0000950170-23-021813.txt : 20230512 0000950170-23-021813.hdr.sgml : 20230512 20230512163345 ACCESSION NUMBER: 0000950170-23-021813 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 64 CONFORMED PERIOD OF REPORT: 20230331 FILED AS OF DATE: 20230512 DATE AS OF CHANGE: 20230512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Affinity Bancshares, Inc. CENTRAL INDEX KEY: 0001823406 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 821147778 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-39914 FILM NUMBER: 23916418 BUSINESS ADDRESS: STREET 1: 3175 HIGHWAY 278 CITY: COVINGTON STATE: GA ZIP: 30014 BUSINESS PHONE: (770) 786-7088 MAIL ADDRESS: STREET 1: 3175 HIGHWAY 278 CITY: COVINGTON STATE: GA ZIP: 30014 10-Q 1 afbi-20230331.htm 10-Q 10-Q
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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 March 31, 2023

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

 

82-1147778

(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 May 9, 2023, 6,535,050 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 March 31, 2023 (unaudited) and December 31, 2022

 

2

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2023 and 2022 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022 (unaudited)

 

5

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited)

 

6

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

7

 

 

 

 

 

Item 2.

 

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

 

24

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

33

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

34

 

 

 

 

 

Item 1A.

 

Risk Factors

 

34

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

34

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

34

 

 

 

 

 

Item 5.

 

Other Information

 

34

 

 

 

 

 

Item 6.

 

Exhibits

 

35

 

 

 

 

 

 

 

SIGNATURES

 

36

 

 

1


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(unaudited)

 

 

 

 

 

 

(Dollars in thousands except per share amounts)

 

Assets

 

Cash and due from banks

 

$

5,714

 

 

$

2,928

 

Interest-earning deposits in other depository institutions

 

 

131,172

 

 

 

23,396

 

Cash and cash equivalents

 

 

136,886

 

 

 

26,324

 

Investment securities available-for-sale

 

 

51,154

 

 

 

46,200

 

Investment securities held-to-maturity (estimated fair value of $32,507, net of allowance for credit losses of $42 at March 31, 2023 and estimated fair value of $26,251 at December 31, 2022)

 

 

34,119

 

 

 

26,527

 

Other investments

 

 

2,996

 

 

 

1,082

 

Loans

 

 

661,426

 

 

 

646,234

 

Allowance for credit loss on loans

 

 

(9,234

)

 

 

(9,325

)

Net loans

 

 

652,192

 

 

 

636,909

 

Other real estate owned

 

 

2,901

 

 

 

2,901

 

Premises and equipment, net

 

 

4,156

 

 

 

4,257

 

Bank owned life insurance

 

 

15,811

 

 

 

15,724

 

Intangible assets

 

 

18,510

 

 

 

18,558

 

Other assets

 

 

13,577

 

 

 

12,801

 

Total assets

 

$

932,302

 

 

$

791,283

 

Liabilities and Stockholders' Equity

 

Liabilities:

 

 

 

 

 

 

Non-interest-bearing checking

 

$

183,862

 

 

$

190,297

 

Interest-bearing checking

 

 

97,537

 

 

 

91,167

 

Money market accounts

 

 

134,872

 

 

 

148,097

 

Savings accounts

 

 

92,382

 

 

 

101,622

 

Certificates of deposit

 

 

242,186

 

 

 

125,989

 

Total deposits

 

 

750,839

 

 

 

657,172

 

Federal Home Loan Bank advances and other borrowings

 

 

55,000

 

 

 

10,025

 

Accrued interest payable and other liabilities

 

 

8,153

 

 

 

6,983

 

Total liabilities

 

 

813,992

 

 

 

674,180

 

Stockholders' equity:

 

 

 

 

 

 

Common stock (par value $0.01 per share, 40,000,000 shares authorized;
   
6,566,137 issued and outstanding at March 31, 2023 and 6,605,384  
   issued and outstanding at December 31, 2022)

 

 

66

 

 

 

66

 

Preferred stock (10,000,000 shares authorized, no shares outstanding)

 

 

 

 

 

 

Additional paid in capital

 

 

62,549

 

 

 

63,130

 

Unearned ESOP shares

 

 

(4,743

)

 

 

(4,795

)

Retained earnings

 

 

66,619

 

 

 

65,357

 

Accumulated other comprehensive loss

 

 

(6,181

)

 

 

(6,655

)

Total stockholders' equity

 

 

118,310

 

 

 

117,103

 

Total liabilities and stockholders' equity

 

$

932,302

 

 

$

791,283

 

 

See accompanying notes to unaudited consolidated financial statements.

2


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

 

2023

 

 

2022

 

 

 

 

(Dollars in thousands except per share amounts)

 

Interest income:

 

 

 

 

 

 

 

Loans, including fees

 

 

$

8,291

 

 

$

6,996

 

Investment securities

 

 

 

949

 

 

 

266

 

Interest-earning deposits

 

 

 

488

 

 

 

17

 

Total interest income

 

 

 

9,728

 

 

 

7,279

 

Interest expense:

 

 

 

 

 

 

 

Deposits

 

 

 

2,314

 

 

 

503

 

FHLB advances and other borrowings

 

 

 

516

 

 

 

(975

)

Total interest expense

 

 

 

2,830

 

 

 

(472

)

Net interest income before provision for credit losses

 

 

 

6,898

 

 

 

7,751

 

Provision for credit losses

 

 

 

7

 

 

 

250

 

Net interest income after provision for credit losses

 

 

 

6,891

 

 

 

7,501

 

Noninterest income:

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

 

391

 

 

 

392

 

Other

 

 

 

161

 

 

 

203

 

Total noninterest income

 

 

 

552

 

 

 

595

 

Noninterest expenses:

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

 

3,004

 

 

 

3,008

 

Occupancy

 

 

 

644

 

 

 

582

 

Advertising

 

 

 

97

 

 

 

80

 

Data processing

 

 

 

493

 

 

 

494

 

FHLB prepayment penalties

 

 

 

 

 

 

647

 

Other

 

 

 

956

 

 

 

947

 

Total noninterest expenses

 

 

 

5,194

 

 

 

5,758

 

Income before income taxes

 

 

 

2,249

 

 

 

2,338

 

Income tax expense

 

 

 

527

 

 

 

547

 

Net income

 

 

$

1,722

 

 

$

1,791

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

 

 

 

6,599,672

 

 

 

6,806,405

 

Diluted

 

 

 

6,681,680

 

 

 

6,908,665

 

Basic earnings per share

 

 

$

0.26

 

 

$

0.26

 

Diluted earnings per share

 

 

$

0.26

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

3


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

 

 

Three Months Ended March 31,

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

Net income

 

$

1,722

 

 

$

1,791

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on available-for-sale securities, net of taxes of $161 and $(896)

 

474

 

 

(2,653

)

 

 

 

 

Total other comprehensive income (loss)

 

474

 

 

(2,653

)

 

 

 

 

 

 

 

Total comprehensive income (loss)

 

$

2,196

 

 

$

(862

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

4


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

 

 

 

Three Months Ended March 31, 2023 and 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Common

 

 

Paid In

 

 

Unearned

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

Stock

 

 

Capital

 

 

ESOP Shares

 

 

Earnings

 

 

Income (Loss)

 

 

Total

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

Beginning balance December 31, 2021

 

$

69

 

 

$

68,038

 

 

$

(5,004

)

 

$

58,223

 

 

$

(358

)

 

$

120,968

 

ESOP loan payment and release of ESOP shares

 

 

 

 

29

 

 

 

52

 

 

 

 

 

 

81

 

Stock-based compensation expense

 

 

 

 

 

113

 

 

 

 

 

 

 

 

 

 

 

 

113

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,653

)

 

 

(2,653

)

Common stock repurchase

 

 

(3

)

 

 

(3,939

)

 

 

 

 

 

 

 

 

 

 

 

(3,942

)

 Net income

 

 

 

 

 

 

 

 

 

1,791

 

 

 

 

1,791

 

Ending balance March 31, 2022

 

$

66

 

 

$

64,241

 

 

$

(4,952

)

 

$

60,014

 

 

$

(3,011

)

 

$

116,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance December 31, 2022

 

$

66

 

 

$

63,130

 

 

$

(4,795

)

 

$

65,357

 

 

$

(6,655

)

 

$

117,103

 

ESOP loan payment and release of ESOP shares

 

 

 

 

26

 

 

 

52

 

 

 

 

 

 

78

 

Issuance of restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

260

 

 

 

 

 

 

 

 

 

 

 

 

260

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

474

 

 

 

474

 

Common stock repurchase

 

 

 

 

 

(867

)

 

 

 

 

 

 

 

 

 

 

 

(867

)

Adoption of new accounting pronouncement (see Note 1)

 

 

 

 

 

 

 

 

 

 

 

(460

)

 

 

 

 

 

(460

)

Net income

 

 

 

 

 

 

 

 

 

1,722

 

 

 

 

1,722

 

Ending balance March 31, 2023

 

$

66

 

 

$

62,549

 

 

$

(4,743

)

 

$

66,619

 

 

$

(6,181

)

 

$

118,310

 

 

See accompanying notes to unaudited consolidated financial statements.

5


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

1,722

 

 

$

1,791

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and (accretion) amortization

 

 

183

 

 

 

(804

)

Stock-based compensation expense

 

 

260

 

 

 

113

 

Provision for credit losses

 

 

7

 

 

 

250

 

ESOP expense

 

 

78

 

 

 

81

 

Increase in cash surrender value of bank owned life insurance

 

 

(87

)

 

 

(85

)

Change in:

 

 

 

 

 

 

Accrued interest receivable and other assets

 

 

(779

)

 

 

70

 

Accrued interest payable and other liabilities

 

 

615

 

 

 

2,492

 

Net cash provided by operating activities

 

 

1,999

 

 

 

3,908

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of investment securities held-to-maturity

 

 

(7,609

)

 

 

 

Purchases of investment securities available-for-sale

 

 

(5,710

)

 

 

(1,751

)

Purchases of premises and equipment

 

 

(148

)

 

 

(380

)

Proceeds from paydowns of investment securities available-for-sale

 

 

1,379

 

 

 

799

 

Proceeds from maturity of investment securities held-to-maturity

 

 

15

 

 

 

 

Purchases of other investments

 

 

(2,339

)

 

 

(378

)

Proceeds from sales of other investments

 

 

425

 

 

 

1,832

 

Net change in loans

 

 

(15,226

)

 

 

(17,215

)

Net cash used in investing activities

 

 

(29,213

)

 

 

(17,093

)

Cash flows from financing activities:

 

 

 

 

 

 

Net change in deposits

 

 

93,668

 

 

 

13,249

 

Stock repurchase

 

 

(867

)

 

 

(3,942

)

Proceeds from FHLB advances

 

 

65,000

 

 

 

20,000

 

Repayment of FHLB advances

 

 

(20,000

)

 

 

(58,000

)

Repayment of federal funds purchased

 

 

(25

)

 

 

 

Net cash provided by (used in) financing activities

 

 

137,776

 

 

 

(28,693

)

Net change in cash and cash equivalents

 

 

110,562

 

 

 

(41,878

)

Cash and cash equivalents at beginning of period

 

 

26,324

 

 

 

111,776

 

Cash and cash equivalents at end of period

 

$

136,886

 

 

$

69,898

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

2,372

 

 

$

587

 

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

 

 

474