Credit Losses (ACL) | Date | ACL (million USD) | ACL as % of Total Loans (%) | | :--- | :--- | :--- | | June 30, 2025 | $7.0 | 1.24% | | March 31, 2025 | $6.8 | 1.20% | | June 30, 2024 | $7.1 | 1.24% | [Noninterest Income and Expense](index=2&type=section&id=Noninterest%20Income%20and%20Expense) Noninterest income was **$0.8 million** in Q2 2025, while noninterest expense decreased **3%** sequentially to **$5.7 million** due to lower occupancy costs, despite a year-over-year increase from higher salaries and professional fees Noninterest Income and Expense | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Noninterest Income (million USD) | $0.8 | $0.7 | $0.9 | | Noninterest Expense (million USD) | $5.7 | $5.9 | $5.5 | - The decrease in noninterest expense from Q1 2025 was mainly due to lower net occupancy and other noninterest expenses[9](index=9&type=chunk) - The increase in noninterest expense from Q2 2024 was primarily due to routine increases in salaries and benefits, along with higher professional fees[9](index=9&type=chunk) [Balance Sheet and Capital](index=2&type=section&id=Balance%20Sheet%20and%20Capital) This section provides an overview of the company's balance sheet composition, including assets, loans, deposits, and stockholders' equity, along with capital adequacy and dividend information [Balance Sheet Analysis](index=2&type=section&id=Balance%20Sheet%20Analysis) Total assets were **$1.0 billion** as of June 30, 2025, with net loans at **$562.7 million** and total deposits at **$939.9 million**, maintaining a clean funding profile with no wholesale funding Selected Period-End Balances | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets (USD) | $1.0 billion | $996.8 million | $1.0 billion | | Loans, net (million USD) | $562.7 | $560.7 | $578.1 | | Total Deposits (million USD) | $939.9 | $910.5 | $946.4 | - The year-over-year decrease in loans was primarily due to the payoff of a single **$14.9 million** loan, the proceeds of which were used to repay **$15.0 million** of high-cost non-core funding[12](index=12&type=chunk) - The company had no FHLB advances or other wholesale funding outstanding at the end of Q2 2025, Q1 2025, or Q2 2024[12](index=12&type=chunk) [Stockholders' Equity and Dividends](index=2&type=section&id=Stockholders%27%20Equity%20and%20Dividends) Stockholders' equity grew to **$86.1 million** or **$24.64 per share**, driven by net earnings and reduced unrealized securities losses, while the company paid a **$0.27 per share** cash dividend and maintained strong regulatory capital ratios Stockholders' Equity | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Equity (million USD) | $86.1 | $83.1 | $75.2 | | Book Value/Share (USD) | $24.64 | $23.79 | $21.53 | - The company paid cash dividends of **$0.27 per share** in the second quarter of 2025[15](index=15&type=chunk) - The Tangible Common Equity (TCE) ratio was **8.36%** at June 30, 2025, and the Bank's regulatory capital ratios were well above the minimums required to be 'well capitalized'[14](index=14&type=chunk)[15](index=15&type=chunk) [Corporate Information and Disclosures](index=3&type=section&id=Corporate%20Information%20and%20Disclosures) This section provides an overview of Auburn National Bancorporation, parent of AuburnBank, including cautionary notices on forward-looking statements and explanations of non-GAAP financial measures used for enhanced comparability - The company is the parent of AuburnBank, which has approximately **$1.0 billion** in total assets and has operated continuously since 1907, serving East Alabama through seven branches and a loan production office[16](index=16&type=chunk) - The press release contains forward-looking statements that are subject to risks and uncertainties, as detailed in the company's SEC filings[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - The report utilizes non-GAAP financial measures, such as net interest income on a tax-equivalent basis and the efficiency ratio, to provide better comparability Reconciliations to GAAP are provided[20](index=20&type=chunk) [Financial Tables](index=4&type=section&id=Financial%20Tables) This section provides detailed unaudited financial tables, including results of operations, per-share data, performance ratios, asset quality metrics, balance sheet figures, and GAAP to non-GAAP reconciliations for relevant periods - The Financial Highlights table provides a comprehensive summary of the income statement, per-share data, performance ratios, and asset quality metrics for the quarters and six months ended June 30, 2025 and 2024[21](index=21&type=chunk) - A table of selected average and period-end balances for key assets, liabilities, and equity is provided for comparative analysis[22](index=22&type=chunk) - A reconciliation of GAAP net interest income to the non-GAAP tax-equivalent net interest income measure is included to clarify the impact of tax-exempt income[24](index=24&type=chunk)

Second Quarter 2025 Highlights: AUBURN, Ala., July 22, 2025 (GLOBE NEWSWIRE) -- Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net earnings of $1.8 million, or $0.52 per share, for the second quarter of 2025, compared to $1.5 million, or $0.44 per share, for the first quarter of 2025, and $1.7 million, or $0.50 per share, for the second quarter of 2024. Net earnings were $3.4 million, or $0.96 per share, for the first six months of 2025, compared to $3.1 million, or $0.89 per share, for the fi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 2025 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period __________ to __________ Commission File Number: 0-26486 Auburn National Bancorporation, Inc. (Exact Name of Registrant as Specified in Its Charte ...

Financial Performance - Net earnings for Q1 2025 were $1.5 million, or $0.44 per share, compared to $1.4 million, or $0.39 per share in Q1 2024, reflecting a 7.7% year-over-year increase in earnings per share [3][8]. - Net earnings for Q1 2025 were $1,530,000, compared to $1,371,000 in Q1 2024, representing an increase of 11.6% [23]. - Basic and diluted net earnings per share for Q1 2025 were $0.44, up from $0.39 in Q1 2024, marking a growth of 12.8% [23]. - Total revenue for Q1 2025 was $7,792,000, slightly up from $7,544,000 in Q1 2024, reflecting a growth of 3.3% [23]. Interest Income and Margin - Net interest income (tax-equivalent) increased to $7.1 million in Q1 2025, a 6% increase compared to $6.7 million in Q1 2024 [5][8]. - Net interest income for Q1 2025 was $7,045,000, an increase of 5.8% compared to $6,657,000 in Q1 2024 [23]. - Net interest margin (tax-equivalent) improved to 3.20% in Q1 2025, up from 3.04% in Q1 2024, driven by a favorable asset mix and improved yields [6][8]. Asset Quality - Nonperforming assets were $0.5 million, or 0.05% of total assets, at March 31, 2025, down from $0.9 million, or 0.09% of total assets, at March 31, 2024 [7][8]. - Nonperforming loans decreased to $520,000 in Q1 2025 from $878,000 in Q1 2024, showing improved asset quality [23]. - The allowance for credit losses was $6.8 million, or 1.20% of total loans, at March 31, 2025, down from 1.27% at March 31, 2024 [9][8]. - The allowance for credit losses as a percentage of loans was 1.20% in Q1 2025, slightly down from 1.27% in Q1 2024 [23]. Deposits and Assets - Total assets increased to $996.8 million at March 31, 2025, compared to $979.0 million at March 31, 2024, reflecting growth in the bank's balance sheet [14][8]. - Total deposits rose to $910.5 million at March 31, 2025, compared to $899.7 million at March 31, 2024, indicating strong deposit growth [14][8]. - Total assets at the end of Q1 2025 were $996,786,000, up from $979,039,000 at the end of Q1 2024 [24]. - Total deposits increased to $910,503,000 in Q1 2025 from $899,673,000 in Q1 2024, reflecting a growth of 1.8% [24]. Expenses and Efficiency - Noninterest income remained stable at $0.8 million for Q1 2025, consistent with Q4 2024, but down from $0.9 million in Q1 2024 [10][8]. - Noninterest expense increased to $5.9 million in Q1 2025, up from $5.7 million in Q1 2024, primarily due to routine salary and benefit increases [11][8]. - The efficiency ratio for Q1 2025 was 75.30%, compared to 75.03% in Q1 2024, indicating a slight decline in operational efficiency [23]. Shareholder Returns - The Company paid cash dividends of $0.27 per share in Q1 2025, maintaining a consistent return to shareholders [17][8]. Return on Equity - The return on average equity (annualized) improved to 7.83% in Q1 2025 from 7.13% in Q1 2024 [23].

Deposits and Loans - The Bank had the largest share of deposits in Lee County, Alabama, with 21.3% as of June 30, 2024[22]. - As of December 31, 2024, the Bank's commercial real estate loans totaled $290.2 million, representing 51% of total loans[28]. - At December 31, 2024, the Bank had $82.8 million in construction and land development loans, representing approximately 73% of the Bank's total risk-based capital[6]. - The Bank had $324.0 million in total CRE loans, which is approximately 286% of the Bank's total risk-based capital at December 31, 2024[7]. - The company had 42% of its loan portfolio in commercial real estate (CRE) loans at year-end 2024, up from 40% at year-end 2023, which raises concerns about potential loan losses due to market volatility[213]. Economic Conditions - The unemployment rate in Lee County was 2.8% as of year-end 2024, compared to 3.3% for the State of Alabama[25]. - The Auburn-Opelika MSA population is estimated to grow by 6.6% from 2023 to 2028, with household income projected to increase by 14.25% to $69,213 during the same period[26]. - Higher interest rates and increased housing costs since 2020 have slowed housing sales, adversely affecting mortgage loan production and residential mortgage collateral values[198]. - The Tax Cuts and Jobs Act's limitations on the deductibility of residential mortgage interest could negatively impact consumer behavior and housing market activity[200]. - The concentration of commercial real estate loans poses risks of possible loss due to market conditions and regulatory scrutiny, necessitating improved underwriting and risk management policies[212]. Regulatory Environment - The Company has a "satisfactory" CRA rating as of February 28, 2022, with satisfactory ratings on both its lending and community development tests[60]. - The New CRA Regulations classify banks into categories based on asset size, with the Bank transitioning from "intermediate small bank" to "intermediate bank" due to assets of $600 million to $2.0 billion[64]. - The New CRA Regulations will become effective on January 1, 2026, with data reporting requirements starting on January 1, 2027[63]. - The Federal Reserve requires bank holding companies to act as a source of financial and managerial strength to their FDIC-insured subsidiaries[44]. - The Federal Reserve and the Alabama Superintendent must approve mergers and acquisitions by the Bank, with the FDIC and OCC also having a role in commenting on such transactions[49]. Management and Employees - The Company had 145 full-time equivalent employees as of December 31, 2024, with an average tenure of approximately 11 years[30]. - The Company successfully transitioned management in 2022, with a new President and CFO who have extensive experience in financial services[32]. - The Company offers a variety of equity and equity-based awards under its 2024 Equity and Incentive Compensation Plan to attract and retain talent[33]. Financial Performance - The Bank paid total cash dividends of approximately $3.8 million during 2024, with net profits for the year and retained net profits for the preceding two years totaling $9.7 million[118]. - As of December 31, 2024, the Bank is categorized as "well capitalized" under regulatory standards, maintaining a total risk-based capital ratio of 10% or greater[117]. - The capital conservation buffer for the Bank exceeded 2.5% at December 31, 2024, allowing for distributions from eligible retained income[116]. Competition - The East Alabama banking markets are highly competitive, served by 19 banks, including 10 headquartered outside Alabama[214]. - Competitors include national and regional banks such as J.P. Morgan Chase, Wells Fargo, and PNC, which have greater resources and broader geographic reach[214]. - The presence of fintech and non-bank competitors is increasing, posing additional challenges to customer retention[214]. - The rapid growth of nationwide lenders operating online is a significant threat to market position[214]. Risk Management - The risks associated with operational, financial, and legal factors are intertwined and could significantly affect the company's performance[189]. - Future acquisitions may disrupt business operations and dilute shareholder value, posing additional risks to financial condition[194]. - The allowance for loan losses may prove inadequate due to unanticipated adverse changes in the economy, including inflation and higher interest rates, which could materially affect the company's financial condition and results of operations[196]. - Nonperforming loans were 0.09% of total loans as of December 31, 2024, with no other real estate owned due to foreclosures, indicating a stable credit quality[197]. Compliance and Legal - The Company expects to continue spending significant amounts on compliance with SEC and FDIC rules regarding internal controls[95]. - The Company adopted the CECL accounting standard effective January 1, 2023, recognizing all effects on its regulatory capital in the year of adoption[111]. - The Company has not elected to become a financial holding company but may consider this option in the future[40]. - The Anti-Money Laundering Act of 2020 and the Corporate Transparency Act require entities to report beneficial ownership information, effective January 1, 2024[88].

Financial Performance - Net income for Q4 2024 was $1.6 million, or $0.45 per share, compared to a net loss of $(4.0) million, or $(1.14) per share in Q4 2023[4] - Full year 2024 net earnings were $6.4 million, or $1.83 per share, up from $1.4 million, or $0.40 per share in 2023[5] - Total revenue for the year ended December 31, 2024, was $30,599,000, compared to $23,347,000 in 2023, marking a 31.2% increase[26] - Net earnings for the year ended December 31, 2024, were $6,397,000, compared to $1,395,000 in 2023, reflecting a substantial increase of 358.4%[26] Interest Income and Margin - Net interest income (tax-equivalent) increased to $7.0 million in Q4 2024, a 14% increase compared to Q4 2023[7][12] - Net interest income for Q4 2024 was $6,969,000, an increase from $6,059,000 in Q4 2023, representing a 15.0% year-over-year growth[26] - Net interest margin (tax-equivalent) improved to 3.09% in Q4 2024, up 44 basis points from Q4 2023[8][12] Asset Quality - Nonperforming assets were $0.5 million, or 0.05% of total assets, at December 31, 2024, down from 0.09% at December 31, 2023[9][12] - The allowance for credit losses was $6.9 million, or 1.22% of total loans, at December 31, 2024, reflecting improved economic forecasts[11] - Nonperforming loans decreased to $503,000 in Q4 2024 from $911,000 in Q4 2023, indicating a 44.8% reduction in nonperforming assets[26] - The provision for credit losses for Q4 2024 was $(48,000), a decrease from $(127,000) in Q3 2024, indicating improved asset quality[26] Dividends and Equity - The Company paid cash dividends of $0.27 per share in Q4 2024[20] - Cash dividends declared remained stable at $0.27 per share for Q4 2024, consistent with the previous quarters[26] - Total stockholders' equity increased to $83,325,000 in Q4 2024 from $60,372,000 in Q4 2023, representing a growth of 38.1%[27] Efficiency and Management - The efficiency ratio improved to 69.86% in Q4 2024 from 71.83% in Q3 2024, demonstrating better cost management[26] - The return on average equity for Q4 2024 was 7.49%, down from 9.10% in Q3 2024, reflecting changes in profitability[26] Loan Growth - Average loans for Q4 2024 were $567.6 million, a 3% increase from Q4 2023[8][12] - Total assets were $977.3 million at December 31, 2024, compared to $975.3 million at December 31, 2023[17] - Noninterest income for Q4 2024 was $845,000, a significant recovery from a loss of $5,429,000 in Q4 2023[26]

Financial Performance - Net interest income for the quarter ended September 30, 2024, was $6,790 thousand, an increase of 8.2% compared to $6,272 thousand for the same quarter in 2023[7]. - Net earnings for the quarter ended September 30, 2024, were $1,732 thousand, up 16.4% from $1,488 thousand in the same quarter of 2023[9]. - The company reported a comprehensive income of $10,070 thousand for the quarter ended September 30, 2024, compared to a loss of $8,453 thousand in the same quarter of 2023[9]. - Basic and diluted earnings per share for the quarter were $0.50, an increase from $0.43 in the same quarter of 2023[7]. - Net earnings for the first nine months of 2024 were $4.8 million, a decrease of 11.1% compared to $5.4 million for the same period in 2023[103]. - Basic and diluted earnings per share for the first nine months of 2024 were $1.38, down from $1.54 in the first nine months of 2023, representing a decrease of 10.4%[103]. - Total revenue for the nine months ended September 30, 2024, was $22,785,000, compared to $22,717,000 for the same period in 2023, reflecting a slight increase[196]. Asset and Equity Growth - Total assets increased to $990,143 thousand as of September 30, 2024, up from $975,255 thousand at December 31, 2023, representing a growth of 1.8%[5]. - The total stockholders' equity increased to $84,336 thousand as of September 30, 2024, up from $76,507 thousand at December 31, 2023, indicating a growth of 10.5%[6]. - The Company’s consolidated stockholders' equity increased to $84.3 million as of September 30, 2024, up from $76.5 million at December 31, 2023, driven by net earnings of $4.8 million[157]. Deposits and Loans - Total deposits reached $901,724 thousand as of September 30, 2024, an increase of 0.5% from $896,243 thousand at December 31, 2023[4]. - The company reported a net decrease in noninterest-bearing deposits of $479,000 for the nine months ended September 30, 2024, contrasting with a significant decrease of $32,717,000 in the same period of 2023[12]. - Total loans as of September 30, 2024, amounted to $565.699 million, with current loans at $564.816 million and non-accrual loans at $775 thousand[50]. - The loan portfolio composition included commercial real estate (53%), residential real estate (21%), construction and land development (14%), and commercial and industrial (11%) as of September 30, 2024[131]. Credit Quality and Provisions - The provision for credit losses for the quarter was a reversal of $127 thousand, compared to a provision of $105 thousand in the same quarter of 2023[7]. - The provision for credit losses was $84,000 for the nine months ended September 30, 2024, compared to a reversal of $191,000 in the same period of 2023, indicating a shift in credit quality assessment[12]. - The total allowance for credit losses was approximately $6.9 million at both September 30, 2024, and December 31, 2023, representing 1.22% of total loans[138]. - Nonperforming loans as a percentage of total loans remained stable at 0.14% in Q3 2024, compared to 0.14% in Q2 2024[194]. Interest Income and Expenses - Net interest income (tax-equivalent) for the first nine months of 2024 was $20.2 million, a 2% decrease from $20.6 million in the first nine months of 2023[104]. - The average yield on loans was 5.18% in the first nine months of 2024, up from 4.71% in the same period of 2023[133]. - The cost of total interest-bearing liabilities increased by 78 basis points to 1.80% in the first nine months of 2024, compared to 1.02% in the same period of 2023[116]. - The average rate paid on total interest-bearing deposits increased to 1.80% in the first nine months of 2024 from 1.02% in the same period of 2023[150]. Noninterest Income and Expenses - Noninterest income for the quarter was $846 thousand, slightly down from $865 thousand in the same quarter of 2023[7]. - Noninterest income increased to $2.6 million in the first nine months of 2024, compared to $2.4 million in the first nine months of 2023[107]. - Noninterest expense decreased to $16.7 million in the first nine months of 2024, compared to $16.8 million for the same period in 2023[108]. Regulatory and Compliance - At September 30, 2024, the Bank's total risk-based capital ratio was 15.76%, well above the minimum required to be "well capitalized" under current regulatory standards[110]. - The Bank's tier 1 leverage ratio was 10.43% and total risk-based capital ratio was 15.76% at September 30, 2024, exceeding the minimum regulatory capital requirements[160]. - The Company operates primarily in East Alabama, with a focus on maintaining strong regulatory compliance and financial stability[94]. Market and Economic Conditions - Inflation and changing interest rates have impacted the Company's deposit costs and overall financial performance, with a noted increase in noninterest expenses[184]. - The Federal Reserve increased its target federal funds rate to a range of 4.75% to 5.00% on September 18, 2024, in response to moderating inflation[186].

Financial Performance - Net earnings for Q3 2024 were $1.7 million, or $0.50 per share, consistent with Q2 2024 and an increase from $1.5 million, or $0.43 per share, in Q3 2023[1] - Net earnings for Q3 2024 were $1,732,000, up from $1,488,000 in Q3 2023, reflecting a 16.4% increase[13] - Total revenue for Q3 2024 reached $7,636,000, compared to $7,137,000 in Q3 2023, marking a 7.0% increase[13] - The company declared cash dividends of $0.27 per share, consistent with the previous quarter and the same quarter last year[13] Asset Quality - Nonperforming assets were $0.8 million, or 0.08% of total assets, at September 30, 2024, down from $1.2 million, or 0.12% of total assets, at September 30, 2023[3] - Nonperforming loans as a percentage of total loans remained stable at 0.14% for Q3 2024[15] Interest Income and Margin - Net interest income for Q3 2024 was $6,790,000, an increase from $6,272,000 in Q3 2023, representing a 8.2% year-over-year growth[13] - Net interest margin (tax-equivalent) was 3.05% in Q3 2024, compared to 2.73% in Q3 2023[3] - The net interest margin for Q3 2024 was 3.05%, unchanged from Q2 2024[13] Loans and Credit Losses - Average loans increased by 8% to $571.7 million in Q3 2024 compared to Q3 2023[3] - The allowance for credit losses was $6.9 million, or 1.22% of total loans, at September 30, 2024, down from $7.1 million, or 1.24% of total loans, at June 30, 2024[4] - The allowance for credit losses was $6,876,000, down from $7,142,000 in Q2 2024[14] Equity and Return Metrics - Return on Assets (annualized) improved to 0.71% in Q3 2024, up from 0.58% in Q3 2023[1] - The return on average equity (annualized) for Q3 2024 was 9.10%, slightly down from 9.63% in Q2 2024[13] - The Company’s tangible common equity (TCE) ratio improved to 8.52% at September 30, 2024, compared to 5.96% at September 30, 2023[8] Noninterest Income and Expenses - Noninterest income was $0.8 million in Q3 2024, a decrease from $0.9 million in both Q2 2024 and Q3 2023[5] - Noninterest expense for Q3 2024 was $5,500,000, a decrease from $5,519,000 in Q2 2024[13] Total Assets - Total assets were $990.1 million at September 30, 2024, a decrease from $1.0 billion at June 30, 2024[6] - Total assets as of September 30, 2024, were $990,143,000, a decrease from $1,025,054,000 at the end of Q2 2024[14] Strategic Decisions - The Company plans to close its Corner Village branch by year-end 2024 to achieve additional cost savings starting in 2025[2]