Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the
“Company”), the holding company for Affinity Bank (the “Bank”),
today announced net income of $1.6 million for the three months
ended June 30, 2023, as compared to $1.8 million for the three
months ended June 30, 2022.
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At or for the three months
ended,
Performance Ratios:
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
Net income (in thousands)
$
1,590
$
1,722
$
1,699
$
1,861
$
1,783
Diluted earnings per share
0.24
0.26
0.26
0.27
0.27
Common book value per share
18.34
18.02
17.73
17.37
17.51
Tangible book value per share (1)
15.47
15.20
14.92
14.57
14.68
Total assets (in thousands)
876,905
932,302
791,283
776,390
766,679
Return on average assets
0.71
%
0.84
%
0.84
%
0.95
%
0.95
%
Return on average equity
5.37
%
5.90
%
5.78
%
6.30
%
6.13
%
Equity to assets
13.45
%
12.69
%
14.80
%
14.84
%
15.05
%
Tangible equity to tangible assets (1)
11.59
%
10.92
%
12.75
%
12.75
%
12.93
%
Net interest margin
3.17
%
3.58
%
3.85
%
4.12
%
4.06
%
Efficiency ratio
71.68
%
69.73
%
71.38
%
67.62
%
67.23
%
(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 $1.6 million for the three months ended June 30,
2023, as compared to $1.8 million for the three months ended June
30, 2022, as a result of an increase in deposit interest expense
offset by an increase in interest income.
- Net income was $3.3 million for six months ended June 30, 2023
as compared to $3.6 million for the six months ended June 30, 2022
as a result of an increase in deposit interest expense and
recognition of the remaining fair value mark on the acquired
Federal Home Loan Bank advances that was recognized upon payoff in
first quarter 2022, partially offset by an increase in interest
income.
Results of Operations
- Net interest income was $6.7 million for the three months ended
June 30, 2023 compared to $7.1 million for the three months ended
June 30, 2022. The decrease was due to an increase in deposit costs
generally offset by an increase in interest income.
- Net interest income was $13.6 million for the six months ended
June 30, 2023 compared to $14.9 million for the six months ended
June 30, 2022. The decrease was due to an increase in deposit costs
and recognition of the remaining fair value mark on acquired FHLB
advances that was recognized upon payoff in the first quarter of
2022, partially offset by an increase in interest income.
- Net interest margin for the three months ended June 30, 2023
decreased to 3.17% from 4.06% for the three months ended June 30,
2022. Net interest margin for the six months ended June 30, 2023
decreased to 3.37% from 4.27% for the six months ended June 30,
2022. The decreases in the margin relate to increases in cost of
funds exceeding our increases in interest income. The decrease in
the margin for the six months ended June 30, 2023 was also impacted
by the fair value mark on the FHLB advances from acquisition that
was recognized upon payoff in first quarter 2022.
- Adjusted Net interest margin for the six months ended June 30,
2023 (see Non-GAAP reconciliation) decreased 61 basis points from
3.98% at six months ended June 30, 2022 to 3.37%.
- Noninterest income increased $30,000 to $678,000 for the three
months ended June 30, 2023 and remained stable at $1.2 million for
the six months ended June 30, 2023 and 2022.
- Non-interest expense increased $47,000 to $5.3 million for the
three months ended June 30, 2023 due to an increase in occupancy
expense, and decreased $517,000 to $10.5 million for the six months
ended June 30, 2023 and 2022, respectively. The decrease was a
result of the FHLB prepayment penalties paid in first quarter
2022.
Financial Condition
- Total assets increased $85.6 million to $876.9 million at June
30, 2023 from $791.3 million at December 31, 2022, as we increased
cash to further enhance liquidity.
- Total gross loans increased $16.9 million to $663.1 million at
June 30, 2023 from $646.2 million at December 31, 2022. The
increase was due to steady loan demand.
- Non-owner occupied office loans totaled $25.1 million at June
30, 2023; average LTV on these loans is 43%;
- $9.6 million medical/ dental tenants
- $15.5 million to other various tenants.
- Investment securities held-to-maturity unrealized losses were
$847,000, net of tax. Investment securities available-for-sale
unrealized losses were $6.7 million, net of tax.
- Cash and cash equivalents increased to $82.9 million at June
30, 2023 from $26.3 million at December 31, 2022, primarily due to
an increase in deposits.
- Deposits increased by $73.9 million to $731.0 million at June
30, 2023 compared to $657.2 million at December 31, 2022 , in part
due to increases in certificates of deposits of $109.9 million
offset by $36.1 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 $81.6 million.
Brokered deposits have an average life of 2.7 years and an average
interest rate of 4.90%.
- Uninsured deposits were approximately $93.9 million at June 30,
2023 and represented 12.8% of total deposits.
- Borrowings increased by $10.0 million to $20.0 million at June
30, 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 decreased to $6.2 million at June 30, 2023
from $6.7 million at December 31, 2022.
- The allowance for credit losses as a percentage of
non-performing loans was 150.0% at June 30, 2023, as compared to
138.8% at December 31, 2022.
- Allowance for credit losses decreased to 1.40% at June 30, 2023
from 1.46% of total loans at December 31, 2022.
- Net loan charge-offs were $72,000 for the six months ended June
30, 2023, as compared to $25,000 for the six months ended June 30,
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
June 30,
2023
2022
Average Outstanding
Balance
Interest
Average Yield/Rate
Average Outstanding
Balance
Interest
Average Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans
$
665,921
$
8,727
5.26
%
$
613,396
$
7,283
4.76
%
Investment securities held-to-maturity
34,131
521
6.13
%
—
—
—
Investment securities
available-for-sale
50,758
428
3.38
%
46,461
279
2.40
%
Interest-earning deposits and federal
funds
93,116
1,150
4.95
%
41,856
79
0.76
%
Other investments
2,167
37
6.90
%
1,187
12
3.95
%
Total interest-earning assets
846,093
10,863
5.15
%
702,900
7,653
4.36
%
Non-interest-earning assets
52,023
51,662
Total assets
$
898,116
$
754,562
Interest-bearing liabilities:
Interest-bearing checking accounts
$
95,317
$
56
0.23
%
$
97,618
$
45
0.19
%
Money market accounts
137,306
825
2.41
%
150,863
93
0.25
%
Savings accounts
88,152
558
2.54
%
82,478
87
0.42
%
Certificates of deposit
240,954
2,346
3.91
%
90,194
259
1.15
%
Total interest-bearing deposits
561,729
3,785
2.70
%
421,153
484
0.46
%
FHLB advances and other borrowings
35,495
385
4.35
%
14,478
28
0.78
%
Total interest-bearing liabilities
597,224
4,170
2.80
%
435,631
512
0.47
%
Non-interest-bearing liabilities
182,140
202,296
Total liabilities
779,364
637,927
Total stockholders' equity
118,752
116,635
Total liabilities and stockholders'
equity
$
898,116
$
754,562
Net interest rate spread
2.35
%
3.89
%
Net interest income
$
6,693
$
7,141
Net interest margin
3.17
%
4.06
%
For the Six Months Ended June
30,
2023
2022
Average Outstanding
Balance
Interest
Average Yield/Rate
Average Outstanding
Balance
Interest
Average Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans
$
658,887
$
17,018
5.21
%
$
604,464
$
14,279
4.76
%
Investment securities held-to-maturity
33,518
1,025
6.17
%
—
—
—
Investment securities
available-for-sale
49,806
838
3.39
%
47,549
539
2.26
%
Interest-earning deposits and federal
funds
69,568
1,638
4.75
%
45,026
97
0.43
%
Other investments
2,403
72
6.07
%
1,094
17
3.21
%
Total interest-earning assets
814,182
20,591
5.10
%
698,133
14,932
4.28
%
Non-interest-earning assets
51,524
52,661
Total assets
$
865,706
$
750,794
Interest-bearing liabilities:
Interest-bearing checking accounts
$
93,596
$
100
0.22
%
$
96,949
$
87
0.18
%
Money market accounts
138,394
1,486
2.17
%
147,677
182
0.25
%
Savings accounts
92,003
1,110
2.43
%
84,326
169
0.40
%
Certificates of deposit
195,260
3,403
3.51
%
92,318
549
1.19
%
Total interest-bearing deposits
519,253
6,099
2.37
%
421,270
987
0.47
%
FHLB advances and other borrowings
41,078
901
4.42
%
11,665
(947
)
-16.37
%
Total interest-bearing liabilities
560,331
7,000
2.52
%
432,935
40
0.02
%
Non-interest-bearing liabilities
186,874
198,680
Total liabilities
747,205
631,615
Total stockholders' equity
118,501
119,179
Total liabilities and stockholders'
equity
$
865,706
$
750,794
Net interest rate spread
2.58
%
4.26
%
Net interest income
$
13,591
$
14,892
Net interest margin
3.37
%
4.27
%
AFFINITY BANCSHARES,
INC.
Consolidated Balance
Sheets
(unaudited)
June 30, 2023
December 31, 2022
(unaudited)
(Dollars in thousands except
per share amounts)
Assets
Cash and due from banks
$
7,061
$
2,928
Interest-earning deposits in other
depository institutions
75,833
23,396
Cash and cash equivalents
82,894
26,324
Investment securities
available-for-sale
49,931
46,200
Investment securities held-to-maturity
(estimated fair value of $33,053, net of allowance for credit
losses of $42 at June 30, 2023 and estimated fair value of $26,251
at December 31, 2022)
34,145
26,527
Other investments
1,508
1,082
Loans
663,141
646,234
Allowance for credit loss on loans
(9,252
)
(9,325
)
Net loans
653,889
636,909
Other real estate owned
2,901
2,901
Premises and equipment, net
4,052
4,257
Bank owned life insurance
15,899
15,724
Intangible assets
18,462
18,558
Other assets
13,224
12,801
Total assets
$
876,905
$
791,283
Liabilities and Stockholders'
Equity
Liabilities:
Non-interest-bearing checking
$
174,752
$
190,297
Interest-bearing checking
93,358
91,167
Money market accounts
141,157
148,097
Savings accounts
85,845
101,622
Certificates of deposit
235,930
125,989
Total deposits
731,042
657,172
Federal Home Loan Bank advances and other
borrowings
20,000
10,025
Accrued interest payable and other
liabilities
7,924
6,983
Total liabilities
758,966
674,180
Stockholders' equity:
Common stock (par value $0.01 per share,
40,000,000 shares authorized; 6,430,300 issued and outstanding at
June 30, 2023 and 6,605,384 issued and outstanding at December 31,
2022)
64
66
Preferred stock (10,000,000 shares
authorized, no shares outstanding)
—
—
Additional paid in capital
61,027
63,130
Unearned ESOP shares
(4,692
)
(4,795
)
Retained earnings
68,209
65,357
Accumulated other comprehensive loss
(6,669
)
(6,655
)
Total stockholders' equity
117,939
117,103
Total liabilities and stockholders'
equity
$
876,905
$
791,283
AFFINITY BANCSHARES,
INC.
Consolidated Statements of
Income
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(Dollars in thousands except
per share amounts)
Interest income:
Loans, including fees
$
8,727
$
7,283
$
17,018
$
14,279
Investment securities
986
291
1,935
556
Interest-earning deposits
1,150
79
1,638
97
Total interest income
10,863
7,653
20,591
14,932
Interest expense:
Deposits
3,785
484
6,099
987
FHLB advances and other borrowings
385
28
901
(947
)
Total interest expense
4,170
512
7,000
40
Net interest income before provision for
credit losses
6,693
7,141
13,591
14,892
Provision for credit losses
—
217
7
467
Net interest income after provision for
credit losses
6,693
6,924
13,584
14,425
Noninterest income:
Service charges on deposit accounts
405
393
796
785
Other
273
255
434
458
Total noninterest income
678
648
1,230
1,243
Noninterest expenses:
Salaries and employee benefits
3,036
3,023
6,040
6,032
Occupancy
638
541
1,282
1,123
Advertising
82
118
179
198
Data processing
487
497
980
990
FHLB prepayment penalties
—
—
—
647
Other
1,041
1,058
1,997
2,005
Total noninterest expenses
5,284
5,237
10,478
10,995
Income before income taxes
2,088
2,335
4,336
4,673
Income tax expense
497
552
1,024
1,099
Net income
$
1,590
$
1,783
$
3,312
$
3,574
Weighted average common shares
outstanding
Basic
6,486,260
6,591,627
6,542,653
6,698,423
Diluted
6,546,382
6,684,721
6,616,294
6,791,517
Basic earnings per share
$
0.25
$
0.27
$
0.51
$
0.53
Diluted earnings per share
$
0.24
$
0.27
$
0.50
$
0.53
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 table below for details on the earnings impact of
these items.
At or For the Period
Ending
Non-GAAP Reconciliation
June 30,
2023
March 31,
2023
December 31,
2022
September 30,
2022
June 30,
2022
Tangible book value per common share
reconciliation
Book Value per common share (GAAP)
$
18.34
$
18.02
$
17.73
$
17.37
$
17.51
Effect of goodwill and other
intangibles
(2.87
)
(2.82
)
(2.81
)
(2.80
)
(2.83
)
Tangible book value per common share
$
15.47
$
15.20
$
14.92
$
14.57
$
14.68
Tangible equity to tangible assets
reconciliation
Equity to assets (GAAP)
13.45
%
12.69
%
14.80
%
14.84
%
15.05
%
Effect of goodwill and other
intangibles
(1.86
)%
(1.77
)%
(2.05
)%
(2.09
)%
(2.12
)%
Tangible equity to tangible assets (1)
11.59
%
10.92
%
12.75
%
12.75
%
12.93
%
(1) Tangible assets is total assets less
intangible assets. Tangible equity is total equity less intangible
assets.
For the
Six months ended June
30,
2023
2022
Operating net income
reconciliation
Net income (GAAP)
$
3,312
$
3,574
FHLB mark from called borrowings
—
(988
)
FHLB prepayment penalties
—
647
Income tax expense
—
87
Operating net income
$
3,312
$
3,320
Weighted average diluted shares
6,616,294
6,791,517
Adjusted earnings per share
$
0.50
$
0.49
Net interest income
$
13,591
$
14,892
FHLB mark from called borrowings
—
(988
)
Adjusted Net interest income
$
13,591
$
13,904
Adjusted Net interest income
reconciliation
Net interest margin (GAAP)
3.37
%
4.27
%
Effect of FHLB mark from called
borrowings
0.00
(0.29
)
Adjusted Net interest margin
3.37
%
3.98
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727998186/en/
Edward J. Cooney Chief Executive Officer (678) 742-9990
Affinity Bancshares (NASDAQ:AFBI)
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