0001564590-21-017146.txt : 20210401 0001564590-21-017146.hdr.sgml : 20210401 20210331183453 ACCESSION NUMBER: 0001564590-21-017146 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 109 CONFORMED PERIOD OF REPORT: 20201231 FILED AS OF DATE: 20210401 DATE AS OF CHANGE: 20210331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Affinity Bancshares, Inc. CENTRAL INDEX KEY: 0001823406 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-39914 FILM NUMBER: 21795214 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-K 1 afbi-10k_20201231.htm 10-K afbi-10k_20201231.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2020

 

OR

 

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

For the transition period from              to                  

 

Commission File Number: 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 Number)

 

3175 Highway 278, Covington, Georgia

 

30014

(Address of principal executive offices)

 

(Zip code)

 

(770) 786-7088

(Registrant’s telephone number including area code)

 

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

 

         Title of each class                                          Trading Symbols

Name of exchange on which registered

Common Stock, par value $0.01 per share              AFBI

The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes    No 

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes    No 

 

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 reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    No 

 

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 such shorter period that the registrant was required to submit such files). Yes    No 

 

 

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No 

 

The aggregate value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the common stock of $10.85 as of January 21, 2021 (the first day of trading of the Registrant’s common stock), was $71.8 million.

 

As of March 25, 2021 there were 6,755,160 shares outstanding of the registrant’s common stock.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

1.  Portions of the Proxy Statement for the 2020 Annual Meeting of Stockholders. (Part III)

 

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

PART I

 

2

 

 

 

ITEM 1.

Business

2

 

 

 

ITEM 1A.

Risk Factors

33

 

 

 

ITEM 1B.

Unresolved Staff Comments

33

 

 

 

ITEM 2.

Properties

33

 

 

 

ITEM 3.

Legal Proceedings

33

 

 

 

ITEM 4.

Mine Safety Disclosures

33

 

 

 

PART II

 

34

 

 

 

ITEM 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

34

 

 

 

ITEM 6.

Selected Financial Data

35

 

 

 

ITEM 7.

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

37

 

 

 

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

49

 

 

 

ITEM 8.

Financial Statements and Supplementary Data

F-1

 

 

 

ITEM 9.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

50

 

 

 

ITEM 9A.

Controls and Procedures

50

 

 

 

ITEM 9B.

Other Information

50

 

 

 

PART III

 

51

 

 

 

ITEM 10.

Directors, Executive Officers and Corporate Governance

51

 

 

 

ITEM 11.

Executive Compensation

51

 

 

 

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

51

 

 

 

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

52

 

 

 

ITEM 14.

Principal Accountant Fees and Services

52

 

 

 

PART IV

 

53

 

 

 

ITEM 15.

Exhibits and Financial Statement Schedules

53

 

 

 

ITEM 16.

Form 10-K Summary

54

 

 

 

SIGNATURES

 

55

 

 

 

1


 

 

PART I

ITEM 1.

Business

Forward Looking Statements

This annual report contains forward-looking statements, which 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,” “potential,” “target” and words of similar meaning.  These forward-looking statements include, but are not limited to:

 

statements of our goals, intentions and expectations;

 

statements regarding our business plans, prospects, growth and operating strategies;

 

statements regarding the quality of our loan and investment portfolios; and

 

estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management 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 annual report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

 

conditions relating to the COVID-19 pandemic, including the severity and duration of the associated economic slowdown either nationally or in our market areas, that are worse than expected;

 

general economic conditions, either nationally or in our market areas, that are worse than expected;

 

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

 

our ability to access cost-effective funding;

 

fluctuations in real estate values and both residential and commercial real estate market conditions;

 

demand for loans and deposits in our market area;

 

our ability to implement and change our business strategies;

 

competition among depository and other financial institutions;

 

inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

 

adverse changes in the securities or secondary mortgage markets;

 

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

 

changes in tax laws;

 

the effects of any Federal government shutdown;

 

changes in the quality or composition of our loan or investment portfolios;

2


 

 

 

technological changes that may be more difficult or expensive than expected;

 

failure or breaches of information technology security systems;

 

the inability of third-party providers to perform as expected;

 

a failure or breach of our operational or security systems or infrastructure, including cyberattacks;

 

our ability to manage market risk, credit risk and operational risk in the current economic environment;

 

our ability to introduce new products and services, enter new markets successfully and capitalize on growth opportunities;

 

our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we have acquired or may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

 

changes in consumer spending, borrowing and savings habits;

 

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

 

our ability to retain key employees;

 

our compensation expense associated with equity allocated or awarded to our employees;

 

changes in the financial condition, results of operations or future prospects of issuers of securities that we own; and

 

the effects of any pandemic disease, natural disaster, war, act of terrorism, accident, or similar action or event.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the novel coronavirus can be fully controlled and abated and when and how the economy may be fully reopened.  As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

3


 

 

demand for products and services may decline, making it difficult to grow assets and income;

 

if the economy is unable to substantially and successfully reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

 

collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

 

the allowance for loan losses has been and may have to be increased if borrowers experience financial difficulties, which will adversely affect our net income;

 

we may experience losses on our PPP loans due to fraud or failures with respect to SBA guarantees;

 

the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments;

 

as the result of the decline in the Federal Reserve Board’s target federal funds rate, the yield on assets may decline to a greater extent than the decline in the cost of interest-bearing liabilities, reducing net interest margin and spread and reducing net income;

 

cyber-security risks are increased as the result of an increase in the number of employees working remotely;

 

we have been subject to litigation, and we face increased regulatory enforcement risk and reputation risk regarding our participation in the PPP and the risk that the SBA may not fund some or all PPP loan guarantees;

 

we rely on third-party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and

 

FDIC premiums may increase if the agency experiences additional resolution costs.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Affinity Bancshares, Inc.

Affinity Bancshares, Inc. (“Affinity Bancshares”) is a Maryland corporation that was incorporated in September 2020 to be the successor corporation to Community First Bancshares, Inc., a federal corporation, upon completion of the second-step mutual-to-stock conversion (the “Conversion”) of Community First Bancshares, MHC, the top tier mutual holding company of Community First Bancshares, Inc. Community First Bancshares, Inc. was the former mid-tier holding company for Affinity Bank (formerly named Newton Federal Bank). Prior to completion of the Conversion, approximately 54% of the shares of common stock of Community First Bancshares, Inc. were owned by Community First Bancshares, MHC. In conjunction with the Conversion, Community First Bancshares, Inc. was merged into Affinity Bancshares, Inc. (and ceased to exist) and Affinity Bancshares, Inc. became its successor holding company for Affinity Bank.  

On January 20, 2021, Affinity Bancshares, Inc. completed the Conversion. Affinity Bancshares, Inc. raised gross proceeds of $37.0 million by selling a total of 3,701,509 shares of common stock at $10.00 per share in the second-step stock offering.  Affinity Bancshares, Inc. utilized $3.0 million of the proceeds to fund an addition to its Employee Stock Ownership Plan (“ESOP”) loan for the acquisition of additional shares at $10.00 per share. Expenses incurred related to the offering were $1.6 million, and have been recorded against offering proceeds. The Company invested $16.3 million of the net proceeds it received from the sale into Affinity Bank’s operations and has retained the remaining amount for general corporate purposes. Concurrent with the completion of the stock offering, each share of Community First Bancshares, Inc. common stock owned by public stockholders (stockholders other than Community First Bancshares, MHC) was exchanged for 0.90686 shares of Company common stock.

Affinity Bancshares, Inc. conducts its operations primarily through its wholly owned subsidiary, Affinity Bank, a federally chartered savings bank. Affinity Bancshares, Inc. manages its operations as one unit, and thus does not have separate operating segments. At December 31, 2020, Affinity Bancshares, Inc. had total assets of $850.6 million, loans of $592.3 million, deposits of $640.2 million, and stockholders’ equity of $80.8 million.

The executive offices of Affinity Bancshares, Inc. are located at 3175 Highway 278, Covington, Georgia 30014, and its telephone number is (770) 786-7088. Affinity Bancshares, Inc. is subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

4


 

Affinity Bank

Affinity Bank is a federally chartered stock savings association headquartered in Covington, Georgia.  Affinity Bank changed its name from Newton Federal Bank in connection with the conversion.  Newton Federal Bank was originally chartered in 1928 as a Georgia-chartered mutual building and loan association under the name Newton County Building and Loan Association, and we continue to operate under the name “Newton Federal Bank, a Division of Affinity Bank” in Newton Federal Bank’s legacy market area.  

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in commercial real estate loans, commercial and industrial loans and residential real estate loans and, to a lesser extent, construction and land loans and consumer loans.  We also invest in securities, which have historically consisted primarily of mortgage-backed securities and obligations issued by U.S. government sponsored enterprises and Federal Home Loan Bank stock.  We offer a variety of deposit accounts, including checking accounts, savings accounts and certificate of deposit accounts.  In addition, we gather deposits nationwide through our virtual bank, FitnessBank, which accepts deposits and provides higher interest rates based on customers meeting certain fitness goals.  We have also used Federal Home Loan Bank borrowings to fund our operations.

Affinity Bank is subject to comprehensive regulation and examination by the Office of the Comptroller of the Currency.  Affinity Bank is a member of the Federal Home Loan Bank system.  We use three website addresses:  www.myaffinitybank.com,  www.newtonfederal.com, and FitnessBank.fit.  Information on our websites is not considered a part of this report.

Acquisition

On January 10, 2020, Community First Bancshares, Inc. and Newton Federal Bank completed their acquisition of ABB Financial Group, Inc. (“ABB”) and its wholly owned subsidiary, Affinity Bank.  At the effective time of the acquisition, each outstanding share of ABB common stock was converted into the right to receive $7.50 in cash.  Including consideration received by holders of options to purchase ABB common stock, the aggregate consideration paid in the transaction was approximately $40.3 million.  In addition, $5.9 million of preferred stock that had been issued by ABB were redeemed, and $1.4 million of trust preferred securities issued by a subsidiary of ABB were acquired by Community First Bancshares, Inc. and canceled.  All accrued but unpaid dividends and interest have been paid on the preferred stock and trust preferred securities.

Market Area

 

We conduct our operations from our main office, a separate operations center and one additional branch office in Covington, Georgia, which is located in Newton County, Georgia; and one branch office in Atlanta, Georgia, which is located in Cobb County, as well as a commercial loan production office located in Alpharetta, Georgia, which is in Fulton County.  Our indirect automobile lending division, Affinity Bank Dealer Select (formerly “Community First Auto”), operates out of an office in Monroe, Georgia.  In addition, we gather deposits nationwide through our virtual bank, FitnessBank.

 

Covington, Georgia is located 35 miles east of Atlanta, Georgia and 47 miles south of Athens, Georgia.  In Newton County, services are the largest employment sector and represent 24% of the non-farm, non-government labor force.  Other significant employer industries in the county include education/healthcare/social services, wholesale/retail trade, finance/insurance/real estate and construction.  There are approximately 1,400 businesses operating in Newton County.  Newton County’s total population was estimated at 114,228 as of January 1, 2021 and grew 14.3% from 2010 to 2021, while the population of the state of Georgia grew 11.2% during that same period.  Newton County’s population is projected to grow 6.1% between 2021 and 2026, compared to 4.7% for the State of Georgia.  As of January 1, 2021, the median household income in Newton County was approximately $62,098, which was lower than the Georgia state median of $64,850 and lower than the national median household income of $67,761.

 

Cobb County, with a total population of 768,828 as of January 1, 2021, grew 11.7% between 2010 and 2021, and is projected to grow another 4.7% by 2026.  In Cobb County, the services sector represents 32% of the non-farm, non-government labor force. Cobb County has approximately 21,000 businesses, with other significant employee representation including retail trade, health care and social assistance.  The median household income in Cobb County was approximately $88,072, which is higher than the Georgia and national medians.

 

Fulton County, with a total population of 1,084,382 as of January 1, 2021, grew 11.7% since 2010, and is projected to grow another 6.0% by 2026. It has approximately 37,000 businesses, with the most significant employee representation in professional, scientific, and technical services, health care and social assistance and retail trade.

 

5


 

The following table provides information with respect to unemployment rates for our market areas, the State of Georgia and the United States as a whole:

 

 

 

Unemployment Rate

 

 

 

 

 

Region

 

January 2021

 

 

January 2020

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

6.80%

 

 

4.00%

 

 

2.80%

 

Georgia

 

5.00%

 

 

3.50%

 

 

1.50%

 

Cobb County, Georgia

 

4.30%

 

 

3.00%

 

 

1.30%

 

Fulton County, Georgia

 

6.10%

 

 

3.40%

 

 

2.70%

 

Newton County, Georgia

 

5.60%

 

 

3.70%

 

 

1.90%

 

 

Unemployment rates have been significantly impacted by the COVID-19 pandemic, but for all counties where we have a physical branch office or loan production office, the unemployment was below the national unemployment rate for January 2021 and, for Cobb County, was also below the unemployment rate for the State of Georgia.

We believe that we have developed products and services that will meet the financial needs of our current and future customer base, and we continually plan to enhance our products and services to meet the changing needs of customers. Marketing strategies focus on the strength of our knowledge of local consumer and small business markets, our understanding of the dental practice market and indirect automobile lending, as well as expanding relationships with current customers and reaching out to develop new, profitable business relationships.

Competition

We face competition within our local market area both in making loans and attracting deposits.  Our market area has a concentration of financial institutions that include large money center and regional banks, community banks and credit unions.  We also face competition from savings institutions, mortgage banking firms, consumer finance companies and credit unions and, with respect to deposits, from money market funds, brokerage firms, mutual funds and insurance companies.  As of June 30, 2020 (the most recent date for which data is available), our market share of deposits represented 22.65% of Federal Deposit Insurance Corporation-insured deposits in Newton County and 2.01% in Cobb County, ranking us first and 14th, respectively, in market share of deposits out of nine institutions operating in Newton County and 23 institutions operating in Cobb County.

Lending Activities

General.  Our historical lending activity consists of originating commercial real estate loans, commercial and industrial loans and residential real estate loans and, to a lesser extent, construction and land loans and consumer loans.  We initiated indirect automobile lending in October 2018.  As a result of our acquisition of the former Affinity Bank, we have a specialized expertise in lending to dentists and dental practices, with dental practice loans totaling $170.8 million, or 29.2% of our loan portfolio, as of December 31, 2020.  Of this amount, 71% consisted of commercial business loans and 29% consisted of commercial real estate loans, with the remaining amount being unsecured loans.  

 

6


 

 

Loan Portfolio Composition.  The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.  In addition to the loans included in the table below, at December 31, 2020, we had no loans held for sale, $566,000 of loans in process and $2.0 million of deferred loan fees.

 

 

 

At December 31,

 

 

At September 30,

 

 

 

2020

 

 

2019

 

 

2018

 

 

2018

 

 

2017

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

 

(Dollars in thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential (1)

 

$

91,777

 

 

 

15.33

%

 

$

116,843

 

 

 

46.35

%

 

$

139,919

 

 

 

60.44

%

 

$

135,508

 

 

 

59.85

%

 

$

138,875

 

 

 

63.78

%

 

$

132,899

 

 

 

68.54

%

Commercial (2)

 

 

178,571

 

 

 

29.83

%

 

 

54,488

 

 

 

21.61

%

 

 

45,509

 

 

 

19.67

%

 

 

39,768

 

 

 

17.57

%

 

 

29,861

 

 

 

13.71

 

 

 

29,162

 

 

 

15.04

 

Construction and land

 

 

23,571

 

 

 

3.94

%

 

 

20,502

 

 

 

8.13

%

 

 

14,015

 

 

 

6.06

%

 

 

20,188

 

 

 

8.92

%

 

 

25,165

 

 

 

11.56

 

 

 

13,343

 

 

 

6.88

 

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial and industrial loans

 

 

155,554

 

 

 

25.99

%

 

 

28,613

 

 

 

11.35

%

 

 

27,408

 

 

 

11.84

%

 

 

28,375

 

 

 

12.53

%

 

 

21,060

 

 

 

9.67

 

 

 

16,221

 

 

 

8.37

 

      Paycheck Protection Program loans

 

 

101,749

 

 

 

17.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

47,393

 

 

 

7.91

%

 

 

31,644

 

 

 

12.56

%

 

 

4,595

 

 

 

1.99

%

 

 

2,555

 

 

 

1.13

%

 

 

2,783

 

 

 

1.28

 

 

 

2,262

 

 

 

1.17

 

 

 

 

598,615

 

 

 

100.00

%

 

 

252,090

 

 

 

100.00

%

 

 

231,446

 

 

 

100.00

%

 

 

226,394

 

 

 

100.00

%

 

 

217,744

 

 

 

100.00

%

 

 

193,887

 

 

 

100.00

%

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for losses

 

 

6,361

 

 

 

 

 

 

 

4,134

 

 

 

 

 

 

 

4,022

 

 

 

 

 

 

 

3,909

 

 

 

 

 

 

 

4,551

 

 

 

 

 

 

 

4,309

 

 

 

 

 

Total loans

 

$

592,254

 

 

 

 

 

 

$

247,956

 

 

 

 

 

 

$

227,424

 

 

 

 

 

 

$

222,485

 

 

 

 

 

 

$

213,193

 

 

 

 

 

 

$

189,578

 

 

 

 

 

 

(1)

Includes home equity loans and lines of credit, which totaled $2.3 million at December 31, 2020.

(2)

Includes multi-family residential real estate loans, which totaled $5.8 million at December 31, 2020.

 

 

 

7


 

 

Contractual Maturities.  The following tables set forth the contractual maturities of our total loan portfolio at December 31, 2020.  Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments.  Actual maturities may differ.  

 

December 31, 2020

 

One- to

Four-Family

Residential

Real Estate

 

 

Commercial

Real Estate

 

 

Construction

and Land

 

 

 

(In thousands)

 

Amounts due in:

 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

 

$

5,659

 

 

$

14,908

 

 

$

11,686

 

After one through five years

 

 

14,155

 

 

 

82,285

 

 

 

5,429

 

After five through 15 years

 

 

38,071

 

 

 

71,156

 

 

 

2,957

 

After 15 years

 

 

33,892

 

 

 

10,222

 

 

 

3,499

 

Total

 

$

91,777

 

 

$

178,571

 

 

$

23,571

 

 

December 31, 2020

 

Commercial

and

Industrial

 

 

Paycheck Protection Program

 

 

Consumer

 

 

Total

 

 

 

(In thousands)

 

Amounts due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

 

$

4,960

 

 

$

 

 

$

201

 

 

$

37,414

 

After one through five years

 

 

54,669

 

 

 

101,749

 

 

 

43,330

 

 

$

301,617

 

After five through 15 years

 

 

94,088

 

 

 

 

 

 

3,862

 

 

$

210,134

 

After 15 years

 

 

1,837

 

 

 

 

 

 

 

 

 

$

49,450

 

Total

 

$

155,554

 

 

$

101,749

 

 

$

47,393

 

 

$

598,615

 

 

The following table sets forth our fixed and adjustable-rate loans at December 31, 2020 that are contractually due after December 31, 2021.

 

 

 

Due After December 31, 2021

 

 

 

Fixed

 

 

Adjustable

 

 

Total

 

 

 

(In thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential

 

$

79,933

 

 

$

6,185

 

 

$

86,118

 

Commercial

 

 

140,662

 

 

 

23,001

 

 

 

163,663

 

Construction and land

 

 

6,684

 

 

 

5,201

 

 

 

11,885

 

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial and industrial loans

 

 

141,744

 

 

 

8,850

 

 

 

150,594

 

      Paycheck Protection Program loans

 

 

101,749

 

 

 

 

 

 

101,749

 

Consumer loans

 

 

47,066

 

 

 

126

 

 

 

47,192

 

Total loans

 

$

517,838

 

 

$

43,363

 

 

$

561,201

 

 

 

(1)

Consists of home equity loans and lines of credit.

 

 

Commercial and Industrial Loans.  We make commercial and industrial loans, primarily in our market area, to a variety of professionals, sole proprietorships and small businesses, including dental loans, which are originated throughout the Southeastern United States.  These loans are generally secured by business assets, and we may support this collateral with junior liens on real property.  At December 31, 2020, commercial and industrial loans were $155.6 million, or 25.9% of our gross loans.  This total excludes $101.7 million of loans originated under the PPP, which are described below.  As part of our relationship driven focus, we encourage our commercial borrowers to maintain their primary deposit accounts with us, which enhances our interest rate spread and net interest margin.

Commercial lending products include term loans and revolving lines of credit. Commercial loans and lines of credit are made with either adjustable or fixed rates of interest. Adjustable rates and fixed rates are based on the prime rate as published in The Wall Street Journal, plus a margin. We are focusing our efforts on experienced, growing small- to medium-sized, privately-held companies with solid historical and projected cash flows that operate in our market areas.

8


 

When making commercial and industrial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, the projected cash flows of the business and the value of the collateral, accounts receivable, inventory and equipment.  Depending on the collateral used to secure the loans, commercial and industrial loans are made in amounts of up to 80% of the value of the collateral securing the loan.

 

Our commercial business loans to dental professionals totaled $170.8 million at December 31, 2020.  The significant majority of these loans are secured by practice assets with the goodwill of each practice providing the value for lending.  We consider numerous factors when underwriting dental loans, including transactional risk related to the selling doctor in a practice purchase, if applicable, procedures performed, insurance taken and the good standing of the dentist by state boards.  We lend across all dental specialties: general, cosmetic, orthodontist, endodontist, periodontist, pediatric, and oral surgery.  The majority of our dental loans are originated to professionals and practices located in the State of Georgia, with the remainder originated through the contiguous states.  We target dental practice loans with principal balances between $350,000 and $500,000, although we will originate dental practice loans with principal balances in excess of $500,000.  The significant majority of our dental loans are to solo practitioners or small practices with two professionals.  We remain knowledgeable of trends in the dental industry through regular contact with our borrowers as well as through our participation in dental managers associations and our dental advisory board.

The CARES Act established the PPP through the SBA, which allowed us to lend money to small businesses to maintain employee payrolls through the COVID-19 crisis with guarantees from the SBA.  Under this program, loan amounts may be forgiven if the borrower maintains employee payrolls and meet certain other requirements.  PPP loans have a fixed interest rate of 1.00% and a maturity date of either two or five years.  Such loans totaled $101.7 million at December 31, 2020.

Our largest commercial and industrial loan at December 31, 2020 totaled $2.5 million, was originated in 2016 and is secured by accounts receivable.  At December 31, 2020, this loan was performing in accordance with its terms.

Commercial Real Estate Loans.  Our commercial real estate loans (which includes multi-family residential loans) are secured primarily by dental/medical professional properties, church campuses and other small businesses.  At December 31, 2020, we had $178.5 million in commercial real estate loans, representing 29.8% of our total loan portfolio.  At that date, $142.7 million, or 23.2% of our commercial real estate loans, were secured by owner-occupied properties.  This amount included $53.5 million of dental loans, $22.3 million of church loans and $6.7 million of multi-family residential real estate loans.  At December 31, 2020, our commercial real estate loans had an average balance of $482,000.

Most of our commercial real estate loans are balloon loans with a five-year initial term and a 20-year amortization period.  The maximum loan-to-value ratio of our commercial real estate loans is generally 80%.  All of our commercial real estate loans are subject to our underwriting procedures and guidelines.  At December 31, 2020, our largest commercial real estate loan totaled $8.0 million and is secured by an industrial warehouse currently under construction.  At December 31, 2020, this loan was performing in accordance with its terms.  

We consider a number of factors in originating commercial real estate loans.  We evaluate the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan.  When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions.  In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service).  The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors, although we are only required to obtain independent appraisals on commercial real estate loans in amounts of $500,000 or greater.  Personal guarantees are generally obtained from the principals of commercial real estate borrowers.

One- to Four-Family Residential Real Estate Lending.  At December 31, 2020, we had $91.7 million of loans secured by one- to four-family real estate, representing 15.3% of our total loan portfolio.  We currently originate adjustable-rate and fixed-rate one- to four-family residential real estate loans, although our ability to originate adjustable-rate residential mortgage loans is significantly limited in the current interest rate environment.  We historically originated fixed-rate one- to four-family residential real estate loans with balloon terms, but recently began originating adjustable-rate one- to four-family residential real estate loans.  At December 31, 2020, $6.7 million, or 7.3%, of our one- to four-family residential real estate loans were adjustable-rate loans and at December 31, 2020, $21.8 million, or 23.8%, of our one- to four-family residential real estate loans were balloon loans.  

Our one- to four-family residential real estate loans are generally underwritten to internal guidelines, although we generally follow the documentation practices of Fannie Mae guidelines.  We generally originate one- to four-family residential real estate loans in amounts up to $150,000, although we will originate loans above this amount.  The significant majority of our one- to four-family residential real estate loans are secured by properties located in our primary market area.

9


 

We generally limit the loan-to-value ratios of our one- to four-family residential mortgage loans to 89.9% of the purchase price or appraised value, whichever is lower.  

We currently offer one- to four-family residential real estate loans with terms of up to 15 years.  Our adjustable-rate one- to four-family residential real estate loans have a five or seven year initial fixed rate.

We do not offer “interest only” mortgage loans on permanent one- to four-family residential real estate loans (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan).  We also do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. We do not currently offer “subprime loans” on one- to four-family residential real estate loans (i.e., generally loans to borrowers with credit scores less than 620).

Construction and Land Loans.  We make construction loans, primarily to individuals for the construction of their primary residences and to contractors and builders of single-family homes. We also make a limited amount of land loans to complement our construction lending activities, as such loans are generally secured by lots that will be used for residential development.  Land loans also include loans secured by land purchased for investment purposes.  At December 31, 2020, our residential construction loans totaled $23.5 million, representing 3.9% of our total loan portfolio, and included $1.6 million of land loans.  At December 31, 2020, $2.1 million of our single-family construction loans were to individuals and $6.6 million were to contractors and builders.  In addition, we had $8.4 million of commercial construction and development loans as of December 31, 2020, which included $4.0 million of commercial development and land loans.

While we may originate loans to contractors and builders whether or not the collateral property underlying the loan is under contract for sale, we consider each project carefully in light of current residential real estate market conditions.  We actively monitor the number of unsold homes in our construction loan portfolio and local housing markets to attempt to maintain an appropriate balance between home sales and new loan originations.  We generally will limit the maximum number of speculative units (units that are not pre-sold) approved for each builder.  We have attempted to diversify the risk associated with speculative construction lending by doing business with experienced small and mid-sized builders within our market area.

We also originate construction loans for commercial development projects, including retail buildings, houses of worship, small industrial projects, hotels and office buildings.  Most of our construction loans are interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 12 months.  At the end of the construction phase, the loan may convert to a permanent mortgage loan or the loan may be paid in full.

Construction loans generally can be made with a maximum loan-to-value ratio of 75% of the estimated appraised market value upon completion of the project.  Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent licensed appraiser.  We also generally require inspections of the property before disbursements of funds during the term of the construction loan.

At December 31, 2020, our largest construction and land loan was for $8.0 million, of which $2.6 million was outstanding. This loan was originated in 2018 to construct a new industrial warehouse and is secured by land and improvements.  This loan was performing according to its terms at December 31, 2020.  

Consumer Loans.  We offer a limited range of consumer loans, principally to customers residing in our primary market area with other relationships with us and with acceptable credit ratings.  Our consumer loans generally consist of indirect loans on new and used automobiles, loans secured by deposit accounts and unsecured personal loans.  At December 31, 2020, consumer and other loans were $47.3 million, or 7.9% of gross loans.  

In October 2018, we established our indirect automobile lending division, Affinity Bank Dealer Select (“ABDS”, and formerly named Community First Auto), which currently operates from an office in Monroe, Georgia.  This division has an experienced manager and sales team to operate this line of business.  At December 31, 2020, we had $44.1 million in indirect automobile loans, and our internal policies limit such loans to 200% of capital and 25% of our loan portfolio.

ABDS purchases retail installment sales contracts from dealerships in the states of Georgia, Tennessee, North Carolina and South Carolina.  A dealership submits credit applications to ABDS for consideration.  ABDS fully underwrites each loan for creditworthiness, vehicle valuation, debt ratios and the consumer’s stability.  ABDS underwrites each loan to ensure all credit policy guidelines are followed.  Applications that are approved and counter-offered are submitted to ABDS for verification and funding.

All dealerships that submit retail installment contracts to ABDS sign a separate retail dealer agreement that makes representations and warranties to ABDS with respect to our security interest and the accuracy and validity of all information provided during the credit application and contract process.  Borrowers are responsible for carrying full coverage insurance during the life of the loan, but ABDS has a blanket Vendor Single Interest policy in place to cover all loans in case of lapse of coverage, skip or confiscation.

10


 

Loan Underwriting Risks

Commercial Real Estate Loans.  Loans secured by commercial real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans.  The primary concern in commercial real estate lending is the borrower’s creditworthiness and the feasibility and cash flow potential of the project.  Payments on loans secured by income properties often depend on successful operation and management of the properties.  As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy.  To monitor cash flows on income properties, we require borrowers and loan guarantors to provide quarterly, semi-annual or annual financial statements, depending on the size of the loan, on commercial real estate loans.  In reaching a decision on whether to make a commercial real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability and the value of the underlying property.  We have generally required that the properties securing these real estate loans have an aggregate debt service ratio, including the guarantor’s cash flows and the borrower’s other projects, of at least 1.20x.  An environmental phase one report is obtained when the possibility exists that hazardous materials may have existed on the site, or the site may have been impacted by adjoining properties that handled hazardous materials.

If we foreclose on a commercial real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability.  Depending on the individual circumstances, initial charge-offs and subsequent losses on commercial real estate loans can be unpredictable and substantial.  

Commercial and Industrial Loans.  Unlike residential real estate loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial and industrial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business and the collateral securing these loans may fluctuate in value.  Our commercial and industrial loans are originated primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.  With respect to dental practice loans, the goodwill of a practice provides the value for lending.   Most often, collateral for commercial and industrial loans consists of accounts receivable, inventory or equipment.  Credit support provided by the borrower for most of these loans is based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if any.  Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value.  As a result, the availability of funds for the repayment of commercial and industrial loans may depend substantially on the success of the business itself.  

Construction and Land Loans.  Our construction loans are based upon estimates of costs and values associated with the completed project.  Underwriting is focused on the borrowers’ financial strength, credit history and demonstrated ability to produce a quality product and effectively market and manage their operations.  

Construction lending involves additional risks when compared with permanent lending because funds are advanced upon the security of the project, which is of uncertain value prior to its completion.  Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio.  In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget.  These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.  If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss.  

Balloon Loans.  Although balloon mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they reprice at the end of the term, the ability of the borrower to renew or repay the loan and the marketability of the underlying collateral may be adversely affected if real estate values decline prior to the expiration of the term of the loan or in a rising interest rate environment.

Adjustable-Rate Loans.  While we anticipate that adjustable-rate loans will better offset the adverse effects of an increase in interest rates as compared to fixed-rate loans, an increased monthly payment required of adjustable-rate loan borrowers in a rising interest rate environment could cause an increase in delinquencies and defaults.  The marketability of the underlying collateral also may be adversely affected in a high interest rate environment.  

11


 

Consumer Loans.  Consumer loans may entail greater risk than residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower.  Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy.  Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Indirect automobile loans are inherently risky as they are often secured by assets that may be difficult to locate and can depreciate rapidly.  In some cases, repossessed collateral for a defaulted automobile loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency may not warrant further substantial collection efforts against the borrower.  Automobile loan collections depend on the borrower’s continuing financial stability, and therefore, are more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy.  Additional risk elements associated with indirect lending include the limited personal contact with the borrower as a result of indirect lending through non-bank channels, namely automobile dealers.

Originations, Purchases and Sales of Loans

Lending activities are conducted by our salaried loan personnel operating at our main and branch office locations and our loan production office.  All loans originated by us are underwritten pursuant to our policies and procedures.  We originate fixed-rate loans and adjustable-rate loans.  Our ability to originate fixed-rate loans or adjustable-rate loans depends on relative customer demand for such loans, which is affected by current and expected future levels of market interest rates.  We originate real estate and other loans through our loan officers, marketing efforts, our customer base, walk-in customers and referrals from real estate brokers, builders and attorneys.  

We sometimes purchase whole loans from third parties to supplement our loan production.  These loans generally consist of loans to health care professionals and loans secured by manufactured housing.  At December 31, 2020, we had $2.5 million of whole loans that we purchased.  The majority of our purchased loans are to borrowers who are not located in our primary market area.  

In addition, from time to time, we may purchase or sell participation interests in loans.  We underwrite our participation interest in the loan that we are purchasing according to our own underwriting criteria and procedures.  At December 31, 2020, we had $3.9 million of committed funds for loan participation interests that we purchased, and at that date, we had $20.6 million of loans for which we had sold participation interests.  

We do not originate significant amounts of loans for sale, but we occasionally sell loans, primarily to generate fee income.  We currently broker loan sales through Quicken Loans and receive fees related to such sales.  For the year ended December 31, 2020, we received $167,000 in fee income.  At December 31, 2020, we had no loans held for sale.

Loan Approval Procedures and Authority

Pursuant to federal law, the aggregate amount of loans that Affinity Bank is permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of Affinity Bank’s unimpaired capital and surplus.  December 31, 2020, based on the 15% limitation, Affinity Bank’s loans-to-one-borrower limit was approximately $10.0 million.  On the same date, Affinity Bank had no borrowers with outstanding balances in excess of this amount.  At December 31, 2020, our largest loan relationship with one borrower was for $8.0 million, which was for the construction of an industrial warehouse, and the underlying loan was performing in accordance with their terms on that date.  

Our lending is subject to written underwriting standards and origination procedures.  Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers approved by our board of directors as well as internal evaluations, where permitted by regulations.  The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, bank statements and tax returns.  

All loan approval amounts are based on the aggregate loans (total credit exposure), including total balances of outstanding loans and the proposed loan to the individual borrower and any related entity. Our Chief Executive Officer and our Chief Credit Officer each has individual authorization to approve loans up to $1.0 million, and, combined, can approve loans up to $3.5 million. Two Senior Credit Managers and the President can approve loans up to $500,000 each, or any two of these individuals can approve loans up to $1.0 million combined. No individual loan officer has approval authority in excess of $300,000 individually, and such authority cannot be combined with other officers.  Loans in excess of $3.5 million require the approval of our full board of directors.  

12


 

Generally, we require title insurance or abstracts on our mortgage loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan.  

Delinquencies and Asset Quality

Delinquency Procedures.  When a loan payment becomes 15 days past due, we contact the customer by mailing a late notice, and loan officers may contact their customers.  If a loan payment becomes 30 days past due, we mail an additional late notice and a loan-specific letter written by a collection representative, and we also place telephone calls to the borrower.  These loan collection efforts continue until a loan becomes 90 days past due, at which point we would refer the loan for foreclosure proceedings unless management determines that it is in the best interest of Affinity Bank to work further with the borrower to arrange a workout plan.  The foreclosure process would begin when a loan becomes 120 days delinquent.  From time to time we may accept deeds in lieu of foreclosure.  

Loans Past Due and Non-Performing Assets.  Loans are reviewed on a regular basis.  Management determines that a loan is impaired or non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent.  When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection.  When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.  

When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned.  The real estate owned is recorded at the lower of carrying amount or fair value, less estimated costs to sell.  Soon after acquisition, we order a new appraisal to determine the current market value of the property.  Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for loan losses, or, if the existing allowance is inadequate, charged to expense of the current period.  After acquisition, all costs incurred in maintaining the property are expensed.  Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.

A loan is classified as a troubled debt restructuring if, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to the borrower that we would not otherwise consider. This usually includes a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due. Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.

Under the CARES Act, COVID-19 related modifications to loans that were current as of December 31, 2019 are exempt from troubled debt restructuring classification under U.S. GAAP.  In addition, the bank regulatory agencies have issued interagency guidance stating that COVID-19 related short-term modifications (i.e., six months or less) for loans that were current as of the loan modification program implementation date are not troubled debt restructurings.  As of December 31, 2020, we had granted short-term deferrals on 737 loans that were otherwise performing, totaling approximately $186.9 million (including $115.0 million of dental practice loans).  As of December 31, 2020, all of these loans had returned to normal payment status.

13


 

Delinquent Loans. The following tables set forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.  We had no PPP loans delinquent at December 31, 2020.  

 

 

 

At December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90

Days

or

More

Past

Due

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90

Days

or

More

Past

Due

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90

Days

or

More

Past

Due

 

 

 

(In thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family

   residential

 

$

4,308

 

 

$

1,094

 

 

$

1,444

 

 

$

3,087

 

 

$

2,040

 

 

$

643

 

 

$

196

 

 

$

1,039

 

 

$

228

 

Commercial

 

 

3,386

 

 

 

 

 

 

1,136

 

 

 

114

 

 

 

24

 

 

 

10

 

 

 

 

 

 

 

 

 

 

Construction and land

 

 

1,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial and industrial loans

 

 

29

 

 

 

 

 

 

1,085

 

 

 

1,270

 

 

 

30

 

 

 

395

 

 

 

 

 

 

 

 

 

 

      Paycheck Protection Program loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

78

 

 

 

 

 

 

73

 

 

 

58

 

 

 

34

 

 

 

 

 

 

9

 

 

 

1

 

 

 

1

 

Total

 

$

9,193

 

 

$

1,094

 

 

$

3,738

 

 

$

4,529

 

 

$

2,128

 

 

$

1,048

 

 

$

205

 

 

$

1,040

 

 

$

229

 

 

 

 

At September 30,

 

 

 

2018

 

 

2017

 

 

2016

 

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90

Days

or

More

Past

Due

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90

Days

or

More

Past

Due

 

 

30-59

Days

Past

Due

 

 

60-89

Days

Past

Due

 

 

90

Days

or

More

Past

Due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential

 

$

167

 

 

$

980

 

 

$

1,115

 

 

$

173

 

 

$

3,236

 

 

$

1,559

 

 

$

32

 

 

$

3,382

 

 

$

1,955

 

Commercial

 

 

283

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

66

 

 

 

44

 

Construction and land

 

 

 

 

 

257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial and industrial loans

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

45

 

 

 

 

 

 

194

 

 

 

 

 

 

 

      Paycheck Protection Program loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

30

 

 

 

7

 

 

 

24

 

 

 

7

 

 

 

 

 

 

20

 

 

 

 

 

 

 

Total

 

$

450

 

 

$

1,270

 

 

$

1,122

 

 

$

216

 

 

$

3,288

 

 

$

1,604

 

 

$

246

 

 

$

3,448

 

 

$

1,999

 

 

14


 

Non-Performing Assets.  The following table sets forth information regarding our non-performing assets.  Non-accrual loans include non-accruing troubled debt restructurings of $241,000, $532,000, $287,000, $279,000, $620,000, and $810,000 as of December 31, 2020, 2019 and 2018, and September 30, 2018, 2017 and 2016, respectively.  No PPP loans were considered non-performing at December 31, 2020.

 

 

 

At December 31,

 

 

At September 30,

 

 

 

2020

 

 

2019

 

 

2018

 

 

2018

 

 

2017

 

 

2016

 

 

 

(Dollars in thousands)

 

Non-accrual loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential

 

$

2,587

 

 

$

1,912

 

 

$

1,744

 

 

$

2,089

 

 

$

3,540

 

 

$

3,013

 

Commercial

 

 

1,157

 

 

 

246

 

 

 

56

 

 

 

70

 

 

 

129

 

 

 

230

 

Construction and land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

 

1,085

 

 

 

395

 

 

 

27

 

 

 

29

 

 

 

 

 

 

 

Paycheck Protection Program loans