Auburn National Bancorporation, Inc. Reports First Quarter Net Earnings

Auburn National Bancorporation, Inc. Reports First Quarter Net Earnings First Quarter 2026 vs. First Quarter 2025 Highlights: Earnings per share increased 43% Net interest income increased 10%Net interest margin (tax-equivalent) increased 19 basis points to 3.28%Controlled expenses – noninterest expense largely unchanged Return on assets (annualized) improved to 0.86%, compared to 0.62% in 1Q 2025Nonperforming assets decreased to 0.01% of total assets AUBURN, Ala., April 28, 2026 (GLOBE NEWSWIRE) -- Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net earnings of $2.2 million, or $0.63 per share, for the first quarter of 2026, compared to $1.7 million, or $0.48 per share, for the fourth quarter of 2025, and $1.5 million, or $0.44 per share, for the first quarter of 2025. “Our first quarter results reflect strong revenue growth as net interest income and mortgage lending income both improved,” said David A. Hedges, President and CEO. “Although net charge-offs increased during the quarter, primarily due to one nonperforming loan that was fully charged-off, our asset quality, capital, and liquidity remain strong and we’re encouraged to report first quarter annualized loan growth of 12%,” continued Mr. Hedges. Net interest income (tax-equivalent) was $7.8 million in the first quarter of 2026 and the fourth quarter of 2025, compared to $7.1 million in the first quarter of 2025. This increase was due to growth in average interest earning assets and improvements in our net interest margin. Net interest margin (tax-equivalent) was 3.28% in the first quarter of 2026, compared to 3.24% in the fourth quarter of 2025 and 3.09% in the first quarter of 2025. The increase in net interest margin was primarily due to higher yields on earning assets, a decrease in our cost of interest-bearing deposits, and a more favorable asset mix. Average loans were approximately $577.5 million in the first quarter of 2026, compared to $559.0 million in the fourth quarter of 2025, and $566.1 million in the first quarter of 2025. Nonperforming assets were $0.1 million, or 0.01% of total assets, at March 31, 2026, compared to $0.5 million, or 0.05% of total assets at both December 31, 2025 and March 31, 2025. The decrease from December 31, 2025 was primarily due to one individually evaluated nonperforming loan that was fully charged-off. Net charge-offs were $402 thousand, or 0.28% of average loans on an annualized basis for the first quarter of 2026, compared to net charge-offs of $304 thousand, or 0.22% of average loans on an annualized basis for the fourth quarter of 2025, and net charge-offs of $64 thousand, or 0.05% of average loans on an annualized basis for the first quarter of 2025. Net charge-offs in the first quarter of 2026 and fourth quarter of 2025 were primarily related to the nonperforming loan referenced above. At March 31, 2026, the Company’s allowance for credit losses was $6.8 million or 1.16% of total loans, compared to $7.2 million, or 1.27% of total loans at December 31, 2025, and $6.8 million, or 1.20% of total loans at March 31, 2025. The decrease was primarily due to refinements in the Company’s calculation of current expected credit losses (“CECL”). During the first quarter of 2026, the Company established a new loan segment within its CECL calculation for municipal loans, which reduced the allowance for credit losses due to lower expected credit costs associated with these loans. Prior to this change, municipal loans were included in the commercial and industrial loan segment for CECL. The Company recorded a negative provision for credit losses of $(76) thousand in the first quarter of 2026, compared to a provision for credit losses of $783 thousand in the fourth quarter of 2025 and a negative provision of $(10) thousand in the first quarter of 2025. The provision for credit losses is affected by changes in overall balance and composition of our loan portfolio and unfunded commitments, our internal assessment of the credit quality of the loan portfolio, our expectations about future economic conditions, and net charge-offs. The provision for credit losses in the fourth quarter of 2025 was primarily due to two commercial real estate loans that were individually evaluated. A specific reserve was established for one loan and the other nonperforming loan was partially charged-off. Noninterest income was $0.9 million for the first quarter of 2026, compared to $0.8 million for the fourth quarter of 2025 and $0.7 million for the first quarter of 2025. The increase was primarily due to mortgage lending income. Noninterest expense was $5.9 million for the first quarter of 2026, compared to $5.6 million for the fourth quarter of 2025 and $5.9 million for the first quarter of 2025. The increase compared to the fourth quarter of 2025 was primarily related to salaries and benefits, net occupancy and equipment, and professional fees expense. Compared to the first quarter of 2025, noninterest expense was largely unchanged as a decrease in net occupancy and equipment expense was largely offset by an increase in professional fees expense. The provision for income tax expense was $0.6 million for the first quarter of 2026, compared to $0.5 million for the fourth quarter of 2025 and $0.4 million for the first quarter of 2025. The effective tax rate for the first quarter of 2026 was 21.53%, compared to 21.50% for the fourth quarter of 2025 and 20.40% for the first quarter of 2025. The Company’s effective income tax rate is principally affected by tax-exempt earnings from the Company’s investments in municipal securities and loans, bank-owned life insurance, and New Markets Tax Credits. At March 31, 2026, the Company’s stockholders’ equity was $93.1 million, or $26.62 per share, compared to $92.1 million, or $26.35 per share, at December 31, 2025 and $83.1 million, or $23.79 per share, at March 31, 2025. The Company’s equity-to-assets ratio was 9.06% at March 31, 2026, compared to 9.04% at December 31, 2025 and 8.34% at March 31, 2025. All of the Company’s marketable securities are classified as available-for-sale. Therefore, any changes in the fair value of the Company’s securities portfolio are reflected in total equity, net of tax, under generally accepted accounting principles, but do not affect our capital for regulatory purposes. The Company paid cash dividends of $0.27 per share in the first quarter of 2026. At March 31, 2026, the Bank’s regulatory capital ratios were well above the minimum amounts required to be “well capitalized” under current regulatory standards. About Auburn National Bancorporation, Inc. Auburn National Bancorporation, Inc. (the “Company”) is the parent company of AuburnBank (the “Bank”), with total assets of approximately $1.0 billion. The Bank is an Alabama state-chartered bank that is a member of the Federal Reserve System, which 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 seven full-service branches in Auburn, Opelika, Valley, and Notasulga, Alabama. The Bank also operates a loan production office in 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. All statements with respect to our objectives, expectations, anticipations, estimates and intentions and all statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “designed,” “plan,” “point to,” “project,” “could,” “intend,” “target,” “seek” and other similar words and expressions of the future. Forward looking statements, include, without limitation, statements about future financial and operating results, costs and revenues, government policies and changes in policies, including Federal Reserve monetary and regulatory actions. Forward looking statements also include statements about economic conditions generally in our markets and which may affect us, loan demand, mortgage lending activity, changes in the mix of our earning assets (including those generating tax exempt income or tax credits) and our mix and cost of deposits and wholesale liabilities, net interest income and margin, yields on earning assets, the market values and performance of securities held, effects of inflation and employment, including Federal Reserve monetary policies. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, achievements and/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. Forward looking statements may not be realized due to numerous factors, including, without limitation, changes in employment levels, actual and expected changes in interest rates and interest rate expectations (generally and those applicable to our assets and liabilities) and the shape of the yield curve, and related changes in our asset values, especially investment securities, noninterest income, loan performance, loan deferrals and modifications, nonperforming assets, other real estate owned, provision for credit losses, including possible adjustments to the fair values of securities available for sale, charge-offs, collateral values, credit quality, asset sales, insurance claims, and market trends. 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 described in the “Cautionary Note Regarding Forward-Looking Statements” and the risks and uncertainties described under “Risk Factors” and elsewhere in our annual report on Form 10-K for the year ended December 31, 2025 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 include certain designated net interest income amounts presented on a tax-equivalent basis, a non-GAAP financial measure. Tax-equivalent net interest income is used in the calculation of our net interest margin and efficiency ratio. In the first quarter of 2026, we changed the presentation of net interest income on a tax-equivalent basis to account for tax-exempt interest income on municipal loans. Also, we reclassified average net unrealized gains (losses) on available-for-sale securities to average other assets so that average total securities are presented on an amortized cost basis in our calculation of net interest margin. Prior period amounts, including the presentation and calculation of our net interest margin and efficiency ratio, have been revised herein to conform with the current period presentation. These changes had no effect on the presentation of GAAP net interest income in current or prior periods. Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes the presentation of net interest income on a tax-equivalent basis provides comparability of net interest income from both taxable and tax-exempt sources and facilitates comparability within the industry. Similarly, the efficiency ratio is a common measure that facilitates comparability with other financial institutions. Although the Company believes these non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. Along with the attached financial highlights, the Company provides reconciliations between the GAAP financial measures and these non-GAAP financial measures. Financial Highlights (unaudited) Quarter ended March 31, December 31, March 31,(Dollars in thousands, except per share amounts) 2026 2025 2025 Results of Operations Net interest income (a) $7,832 7,780 7,112 Less: tax-equivalent adjustment 99 67 67 Net interest income (GAAP) 7,733 7,713 7,045 Noninterest income 893 754 747 Total revenue 8,626 8,467 7,792 Provision for credit losses (76) 783 (10)Noninterest expense 5,901 5,563 5,880 Income tax expense 603 456 392 Net earnings $2,198 1,665 1,530 Per share data: Basic and diluted net earnings $0.63 0.48 0.44 Cash dividends declared $0.27 0.27 0.27 Weighted average shares outstanding - basic 3,494,229 3,493,699 3,493,699 Weighted average shares outstanding - diluted 3,496,518 3,496,729 3,493,699 Shares outstanding, at period end 3,495,866 3,493,699 3,493,699 Stockholders' equity (book value) $26.62 26.35 23.79 Common stock price: High $26.50 27.98 23.37 Low 21.01 24.00 20.36 Period-end 23.87 26.95 21.59 To earnings ratio (c) 10.52 x 12.96 11.42 To book value 90 % 102 91 Performance ratios: Return on average equity (annualized) 9.65 % 7.40 7.83 Return on average assets (annualized) 0.86 % 0.66 0.62 Dividend payout ratio 42.86 % 56.25 61.36 Other financial data: Net interest margin (a) 3.28 % 3.24 3.09 Effective income tax rate 21.53 % 21.50 20.40 Efficiency ratio (b) 67.63 % 65.19 74.82 Asset Quality: Nonperforming assets: Nonperforming (nonaccrual) loans $102 482 520 Total nonperforming assets $102 482 520 Net charge-offs $402 304 64 Allowance for credit losses as a % of: Loans 1.16 % 1.27 1.20 Nonperforming loans 6,643 % 1,489 1,298 Nonperforming assets as a % of: Loans and other real estate owned 0.02 % 0.09 0.09 Total assets 0.01 % 0.05 0.05 Nonperforming loans as a % of total loans 0.02 % 0.09 0.09 Annualized net charge-offs as a % of average loans 0.28 % 0.22 0.05 Selected average balances: Loans, net of unearned income $577,489 559,009 566,082 Total assets 1,026,163 1,009,953 987,272 Total deposits 930,474 917,178 906,805 Total stockholders' equity 91,088 90,000 78,158 Selected period end balances: Loans, net of unearned income $582,040 565,354 560,650 Allowance for credit losses 6,776 7,176 6,750 Total assets 1,026,946 1,018,797 996,786 Total deposits 931,109 922,926 910,503 Total stockholders' equity 93,061 92,053 83,115 (a) Tax equivalent. See “Explanation of Certain Unaudited Non-GAAP Financial Measures” and “Reconciliation of GAAP to non-GAAP Measures (unaudited).”(b) Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and tax-equivalent net interest income. See "Reconciliation of GAAP to non-GAAP Measures (unaudited)" below.(c) Calculated by dividing period end share price by earnings per share for the previous four quarters.Average Balances and Net Interest Income Analysis(1) Quarter ended March 31, 2026 December 31, 2025 March 31, 2025 Interest Interest Interest Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/(Dollars in thousands) Balance Expense Rate Balance Expense Rate Balance Expense RateInterest-earning assets: Loans and loans held for sale (2) (3) $577,847 $8,014 5.62% $559,084 $7,877 5.59% $566,267 $7,592 5.44%Securities (3) (4) 256,565 1,241 1.96% 262,132 1,284 1.94% 280,061 1,367 1.98%Federal funds sold 24,352 216 3.60% 25,995 252 3.85% 26,865 291 4.39%Interest bearing bank deposits 108,509 989 3.70% 105,589 1,038 3.90% 61,235 678 4.49% Total interest-earning assets 967,273 $10,460 4.39% 952,800 $10,451 4.35% 934,428 $9,928 4.31%Cash and due from banks 14,153 14,081 18,077 Other assets (5) 44,737 43,072 34,767 Total assets $1,026,163 $1,009,953 $987,272 Interest-bearing liabilities: Deposits: NOW $236,218 $779 1.34% $216,545 $698 1.28% $209,222 $743 1.44% Savings and money market 257,214 473 0.75% 252,403 552 0.87% 242,701 502 0.84% Time deposits 179,947 1,376 3.10% 180,163 1,420 3.13% 190,895 1,571 3.34% Total interest-bearing deposits 673,379 2,628 1.58% 649,111 2,670 1.63% 642,818 2,816 1.78%Short-term borrowings — — — 1 1 NM — — — Total interest-bearing liabilities 673,379 $2,628 1.58% 649,112 $2,671 1.63% 642,818 $2,816 1.78%Noninterest-bearing deposits 257,095 268,067 263,987 Other liabilities 4,601 2,774 2,309 Stockholders' equity 91,088 90,000 78,158 Total liabilities and stockholders' equity $1,026,163 $1,009,953 $987,272 Net interest income and margin (tax-equivalent) $7,832 3.28% $7,780 3.24% $7,112 3.09% (1) In the first quarter of 2026, we changed the presentation of net interest income on a tax-equivalent basis to account for tax-exempt interest income on municipal loans. Also, wereclassified average net unrealized gains (losses) on available-for-sale securities to average other assets so that average total securities are presented on an amortized cost basis in ourcalculation of net interest margin. Prior period amounts, including the presentation and calculation of our net interest margin, have been revised to conform with the current periodpresentation.(2) Loans on nonaccrual status have been included in the computation of average balances.(3) Reflects tax-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans and securities to a tax-equivalent basis.(4) Securities are included on an amortized cost basis with yield and net interest margin calculated accordingly.(5) Includes average net unrealized gains (losses) on securities available-for-sale of $(26.2), $(25.9), and $(33.9) million for the quarters ended March 31, 2026, December 31, 2025,and March 31, 2025, respectively.Reconciliation of GAAP to non-GAAP Measures (unaudited): Quarter ended March 31, December 31, March 31,(Dollars in thousands, except per share amounts) 2026 2025 2025Net interest income, as reported (GAAP) $7,733 7,713 7,045Tax-equivalent adjustment 99 67 67Net interest income (tax-equivalent) $7,832 7,780 7,112 For additional information, contact: David A. Hedges President and CEO (334) 821-9200 Source: Auburn National Bancorporation, Inc.