AFBI Affinity Bancshares Inc

Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the “Company”), the holding company for Affinity Bank (the “Bank”), today announced net income of $1.7 million for the three months ended December 31, 2022, as compared to $1.3 million for the three months ended December 31, 2021. For the year ended December 31, 2022, net income was $7.1 million, as compared to $7.6 million for the year ended December 31, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230210005278/en/

 

 

At or for the three months ended,

Performance Ratios:

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Net income (in thousands)

 

$

1,699

 

 

$

1,861

 

 

$

1,783

 

 

$

1,791

 

 

$

1,318

 

Diluted earnings per share

 

 

0.26

 

 

 

0.27

 

 

 

0.27

 

 

 

0.26

 

 

 

0.20

 

Common book value per share

 

 

17.73

 

 

 

17.37

 

 

 

17.51

 

 

 

17.58

 

 

 

17.60

 

Tangible book value per share (1)

 

 

14.92

 

 

 

14.57

 

 

 

14.68

 

 

 

14.75

 

 

 

14.87

 

Total assets (in thousands)

 

 

791,283

 

 

 

776,390

 

 

 

766,679

 

 

 

760,208

 

 

 

788,088

 

Return on average assets

 

 

0.84

%

 

 

0.95

%

 

 

0.95

%

 

 

0.97

%

 

 

0.66

%

Return on average equity

 

 

5.78

%

 

 

6.30

%

 

 

6.13

%

 

 

5.97

%

 

 

4.36

%

Equity to assets

 

 

14.80

%

 

 

14.84

%

 

 

15.05

%

 

 

15.31

%

 

 

15.35

%

Tangible equity to tangible assets (1)

 

 

12.75

%

 

 

12.75

%

 

 

12.93

%

 

 

13.17

%

 

 

13.29

%

Net interest margin

 

 

3.85

%

 

 

4.12

%

 

 

4.06

%

 

 

4.47

%

 

 

3.60

%

Efficiency ratio

 

 

71.38

%

 

 

67.62

%

 

 

67.23

%

 

 

69.00

%

 

 

74.29

%

(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 $1.7 million for the three months ended December 31, 2022, as compared to $1.3 million for the three months ended December 31, 2021, as a result of an increase in interest income partially offset by an increase in deposit interest expense.
• Net income was $7.1 million for the year ended December 31, 2022, as compared to $7.6 million for the year ended December 31, 2021, as a result of lower interest and fee income on PPP loans and an increase in salaries and employee benefits, partially offset by a decrease in interest expense primarily related to the recognition of remaining purchase accounting fair value discounts upon the payoff of acquired Federal Home Loan Bank advances.

Results of Operations

• Net interest income was $7.3 million for the three months ended December 31, 2022 compared to $6.7 million for the three months ended December 31, 2021 due to an increase in loan interest, partially offset by a decrease in PPP loan-related interest and fee income. Net interest income was $29.8 million for the year ended December 31, 2022 compared to $29.3 million for the year ended December 31, 2021. The increase was a result of the recognition of remaining purchase accounting fair value discounts upon the payoff of acquired Federal Home Loan Bank advances, off set by the lower fee income on PPP loans.
• The Company’s net interest margin increased to 3.85% from 3.57% for the three months ended December 31, 2022 and 2021. Net interest margin for the year ended December 31, 2022 increased slightly to 4.14% from 4.04% for the year ended December 31, 2021. The Company anticipates it will experience margin compression in 2023 as a result of recent increases in market interest rates.
• Noninterest income was $566 thousand for the three months ended December 31, 2022 and $572 thousand for the three months ended December 31, 2021. For the year ended December 31, 2022, noninterest income was $2.4 million compared to $2.7 million for the year ended December 31, 2021. The decreases were a result of the Company recognizing gains on sale of other real estate and death benefits received from bank owned life insurance in previous periods.
• Non-interest expense was $5.6 million and $5.4 million for the three months ended December 31, 2022 and 2021, respectively. Non-interest expense was $22.1 million and $21.0 million for the year ended December 31, 2022 and 2021, respectively. The increases were due in part to the increases in salaries and employee benefits as a result of the Company’s strategic initiative to attract and retain talent.
• In fourth quarter, the Company implemented an arbitrage strategy where $31.5 million in securities with 6.05% average yield was purchased using funds of $34.9 million in brokered deposits with average yield of 4.50%. The brokered deposits have optional call dates ranging from six to twelve months.

Financial Condition

• Total assets increased $3.2 million to $791.3 million at December 31, 2022 from $788.1 million at December 31, 2021.
• Total net loans increased $61.1 million to $636.9 million at December 31, 2022 from $575.8 million at December 31, 2021. The increase was due to non-PPP loans increasing $79 million, offset by a continuing decline in PPP loans as such loans continued to be repaid.
• Deposits increased by $44.4 million to $657.2 million at December 31, 2022 compared to $612.8 million at December 31, 2021, in part due to increases in CDs of $29.2 million and in savings of $14.9 million.
• Borrowings decreased by $39.0 million to $10.0 million at December 31, 2022 compared to $49.0 million at December 31, 2021 as we repaid Federal Home Loan Bank borrowings.

Asset Quality

• Non-performing loans decreased to $6.7 million at December 31, 2022 from $7.0 million December 31, 2021.
• The allowance for loan losses as a percentage of non-performing loans was 138.8% at December 31, 2022, as compared to 122.7% at December 31, 2021.
• Allowance for loan losses remained consistent at 1.46% of total loans at December 31, 2022, and 2021.
• Net loan recoveries were $62,000 for the year ended December 31, 2022, as compared to $1.1 million for the year ended December 31, 2021.

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 technology; failures or breaches of our IT security systems; our ability to introduce new products and services and capitalize on growth opportunities; our ability to successfully integrate acquired operations or assets; changes in accounting policies and practices; our ability to retain key employees; the impact of the COVID-19 pandemic; 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 Three Months Ended December 31,

 

 

2022

 

2021

 

 

Average Outstanding Balance

 

Interest

 

Average Yield/Rate

 

Average Outstanding Balance

 

Interest

 

Average Yield/Rate

 

 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

650,922

 

$

8,032

 

4.90%

 

$

576,358

 

$

7,060

 

4.86%

Investment securities held-to-maturity

 

 

8,809

 

 

130

 

5.85%

 

 

—

 

 

—

 

—

Investment securities available-for-sale

 

 

42,653

 

 

323

 

3.00%

 

 

46,191

 

 

237

 

2.04%

Interest-earning deposits and federal funds

 

 

53,238

 

 

485

 

3.61%

 

 

115,390

 

 

46

 

0.16%

Other investments

 

 

758

 

 

8

 

4.19%

 

 

2,476

 

 

23

 

3.69%

Total interest-earning assets

 

 

756,380

 

 

8,977

 

4.71%

 

 

740,415

 

 

7,366

 

3.95%

Non-interest-earning assets

 

 

50,538

 

 

 

 

 

 

56,127

 

 

 

 

Total assets

 

$

806,918

 

 

 

 

 

$

796,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

 

$

95,200

 

$

42

 

0.18%

 

$

90,924

 

$

47

 

0.21%

Money market accounts

 

$

161,901

 

 

470

 

1.15%

 

 

142,447

 

 

91

 

0.25%

Savings accounts

 

$

103,772

 

 

499

 

1.91%

 

 

90,992

 

 

93

 

0.41%

Certificates of deposit

 

$

117,102

 

 

610

 

2.07%

 

 

99,235

 

 

339

 

1.36%

Total interest-bearing deposits

 

$

477,975

 

 

1,621

 

1.35%

 

 

423,598

 

 

570

 

0.53%

FHLB advances and other borrowings

 

$

2,717

 

 

20

 

2.92%

 

 

49,007

 

 

132

 

1.07%

Total interest-bearing liabilities

 

$

480,692

 

 

1,641

 

1.35%

 

 

472,605

 

 

702

 

0.59%

Non-interest-bearing liabilities

 

 

209,683

 

 

 

 

 

 

203,108

 

 

 

 

Total liabilities

 

 

690,375

 

 

 

 

 

 

675,713

 

 

 

 

Total stockholders' equity

 

 

116,543

 

 

 

 

 

 

120,829

 

 

 

 

Total liabilities and stockholders' equity

 

$

806,918

 

 

 

 

 

$

796,542

 

 

 

 

Net interest rate spread

 

 

 

 

 

3.36%

 

 

 

 

 

3.36%

Net interest income

 

 

 

$

7,336

 

 

 

 

 

$

6,664

 

 

Net interest-earning assets

 

$

275,688

 

 

 

 

 

$

267,810

 

 

 

 

Net interest margin

 

 

 

 

 

3.85%

 

 

 

 

 

3.57%

 

 

For the Year Ended December 31,

 

 

2022

 

2021

 

 

Average Outstanding Balance

 

Interest

 

Average Yield/Rate

 

Average Outstanding Balance

 

Interest

 

Average Yield/Rate

 

 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

624,908

 

$

30,045

 

4.81%

 

$

588,976

 

$

31,484

 

5.35%

Investment securities held-to-maturity

 

 

2,220

 

 

130

 

5.86%

 

 

—

 

 

—

 

—

Investment securities available-for-sale

 

 

45,594

 

 

1,150

 

2.52%

 

 

35,109

 

 

709

 

2.02%

Interest-earning deposits and federal funds

 

 

45,674

 

 

771

 

1.69%

 

 

98,554

 

 

180

 

0.18%

Other investments

 

 

1,027

 

 

38

 

3.70%

 

 

2,324

 

 

80

 

3.43%

Total interest-earning assets

 

 

719,423

 

 

32,134

 

4.47%

 

 

724,963

 

 

32,453

 

4.48%

Non-interest-earning assets

 

 

51,397

 

 

 

 

 

 

63,373

 

 

 

 

Total assets

 

$

770,820

 

 

 

 

 

$

788,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

 

$

96,892

 

$

176

 

0.18%

 

$

88,852

 

$

185

 

0.21%

Money market accounts

 

 

154,237

 

 

752

 

0.49%

 

 

133,835

 

 

469

 

0.35%

Savings accounts

 

 

89,015

 

 

856

 

0.96%

 

 

93,113

 

 

403

 

0.43%

Certificates of deposit

 

 

97,948

 

 

1,449

 

1.48%

 

 

110,742

 

 

1,623

 

1.47%

Total interest-bearing deposits

 

 

438,092

 

 

3,233

 

0.74%

 

 

426,542

 

 

2,680

 

0.63%

FHLB advances and other borrowings

 

 

9,887

 

 

(854)

 

(8.64)%

 

 

44,811

 

 

497

 

1.11%

Total interest-bearing liabilities

 

 

447,979

 

 

2,379

 

0.53%

 

 

471,353

 

 

3,177

 

0.67%

Non-interest-bearing liabilities

 

 

204,842

 

 

 

 

 

 

200,756

 

 

 

 

Total liabilities

 

 

652,821

 

 

 

 

 

 

672,109

 

 

 

 

Total stockholders' equity

 

 

117,999

 

 

 

 

 

 

116,227

 

 

 

 

Total liabilities and stockholders' equity

 

$

770,820

 

 

 

 

 

$

788,336

 

 

 

 

Net interest rate spread

 

 

 

 

 

3.94%

 

 

 

 

 

3.81%

Net interest income

 

 

 

$

29,755

 

 

 

 

 

$

29,276

 

 

Net interest-earning assets

 

$

271,443

 

 

 

 

 

$

253,610

 

 

 

 

Net interest margin

 

 

 

 

 

4.14%

 

 

 

 

 

4.04%

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

(unaudited)

 

 

 

December 31, 2022

 

December 31, 2021

 

 

(In thousands except share amounts)

Assets

Cash and due from banks

 

$

2,928

 

 

$

16,239

 

Interest-earning deposits in other depository institutions

 

 

23,396

 

 

 

95,537

 

Cash and cash equivalents

 

 

26,324

 

 

 

111,776

 

Investment securities held-to-maturity (estimated fair value of $26,251)

 

 

26,527

 

 

 

—

 

Investment securities available-for-sale

 

 

46,200

 

 

 

48,557

 

Other investments

 

 

1,082

 

 

 

2,476

 

Loans, net

 

 

636,909

 

 

 

575,825

 

Other real estate owned

 

 

2,901

 

 

 

3,538

 

Premises and equipment, net

 

 

4,257

 

 

 

3,783

 

Bank owned life insurance

 

 

15,724

 

 

 

15,377

 

Intangible assets

 

 

18,558

 

 

 

18,749

 

Other assets

 

 

12,801

 

 

 

8,007

 

Total assets

 

$

791,283

 

 

$

788,088

 

Liabilities and Stockholders' Equity

Liabilities:

 

 

 

 

Non-interest-bearing checking

 

$

190,297

 

 

$

193,940

 

Interest-bearing checking

 

 

91,167

 

 

 

89,384

 

Money market accounts

 

 

148,097

 

 

 

145,969

 

Savings accounts

 

 

101,622

 

 

 

86,745

 

Certificates of deposit

 

 

125,989

 

 

 

96,758

 

Total deposits

 

 

657,172

 

 

 

612,796

 

Federal Home Loan Bank advances and other borrowings

 

 

10,025

 

 

 

48,988

 

Accrued interest payable and other liabilities

 

 

6,983

 

 

 

5,336

 

Total liabilities

 

 

674,180

 

 

 

667,120

 

Stockholders' equity:

 

 

 

 

Common stock (par value $0.01 per share, 40,000,000 shares authorized; 6,605,384 issued and outstanding at December 31, 2022 and 6,872,634 issued and outstanding at December 31, 2021)

 

 

66

 

 

 

69

 

Preferred stock (1,000,000 shares authorized, no shares outstanding)

 

 

—

 

 

 

—

 

Additional paid in capital

 

 

63,130

 

 

 

68,038

 

Unearned ESOP shares

 

 

(4,795

)

 

 

(5,004

)

Retained earnings

 

 

65,357

 

 

 

58,223

 

Accumulated other comprehensive loss

 

 

(6,655

)

 

 

(358

)

Total stockholders' equity

 

 

117,103

 

 

 

120,968

 

Total liabilities and stockholders' equity

 

$

791,283

 

 

$

788,088

 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2022

 

2021

 

2022

 

2021

 

 

(In thousands except per share amounts)

Interest income:

 

 

 

 

 

 

 

 

Loans, including fees

 

$

8,032

 

$

7,060

 

$

30,045

 

 

$

31,484

Investment securities

 

 

461

 

 

260

 

 

1,318

 

 

 

789

Interest-earning deposits

 

 

485

 

 

46

 

 

771

 

 

 

180

Total interest income

 

 

8,978

 

 

7,366

 

 

32,134

 

 

 

32,453

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

 

1,621

 

 

570

 

 

3,233

 

 

 

2,680

FHLB advances and other borrowings

 

 

20

 

 

132

 

 

(854

)

 

 

497

Total interest expense

 

 

1,641

 

 

702

 

 

2,379

 

 

 

3,177

Net interest income before provision for loan losses

 

 

7,337

 

 

6,664

 

 

29,755

 

 

 

29,276

Provision for loan losses

 

 

50

 

 

100

 

 

704

 

 

 

1,075

Net interest income after provision for loan losses

 

 

7,287

 

 

6,564

 

 

29,051

 

 

 

28,201

Noninterest income:

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

406

 

 

380

 

 

1,611

 

 

 

1,506

Other

 

 

160

 

 

192

 

 

791

 

 

 

1,172

Total noninterest income

 

 

566

 

 

572

 

 

2,402

 

 

 

2,678

Noninterest expenses:

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,002

 

 

2,866

 

 

12,221

 

 

 

10,663

Occupancy

 

 

725

 

 

606

 

 

2,523

 

 

 

2,935

Advertising

 

 

150

 

 

43

 

 

476

 

 

 

339

Data processing

 

 

471

 

 

457

 

 

1,947

 

 

 

1,975

Write-down of premises and equipment

 

 

—

 

 

311

 

 

—

 

 

 

1,199

FHLB prepayment penalties

 

 

—

 

 

—

 

 

647

 

 

 

—

Other

 

 

1,293

 

 

1,093

 

 

4,312

 

 

 

3,857

Total noninterest expenses

 

 

5,641

 

 

5,376

 

 

22,126

 

 

 

20,968

Income before income taxes

 

 

2,212

 

 

1,760

 

 

9,327

 

 

 

9,911

Income tax expense

 

 

513

 

 

442

 

 

2,193

 

 

 

2,338

Net income

 

$

1,699

 

$

1,318

 

$

7,134

 

 

$

7,573

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

6,628,847

 

 

6,872,634

 

 

6,669,389

 

 

 

6,911,576

Diluted

 

 

6,708,922

 

 

6,956,955

 

 

6,761,771

 

 

 

6,969,402

Basic earnings per share

 

$

0.26

 

$

0.19

 

$

1.07

 

 

$

1.10

Diluted earnings per share

 

$

0.26

 

$

0.18

 

$

1.06

 

 

$

1.09

Explanation of Certain Unaudited Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. Additionally, the Company believes this 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 table below for details on the earnings impact of these items.

 

At or For the Period Ending

Non-GAAP Reconciliation

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Tangible book value per common share reconciliation

 

 

 

 

 

 

 

 

 

Book Value per common share (GAAP)

$

17.73

 

 

$

17.37

 

 

$

17.51

 

 

$

17.58

 

 

$

17.60

 

Effect of goodwill and other intangibles

 

(2.81

)

 

 

(2.80

)

 

 

(2.83

)

 

 

(2.83

)

 

 

(2.73

)

Tangible book value per common share

$

14.92

 

 

$

14.57

 

 

$

14.68

 

 

$

14.75

 

 

$

14.87

 

Tangible equity to tangible assets reconciliation

 

 

 

 

 

 

 

 

 

Equity to assets (GAAP)

 

14.80

%

 

 

14.84

%

 

 

15.05

%

 

 

15.31

%

 

 

15.35

%

Effect of goodwill and other intangibles

 

(2.05

)%

 

 

(2.09

)%

 

 

(2.12

)%

 

 

(2.14

)%

 

 

(2.06

)%

Tangible equity to tangible assets (1)

 

12.75

%

 

 

12.75

%

 

 

12.93

%

 

 

13.17

%

 

 

13.29

%

(1) Tangible assets is total assets less intangible assets. Tangible equity is total equity less intangible assets.

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230210005278/en/

Edward J. Cooney Chief Executive Officer (678)742-9990