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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period

Commission File No. 001-39914

 

Affinity Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

 

86-1339773

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

3175 Highway 278

Covington, Georgia

 

30014

(Address of Principal Executive Offices)

 

(Zip Code)

 

(770) 786-7088

(Registrant’s Telephone Number, Including Area Code)

 

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

AFBI

 

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. YesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

 

Accelerated filer

 

 

 

 

 

 

Non-accelerated filer

 

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo

 

 

 

 

 

 

 

 

 

 

 

As of November 8, 2021, 6,872,634 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding.

 

 

 


 

Affinity Bancshares, Inc.

Form 10-Q

Table of Contents

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

 

Financial Statements

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets at September 30, 2021 (unaudited) and December 31, 2020 (audited)

 

2

 

 

 

 

 

 

 

Consolidated Statements of Earnings for the Three Months and Nine Months Ended September 30, 2021 and 2020 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended September 30, 2021 and 2020 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Nine Months Ended September 30, 2021 and 2020 (unaudited)

 

5

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

41

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

42

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

43

 

 

 

 

 

Item 1A.

 

Risk Factors

 

43

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

43

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

43

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

43

 

 

 

 

 

Item 5.

 

Other Information

 

43

 

 

 

 

 

Item 6.

 

Exhibits

 

43

 

 

 

 

 

 

 

SIGNATURES

 

44

 

 

1


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

 

 

 

September 30, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

(audited)

 

 

 

(In thousands)

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks, including reserve requirement of $0 at September 30, 2021
   and December 31, 2020

 

$

17,321

 

 

$

5,552

 

Interest-earning deposits in other depository institutions

 

 

113,589

 

 

 

172,701

 

Cash and cash equivalents

 

 

130,910

 

 

 

178,253

 

Investment securities available-for-sale

 

 

44,071

 

 

 

24,005

 

Other investments

 

 

2,476

 

 

 

1,596

 

Loans, net

 

 

563,539

 

 

 

592,254

 

Other real estate owned

 

 

 

 

 

1,292

 

Premises and equipment, net

 

 

7,425

 

 

 

8,617

 

Bank owned life insurance

 

 

15,285

 

 

 

15,311

 

Intangible assets

 

 

18,797

 

 

 

18,940

 

Accrued interest receivable and other assets

 

 

7,462

 

 

 

10,360

 

Total assets

 

$

789,965

 

 

$

850,628

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Savings accounts

 

$

92,003

 

 

$

96,591

 

Interest-bearing checking

 

 

82,750

 

 

 

129,813

 

Market rate checking

 

 

138,592

 

 

 

121,317

 

Non-interest-bearing checking

 

 

196,990

 

 

 

160,819

 

Certificates of deposit

 

 

104,896

 

 

 

131,625

 

Total deposits

 

 

615,231

 

 

 

640,165

 

Federal Home Loan Bank advances

 

 

49,020

 

 

 

19,117

 

Paycheck Protection Program Liquidity Facility (PPPLF) borrowings

 

 

 

 

 

100,813

 

Other borrowings

 

 

 

 

 

5,000

 

Accrued interest payable and other liabilities

 

 

6,011

 

 

 

4,748

 

Total liabilities

 

 

670,262

 

 

 

769,843

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock (par value $0.01 per share, 40,000,000 shares authorized,
   
6,872,634 issued and outstanding at September 30, 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 (10,000,000 shares authorized, no shares outstanding at September 30,
   2021 and
1,000,000 shares authorized, no shares outstanding at December 31, 2020)

 

 

 

 

 

 

Additional paid in capital

 

 

67,899

 

 

 

33,628

 

Treasury stock, 102,816 shares at December 31, 2020, at cost (1)

 

 

 

 

 

(1,268

)

Unearned ESOP shares

 

 

(5,056

)

 

 

(2,453

)

Retained earnings

 

 

56,905

 

 

 

50,650

 

Accumulated other comprehensive (loss) income

 

 

(114

)

 

 

159

 

Total stockholders' equity

 

 

119,703

 

 

 

80,785

 

Total liabilities and stockholders' equity

 

$

789,965

 

 

$

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) (see Note 1).

See accompanying notes to unaudited consolidated financial statements.

2


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Earnings

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

(In thousands)

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

7,332

 

 

$

8,526

 

 

$

24,424

 

 

$

22,046

 

Investment securities, including dividends

 

 

237

 

 

 

109

 

 

 

529

 

 

 

392

 

Interest-earning deposits

 

 

53

 

 

 

36

 

 

 

134

 

 

 

185

 

Total interest income

 

 

7,622

 

 

 

8,671

 

 

 

25,087

 

 

 

22,623

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

629

 

 

 

1,163

 

 

 

2,110

 

 

 

3,789

 

Borrowings

 

 

132

 

 

 

257

 

 

 

365

 

 

 

649

 

Total interest expense

 

 

761

 

 

 

1,420

 

 

 

2,475

 

 

 

4,438

 

Net interest income before provision for loan losses

 

 

6,861

 

 

 

7,251

 

 

 

22,612

 

 

 

18,185

 

Provision for loan losses

 

 

225

 

 

 

600

 

 

 

975

 

 

 

1,400

 

Net interest income after provision for loan losses

 

 

6,636

 

 

 

6,651

 

 

 

21,637

 

 

 

16,785

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

416

 

 

 

351

 

 

 

1,126

 

 

 

1,009

 

Gain on sales of investment securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

20

 

Other

 

 

355

 

 

 

195

 

 

 

980

 

 

 

569

 

Total noninterest income

 

 

771

 

 

 

546

 

 

 

2,106

 

 

 

1,598

 

Noninterest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,715

 

 

 

2,415

 

 

 

7,609

 

 

 

8,767

 

Deferred compensation

 

 

62

 

 

 

70

 

 

 

188

 

 

 

211

 

Occupancy

 

 

633

 

 

 

734

 

 

 

2,329

 

 

 

2,071

 

Advertising

 

 

116

 

 

 

40

 

 

 

296

 

 

 

173

 

Data processing

 

 

520

 

 

 

523

 

 

 

1,518

 

 

 

1,773

 

Other real estate owned

 

 

 

 

 

9

 

 

 

19

 

 

 

11

 

Net (gain) loss on sale of other real estate owned

 

 

 

 

 

159

 

 

 

(127

)

 

 

188

 

Legal and accounting

 

 

153

 

 

 

230

 

 

 

555

 

 

 

1,196

 

Organizational dues and subscriptions

 

 

105

 

 

 

70

 

 

 

266

 

 

 

238

 

Director compensation

 

 

50

 

 

 

51

 

 

 

150

 

 

 

153

 

Federal deposit insurance premiums

 

 

61

 

 

 

51

 

 

 

201

 

 

 

304

 

Writedown of premises and equipment

 

 

14

 

 

 

 

 

 

888

 

 

 

 

Other

 

 

598

 

 

 

400

 

 

 

1,700

 

 

 

1,324

 

Total noninterest expenses

 

 

5,027

 

 

 

4,752

 

 

 

15,592

 

 

 

16,409

 

Income before income taxes

 

 

2,380

 

 

 

2,445

 

 

 

8,151

 

 

 

1,974

 

Income tax expense

 

 

575

 

 

 

575

 

 

 

1,896

 

 

 

324

 

Net income

 

$

1,805

 

 

$

1,870

 

 

$

6,255

 

 

$

1,650

 

Basic earnings per share (1)

 

$

0.26

 

 

$

0.25

 

 

$

0.90

 

 

$

0.22

 

Diluted earnings per share (1)

 

$

0.26

 

 

$

0.25

 

 

$

0.89

 

 

$

0.22

 

 

(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) (see Note 1).

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

3


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Comprehensive Income

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

(In thousands)

 

 

 

 

Net income

 

$

1,805

 

 

$

1,870

 

 

$

6,255

 

 

$

1,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (loss) gain on available-for-sale securities, net of taxes of $29, $(11), $(96)
   and $
52

 

 

82

 

 

 

(32

)

 

 

(273

)

 

 

150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for gain included in net income, net of taxes of ($5)

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive (loss) income

 

 

82

 

 

 

(32

)

 

 

(273

)

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

$

1,887

 

 

$

1,838

 

 

$

5,982

 

 

$

1,785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

4


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

 

 

 

Three and Nine Months Ended September 30, 2020 and 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common

 

 

Paid In

 

 

Treasury

 

 

Unearned

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Stock (1)

 

 

Capital

 

 

Stock

 

 

ESOP Shares

 

 

Earnings

 

 

Income (Loss)

 

 

Total

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

Beginning balance December 31, 2019

 

$

69

 

 

$

33,366

 

 

$

(1,268

)

 

$

(2,571

)

 

$

47,562

 

 

$

9

 

 

$

77,167

 

ESOP loan payment
  and release of
  ESOP shares

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

30

 

Purchase of treasury
  stock

 

 

 

 

 

(80

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(80

)

Change in unrealized
  gain on investment
  securities available-
  for-sale, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121

 

 

 

121

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,298

)

 

 

 

 

 

(1,298

)

Ending balance March 31, 2020

 

$

69

 

 

$

33,286

 

 

$

(1,268

)

 

$

(2,541

)

 

$

46,264

 

 

$

130

 

 

$

75,940

 

ESOP loan payment
  and release of
  ESOP shares

 

$

 

 

$

(8

)

 

$

 

 

$

29

 

 

$

 

 

$

 

 

$

21

 

Issuance of restricted
   stock awards

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

Stock-based
  compensation
   expense

 

 

 

 

 

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

141

 

Change in unrealized
  gain on investment
  securities available-
  for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46

 

 

 

46

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,079

 

 

 

 

 

 

1,079

 

Ending balance June 30, 2020

 

$

69

 

 

$

33,436

 

 

$

(1,268

)

 

$

(2,512

)

 

$

47,343

 

 

$

176

 

 

$

77,244

 

ESOP loan payment
  and release of
  ESOP shares

 

$

 

 

$

(10

)

 

$

 

 

$

30

 

 

$

 

 

$

 

 

$

20

 

Issuance of restricted
   stock awards