Affinity bancshares, inc. announces fourth quarter and full year 2022 financial results
Covington, ga.--(business wire)--affinity bancshares, inc. (nasdaq:“afbi”) (the “company”), the holding company for affinity bank (the “bank”), today announced net income of $1.7 million for the three months ended december 31, 2022, as compared to $1.3 million for the three months ended december 31, 2021. for the year ended december 31, 2022, net income was $7.1 million, as compared to $7.6 million for the year ended december 31, 2021. at or for the three months ended, performance ratios: december 31, 2022 september 30, 2022 june 30, 2022 march 31, 2022 december 31, 2021 net income (in thousands) $ 1,699 $ 1,861 $ 1,783 $ 1,791 $ 1,318 diluted earnings per share 0.26 0.27 0.27 0.26 0.20 common book value per share 17.73 17.37 17.51 17.58 17.60 tangible book value per share (1) 14.92 14.57 14.68 14.75 14.87 total assets (in thousands) 791,283 776,390 766,679 760,208 788,088 return on average assets 0.84 % 0.95 % 0.95 % 0.97 % 0.66 % return on average equity 5.78 % 6.30 % 6.13 % 5.97 % 4.36 % equity to assets 14.80 % 14.84 % 15.05 % 15.31 % 15.35 % tangible equity to tangible assets (1) 12.75 % 12.75 % 12.93 % 13.17 % 13.29 % net interest margin 3.85 % 4.12 % 4.06 % 4.47 % 3.60 % efficiency ratio 71.38 % 67.62 % 67.23 % 69.00 % 74.29 % (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 $1.7 million for the three months ended december 31, 2022, as compared to $1.3 million for the three months ended december 31, 2021, as a result of an increase in interest income partially offset by an increase in deposit interest expense. net income was $7.1 million for the year ended december 31, 2022, as compared to $7.6 million for the year ended december 31, 2021, as a result of lower interest and fee income on ppp loans and an increase in salaries and employee benefits, partially offset by a decrease in interest expense primarily related to the recognition of remaining purchase accounting fair value discounts upon the payoff of acquired federal home loan bank advances. results of operations net interest income was $7.3 million for the three months ended december 31, 2022 compared to $6.7 million for the three months ended december 31, 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 $29.8 million for the year ended december 31, 2022 compared to $29.3 million for the year ended december 31, 2021. the increase was a result of the recognition of remaining purchase accounting fair value discounts upon the payoff of acquired federal home loan bank advances, off set by the lower fee income on ppp loans. the company’s net interest margin increased to 3.85% from 3.57% for the three months ended december 31, 2022 and 2021. net interest margin for the year ended december 31, 2022 increased slightly to 4.14% from 4.04% for the year ended december 31, 2021. the company anticipates it will experience margin compression in 2023 as a result of recent increases in market interest rates. noninterest income was $566 thousand for the three months ended december 31, 2022 and $572 thousand for the three months ended december 31, 2021. for the year ended december 31, 2022, noninterest income was $2.4 million compared to $2.7 million for the year ended december 31, 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 $5.6 million and $5.4 million for the three months ended december 31, 2022 and 2021, respectively. non-interest expense was $22.1 million and $21.0 million for the year ended december 31, 2022 and 2021, respectively. 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. in fourth quarter, the company implemented an arbitrage strategy where $31.5 million in securities with 6.05% average yield was purchased using funds of $34.9 million in brokered deposits with average yield of 4.50%. the brokered deposits have optional call dates ranging from six to twelve months. financial condition total assets increased $3.2 million to $791.3 million at december 31, 2022 from $788.1 million at december 31, 2021. total net loans increased $61.1 million to $636.9 million at december 31, 2022 from $575.8 million at december 31, 2021. the increase was due to non-ppp loans increasing $79 million, offset by a continuing decline in ppp loans as such loans continued to be repaid. deposits increased by $44.4 million to $657.2 million at december 31, 2022 compared to $612.8 million at december 31, 2021, in part due to increases in cds of $29.2 million and in savings of $14.9 million. borrowings decreased by $39.0 million to $10.0 million at december 31, 2022 compared to $49.0 million at december 31, 2021 as we repaid federal home loan bank borrowings. asset quality non-performing loans decreased to $6.7 million at december 31, 2022 from $7.0 million december 31, 2021. the allowance for loan losses as a percentage of non-performing loans was 138.8% at december 31, 2022, as compared to 122.7% at december 31, 2021. allowance for loan losses remained consistent at 1.46% of total loans at december 31, 2022, and 2021. net loan recoveries were $62,000 for the year ended december 31, 2022, as compared to $1.1 million for the year ended 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, 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 december 31, 2022 2021 average outstanding balance interest average yield/rate average outstanding balance interest average yield/rate (dollars in thousands) interest-earning assets: loans $ 650,922 $ 8,032 4.90% $ 576,358 $ 7,060 4.86% investment securities held-to-maturity 8,809 130 5.85% — — — investment securities available-for-sale 42,653 323 3.00% 46,191 237 2.04% interest-earning deposits and federal funds 53,238 485 3.61% 115,390 46 0.16% other investments 758 8 4.19% 2,476 23 3.69% total interest-earning assets 756,380 8,977 4.71% 740,415 7,366 3.95% non-interest-earning assets 50,538 56,127 total assets $ 806,918 $ 796,542 interest-bearing liabilities: interest-bearing checking accounts $ 95,200 $ 42 0.18% $ 90,924 $ 47 0.21% money market accounts $ 161,901 470 1.15% 142,447 91 0.25% savings accounts $ 103,772 499 1.91% 90,992 93 0.41% certificates of deposit $ 117,102 610 2.07% 99,235 339 1.36% total interest-bearing deposits $ 477,975 1,621 1.35% 423,598 570 0.53% fhlb advances and other borrowings $ 2,717 20 2.92% 49,007 132 1.07% total interest-bearing liabilities $ 480,692 1,641 1.35% 472,605 702 0.59% non-interest-bearing liabilities 209,683 203,108 total liabilities 690,375 675,713 total stockholders' equity 116,543 120,829 total liabilities and stockholders' equity $ 806,918 $ 796,542 net interest rate spread 3.36% 3.36% net interest income $ 7,336 $ 6,664 net interest-earning assets $ 275,688 $ 267,810 net interest margin 3.85% 3.57% for the year ended december 31, 2022 2021 average outstanding balance interest average yield/rate average outstanding balance interest average yield/rate (dollars in thousands) interest-earning assets: loans $ 624,908 $ 30,045 4.81% $ 588,976 $ 31,484 5.35% investment securities held-to-maturity 2,220 130 5.86% — — — investment securities available-for-sale 45,594 1,150 2.52% 35,109 709 2.02% interest-earning deposits and federal funds 45,674 771 1.69% 98,554 180 0.18% other investments 1,027 38 3.70% 2,324 80 3.43% total interest-earning assets 719,423 32,134 4.47% 724,963 32,453 4.48% non-interest-earning assets 51,397 63,373 total assets $ 770,820 $ 788,336 interest-bearing liabilities: interest-bearing checking accounts $ 96,892 $ 176 0.18% $ 88,852 $ 185 0.21% money market accounts 154,237 752 0.49% 133,835 469 0.35% savings accounts 89,015 856 0.96% 93,113 403 0.43% certificates of deposit 97,948 1,449 1.48% 110,742 1,623 1.47% total interest-bearing deposits 438,092 3,233 0.74% 426,542 2,680 0.63% fhlb advances and other borrowings 9,887 (854) (8.64)% 44,811 497 1.11% total interest-bearing liabilities 447,979 2,379 0.53% 471,353 3,177 0.67% non-interest-bearing liabilities 204,842 200,756 total liabilities 652,821 672,109 total stockholders' equity 117,999 116,227 total liabilities and stockholders' equity $ 770,820 $ 788,336 net interest rate spread 3.94% 3.81% net interest income $ 29,755 $ 29,276 net interest-earning assets $ 271,443 $ 253,610 net interest margin 4.14% 4.04% affinity bancshares, inc. consolidated balance sheets (unaudited) december 31, 2022 december 31, 2021 (in thousands except share amounts) assets cash and due from banks $ 2,928 $ 16,239 interest-earning deposits in other depository institutions 23,396 95,537 cash and cash equivalents 26,324 111,776 investment securities held-to-maturity (estimated fair value of $26,251) 26,527 — investment securities available-for-sale 46,200 48,557 other investments 1,082 2,476 loans, net 636,909 575,825 other real estate owned 2,901 3,538 premises and equipment, net 4,257 3,783 bank owned life insurance 15,724 15,377 intangible assets 18,558 18,749 other assets 12,801 8,007 total assets $ 791,283 $ 788,088 liabilities and stockholders' equity liabilities: non-interest-bearing checking $ 190,297 $ 193,940 interest-bearing checking 91,167 89,384 money market accounts 148,097 145,969 savings accounts 101,622 86,745 certificates of deposit 125,989 96,758 total deposits 657,172 612,796 federal home loan bank advances and other borrowings 10,025 48,988 accrued interest payable and other liabilities 6,983 5,336 total liabilities 674,180 667,120 stockholders' equity: common stock (par value $0.01 per share, 40,000,000 shares authorized; 6,605,384 issued and outstanding at december 31, 2022 and 6,872,634 issued and outstanding at december 31, 2021) 66 69 preferred stock (1,000,000 shares authorized, no shares outstanding) — — additional paid in capital 63,130 68,038 unearned esop shares (4,795 ) (5,004 ) retained earnings 65,357 58,223 accumulated other comprehensive loss (6,655 ) (358 ) total stockholders' equity 117,103 120,968 total liabilities and stockholders' equity $ 791,283 $ 788,088 affinity bancshares, inc. consolidated statements of income (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 (in thousands except per share amounts) interest income: loans, including fees $ 8,032 $ 7,060 $ 30,045 $ 31,484 investment securities 461 260 1,318 789 interest-earning deposits 485 46 771 180 total interest income 8,978 7,366 32,134 32,453 interest expense: deposits 1,621 570 3,233 2,680 fhlb advances and other borrowings 20 132 (854 ) 497 total interest expense 1,641 702 2,379 3,177 net interest income before provision for loan losses 7,337 6,664 29,755 29,276 provision for loan losses 50 100 704 1,075 net interest income after provision for loan losses 7,287 6,564 29,051 28,201 noninterest income: service charges on deposit accounts 406 380 1,611 1,506 other 160 192 791 1,172 total noninterest income 566 572 2,402 2,678 noninterest expenses: salaries and employee benefits 3,002 2,866 12,221 10,663 occupancy 725 606 2,523 2,935 advertising 150 43 476 339 data processing 471 457 1,947 1,975 write-down of premises and equipment — 311 — 1,199 fhlb prepayment penalties — — 647 — other 1,293 1,093 4,312 3,857 total noninterest expenses 5,641 5,376 22,126 20,968 income before income taxes 2,212 1,760 9,327 9,911 income tax expense 513 442 2,193 2,338 net income $ 1,699 $ 1,318 $ 7,134 $ 7,573 weighted average common shares outstanding basic 6,628,847 6,872,634 6,669,389 6,911,576 diluted 6,708,922 6,956,955 6,761,771 6,969,402 basic earnings per share $ 0.26 $ 0.19 $ 1.07 $ 1.10 diluted earnings per share $ 0.26 $ 0.18 $ 1.06 $ 1.09 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. at or for the period ending non-gaap reconciliation december 31, 2022 september 30, 2022 june 30, 2022 march 31, 2022 december 31, 2021 tangible book value per common share reconciliation book value per common share (gaap) $ 17.73 $ 17.37 $ 17.51 $ 17.58 $ 17.60 effect of goodwill and other intangibles (2.81 ) (2.80 ) (2.83 ) (2.83 ) (2.73 ) tangible book value per common share $ 14.92 $ 14.57 $ 14.68 $ 14.75 $ 14.87 tangible equity to tangible assets reconciliation equity to assets (gaap) 14.80 % 14.84 % 15.05 % 15.31 % 15.35 % effect of goodwill and other intangibles (2.05 )% (2.09 )% (2.12 )% (2.14 )% (2.06 )% tangible equity to tangible assets (1) 12.75 % 12.75 % 12.93 % 13.17 % 13.29 % (1) tangible assets is total assets less intangible assets. tangible equity is total equity less intangible assets.
