Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the “Company”), the holding company for Affinity Bank (the “Bank”), today announced net income of $7.6 million for the year ended December 31, 2021 as compared to $3.1 million for the year ended December 31, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220222006171/en/

AFBI Selected Data (Graphic: Business Wire)

For the three months ended,

For the year ended,

Performance Ratios:

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2021

December 31, 2020

Return on average assets

0.66

%

0.91

%

1.18

%

1.11

%

0.96

%

0.42

%

Return on average equity

4.36

%

6.00

%

7.95

%

8.03

%

6.52

%

3.97

%

Net interest margin

3.64

%

3.78

%

4.10

%

4.65

%

4.04

%

3.77

%

Efficiency ratio

74.29

%

65.87

%

58.30

%

64.96

%

65.62

%

78.46

%

Results of Operations

Net income was $7.6 million for the year ended December 31, 2021 as compared to $3.1 million for the year ended December 31, 2020, as we have increased our interest income while reducing interest and non-interest expense. Our net income in 2020 was reduced as a result of merger related expenses. Merger related expenses for the year ended December 31, 2020, were $2.8 million.

Net Interest Income and Margin

Net interest income increased $4.1 million, and was $29.3 million for the year ended December 31, 2021, compared to $25.1 million for the year ended December 31, 2020. Average interest-earning assets increased by $57.8 million for the year ended December 31, 2021. Net interest margin for the year ended December 31, 2021, increased to 4.04%, from 3.77% for the year ended December 31, 2020. The increase in net interest margin was primarily due to the decrease in the cost of funds. For the year ended December 31, 2021, the cost of average interest-bearing liabilities decreased to 0.67% from 1.10% for the year ended December 31, 2020. The total cost of deposits was 0.63% for the year ended December 31, 2021 compared to 1.12% for the year ended December 31, 2020. The decrease was due to decreasing deposit rates related to the decrease in market rates.

Provision for Loan Losses

For the year ended December 31, 2021, the provision for loan loss expense was $1.1 million compared to $2.0 million for the year ended December 31, 2020. We increased our provision expense in 2020 due to the uncertainty related to the COVID-19 pandemic. As the economy began to improve in 2021, less provision expense was required. Net loan recoveries were $1.1 million for the year ended December 31, 2021, compared to $227,000 for the year ended December 31, 2020. The increase in net recoveries was primarily driven by a $1.0 million recovery on a previously charged off commercial real estate loan.

Non-interest Income

For the year ended December 31, 2021, noninterest income increased $522,000 to $2.7 million compared to $2.2 million for the year ended December 31, 2020. This was a result of increases in service charges on deposits accounts, interchange income, and secondary market fee income.

Non-interest Expense

Operating expenses decreased $450,000 to $21.0 million for the year ended December 31, 2021, compared to $21.4 million for the year ended December 31, 2020. We saw an increase in legal and accounting fees as well as salary and employee expense in 2020 due to the merger.

Income Tax Expense

We recorded income tax expense of $2.3 million for year ended December 31, 2021, compared to $792,000 for the year ended December 31, 2020. The higher tax expense for the year ended December 31, 2021, was primarily due to higher pretax income.

Financial Condition

Total assets decreased by $62.5 million to $788.1 million at December 31, 2021, from $850.6 million at December 31, 2020. The decrease was due primarily to a decrease in cash and cash equivalents of $66.5 million due to our no longer using the Paycheck Protection Program Liquidity Facility (PPPLF) for funding as well as a decrease in net loans of $16.4 million. Cash and equivalents decreased $66.5 million, to $111.8 million at December 31, 2021, from $178.3 million at December 31, 2020, as the PPPLF was not used for funding at year end and excess cash from the stock offering was returned. Total investment securities available for sale increased by $24.6 million at December 31, 2021, as compared to December 31, 2020, as we deployed excess liquidity. Total loans decreased $14.2 million to $584.4 million at December 31, 2021 from $598.6 million at December 31, 2020, including Paycheck Protection Program (PPP) loans of $17.9 million and $101.7 million at December 31, 2021 and December 31, 2020, respectively. Deposits decreased by $25.4 million to $614.8 million at December 31, 2021 compared to $640.2 million at December 31, 2020, which reflected a decrease in certificate of deposits of $34.9 million, partly offset by an increase in non-interest-bearing deposits of $33.1 million. The loan-to-deposit ratio at December 31, 2021 was 93.7%, as compared to 92.5% at December 31, 2020. Interest-bearing checking accounts decreased $38.4 million as a result of the completion of the second step conversion. Stockholders’ equity increased to $121.0 million at December 31, 2021, as compared to $80.8 million at December 31, 2020, primarily due to the completion of our mutual-to-stock conversion and related stock offering on January 20, 2021. We sold 3,701,509 shares of common stock at $10.00 per share and raised gross proceeds of $37.1 million in the offering.

Asset Quality

The Company’s non-performing loans increased to $7.0 million at December 31, 2021, as compared to $4.9 million at December 31, 2020. The allowance for loan losses as a percentage of non-performing loans was 122.1% at December 31, 2021, as compared to 129.8% at December 31, 2020. The Company’s allowance for loan losses was 1.46% of total loans at December 30, 2021, as compared to 1.06% at December 31, 2020. The allowance as a percentage of total loans increased due to the decrease in PPP loans as well as a large recovery of a previously charged off loan.

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.

Average Balance Sheets

The following tables set forth average balance sheets, average yields and costs, and certain other information for the years 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 Year Ended December 31,

 

 

2021

 

 

2020

 

 

Average Outstanding Balance

 

 

Interest

 

 

Average Yield/Rate

 

 

Average Outstanding Balance

 

 

Interest

 

 

Average Yield/Rate

 

 

(Dollars in thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

588,976

 

 

$

31,484

 

 

 

5.35

%

 

$

575,548

 

 

$

29,933

 

 

 

5.20

%

Securities

 

35,109

 

 

 

709

 

 

 

2.02

%

 

 

19,917

 

 

 

380

 

 

 

1.91

%

Interest-earning deposits and federal funds

 

98,554

 

 

 

180

 

 

 

0.18

%

 

 

69,137

 

 

 

212

 

 

 

0.31

%

Other investments

 

2,324

 

 

 

80

 

 

 

3.43

%

 

 

2,523

 

 

 

107

 

 

 

4.24

%

Total interest-earning assets

 

724,963

 

 

 

32,453

 

 

 

4.48

%

 

 

667,125

 

 

 

30,632

 

 

 

4.59

%

Noninterest-earning assets

 

63,373

 

 

 

 

 

 

 

 

 

60,601

 

 

 

 

 

 

 

Total assets

$

788,336

 

 

 

 

 

 

 

 

$

727,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings accounts

$

93,113

 

 

 

403

 

 

 

0.43

%

 

$

88,425

 

 

 

878

 

 

 

0.99

%

Interest-bearing checking accounts

 

88,852

 

 

 

185

 

 

 

0.21

%

 

 

70,678

 

 

 

286

 

 

 

0.40

%

Money market checking accounts

 

133,835

 

 

 

469

 

 

 

0.35

%

 

 

112,863

 

 

 

965

 

 

 

0.86

%

Certificates of deposit

 

110,742

 

 

 

1,623

 

 

 

1.47

%

 

 

154,020

 

 

 

2,623

 

 

 

1.70

%

Total interest-bearing deposits

 

426,542

 

 

 

2,680

 

 

 

0.63

%

 

 

425,986

 

 

 

4,752

 

 

 

1.12

%

Federal Home Loan Bank advances

 

43,370

 

 

 

482

 

 

 

1.11

%

 

 

44,574

 

 

 

569

 

 

 

1.28

%

Paycheck Protection Program Liquidity Facility borrowings

 

1,023

 

 

 

4

 

 

 

0.35

%

 

 

20,324

 

 

 

72

 

 

 

0.35

%

Other borrowings

 

418

 

 

 

11

 

 

 

2.59

%

 

 

8,184

 

 

 

97

 

 

 

1.18

%

Total interest-bearing liabilities

 

471,353

 

 

 

3,177

 

 

 

0.67

%

 

 

499,068

 

 

 

5,490

 

 

 

1.10

%

Noninterest-bearing liabilities

 

200,756

 

 

 

 

 

 

 

 

 

150,781

 

 

 

 

 

 

 

Total liabilities

 

672,109

 

 

 

 

 

 

 

 

 

649,849

 

 

 

 

 

 

 

Total stockholders' equity

$

116,227

 

 

 

 

 

 

 

 

$

77,877

 

 

 

 

 

 

 

Total liabilities and retained earnings

$

788,336

 

 

 

 

 

 

 

 

$

727,726

 

 

 

 

 

 

 

Net interest income

 

 

 

$

29,276

 

 

 

 

 

 

 

 

$

25,142

 

 

 

 

Net interest rate spread (1)

 

 

 

 

 

 

 

3.81

%

 

 

 

 

 

 

 

 

3.49

%

Net interest-earning assets (2)

$

253,610

 

 

 

 

 

 

 

 

$

168,057

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

 

 

4.04

%

 

 

 

 

 

 

 

 

3.77

%

Average interest-earning assets to interest- bearing liabilities

 

153.80

%

 

 

 

 

 

 

 

 

133.67

%

 

 

 

 

 

 

(1)

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)

Net interest margin represents net interest income divided by average total interest-earning assets.

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

 

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

(In thousands except share amounts)

 

Assets

 

 

 

 

 

 

Cash and due from banks, including reserve requirement of $0 at December 31, 2021 and 2020, respectively

 

$

16,239

 

 

 

5,552

 

Interest-earning deposits in other depository institutions

 

 

95,537

 

 

 

172,701

 

Cash and cash equivalents

 

 

111,776

 

 

 

178,253

 

Investment securities available-for-sale

 

 

48,557

 

 

 

24,005

 

Other investments

 

 

2,476

 

 

 

1,596

 

Loans, net

 

 

575,825

 

 

 

592,254

 

Other real estate owned

 

 

3,538

 

 

 

1,292

 

Premises and equipment, net

 

 

3,783

 

 

 

8,617

 

Bank owned life insurance

 

 

15,377

 

 

 

15,311

 

Intangible assets

 

 

18,749

 

 

 

18,940

 

Accrued interest receivable and other assets

 

 

8,007

 

 

 

10,360

 

Total assets

 

$

788,088

 

 

 

850,628

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities :

 

 

 

 

 

 

Savings accounts

 

$

86,745

 

 

 

96,591

 

Interest-bearing checking

 

 

91,387

 

 

 

129,813

 

Market rate checking

 

 

145,969

 

 

 

121,317

 

Noninterest-bearing checking

 

 

193,940

 

 

 

160,819

 

Certificate of deposits

 

 

96,758

 

 

 

131,625

 

Total deposits

 

 

614,799

 

 

 

640,165

 

Federal Home Loan Bank (FHLB) advances

 

 

48,988

 

 

 

19,117

 

Paycheck Protection Program Liquidity Facility (PPPLF) borrowings

 

 

 

 

 

100,814

 

Other borrowings

 

 

 

 

 

5,000

 

Accrued interest payable and other liabilities

 

 

3,333

 

 

 

4,748

 

Total liabilities

 

 

667,120

 

 

 

769,843

 

Commitments

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock (par value $0.01 per share, 40,000,000 shares authorized, 6,872,634 issued and outstanding at December 31, 2021 and 19,000,000 shares authorized, 6,968,469 issued and 6,865,653 outstanding at December 31, 2020) (1)

 

 

69

 

 

 

69

 

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

 

 

 

 

 

 

Additional paid in capital

 

 

68,038

 

 

 

33,628

 

Treasury stock, 0 shares at December 31, 2021 and 102,816 shares at December 31, 2020, at cost

 

 

 

 

 

(1,268

)

Unearned ESOP shares

 

 

(5,004

)

 

 

(2,453

)

Retained earnings

 

 

58,223

 

 

 

50,650

 

Accumulated other comprehensive (loss) income

 

 

(358

)

 

 

159

 

Total stockholders' equity

 

 

120,968

 

 

 

80,785

 

Total liabilities and stockholders' equity

 

$

788,088

 

 

 

850,628

 

(1)

Amounts related to periods prior to the date of Conversion (January 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (0.90686).

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

 

 

 

For the Year Ended December 31,

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

 

(In thousands except per share amounts)

 

Interest income:

 

 

 

 

 

 

Loans, including fees

 

$

31,484

 

 

 

29,933

 

Investment securities, including dividends

 

 

789

 

 

 

487

 

Interest-earning deposits

 

 

180

 

 

 

212

 

Total interest income

 

 

32,453

 

 

 

30,632

 

Interest expense:

 

 

 

 

 

 

Deposits

 

 

2,680

 

 

 

4,752

 

Borrowings

 

 

497

 

 

 

738

 

Total interest expense

 

 

3,177

 

 

 

5,490

 

Net interest income before provision for loan losses

 

 

29,276

 

 

 

25,142

 

Provision for loan losses

 

 

1,075

 

 

 

2,000

 

Net interest income after provision for loan losses

 

 

28,201

 

 

 

23,142

 

Noninterest income:

 

 

 

 

 

 

Service charges on deposit accounts

 

 

1,506

 

 

 

1,359

 

Gain on sales of investment securities available-for-sale

 

 

 

 

 

20

 

Other

 

 

1,172

 

 

 

777

 

Total noninterest income

 

 

2,678

 

 

 

2,156

 

Noninterest expenses:

 

 

 

 

 

 

Salaries and employee benefits

 

 

10,415

 

 

 

10,969

 

Deferred compensation

 

 

248

 

 

 

279

 

Occupancy

 

 

2,935

 

 

 

2,820

 

Advertising

 

 

339

 

 

 

200

 

Data processing

 

 

1,975

 

 

 

2,343

 

Other real estate owned

 

 

18

 

 

 

20

 

Net loss (gain) on sale and write-down of other real estate owned

 

 

(127

)

 

 

289

 

Legal and accounting

 

 

827

 

 

 

1,447

 

Organizational dues and subscriptions

 

 

363

 

 

 

306

 

Director compensation

 

 

198

 

 

 

203

 

Federal deposit insurance premiums

 

 

260

 

 

 

401

 

Other

 

 

3,517

 

 

 

2,141

 

Total noninterest expenses

 

 

20,968

 

 

 

21,418

 

Income before income taxes

 

 

9,911

 

 

 

3,880

 

Income tax expense

 

 

2,338

 

 

 

792

 

Net income

 

$

7,573

 

 

 

3,088

 

Basic earnings per share (1)

 

$

1.10

 

 

 

0.41

 

Diluted earnings per share (1)

 

$

1.09

 

 

$

0.41

 

(1)

Amounts related to periods prior to the date of the Conversion (January 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (0.90686-to-one).

Non-GAAP Reconciliation

Reported amounts for total loans are presented in accordance with GAAP. The Company’s management believes that the following supplemental non-GAAP information, which consists of total loans excluding PPP loans, deferred loan fees and other loan adjustments (consisting of loans in process), provides a better comparison of the amount of the Company’s loan portfolio. Additionally, the Company believes this information is utilized by 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.

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

(In thousands)

Non-GAAP Reconciliation

Total Loans

 

$

584,384

 

$

571,170

 

$

590,011

 

$

626,096

 

$

598,615

Plus:

Fair Value Marks

 

 

1,350

 

 

 

1,422

 

 

 

1,529

 

 

 

1,607

 

 

 

1,772

 

Deferred loan fees

 

 

953

 

 

 

1,077

 

 

 

1,666

 

 

 

2,466

 

 

 

1,980

 

Less:

 

 

 

 

 

 

 

 

Payroll Protection Program

 

 

18,124

 

 

 

32,204

 

 

 

73,020

 

 

 

126,054

 

 

 

101,749

 

loans

 

 

 

 

 

 

 

 

 

 

Indirect Auto Dealer

Reserve

 

 

1,846

 

 

 

1,724

 

 

 

1,495

 

 

 

1,302

 

 

 

1,167

 

Other Loan Adjustments

 

 

219

 

 

 

102

 

 

 

447

 

 

 

0

 

 

 

591

 

Gross Loans

 

$

566,498

 

 

$

539,639

 

 

$

518,244

 

 

$

502,813

 

 

$

498,860

 

 

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

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