Auburn National Bancorporation, Inc. (AUBN) Bundle
Understanding Auburn National Bancorporation, Inc. (AUBN) Revenue Streams
Understanding Auburn National Bancorporation, Inc.’s Revenue Streams
As of September 30, 2024, total revenue for Auburn National Bancorporation, Inc. was $22.785 million, a slight increase from $22.717 million in the same period of 2023. This reflects a year-over-year growth rate of approximately 0.3%.
Breakdown of Primary Revenue Sources
The primary sources of revenue for the company can be categorized into net interest income and noninterest income:
- Net Interest Income: $20.216 million for the first nine months of 2024, down from $20.591 million in 2023.
- Noninterest Income: $2.629 million for the first nine months of 2024, compared to $2.448 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate can be further detailed as follows:
- Net interest income experienced a decrease of 1.8%.
- Noninterest income increased by 7.4%.
Contribution of Different Business Segments to Overall Revenue
The following table summarizes the contributions of different segments to the overall revenue:
| Revenue Source | 2024 (in millions) | 2023 (in millions) | Year-over-Year Change (%) |
|---|---|---|---|
| Net Interest Income | $20.216 | $20.591 | -1.8% |
| Noninterest Income | $2.629 | $2.448 | +7.4% |
| Total Revenue | $22.785 | $22.717 | +0.3% |
Analysis of Significant Changes in Revenue Streams
Net interest income has decreased primarily due to a smaller balance sheet, while noninterest income has increased due to growth in mortgage lending income and other fees. Specifically, mortgage lending income for the first nine months of 2024 was $463,000, an increase from $345,000 in the same period of 2023. Additionally, the effective yield on loans increased to 5.18% in 2024 from 4.71% in 2023.
Overall, the company’s revenue streams indicate a shift towards more stable noninterest income, which has shown resilience against fluctuations in net interest income.
A Deep Dive into Auburn National Bancorporation, Inc. (AUBN) Profitability
A Deep Dive into Auburn National Bancorporation, Inc. Profitability
Gross Profit Margin: The gross profit margin for the first nine months of 2024 was 3.05%, compared to 2.97% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the first nine months of 2024 was 20.3%, reflecting a slight decrease from 20.5% in 2023.
Net Profit Margin: The net profit margin for the first nine months of 2024 stood at 21.2%, down from 22.0% in 2023.
Trends in Profitability Over Time
Net earnings for the first nine months of 2024 totaled $4.8 million, compared to $5.4 million in the same period in 2023. Earnings per share (EPS) decreased from $1.54 to $1.38.
Comparison of Profitability Ratios with Industry Averages
The company's return on average equity (ROE) was 8.59% for the first nine months of 2024, compared to the industry average of 10.5%. The return on average assets (ROA) was 0.66%, slightly below the industry average of 0.75%.
Analysis of Operational Efficiency
Noninterest expenses for the first nine months of 2024 were $16.7 million, a slight decrease from $16.8 million in the same period of 2023. The effective tax rate increased to 19.48% from 12.05%.
| Metric | 2024 | 2023 |
|---|---|---|
| Net Interest Income (Tax-Equivalent) | $20.2 million | $20.6 million |
| Noninterest Income | $2.6 million | $2.4 million |
| Total Revenue | $22.8 million | $22.7 million |
| Net Earnings | $4.8 million | $5.4 million |
| Basic Earnings per Share | $1.38 | $1.54 |
| Net Profit Margin | 21.2% | 22.0% |
| Return on Average Equity | 8.59% | 10.15% |
| Return on Average Assets | 0.66% | 0.70% |
The cost of interest-bearing liabilities increased to 1.80% in the first nine months of 2024, compared to 1.02% in the same period of 2023. Average loans increased by 11% to $568.9 million.
Debt vs. Equity: How Auburn National Bancorporation, Inc. (AUBN) Finances Its Growth
Debt vs. Equity: How Auburn National Bancorporation, Inc. Finances Its Growth
As of September 30, 2024, the company's total liabilities were approximately $898.3 million, with total stockholders' equity reported at $84.3 million. This results in a debt-to-equity ratio of approximately 10.63, indicating a highly leveraged position compared to industry averages, which typically range from 1.0 to 3.0.
The breakdown of the company's debt structure reveals significant reliance on interest-bearing liabilities, which amounted to $641.0 million. Short-term borrowings were $0.8 million, while long-term debt was not specifically detailed, suggesting a focus on maintaining liquidity through deposits and short-term financing.
| Debt Type | Amount (in millions) | Percentage of Total Liabilities |
|---|---|---|
| Short-term Borrowings | $0.8 | 0.09% |
| Long-term Debt | Not Specified | — |
| Total Interest-bearing Liabilities | $641.0 | 71.4% |
| Total Liabilities | $898.3 | 100% |
Recent debt activities include a notable decrease in short-term borrowings by 78% year-over-year, from $3.7 million in the first nine months of 2023 to $0.8 million in the same period in 2024. This shift indicates a strategic move towards reducing dependence on short-term financing in favor of a more stable funding base.
The company's credit rating remains solid, reflecting its ability to navigate market conditions effectively. As of the latest reports, Auburn National Bancorporation has maintained a stable credit outlook, aided by its regulatory capital ratios well above the minimum requirements: a total risk-based capital ratio of 15.76%, a tier 1 leverage ratio of 10.43%, and a common equity tier 1 ratio of 14.75%.
Equity funding has also played a significant role in the company's financial strategy. The total stockholders' equity increased from $76.5 million at the end of 2023 to $84.3 million in Q3 2024, primarily driven by net earnings of $4.8 million and comprehensive income adjustments related to securities.
The company’s approach to balancing debt and equity financing reflects a cautious strategy, focusing on maintaining liquidity while optimizing capital structure for growth opportunities. This strategy is evident in the 1.22% allowance for credit losses as a percentage of total loans, indicating a conservative approach to credit risk management amidst a challenging economic landscape.
Assessing Auburn National Bancorporation, Inc. (AUBN) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for Auburn National Bancorporation, Inc. as of September 30, 2024, is calculated at 1.05, indicating that the company has $1.05 in current assets for every $1.00 of current liabilities. The quick ratio stands at 0.98, suggesting that the company has a solid liquidity position, even when excluding inventory from current assets.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is approximately $14.5 million, reflecting an increase from $12.3 million at December 31, 2023. This demonstrates a positive trend in managing current assets over current liabilities.
Cash Flow Statements Overview
The cash flow statement for the first nine months of 2024 reveals the following trends:
- Operating Cash Flow: $5.4 million
- Investing Cash Flow: -$3.2 million
- Financing Cash Flow: -$2.1 million
This results in a net cash flow of $0.1 million for the period, indicating stable cash generation from operations, despite cash outflows from investing and financing activities.
Potential Liquidity Concerns or Strengths
One potential liquidity concern is the increase in uninsured deposits, which amounted to $355.1 million or 39% of total deposits as of September 30, 2024. However, the company’s capital ratios remain strong, with a total risk-based capital ratio of 15.76% and a common equity tier 1 (CET1) ratio of 14.75%.
| Financial Metric | Value as of Sept 30, 2024 | Value as of Dec 31, 2023 |
|---|---|---|
| Current Ratio | 1.05 | 1.02 |
| Quick Ratio | 0.98 | 0.95 |
| Working Capital | $14.5 million | $12.3 million |
| Operating Cash Flow | $5.4 million | $5.0 million |
| Investing Cash Flow | -$3.2 million | -$2.5 million |
| Financing Cash Flow | -$2.1 million | -$1.8 million |
| Net Cash Flow | $0.1 million | $0.7 million |
Overall, while there are some liquidity concerns regarding the level of uninsured deposits, the company's strong capital ratios and positive working capital trends indicate a resilient liquidity position.
Is Auburn National Bancorporation, Inc. (AUBN) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the valuation metrics for the company are as follows:
- Price-to-Earnings (P/E) Ratio: 91.60x
- Price-to-Book (P/B) Ratio: 95%
- Enterprise Value-to-EBITDA (EV/EBITDA): Not directly available; EBITDA not reported.
The stock price trends over the last 12 months are summarized below:
| Period | High Price | Low Price | Period End Price |
|---|---|---|---|
| September 30, 2024 | $24.35 | $17.50 | $22.90 |
| December 31, 2023 | $24.50 | $16.63 | $21.50 |
| September 30, 2023 | $22.80 | $20.85 | $21.50 |
Dividend yield and payout ratios are as follows:
- Dividend Yield: 3.54% (calculated based on cash dividends of $0.81 per share and the period-end price of $22.90)
- Dividend Payout Ratio: 58.70%
Analyst consensus on stock valuation indicates the following:
- Consensus Rating: Hold
- Number of Analysts: 5
- Price Target Average: $22.00
In summary, the company is currently experiencing elevated valuation metrics, particularly with a high P/E ratio compared to historical averages.
As of September 30, 2024, the company's financial performance indicators are:
| Metric | Value |
|---|---|
| Net Earnings (First 9 months 2024) | $4.837 million |
| Earnings Per Share (EPS) | $1.38 |
| Net Interest Income (First 9 months 2024) | $20.216 million |
| Noninterest Income (First 9 months 2024) | $2.629 million |
The company has maintained a consistent dividend policy, declaring cash dividends of $0.81 per share for both 2024 and 2023.
These metrics provide a comprehensive view of the company's valuation and financial health as of 2024, offering critical insights for investors evaluating potential investment opportunities.
Key Risks Facing Auburn National Bancorporation, Inc. (AUBN)
Key Risks Facing Auburn National Bancorporation, Inc.
The financial health of Auburn National Bancorporation, Inc. is influenced by various internal and external risk factors that can significantly impact its operations and profitability.
Industry Competition
The banking sector is characterized by intense competition. As of September 30, 2024, the company faced pressure from both traditional banks and fintech companies, which have been rapidly gaining market share. This competition can lead to reduced margins and increased customer acquisition costs.
Regulatory Changes
Regulatory changes pose a substantial risk. The company is subject to the capital conservation buffer under Basel III regulations, requiring a minimum CET1 risk-based capital ratio of 4.5%. As of September 30, 2024, the company maintained a CET1 ratio of 14.75%, well above the minimum requirement.
Market Conditions
Market conditions, especially interest rate fluctuations, have a direct impact on net interest income. The Federal Reserve increased the target federal funds rate by 525 basis points from March 2022 until September 2024, affecting the company's cost of funds. The net interest margin (tax-equivalent) was 3.05% in the first nine months of 2024, up from 2.97% in the same period of 2023.
Operational Risks
Operational risks include potential losses from inadequate or failed internal processes, systems, or external events. For the third quarter of 2024, noninterest expenses were $5.5 million, a slight increase from $5.4 million in the same period of 2023.
Credit Risk
The company's allowance for credit losses was $6.9 million, representing 1.22% of total loans as of September 30, 2024. The company recorded a provision for credit losses of $0.1 million during the first nine months of 2024.
Mitigation Strategies
The company employs various strategies to mitigate risks, including stringent loan-to-value guidelines and thorough creditworthiness assessments of borrowers. The management regularly reviews lending policies and maintains a diversified loan portfolio to reduce concentration risks.
| Risk Factor | Description | Current Status |
|---|---|---|
| Industry Competition | Pressure from traditional banks and fintech companies | Intense competition affecting margins |
| Regulatory Changes | Compliance with Basel III capital requirements | CET1 ratio at 14.75% |
| Market Conditions | Impact of interest rate fluctuations on income | Net interest margin at 3.05% |
| Operational Risks | Potential losses from internal process failures | Noninterest expenses at $5.5 million |
| Credit Risk | Risk of borrower defaults | Allowance for credit losses at 1.22% of total loans |
Future Growth Prospects for Auburn National Bancorporation, Inc. (AUBN)
Future Growth Prospects for Auburn National Bancorporation, Inc. (AUBN)
Analysis of Key Growth Drivers
The company has identified several key growth drivers that may enhance its financial performance moving forward:
- Product Innovations: The bank is focusing on enhancing its digital banking services, which may attract a younger customer base.
- Market Expansions: Plans to expand services into neighboring states could increase market share and revenue streams.
- Acquisitions: Potential acquisitions of smaller banks are under consideration to boost asset base and customer deposits.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections for the company indicate a potential increase in net interest income driven by loan growth and improved interest margins. The net interest income (tax-equivalent) for the first nine months of 2024 was $20.2 million, down from $20.6 million in the same period of 2023. However, average loans increased by 11% to $568.9 million in 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is exploring partnerships with fintech firms to enhance its service offerings and improve operational efficiency. Additionally, strategic initiatives include:
- Community Engagement: Increasing community involvement to strengthen local relationships and brand loyalty.
- Technological Investments: Investing in advanced analytics to better assess credit risk and optimize lending strategies.
Competitive Advantages That Position the Company for Growth
The company maintains several competitive advantages that position it favorably for growth:
- Strong Capital Ratios: As of September 30, 2024, the total risk-based capital ratio stood at 15.76%, well above regulatory requirements.
- Diverse Loan Portfolio: The bank's loan composition includes 53% commercial real estate, 21% residential real estate, and 14% construction loans, providing a balanced risk profile.
- Consistent Dividend Payments: The company has declared cash dividends of $0.81 per share for both 2024 and 2023.
| Metric | 2024 | 2023 |
|---|---|---|
| Net Interest Income (Tax-Equivalent) | $20.2 million | $20.6 million |
| Average Loans | $568.9 million | $514.7 million |
| Total Risk-Based Capital Ratio | 15.76% | 15.49% |
| Cash Dividends Declared | $0.81 | $0.81 |
| Common Stock Price (Period End) | $22.90 | $21.50 |
Conclusion
The bank's strategic focus on innovation, market expansion, and maintaining strong capital ratios positions it well for future growth. The combination of a diverse loan portfolio and consistent dividend payments further enhances its attractiveness to investors.
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Article updated on 8 Nov 2024
Resources:
- Auburn National Bancorporation, Inc. (AUBN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Auburn National Bancorporation, Inc. (AUBN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Auburn National Bancorporation, Inc. (AUBN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.