[8-K] Auburn National Bancorporation Reports Material Event

Rhea-AI Filing Summary

Morgan Stanley Finance LLC is issuing $2.508 million of Trigger Performance Leveraged Upside Securities (PLUS) maturing 6 July 2028. Each $1,000 note is an unsecured obligation of MSFL, fully and unconditionally guaranteed by Morgan Stanley, and will pay no periodic interest.

Pay-off structure

• Upside: If the final level of each index (S&P 500 & Russell 2000) exceeds its initial level, investors receive principal plus 136 % of the worst performer’s gain.
• Par: If either index is ≤ its initial level but both remain ≥ 70 % of the initial, only principal is returned.
• Downside: If either index closes below its 70 % downside threshold (SPX 4,343.465 / RTY 1,522.525), repayment equals principal × performance of the worst performer, exposing investors to 1 % loss for every 1 % decline; the payment can fall to $0.

Key terms

• Issue/Strike/Pricing date: 30 June 2025  |  Maturity: 6 July 2028 (3-year tenor)
• Initial levels: SPX 6,204.95; RTY 2,175.035
• Estimated value on pricing date: $972.30 (97.23 % of issue price) reflecting structuring & hedging costs
• No listing; secondary liquidity solely through MS&Co, which is not obligated to make a market
• Aggregate commissions to dealers: up to $6.25 per note (sold only through fee-based advisory accounts)
• Minimum denomination: $1,000; CUSIP 61778KF44

Risk highlights

• Principal at risk; no minimum repayment
• Linked to the worst performing index, eliminating diversification benefits
• Subject to Morgan Stanley credit risk; MSFL has no independent operations
• Estimated value < issue price; expected secondary price lower than par
• Limited or no secondary market; investors should be prepared to hold to maturity

Positive

• 136 % upside participation if both indices finish above their initial levels, enhancing equity gains.
• 30 % downside buffer (threshold at 70 % of initial) before capital is at risk of loss.
• Full guarantee by Morgan Stanley adds investment-grade credit backing compared with non-guaranteed issuers.

Negative

• No principal protection: a fall below the 70 % threshold in either index results in proportional losses up to 100 %.
• Worst-performer feature removes diversification benefit and raises loss probability versus single-index notes.
• Estimated value is only 97.23 % of issue price, indicating an initial 2.77 % cost to investors.
• No exchange listing; liquidity depends solely on MS&Co and may be limited or unavailable.
• Product pays zero interest, so negative carry if held in margin or versus inflation.

Insights

Structured-Products Analyst

TL;DR – 3-year note offers 136 % upside leverage but full downside after 30 % buffer.

The offering is a conventional dual-index Trigger PLUS with modest size ($2.5 m). Investors gain above-par exposure if both SPX and RTY finish positive, yet face uncapped losses if either breaches its 70 % barrier. The 136 % leverage is in line with similar maturities, while the estimated value of 97.23 % shows typical 2.8 % structuring drag. Absence of exchange listing and reliance on MS&Co for liquidity raise exit-cost concerns. Credit exposure to Morgan Stanley remains IG, but widening spreads could hit secondary pricing. Overall, product suits tactical bullish investors who can stomach equity drawdowns and illiquidity; impact on Morgan Stanley’s balance sheet is immaterial.

Risk Analyst

TL;DR – Downside buffer only to –30 %; worst-of design magnifies loss probability.

The worst-performer mechanic means the probability of triggering principal loss exceeds that of a single-index note, particularly given RTY’s higher volatility. Historical swings show RTY has dropped >30 % several times since 2020, underscoring tail-risk. Investors also accept issuer credit risk and a secondary market likely discounted by bid-offer and spread adjustments. With no interim coupons, total return is path-dependent and back-ended. Tax treatment as a prepaid forward contract is untested and could change. These factors make the security appropriate only for sophisticated clients with clear risk appetite.

AUBURN NATIONAL BANCORPORATION, INC --12-31 0000750574 false 0000750574 2025-07-01 2025-07-01

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 2, 2025 (July 1, 2025)

AUBURN NATIONAL BANCORPORATION, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware		0-26486		63-0885779
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

100 North Gay Street, P.O. Drawer 3110, Auburn, Alabama 36831-3110

(Addresses of Principal Executive Offices, including Zip Code)

(334) 821-9200

(Registrant’s Telephone Number, including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01		AUBN		Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected 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. ☐

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The 2025 Annual Meeting of Shareholders of Auburn National Bancorporation, Inc. (“the Company”) was held on Tuesday, May 13, 2025, at which the shareholders approved an amendment to the Company’s Certificate of Incorporation to limit the liability of officers as permitted by the Delaware General Corporation Law.

A detailed description of the amendment is set forth in “Proposal Four: Amendment of Certificate of Incorporation” in the Company’s proxy statement filed with the Securities and Exchange Commission on April 3, 2025, which description is qualified in its entirety by reference to the full text of the Certificate of Amendment to the Certificate of Incorporation amending and restating Section 7.04 of the Certificate of Incorporation (“Certificate of Amendment”) filed as Exhibit 3.1 to this Report and incorporated herein by reference. The Certificate of Amendment became effective upon its filing with the Secretary of State of the State of Delaware on July 1, 2025.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
3.1		Certificate of Amendment to the Certificate of Incorporation amending and restating Section 7.04 of the Certificate of Incorporation.
104		Cover Page Interactive Data File, formatted in Inline XBRL.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AUBURN NATIONAL BANCORPORATION, INC.

(Registrant)

/s/ David A. Hedges

David A. Hedges

President and CEO

Date: July 2, 2025

FAQ

What are the key terms of Morgan Stanley's Trigger PLUS due July 6 2028 (MS)?

Each $1,000 note offers 136 % upside on the worst performer of the S&P 500 and Russell 2000, a 70 % downside threshold, no coupons, and matures on July 6 2028.

How is the maturity payment calculated for the MS Trigger PLUS?

If both indices end above their initial levels, you receive principal plus 136 % of the worst performer’s gain; if either is ≤ initial but ≥ 70 %, you get principal only; below 70 %, losses match the worst performer’s decline.

What is the initial and downside threshold level for each index?

SPX: Initial 6,204.95; Threshold 4,343.465. RTY: Initial 2,175.035; Threshold 1,522.525.

What is the estimated value versus issue price of the securities?

Morgan Stanley estimates the value at $972.30 per $1,000 note on the pricing date, below the issue price due to structuring and hedging costs.

Are the Trigger PLUS securities principal-protected?

No. Principal is at risk; investors can lose the entire investment if either index falls more than 30 %.

Will the securities be listed or have active secondary trading?

The notes will not be listed on any exchange; MS&Co may provide limited, discretionary secondary market liquidity.

What are the U.S. federal tax considerations for this note?

Counsel believes the notes are prepaid financial contracts treated as open transactions, but the IRS could challenge this; investors should consult a tax adviser.