10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
10-K
☒
Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the fiscal year ended
December 31, 2025
OR
☐
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from __________ to __________
Commission File Number:
0-26486
Auburn National Bancorporation, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
63-0885779
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)
100 N. Gay Street
,
Auburn,
Alabama
36830
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
334
)
821-9200
Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class
Trading Symbol
Name of Exchange on which Registered
Common Stock
, par value $0.01
AUBN
NASDAQ
Global Market
Securities registered to Section 12(g) of the Act:
None
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act. Yes
☐
No
☒
Indicate by check mark if the registrant
is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
☐
No
☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the
preceding 12 months (or for such shorter period
that the registrant was required to file
such reports), and (2) has been subject to
such filing requirements for the past
90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive
Data File required to be submitted pursuant
to Rule 405 of Regulation S-
T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter
period that the registrant was required
to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large Accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging Growth
Company
☐
If an emerging growth company, indicate by check mark if the registrant
has selected not to use the extended
transition period for complying with any
new or revised
financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant
has filed a report on and attestation
to its management’s assessment of the effectiveness of its internal control
over
financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm
that prepared or issued its audit
report.
☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark
whether the financial statements of the registrant
included in the filing reflect
the correction of an error to previously
issued financial statements.
☐
Indicate by check mark whether any of
those error corrections are restatements
that required a recovery analysis of incentive-based
compensation received by any of
the registrant’s executive officers during the relevant recovery period
pursuant to §240.10D-1(b).
☐
Indicate by check mark if the registrant
is a shell company (as defined in Rule
12b-2 of the Act). Yes
☐
No
☒
State the aggregate market value of the
voting and non-voting common equity
held by non-affiliates computed by reference to the
price at which the common equity
was last sold, or the average bid and asked
price of such common equity as of the last
business day of the registrant’s most recently completed
second fiscal quarter:
$
55,287,550
as of June 30, 2025.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding
of each of the registrant’s classes of common stock, as
of the latest practicable date:
3,493,699
shares of common stock as
of March 16, 2026.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual
Meeting of Shareholders, scheduled to
be held May 12, 2026, are incorporated by
reference into Part II, Item 5 and
Part III of this Form 10-K.
Table of Contents
.
TABLE OF CONTENTS
PARTI
PAGE
ITEM 1.
BUSINESS
4
ITEM 1A.
RISK FACTORS
27
ITEM 1B.
UNRESOLVEDSTAFF COMMENTS
36
ITEM 1C.
CYBERSECURITY
36
ITEM 2.
PROPERTIES
38
ITEM 3.
LEGAL PROCEEDINGS
39
ITEM 4.
MINE SAFETY DISCLOSURES
39
PARTII
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY,RELATEDSTOCKHOLDER
MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES
40
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION
AND RESULTSOF OPERATIONS
42
ITEM 7A.
QUANTITATIVEAND QUALITATIVEDISCLOSURES ABOUT MARKET RISK
65
ITEM 8.
FINANCIAL STATEMENTSAND SUPPLEMENTARYDATA
65
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTSON
ACCOUNTING AND FINANCIAL DISCLOSURE
106
ITEM 9A.
CONTROLS AND PROCEDURES
106
ITEM 9B.
OTHER INFORMATION
107
ITEM 9C.
DISCLOSURE REGARDING FORGEIN JURISDICTIONS THATPREVENT
INSPECTION
107
PARTIII
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE
108
ITEM 11.
EXECUTIVE COMPENSATION
108
ITEM 12.
SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND
MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS
108
ITEM 13.
CERTAINRELATIONSHIPS,RELATEDTRANSACTIONS AND DIRECTOR
INDEPENDENCE
108
ITEM 14.
PRINCIPALACCOUNTING FEES AND SERVICES
108
PARTIV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENTSCHEDULES
109
ITEM 16.
FORM 10-K SUMMARY
110
Table of Contents
3
PART
I
SPECIAL CAUTIONARY NOTE REGARDING
FORWARD
-LOOKING STATEMENTS
Various
of the statements made herein under the captions “Business,” Properties,” “Risk Factors,”
“Management’s
Discussion and Analysis of Financial Condition and Results of Operations”,
“Quantitative and Qualitative Disclosures
about Market Risk”, and elsewhere, are “forward-looking statements” within
the meaning and protections of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).
Forward-looking statements include statements with respect to our beliefs, plans,
objectives, goals, expectations,
anticipations, assumptions, estimates, intentions and future performance,
and 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 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 statements other than statements of historical fact could be 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.
These forward-looking statements may not
be realized due to a variety of factors, including, without limitation:
●
the effects of future economic, business and market conditions and
changes, foreign, domestic and locally,
including inflation, seasonality,
natural disasters such as hurricanes, and tornados and floods, epidemics or
pandemics, supply chain disruptions and changes in consumer behaviors;
●
the effects of war, other conflicts or
attacks, acts of terrorism, trade restrictions, tariffs, sanctions,
the value of the
U.S. dollar against other currencies, or other events that may affect general
economic conditions, and consumer
and business confidence;
●
governmental fiscal and monetary policies and changes, including
taxes, the amount of federal deficit spending
and the debt to fund such spending, changes in monetary policies, including
changes in the Federal Reserve’s
target federal funds rate and in the Federal Reserve’s
holdings of securities through quantitative tightening or
easing; and the duration that the Federal Reserve will keep its targeted federal
funds rates at or above current target
ranges to meet its long term inflation target of 2%;
●
changes in market interest rates and the shape of the yield curve on changes in savings,
deposit and payment
behaviors, the levels, composition and costs of deposits, loan demand and mortgage
loan originations, and the
values and liquidity of and interest-sensitive assets and liabilities;
●
increases in market interest rates that may result in unrealized losses on our
securities portfolio, which adversely
affect our stockholders’ equity for financial reporting purposes and
our tangible equity;
●
the effects of competition from a wide variety of local, regional,
national and other providers of financial,
investment and insurance services, including the disruptive effects
of financial technology and products, including
stablecoin and other digital assets businesses, which are not subject to the same
regulation, including capital and
liquidity requirements, internal controls, and supervision and examination,
as the Company and the Bank, and
competition from credit unions, which are not subject to federal income taxation;
●
more permissive regulation and/or enforcement of digital assets, such as cyber
currency and stablecoins (including
rewards or other forms of payments functionally similar to interest), that
increases competition to banks, increases
risks to the payment systems, increases risks of fraud and theft of digital assets and their effects
on customers other
financial institutions, including our counterparties, and confidence
in the financial system, generally;
●
changes in banking, securities and tax laws, regulations and rules and their
application by the regulators, including
capital and liquidity requirements, and in the coverage and cost of FDIC deposit
insurance;
Table of Contents
4
●
legislative, executive branch and regulatory changes, including changes
in policy, leadership and personnel,
including reductions in the number and experience of personnel, at the bank
and securities regulators and the
CFPB, and the uncertain effects of all these, including the costs and
benefits of such changes;
●
the effects of the potential privatization and changes to Fannie Mae
and Freddie Mac and its purchases of
mortgage-backed securities on the mortgage markets and to us as an
originator, seller and servicer of residential
mortgage loans;
●
the assumptions, judgments and estimates made by the Company,
including those used in the Company’s CECL
models to establish our allowance for credit losses and asset impairments, as well as differences
in, and changes to,
economic, market and credit conditions, including changes in employment
levels and payment behaviors from
those used in our CECL models and loan portfolio reviews;
●
changes in accounting pronouncements and interpretations;
●
changes in borrower credit risks, and;
●
changes in the availability and cost of credit and capital in the financial markets, and
the types of instruments that
may be included as capital for regulatory purposes;
●
changes in our technology or products that may be more difficult,
costly and risky, or less effective
than
anticipated;
●
threats of potential cyber-attacks and data breaches, in constantly changing
forms and increasing sophistication,
including through the use of artificial intelligence and state sponsorship
of the attacks;
●
the estimates that our future taxable income could be inaccurate, and if lower taxable
income is realized from our
operations, the amount of our deferred tax assets that we anticipate will be reduced;
●
our future earnings and “eligible retained earnings” over rolling four calendar
quarter periods may limit our
dividends, share repurchases and discretionary bonuses; and
●
other factors and risks described under “Risk Factors” herein and in any of our
subsequent reports that we make
with the Securities and Exchange Commission (the “Commission” or
“SEC”) under the Exchange Act.
All written or oral forward-looking statements that we make or are attributable
to us are expressly qualified in their entirety
by this cautionary notice.
We have no obligation
and do not undertake to update, revise or correct any of the forward-
looking statements after the date of this report, or after the respective dates on which
such statements otherwise are made.
ITEM 1.
BUSINESS
Auburn National Bancorporation, Inc. (the “Company”) is a bank holding
company registered with the Board of Governors
of the Federal Reserve System (the “Federal Reserve”) under the Bank Holding
Company Act of 1956, as amended (the
“BHC Act”).
The Company was incorporated in Delaware in 1990, and in 1994 it succeeded
its Alabama predecessor as
the bank holding company controlling AuburnBank, an Alabama state member
bank with its principal office in Auburn,
Alabama (the “Bank”).
The Company and its predecessor have controlled the Bank since 1984.
As a bank holding
company, the Company
may diversify into a broader range of financial services and other business activities than
currently
are permitted to the Bank under applicable laws and regulations.
The holding company structure also provides greater
financial and operating flexibility than is presently permitted to the
Bank.
The Bank has operated continuously since 1907 and currently conducts its business
primarily in East Alabama, including
Lee County and surrounding areas.
The Bank has been a member of the Federal Reserve Bank of Atlanta (the
“Federal
Reserve Bank”) since April 1995.
The Bank’s primary regulators are the Federal
Reserve and the Alabama Superintendent
of Banks (the “Alabama Superintendent”).
The Bank has been a member of the Federal Home Loan Bank of Atlanta (the
“FHLB-Atlanta”) since 1991.
Table of Contents
5
General
The Company’s business is conducted
primarily through the Bank and its subsidiaries.
Although it has no immediate plans
to conduct any other business, the Company may engage directly or
indirectly in a number of activities closely related to
banking permitted by the Federal Reserve.
The Company’s principal
executive offices are located at 100 N. Gay Street, Auburn, Alabama 36830,
and its telephone
number at such address is (334) 821-9200.
The Company maintains an Internet website at
www.auburnbank.com
.
The
Company’s website and
the information appearing on the website are not included or incorporated in, and are not part of,
this report.
The Company files annual, quarterly and current reports, proxy statements, and other
information with the
SEC.
You
may read and copy any document we file with the SEC at the SEC’s
public reference room at 100 F Street, N.E.,
Washington,
DC 20549.
Please call the SEC at 1-800-SEC-0330 for more information on the operation of the public
reference rooms.
The SEC maintains an Internet site at
www.sec.gov
that contains reports, proxy,
and other information,
where SEC filings are available to the public free of charge.
Services
The Bank operates its main office and 7 branches in Auburn, Opelika,
Notasulga, and Valley,
Alabama and a loan
production office in Phenix City,
Alabama.
We
evaluate the utilization of our existing facilities and customer preferences
for online and mobile banking.
In addition to opening our new main office in 2022, we closed one
branch office in Auburn
at the end of 2024, whose customers could be served conveniently and more
efficiently by another existing Bank branch.
The Bank offers checking, savings, transaction deposit accounts
and certificates of deposit, and is an active residential
mortgage lender in its primary service area.
The Bank’s primary service area includes
the cities of Auburn and Opelika,
Alabama and nearby surrounding areas in East Alabama, primarily
in Lee County.
The Bank also offers commercial,
financial, agricultural, real estate construction and consumer loan products,
and other financial services.
The Bank operates
ATM
machines in 8 locations in its primary service area.
The Bank offers Visa
®
Checkcards, which are debit cards with
the Visa logo that work like
checks and can be used anywhere Visa
is accepted, including ATMs.
The Bank’s Visa
Checkcards can be used internationally through the Plus
®
network.
The Bank offers online banking, bill payment, online
consumer account opening, and other electronic banking services through
its Internet website, www.auburnbank.com
.
Our
online banking services, bill payment and electronic services are subject
to certain cybersecurity risks.
See “Risk Factors –
Our information systems may experience interruptions and
security breaches.”
The Bank has not offered any services related to any Bitcoin or
other digital or crypto instruments, stablecoins or
businesses.
Competition
The Bank operates in a highly competitive market for loans, deposits and
other financial services in East Alabama,
including Lee County.
Based on FDIC deposit market share data as of June 30, 2025, the Bank held
the largest share of
deposits in Lee County.
The Bank competes with 20 national, regional and community banks with offices
in Lee County,
which operate offices in the local market and many have substantially greater
financial, technological and marketing
resources.
The Bank also competes with credit unions, mortgage lenders, insurance
companies, investment firms and other
financial service providers. In addition, financial services are increasingly
offered through digital and online platforms by
institutions that may not maintain a physical presence in our market.
Many larger financial institutions have advantages over
the Bank, including broader product offerings, higher lending
limits, greater access to capital markets, more extensive advertising and
marketing capabilities, and the ability to operate
across larger geographic markets.
The Bank also faces significant competition for deposits and other financial
services
from investment companies, mutual funds, insurance companies and other
financial institutions offering alternative savings
and investment products. Some of these competitors may not be subject
to the same regulatory requirements as banks.
The Bank seeks to compete by emphasizing customer relationships, community
presence, local decision-making and
responsive service.
Table of Contents
6
Selected Economic Data
The Company’s primary market area
is Lee County, Alabama, including
the cities of Auburn and Opelika and surrounding
communities in East Alabama. Lee County is part of the Auburn-Opelika
metropolitan statistical area. The local economy
is influenced by higher education, healthcare services, public education,
distribution and logistics operations, retail and
service businesses, and automobile manufacturing and related suppliers
located in the region.
Major employers in the area
include Auburn University,
regional healthcare providers, public school systems, manufacturing facilities,
and distribution
operations. The presence of large automobile manufacturing
plants and related suppliers along the Interstate 85 corridor in
eastern Alabama and western Georgia also contributes
significantly to economic activity in the region and supports local
employment, business development, and population growth.
As of year-end 2025, Lee County’s
unemployment rate was
2.1% compared to 2.7% for the State of Alabama.
Economic conditions in our market area, including employment levels, housing
activity, business investment, inflation
and
interest rates, influence loan demand, credit quality,
deposit growth, and other aspects of our operations. Changes in these
conditions could affect our results of operations and financial
condition.
The Auburn-Opelika metropolitan area has experienced population
and economic growth in recent years, supported by
expansion in education, healthcare, manufacturing and related industries.
Continued growth in these sectors may influence
future economic conditions in our market area.
Loans and Loan Concentrations
The Bank makes loans for commercial, financial and agricultural purposes, as well as for
real estate mortgages, real estate
acquisition, construction and development and consumer purposes.
While there are certain risks unique to each type of
lending, management believes that there is more risk associated with commercial,
real estate acquisition, construction and
development, agricultural and consumer lending than with residential real
estate mortgage loans.
To help manage these
risks, the Bank has established underwriting standards used in evaluating
each extension of credit on an individual basis,
which are substantially similar for each type of loan.