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.
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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
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version on businesswire.com: https://www.businesswire.com/news/home/20220222006171/en/
Edward J. Cooney Chief Executive Officer (678) 742-9990
Affinity Bancshares (NASDAQ:AFBI)
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