Affinity Bancshares, Inc. Announces Second Quarter 2024 Financial Results

Affinity Bancshares, Inc. (NASDAQ:"AFBI") (the "Company"), the holding company for Affinity Bank (the "Bank"), today announced net income of $1.0 million for the three months ended June 30, 2024, as compared to $1.6 million for the three months ended June 30, 2023.

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Net Income

• Net income was $1.0 million for three months ended June 30, 2024 as compared to $1.6 million for the three months ended June 30, 2023, as a result of an increase in other noninterest expense partially offset by a net increase in interest income.

Results of Operations

• Net interest income was $7.6 million for the three months ended June 30, 2024 compared to $6.7 million for the three months ended June 30, 2023. The increase was due to an increase in interest income on loans and investment securities, partially offset by a rise in deposit and borrowing costs and a decrease in interest income on interest-earning deposits.
• Net interest margin for the three months ended June 30, 2024 increased to 3.71% from 3.17% for the three months ended June 30, 2023. The increases in the margin relate to increases in our yield on earning assets exceeding our increases in our deposits and borrowing costs.
• Provision for credit losses, which is related to provision on unfunded commitments was $213,000 for the three months ended June 30, 2024 compared to zero provision for the three months ended June 30, 2023.
• Noninterest income increased $28,000 to $706,000 for the three months ended June 30, 2024.
• Non-interest expense increased $1.4 million to $6.7 million for the three months ended June 30, 2024 compared to the respective period in 2023, due to increases in professional fees related to our recently announced merger with Atlanta Postal Credit Union and increases in salaries and employee benefits.
• Net interest income was $14.3 million for the six months ended June 30, 2024 compared to $13.6 million for the six months ended June 30, 2023. The increase was due to an increase in interest income on loans and investment securities, partially offset by a rise in deposit and borrowing costs and a decrease in interest income on interest-earning deposits.
• Net interest margin for the six months ended June 30, 2024 increased to 3.55% from 3.37% for the six months ended June 30, 2023. The increase in the margin relates to increases in our yield on earning assets exceeding our increases in our deposits and borrowing costs.
• Noninterest income increased $60,000 to $1.3 million for the six months ended June 30, 2024.
• Non-interest expense increased $1.8 million to $12.3 million for the six months ended June 30, 2024 compared to the respective period in 2023, due to increases in professional fees related to our recently announced merger with Atlanta Postal Credit Union and increases in salaries and employee benefits.

Financial Condition

• Total assets increased $29.3 million to $872.6 million at June 30, 2024 from $843.3 million at December 31, 2023, as we experienced loan growth.
• Total gross loans increased $32.7 million to $692.6 million at June 30, 2024 from $659.9 million at December 31, 2023. The increase was due to steady loan demand in construction and commercial non-owner occupied properties.
• Non-owner occupied office loans totaled $29.4 million at June 30, 2024; the average LTV on these loans is 46.0%, including
  • $15.0 million medical/dental tenants and
  • $14.4 million to other various tenants.
• Investment securities held-to-maturity unrealized losses were $294,000, net of tax. Investment securities available-for-sale unrealized losses were $6.0 million, net of tax.
• Cash and cash equivalents remained stable at $50.4 million at June 30, 2024 from $50.0 million at December 31, 2023.
• Deposits increased by $15.3 million to $689.7 million at June 30, 2024 compared to $674.4 million at December 31, 2023, with an $18.4 million increase in demand deposits partially offset by $2.5 million decrease in certificates of deposits.
• Uninsured deposits were approximately $106.3 million at June 30, 2024 and represented 15.4% of total deposits.
• Borrowings increased by $11.8 million to $51.8 million at June 30, 2024 compared to $40.0 million at December 31, 2023 as we continue to evaluate borrowing needs related to enhancing bank liquidity.

Asset Quality

• Non-performing loans decreased to $3.0 million at June 30, 2024 from $7.4 million at December 31, 2023.
• The allowance for credit losses as a percentage of non-performing loans was 282.0% at June 30, 2024, as compared to 120.1% at December 31, 2023.
• Allowance for credit losses to total loans decreased to 1.22% at June 30, 2024 from 1.35% at December 31, 2023.
• Net loan charge-offs were $460,000 for the six months ended June 30, 2024, as compared to net loan charge-offs of $72,000 for the six months ended June 30, 2023.

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; changes in the value of our goodwill and other intangible assets; 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.

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 tables below for details on the earnings impact of these items.

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