Auburn National Bancorporation, Inc. Reports Record Full Year Net Earnings of $7.1 million, or $1.95 Per Share; Fourth Quarter

Auburn National Bancorporation, Inc. Reports Record Full Year Net Earnings of
$7.1 million, or $1.95 Per Share; Fourth Quarter Net Earnings of $1.7 million,
or $0.47 Per Share

Full Year 2013 Results – Compared to Full Year 2012:

  *Net earnings increased 5%
  *Improved profitability – return on average assets of 0.94%, compared to
    0.90% in 2012
  *Declining credit costs – provision for loan losses decreased $3.4 million,
    or 90%
  *NPAs declined by 47%; NPAs to total assets of 1.08% at December 31, 2013,
    compared to 2.03% in 2012
  *Strong capital position – Tier 1 common equity to total assets of 9.19%.

AUBURN, Ala., Jan. 28, 2014 (GLOBE NEWSWIRE) -- Auburn National Bancorporation
(Nasdaq:AUBN) reported net earnings of $1.7 million, or $0.47 per share, for
the fourth quarter of 2013, compared to $1.7 million, or $0.46 per share, for
the fourth quarter of 2012. For the full year 2013, the Company reported
record net earnings of $7.1 million, or $1.95 per share, compared to $6.8
million, or $1.86 per share, for the full year 2012.

Fourth quarter 2013 operating net earnings, which exclude the effects of
non-operating items such as securities gains and losses, gain on sale of
premises and equipment, gain on sale of affordable housing investments, and
prepayment penalties on long-term debt, were approximately $1.7 million, or
$0.47 per share, compared to fourth quarter 2012 operating net earnings of
approximately $1.6 million, or $0.45 per share. For the full year 2013,
operating net earnings were $8.0 million, or $2.19 per share, compared to $6.6
million, or $1.81 per share, for the full year 2012.

E.L. Spencer, Jr., President, CEO and Chairman of the Board, commented: "We
are pleased to report record earnings for the full year 2013. Our full year
and fourth quarter results reflect a significant decline in the provision for
loan losses as asset quality improved in 2013. In addition to maintaining
strong capital and liquidity, the Company paid cash dividends of $0.84 per
share during 2013."

Net interest income (tax-equivalent) was $5.6 million for the fourth quarter
of 2013, a decrease of 2% compared to the fourth quarter of 2012.However, net
interest income (tax-equivalent) for the fourth quarter of 2012 included a
$229,000 recovery of interest related to the payoff on a nonperforming
construction and land development loan.Excluding the impact of this interest
recovery, net interest income (tax-equivalent) increased 2% in the fourth
quarter of 2013 compared to the fourth quarter of 2012 despite a decrease in
average loans of $16.0 million, or 4%.This increase was primarily due to
continued improvement in the Company's cost of funds as the Company increased
its lower-cost noninterest bearing demand deposits, interest bearing demand
deposits, and savings and money market accounts and concurrently reduced
balances of higher cost certificates of deposit, other time deposits, and
long-term debt (i.e. wholesale funding).Average deposits were $653.8 million
in the fourth quarter of 2013, an increase of $22.9 million or 4% from the
fourth quarter of 2012.

The Company's annualized net charge-off ratio was 0.71% in the fourth quarter
of 2013, compared to 0.39% in the fourth quarter of 2012.Despite the increase
in net charge-offs for the fourth quarter of 2013, the Company's annualized
net-charge off ratio for the full year 2013 was 0.48%, compared to 1.03% for
the full year 2012.The Company made no provision for loan losses in the
fourth quarter of 2013, compared to $1.1 million in the fourth quarter of
2012.The decrease in the provision for loan losses was primarily due to
improvement in the overall credit quality of the loan portfolio, including
lower levels of adversely classified and nonperforming loans.

Total noninterest income was $2.1 million in the fourth quarter of 2013,
compared to $1.8 million in the fourth quarter of 2012.The increase in total
noninterest income was primarily due to a $1.0 million gain on sale of
premises and equipment in the fourth quarter of 2013.In November 2013, the
Company sold certain real property in downtown Auburn that was no longer used
for Company operations and was fully leased to third party tenants.This
increase in noninterest income was offset by a decrease in mortgage lending
income of $0.5 million, reflecting decreased origination volume, and a $0.1
million decrease in net securities gains (losses), reflecting a net loss of
$0.1 million from the December 2013 sale of all remaining trust preferred
securities held by the Company.At December 31, 2013, the Company had no
remaining investments in trust preferred securities (individual issuer or
pooled).

Total noninterest expense was $5.2 million in the fourth quarter of 2013
compared to $4.0 million in fourth quarter of 2012.The increase was primarily
due to $1.0 million of prepayment penalties incurred during the fourth quarter
of 2013 resulting from the Company's December 2013 repayment of $10.0 million
of long-term debt with an interest rate of 3.58%, and an increase of $0.4
million in net expenses related to other real estate owned (OREO) which was
primarily due to fair value write-downs for certain OREO properties.These
increases in noninterest expense were offset by a decrease in other
noninterest expense of $0.2 million.

Income tax expense was approximately $0.5 million for the fourth quarter of
2013, compared to $0.4 million in the fourth quarter of 2012. The Company's
annualized effective tax rate for the fourth quarter of 2013 was 22.46%,
compared to an annualized effective income tax rate of 18.02% for the fourth
quarter of 2012. The Company's effective tax rate increased during the fourth
quarter of 2013 compared to the fourth quarter of 2012 primarily because the
Company's annualized effective tax rate for 2012 was reduced by the reversal
of a deferred tax valuation allowance related to capital loss carry-forwards.

The Company paid cash dividends of $0.21 per share in the fourth quarter of
2013. At December 31, 2013, the Bank's regulatory capital was well above the
minimum amounts required to be "well capitalized" under current regulatory
standards.

About Auburn National Bancorporation

Auburn National Bancorporation, Inc. (the "Company") is the parent company of
AuburnBank (the "Bank"), with total assets of approximately $751 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, Valley, Hurtsboro and Notasulga,
Alabama. In-store branches are located in the Kroger and Wal-Mart SuperCenter
stores in both Auburn and Opelika. The Bank also operates commercial loan
production offices in Montgomery and Phenix City, Alabama. Additional
information about the Company and the Bank may be found by visiting
www.auburnbank.com.

Cautionary Notice Regarding 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, mortgage
lending activity, net interest margin, yields on earning assets, securities
valuations and performance, interest rates, generally and applicable to our
assets and liabilities, loan performance, nonperforming assets, other real
estate owned, loan losses, charge-offs, other-than-temporary impairments,
collateral values, credit quality, asset sales, and market trends, 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, achievements, or
financial condition of the Company or the Bank to be materially different from
future results, performance, achievements, or financial condition 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, together with
those risks and uncertainties described in our annual report on Form 10-K for
the year ended December31, 2012 and otherwise in our other SEC reports and
filings.

Explanation of Certain Unaudited Non-GAAP Financial Measures

This press release contains financial information determined by methods other
than U.S. 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, including the presentation of noninterest income, total
revenue, noninterest expense, and the calculation of the efficiency ratio.
Management uses these non-GAAP financial measures in its analysis of the
Company's performance and believes presentations of "operating" and
tax-equivalent financial measures provide useful supplemental information
regarding the Company's performance, and that operating net earnings better
reflect the Company's core operating activities. Management utilizes these
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 these 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 December   Years ended December 31,
                     31,
(Dollars in
thousands, except    2013          2012       2013         2012
per share amounts)
Results of                                              
Operations
Net interest income  $5,621      $5,721   $22,362    $22,539
(a)
Less: tax-equivalent 342          396       1,440       1,642
adjustment
Net interest income  5,279        5,325     20,922      20,897
(GAAP)
Noninterest income  2,140        1,788     7,298       10,483
Total revenue        7,419        7,113     28,220      31,380
Provision for loan   —            1,065     400         3,815
losses
Noninterest expense  5,188        4,023     18,412      19,383
Income tax expense  501          365       2,290       1,419
Net earnings        $1,730      $1,660   $7,118     $6,763
                                                       
Per share data:                                         
Basic and diluted                                       
net earnings:
GAAP                $0.47       $0.46    $1.95      $1.86
Operating (b)        0.47         0.45      2.19        1.81
Cash dividends       $0.21       $0.205   $0.84      $0.82
declared
Weighted average                                        
shares outstanding:
Basic and diluted    3,643,110    3,642,903 3,643,003   3,642,831
Shares outstanding,  3,643,118    3,642,903 3,643,118   3,642,903
at period end
Book value          $17.70      $19.26   $17.70     $19.26
Common stock price:                                     
High                 $25.75      $24.87   $25.75     $26.65
Low                  23.93        20.85     20.80       18.23
Period-end:          25.00        20.85     25.00       20.85
To earnings ratio    12.89 x      11.21 x   12.89 x     11.21 x
To book value        141 %        108 %     141 %       108 %
Performance ratios:                                     
Return on average                                       
equity (annualized):
GAAP                 10.33 %      9.30 %    10.33 %     9.85 %
Operating (b)        10.43 %      9.05 %    11.57 %     9.64 %
Return on average                                       
assets (annualized):
GAAP                 0.92 %       0.88 %    0.94 %      0.90 %
Operating (b)        0.93 %       0.86 %    1.05 %      0.88 %
Dividend payout      44.68 %      44.57 %   43.08 %     44.09 %
ratio
Other financial                                         
data:
Net interest margin  3.20 %       3.22 %    3.16 %      3.21 %
(a)
Effective income tax 22.46 %      18.02 %   24.34 %     17.34 %
rate
Efficiency ratio (c) 61.62 %      54.08 %   54.96 %     53.87 %
Asset Quality:                                          
Nonperforming                                           
assets:
Nonperforming        $4,261      $10,535  $4,261     $10,535
(nonaccrual) loans
Other real estate    3,884        4,919     3,884       4,919
owned
Total nonperforming  $8,145      $15,454  $8,145     $15,454
assets
                                                       
Net charge-offs      $678        $387     $1,855     $4,011
                                                       
Allowance for loan                                      
losses as a % of:
Loans                1.37 %       1.69 %    1.37 %      1.69 %
Nonperforming loans  124 %        64 %      124 %       64 %
Nonperforming assets                                    
as a % of:
Loans and other real 2.10 %       3.83 %    2.10 %      3.83 %
estate owned
Total assets         1.08 %       2.03 %    1.08 %      2.03 %
Nonperforming loans
as a % of total      1.11 %       2.65 %    1.11 %      2.65 %
loans
Net charge-offs
(annualized) as a %  0.71 %       0.39 %    0.48 %      1.03 %
of average loans
Selected average                                        
balances:
Securities           $260,091    $253,765 $263,647   $277,240
Loans, net of        379,450      395,487   387,130     391,254
unearned income
Total assets         748,894      755,991   759,770     755,305
Total deposits       653,825      630,950   652,995     631,133
Long-term debt       21,347       47,217    31,518      49,115
Total stockholders'  67,015       71,421    68,918      68,676
equity
Selected period end                                     
balances:
Securities           $271,219    $259,475 $271,219   $259,475
Loans, net of        383,339      398,193   383,339     398,193
unearned income
Allowance for loan   5,268        6,723     5,268       6,723
losses
Total assets         751,343      759,833   751,343     759,833
Total deposits       668,844      636,817   668,844     636,817
Long-term debt       12,217       47,217    12,217      47,217
Total stockholders'  64,485       70,149    64,485      70,149
equity
                                                                         
(a) Tax equivalent. See "Explanation of Certain Unaudited Non-GAAP
Financial Measures" and "Reconciliation of GAAP to non-GAAP Measures   
(unaudited)."
(b) Operating measures. See "Explanation of Certain Unaudited Non-GAAP
Financial Measures" and "Reconciliation of GAAP to non-GAAP Measures   
(unaudited)."
(c) Efficiency ratio is the result of operating noninterest expense
divided by the sum of operating noninterest income and tax-equivalent   
net interest income.
                                                       
NM - not meaningful                                                       


Reconciliation of GAAP to non-GAAP Measures (unaudited):
                                                         
                          Quarter ended December Years ended December
                           31,                    31,
(Dollars in thousands,     2013        2012       2013       2012
except per share amounts)
Net earnings, as reported  $1,730    $1,660   $7,118   $6,763
(GAAP)
Non-operating items (net
of 37% statutory tax                                      
rate):
Securities losses (gains), 18         (44)      (410)     (428)
net
Gain on sale of premises   (641)      —         (641)     —
and equipment
Gain on sale of affordable —          —         —         (2,059)
housing investments
Prepayment penalties on    640        —         1,909     2,344
long-term debt
Operating net earnings     $1,747    $1,616   $7,976   $6,620
                                                         
Basic and diluted earnings
per share, as reported     $0.47     $0.46    $1.95    $1.86
(GAAP)
Non-operating items (net
of 37% statutory tax                                      
rate):
Securities losses (gains), —          (0.01)    (0.11)    (0.12)
net
Gain on sale of premises   (0.18)     —         (0.18)    —
and equipment
Gain on sale of affordable —          —         —         (0.57)
housing investments
Prepayment penalties on    0.18       —         0.53      0.64
long-term debt
Operating net earnings per $0.47     $0.45    $2.19    $1.81
share
                                                         
Net interest income, as    $5,279    $5,325   $20,922  $20,897
reported (GAAP)
Tax-equivalent adjustment  342         396        1,440      1,642
Net interest income        $5,621    $5,721   $22,362  $22,539
(tax-equivalent)
                                                         
Noninterest income, as     $2,140    $1,788   $7,298   $10,483
reported (GAAP)
Non-operating items:                                      
Securities losses (gains), 28         (70)      (651)     (679)
net
Gain on sale of premises   (1,018)    —         (1,018)   —
and equipment
Gain on sale of affordable —          —         —         (3,268)
housing investments
Operating noninterest      $1,150    $1,718   $5,629   $6,536
income
                                                         
Total Revenue, as reported $7,419    $7,113   $28,220  $31,380
(GAAP)
Tax-equivalent adjustment  342         396        1,440      1,642
Non-operating items:                                      
Securities losses (gains), 28         (70)      (651)     (679)
net
Gain on sale of premises   (1,018)    —         (1,018)   —
and equipment
Gain on sale of affordable —          —         —         (3,268)
housing investments
Total Operating Revenue    $6,771    $7,439   $27,991  $29,075
(tax-equivalent)
                                                         
Noninterest expense, as    $5,188    $4,023   $18,412  $19,383
reported (GAAP)
Non-operating items:                                      
Prepayment penalties on    (1,016)    —         (3,028)   (3,720)
long-term debt
Operating noninterest      $4,172    $4,023   $15,384  $15,663
expense
                                                         
Total stockholders' equity $64,485   $70,149  $64,485  $70,149
(GAAP)
Unrealized losses (gains)
on available for sale      4,552      (5,174)   4,552     (5,174)
securities, net of tax
Other deductions           —          (96)      —         (96)
Tier 1 Common Equity (1)   $69,037   $64,879  $69,037  $64,879
                                                         
(1) December 31, 2013 total is preliminary.                               

CONTACT: For additional information, contact:
         E.L. Spencer, Jr.
         President, CEO and
         Chairman of the Board
         (334) 821-9200

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