Affinity bancshares, inc. announces 2021 year end 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 $7.6 million for the year ended december 31, 2021 as compared to $3.1 million for the year ended december 31, 2020. for the three months ended, for the year ended, performance ratios: december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 december 31, 2021 december 31, 2020 return on average assets 0.66 % 0.91 % 1.18 % 1.11 % 0.96 % 0.42 % return on average equity 4.36 % 6.00 % 7.95 % 8.03 % 6.52 % 3.97 % net interest margin 3.64 % 3.78 % 4.10 % 4.65 % 4.04 % 3.77 % efficiency ratio 74.29 % 65.87 % 58.30 % 64.96 % 65.62 % 78.46 % results of operations net income was $7.6 million for the year ended december 31, 2021 as compared to $3.1 million for the year ended december 31, 2020, as we have increased our interest income while reducing interest and non-interest expense. our net income in 2020 was reduced as a result of merger related expenses. merger related expenses for the year ended december 31, 2020, were $2.8 million. net interest income and margin net interest income increased $4.1 million, and was $29.3 million for the year ended december 31, 2021, compared to $25.1 million for the year ended december 31, 2020. average interest-earning assets increased by $57.8 million for the year ended december 31, 2021. net interest margin for the year ended december 31, 2021, increased to 4.04%, from 3.77% for the year ended december 31, 2020. the increase in net interest margin was primarily due to the decrease in the cost of funds. for the year ended december 31, 2021, the cost of average interest-bearing liabilities decreased to 0.67% from 1.10% for the year ended december 31, 2020. the total cost of deposits was 0.63% for the year ended december 31, 2021 compared to 1.12% for the year ended december 31, 2020. the decrease was due to decreasing deposit rates related to the decrease in market rates. provision for loan losses for the year ended december 31, 2021, the provision for loan loss expense was $1.1 million compared to $2.0 million for the year ended december 31, 2020. we increased our provision expense in 2020 due to the uncertainty related to the covid-19 pandemic. as the economy began to improve in 2021, less provision expense was required. net loan recoveries were $1.1 million for the year ended december 31, 2021, compared to $227,000 for the year ended december 31, 2020. the increase in net recoveries was primarily driven by a $1.0 million recovery on a previously charged off commercial real estate loan. non-interest income for the year ended december 31, 2021, noninterest income increased $522,000 to $2.7 million compared to $2.2 million for the year ended december 31, 2020. this was a result of increases in service charges on deposits accounts, interchange income, and secondary market fee income. non-interest expense operating expenses decreased $450,000 to $21.0 million for the year ended december 31, 2021, compared to $21.4 million for the year ended december 31, 2020. we saw an increase in legal and accounting fees as well as salary and employee expense in 2020 due to the merger. income tax expense we recorded income tax expense of $2.3 million for year ended december 31, 2021, compared to $792,000 for the year ended december 31, 2020. the higher tax expense for the year ended december 31, 2021, was primarily due to higher pretax income. financial condition total assets decreased by $62.5 million to $788.1 million at december 31, 2021, from $850.6 million at december 31, 2020. the decrease was due primarily to a decrease in cash and cash equivalents of $66.5 million due to our no longer using the paycheck protection program liquidity facility (ppplf) for funding as well as a decrease in net loans of $16.4 million. cash and equivalents decreased $66.5 million, to $111.8 million at december 31, 2021, from $178.3 million at december 31, 2020, as the ppplf was not used for funding at year end and excess cash from the stock offering was returned. total investment securities available for sale increased by $24.6 million at december 31, 2021, as compared to december 31, 2020, as we deployed excess liquidity. total loans decreased $14.2 million to $584.4 million at december 31, 2021 from $598.6 million at december 31, 2020, including paycheck protection program (ppp) loans of $17.9 million and $101.7 million at december 31, 2021 and december 31, 2020, respectively. deposits decreased by $25.4 million to $614.8 million at december 31, 2021 compared to $640.2 million at december 31, 2020, which reflected a decrease in certificate of deposits of $34.9 million, partly offset by an increase in non-interest-bearing deposits of $33.1 million. the loan-to-deposit ratio at december 31, 2021 was 93.7%, as compared to 92.5% at december 31, 2020. interest-bearing checking accounts decreased $38.4 million as a result of the completion of the second step conversion. stockholders’ equity increased to $121.0 million at december 31, 2021, as compared to $80.8 million at december 31, 2020, primarily due to the completion of our mutual-to-stock conversion and related stock offering on january 20, 2021. we sold 3,701,509 shares of common stock at $10.00 per share and raised gross proceeds of $37.1 million in the offering. asset quality the company’s non-performing loans increased to $7.0 million at december 31, 2021, as compared to $4.9 million at december 31, 2020. the allowance for loan losses as a percentage of non-performing loans was 122.1% at december 31, 2021, as compared to 129.8% at december 31, 2020. the company’s allowance for loan losses was 1.46% of total loans at december 30, 2021, as compared to 1.06% at december 31, 2020. the allowance as a percentage of total loans increased due to the decrease in ppp loans as well as a large recovery of a previously charged off loan. 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 tables set forth average balance sheets, average yields and costs, and certain other information for the years 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 year ended december 31, 2021 2020 average outstanding balance interest average yield/rate average outstanding balance interest average yield/rate (dollars in thousands) interest-earning assets: loans $ 588,976 $ 31,484 5.35 % $ 575,548 $ 29,933 5.20 % securities 35,109 709 2.02 % 19,917 380 1.91 % interest-earning deposits and federal funds 98,554 180 0.18 % 69,137 212 0.31 % other investments 2,324 80 3.43 % 2,523 107 4.24 % total interest-earning assets 724,963 32,453 4.48 % 667,125 30,632 4.59 % noninterest-earning assets 63,373 60,601 total assets $ 788,336 $ 727,726 interest-bearing liabilities: savings accounts $ 93,113 403 0.43 % $ 88,425 878 0.99 % interest-bearing checking accounts 88,852 185 0.21 % 70,678 286 0.40 % money market checking accounts 133,835 469 0.35 % 112,863 965 0.86 % certificates of deposit 110,742 1,623 1.47 % 154,020 2,623 1.70 % total interest-bearing deposits 426,542 2,680 0.63 % 425,986 4,752 1.12 % federal home loan bank advances 43,370 482 1.11 % 44,574 569 1.28 % paycheck protection program liquidity facility borrowings 1,023 4 0.35 % 20,324 72 0.35 % other borrowings 418 11 2.59 % 8,184 97 1.18 % total interest-bearing liabilities 471,353 3,177 0.67 % 499,068 5,490 1.10 % noninterest-bearing liabilities 200,756 150,781 total liabilities 672,109 649,849 total stockholders' equity $ 116,227 $ 77,877 total liabilities and retained earnings $ 788,336 $ 727,726 net interest income $ 29,276 $ 25,142 net interest rate spread (1) 3.81 % 3.49 % net interest-earning assets (2) $ 253,610 $ 168,057 net interest margin (3) 4.04 % 3.77 % average interest-earning assets to interest- bearing liabilities 153.80 % 133.67 % (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 december 31, 2021 december 31, 2020 (in thousands except share amounts) assets cash and due from banks, including reserve requirement of $0 at december 31, 2021 and 2020, respectively $ 16,239 5,552 interest-earning deposits in other depository institutions 95,537 172,701 cash and cash equivalents 111,776 178,253 investment securities available-for-sale 48,557 24,005 other investments 2,476 1,596 loans, net 575,825 592,254 other real estate owned 3,538 1,292 premises and equipment, net 3,783 8,617 bank owned life insurance 15,377 15,311 intangible assets 18,749 18,940 accrued interest receivable and other assets 8,007 10,360 total assets $ 788,088 850,628 liabilities and stockholders' equity liabilities : savings accounts $ 86,745 96,591 interest-bearing checking 91,387 129,813 market rate checking 145,969 121,317 noninterest-bearing checking 193,940 160,819 certificate of deposits 96,758 131,625 total deposits 614,799 640,165 federal home loan bank (fhlb) advances 48,988 19,117 paycheck protection program liquidity facility (ppplf) borrowings — 100,814 other borrowings — 5,000 accrued interest payable and other liabilities 3,333 4,748 total liabilities 667,120 769,843 commitments stockholders' equity: common stock (par value $0.01 per share, 40,000,000 shares authorized, 6,872,634 issued and outstanding at december 31, 2021 and 19,000,000 shares authorized, 6,968,469 issued and 6,865,653 outstanding at december 31, 2020) (1) 69 69 preferred stock (1,000,000 shares authorized, no shares outstanding) — — additional paid in capital 68,038 33,628 treasury stock, 0 shares at december 31, 2021 and 102,816 shares at december 31, 2020, at cost — (1,268 ) unearned esop shares (5,004 ) (2,453 ) retained earnings 58,223 50,650 accumulated other comprehensive (loss) income (358 ) 159 total stockholders' equity 120,968 80,785 total liabilities and stockholders' equity $ 788,088 850,628 (1) amounts related to periods prior to the date of conversion (january 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the conversion (0.90686). affinity bancshares, inc. consolidated statements of income for the year ended december 31, for the year ended december 31, 2021 2020 (in thousands except per share amounts) interest income: loans, including fees $ 31,484 29,933 investment securities, including dividends 789 487 interest-earning deposits 180 212 total interest income 32,453 30,632 interest expense: deposits 2,680 4,752 borrowings 497 738 total interest expense 3,177 5,490 net interest income before provision for loan losses 29,276 25,142 provision for loan losses 1,075 2,000 net interest income after provision for loan losses 28,201 23,142 noninterest income: service charges on deposit accounts 1,506 1,359 gain on sales of investment securities available-for-sale — 20 other 1,172 777 total noninterest income 2,678 2,156 noninterest expenses: salaries and employee benefits 10,415 10,969 deferred compensation 248 279 occupancy 2,935 2,820 advertising 339 200 data processing 1,975 2,343 other real estate owned 18 20 net loss (gain) on sale and write-down of other real estate owned (127 ) 289 legal and accounting 827 1,447 organizational dues and subscriptions 363 306 director compensation 198 203 federal deposit insurance premiums 260 401 other 3,517 2,141 total noninterest expenses 20,968 21,418 income before income taxes 9,911 3,880 income tax expense 2,338 792 net income $ 7,573 3,088 basic earnings per share (1) $ 1.10 0.41 diluted earnings per share (1) $ 1.09 $ 0.41 (1) amounts related to periods prior to the date of the conversion (january 20, 2021) have been restated to give the retroactive recognition to the exchange ratio applied in the conversion (0.90686-to-one). non-gaap reconciliation reported amounts for total loans are presented in accordance with gaap. the company’s management believes that the following supplemental non-gaap information, which consists of total loans excluding 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 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. december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 december 31, 2020 (in thousands) non-gaap reconciliation total loans $ 584,384 $ 571,170 $ 590,011 $ 626,096 $ 598,615 plus: fair value marks 1,350 1,422 1,529 1,607 1,772 deferred loan fees 953 1,077 1,666 2,466 1,980 less: payroll protection program 18,124 32,204 73,020 126,054 101,749 loans indirect auto dealer reserve 1,846 1,724 1,495 1,302 1,167 other loan adjustments 219 102 447 0 591 gross loans $ 566,498 $ 539,639 $ 518,244 $ 502,813 $ 498,860
