Affinity Bancshares, Inc. Announces First Quarter 2023 Financial Results

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Affinity Bancshares, Inc. Announces First Quarter 2023 Financial Results

COVINGTON, Ga.--()--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 March 31, 2023, as compared to $1.8 million for the three months ended March 31, 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At or for the three months ended,

 

Performance Ratios:

 

March 31, 2023

 

 

December 31,
2022

 

 

September 30,
2022

 

 

June 30, 2022

 

 

March 31, 2022

 

Net income (in thousands)

 

$

1,722

 

 

$

1,699

 

 

$

1,861

 

 

$

1,783

 

 

$

1,791

 

Diluted earnings per share

 

 

0.26

 

 

 

0.26

 

 

 

0.27

 

 

 

0.27

 

 

 

0.26

 

Common book value per share

 

 

18.02

 

 

 

17.73

 

 

 

17.37

 

 

 

17.51

 

 

 

17.58

 

Tangible book value per share (1)

 

 

15.20

 

 

 

14.92

 

 

 

14.57

 

 

 

14.68

 

 

 

14.75

 

Total assets (in thousands)

 

 

932,302

 

 

 

791,283

 

 

 

776,390

 

 

 

766,679

 

 

 

760,208

 

Return on average assets

 

 

0.84

%

 

 

0.84

%

 

 

0.95

%

 

 

0.95

%

 

 

0.97

%

Return on average equity

 

 

5.90

%

 

 

5.78

%

 

 

6.30

%

 

 

6.13

%

 

 

5.97

%

Equity to assets

 

 

12.69

%

 

 

14.80

%

 

 

14.84

%

 

 

15.05

%

 

 

15.31

%

Tangible equity to tangible assets (1)

 

 

10.92

%

 

 

12.75

%

 

 

12.75

%

 

 

12.93

%

 

 

13.17

%

Net interest margin

 

 

3.58

%

 

 

3.85

%

 

 

4.12

%

 

 

4.06

%

 

 

4.47

%

Efficiency ratio

 

 

69.73

%

 

 

71.38

%

 

 

67.62

%

 

 

67.23

%

 

 

69.00

%

(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 March 31, 2023, as compared to $1.8 million for the three months ended March 31, 2022, as a result of an increase in deposit interest expense offset by an increase in interest income and decreases in noninterest expenses.
  • Operating net income was $1.7 million and $0.26 diluted earnings per share for the three months ended March 31, 2023, as compared to $1.5 million and $0.22 diluted earnings per share for the three months ended March 31, 2022.

Results of Operations

  • Net interest income was $6.9 million for the three months ended March 31, 2023 compared to $7.8 million for the three months ended March 31, 2022, due to an increase in deposit costs and recognition of remaining purchase accounting fair value discounts upon the payoff of acquired Federal Home Loan Bank (FHLB) advances in the first quarter of 2022, partially offset by an increase in interest income on loans.
  • Net interest margin for the three months ended March 31, 2023 decreased to 3.58% from 4.53% for the three months ended March 31, 2022. The Company anticipates it will experience continued margin compression in 2023 as a result of recent increases in market interest rates along with the mark on the FHLB advances from acquisition that was recognized upon payoff in first quarter 2022.
  • Noninterest income was $552 thousand for the three months ended March 31, 2023 and $595 thousand for the three months ended March 31, 2022. The decrease was attributable to a decrease in mortgage fee income.
  • Non-interest expense was $5.2 million and $5.8 million for the three months ended March 31, 2023 and 2022, respectively. The decrease was a result of the FHLB prepayment penalties paid in first quarter 2022.

Financial Condition

  • Total assets increased $141.0 million to $932.3 million at March 31, 2023 from $791.3 million at December 31, 2022 to further enhance liquidity.
  • Total net loans increased $15.3 million to $652.2 million at March 31, 2023 from $636.9 million at December 31, 2022. The increase was due to steady loan demand.
  • Non-owner occupied office loans totaled $26.2 million at March 31, 2023; average LTV on these loans is 45%;
    • $10.4 million medical/ dental tenants
    • $15.8 million to other various tenants.
  • Investment securities held-to-maturity unrealized losses were $1.3 million, net of tax. Investment securities available-for-sale unrealized losses were $6.2 million, net of tax.
  • Cash and cash equivalents increased to $136.9 million at March 31, 2023 from $26.3 million at December 31, 2023, primarily due to an increase in deposits.
  • Deposits increased by $93.6 million to $750.8 million at March 31, 2023 compared to $657.2 million at December 31, 2022, in part due to increases in certificates of deposits of $116.2 million offset by $22.6 million decreases in non-time deposits, as customers increased deposits in higher-yielding accounts during the current interest rate environment. The certificates of deposits increase included brokered deposits totaling $85.6 million with an average life of three years and an average interest rate of 5.07%.
  • Uninsured deposits were approximately $91.9 million and represented 12.1% of total deposits.
  • Borrowings increased by $45.0 million to $55.0 million at March 31, 2023 compared to $10.0 million at December 31, 2022 as we continue to evaluate borrowing needs related to enhancing bank liquidity.

Asset Quality

  • Non-performing loans increased to $6.9 million at March 31, 2023 from $6.7 million at December 31, 2022.
  • The allowance for credit losses as a percentage of non-performing loans was 145.49% at March 31, 2023, as compared to 138.8% at December 31, 2022.
  • Allowance for credit losses decreased to 1.40% at March 31, 2023 from 1.46% of total loans at December 31, 2022.
  • Net loan charge-offs were $91 thousand for the three months ended March 31, 2023, as compared to $3 thousand for the three months ended March 31, 2022.

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; 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 Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

Average
Outstanding
Balance

 

 

Interest

 

 

Average
Yield/Rate

 

 

Average
Outstanding
Balance

 

 

Interest

 

 

Average
Yield/Rate

 

 

 

(Dollars in thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

651,750

 

 

$

8,291

 

 

 

5.16

%

 

$

586,762

 

 

$

6,996

 

 

 

4.84

%

Investment securities held-to-maturity

 

 

32,898

 

 

 

503

 

 

 

6.20

%

 

 

 

 

 

 

 

 

 

Investment securities available-for-sale

 

 

48,844

 

 

 

411

 

 

 

3.41

%

 

 

48,648

 

 

 

260

 

 

 

2.14

%

Interest-earning deposits and federal funds

 

 

45,758

 

 

 

488

 

 

 

4.32

%

 

 

48,231

 

 

 

17

 

 

 

0.14

%

Other investments

 

 

2,643

 

 

 

35

 

 

 

5.39

%

 

 

1,000

 

 

 

6

 

 

 

2.33

%

Total interest-earning assets

 

 

781,893

 

 

 

9,728

 

 

 

5.05

%

 

 

684,641

 

 

 

7,279

 

 

 

4.25

%

Non-interest-earning assets

 

 

51,044

 

 

 

 

 

 

 

 

 

62,343

 

 

 

 

 

 

 

Total assets

 

 

832,937

 

 

 

 

 

 

 

 

$

746,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

 

$

91,856

 

 

$

45

 

 

 

0.20

%

 

$

96,273

 

 

$

42

 

 

 

0.17

%

Money market accounts

 

 

139,495

 

 

 

661

 

 

 

1.92

%

 

 

144,455

 

 

 

88

 

 

 

0.25

%

Savings accounts

 

 

95,897

 

 

 

552

 

 

 

2.34

%

 

 

86,195

 

 

 

83

 

 

 

0.38

%

Certificates of deposit

 

 

149,058

 

 

 

1,056

 

 

 

2.87

%

 

 

94,465

 

 

 

290

 

 

 

1.23

%

Total interest-bearing deposits

 

 

476,306

 

 

 

2,314

 

 

 

1.97

%

 

 

421,388

 

 

 

503

 

 

 

0.48

%

FHLB advances and other borrowings

 

 

46,723

 

 

 

516

 

 

 

4.48

%

 

 

8,821

 

 

 

(975

)

 

 

(44.20

)%

Total interest-bearing liabilities

 

 

523,029

 

 

 

2,830

 

 

 

2.19

%

 

 

430,209

 

 

 

(472

)

 

 

(0.44

)%

Non-interest-bearing liabilities

 

 

191,659

 

 

 

 

 

 

 

 

 

195,024

 

 

 

 

 

 

 

Total liabilities

 

 

714,688

 

 

 

 

 

 

 

 

 

625,233

 

 

 

 

 

 

 

Total stockholders' equity

 

 

118,249

 

 

 

 

 

 

 

 

 

121,751

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

832,937

 

 

 

 

 

 

 

 

$

746,984

 

 

 

 

 

 

 

Net interest rate spread

 

 

 

 

 

 

 

 

2.86

%

 

 

 

 

 

 

 

 

4.69

%

Net interest income

 

 

 

 

$

6,898

 

 

 

 

 

 

 

 

$

7,751

 

 

 

 

Net interest margin

 

 

 

 

 

 

 

 

3.58

%

 

 

 

 

 

 

 

 

4.53

%

 

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

(unaudited)

 

 

 

 

 

 

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(Dollars in thousands except per share amounts)

 

Assets

 

Cash and due from banks

 

$

5,714

 

 

$

2,928

 

Interest-earning deposits in other depository institutions

 

 

131,172

 

 

 

23,396

 

Cash and cash equivalents

 

 

136,886

 

 

 

26,324

 

Investment securities available-for-sale

 

 

51,154

 

 

 

46,200

 

Investment securities held-to-maturity (estimated fair value of $32,507)

 

 

34,119

 

 

 

26,527

 

Other investments

 

 

2,996

 

 

 

1,082

 

Loans, net

 

 

652,192

 

 

 

636,909

 

Other real estate owned

 

 

2,901

 

 

 

2,901

 

Premises and equipment, net

 

 

4,156

 

 

 

4,257

 

Bank owned life insurance

 

 

15,811

 

 

 

15,724

 

Intangible assets

 

 

18,510

 

 

 

18,558

 

Other assets

 

 

13,577

 

 

 

12,801

 

Total assets

 

$

932,302

 

 

$

791,283

 

Liabilities and Stockholders' Equity

 

Liabilities:

 

 

 

 

 

 

Non-interest-bearing checking

 

$

183,862

 

 

$

190,297

 

Interest-bearing checking

 

 

97,537

 

 

 

91,167

 

Money market accounts

 

 

134,872

 

 

 

148,097

 

Savings accounts

 

 

92,382

 

 

 

101,622

 

Certificates of deposit

 

 

242,186

 

 

 

125,989

 

Total deposits

 

 

750,839

 

 

 

657,172

 

Federal Home Loan Bank advances and other borrowings

 

 

55,000

 

 

 

10,025

 

Accrued interest payable and other liabilities

 

 

8,153

 

 

 

6,983

 

Total liabilities

 

 

813,992

 

 

 

674,180

 

Stockholders' equity:

 

 

 

 

 

 

Common stock (par value $0.01 per share, 40,000,000 shares authorized;
6,566,137 issued and outstanding at March 31, 2023 and 6,605,384
issued and outstanding at December 31, 2022)

 

 

66

 

 

 

66

 

Preferred stock (10,000,000 shares authorized, no shares outstanding)

 

 

 

 

 

 

Additional paid in capital

 

 

62,549

 

 

 

63,130

 

Unearned ESOP shares

 

 

(4,743

)

 

 

(4,795

)

Retained earnings

 

 

66,619

 

 

 

65,357

 

Accumulated other comprehensive loss

 

 

(6,181

)

 

 

(6,655

)

Total stockholders' equity

 

 

118,310

 

 

 

117,103

 

Total liabilities and stockholders' equity

 

$

932,302

 

 

$

791,283

 

 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

2023

 

 

2022

 

 

 

 

(Dollars in thousands except per share amounts)

 

Interest income:

 

 

 

 

 

 

 

Loans, including fees

 

 

$

8,291

 

 

$

6,996

 

Investment securities

 

 

 

949

 

 

 

266

 

Interest-earning deposits

 

 

 

488

 

 

 

17

 

Total interest income

 

 

 

9,728

 

 

 

7,279

 

Interest expense:

 

 

 

 

 

 

 

Deposits

 

 

 

2,314

 

 

 

503

 

FHLB advances and other borrowings

 

 

 

516

 

 

 

(975

)

Total interest expense

 

 

 

2,830

 

 

 

(472

)

Net interest income before provision for credit losses

 

 

 

6,898

 

 

 

7,751

 

Provision for credit losses

 

 

 

7

 

 

 

250

 

Net interest income after provision for credit losses

 

 

 

6,891

 

 

 

7,501

 

Noninterest income:

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

 

391

 

 

 

392

 

Other

 

 

 

161

 

 

 

203

 

Total noninterest income

 

 

 

552

 

 

 

595

 

Noninterest expenses:

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

 

3,004

 

 

 

3,008

 

Occupancy

 

 

 

644

 

 

 

582

 

Advertising

 

 

 

97

 

 

 

80

 

Data processing

 

 

 

493

 

 

 

494

 

FHLB prepayment penalties

 

 

 

 

 

 

647

 

Other

 

 

 

956

 

 

 

947

 

Total noninterest expenses

 

 

 

5,194

 

 

 

5,758

 

Income before income taxes

 

 

 

2,249

 

 

 

2,338

 

Income tax expense

 

 

 

527

 

 

 

547

 

Net income

 

 

$

1,722

 

 

$

1,791

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

 

 

 

6,599,672

 

 

 

6,806,405

 

Diluted

 

 

 

6,681,680

 

 

 

6,908,665

 

Basic earnings per share

 

 

$

0.26

 

 

$

0.26

 

Diluted earnings per share

 

 

$

0.26

 

 

$

0.26

 

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

 

 

March 31, 2023

 

 

December 31, 2022

 

 

September 30, 2022

 

 

June 30, 2022

 

 

March 31, 2022

 

Operating net income reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

 

$

1,722

 

 

$

1,699

 

 

$

1,861

 

 

$

1,783

 

 

$

1,791

 

FHLB mark from called borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

988

 

FHLB prepayment penalties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

647

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(87

)

Operating net income

$

1,722

 

 

$

1,699

 

 

$

1,861

 

 

$

1,783

 

 

$

1,537

 

Weighted average diluted shares

 

 

 

6,681,680

 

 

 

6,708,922

 

 

 

6,752,152

 

 

 

6,684,721

 

 

 

6,908,665

 

Adjusted earnings per share

 

 

$

0.26

 

 

$

0.26

 

 

$

0.27

 

 

$

0.27

 

 

$

0.22

 

Tangible book value per common share reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Value per common share (GAAP)

 

 

$

18.02

 

 

$

17.73

 

 

$

17.37

 

 

$

17.51

 

 

$

17.58

 

Effect of goodwill and other intangibles

 

 

 

(2.82

)

 

 

(2.81

)

 

 

(2.80

)

 

 

(2.83

)

 

 

(2.83

)

Tangible book value per common share

$

15.20

 

 

$

14.92

 

 

$

14.57

 

 

$

14.68

 

 

$

14.75

 

Tangible equity to tangible assets reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets (GAAP)

 

12.69

%

 

 

14.80

%

 

 

14.84

%

 

 

15.05

%

 

 

15.31

%

Effect of goodwill and other intangibles

 

 

 

(1.77

)%

 

 

(2.05

)%

 

 

(2.09

)%

 

 

(2.12

)%

 

 

(2.14

)%

Tangible equity to tangible assets (1)

 

 

 

10.92

%

 

 

12.75

%

 

 

12.75

%

 

 

12.93

%

 

 

13.17

%

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

 

 

 

 

 

Contacts

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

Release Summary

Affinity Bancshares, Inc. Announces First Quarter 2023 Financial Results

Contacts

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