0000950170-23-041888.txt : 20230811 0000950170-23-041888.hdr.sgml : 20230811 20230811163120 ACCESSION NUMBER: 0000950170-23-041888 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 65 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230811 DATE AS OF CHANGE: 20230811 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: 231164608 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-20230630.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 June 30, 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 August 8, 2023, 6,421,700 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 June 30, 2023 (unaudited) and December 31, 2022

 

2

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2023 and 2022 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Six Months Ended June 30, 2023 and 2022 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Six Months Ended June 30, 2023 and 2022 (unaudited)

 

5

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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

 

36

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

36

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

37

 

 

 

 

 

Item 1A.

 

Risk Factors

 

37

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

 

37

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

37

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

37

 

 

 

 

 

Item 5.

 

Other Information

 

37

 

 

 

 

 

Item 6.

 

Exhibits

 

38

 

 

 

 

 

 

 

SIGNATURES

 

39

 

 

1


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

 

 

 

June 30, 2023

 

 

December 31, 2022

 

 

 

(unaudited)

 

 

 

 

 

 

(Dollars in thousands except per share amounts)

 

Assets

 

Cash and due from banks

 

$

7,061

 

 

$

2,928

 

Interest-earning deposits in other depository institutions

 

 

75,833

 

 

 

23,396

 

Cash and cash equivalents

 

 

82,894

 

 

 

26,324

 

Investment securities available-for-sale

 

 

49,931

 

 

 

46,200

 

Investment securities held-to-maturity (estimated fair value of $33,053, net of allowance for credit losses of $42 at June 30, 2023 and estimated fair value of $26,251 at December 31, 2022)

 

 

34,145

 

 

 

26,527

 

Other investments

 

 

1,508

 

 

 

1,082

 

Loans

 

 

663,141

 

 

 

646,234

 

Allowance for credit loss on loans

 

 

(9,252

)

 

 

(9,325

)

Net loans

 

 

653,889

 

 

 

636,909

 

Other real estate owned

 

 

2,901

 

 

 

2,901

 

Premises and equipment, net

 

 

4,052

 

 

 

4,257

 

Bank owned life insurance

 

 

15,899

 

 

 

15,724

 

Intangible assets

 

 

18,462

 

 

 

18,558

 

Other assets

 

 

13,224

 

 

 

12,801

 

Total assets

 

$

876,905

 

 

$

791,283

 

Liabilities and Stockholders' Equity

 

Liabilities:

 

 

 

 

 

 

Non-interest-bearing checking

 

$

174,752

 

 

$

190,297

 

Interest-bearing checking

 

 

93,358

 

 

 

91,167

 

Money market accounts

 

 

141,157

 

 

 

148,097

 

Savings accounts

 

 

85,845

 

 

 

101,622

 

Certificates of deposit

 

 

235,930

 

 

 

125,989

 

Total deposits

 

 

731,042

 

 

 

657,172

 

Federal Home Loan Bank advances and other borrowings

 

 

20,000

 

 

 

10,025

 

Accrued interest payable and other liabilities

 

 

7,924

 

 

 

6,983

 

Total liabilities

 

 

758,966

 

 

 

674,180

 

Stockholders' equity:

 

 

 

 

 

 

Common stock (par value $0.01 per share, 40,000,000 shares authorized;
   
6,430,300 issued and outstanding at June 30, 2023 and 6,605,384  
   issued and outstanding at December 31, 2022)

 

 

64

 

 

 

66

 

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

 

 

 

 

 

 

Additional paid in capital

 

 

61,027

 

 

 

63,130

 

Unearned ESOP shares

 

 

(4,692

)

 

 

(4,795

)

Retained earnings

 

 

68,209

 

 

 

65,357

 

Accumulated other comprehensive loss

 

 

(6,669

)

 

 

(6,655

)

Total stockholders' equity

 

 

117,939

 

 

 

117,103

 

Total liabilities and stockholders' equity

 

$

876,905

 

 

$

791,283

 

 

See accompanying notes to unaudited consolidated financial statements.

2


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

(Dollars in thousands except per share amounts)

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

 

$

8,727

 

 

$

7,283

 

 

$

17,018

 

 

$

14,279

 

Investment securities

 

 

 

986

 

 

 

291

 

 

 

1,935

 

 

 

556

 

Interest-earning deposits

 

 

 

1,150

 

 

 

79

 

 

 

1,638

 

 

 

97

 

Total interest income

 

 

 

10,863

 

 

 

7,653

 

 

 

20,591

 

 

 

14,932

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

3,785

 

 

 

484

 

 

 

6,099

 

 

 

987

 

FHLB advances and other borrowings

 

 

 

385

 

 

 

28

 

 

 

901

 

 

 

(947

)

Total interest expense

 

 

 

4,170

 

 

 

512

 

 

 

7,000

 

 

 

40

 

Net interest income before provision for credit losses

 

 

 

6,693

 

 

 

7,141

 

 

 

13,591

 

 

 

14,892

 

Provision for credit losses

 

 

 

 

 

 

217

 

 

 

7

 

 

 

467

 

Net interest income after provision for credit losses

 

 

 

6,693

 

 

 

6,924

 

 

 

13,584

 

 

 

14,425

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

 

405

 

 

 

393

 

 

 

796

 

 

 

785

 

Other

 

 

 

273

 

 

 

255

 

 

 

434

 

 

 

458

 

Total noninterest income

 

 

 

678

 

 

 

648

 

 

 

1,230

 

 

 

1,243

 

Noninterest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

 

3,036

 

 

 

3,023

 

 

 

6,040

 

 

 

6,032

 

Occupancy

 

 

 

638

 

 

 

541

 

 

 

1,282

 

 

 

1,123

 

Advertising

 

 

 

82

 

 

 

118

 

 

 

179

 

 

 

198

 

Data processing

 

 

 

487

 

 

 

497

 

 

 

980

 

 

 

990

 

FHLB prepayment penalties

 

 

 

 

 

 

 

 

 

 

 

 

647

 

Other

 

 

 

1,041

 

 

 

1,058

 

 

 

1,997

 

 

 

2,005

 

Total noninterest expenses

 

 

 

5,284

 

 

 

5,237

 

 

 

10,478

 

 

 

10,995

 

Income before income taxes

 

 

 

2,087

 

 

 

2,335

 

 

 

4,336

 

 

 

4,673

 

Income tax expense

 

 

 

497

 

 

 

552

 

 

 

1,024

 

 

 

1,099

 

Net income

 

 

$

1,590

 

 

$

1,783

 

 

$

3,312

 

 

$

3,574

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

6,486,260

 

 

 

6,591,627

 

 

 

6,542,653

 

 

 

6,698,423

 

Diluted

 

 

 

6,546,382

 

 

 

6,684,721

 

 

 

6,616,294

 

 

 

6,791,517

 

Basic earnings per share

 

 

$

0.25

 

 

$

0.27

 

 

$

0.51

 

 

$

0.53

 

Diluted earnings per share

 

 

$

0.24

 

 

$

0.27

 

 

$

0.50

 

 

$

0.53

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

3


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

(In thousands)

 

Net income

 

$

1,590

 

 

$

1,783

 

 

$

3,312

 

 

$

3,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized loss on available-for-sale securities, net of taxes of $171, $730, $6 and $1,602

 

(488

)

 

(2,078

)

 

(14

)

 

(4,731

)

 

 

 

 

 

 

Total other comprehensive loss

 

(488

)

 

(2,078

)

 

(14

)

 

(4,731

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income (loss)

 

$

1,102

 

 

$

(295

)

 

$

3,298

 

 

$

(1,157

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

4


 

AFFINITY BANCSHARES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

 

 

 

Three and Six Months Ended June 30, 2023 and 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Common

 

 

Paid In

 

 

Unearned

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

Stock

 

 

Capital

 

 

ESOP Shares

 

 

Earnings

 

 

Income (Loss)

 

 

Total

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

ESOP loan payment and release of ESOP shares

 

 

 

 

16

 

 

 

51

 

 

 

 

 

 

67

 

Stock-based compensation expense

 

 

 

 

 

264

 

 

 

 

 

 

 

 

 

 

 

 

264

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(488

)

 

 

(488

)

Common stock repurchase

 

 

(2

)

 

 

(1,802

)

 

 

 

 

 

 

 

 

 

 

 

(1,804

)

Net income

 

 

 

 

 

 

 

 

 

1,590

 

 

 

 

1,590

 

Ending balance June 30, 2023

 

$

64

 

 

$

61,027

 

 

$

(4,692

)

 

$

68,209

 

 

$

(6,669

)

 

$

117,939

 

Beginning balance December 31, 2021

 

$

69

 

 

$

68,038

 

 

$

(5,004

)

 

$

58,223

 

 

$

(358