Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the
“Company”), the holding company for Affinity Bank (the “Bank”),
today announced net income of $1.8 million for the three months
ended June 30, 2022 as compared to $2.3 million for the three
months ended June 30, 2021. For the six months ended June 30, 2022,
net income was $3.6 million as compared to $4.5 million for the six
months ended June 30, 2021.
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AFBI Selected Data (Graphic: Business
Wire)
For the three months
ended,
Performance Ratios:
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
Return on average assets (1)
0.95%
0.97%
0.66%
0.91%
1.18%
Return on average equity (1)
6.13%
5.97%
4.36%
6.00%
7.95%
Net interest margin (1)
4.06%
4.47%
3.60%
3.74%
4.06%
Efficiency ratio
67.23%
69.00%
74.29%
65.87%
58.30%
(1) Annualized.
Results of Operations
Net income was $1.8 million for the three months ended June 30,
2022, as compared to $2.3 million for the three months ended June
30, 2021, as a result of a decrease in Payroll Protection Program
(PPP) loan related interest and fee income as we have been
receiving forgiveness payments for these loans partially offset by
a decrease in interest expense. Net income was $3.6 million for the
six months ended June 30, 2022, as compared to $4.5 million for the
six months ended June 30, 2021, as a result of lower interest and
fee income on PPP loans partially offset by a decrease in interest
expense primarily related to the recognition of remaining discounts
upon the payoff of acquired Federal Home Loan Bank advances.
Net Interest Income and
Margin
Net interest income decreased $269,000, and was $7.1 million for
the three months ended June 30, 2022, compared to $7.4 million for
the three months ended June 30, 2021, as a result of a decrease in
Payroll Protection Program (PPP) loan related interest and fee
income as we have been receiving forgiveness payments for these
loans partially offset by a decrease in interest expense. Net
interest income decreased $859,000, and was $14.9 million for the
six months ended June 30, 2022, compared to $15.8 million for the
six months ended June 30, 2021, as a result of a decrease in PPP
loan related interest and fee income as we have been receiving
forgiveness payments for these loans partially offset by a decrease
in interest expense primarily related to the recognition of
remaining discounts upon the payoff of acquired Federal Home Loan
Bank advances. Average interest-earning assets decreased by $27.1
million, and was $702.9 million for the three months ended June 30,
2022, compared to $730.0 for the three months ended June 30, 2021.
Average interest-earning assets decreased by $29.1 million, and was
$698.1 million for the six months ended June 30, 2022, compared to
$727.2 million for the six months ended June 30, 2021. This
decrease was a result of the decrease in PPP loans as forgiveness
payments were received for both the three- and six-month periods
ended June 30, 2022. The Company’s net interest margin remained
constant at 4.06% for the three months ended June 30, 2022, and
June 30, 2021. Net interest margin for the six months ended June
30, 2022, decreased to 4.27% from 4.33% for the six months ended
June 30, 2021. For the three months ended June 30, 2022, the cost
of average interest-bearing liabilities decreased to 0.47% from
0.70% for the three months ended June 30, 2021, as a result of
paying off Federal Home Loan Bank advances and decreasing deposit
rates related to the decrease in market rates. For the six months
ended June 30, 2022, the cost of average interest-bearing
liabilities decreased to 0.02% from 0.72% for the six months ended
June 30, 2021, as a result of paying off Federal Home Loan Bank
advances and recognizing $1.0 million in accretion from fair value
adjustments on acquired advances. The total cost of deposits was
0.46% for the three months ended June 30, 2022, compared to 0.65%
for the three months ended June 30, 2021. For the six months ended
June 30, 2022, the total cost of deposits was 0.47% compared to
0.69% for the six months ended June 30, 2021. The decrease was due
to decreasing deposit rates related to the decrease in market rates
for both the three- and six-month periods ended June 30, 2022.
Provision for Loan
Losses
For the three months ended June 30, 2022, the provision for loan
loss expense was $217,000 compared to $300,000 for the three months
ended June 30, 2021. For the six months ended June 30, 2022, the
provision for loan loss expense was $467,000 compared to $750,000
for the six months ended June 30, 2021. We increased our provision
expense in 2021 due to the uncertainty related to the COVID-19
pandemic. We continue to assess current economic conditions when
determining the level of provision expense. Net loan charge offs
were $25,000 for the six months ended June 30, 2022, compared to
net loan recoveries of $276,000 for the six months ended June 30,
2021.
Non-interest Income
For the three months ended June 30, 2022, noninterest income
increased $42,000 to $648,000 compared to $606,000 for the three
months ended June 30, 2021. For the six months ended June 30, 2022,
noninterest income decreased $91,000 to $1.2 million compared to
$1.3 million for the six months ended June 30, 2021. This was a
result of the decrease in other non-interest income as income was
received in 2021 for a bank-owned life insurance death benefit
claim and no such benefit claim was received in 2022.
Non-interest Expense
Operating expenses increased $564,000, and were $5.2 million for
the three months ended June 30, 2022, compared to $4.7 million for
the three months ended June 30, 2021. For the six months ended June
30, 2022, operating expenses increased $431,000, and were $11.0
million for the six months ended June 30, 2022, compared to $10.6
million for the six months ended June 30, 2021. The increase in
salaries and employee benefits were due to the Company’s strategic
initiative to attract and retain talent for both the three- and
six-month periods ended June 30, 2022.
Income Tax Expense
We recorded income tax expense of $552,000 for three months
ended June 30, 2022, compared to $725,000 for the three months
ended June 30, 2021. For the six months ended June 30, 2022, income
tax expense was $1.1 million compared to $1.3 million for the six
months ended June 30, 2021. The lower tax expense for both the
three- and six-month periods ended June 30, 2022, was primarily due
to lower pretax income.
Financial Condition
Total assets decreased by $21.4 million to $766.7 million at
June 30, 2022, from $788.1 million at December 31, 2021. The
decrease was due primarily to a decrease in cash and cash
equivalents of $56.4 million due to paying off Federal Home Loan
Bank advances, partially offset by an increase in net loans. Cash
and equivalents decreased $56.4 million, to $55.0 million at June
30, 2022, from $111.8 million at December 31, 2021, as excess
liquidity was utilized to payoff Federal Home Loan Bank advances.
Total investment securities available for sale decreased by $4.0
million at June 30, 2022, as compared to December 31, 2021, as our
unrealized loss on the investment portfolio increased due to the
rise in interest rates. Total net loans increased $38.5 million to
$614.4 million at June 30, 2022 from $575.8 million at December 31,
2021, including Paycheck Protection Program (PPP) loans of $916,000
and $17.9 million at June 30, 2022 and December 31, 2021,
respectively. Loans increased due to our continued success with our
strategic initiatives to grow organically and diversify our loan
portfolio. This includes adding additional lenders to our business
development team. Deposits increased by $11.4 million to $626.2
million at June 30, 2022 compared to $614.8 million at December 31,
2021, which reflected an increase in interest-bearing, market rate,
and non-interest-bearing deposits of $23.0 million. The
loan-to-deposit ratio at June 30, 2022 was 98.1%, as compared to
93.7% at December 31, 2021. Stockholders’ equity decreased to
$115.4 million at June 30, 2022, as compared to $121.0 million at
December 31, 2021, primarily due to the decrease in additional paid
in capital from the repurchase of 308,602 shares of common stock
totaling $4.8 million with an average price per share of $15.48 as
well as an increase in accumulated other comprehensive loss related
to our investment portfolio.
Asset Quality
The Company’s non-performing loans remained constant at $7.0
million at June 30, 2022 and December 31, 2021. The allowance for
loan losses as a percentage of non-performing loans was 129.5% at
June 30, 2022, as compared to 122.1% at December 31, 2021. The
Company’s allowance for loan losses was 1.44% of total loans at
June 30, 2022, as compared to 1.46% of total loans at 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. 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
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
June 30,
2022
2021
Average Outstanding
Balance
Interest
Average Yield/Rate
Average Outstanding
Balance
Interest
Average Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans excluding PPP loans
$
609,646
$
7,212
4.73
%
$
505,912
$
6,310
4.99
%
PPP loans
3,750
71
7.58
%
107,154
1,687
6.30
%
Securities
46,461
279
2.40
%
29,619
163
2.20
%
Interest-earning deposits
41,856
79
0.76
%
84,950
39
0.18
%
Other investments
1,187
12
3.95
%
2,346
18
3.06
%
Total interest-earning assets
702,900
7,653
4.36
%
729,981
8,217
4.50
%
Non-interest-earning assets
51,662
57,220
Total assets
$
754,562
$
787,201
Interest-bearing liabilities:
Savings accounts
$
82,478
87
0.42
%
$
93,598
103
0.44
%
Interest-bearing checking accounts
97,618
45
0.19
%
84,571
44
0.21
%
Market rate checking accounts
150,863
93
0.25
%
131,466
128
0.39
%
Certificates of deposit
90,194
259
1.15
%
108,936
409
1.50
%
Total interest-bearing deposits
421,153
484
0.46
%
418,571
684
0.65
%
FHLB advances
14,341
27
0.76
%
45,610
123
1.08
%
Other borrowings
137
1
1.71
%
—
—
—
Total interest-bearing liabilities
435,631
512
0.47
%
464,181
807
0.70
%
Non-interest-bearing liabilities
202,296
206,119
Total liabilities
637,927
670,300
Total stockholders' equity
116,635
116,901
Total liabilities and stockholders'
equity
$
754,562
$
787,201
Net interest income
$
7,141
$
7,410
Net interest rate spread (1)
3.89
%
3.80
%
Net interest-earning assets (2)
$
267,269
$
265,800
Net interest margin (3)
4.06
%
4.06
%
Average interest-earning assets to
interest- bearing liabilities
161.35
%
157.26
%
(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.
For the Six Months Ended June
30,
2022
2021
Average Outstanding
Balance
Interest
Average Yield/Rate
Average Outstanding
Balance
Interest
Average Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans excluding PPP loans
$
596,429
$
14,004
4.70
%
$
501,596
$
12,514
4.99
%
PPP loans
8,035
275
6.84
%
115,260
4,577
7.94
%
Securities
47,549
539
2.27
%
26,701
256
1.92
%
Interest-earning deposits
45,026
97
0.43
%
81,469
82
0.20
%
Other investments
1,094
17
3.21
%
2,169
36
3.29
%
Total interest-earning assets
698,133
14,932
4.28
%
727,195
17,465
4.80
%
Non-interest-earning assets
52,661
55,514
Total assets
$
750,794
$
782,709
Interest-bearing liabilities:
Savings accounts
$
84,326
169
0.40
%
$
93,881
210
0.45
%
Interest-bearing checking accounts
96,949
87
0.18
%
90,509
95
0.21
%
Market rate checking accounts
147,677
182
0.25
%
127,858
261
0.41
%
Certificates of deposit
92,318
549
1.19
%
119,366
915
1.53
%
Total interest-bearing deposits
421,270
987
0.47
%
431,614
1,481
0.69
%
FHLB advances
11,596
(948
)
(16.35
)%
37,624
219
1.16
%
Other borrowings
69
1
1.70
%
69
14
41.69
%
Total interest-bearing liabilities
432,935
41
0.02
%
469,307
1,714
0.72
%
Non-interest-bearing liabilities
198,680
201,098
Total liabilities
631,615
670,405
Total stockholders' equity
119,179
112,304
Total liabilities and stockholders'
equity
$
750,794
$
782,709
Net interest income
$
14,891
$
15,751
Net interest rate spread (1)
4.26
%
4.08
%
Net interest-earning assets (2)
$
265,197
$
257,888
Net interest margin (3)
4.27
%
4.33
%
Average interest-earning assets to
interest-bearing liabilities
161.26
%
154.95
%
(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
June 30, 2022
December 31, 2021
(unaudited)
(audited)
(In thousands)
Assets
Cash and due from banks, including reserve
requirement of $0 at June 30, 2022 and December 31, 2021
$
8,111
$
16,239
Interest-earning deposits in other
depository institutions
47,288
95,537
Cash and cash equivalents
55,399
111,776
Investment securities
available-for-sale
44,551
48,557
Other investments
1,400
2,476
Loans, net
614,358
575,825
Other real estate owned
3,538
3,538
Premises and equipment, net
4,048
3,783
Bank owned life insurance
15,549
15,377
Intangible assets
18,653
18,749
Accrued interest receivable and other
assets
9,183
8,007
Total assets
$
766,679
$
788,088
Liabilities and Stockholders'
Equity
Liabilities:
Savings accounts
$
82,742
$
86,745
Interest-bearing checking
96,176
91,387
Market rate checking
159,900
145,969
Non-interest-bearing checking
198,177
193,940
Certificates of deposit
89,180
96,758
Total deposits
626,175
614,799
Federal Home Loan Bank advances
20,000
48,988
Accrued interest payable and other
liabilities
5,133
3,333
Total liabilities
651,308
667,120
Stockholders' equity:
Common stock (par value $0.01 per share,
40,000,000 shares authorized; 6,590,362 issued and outstanding at
June 30, 2022 and 6,872,634 issued and outstanding at December 31,
2021
65
69
Preferred stock (10,000,000 shares
authorized, no shares outstanding at June 30, 2022 and December 31,
2021
—
—
Additional paid in capital
63,497
68,038
Unearned ESOP shares
(4,899
)
(5,004
)
Retained earnings
61,797
58,223
Accumulated other comprehensive loss
(5,089
)
(358
)
Total stockholders' equity
115,371
120,968
Total liabilities and stockholders'
equity
$
766,679
$
788,088
AFFINITY BANCSHARES,
INC.
Consolidated Statements of
Income
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
(In thousands)
Interest income:
Loans, including fees
$
7,283
$
7,997
$
14,279
$
17,091
Investment securities, including
dividends
291
181
556
292
Interest-earning deposits
79
39
97
82
Total interest income
7,653
8,217
14,932
17,465
Interest expense:
Deposits
484
684
987
1,481
Borrowings
28
123
(947
)
233
Total interest expense
512
807
40
1,714
Net interest income before provision for
loan losses
7,141
7,410
14,892
15,751
Provision for loan losses
217
300
467
750
Net interest income after provision for
loan losses
6,924
7,110
14,425
15,001
Noninterest income:
Service charges on deposit accounts
393
376
785
709
Other
255
230
458
625
Total noninterest income
648
606
1,243
1,334
Noninterest expenses:
Salaries and employee benefits
2,959
2,511
5,901
4,894
Deferred compensation
64
62
131
126
Occupancy
541
644
1,123
1,696
Advertising
118
100
198
180
Data processing
497
517
990
999
Other real estate owned
—
7
—
19
Net (gain) on sale of other real estate
owned
—
(126
)
—
(127
)
Legal and accounting
203
226
385
402
Organizational dues and subscriptions
133
91
264
161
Director compensation
51
50
102
100
Federal deposit insurance premiums
52
67
112
140
Writedown of premises and equipment
—
—
—
873
FHLB prepayment penalties
—
—
647
—
Other
619
524
1,142
1,101
Total noninterest expenses
5,237
4,673
10,995
10,564
Income before income taxes
2,335
3,043
4,673
5,771
Income tax expense
552
725
1,099
1,321
Net income
$
1,783
$
2,318
$
3,574
$
4,450
Basic earnings per share
$
0.27
$
0.34
$
0.53
$
0.65
Diluted earnings per share
$
0.27
$
0.34
$
0.53
$
0.64
Explanation of Non-GAAP Financial
Measures
Reported amounts are presented in accordance with GAAP. The
Company’s management believes that the supplemental non-GAAP
information, which consists of reported net income less interest
and fees income on PPP loans provides a better comparison of the
amount of the Company’s earnings. Management also believes that
reported loans less 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
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 at
the end of this document for details on the earnings impact of
these items.
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
(In thousands)
Non-GAAP Reconciliation
Total Loans
$
623,359
$
601,693
$
584,384
$
571,170
$
590,011
Plus:
Fair Value Marks
1,157
1,239
1,350
1,422
1,529
Deferred Loan fees
873
958
958
1,077
1,666
Less:
Payroll Protection
Program Loans
916
7,146
18,124
32,204
73,020
Indirect Auto
Dealer Reserve
2,386
2,058
1,846
1,724
1,495
Other Loan
Adjustments
82
69
224
102
447
Gross Loans
$
622,005
$
594,617
$
566,498
$
539,639
$
518,244
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
(In thousands)
Non-GAAP Reconciliation
Net Income
$
1,783
$
1,791
$
1,318
$
1,805
$
2,318
Less:
PPP Interest Income
9
30
59
121
269
PPP Fee Income
62
174
271
741
1,419
Plus:
Tax Effect
17
47
84
208
403
Non-GAAP Net Income
$
1,729
$
1,634
$
1,072
$
1,151
$
1,033
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
(In thousands)
Non-GAAP Reconciliation
Total Equity
$
115,371
$
116,358
$
120,968
$
119,703
$
117,635
Minus:
Goodwill
17,219
17,219
17,219
17,219
17,219
Core Deposit Intangible
1,435
1,483
1,530
1,578
1,626
Tangible Common Equity
96,717
97,656
102,219
100,906
98,790
Divided By:
Outstanding Shares
6,590
6,619
6,873
6,873
6,873
Tangible Book Value Per Share
$
14.68
$
14.75
$
14.87
$
14.68
$
14.37
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726006107/en/
Edward J. Cooney Chief Executive Officer (678)742-9990
Affinity Bancshares (NASDAQ:AFBI)
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