Auburn National Bancorporation (AUBN -1.78%), a community bank serving East Alabama, reported its second quarter 2025 results on July 22, 2025. The bank posted earnings per share of $0.52 (GAAP) and revenue of $8.1 million, Both earnings per share and revenue were higher than in Q1 2025 and Q2 2024. The quarter was marked by improved profitability, a stronger net interest margin (tax-equivalent, non-GAAP), and continued robust asset quality, although loan growth was flat and noninterest expense increased from $5.5 million in Q2 2024 to $5.7 million.
| Metric | Q2 2025 | Q1 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.52 | $0.44 | $0.50 | 4.0 % |
| Revenue (GAAP) | $8.1 million | $7.8 million | $7.6 million | 6.6 % |
| Net Interest Income (Non-GAAP) | $7.36 million | $7.06 million | $6.7 million | 9.9 % |
| Net Interest Margin (Non-GAAP) | 3.27 % | 3.20 % | 3.06 % | 0.21 pp |
| Noninterest Expense | $5.7 million | $5.9 million | $5.5 million | 3.6 % |
Overview of Auburn National Bancorporation's Business and Primary Focuses
Auburn National Bancorporation is a regional community bank headquartered in Auburn, Alabama. Its banking unit, AuburnBank, holds the largest share of deposits in Lee County, Alabama, with a market share of 21.3% as of June 30, 2024. This locally focused franchise caters to retail, small business, and commercial customers with loans, deposit accounts, and mortgage services.
The company has built its reputation on strong customer relationships, stability, and asset quality. Its competitive advantages stem from deep local knowledge, stable market leadership, and a traditionally conservative risk profile. Major focus areas include managing commercial real estate lending concentrations, adapting to evolving customer digital expectations, and maintaining top-tier credit quality. Success relies on market leadership, strong capital, and careful risk management in loan underwriting.
Quarterly Performance: Growth, Profitability, and Noteworthy Developments
Profitability and core earnings increased compared to Q1 2025. Net income (GAAP) rose to $1.8 million, yielding $0.52 per share, up from both the prior quarter and prior-year period. Net interest income, which measures the spread between interest earned on loans and securities and interest paid on deposits, increased by 9.5% compared to Q2 2024 and by 4% compared to Q1 2025. The net interest margin, a key efficiency measure showing how much the bank earns on its lending and investing activities relative to its assets, was 3.27%. This gain in net interest margin was driven by a drop in the cost of interest-bearing deposits, as management noted.
Total assets stood at $1.0 billion. Loans ended the period at $562.7 million, essentially unchanged from the prior quarter. Deposit balances increased to $939.9 million at June 30, 2025, compared to $910.5 million at March 31, 2025, primarily due to fluctuations in reciprocal customer deposits sold through the Intrafi network. The large payoff of a single $14.9 million loan contributed to the year-on-year decline in the loan book between Q2 2024 and Q2 2025. Despite this, the balance sheet remained stable and capital ratios improved. Tangible common equity rose to 8.36% of assets, up from 7.34% in Q2 2024, reflecting retained earnings and improved investment security market values.
Noninterest expense, which includes items like salaries and facilities costs, fell 3% from Q1 2025, mainly due to lower occupancy and other costs. (GAAP) Noninterest expense increased from $5.5 million in Q2 2024 to $5.7 million, with higher salary and benefit costs and increased professional fees. This resulted in a more efficient operation as the efficiency ratio -- a non-GAAP metric that compares expenses to adjusted revenue -- was 69.95%. Revenue not linked to lending or deposit-taking, which the bank calls noninterest income, was $0.8 million (GAAP). This figure, though slightly higher than in Q1 2025, was lower than in Q2 2024 due to less mortgage lending activity.
Asset quality remained a standout, with nonperforming assets -- a measure of loans and property where borrowers are not making required payments -- falling to 0.03% of total assets at June 30, 2025. Net recoveries were $48 thousand, while the provision for credit losses, or the amount set aside for potential future bad loans, was $113 thousand. The allowance for credit losses equaled 1.24% of total loans, reflecting a well-reserved position.
The quarter saw no changes to the company’s borrowing arrangements, with no outstanding Federal Home Loan Bank (FHLB) advances. The bank maintained a $0.27 quarterly dividend, representing a 51.9% payout of earnings to shareholders. The dividend payout ratio decreased from 61.36% in Q1 2025 to 51.92% as improved profits outpaced dividend growth.
Looking Ahead: Guidance and Investor Focus
Management stated it expects net interest margin (tax-equivalent, non-GAAP) to continue improving as more loans and securities re-price in the current rate cycle. There was no specific financial guidance for future periods regarding expected earnings, revenue, or loan growth. Commentary did flag that loan demand has slowed and that noninterest expenses should be monitored due to routine increases in compensation and other costs.
The outlook remains focused on core strengths, with the bank’s leadership highlighting strong capital and liquidity but acknowledging uncertainty around continued loan growth and the potential for further changes in noninterest income, especially given mortgage lending trends. No explicit changes in dividend policy or payout were announced outside the maintained quarterly dividend of $0.27.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
