Affinity bancshares, inc. announces first quarter 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 $1.8 million for the three months ended march 31, 2022 as compared to $2.1 million for the three months ended march 31, 2021. for the three months ended, performance ratios: march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 return on average assets 0.97% 0.66% 0.91% 1.18% 1.11% return on average equity 5.97% 4.36% 6.00% 7.95% 8.03% net interest margin 4.53% 3.64% 3.78% 4.10% 4.65% efficiency ratio 69.00% 74.29% 65.87% 58.30% 64.96% results of operations net income was $1.8 million for the three months ended march 31, 2022, as compared to $2.1 million for the three months ended march 31, 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 mostly related to the recognition of remaining discounts upon the payoff of acquired fhlb advances. net interest income and margin net interest income decreased $590,000, and was $7.8 million for the three months ended march 31, 2022, compared to $8.3 million for the three months ended march 31, 2021. average interest-earning assets decreased by $33.2 million, and was $684.6 million for the three months ended march 31, 2022 compared to $717.8 for the three months ended march 31, 2021. this decrease was a result of the decrease in ppp loans as forgiveness payments were received. net interest margin for the three months ended march 31, 2022, decreased to 4.53% from 4.65% for the three months ended march 31, 2021. the decrease in net interest margin was primarily due to the decrease in ppp loans as forgiveness payments were received and partially offset by the decrease in interest expense from recognition of remaining discounts upon the payoff of acquired fhlb advances. for the three months ended march 31, 2022, the cost of average interest-bearing liabilities decreased to (0.44)% from 0.76% for the three months ended march 31, 2021, as a result of paying off federal home loan bank advances and recognizing $1.0 million in accretion from marks on acquired advances. the total cost of deposits was 0.48% for the three months ended march 31, 2022, compared to 0.72% for the three months ended march 31, 2021. the decrease was due to decreasing deposit rates related to the decrease in market rates. provision for loan losses for the three months ended march 31, 2022, the provision for loan loss expense was $250,000 compared to $450,000 for the three months ended march 31, 2021. we increased our provision expense in 2021 due to the uncertainty related to the covid-19 pandemic. as the economy began to improve in 2021 and continued to improve in 2022, less provision expense was required. net loan charge offs were $3,000 for the three months ended march 31, 2022, compared to net loan recoveries of $1.1 million for the three months ended march 31, 2021. the increase in net recoveries for 2021 was primarily driven by a $1.0 million recovery on a previously charged off commercial real estate loan. non-interest income for the three months ended march 31, 2022, noninterest income decreased $134,000 to $595,000 compared to $729,000 for the three months ended march 31, 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 decreased $134,000, and was $5.8 million for the three months ended march 31, 2022, compared to $5.9 million for the three months ended march 31, 2021, primarily as a result of a decrease in occupancy expense due to facilities consolidation partially offset by an increase in salaries and employee benefits due to the company’s strategic initiative to attract and retain talent. income tax expense we recorded income tax expense of $547,000 for three months ended march 31, 2022, compared to $596,000 for the three months ended march 31, 2021. the higher tax expense for the three months ended march 31, 2021, was primarily due to higher pretax income. financial condition total assets decreased by $27.9 million to $760.2 million for the three months ended march 31, 2022, from $788.1 million at december 31, 2021. the decrease was due primarily to a decrease in cash and cash equivalents of $41.9 million due to paying off federal home loan bank advances and partially offset by an increase in net loans. cash and equivalents decreased $41.9 million, to $69.9 million for the three months ended march 31, 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 $2.6 million for the three months ended march 31, 2022, as compared to december 31, 2021, as our unrealized loss on the investment portfolio increased. total net loans increased $17.1 million to $592.9 million at march 31, 2022 from $575.8 million at december 31, 2021, including paycheck protection program (ppp) loans of $7.1 million and $17.9 million at march 31, 2022 and december 31, 2021, respectively. deposits increased by $13.2 million to $628.0 million at march 31, 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 $17.7 million. the loan-to-deposit ratio at march 31, 2022 was 94.4%, as compared to 93.7% at december 31, 2021. stockholders’ equity decreased to $116.4 million at march 31, 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 253,779 shares of afbi stock totaling $3.9 million with an average price per share of $15.53 as well as an increase in accumulated other comprehensive loss related to our investment portfolio. asset quality the company’s non-performing loans decreased to $6.3 million at march 31, 2022, as compared to $7.0 million at december 31, 2021. the allowance for loan losses as a percentage of non-performing loans was 138.9% at march 31, 2022, as compared to 122.1% at december 31, 2021. the company’s allowance for loan losses was 1.46% of total loans for both march 31, 2022 and 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. average balance sheets the following table sets 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 march 31, 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 $ 574,393 $ 6,792 4.73 % $ 490,660 $ 6,204 5.06 % ppp loans 12,369 204 6.59 % 123,457 2,890 9.36 % securities 48,648 260 2.14 % 23,751 94 1.59 % interest-earning deposits 48,231 17 0.14 % 77,950 42 0.22 % other investments 1,000 6 2.33 % 1,990 18 3.56 % total interest-earning assets 684,641 7,279 4.25 % 717,808 9,248 5.15 % non-interest-earning assets 62,343 62,054 total assets $ 746,984 $ 779,862 interest-bearing liabilities: savings accounts $ 86,195 83 0.38 % $ 94,167 107 0.45 % interest-bearing checking accounts 96,273 42 0.17 % 96,513 52 0.22 % market rate checking accounts 144,455 88 0.25 % 124,209 133 0.43 % certificates of deposit 94,465 290 1.23 % 129,913 506 1.56 % total interest-bearing deposits 421,388 503 0.48 % 444,802 798 0.72 % fhlb advances (4) 8,821 (975 ) (44.20 )% 29,549 95 1.29 % ppplf borrowings — — — 4,150 4 0.35 % other borrowings — — — 1,555 10 2.69 % total interest-bearing liabilities 430,209 (472 ) (0.44 )% 480,056 907 0.76 % non-interest-bearing liabilities 195,024 192,150 total liabilities 625,233 672,206 total stockholders' equity 121,751 107,656 total liabilities and stockholders' equity $ 746,984 $ 779,862 net interest income $ 7,751 $ 8,341 net interest rate spread (1) 4.69 % 4.39 % net interest-earning assets (2) $ 254,432 $ 237,752 net interest margin (3) 4.53 % 4.65 % average interest-earning assets to interest-bearing liabilities 159.14 % 149.53 % 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. net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. net interest margin represents net interest income divided by average total interest-earning assets. interest and yield/rate for fhlb advances is negative as a result of paying off fhlb advances and recognizing $1.0 million in accretion from the marks on acquired advances. affinity bancshares, inc. consolidated balance sheets march 31, 2022 december 31, 2021 (unaudited) (audited) (in thousands) assets cash and due from banks, including reserve requirement of $0 at march 31, 2022 and december 31, 2021 $ 14,302 $ 16,239 interest-earning deposits in other depository institutions 55,596 95,537 cash and cash equivalents 69,898 111,776 investment securities available-for-sale 45,911 48,557 other investments 1,022 2,476 loans, net 592,887 575,825 other real estate owned 3,538 3,538 premises and equipment, net 3,955 3,783 bank owned life insurance 15,462 15,377 intangible assets 18,701 18,749 accrued interest receivable and other assets 8,834 8,007 total assets $ 760,208 $ 788,088 liabilities and stockholders' equity liabilities: savings accounts $ 86,717 $ 86,745 interest-bearing checking 95,555 91,387 market rate checking 151,443 145,969 non-interest-bearing checking 202,042 193,940 certificates of deposit 92,288 96,758 total deposits 628,045 614,799 federal home loan bank advances 10,000 48,988 accrued interest payable and other liabilities 5,805 3,333 total liabilities 643,850 667,120 stockholders' equity: common stock (par value $0.01 per share, 40,000,000 shares authorized; 6,618,685 issued and outstanding at march 31, 2022 and 6,872,634 issued and outstanding at december 31, 2021) 66 69 preferred stock (10,000,000 shares authorized, no shares outstanding at march 31, 2022 and december 31, 2021) — — additional paid in capital 64,241 68,038 unearned esop shares (4,952 ) (5,004 ) retained earnings 60,014 58,223 accumulated other comprehensive loss (3,011 ) (358 ) total stockholders' equity 116,358 120,968 total liabilities and stockholders' equity $ 760,208 $ 788,088 affinity bancshares, inc. consolidated statements of income (unaudited) three months ended march 31, 2022 2021 (in thousands) interest income: loans, including fees $ 6,996 $ 9,094 investment securities, including dividends 266 112 interest-earning deposits 17 42 total interest income 7,279 9,248 interest expense: deposits 503 798 borrowings (975 ) 109 total interest expense (472 ) 907 net interest income before provision for loan losses 7,751 8,341 provision for loan losses 250 450 net interest income after provision for loan losses 7,501 7,891 noninterest income: service charges on deposit accounts 392 334 other 203 395 total noninterest income 595 729 noninterest expenses: salaries and employee benefits 2,942 2,383 deferred compensation 66 64 occupancy 582 1,052 advertising 80 80 data processing 494 481 other real estate owned — 12 net (gain) loss on sale of other real estate owned — (1 ) legal and accounting 182 177 organizational dues and subscriptions 131 71 director compensation 51 50 federal deposit insurance premiums 60 73 writedown of premises and equipment — 873 fhlb prepayment penalties 647 — other 523 577 total noninterest expenses 5,758 5,892 income before income taxes 2,338 2,728 income tax expense 547 596 net income $ 1,791 $ 2,132 basic earnings per share $ 0.26 $ 0.31 diluted earnings per share $ 0.26 $ 0.31 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 plus expenses related to the write-off of a branch building and lease 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. march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 (in thousands) non-gaap reconciliation total loans $ 601,693 $ 584,384 $ 571,170 $ 590,011 $ 626,096 plus: fair value marks 1,239 1,350 1,422 1,529 1,607 deferred loan fees 958 958 1,077 1,666 2,466 less: payroll protection program loans 7,146 18,124 32,204 73,020 126,054 indirect auto dealer reserve 2,058 1,846 1,724 1,495 1,302 other loan adjustments 69 224 102 447 0 gross loans $ 594,617 $ 566,498 $ 539,639 $ 518,244 $ 502,813 march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 (in thousands) non-gaap reconciliation net income $ 1,791 $ 1,318 $ 1,805 $ 2,318 $ 2,132 less: ppp interest income 30 59 121 269 312 ppp fee income 174 271 741 1,419 2,578 plus: branch building and lease write-off 1,186 tax effect 47 84 208 403 372 non-gaap net income $ 1,634 $ 1,072 $ 1,151 $ 1,033 $ 800
