Total Assets and Liabilities - Total assets increased to $1,025.1 million as of June 30, 2024, compared to $975.3 million as of December 31, 2023[7] - Total deposits grew to $946.4 million as of June 30, 2024, compared to $896.2 million as of December 31, 2023[7] - Loans, net of allowance for credit losses, increased to $570.9 million as of June 30, 2024, from $550.4 million as of December 31, 2023[7] - Cash and cash equivalents increased to $114.5 million as of June 30, 2024, from $71.4 million as of December 31, 2023[7] - Total assets at fair value decreased by 6.1% from $270.91 million in December 2023 to $254.36 million in June 2024[79] - Total assets increased to $1,025,054 thousand in June 2024 from $975,255 thousand in December 2023, reflecting a growth of 5.1%[7] - Total deposits grew to $946,405 thousand in June 2024 from $896,243 thousand in December 2023, an increase of 5.6%[7] - Loans, net increased to $570,926 thousand in June 2024 from $550,431 thousand in December 2023, reflecting a growth of 3.7%[7] - Cash and cash equivalents increased to $114,499 thousand in June 2024 from $71,369 thousand in December 2023, reflecting a growth of 60.4%[7] - Total stockholders' equity decreased to $75,209 thousand in June 2024 from $76,507 thousand in December 2023, a decline of 1.7%[7] Net Interest Income and Margin - Net interest income for the six months ended June 30, 2024, was $13.4 million, a decrease from $14.0 million in the same period in 2023[9] - Net interest income (tax-equivalent) decreased by 6% to $13.4 million in the first six months of 2024, compared to $14.2 million in the same period of 2023[104] - The Company's net interest margin (tax-equivalent) was 3.05% for the first six months of 2024, down from 3.10% in the first six months of 2023[104] - Net interest income (tax-equivalent) for Q2 2024 was $6.7 million, down from $7.0 million in Q2 2023, primarily due to higher deposit costs[110] - Net interest margin (tax-equivalent) increased to 3.06% in Q2 2024 from 3.03% in Q2 2023, driven by a favorable asset mix and higher yields on interest-earning assets[110] - Net interest income (tax-equivalent) for the first six months of 2024 was $13.4 million, a 6% decrease compared to $14.2 million in the same period of 2023[113] - The tax-equivalent yield on total interest-earning assets increased by 62 basis points to 4.29% in the first six months of 2024 compared to 3.67% in the same period of 2023[114] - The cost of total interest-bearing liabilities increased by 89 basis points to 1.71% in the first six months of 2024 compared to 0.82% in the same period of 2023[114] - Net interest income for Q2 2024 increased to $6,728 thousand, up from $6,677 thousand in Q1 2024[179] - Net interest income for Q2 2024 was $6.7 million, slightly down from $7.0 million in Q2 2023, with the net interest margin increasing from 3.03% to 3.06%[182] - Net interest income for the six months ended June 30, 2024, was $13.4 million, down from $14.2 million in 2023, with the net interest margin decreasing from 3.10% to 3.05%[183] - Net interest income for the six months ended June 30, 2024, was $13,366 thousand, a decrease of 4.5% compared to $13,997 thousand in the same period of 2023[9] Net Earnings and Comprehensive Income - Net earnings for the six months ended June 30, 2024, were $3.1 million, down from $3.9 million in the same period in 2023[9] - Comprehensive income for the six months ended June 30, 2024, was $0.9 million, compared to $5.7 million in the same period in 2023[13] - Net earnings per share (basic and diluted) for the six months ended June 30, 2024, were $0.89, down from $1.11 in the same period in 2023[9] - Net earnings for the six months ended June 30, 2024, were $3.105 million, compared to $3.892 million in the same period in 2023[16] - Net earnings for Q2 2024 were $1.734 million, a decrease from $1.928 million in Q2 2023[29] - Basic net earnings per share for Q2 2024 were $0.50, down from $0.55 in Q2 2023[29] - Net earnings for the first six months of 2024 were $3.1 million, a decrease from $3.9 million in the same period of 2023[103] - Basic and diluted earnings per share for the first six months of 2024 were $0.89, compared to $1.11 in the first six months of 2023[103] - Net earnings for Q2 2024 were $1.7 million, or $0.50 per share, compared to $1.9 million, or $0.55 per share, in Q2 2023[110] - Net earnings for Q2 2024 were $1,734 thousand, up from $1,371 thousand in Q1 2024[179] - Net earnings for the six months ended June 30, 2024, were $3,105 thousand, a decrease of 20.2% compared to $3,892 thousand in the same period of 2023[9] - Comprehensive income for the six months ended June 30, 2024, was $850 thousand, a significant decrease compared to $5,740 thousand in the same period of 2023[13] Noninterest Income and Expense - Noninterest income for the six months ended June 30, 2024, was $1.8 million, up from $1.6 million in the same period in 2023[9] - Total noninterest expense for the six months ended June 30, 2024, was $11.2 million, a slight decrease from $11.4 million in the same period in 2023[9] - Noninterest income increased to $1.8 million in the first six months of 2024, up from $1.6 million in the same period of 2023[106] - Noninterest expense decreased to $11.2 million in the first six months of 2024, compared to $11.4 million in the same period of 2023[107] - Noninterest income for Q2 2024 was $0.9 million, up from $0.8 million in Q2 2023[110] - Noninterest expense for Q2 2024 was $5.5 million, down from $5.8 million in Q2 2023[110] - Noninterest expense decreased to $5.5 million in Q2 2024 from $5.8 million in Q2 2023[125] - Total noninterest expense for the six months ended June 30, 2024, was $11,194 thousand, a decrease of 2.1% compared to $11,429 thousand in the same period of 2023[9] Loans and Credit Quality - Loans secured by real estate accounted for 84.8% of the company's total loan portfolio as of June 30, 2024[44] - Commercial real estate loans increased to $297.23 million as of June 30, 2024, compared to $287.31 million as of December 31, 2023[44] - Residential real estate loans rose to $119.43 million as of June 30, 2024, up from $117.46 million as of December 31, 2023[44] - Nonaccrual loans decreased to $794,000 as of June 30, 2024, down from $911,000 as of December 31, 2023[52] - Total accruing loans increased to $577.27 million as of June 30, 2024, compared to $556.38 million as of December 31, 2023[52] - Commercial and industrial loans grew to $77.63 million as of June 30, 2024, up from $73.37 million as of December 31, 2023[44] - Construction and land development loans increased to $73.69 million as of June 30, 2024, compared to $68.33 million as of December 31, 2023[44] - Consumer installment loans decreased to $10.09 million as of June 30, 2024, down from $10.83 million as of December 31, 2023[44] - The company's loan distribution is primarily concentrated in Lee County, Alabama, and surrounding areas[44] - Total owner occupied commercial real estate loans amounted to $63.384 million, with $1.185 million in special mention and $753,000 in nonaccrual status[57] - Hotel/motel loans totaled $38.542 million, all classified as pass with no special mention, substandard, or nonaccrual loans[57] - Multi-family loans as of June 30, 2024, were $44.135 million, all classified as pass with no special mention, substandard, or nonaccrual loans[58] - Other loans as of June 30, 2024, totaled $151.171 million, with $905,000 in special mention and $126,000 in substandard status[58] - Total consumer mortgage loans were $60.957 million, including $490,000 in special mention, $495,000 in substandard, and $41,000 in nonaccrual status[59] - Investment property loans amounted to $58.47 million, with $401,000 in substandard status[59] - Total loans as of December 31, 2023, were $578.068 million, with $3.436 million in special mention, $1.554 million in substandard, and $794,000 in nonaccrual status[59] - Commercial and industrial loans as of December 31, 2023, totaled $73.374 million, with $261,000 in substandard status[60] - Construction and land development loans as of December 31, 2023, were $68.329 million, all classified as pass with no special mention, substandard, or nonaccrual loans[60] - Multi-family loans as of December 31, 2023, were $45.841 million, all classified as pass with no special mention, substandard, or nonaccrual loans[62] - Total loans amounted to $557.294 million, with pass loans making up $553.961 million, special mention loans at $841 thousand, substandard loans at $1.581 million, and nonaccrual loans at $911 thousand[63] - The provision for credit losses in Q2 2024 was a reversal of $123 thousand, compared to a reversal of $362 thousand in Q2 2023[65] - The allowance for credit losses for loans ended at $7.142 million in Q2 2024, down from $7.215 million at the beginning of the quarter[66] - Nonaccrual loans totaled $794 thousand as of June 30, 2024, with $753 thousand in commercial real estate and $41 thousand in residential real estate[69] - The company adopted ASC 326 on January 1, 2023, introducing the CECL methodology for estimating expected credit losses[64] - Mortgage servicing rights (MSRs) are measured under the amortization method, with impairment evaluated quarterly based on fair value[70][71] - MSRs, net ending balance for Q2 2024 was $942 thousand, compared to $1,050 thousand in Q2 2023, reflecting a decrease of 10.3%[72] - Loans, net fair value decreased by 2.0% from $526.37 million in December 2023 to $536.97 million in June 2024[91] - Collateral dependent loans fair value decreased by 3.8% from $783 thousand in December 2023 to $753 thousand in June 2024[83] - Mortgage servicing rights, net fair value decreased by 5.0% from $992 thousand in December 2023 to $942 thousand in June 2024[83] - Loans held for sale remained stable at $30 thousand from December 2023 to June 2024[83] - The allowance for credit losses was $7.1 million, or 1.24% of total loans, at June 30, 2024, compared to $6.9 million, or 1.23% of total loans, at December 31, 2023[105] - Total loans increased to $578.1 million at June 30, 2024, a 4% increase compared to $557.3 million at December 31, 2023[126] - Commercial real estate loans accounted for 51% of the total loan portfolio at June 30, 2024[126] - The average yield on loans and loans held for sale was 5.12% in the first six months of 2024, compared to 4.68% in the same period of 2023[127] - The allowance for credit losses was $7.1 million at June 30, 2024, representing 1.24% of total loans, compared to $6.9 million (1.23%) at December 31, 2023[131] - Nonperforming assets decreased to $0.8 million at June 30, 2024 from $0.9 million at December 31, 2023[135] - Net recoveries (charge-offs) were $(9) thousand in Q2 2024, compared to $67 thousand in Q1 2024[134] - Nonperforming loans as a percentage of total loans decreased to 0.14% in Q2 2024 from 0.15% in Q1 2024[179] Deposits and Funding - Total deposits increased to $946.4 million at June 30, 2024, up from $896.2 million at December 31, 2023[139] - Money market deposits increased significantly to $205.7 million at June 30, 2024 from $148.0 million at December 31, 2023[139] - Total deposits increased to $946.4 million at June 30, 2024, compared to $896.2 million at December 31, 2023, primarily due to a decrease in reciprocal customer deposits[140] - Noninterest-bearing deposits were $263.1 million, or 28% of total deposits, at June 30, 2024, down from $270.7 million, or 30% of total deposits, at December 31, 2023[140] - The average rate paid on total interest-bearing deposits was 1.72% in the first six months of 2024, compared to 0.81% in the first six months of 2023[140] - Estimated uninsured deposits totaled $364.9 million, or 39% of total deposits, at June 30, 2024, compared to $356.3 million, or 40% of total deposits, at December 31, 2023[141] - The Bank had $293.7 million of available credit from the FHLB and $61.0 million of available federal funds lines with no borrowings outstanding as of June 30, 2024[162] - The Bank had outstanding standby letters of credit of $0.5 million and unfunded loan commitments of $63.8 million as of June 30, 2024[164] - The aggregate unpaid principal balance of residential mortgage loans originated and sold, but with retained servicing rights, was $212.1 million as of June 30, 2024[166] - 99% of the residential mortgage loans serviced for Fannie Mae were current as of June 30, 2024[169] - Net increase in interest-bearing deposits for the six months ended June 30, 2024, was $57.780 million, compared to $13.297 million in 2023[16] Capital and Regulatory Ratios - The Bank's total risk-based capital ratio was 15.49%, tier 1 leverage ratio was 10.39%, and CET1 ratio was 14.47% at June 30, 2024[109] - The Bank's tier 1 leverage ratio was 10.39%, CET1 risk-based capital ratio was 14.47%, tier 1 risk-based capital ratio was 14.47%, and total risk-based capital ratio was 15.49% at June 30, 2024, all exceeding regulatory minimums[150] - The Bank's capital conservation buffer was 7.49% at June 30, 2024, sufficient to meet the fully phased-in conservation buffer[150] - CET1 risk-based capital ratio stood at 14.47% in Q2 2024, slightly down from 14.62% in Q1 2024[179] Cash Flows and Financing Activities - Cash flows from operating activities for the six months ended June 30, 2024, were $6.126 million, down from $7.375 million in 2023[16] - Net cash used in investing activities for the six months ended June 30, 2024, was $9.785 million, compared to $3.125 million in 2023[16] - Net cash provided by financing activities for the six months ended June 30, 2024, was $46.789 million, a significant increase from a net cash used of $1.968 million in 2023[16] - Cash and

Financial Performance - Net earnings for Q2 2024 were $1.7 million, or $0.50 per share, an increase from $1.4 million, or $0.39 per share in Q1 2024[1] - Total revenue for Q2 2024 was $7,605,000, slightly down from $7,679,000 in Q2 2023, indicating a decrease of 1.0%[13] - Net earnings for Q2 2024 increased to $1,734,000, up from $1,928,000 in Q2 2023, representing a decline of 10.1%[13] - Noninterest income rose to $896,000 in Q2 2024, compared to $791,000 in Q2 2023, marking an increase of 13.3%[13] - The return on average equity (annualized) improved to 9.63% in Q2 2024, compared to 10.37% in Q2 2023[13] Revenue and Income - Total revenue increased by 1% compared to the previous quarter[1] - Net interest income for Q2 2024 was $6,709,000, compared to $6,888,000 in Q2 2023, reflecting a decrease of 2.6% year-over-year[13] Assets and Equity - Total assets were $1.0 billion at June 30, 2024, compared to $979.0 million at March 31, 2024[6] - Total assets as of June 30, 2024, were $1,025,054,000, compared to $1,026,130,000 at the end of Q2 2023[14] - The company's consolidated stockholders' equity increased to $75.2 million, or $21.53 per share, from $74.5 million, or $21.32 per share at March 31, 2024[7] Loan and Credit Quality - Average loans grew by 9% on an annualized basis, reaching $573.4 million, a 2% increase from Q1 2024 and a 12% increase from Q2 2023[3] - Nonperforming assets decreased to $0.8 million, or 0.08% of total assets, down from $0.9 million, or 0.09% in Q1 2024[3] - The allowance for credit losses was $7,142,000 as of June 30, 2024, compared to $6,634,000 in Q2 2023[14] - The provision for credit losses was $(123,000) in Q2 2024, a significant improvement compared to $(362,000) in Q2 2023[13] - The company recorded a negative provision for credit losses of $0.1 million in Q2 2024, compared to a provision of $0.3 million in Q1 2024[4] Expenses - Noninterest expense decreased by 3% to $5.5 million in Q2 2024, primarily due to reductions in occupancy expenses[5] Tax and Dividends - Cash dividends paid were $0.27 per share in Q2 2024, with regulatory capital ratios well above the minimum required[8] - The effective income tax rate for Q2 2024 was 21.50%, up from 13.00% in Q2 2023[13] Interest Margin - Net interest margin improved by 2 basis points to 3.06% in Q2 2024, up from 3.04% in Q1 2024[3] - The net interest margin for Q2 2024 was 3.06%, slightly up from 3.03% in Q2 2023[13]

Financial Performance - Net interest income for the quarter ended March 31, 2024, was $6,657 thousand, a decrease of 6.34% from $7,109 thousand in the same quarter of 2023[9] - Net earnings for the quarter were $1,371 thousand, down 30.06% from $1,964 thousand year-over-year[9] - Comprehensive loss for the quarter was $813 thousand, a decline from a comprehensive income of $7,427 thousand in the same quarter of the previous year[13] - Net earnings for the quarter ended March 31, 2024, were $1,371,000, a decrease of 30% compared to $1,964,000 for the same period in 2023[17] - Basic and diluted earnings per share were $0.39 for Q1 2024, down from $0.56 in Q1 2023, reflecting a 30% decline[102] - Net interest income (tax-equivalent) decreased by 7% to $6.7 million in Q1 2024 from $7.2 million in Q1 2023, primarily due to a smaller balance sheet and decreased net interest margin[103] - The company's net interest margin (tax-equivalent) was 3.04% in Q1 2024, down from 3.17% in Q1 2023, attributed to increased cost of funds[103] - Total revenue for Q1 2024 was $7,544,000, up from $630,000 in Q4 2023, indicating a significant increase[178] Asset and Deposit Growth - Total assets increased to $979,039 thousand as of March 31, 2024, compared to $975,255 thousand at December 31, 2023, reflecting a growth of 0.08%[7] - Total deposits rose to $899,673 thousand as of March 31, 2024, compared to $896,243 thousand at the end of 2023, marking a slight increase of 0.16%[7] - Total deposits increased to $899.7 million at March 31, 2024, from $896.2 million at December 31, 2023[140] - Total assets as of March 31, 2024, were $976,930,000, a decrease from $1,022,938,000 as of December 31, 2023[180] Credit Losses and Provisions - Provision for credit losses increased to $334 thousand in Q1 2024, compared to $66 thousand in Q1 2023, indicating a significant rise in credit risk assessment[9] - The allowance for credit losses stood at $7,215 thousand as of March 31, 2024, compared to $6,863 thousand at December 31, 2023, indicating a proactive approach to potential loan defaults[7] - The provision for credit losses increased significantly to $334,000 from $66,000 year-over-year[17] - The total provision for credit losses for loans was $285 million for the quarter ended March 31, 2024, compared to $40 million for the same quarter in 2023[68] - The allowance for credit losses was $7.2 million, or 1.27% of total loans, compared to $6.8 million, or 1.35% of total loans, in Q1 2023[104] Noninterest Income and Expenses - Noninterest income for the quarter was $887 thousand, up 11.98% from $792 thousand in the same quarter of 2023[9] - Total noninterest expense increased to $5,675 thousand in Q1 2024, compared to $5,604 thousand in Q1 2023, reflecting a rise of 1.27%[9] - Noninterest income was $0.9 million in Q1 2024, slightly up from $0.8 million in Q1 2023[105] - Noninterest expense rose to $5.7 million in Q1 2024 from $5.6 million in Q1 2023, primarily due to routine salary and benefits increases[106] Loan Portfolio - Total loans increased to $567.5 million as of March 31, 2024, up from $557.3 million at December 31, 2023, representing a growth of approximately 2.1%[45] - Loans secured by real estate constituted approximately 84.2% of the total loan portfolio as of March 31, 2024[45] - The commercial real estate segment totaled $300,484,000 as of March 31, 2024, up from $287,307,000 at December 31, 2023, reflecting an increase of approximately 4.2%[53] - The residential real estate loans reached $118,240,000 as of March 31, 2024, compared to $117,457,000 at the end of 2023, showing a growth of about 0.7%[53] - The commercial and industrial loans increased to $78,920,000 as of March 31, 2024, from $73,374,000 at December 31, 2023, marking a growth of about 7.6%[53] Dividends and Stockholder Equity - The company declared cash dividends of $0.27 per share, totaling $943 thousand for the quarter ended March 31, 2024[14] - The Company's consolidated stockholders' equity decreased to $74.5 million as of March 31, 2024, from $76.5 million at December 31, 2023[147] - The Company paid cash dividends of $0.27 per share for both the first quarter of 2024 and the first quarter of 2023[148] Liquidity and Capital Ratios - The Company believes it has adequate sources of liquidity to meet all known contractual obligations and unfunded commitments over the next twelve months[163] - The Bank's capital conservation buffer was 7.69% at March 31, 2024, indicating a strong capital position[150] - The Company's total risk-based capital ratio was 15.69% at March 31, 2024, well above the minimum required to be "well capitalized"[107] Market Conditions and Economic Factors - The yield curve was inverted as of March 31, 2024, affecting the spread between costs of funds and interest income[172] - The Federal Reserve raised the target federal funds rate to 5.25-5.50% as of July 26, 2023, with potential further increases if inflation remains elevated[173]

Financial Performance - Net income for Q1 2024 was $1.4 million, or $0.39 per share, compared to a net loss of $(4.0) million, or $(1.14) per share, in Q4 2023[1] - Noninterest income for Q1 2024 was $0.9 million, a significant recovery from a loss of $(5.4) million in Q4 2023[5] - Total revenue for the first quarter of 2024 was $7,544,000, compared to $6,300,000 in the previous quarter and $7,901,000 in the same quarter last year[13] - Basic and diluted net earnings per share for the first quarter of 2024 were $0.39, recovering from a loss of $(1.14) in the previous quarter and down from $0.56 in the same quarter last year[13] - The return on average equity for the first quarter of 2024 was 7.13%, a significant recovery from (26.40%) in the previous quarter and an increase from 11.44% in the same quarter last year[13] Asset and Deposit Growth - Total assets increased to $979.0 million as of March 31, 2024, compared to $975.3 million at December 31, 2023[6] - Total deposits rose by $3.4 million to $899.7 million, reflecting a slight increase from $896.2 million at the end of Q4 2023[6] - Total assets at the end of the first quarter of 2024 were $979,039,000, a slight increase from $975,255,000 in the previous quarter but a decrease from $1,017,746,000 in the same quarter last year[14] Loan and Credit Quality - Annualized loan growth was reported at 7%, with average loans reaching $560.8 million, a 2% increase from Q4 2023[3] - Nonperforming assets remained low at $0.9 million, or 0.09% of total assets, down from $2.7 million, or 0.26%, a year earlier[3] - The allowance for credit losses was $7.2 million, or 1.27% of total loans, up from $6.9 million, or 1.23%, at the end of Q4 2023[4] - Nonperforming loans were $878,000, a decrease from $911,000 in the previous quarter and a significant decrease from $2,679,000 in the same quarter last year[13] - The provision for credit losses was $334,000, slightly up from $326,000 in the previous quarter and significantly higher than $66,000 in the same quarter last year[13] Interest Income and Margin - Net interest income (tax-equivalent) increased by 8% to $6.7 million in Q1 2024, driven by a net interest margin rise of 39 basis points to 3.04%[3] - Net interest income for the first quarter of 2024 was $6,657,000, an increase from $6,059,000 in the previous quarter and a decrease from $7,109,000 in the same quarter last year[13] - The net interest margin for the first quarter of 2024 was 3.04%, up from 2.65% in the previous quarter and down from 3.17% in the same quarter last year[13] Equity and Dividends - Total stockholders' equity at the end of the first quarter of 2024 was $74,489,000, down from $76,507,000 in the previous quarter and up from $73,640,000 in the same quarter last year[14] - Cash dividends paid were $0.27 per share in Q1 2024, with no share repurchases during the quarter[8] - The tangible common equity ratio was 7.63% at March 31, 2024, compared to 7.84% at December 31, 2023[8] Efficiency Metrics - The efficiency ratio improved to 75.03% in the first quarter of 2024, compared to 80.04% in the previous quarter and 69.97% in the same quarter last year[13]

Core Insights - Auburn National Bancorporation, Inc. reported a net income of $1.4 million, or $0.39 per share, for Q1 2024, a significant recovery from a net loss of $(4.0) million in Q4 2023 and a decrease from net earnings of $2.0 million in Q1 2023 [1][2][14] Financial Performance - Net interest income (tax-equivalent) for Q1 2024 was $6.7 million, an increase of 8% from Q4 2023, primarily driven by a rise in net interest margin to 3.04% from 2.65% [1][3][17] - Annualized loan growth was reported at 7%, with average loans increasing to $560.8 million, a 2% rise from the previous quarter [1][3] - Noninterest income improved to $0.9 million in Q1 2024, compared to a loss of $(5.4) million in Q4 2023, largely due to the prior quarter's balance sheet repositioning [4][14] Asset Quality - Nonperforming assets were $0.9 million, or 0.09% of total assets, showing improvement from $2.7 million, or 0.26%, a year earlier [3][6] - The provision for credit losses was $0.3 million in both Q1 2024 and Q4 2023, compared to $0.1 million in Q1 2023 [4][14] Capital and Equity - Total assets increased to $979.0 million at the end of Q1 2024, up from $975.3 million at the end of Q4 2023 [5][6] - Stockholders' equity decreased to $74.5 million, or $21.32 per share, from $76.5 million, or $21.90 per share, at the end of Q4 2023 [7][14] Deposits and Funding - Period-end deposits rose by $3.4 million to $899.7 million, although down from $939.2 million a year earlier, primarily due to the sale of reciprocal deposits [1][6] - The company had no FHLB advances or other wholesale borrowings outstanding as of March 31, 2024 [6][9]

Economic Conditions - The unemployment rate in Lee County was 2.4% at year-end 2023, indicating a strong local labor market[25]. - The local economy is positively influenced by the automotive industry, with potential risks from interest rate increases affecting sales[28]. - The economic conditions and cyclicality, including inflation and interest rates, may adversely affect the industry in 2024[169]. - Inflation is running at levels unseen in decades, well above the Federal Reserve's long-term inflation goal of 2.0% annually[170]. - The Federal Reserve has been raising target federal funds interest rates since March 2022 to combat inflation[170]. Commercial Real Estate (CRE) Loans - The Bank's commercial real estate (CRE) loans totaled $287.3 million, representing 52% of total loans as of December 31, 2023[28]. - The Bank's loans on owner-occupied property amounted to $66.8 million, included in the total CRE loans[28]. - The Bank's total CRE loans amounted to $293.0 million, which is approximately 264% of the Bank's total risk-based capital as of December 31, 2023[139]. - The company had 39.6% of its loan portfolio in commercial real estate (CRE) loans at year-end 2023, down from 40.4% in 2022 and 42.6% in 2021[193]. - The company is subject to regulatory scrutiny regarding its concentration of CRE loans, which could lead to higher allowances for possible losses[193]. Regulatory Environment - The company is subject to extensive regulation under federal and state laws, which may materially affect its business and financial condition[33]. - The Federal Reserve requires that distributions, including dividends, are only permissible if the Bank's capital conservation buffer exceeds 2.5%[83]. - The Company is subject to various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act, which includes annual reporting on internal controls[81]. - The Bank's compliance with anti-money laundering laws is critical for merger and acquisition proposals, with potential sanctions for violations reaching up to $1 million[72]. - The new CRA regulations, finalized on October 24, 2023, will become effective on January 1, 2026, with data reporting requirements starting on January 1, 2027[54]. Financial Performance - Total cash dividends paid by the Bank to the Company during 2023 amounted to approximately $3.8 million, with net profits for the year and retained profits totaling $8.2 million[85]. - Nonperforming loans were 0.16% of total loans as of December 31, 2023, with no other real estate owned due to foreclosures[174]. - The allowance for loan losses may prove inadequate due to unanticipated adverse changes in the economy, including inflation and higher interest rates[176]. - The company has not reported any material weaknesses in its financial reporting controls as of December 31, 2022[82]. - The Company recorded FDIC insurance premiums expenses of $0.5 million in 2023, an increase from $0.3 million in 2022, reflecting a uniform increase of 2 basis points in the initial base deposit insurance assessment rate schedules[135]. Employee and Management - As of December 31, 2023, the company had 149.5 full-time equivalent employees, including 38 officers, with an average term of service of approximately 10 years[29]. - The company emphasizes competitive compensation and benefits, including employer matches for 401(k) contributions and internal promotions[32]. - The company successfully transitioned management in 2022, with the former CEO becoming Chairman and the CFO succeeding him as President[31]. - The company is committed to maintaining employee health and safety, implementing remote work access during the COVID-19 pandemic[29]. - The company received a federal employee retention tax credit of approximately $1.6 million in 2022 due to little turnover during the COVID-19 pandemic[30]. Risk Management - The Bank's online banking services are subject to cybersecurity risks, highlighting the importance of data security measures[21]. - The Bank has established underwriting standards to manage risks associated with various types of lending, including commercial and consumer loans[27]. - The company has developed risk management and internal audit policies to mitigate material risks and losses, but acknowledges that these may not be comprehensive or timely in identifying all risks[204]. - The new CECL models used by the company are based on assumptions and projections that may not operate properly, potentially leading to inaccurate predictions of future exposures[204]. - The company may face increased costs and risks due to potential changes in mortgage servicing rights requirements[182]. Market Competition - The Bank holds a 20.1% share of the Auburn-Opelika MSA's deposits as of June 30, 2023, making it the largest provider in the area[22]. - The company competes in a highly competitive market with 19 banks in Lee County, including major national banks[195]. - The company’s future success is dependent on local economic conditions, which significantly affect its commercial, real estate, and construction loans[196]. - The company may face challenges in acquiring other businesses due to competition from larger financial institutions and regulatory approvals[198]. - The company must invest in technology to remain competitive, but it may have fewer resources than larger competitors to do so[201]. Community Engagement - The Bank received a "satisfactory" CRA rating in its latest public evaluation dated February 28, 2022, with satisfactory ratings on both lending and community development tests[50]. - The National Community Reinvestment Coalition reported executing over 21 community benefit plans with banking organizations, valued at approximately $580 billion for low- and moderate-income communities[52]. - The new performance evaluation framework for intermediate banks includes two tests: the Retail Lending Test and the Intermediate Bank Community Development Test[56]. - The new CRA rules allow for consideration of community development loans, investments, and services regardless of location, depending on the bank's responsiveness to community needs[59]. - The new regulations exempt small and intermediate banks from certain data requirements that apply to larger banks with assets over $2 billion[61].

AUBURN, Ala., Feb. 13, 2024 (GLOBE NEWSWIRE) -- On February 13, 2024, the Board of Directors of Auburn National Bancorporation, Inc. (the "Company") (NASDAQ:AUBN) declared a first quarter $0.27 per share cash dividend, payable March 25, 2024 to shareholders of record as of March 8, 2024. About Auburn National Bancorporation, Inc. Auburn National Bancorporation, Inc. (the "Company") is the parent company of AuburnBank (the "Bank"), with total assets of approximately $975 million. The Bank is an Alabama stat ...

Core Points - Auburn National Bancorporation reported a net loss of $4.0 million, or $1.14 per share, for Q4 2023, primarily due to the sale of $117.6 million in available-for-sale securities, resulting in an after-tax loss of $4.7 million [1][3] - The company's balance sheet repositioning strategy is expected to improve future earnings and interest rate risk profile, with an estimated earn-back period of approximately 2.3 years [1][2] Financial Performance - Net earnings for the full year 2023 were $1.4 million, or $0.40 per share, down from $10.3 million, or $2.95 per share, in 2022 [3] - Excluding the loss on securities sale, net earnings for 2023 would have been $6.1 million, or $1.75 per share, compared to $6.7 million, or $1.92 per share in 2022 [3] - Net interest income for Q4 2023 was $6.2 million, a decrease of 19% from $7.6 million in Q4 2022, attributed to a decline in net interest margin [4] Asset Quality - Nonperforming assets decreased to $0.9 million, or 0.09% of total assets, at December 31, 2023, down from $2.7 million, or 0.27% of total assets, at December 31, 2022 [5] - The allowance for credit losses was $6.9 million, or 1.23% of total loans, at December 31, 2023, compared to $5.8 million, or 1.14% at the same time last year [6] Noninterest Income and Expenses - Noninterest income recorded a loss of $5.4 million in Q4 2023, compared to a gain of $3.9 million in Q4 2022; excluding the pre-tax securities loss, noninterest income would have been $0.9 million [8] - Noninterest expense increased to $5.8 million in Q4 2023 from $4.4 million in Q4 2022, primarily due to increases in professional fees [9] Tax and Equity - The provision for income taxes was a credit of $1.5 million for Q4 2023, resulting in an effective tax rate of (27.53)%, compared to a tax expense of $1.5 million and an effective rate of 24.56% in Q4 2022 [10] - Total stockholders' equity increased to $76.5 million, or $21.90 per share, at December 31, 2023, up from $68.0 million, or $19.42 per share, at December 31, 2022 [12] Regulatory Capital - The total equity to total assets ratio improved to 7.84% at December 31, 2023, compared to 6.65% at December 31, 2022 [13] - The company maintained strong capital and liquidity positions, with no brokered deposits or wholesale borrowings outstanding at December 31, 2023 [11]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements present the company's financial position as of September 30, 2023, with **$1.03 billion** in total assets, a nine-month net earnings of **$5.4 million**, and a comprehensive loss, reflecting the **CECL adoption** and its **$1.0 million** impact on credit loss allowance [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (Unaudited) | Metric | Sep 30, 2023 ($ thousands) | Dec 31, 2022 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **1,030,724** | **1,023,888** | **+0.7%** | | Loans, net | 538,832 | 498,693 | +8.0% | | Securities available-for-sale | 373,286 | 405,304 | -7.9% | | **Total Deposits** | **964,601** | **950,337** | **+1.5%** | | **Total Stockholders' Equity** | **61,451** | **68,041** | **-9.7%** | - The decrease in stockholders' equity was primarily driven by an increase in accumulated other comprehensive loss from **$(40.9) million** to **$(49.0) million**, reflecting unrealized losses on the securities portfolio[7](index=7&type=chunk) [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Earnings Performance (Unaudited) | Metric | Q3 2023 ($ thousands) | Q3 2022 ($ thousands) | Nine Months 2023 ($ thousands) | Nine Months 2022 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | 6,272 | 7,243 | 20,269 | 19,695 | | Provision for Credit Losses | 105 | 250 | (191) | — | | **Net Earnings** | **1,488** | **1,998** | **5,380** | **5,880** | | **EPS (Basic and Diluted)** | **$0.43** | **$0.57** | **$1.54** | **$1.67** | - Net earnings decreased by **25.5%** for the third quarter and **8.5%** for the nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to lower net interest income in Q3 and higher noninterest expense over the nine-month period[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) - The company reported a comprehensive loss of **$8.5 million** for Q3 2023 and **$2.7 million** for the nine months ended September 30, 2023, primarily due to significant unrealized net losses on securities, which amounted to **$9.9 million** and **$8.1 million** for the respective periods, net of tax[12](index=12&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$68.0 million** at the end of 2022 to **$61.5 million** at September 30, 2023, mainly caused by an **$8.1 million** other comprehensive loss and **$2.8 million** in cash dividends, partially offset by **$5.4 million** in net earnings[15](index=15&type=chunk) - The company paid cash dividends of **$0.81 per share** and repurchased **10,108 shares** during the first nine months of 2023[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) - For the nine months ended September 30, 2023, net cash provided by operating activities was **$10.7 million**, net cash used in investing activities was **$18.7 million** primarily due to a net increase in loans, and net cash provided by financing activities was **$10.4 million** driven by a net increase in deposits[16](index=16&type=chunk) - Cash and cash equivalents increased by **$2.4 million** during the first nine months of 2023, ending the period at **$29.6 million**[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including the **CECL adoption** on January 1, 2023, which increased the allowance for credit losses by **$1.0 million**, and provide breakdowns of the securities portfolio with **significant unrealized losses** and the **real estate-concentrated loan portfolio** - Effective **January 1, 2023**, the company adopted ASU 2016-13 (**CECL**), replacing the incurred loss methodology with an expected loss methodology, with a transition adjustment including a **$1.0 million** increase in the allowance for credit losses on loans and a net decrease to retained earnings of **$0.8 million**[26](index=26&type=chunk)[28](index=28&type=chunk) Securities Available-for-Sale (September 30, 2023) | Security Type | Fair Value ($ thousands) | Amortized Cost ($ thousands) | Gross Unrealized Losses ($ thousands) | | :--- | :--- | :--- | :--- | | Agency obligations | 122,750 | 139,902 | 17,152 | | Agency MBS | 192,457 | 232,038 | 39,581 | | State and political subdivisions | 58,079 | 66,796 | 8,717 | | **Total** | **373,286** | **438,736** | **65,450** | - The loan portfolio totaled **$545.6 million** as of September 30, 2023, with commercial real estate (**52%**) and residential real estate (**21%**) being the largest segments, and nonaccrual loans stood at **$1.2 million**[66](index=66&type=chunk)[141](index=141&type=chunk) Allowance for Credit Losses Roll-Forward (Nine Months Ended Sep 30, 2023) | Description | Amount ($ thousands) | | :--- | :--- | | Beginning Balance (Dec 31, 2022) | 5,765 | | Impact of adopting ASC 326 | 1,019 | | Net recoveries (charge-offs) | 127 | | Provision for credit losses | (133) | | **Ending Balance (Sep 30, 2023)** | **6,778** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a decrease in nine-month net earnings to **$5.4 million**, driven by higher noninterest expenses and declining net interest margin, alongside **8% loan growth**, a shift in deposit composition, and a decline in stockholders' equity due to **unrealized securities losses**, while capital ratios remain strong [Summary of Results of Operations](index=30&type=section&id=Summary%20of%20Results%20of%20Operations) Financial Summary | Metric | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | Net Earnings | $5.4 million | $5.9 million | | EPS (Basic and Diluted) | $1.54 | $1.67 | | Net Interest Income (tax-equivalent) | $20.6 million | $20.0 million | | Net Interest Margin (tax-equivalent) | 2.97% | 2.67% | - The increase in net interest income for the nine-month period was driven by a more favorable asset mix and higher yields on earning assets, partially offset by increased funding costs, though Q3 2023 net interest income decreased year-over-year due to a declining net interest margin[118](index=118&type=chunk)[124](index=124&type=chunk) - The allowance for credit losses increased to **$6.8 million** (**1.24%** of total loans) at September 30, 2023, up from **$5.8 million** (**1.14%** of total loans) at year-end 2022, largely due to the adoption of **CECL**[119](index=119&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) For the first nine months of 2023, net interest income (tax-equivalent) increased **3% to $20.6 million**, with net interest margin expanding **30 basis points to 2.97%**, while a **negative provision of $0.2 million** was recorded, and noninterest income decreased as noninterest expense rose - Net interest margin (tax-equivalent) for the first nine months of 2023 increased to **2.97%** from **2.67%** in the prior year period, as the yield on interest-earning assets rose by **81 basis points**, while the cost of interest-bearing liabilities increased by **70 basis points**[127](index=127&type=chunk)[128](index=128&type=chunk) - A negative provision for credit losses of **$0.2 million** was recorded in the first nine months of 2023, compared to zero in the same period of 2022, mainly due to the full collection of a **$1.3 million** collateral-dependent nonperforming loan[130](index=130&type=chunk) Noninterest Income (Nine Months Ended) | Category | 2023 ($ thousands) | 2022 ($ thousands) | | :--- | :--- | :--- | | Service charges on deposit accounts | 456 | 446 | | Mortgage lending income | 345 | 566 | | Bank-owned life insurance | 311 | 293 | | Other | 1,336 | 1,259 | | **Total** | **2,448** | **2,608** | Noninterest Expense (Nine Months Ended) | Category | 2023 ($ thousands) | 2022 ($ thousands) | | :--- | :--- | :--- | | Salaries and benefits | 8,809 | 8,901 | | Net occupancy and equipment | 2,341 | 1,955 | | Professional fees | 898 | 704 | | Other | 4,743 | 3,814 | | **Total** | **16,791** | **15,374** | [Balance Sheet Analysis](index=34&type=section&id=Balance%20Sheet%20Analysis) Total loans grew **8% to $545.6 million**, with increased allowance for credit losses to **1.24%** post-CECL, while nonperforming assets decreased to **$1.2 million**, and total deposits increased to **$964.6 million** with a shift to interest-bearing accounts and **35% uninsured deposits** - Total loans increased by **8%** to **$545.6 million** at September 30, 2023, from **$504.5 million** at December 31, 2022, with the portfolio primarily composed of commercial real estate (**52%**) and residential real estate (**21%**)[141](index=141&type=chunk) - Nonperforming assets decreased to **$1.2 million** (**0.12%** of total assets) at September 30, 2023, from **$2.7 million** (**0.27%** of total assets) at December 31, 2022, mainly due to the resolution of a large nonperforming loan[152](index=152&type=chunk)[153](index=153&type=chunk) Deposit Composition | Deposit Type | Sep 30, 2023 ($ thousands) | Dec 31, 2022 ($ thousands) | | :--- | :--- | :--- | | Noninterest bearing demand | 279,458 | 311,371 | | Interest-bearing deposits | 685,143 | 638,966 | | **Total Deposits** | **964,601** | **950,337** | - Estimated uninsured deposits totaled **$337.4 million**, or **35%** of total deposits, at September 30, 2023, including **$185.7 million** of public funds collateralized by securities[158](index=158&type=chunk) [Capital Adequacy](index=39&type=section&id=Capital%20Adequacy) - Consolidated stockholders' equity decreased to **$61.5 million** at September 30, 2023, from **$68.0 million** at year-end 2022, primarily due to an **$8.1 million** other comprehensive loss from unrealized losses on securities[162](index=162&type=chunk) Bank Regulatory Capital Ratios (September 30, 2023) | Ratio | Actual | "Well Capitalized" Minimum | | :--- | :--- | :--- | | Tier 1 Leverage | 10.26% | 5.0% | | CET1 Risk-Based Capital | 15.01% | 6.5% | | Total Risk-Based Capital | 15.98% | 10.0% | [Market and Liquidity Risk Management](index=40&type=section&id=Market%20and%20Liquidity%20Risk%20Management) - The company manages interest rate risk using earnings simulation and Economic Value of Equity (EVE) models, with modeling indicating the balance sheet is **liability-sensitive** over a **12-month** forecast period and compliance with internal policy limits for both earnings at risk and EVE as of September 30, 2023[170](index=170&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) - The Bank maintains multiple sources of liquidity, including customer deposits, FHLB advances, and federal funds lines, with **$307.7 million** available credit from the FHLB and **$61.0 million** in federal funds lines at September 30, 2023, and no outstanding borrowings from either source[178](index=178&type=chunk) - At September 30, 2023, the Bank had unfunded loan commitments of **$60.1 million** and standby letters of credit of **$0.8 million**[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates by reference the **Market and Liquidity Risk Management** details from Item 2, outlining the company's approach to managing **interest rate and liquidity risks** - The company's disclosures about market risk are detailed in the "MARKET AND LIQUIDITY RISK MANAGEMENT" section of the MD&A[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective** as of September 30, 2023, with **no material changes** to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2023[204](index=204&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the third quarter of 2023[204](index=204&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with **no expected material adverse effect** on its financial condition or results of operations from pending or threatened cases - Management believes there are **no pending or threatened legal proceedings** that are expected to have a **material adverse effect** on the company[205](index=205&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company refers to its 2022 Form 10-K for risk factors, highlighting ongoing risks from **inflation** and **monetary tightening** impacting interest rates, mortgage income, securities values, deposit costs, and borrower financial health - The company directs investors to the risk factors in its 2022 Form 10-K and highlights ongoing risks from **inflation** and **rising interest rates**, which have adversely affected stockholders' equity through **unrealized losses** on the securities portfolio[206](index=206&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2023, the company repurchased **5,883 shares** at an average of **$22.16 per share** under a program authorizing up to **$5 million** in repurchases through April 2024 Share Repurchases in Q3 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2023 | 948 | $21.89 | | August 2023 | 4,935 | $22.21 | | September 2023 | — | — | | **Total** | **5,883** | **$22.16** | - As of September 30, 2023, approximately **$4.4 million** remained available for future repurchases under the current plan, which expires in April 2024[208](index=208&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed, including **CEO and CFO certifications** under Sarbanes-Oxley and **XBRL interactive data files** - The report includes **certifications** from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as **XBRL data files**[210](index=210&type=chunk)

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, 2023 ☐ 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 ...