Affinity Bancshares, Inc. Announces Second Quarter 2024 Financial Results

Business Wire

Fri, Jul 26, 2024, 2:30 PM 10 min read

COVINGTON, Ga., July 26, 2024--(BUSINESS WIRE)--Affinity Bancshares, Inc. (NASDAQ:"AFBI") (the "Company"), the holding company for Affinity Bank (the "Bank"), today announced net income of $1.0 million for the three months ended June 30, 2024, as compared to $1.6 million for the three months ended June 30, 2023.


	At or for the three months ended,
Performance Ratios:	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Net income (in thousands)	$	1,031		$	1,335		$	1,514		$	1,623		$	1,590
Diluted earnings per share		0.16			0.20			0.23			0.25			0.24
Common book value per share		19.49			19.21			18.94			18.50			18.34
Tangible book value per share ⁽¹⁾		16.64			16.36			16.08			15.63			15.47
Total assets (in thousands)		872,558			869,547			843,258			855,431			876,905
Return on average assets		0.48	%		0.63	%		0.70	%		0.74	%		0.71	%
Return on average equity		3.33	%		4.38	%		5.03	%		5.42	%		5.37	%
Equity to assets		14.33	%		14.18	%		14.41	%		13.85	%		13.45	%
Tangible equity to tangible assets ⁽¹⁾		12.50	%		12.33	%		12.50	%		11.95	%		11.59	%
Net interest margin		3.71	%		3.38	%		3.32	%		3.36	%		3.17	%
Efficiency ratio		78.74	%		75.96	%		74.30	%		71.78	%		71.68	%
(1) Non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and reconciliation to GAAP.

Net Income

Net income was $1.0 million for three months ended June 30, 2024 as compared to $1.6 million for the three months ended June 30, 2023, as a result of an increase in other noninterest expense partially offset by a net increase in interest income.

Results of Operations

Net interest income was $7.6 million for the three months ended June 30, 2024 compared to $6.7 million for the three months ended June 30, 2023. The increase was due to an increase in interest income on loans and investment securities, partially offset by a rise in deposit and borrowing costs and a decrease in interest income on interest-earning deposits.
Net interest margin for the three months ended June 30, 2024 increased to 3.71% from 3.17% for the three months ended June 30, 2023. The increases in the margin relate to increases in our yield on earning assets exceeding our increases in our deposits and borrowing costs.
Provision for credit losses, which is related to provision on unfunded commitments was $213,000 for the three months ended June 30, 2024 compared to zero provision for the three months ended June 30, 2023.
Noninterest income increased $28,000 to $706,000 for the three months ended June 30, 2024.
Non-interest expense increased $1.4 million to $6.7 million for the three months ended June 30, 2024 compared to the respective period in 2023, due to increases in professional fees related to our recently announced merger with Atlanta Postal Credit Union and increases in salaries and employee benefits.
Net interest income was $14.3 million for the six months ended June 30, 2024 compared to $13.6 million for the six months ended June 30, 2023. The increase was due to an increase in interest income on loans and investment securities, partially offset by a rise in deposit and borrowing costs and a decrease in interest income on interest-earning deposits.
Net interest margin for the six months ended June 30, 2024 increased to 3.55% from 3.37% for the six months ended June 30, 2023. The increase in the margin relates to increases in our yield on earning assets exceeding our increases in our deposits and borrowing costs.
Noninterest income increased $60,000 to $1.3 million for the six months ended June 30, 2024.
Non-interest expense increased $1.8 million to $12.3 million for the six months ended June 30, 2024 compared to the respective period in 2023, due to increases in professional fees related to our recently announced merger with Atlanta Postal Credit Union and increases in salaries and employee benefits.

Financial Condition

Total assets increased $29.3 million to $872.6 million at June 30, 2024 from $843.3 million at December 31, 2023, as we experienced loan growth.
Total gross loans increased $32.7 million to $692.6 million at June 30, 2024 from $659.9 million at December 31, 2023. The increase was due to steady loan demand in construction and commercial non-owner occupied properties.
Non-owner occupied office loans totaled $29.4 million at June 30, 2024; the average LTV on these loans is 46.0%, including
- $15.0 million medical/dental tenants and
- $14.4 million to other various tenants.
Investment securities held-to-maturity unrealized losses were $294,000, net of tax. Investment securities available-for-sale unrealized losses were $6.0 million, net of tax.
Cash and cash equivalents remained stable at $50.4 million at June 30, 2024 from $50.0 million at December 31, 2023.
Deposits increased by $15.3 million to $689.7 million at June 30, 2024 compared to $674.4 million at December 31, 2023, with an $18.4 million increase in demand deposits partially offset by $2.5 million decrease in certificates of deposits.
Uninsured deposits were approximately $106.3 million at June 30, 2024 and represented 15.4% of total deposits.
Borrowings increased by $11.8 million to $51.8 million at June 30, 2024 compared to $40.0 million at December 31, 2023 as we continue to evaluate borrowing needs related to enhancing bank liquidity.

Asset Quality

Non-performing loans decreased to $3.0 million at June 30, 2024 from $7.4 million at December 31, 2023.
The allowance for credit losses as a percentage of non-performing loans was 282.0% at June 30, 2024, as compared to 120.1% at December 31, 2023.
Allowance for credit losses to total loans decreased to 1.22% at June 30, 2024 from 1.35% at December 31, 2023.
Net loan charge-offs were $460,000 for the six months ended June 30, 2024, as compared to net loan charge-offs of $72,000 for the six months ended June 30, 2023.

About Affinity Bancshares, Inc.

The Company is a Maryland corporation based in Covington, Georgia. The Company’s banking subsidiary, Affinity Bank, opened in 1928 and currently operates a full-service office in Atlanta, Georgia, two full-service offices in Covington, Georgia, and a loan production office serving the Alpharetta and Cumming, Georgia markets.

Forward-Looking Statements

In addition to historical information, this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which describe the future plans, strategies and expectations of the Company. Forward-looking statements can be identified by the use of words such as "estimate," "project," "believe," "intend," "anticipate," "assume," "plan," "seek," "expect," "will," "may," "should," "indicate," "would," "contemplate," "continue," "target" and words of similar meaning. Forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Accordingly, you should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in general economic conditions, interest rates and inflation; changes in asset quality; our ability to access cost-effective funding; fluctuations in real estate values; changes in laws or regulations; changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; changes in technology; failures or breaches of our IT security systems; our ability to introduce new products and services and capitalize on growth opportunities; changes in the value of our goodwill and other intangible assets; our ability to successfully integrate acquired operations or assets; changes in accounting policies and practices; our ability to retain key employees; and the effects of natural disasters and geopolitical events, including terrorism, conflict and acts of war. These risks and other uncertainties are further discussed in the reports that the Company files with the Securities and Exchange Commission.

Average Balance Sheets

The following tables set forth average balance sheets, average annualized yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are monthly average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

	For the Six Months Ended June 30,
	2024							2023
	Average Outstanding Balance		Interest		Average Yield/Rate			Average Outstanding Balance		Interest		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	673,282	$	19,978		5.97	%	$	658,887	$	17,018		5.21	%
Investment securities held-to-maturity		34,225		1,056		6.20	%		33,518		1,025		6.17	%
Investment securities available-for-sale		47,875		942		3.96	%		49,806		838		3.39	%
Interest-earning deposits and federal funds		50,527		1,296		5.16	%		69,568		1,638		4.75	%
Other investments		5,467		171		6.29	%		2,403		72		6.07	%
Total interest-earning assets		811,376		23,443		5.81	%		814,182		20,591		5.10	%
Non-interest-earning assets		51,633							51,524
Total assets	$	863,009						$	865,706

Interest-bearing liabilities:
Interest-bearing checking accounts	$	88,584	$	217		0.49	%	$	93,596	$	100		0.22	%
Money market accounts		143,243		2,258		3.17	%		138,394		1,486		2.17	%
Savings accounts		74,093		1,054		2.86	%		92,003		1,110		2.43	%
Certificates of deposit		219,315		4,571		4.19	%		195,260		3,403		3.51	%
Total interest-bearing deposits		525,235		8,100		3.10	%		519,253		6,099		2.37	%
FHLB advances and other borrowings		58,145		1,025		3.55	%		41,078		901		4.42	%
Total interest-bearing liabilities		583,380		9,125		3.15	%		560,331		7,000		2.52	%
Non-interest-bearing liabilities		156,177							186,874
Total liabilities		739,557							747,205
Total stockholders' equity		123,452							118,501
Total liabilities and stockholders' equity	$	863,009						$	865,706
Net interest rate spread						2.66	%						2.58	%
Net interest income			$	14,318						$	13,591
Net interest margin						3.55	%						3.37	%

	For the Three Months Ended June 30,
	2024							2023
	Average Outstanding Balance		Interest		Average Yield/Rate			Average Outstanding Balance		Interest		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	681,903	$	10,479		6.18	%	$	665,921	$	8,727		5.26	%
Investment securities held-to-maturity		34,237		529		6.21	%		34,131		521		6.13	%
Investment securities available-for-sale		47,581		479		4.05	%		50,758		428		3.38	%
Interest-earning deposits and federal funds		50,973		648		5.11	%		93,116		1,150		4.95	%
Other investments		5,487		87		6.38	%		2,167		37		6.90	%
Total interest-earning assets		820,181		12,222		5.99	%		846,093		10,863		5.15	%
Non-interest-earning assets		51,122							52,023
Total assets	$	871,303						$	898,116

Interest-bearing liabilities:
Interest-bearing checking accounts	$	89,110	$	115		0.52	%	$	95,317	$	56		0.23	%
Money market accounts		145,886		1,173		3.23	%		137,306		825		2.41	%
Savings accounts		73,775		526		2.87	%		88,152		558		2.54	%
Certificates of deposit		218,824		2,285		4.20	%		240,954		2,346		3.91	%
Total interest-bearing deposits		527,595		4,099		3.12	%		561,729		3,785		2.70	%
FHLB advances and other borrowings		63,674		555	...	3.51	%		35,495		385		4.35	%
Total interest-bearing liabilities		591,269		4,654		3.17	%		597,224		4,170		2.80	%
Non-interest-bearing liabilities		155,659							182,140
Total liabilities		746,928							779,364
Total stockholders' equity		124,375							118,752
Total liabilities and stockholders' equity	$	871,303						$	898,116
Net interest rate spread						2.82	%						2.35	%
Net interest income			$	7,568						$	6,693
Net interest margin						3.71	%						3.17	%

AFFINITY BANCSHARES, INC. Consolidated Balance Sheets (unaudited)

	June 30, 2024			December 31, 2023
	(Dollars in thousands except per share amounts)
Assets
Cash and due from banks	$	6,158		$	6,030
Interest-earning deposits in other depository institutions		44,239			43,995
Cash and cash equivalents		50,397			50,025
Investment securities available-for-sale		47,266			48,561
Investment securities held-to-maturity (estimated fair value of $33,901, net of allowance for credit losses of $45 at June 30, 2024 and estimated fair value of $33,835, net of allowance for credit losses of $45 at December 31, 2023)		34,248			34,206
Other investments		5,491			5,434
Loans		692,591			659,876
Allowance for credit loss on loans		(8,461	)		(8,921	)
Net loans		684,130			650,955
Other real estate owned		—			2,850
Premises and equipment, net		3,569			3,797
Bank owned life insurance		16,283			16,086
Intangible assets		18,271			18,366
Other assets		12,903			12,978
Total assets	$	872,558		$	843,258

Liabilities and Stockholders' Equity

Liabilities:
Non-interest-bearing checking	$	161,156		$	154,689
Interest-bearing checking		88,742			85,362
Money market accounts		147,250			138,673
Savings accounts		74,077			74,768
Certificates of deposit		218,487			220,951
Total deposits		689,712			674,443
Federal Home Loan Bank advances and other borrowings		51,837			40,000
Accrued interest payable and other liabilities		5,944			7,299
Total liabilities		747,493			721,742
Stockholders' equity:
Common stock (par value $0.01 per share, 40,000,000 shares authorized; 6,416,628 issued and outstanding at June 30, 2024 and December 31, 2023)		64			64
Preferred stock (10,000,000 shares authorized, no shares outstanding)		—			—
Additional paid in capital		61,773			61,026
Unearned ESOP shares		(4,482	)		(4,587	)
Retained earnings		73,711			71,345
Accumulated other comprehensive loss		(6,001	)		(6,332	)
Total stockholders' equity		125,065			121,516
Total liabilities and stockholders' equity	$	872,558		$	843,258

AFFINITY BANCSHARES, INC. Consolidated Statements of Income (unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands except per share amounts)
Interest income:
Loans, including fees	$	10,479	$	8,727	$	19,978	$	17,018
Investment securities		1,095		986		2,169		1,935
Interest-earning deposits		648		1,150		1,296		1,638
Total interest income		12,222		10,863		23,443		20,591
Interest expense:
Deposits		4,099		3,785		8,100		6,099
FHLB advances and other borrowings		555		385		1,025		901
Total interest expense		4,654		4,170		9,125		7,000
Net interest income before provision for credit losses		7,568		6,693		14,318		13,591
Provision for credit losses		213		—		213		7
Net interest income after provision for credit losses		7,355		6,693		14,105		13,584
Noninterest income:
Service charges on deposit accounts		391		405		786		796
Net gain on sale of other real estate owned		135		—		135		—
Other		180		273		369		434
Total noninterest income		706		678		1,290		1,230
Noninterest expenses:
Salaries and employee benefits		3,417		3,036		6,596		6,040
Occupancy		615		638		1,233		1,282
Data processing		508		487		1,019		980
Professional fees		1,118		177		1,381		315
Other		1,061		946		2,061		1,861
Total noninterest expenses		6,719		5,284		12,290		10,478
Income before income taxes		1,342		2,087		3,105		4,336
Income tax expense		311		497		739		1,024
Net income	$	1,031	$	1,590	$	2,366	$	3,312
Weighted average common shares outstanding
Basic		6,416,628		6,486,260		6,416,628		6,542,653
Diluted		6,544,450		6,546,382		6,534,751		6,616,294
Basic earnings per share	$	0.16	$	0.25	$	0.37	$	0.51
Diluted earnings per share	$	0.16	$	0.24	$	0.36	$	0.50

Explanation of Certain Unaudited Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. Additionally, the Company believes the following information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation tables below for details on the earnings impact of these items.

	For the Three Months Ended
Non-GAAP Reconciliation	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Tangible book value per common share reconciliation
Book Value per common share (GAAP)	$	19.49		$	19.21		$	18.94		$	18.50		$	18.34
Effect of goodwill and other intangibles		(2.85	)		(2.85	)		(2.86	)		(2.87	)		(2.87	)
Tangible book value per common share	$	16.64		$	16.36		$	16.08		$	15.63		$	15.47
Tangible equity to tangible assets reconciliation
Equity to assets (GAAP)		14.33	%		14.18	%		14.41	%		13.85	%		13.45	%
Effect of goodwill and other intangibles		(1.83	)%		(1.85	)%		(1.91	)%		(1.90	)%		(1.86	)%
Tangible equity to tangible assets (1)		12.50	%		12.33	%		12.50	%		11.95	%		11.59	%
(1) Tangible assets is total assets less intangible assets. Tangible equity is total equity less intangible assets.