Affinity Bancshares, Inc. Announces Third Quarter 2022 Financial Results

Rhea-AI Summary

Affinity Bancshares, Inc. (NASDAQ: AFBI) reported a net income of $1.9 million for Q3 2022, up from $1.8 million in Q3 2021. However, net income for the first nine months of 2022 dropped to $5.4 million, down from $6.3 million in 2021. Total assets fell to $776.4 million, with net loans increasing to $641.1 million. The net interest margin improved to 4.12%, while non-interest income decreased to $593 thousand for Q3 2022. Non-interest expenses rose to $5.5 million due to increased salaries. Allowance for loan losses stood at 1.43% of total loans.

Positive

• Net income increased to $1.9 million for Q3 2022.
• Net interest income rose to $7.5 million in Q3 2022.
• Net interest margin improved to 4.12%.
• Deposits increased by $31.2 million to $646.0 million.

Negative

• Net income for the first nine months of 2022 decreased to $5.4 million from $6.3 million.
• Non-interest income declined to $593 thousand for Q3 2022.
• Non-interest expenses increased to $5.5 million due to higher salaries.

COVINGTON, Ga.--(BUSINESS WIRE)-- Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the “Company”), the holding company for Affinity Bank (the “Bank”), today announced net income of $1.9 million for the three months ended September 30, 2022, as compared to $1.8 million for the three months ended September 30, 2021. For the nine months ended September 30, 2022, net income was $5.4 million, as compared to $6.3 million for the nine months ended September 30, 2021.

		At or for the three months ended,
Performance Ratios:		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
Net income (in thousands)		$	1,861			$	1,783			$	1,791			$	1,318			$	1,805
Diluted earnings per share			0.27				0.27				0.26				0.20				0.26
Common book value per share			17.37				17.51				17.58				17.60				17.42
Tangible book value per share (1)			14.57				14.68				14.75				14.87				14.69
Total assets (in thousands)			776,390				766,679				760,208				788,088				789,965
Return on average assets			0.95	%			0.95	%			0.97	%			0.66	%			0.91	%
Return on average equity			6.30	%			6.13	%			5.97	%			4.36	%			6.00	%
Equity to assets			14.84	%			15.05	%			15.31	%			15.35	%			15.15	%
Tangible equity to tangible assets (1)			12.75	%			12.93	%			13.17	%			13.29	%			13.08	%
Net interest margin			4.12	%			4.06	%			4.47	%			3.60	%			3.74	%
Efficiency ratio			67.62	%			67.23	%			69.00	%			74.29	%			65.87	%
(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 $1.9 million for the three months ended September 30, 2022, as compared to $1.8 million for the three months ended September 30, 2021, as a result of a decrease in Payroll Protection Program (PPP) loan-related interest and fee income, partially offset by a decrease in interest expense.
• Net income was $5.4 million for the nine months ended September 30, 2022, as compared to $6.3 million for the nine months ended September 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.

Results of Operations

• Net interest income was $7.5 million for the three months ended September 30, 2022 compared to $6.9 million for the three months ended September 30, 2021 due to an increase in loan interest, partially offset by a decrease in PPP loan-related interest and fee income. Net interest income was $22.4 million for the nine months ended September 30, 2022 compared to $22.6 million for the nine months ended September 30, 2021. The decrease for the nine months ended September 30, 2022 compared to the same period in 2021 was a result of a decrease in PPP loan-related interest and fee income, 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.
• The Company’s net interest margin increased to 4.12% from 3.78% for the three months ended September 30, 2022 and 2021. Net interest margin for the nine months ended September 30, 2022 increased slightly to 4.24% from 4.17% for the nine months ended September 30, 2021.
• Noninterest income was $593 thousand for the three months ended September 30, 2022 and $771 thousand for the three months ended September 30, 2021. For the nine months ended September 30, 2022, noninterest income was $1.8 million compared to $2.1 million for the nine months ended September 30, 2021. The decreases were a result of the Company recognizing gains on sale of other real estate and death benefits received from bank owned life insurance in previous periods.
• Non-interest expense was $5.5 million and $5.0 million for the three months ended September 30, 2022 and 2021. Non-interest expense was $16.5 million and $15.6 million for the nine months ended September 30, 2022 and 2021. The increases were due in part to the increases in salaries and employee benefits as a result of the Company’s strategic initiative to attract and retain talent.

Financial Condition

• Total assets decreased $11.7 million to $776.4 million at September 30, 2022 from $788.1 million at December 31, 2021.
• Total net loans increased $65.3 million to $641.1 million at September 30, 2022 from $575.8 million at December 31, 2021 due primarily to strategic lending staff hires made to diversify our loan portfolio.
• Deposits increased by $31.2 million to $646.0 million at September 30, 2022 compared to $614.8 million at December 31, 2021.
• Borrowings decreased by $39.0 million to $10.0 million at September 30, 2022 compared to $49.0 million at December 31, 2021 as we repaid Federal Home Loan Bank borrowings.

Asset Quality

• Non-performing loans remained unchanged at $7.0 million at September 30, 2022 and December 31, 2021.
• The allowance for loan losses as a percentage of non-performing loans was 132.8% at September 30, 2022, as compared to 122.1% at December 31, 2021.
• Allowance for loan losses was 1.43% of total loans at September 30, 2022, as compared to 1.46% of total loans at December 31, 2021.
• Net loan recoveries were $108,000 for the nine months ended September 30, 2022, as compared to $295,000 for the nine months ended September 30, 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, 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 September 30,
		2022												2021
		Average Outstanding Balance				Interest				Average Yield/Rate				Average Outstanding Balance				Interest				Average Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Loans		$	639,115			$	7,734				4.80	%		$	568,442			$	7,332				5.12	%
Securities			44,690				289				2.56	%			40,569				216				2.13	%
Interest-earning deposits			39,384				189				1.91	%			115,330				53				0.18	%
Other investments			1,163				12				4.19	%			2,476				21				3.37	%
Total interest-earning assets			724,352				8,224				4.50	%			726,817				7,622				4.19	%
Non-interest-earning assets			49,770												64,408
Total assets		$	774,122											$	791,225
Interest-bearing liabilities:
Interest-bearing checking accounts		$	98,473			$	47				0.19	%		$	83,519			$	43				0.21	%
Market rate checking accounts			159,478				100				0.25	%			136,984				117				0.34	%
Savings accounts			83,484				187				0.89	%			93,717				100				0.43	%
Certificates of deposit			89,871				291				1.28	%			105,285				369				1.40	%
Total interest-bearing deposits			431,306				625				0.57	%			419,505				629				0.60	%
FHLB advances			13,696				73				2.12	%			49,039				132				1.07	%
Total interest-bearing liabilities			445,002				698				0.62	%			468,544				761				0.65	%
Non-interest-bearing liabilities			211,986												203,336
Total liabilities			656,988												671,880
Total stockholders' equity			117,134												119,345
Total liabilities and stockholders' equity		$	774,122											$	791,225
Net interest rate spread											3.88	%											3.54	%
Net interest income						$	7,526											$	6,861
Net interest-earning assets		$	279,350											$	258,273
Net interest margin											4.12	%											3.78	%

		For the Nine Months Ended September 30,
		2022												2021
		Average Outstanding Balance				Interest				Average Yield/Rate				Average Outstanding Balance				Interest				Average Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Loans		$	616,141			$	22,013				4.78	%		$	596,024			$	24,424				5.48	%
Securities			46,585				827				2.37	%			31,374				472				2.01	%
Interest-earning deposits			43,125				286				0.89	%			92,880				134				0.19	%
Other investments			1,117				30				3.57	%			2,273				57				3.32	%
Total interest-earning assets			706,968				23,156				4.38	%			722,551				25,087				4.63	%
Non-interest-earning assets			51,687												63,028
Total assets		$	758,655											$	785,579
Interest-bearing liabilities:
Interest-bearing checking accounts		$	97,463			$	134				0.18	%		$	88,154			$	138				0.21	%
Market rate checking accounts			151,654				282				0.25	%			130,933				378				0.39	%
Savings accounts			84,042				356				0.57	%			93,823				310				0.44	%
Certificates of deposit			91,493				840				1.23	%			114,623				1,284				1.49	%
Total interest-bearing deposits			424,652				1,612				0.51	%			427,533				2,110				0.66	%
FHLB advances			12,304				(875	)			(9.50	)%			41,471				350				1.13	%
Other borrowings			46				1				3.43	%			1,927				15				1.01	%
Total interest-bearing liabilities			437,002				738				0.23	%			470,931				2,475				0.69	%
Non-interest-bearing liabilities			203,164												199,971
Total liabilities			640,166												670,902
Total stockholders' equity			118,489												114,677
Total liabilities and stockholders' equity		$	758,655											$	785,579
Net interest rate spread											4.15	%											3.94	%
Net interest income						$	22,418											$	22,612
Net interest margin											4.24	%											4.17	%

AFFINITY BANCSHARES, INC.
Consolidated Balance Sheets
		September 30, 2022				December 31, 2021
		(unaudited)
		(In thousands)
Assets
Cash and due from bank		$	6,887			$	16,239
Interest-earning deposits in other depository institutions			33,619				95,537
Cash and cash equivalents			40,506				111,776
Investment securities available-for-sale			41,878				48,557
Other investments			1,025				2,476
Loans, net			641,062				575,825
Other real estate owned			3,538				3,538
Premises and equipment, net			4,069				3,783
Bank owned life insurance			15,637				15,377
Intangible assets			18,606				18,749
Other assets			10,069				8,007
Total assets		$	776,390			$	788,088
Liabilities and Stockholders' Equity
Liabilities:
Non-interest-bearing checking		$	204,781			$	193,940
Interest-bearing checking			93,235				91,387
Market rate checking			160,377				145,969
Savings accounts			88,840				86,745
Certificates of deposit			98,784				96,758
Total deposits			646,017				614,799
Federal Home Loan Bank advances			10,000				48,988
Accrued interest payable and other liabilities			5,152				3,333
Total liabilities			661,169				667,120
Stockholders' equity:
Preferred stock (10,000,000 shares authorized, no shares outstanding at September 30, 2022 and December 31, 2021)			—				—
Common stock (par value $0.01 per share, 40,000,000 shares authorized; 6,634,885 issued and outstanding at September 30, 2022 and 6,872,634 issued and outstanding at December 31, 2021)			65				69
Additional paid in capital			63,289				68,038
Unearned ESOP shares			(4,847	)			(5,004	)
Retained earnings			63,658				58,223
Accumulated other comprehensive loss			(6,944	)			(358	)
Total stockholders' equity			115,221				120,968
Total liabilities and stockholders' equity		$	776,390			$	788,088

AFFINITY BANCSHARES, INC.
Consolidated Statements of Income
(unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
		(In thousands)
Interest income:
Loans, including fees		$	7,734			$	7,332			$	22,013			$	24,424
Investment securities			301				237				857				529
Interest-earning deposits			189				53				286				134
Total interest income			8,224				7,622				23,156				25,087
Interest expense:
Deposits			625				629				1,612				2,110
Borrowings			73				132				(874	)			365
Total interest expense			698				761				738				2,475
Net interest income before provision for loan losses			7,526				6,861				22,418				22,612
Provision for loan losses			187				225				654				975
Net interest income after provision for loan losses			7,339				6,636				21,764				21,637
Noninterest income:
Service charges on deposit accounts			420				416				1,205				1,126
Other			173				355				631				980
Total noninterest income			593				771				1,836				2,106
Noninterest expenses:
Salaries and employee benefits			3,187				2,777				9,219				7,797
Occupancy			675				633				1,798				2,329
Advertising			128				116				326				296
Data processing			486				520				1,476				1,518
Writedown of premises and equipment			—				14				—				888
FHLB prepayment penalties			—				—				647				—
Other			1,014				967				3,019				2,764
Total noninterest expenses			5,490				5,027				16,485				15,592
Income before income taxes			2,442				2,380				7,115				8,151
Income tax expense			581				575				1,680				1,896
Net income		$	1,861			$	1,805			$	5,435			$	6,255
Weighted average common shares outstanding
Basic
Diluted
Basic earnings per share		$	0.28			$	0.26			$	0.81			$	0.90
Diluted earnings per share		$	0.27			$	0.26			$	0.80			$	0.89

Explanation of Certain Unaudited Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. 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 below for details on the earnings impact of these items.

Non-GAAP Reconciliation			September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
Tangible book value per common share reconciliation
Book Value per common share (GAAP)			$	17.37			$	17.51			$	17.58			$	17.60			$	17.42
Effect of goodwill and other intangibles				(2.80	)			(2.83	)			(2.83	)			(2.73	)			(2.73	)
Tangible book value per common share			$	14.57			$	14.68			$	14.75			$	14.87			$	14.69
Tangible equity to tangible assets reconciliation
Equity to assets (GAAP)				14.84	%			15.05	%			15.31	%			15.35	%			15.15	%
Effect of goodwill and other intangibles				(2.09	)%			(2.12	)%			(2.14	)%			(2.06	)%			(2.07	)%
Tangible equity to tangible assets				12.75	%			12.93	%			13.17	%			13.29	%			13.08	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221026005921/en/

Edward J. Cooney

Chief Executive Officer

(678)742-9990

Source: Affinity Bancshares, Inc.

FAQ

What were Affinity Bancshares' earnings for Q3 2022?

Affinity Bancshares reported a net income of $1.9 million for Q3 2022.

How did net income for the first nine months of 2022 compare to 2021?

Net income for the first nine months of 2022 was $5.4 million, down from $6.3 million in 2021.

What is the stock symbol for Affinity Bancshares?

The stock symbol for Affinity Bancshares is AFBI.

What was the net interest margin for Q3 2022?

The net interest margin for Q3 2022 was 4.12%.

How much did deposits increase by in 2022?

Deposits increased by $31.2 million to $646.0 million at September 30, 2022.