Affinity Bancshares Inc.

10/25/2024 | Press release | Distributed by Public on 10/25/2024 14:31

Announces Third Quarter 2024 Financial Results Form 8 K

Announces Third Quarter 2024

Financial Results

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 September 30, 2024, as compared to $1.6 million for the three months ended September 30, 2023.

At or for the three months ended,

Performance Ratios:

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

Net income (in thousands)

$

1,730

$

1,031

$

1,335

$

1,514

$

1,623

Diluted earnings per share

0.26

0.16

0.20

0.23

0.25

Common book value per share

20.02

19.49

19.21

18.94

18.50

Tangible book value per share (1)

17.18

16.64

16.36

16.08

15.63

Total assets (in thousands)

878,561

873,582

869,547

843,258

855,431

Return on average assets

0.78

%

0.48

%

0.63

%

0.70

%

0.74

%

Return on average equity

5.43

%

3.33

%

4.38

%

5.03

%

5.42

%

Equity to assets

14.61

%

14.32

%

14.18

%

14.41

%

13.85

%

Tangible equity to tangible assets (1)

12.80

%

12.49

%

12.33

%

12.50

%

11.95

%

Net interest margin

3.52

%

3.71

%

3.38

%

3.32

%

3.36

%

Efficiency ratio

71.48

%

78.74

%

75.96

%

74.30

%

71.78

%

(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 three months ended September 30, 2024 as compared to $1.6 million for the three months ended September 30, 2023, as a result of an increase in net interest income partially offset by an increase in noninterest expenses.

Results of Operations

Net interest income was $7.4 million for the three months ended September 30, 2024 compared to $6.9 million for the three months ended September 30, 2023. The increase was due to an increase in interest income on loans, 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 September 30, 2024 increased to 3.52% from 3.36% for the three months ended September 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 decreased $64,000 to $566,000 for the three months ended September 30, 2024.
Non-interest expense increased $298,000 to $5.7 million for the three months ended September 30, 2024 compared to the respective period in 2023, due to increases in professional fees related to our proposed merger with Atlanta Postal Credit Union and increases in salaries and employee benefits.
Net interest income was $21.7 million for the nine months ended September 30, 2024 compared to $20.5 million for the nine months ended September 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 nine months ended September 30, 2024 increased to 3.54% from 3.36% for the nine months ended September 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.
Provision for credit losses, which is related to provision on unfunded commitments was $213,000 for the nine months ended September 30, 2024 compared to $7,000 for the nine months ended September 30, 2023.
Noninterest income decreased $5,000 to $1.8 million for the nine months ended September 30, 2024.
Non-interest expense increased $2.1 million to $18.0 million for the nine months ended September 30, 2024 compared to the respective period in 2023, due to increases in professional fees related to our proposed merger with Atlanta Postal Credit Union and increases in salaries and employee benefits.

Financial Condition

Total assets increased $35.3 million to $878.6 million at September 30, 2024 from $843.3 million at December 31, 2023, as we experienced loan growth.
Total gross loans increased $37.7 million to $697.6 million at September 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 $32.7 million at September 30, 2024; the average LTV on these loans is 46.6%, including
o
$14.5 million medical/dental tenants and
o
$18.2 million to other various tenants.
Investment securities held-to-maturity unrealized gains were $189,000, net of tax. Investment securities available-for-sale unrealized losses were $4.7 million, net of tax.
Cash and cash equivalents increased $2.3 million to $52.3 million at September 30, 2024 from $50.0 million at December 31, 2023.
Deposits increased by $9.3 million to $683.8 million at September 30, 2024 compared to $674.4 million at December 31, 2023, with a $16.5 million net increase in demand deposits partially offset by $7.1 million decrease in certificates of deposits.
Uninsured deposits were approximately $103.7 million at September 30, 2024 and represented 15.2% of total deposits.
Borrowings increased by $18.8 million to $58.8 million at September 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 $4.9 million at September 30, 2024 from $7.4 million at December 31, 2023.
The allowance for credit losses as a percentage of non-performing loans was 172.4% at September 30, 2024, as compared to 120.1% at December 31, 2023.
Allowance for credit losses to total loans decreased to 1.20% at September 30, 2024 from 1.35% at December 31, 2023.
Net loan charge-offs were $523,000for the nine months ended September 30, 2024, as compared to net loan charge-offs of $114,000 for the nine months ended September 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 Nine Months Ended September 30,

2024

2023

Average
Outstanding
Balance

Interest

Average
Yield/Rate

Average
Outstanding
Balance

Interest

Average
Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans

$

681,876

$

30,575

5.99

%

$

659,416

$

26,131

5.30

%

Investment securities held-to-maturity

33,892

1,567

6.18

%

33,733

1,549

6.14

%

Investment securities available-for-sale

47,783

1,377

3.85

%

49,616

1,299

3.50

%

Interest-earning deposits and federal funds

51,105

1,964

5.13

%

69,340

2,527

4.87

%

Other investments

5,676

263

6.19

%

2,285

109

6.38

%

Total interest-earning assets

820,332

35,746

5.82

%

814,390

31,615

5.19

%

Non-interest-earning assets

50,238

51,675

Total assets

$

870,570

$

866,065

Interest-bearing liabilities:

Interest-bearing checking accounts

$

88,243

$

344

0.52

%

$

92,614

$

172

0.25

%

Money market accounts

145,284

3,496

3.21

%

139,726

2,472

2.37

%

Savings accounts

73,056

1,563

2.86

%

88,528

1,680

2.54

%

Certificates of deposit

218,641

6,884

4.21

%

207,734

5,691

3.66

%

Total interest-bearing deposits

525,224

12,287

3.12

%

528,602

10,015

2.53

%

FHLB advances and other borrowings

53,857

1,727

4.28

%

33,975

1,109

4.36

%

Total interest-bearing liabilities

579,081

14,014

3.23

%

562,577

11,124

2.64

%

Non-interest-bearing liabilities

166,911

184,871

Total liabilities

745,992

747,448

Total stockholders' equity

124,578

118,617

Total liabilities and stockholders' equity

$

870,570

$

866,065

Net interest rate spread

2.59

%

2.55

%

Net interest income

$

21,732

$

20,491

Net interest margin

3.54

%

3.36

%

For the Three Months Ended September 30,

2024

2023

Average
Outstanding
Balance

Interest

Average
Yield/Rate

Average
Outstanding
Balance

Interest

Average
Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans

$

698,877

$

10,596

6.03

%

$

660,456

$

9,113

5.47

%

Investment securities held-to-maturity

33,235

511

6.12

%

34,158

525

6.10

%

Investment securities available-for-sale

47,600

435

3.64

%

49,242

461

3.71

%

Interest-earning deposits and federal funds

52,250

668

5.09

%

68,892

889

5.12

%

Other investments

6,091

92

6.01

%

2,053

36

6.96

%

Total interest-earning assets

838,053

12,302

5.84

%

814,801

11,024

5.37

%

Non-interest-earning assets

47,471

51,971

Total assets

$

885,524

$

866,772

Interest-bearing liabilities:

Interest-bearing checking accounts

$

87,569

$

127

0.58

%

$

90,682

$

73

0.32

%

Money market accounts

149,321

1,238

3.30

%

142,346

987

2.75

%

Savings accounts

71,003

509

2.85

%

81,756

569

2.76

%

Certificates of deposit

217,307

2,313

4.23

%

232,276

2,286

3.90

%

Total interest-bearing deposits

525,200

4,187

3.17

%

547,060

3,915

2.84

%

FHLB advances and other borrowings

63,323

701

4.40

%

20,000

208

4.13

%

Total interest-bearing liabilities

588,523

4,888

3.30

%

567,060

4,123

2.88

%

Non-interest-bearing liabilities

170,197

180,868

Total liabilities

758,720

747,928

Total stockholders' equity

126,804

118,844

Total liabilities and stockholders' equity

$

885,524

$

866,772

Net interest rate spread

2.54

%

2.49

%

Net interest income

$

7,414

$

6,901

Net interest margin

3.52

%

3.36

%

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

(unaudited)

September 30, 2024

December 31, 2023

(Dollars in thousands except per share amounts)

Assets

Cash and due from banks

$

5,316

$

6,030

Interest-earning deposits in other depository institutions

46,983

43,995

Cash and cash equivalents

52,299

50,025

Investment securities available-for-sale

48,400

48,561

Investment securities held-to-maturity (estimated fair value of $32,571, net of allowance for credit losses of $45 at September 30, 2024 and estimated fair value of $33,835, net of allowance for credit losses of $45 at December 31, 2023)

32,273

34,206

Other investments

6,167

5,434

Loans

697,572

659,876

Allowance for credit loss on loans

(8,398

)

(8,921

)

Net loans

689,174

650,955

Other real estate owned

-

2,850

Premises and equipment, net

3,469

3,797

Bank owned life insurance

16,385

16,086

Intangible assets

18,223

18,366

Other assets

12,171

12,978

Total assets

$

878,561

$

843,258

Liabilities and Stockholders' Equity

Liabilities:

Non-interest-bearing checking

$

161,361

$

154,689

Interest-bearing checking

87,947

85,362

Money market accounts

151,232

138,673

Savings accounts

69,426

74,768

Certificates of deposit

213,804

220,951

Total deposits

683,770

674,443

Federal Home Loan Bank advances and other borrowings

58,815

40,000

Accrued interest payable and other liabilities

7,600

7,299

Total liabilities

750,185

721,742

Stockholders' equity:

Common stock (par value $0.01 per share, 40,000,000 shares authorized;
6,412,430 issued and outstanding at September 30, 2024 and 6,416,628 issued and outstanding at December 31, 2023)

64

64

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

-

-

Additional paid in capital

62,049

61,026

Unearned ESOP shares

(4,430

)

(4,587

)

Retained earnings

75,441

71,345

Accumulated other comprehensive loss

(4,748

)

(6,332

)

Total stockholders' equity

128,376

121,516

Total liabilities and stockholders' equity

$

878,561

$

843,258

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

(Dollars in thousands except per share amounts)

Interest income:

Loans, including fees

$

10,596

$

9,113

$

30,575

$

26,131

Investment securities

1,038

1,022

3,207

2,957

Interest-earning deposits

668

889

1,964

2,527

Total interest income

12,302

11,024

35,746

31,615

Interest expense:

Deposits

4,187

3,915

12,287

10,015

FHLB advances and other borrowings

701

208

1,727

1,109

Total interest expense

4,888

4,123

14,014

11,124

Net interest income before provision for credit losses

7,414

6,901

21,732

20,491

Provision for credit losses

-

-

213

7

Net interest income after provision for credit losses

7,414

6,901

21,519

20,484

Noninterest income:

Service charges on deposit accounts

364

426

1,150

1,222

Net gain on sale of other real estate owned

-

-

135

-

Other

202

204

570

638

Total noninterest income

566

630

1,855

1,860

Noninterest expenses:

Salaries and employee benefits

3,257

3,007

9,853

9,047

Occupancy

600

637

1,833

1,919

Data processing

520

525

1,538

1,504

Professional fees

356

160

1,737

475

Other

971

1,077

3,032

2,939

Total noninterest expenses

5,704

5,406

17,993

15,884

Income before income taxes

2,276

2,125

5,381

6,460

Income tax expense

546

502

1,285

1,525

Net income

$

1,730

$

1,623

$

4,096

$

4,935

Weighted average common shares outstanding

Basic

6,412,511

6,417,754

6,415,246

6,500,562

Diluted

6,611,468

6,493,114

6,555,096

6,575,923

Basic earnings per share

$

0.27

$

0.25

$

0.64

$

0.76

Diluted earnings per share

$

0.26

$

0.25

$

0.62

$

0.75

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

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

Tangible book value per common share reconciliation

Book Value per common share (GAAP)

$

20.02

$

19.49

$

19.21

$

18.94

$

18.50

Effect of goodwill and other intangibles

(2.84

)

(2.85

)

(2.85

)

(2.86

)

(2.87

)

Tangible book value per common share

$

17.18

$

16.64

$

16.36

$

16.08

$

15.63

Tangible equity to tangible assets reconciliation

Equity to assets (GAAP)

14.61

%

14.32

%

14.18

%

14.41

%

13.85

%

Effect of goodwill and other intangibles

(1.81

)%

(1.83

)%

(1.85

)%

(1.91

)%

(1.90

)%

Tangible equity to tangible assets (1)

12.80

%

12.49

%

12.33

%

12.50

%

11.95

%

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