Auburn National Bancorporation (AUBN) 8-K Auburn National Bancorporation, Inc. Reports First Quarter Net Earnings

Exhibit 99.1   For additional information, contact: Robert W. Dumas Chairman, President and CEO (334) 821-9200

Press Release – May 8, 2020

Auburn National Bancorporation, Inc. Reports First Quarter Net Earnings

First Quarter 2020 Results:

• Net earnings of $1.8 million, compared to $2.5 million for Q1 2019

• Earnings per share of $0.50 per share, compared to $0.70 per share for Q1 2019

• Provision for loan losses of $400 thousand, compared to none for Q1 2019

• Allowance for loan losses to total loans of 1.10%, compared to 0.95% atyear-end 2019

AUBURN, Alabama – Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net earnings of $1.8 million, or $0.50 per share, for the first quarter of 2020, compared to $2.5 million, or $0.70 per share, for the first quarter of 2019.

“I am very pleased with the response of our organization to the challenges presented by theCOVID-19 pandemic,” said Robert W. Dumas, Chairman, President, and CEO. “As the crisis unfolded, we moved very quickly to protect the health and safety of our employees and customers. These steps included closing our bank branch lobbies, servicing customers primarily through our drive-through facilities, rotating branch staff, and enabling a large number of ournon-retail employees to work remotely.”

“We are actively working with our customers that have been impacted byCOVID-19 to support them during this difficult time. We were able to quickly establish our process for participating in the Small Business Administration’s Paycheck Protection Program, and through April 30, 2020, we had 389 applications approved by the SBA totaling over $35 million in loans for our customers, which will help support close to 5,500 employees in our markets.”

“While the duration and effects of the pandemic and the timing and strength of the eventual economic recovery remain uncertain, we believe the Company is well positioned from a capital and liquidity standpoint to play a critical role in supporting our communities as we work together to manage through this crisis,” said Mr. Dumas.

Net interest income(tax-equivalent) was $6.3 million for the first quarter of 2020, a 6% decrease compared to $6.8 million for the first quarter of 2019. This decrease was primarily due to loan payoffs and recent declines in market interest rates. Average loans were down 5% to $451.2 million in the first quarter of 2020 compared to $477.3 million in the first quarter of 2019. The Company’s net interest margin(tax-equivalent) was 3.23% in first quarter of 2020 compared to 3.54% in the first quarter of 2019.

At March 31, 2020, the Company’s allowance for loan losses was $4.9 million, or 1.10% of total loans, compared to $4.4 million, or 0.95% of total loans, at December 31, 2019 and $4.8 million, or 1.02% of total loans, at March 31, 2019. The provision for loan losses was $0.4 million for the first quarter of 2020, compared to no provision for loan losses during the first quarter of 2019. The increase in the provision for loan losses was related to changes in economic conditions driven by the impact ofCOVID-19 and higher unemployment in our primary market area. The provision for loan losses is based upon various estimates and judgments, including the absolute level of loans, loan growth, credit quality and risks, and the amount of net charge-offs.

As we work to assist customers affected by the pandemic, we are granting loan modifications or deferrals to certain borrowers on a short-term basis of three to six months. Through April 30, 2020, we have granted loan payment deferrals or payments of interest only on loans totaling $43.3 million, or 10% of total loans. Based on current requests, we expect the number of modifications or deferrals to continue to increase in the second quarter of 2020. In addition, we have identified certain commercial sectors with enhanced risk resulting from the impact ofCOVID-19. See table below for a summary of loans outstanding for these sectors at March 31, 2020.

		Portfolio Segment
(In thousands)		Commercial and industrial		Construction and land development		Commercial real estate			Total		% of Total Loans
March 31, 2020:
Hotel/motel	$		755		7,293		43,249	$		51,297		12	%
Shopping centers			25		—		34,037			34,062		8
Retail, excluding shopping centers			435		826		18,413			19,674		4
Restaurants			566		—		14,089			14,655		3
Total	$		1,781		8,119		109,788	$		119,688		27	%

Noninterest income was $1.2 million for the first quarter of 2020 and 2019, respectively. For the first quarter of 2020 noninterest income included $0.3 million innon-taxable death benefits from bank-owned life insurance and a $0.3 millionpre-tax gain from an insurance recovery in the first quarter of 2019.

Noninterest expense was $4.9 million for the first quarter of 2020 compared to $4.6 million for the first quarter of 2019. The increase was primarily due to $0.2 million of various expenses related to the redevelopment of the Company’s headquarters in downtown Auburn, including revised depreciation estimates and temporary relocation costs. The Company expects it will incur additional expense in 2020 related to this redevelopment project.

Income tax expense was $0.4 million and $0.6 million for the first quarter of 2020 and 2019, respectively, reflecting an effective tax rate of 17.80% and 19.75%, respectively. This change was primarily due to a decrease in the level of earnings before taxes relative totax-exempt sources of income. The Company’s effective income tax rate is principally impacted bytax-exempt earnings from the Company’s investments in municipal securities and bank-owned life insurance.

The Company paid cash dividends of $0.255 per share in the first quarter of 2020, an increase of 2% from the same period in 2019. At March 31, 2020, 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 $856 million. 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 eight full-service branches in Auburn, Opelika, Valley, and Notasulga, Alabama. The Bank also operates loan production offices in Auburn and Phenix City, Alabama. Additional information about the Company and the Bank may be found by visitingwww.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,COVID-19 and its effects, including economic conditions and changes in such conditions in our markets, loan demand, mortgage lending activity, changes in the mix of our earning assets (including those generating tax exempt income) and our deposit and wholesale liabilities, net interest margin, yields on earning assets, securities valuations and performance, interest rates (generally and those applicable to our assets and liabilities), loan performance, nonperforming assets, other real estate owned, provision for loan losses, charge-offs, other-than-temporary impairments, collateral values, credit quality and risks, and market and economic 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 Form10-K for the year ended December 31, 2019 and otherwise in our other SEC reports and filings.

Explanation of Certain UnauditedNon-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 includes certain designated net interest income amounts presented on atax-equivalent basis, anon-GAAP financial measure, and the presentation and calculation of the efficiency ratio, anon-GAAP measure. Management uses thesenon-GAAP financial measures in its analysis of the Company’s performance and believes the presentation of net interest income on atax-equivalent basis provides comparability of net interest income from both taxable andtax-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 thesenon-GAAP financial measures enhance investors’ understanding of its business and performance, thesenon-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 thesenon-GAAP financial measures.

Reports First Quarter Net Earnings/page 4

Financial Highlights (unaudited)

	Quarter ended March 31,
(Dollars in thousands, except per share amounts)	2020			2019
Results of Operations
Net interest income (a)	$	6,332		$	6,766
Less:tax-equivalent adjustment		120			146
Net interest income (GAAP)		6,212			6,620
Noninterest income		1,235			1,160
Total revenue		7,447			7,780
Provision for loan losses		400			—
Noninterest expense		4,856			4,611
Income tax expense		390			626
Net earnings	$	1,801		$	2,543
Per share data:
Basic and diluted net earnings	$	0.50		$	0.70
Cash dividends declared	$	0.255		$	0.25
Weighted average shares outstanding:
Basic and diluted		3,566,146			3,614,741
Shares outstanding, at period end		3,566,146			3,581,485
Book value	$	29.04		$	25.39
Common stock price:
High	$	59.99		$	39.43
Low		24.11			30.61
Period-end		41.98			39.43
To earnings ratio		16.66	x		15.71	x
To book value		145	%		155	%
Performance ratios:
Return on average equity (annualized)		7.24	%		11.31	%
Return on average assets (annualized)		0.86	%		1.23	%
Dividend payout ratio		51.00	%		35.71	%
Other financial data:
Net interest margin (a)		3.23	%		3.54	%
Effective income tax rate		17.80	%		19.75	%
Efficiency ratio (b)		64.17	%		58.18	%
Asset Quality:
Nonperforming assets:
Nonperforming (nonaccrual) loans	$	116		$	169
Other real estate owned		99			172
Total nonperforming assets	$	215		$	341
Net recoveries	$	(81	)	$	(18	)
Allowance for loan losses as a % of:
Loans		1.10	%		1.02	%
Nonperforming loans		4,196	%		2,845	%
Nonperforming assets as a % of:
Loans and other real estate owned		0.05	%		0.07	%
Total assets		0.03	%		0.04	%
Nonperforming loans as a % of total loans		0.03	%		0.04	%
Annualized net recoveries as a % of average loans		(0.07	)%		(0.02	)%

Selected average balances:
Securities	$	257,317	$	240,024
Loans, net of unearned income		451,210		477,335
Total assets		838,725		827,143
Total deposits		734,047		732,539
Long-term debt		—		—
Total stockholders’ equity		99,560		89,934
Selected period end balances:
Securities	$	280,435	$	241,287
Loans, net of unearned income		443,868		472,650
Allowance for loan losses		4,867		4,808
Total assets		856,475		835,014
Total deposits		746,785		739,631
Long-term debt		—		—
Total stockholders’ equity		103,563		90,949

(a) Tax equivalent. See “Explanation of Certain UnauditedNon-GAAP Financial Measures” and “Reconciliation of GAAP tonon-GAAP Measures (unaudited).”

(b) Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income andtax-equivalent net interest income.

Reports First Quarter Earnings/page 5

Reconciliation of GAAP tonon-GAAP Measures (unaudited):

		Quarter ended March 31,
(Dollars in thousands, except per share amounts)		2020		2019
Net interest income, as reported (GAAP)	$		6,212	$	6,620
Tax-equivalent adjustment			120		146
Net interest income(tax-equivalent)	$		6,332	$	6,766