Auburn National Bancorporation(AUBN) - 2025 Q2 - Quarterly Results

Financial Highlights 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] Management Commentary 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] - Management remains optimistic about further net interest margin improvement from the re-pricing of loans and securities, even with slower loan demand[3] - The company's capital and liquidity are described as strong and well-positioned to serve its customers[3] Detailed Financial Performance 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 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] Credit Quality and Provision for Credit Losses 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] 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 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] - The increase in noninterest expense from Q2 2024 was primarily due to routine increases in salaries and benefits, along with higher professional fees[9] Balance Sheet and Capital 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 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] - The company had no FHLB advances or other wholesale funding outstanding at the end of Q2 2025, Q1 2025, or Q2 2024[12] Stockholders' Equity and Dividends 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] - 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][15] Corporate Information and Disclosures 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] - The press release contains forward-looking statements that are subject to risks and uncertainties, as detailed in the company's SEC filings[17][18][19] - 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] Financial Tables 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] - A table of selected average and period-end balances for key assets, liabilities, and equity is provided for comparative analysis[22] - 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]