Group 1 - Affinity Bancshares (NASDAQ: AFBI) is the holding company of Affinity Bank, which focuses on the Georgia market [1] - The previous sale of Affinity Bancshares was canceled, which was discussed in May of this year [1] - The investment group European Small Cap Ideas offers exclusive access to actionable research on appealing Europe-focused investment opportunities [1] Group 2 - The focus of the European Small Cap Ideas is on high-quality ideas in the small-cap space, emphasizing capital gains and dividend income for continuous cash flow [1] - Features of the investment group include two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1] - An active chat room is available for discussions on the latest developments of the portfolio holdings [1]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Affinity Bancshares, Inc.'s unaudited consolidated financial statements for Q2 2025, including Balance Sheets, Income, Comprehensive Income, Equity, Cash Flows, and detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $933,799 | $866,817 | $66,982 | 7.73% | | Cash and cash equivalents | $89,666 | $41,425 | $48,241 | 116.45% | | Net loans | $722,593 | $705,619 | $16,974 | 2.41% | | Total deposits | $749,338 | $673,481 | $75,857 | 11.26% | | Total liabilities | $809,699 | $737,702 | $71,997 | 9.76% | | Total stockholders' equity | $124,100 | $129,115 | $(5,015) | -3.88% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights (Three Months Ended June 30) | Item | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Total interest income | $12,823 | $12,222 | $601 | 4.92% | | Total interest expense | $5,045 | $4,654 | $391 | 8.40% | | Net interest income before provision | $7,778 | $7,568 | $210 | 2.77% | | Provision for credit losses | $17 | $213 | $(196) | -92.02% | | Net income | $2,152 | $1,031 | $1,121 | 108.73% | | Basic earnings per share | $0.34 | $0.16 | $0.18 | 112.50% | | Diluted earnings per share | $0.33 | $0.16 | $0.17 | 106.25% | Consolidated Statements of Income Highlights (Six Months Ended June 30) | Item | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Total interest income | $24,928 | $23,443 | $1,485 | 6.33% | | Total interest expense | $9,813 | $9,125 | $688 | 7.54% | | Net interest income before provision | $15,115 | $14,318 | $797 | 5.57% | | Provision for credit losses | $67 | $213 | $(146) | -68.54% | | Net income | $3,983 | $2,366 | $1,617 | 68.34% | | Basic earnings per share | $0.63 | $0.37 | $0.26 | 70.27% | | Diluted earnings per share | $0.61 | $0.36 | $0.25 | 69.44% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (Three and Six Months Ended June 30) | Item | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $2,152 | $1,031 | $3,983 | $2,366 | | Net unrealized gains on AFS securities (net of tax) | $77 | $317 | $711 | $331 | | Total comprehensive income | $2,229 | $1,348 | $4,694 | $2,697 | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - Total stockholders' equity decreased by **$5.0 million** from December 31, 2024, to June 30, 2025, primarily due to an **$8.8 million** special dividend payment and **$2.1 million** in common stock repurchases, partially offset by **$4.0 million** in net income and a **$711,000** change in unrealized gain on available-for-sale investment securities[19](index=19&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Net cash provided by operating activities | $5,692 | $1,836 | $3,856 | | Net cash used in investing activities | $(17,603) | $(28,570) | $10,967 | | Net cash provided by financing activities | $60,152 | $27,106 | $33,046 | | Net change in cash and cash equivalents | $48,241 | $372 | $47,869 | | Cash and cash equivalents at end of period | $89,666 | $50,397 | $39,269 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [(1) Nature of Operations](index=9&type=section&id=(1)%20Nature%20of%20Operations) - Affinity Bancshares, Inc. is a bank holding company operating primarily in Newton, Cobb, and Fulton Counties, Georgia, through its subsidiary Affinity Bank, National Association. The Bank offers customary banking services including consumer and commercial checking, savings, CDs, and various loans, with a focus on dental practice loans and indirect automobile loans across the Southeastern U.S.[25](index=25&type=chunk) [Earnings per Share](index=9&type=section&id=Earnings%20per%20Share) Earnings Per Share (Three and Six Months Ended June 30) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (in thousands) | $2,152 | $1,031 | $3,983 | $2,366 | | Basic EPS | $0.34 | $0.16 | $0.63 | $0.37 | | Diluted EPS | $0.33 | $0.16 | $0.61 | $0.36 | - The Company had **117,000** anti-dilutive options for the three and six months ended June 30, 2025, compared to **339,500** for the same periods in 2024[32](index=32&type=chunk) [(2) Investment Securities](index=11&type=section&id=(2)%20Investment%20Securities) Investment Securities Available-for-Sale (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (Fair Value, in thousands) | December 31, 2024 (Fair Value, in thousands) | | :----------------------------------- | :--------------------------------------- | :----------------------------------------- | | U.S. Treasury securities | $4,761 | $4,567 | | Municipal securities - tax exempt | $415 | $433 | | Municipal securities - taxable | $1,735 | $1,671 | | U.S. Government sponsored enterprises | $8,666 | $8,481 | | Government agency mortgage-backed securities | $16,004 | $12,344 | | Corporate securities | $9,158 | $9,006 | | Total | $40,739 | $36,502 | - As of June 30, 2025, the Company had **46** available-for-sale securities with unrealized losses totaling **$6.7 million**, primarily due to changing interest rates, but these are considered temporary due to acceptable investment grades and the Bank's intent not to sell before anticipated recovery[35](index=35&type=chunk)[36](index=36&type=chunk) [(3) Loans and Allowance for Credit Losses](index=14&type=section&id=(3)%20Loans%20and%20Allowance%20for%20Credit%20Losses) Major Loan Classifications (June 30, 2025 vs. December 31, 2024) | Loan Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------- | :------------------------------- | | Commercial (secured by real estate - owner occupied) | $163,696 | $156,923 | | Commercial (secured by real estate - non-owner occupied) | $165,169 | $166,662 | | Commercial and industrial | $148,302 | $148,150 | | Construction, land and acquisition & development | $73,538 | $67,622 | | Residential mortgage 1-4 family | $50,651 | $54,142 | | Consumer installment | $129,779 | $120,616 | | Total loans | $731,135 | $714,115 | | Less allowance for credit losses | $(8,542) | $(8,496) | | Total loans, net | $722,593 | $705,619 | - The allowance for credit losses to total loans was **1.17%** at June 30, 2025, a slight decrease from **1.19%** at December 31, 2024. The allowance for credit losses to non-performing loans improved to **190.3%** at June 30, 2025, from **177.9%** at December 31, 2024[133](index=133&type=chunk)[147](index=147&type=chunk) Allowance for Credit Losses (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Beginning balance | $8,496 | $8,496 | | Provision | $125 | $0 (implied from change) | | Charge-offs | $(144) | $0 (implied from change) | | Recoveries | $65 | $0 (implied from change) | | Ending balance | $8,542 | $8,496 | [(4) Intangible Assets](index=21&type=section&id=(4)%20Intangible%20Assets) - The core deposit premium intangible asset had a gross carrying amount of **$1.9 million** at June 30, 2025, with accumulated amortization of **$1.1 million**. Goodwill remained at **$17.2 million**, with no impairment loss recognized during the six months ended June 30, 2025[60](index=60&type=chunk)[61](index=61&type=chunk) [(5) Deposits](index=23&type=section&id=(5)%20Deposits) - Certificates of deposit of **$250,000** or more totaled approximately **$37.5 million** at June 30, 2025, up from **$35.2 million** at December 31, 2024. Brokered CDs amounted to **$106.8 million** with a weighted average rate of **4.32%** and an **18-month** maturity at June 30, 2025[63](index=63&type=chunk)[64](index=64&type=chunk) [(6) Borrowings](index=23&type=section&id=(6)%20Borrowings) - FHLB advances totaled **$54.0 million** at June 30, 2025, collateralized by **$444.1 million** in loans and **$3.2 million** in FHLB stock. The Company also had a **$13.0 million** FHLB letter of credit and unsecured Federal Funds lines of credit totaling **$32.5 million**, with no amounts borrowed[66](index=66&type=chunk)[67](index=67&type=chunk) - The **$4.8 million** outstanding under the Federal Reserve's Bank Term Funding Program at December 31, 2024, was paid in full during the first quarter of 2025[68](index=68&type=chunk) [(7) Employee Stock Ownership Plan](index=24&type=section&id=(7)%20Employee%20Stock%20Ownership%20Plan) - The ESOP expense for the six months ended June 30, 2025, was approximately **$632,000**, with **$422,000** related to a special dividend. The ESOP's note payable balance decreased to **$4.2 million** at June 30, 2025, from **$5.0 million** at December 31, 2024[72](index=72&type=chunk) [(8) Stock-Based Compensation](index=24&type=section&id=(8)%20Stock-Based%20Compensation) - The Company recognized **$549,000** in stock-based compensation expense for the six months ended June 30, 2025, compared to **$670,000** for the same period in 2024. As of June 30, 2025, there was approximately **$1.9 million** of unrecognized compensation cost, expected to be recognized over a weighted average remaining vesting period of **1.26 years**[80](index=80&type=chunk)[81](index=81&type=chunk) Stock Option Activity (June 30, 2025) | Stock Options | Outstanding | Weighted Average Exercise Price | | :-------------------------- | :---------- | :------------------------------ | | Outstanding - Dec 31, 2024 | 640,766 | $12.58 | | Exercised | 11,921 | $12.98 | | Forfeited | 13,406 | $14.38 | | Granted | 7,000 | $18.53 | | Outstanding - June 30, 2025 | 622,439 | $12.60 | | Exercisable - June 30, 2025 | 401,568 | $11.44 | [(9) Fair Value Measurements and Disclosures](index=26&type=section&id=(9)%20Fair%20Value%20Measurements%20and%20Disclosures) - The Company's available-for-sale securities are recorded at fair value on a recurring basis, totaling **$40.7 million** at June 30, 2025, and are classified as Level 2. Collateral-dependent loans, measured at fair value on a nonrecurring basis, amounted to **$1.8 million** at June 30, 2025, and are classified as Level 3[98](index=98&type=chunk)[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of financial condition and operating results, covering assets, liabilities, equity, income, market risk, and liquidity [General](index=31&type=section&id=General) - This section aims to help readers understand the Company's financial condition and results of operations, and should be read with the unaudited consolidated financial statements[104](index=104&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=31&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements identified by words like 'estimate,' 'project,' and 'believe,' which are subject to significant business, economic, and competitive uncertainties. Actual results may differ materially due to factors such as general economic conditions, changes in loan delinquencies, funding access, real estate values, interest rates, and regulatory changes[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Summary of Significant Accounting Policies](index=33&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) - There have been no material changes to the Company's significant accounting policies as described in its Annual Report on Form 10-K for the year ended December 31, 2024[109](index=109&type=chunk) [Comparison of Financial Condition at June 30, 2025 and December 31, 2024](index=33&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20and%20December%2031%2C%202024) - Total assets increased by **$67.0 million** (**7.8%**) to **$933.8 million** at June 30, 2025, driven by increases in loans and cash and cash equivalents[110](index=110&type=chunk) - Gross loans grew by **$17.0 million** (**2.4%**) to **$731.1 million**, with notable increases in construction loans (**$5.9 million**, **8.7%**), owner-occupied commercial real estate loans (**$6.8 million**, **4.3%**), and consumer installment loans (**$9.2 million**, **7.6%**)[111](index=111&type=chunk) - Total deposits increased by **$75.9 million** (**11.3%**) to **$749.3 million**, reflecting growth across all deposit types. The loan-to-deposit ratio decreased to **97.6%** from **106.0%**[112](index=112&type=chunk) - Stockholders' equity decreased by **$5.0 million** (**3.9%**) to **$124.1 million**, primarily due to an **$8.8 million** special dividend and **$2.1 million** in common stock repurchases, partially offset by **$4.0 million** in net income[114](index=114&type=chunk)[115](index=115&type=chunk) [Average Balance Sheets](index=35&type=section&id=Average%20Balance%20Sheets) Average Balance Sheet Highlights (Three Months Ended June 30) | Item | 2025 Average Balance (in thousands) | 2024 Average Balance (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | | Total interest-earning assets | $874,197 | $820,181 | $54,016 | | Total interest-bearing liabilities | $643,788 | $591,269 | $52,519 | | Net interest rate spread | 2.74% | 2.82% | -0.08% | | Net interest margin | 3.57% | 3.71% | -0.14% | Average Balance Sheet Highlights (Six Months Ended June 30) | Item | 2025 Average Balance (in thousands) | 2024 Average Balance (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | | Total interest-earning assets | $859,615 | $811,376 | $48,239 | | Total interest-bearing liabilities | $627,550 | $583,380 | $44,170 | | Net interest rate spread | 2.70% | 2.66% | 0.04% | | Net interest margin | 3.55% | 3.55% | 0.00% | [Rate/Volume Analysis](index=37&type=section&id=Rate%2FVolume%20Analysis) Net Interest Income Change (Three Months Ended June 30, 2025 vs. 2024) | Category | Volume Effect (in thousands) | Rate Effect (in thousands) | Total Change (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------- | :-------------------------- | | Interest-earning assets | $2,020 | $(1,419) | $601 | | Interest-bearing liabilities | $1,540 | $(1,149) | $391 | | Change in net interest income | $480 | $(270) | $210 | Net Interest Income Change (Six Months Ended June 30, 2025 vs. 2024) | Category | Volume Effect (in thousands) | Rate Effect (in thousands) | Total Change (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------- | :-------------------------- | | Interest-earning assets | $2,633 | $(1,148) | $1,485 | | Interest-bearing liabilities | $1,345 | $(657) | $688 | | Change in net interest income | $1,288 | $(491) | $797 | [Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024](index=37&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) - Net income increased by **$1.1 million** to **$2.2 million** for the three months ended June 30, 2025, compared to **$1.0 million** in the prior year, driven by higher net interest income and lower noninterest expenses[121](index=121&type=chunk) [Interest Income](index=37&type=section&id=Interest%20Income%20(Three%20Months)) - Total interest income rose by **$601,000** (**4.9%**) to **$12.8 million**, primarily due to a **$716,000** (**6.8%**) increase in loan interest income, as the average balance of loans grew by **$46.1 million** (**6.8%**) to **$728.0 million**[122](index=122&type=chunk) - Interest income from investment securities (available-for-sale and held-to-maturity) decreased by **$242,000** to **$766,000**, while interest-earning deposits and federal funds income increased by **$122,000** to **$770,000**, despite a decrease in yields[123](index=123&type=chunk)[124](index=124&type=chunk) [Interest Expense](index=38&type=section&id=Interest%20Expense%20(Three%20Months)) - Total interest expense increased by **$391,000** to **$5.0 million**, mainly due to a **$426,000** rise in deposit interest expense, with certificates of deposit interest expense increasing by **$291,000** due to a **$37.2 million** increase in average balance[125](index=125&type=chunk)[126](index=126&type=chunk) - Interest expense on borrowings decreased by **$35,000** to **$520,000**, attributed to a **$9.7 million** decrease in average borrowings[127](index=127&type=chunk) [Net Interest Income](index=38&type=section&id=Net%20Interest%20Income%20(Three%20Months)) - Net interest income before provision for credit losses increased by **$210,000** (**2.8%**) to **$7.8 million**. However, the net interest rate spread decreased to **2.74%** (from **2.82%**) and net interest margin decreased to **3.57%** (from **3.71%**) as asset yields declined more than liability rates[128](index=128&type=chunk) [Provision for Credit Losses](index=38&type=section&id=Provision%20for%20Credit%20Losses%20(Three%20Months)) - A provision for credit losses of **$17,000** was recorded for the three months ended June 30, 2025, a significant decrease from **$213,000** in the prior year. This included a **$75,000** provision for loans, a **$50,000** reversal for unfunded commitments, and an **$8,000** reversal for held-to-maturity securities[133](index=133&type=chunk) - Net loan recovery was **$9,000** for the three months ended June 30, 2025, compared to net loan charge-offs of **$134,000** in the prior year[133](index=133&type=chunk) [Noninterest Income](index=40&type=section&id=Noninterest%20Income%20(Three%20Months)) - Noninterest income decreased by **$166,000** (**23.5%**) to **$540,000**, primarily due to a decline in merchant services volume and the absence of a gain on sale of other real estate owned recorded in the prior year[135](index=135&type=chunk) [Noninterest Expenses](index=40&type=section&id=Noninterest%20Expenses%20(Three%20Months)) Noninterest Expenses (Three Months Ended June 30) | Expense Category | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Salaries and employee benefits | $3,260 | $3,417 | $(157) | -4.6% | | Occupancy | $595 | $615 | $(20) | -3.3% | | Data processing | $550 | $508 | $42 | 8.3% | | Other | $1,062 | $2,179 | $(1,117) | -51.3% | | Total non-interest expenses | $5,467 | $6,719 | $(1,252) | -18.6% | - Total non-interest expenses decreased by **$1.3 million** (**18.6%**) to **$5.5 million**, mainly due to a **$1.1 million** reduction in 'Other' fees, primarily from lower professional fees related to a prior-year merger transaction that was not completed[137](index=137&type=chunk) [Income Tax Expense](index=40&type=section&id=Income%20Tax%20Expense%20(Three%20Months)) - Income tax expense increased to **$682,000** (effective tax rate of **24.1%**) for the three months ended June 30, 2025, from **$311,000** (effective tax rate of **23.2%**) in the prior year[138](index=138&type=chunk) [Comparison of Operating Results for the Six Months Ended June 30, 2025 and 2024](index=40&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) - Net income increased by **$1.6 million** to **$4.0 million** for the six months ended June 30, 2025, compared to **$2.4 million** in the prior year, driven by higher net interest income and lower noninterest expenses[139](index=139&type=chunk) [Interest Income](index=40&type=section&id=Interest%20Income%20(Six%20Months)) - Total interest income increased by **$1.5 million** (**6.3%**) to **$24.9 million**, primarily from a **$1.9 million** (**9.3%**) increase in loan interest income, as average loan balances grew by **$47.7 million** (**7.1%**) and average loan yields increased by **14 basis points** to **6.11%**[140](index=140&type=chunk) - Interest income from interest-earning deposits and federal funds increased by **$89,000** to **$1.4 million**, despite a decrease in yields, due to a **$15.4 million** increase in average balances held for liquidity[141](index=141&type=chunk) - Interest income from available-for-sale and held-to-maturity securities decreased by **$469,000** to **$1.7 million**, with average securities balances decreasing by **$15.6 million**[142](index=142&type=chunk) [Interest Expense](index=40&type=section&id=Interest%20Expense%20(Six%20Months)) - Total interest expense increased by **$688,000** to **$9.8 million**. The largest increase was in certificates of deposit interest expense, up **$450,000** to **$5.0 million**, driven by a **$28.2 million** increase in average CD balances as customers sought higher-yielding accounts[143](index=143&type=chunk)[144](index=144&type=chunk) - Money market account interest expense also increased by **$163,000** to **$2.4 million** due to an **$18.3 million** increase in average balance[144](index=144&type=chunk) [Net Interest Income](index=42&type=section&id=Net%20Interest%20Income%20(Six%20Months)) - Net interest income increased by **$797,000** (**5.6%**) to **$15.1 million**. The net interest rate spread increased to **2.70%** (from **2.66%**), and the net interest margin remained stable at **3.55%**[145](index=145&type=chunk) [Provision for Credit Losses](index=42&type=section&id=Provision%20for%20Credit%20Losses%20(Six%20Months)) - A provision for credit losses of **$67,000** was recorded for the six months ended June 30, 2025, down from **$213,000** in the prior year. This included a **$125,000** provision for loans, a **$50,000** reversal for unfunded commitments, and an **$8,000** reversal for held-to-maturity securities[147](index=147&type=chunk) - Net charge-offs were **$79,000** for the six months ended June 30, 2025, a significant decrease from **$460,000** in the prior year[147](index=147&type=chunk) [Noninterest Income](index=42&type=section&id=Noninterest%20Income%20(Six%20Months)) - Noninterest income decreased by **$269,000** to **$1.0 million**, primarily due to a decline in merchant services volume and the absence of a gain on sale of other real estate owned recorded in the prior year[148](index=148&type=chunk) [Noninterest Expenses](index=42&type=section&id=Noninterest%20Expenses%20(Six%20Months)) Noninterest Expenses (Six Months Ended June 30) | Expense Category | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Salaries and employee benefits | $6,619 | $6,596 | $23 | 0.3% | | Occupancy | $1,200 | $1,233 | $(33) | -2.7% | | Data processing | $1,093 | $1,019 | $74 | 7.3% | | Other | $1,914 | $3,442 | $(1,528) | -44.4% | | Total non-interest expenses | $10,826 | $12,290 | $(1,464) | -11.9% | - Total non-interest expenses decreased by **$1.5 million** (**11.9%**) to **$10.8 million**, mainly due to a **$1.5 million** reduction in 'Other' fees, primarily from lower professional fees related to a prior-year merger transaction that was not completed[150](index=150&type=chunk) [Income Tax Expense](index=42&type=section&id=Income%20Tax%20Expense%20(Six%20Months)) - Income tax expense increased to **$1.3 million** (effective tax rate of **24.0%**) for the six months ended June 30, 2025, from **$739,000** (effective tax rate of **23.8%**) in the prior year[151](index=151&type=chunk) [Management of Market Risk](index=42&type=section&id=Management%20of%20Market%20Risk) - The Company's primary market risk is interest rate risk, managed by the Asset/Liability Management Committee. Strategies include limiting reliance on wholesale funding, growing transaction deposits, increasing investment securities with shorter maturities, diversifying the loan portfolio, and pricing residential loans to encourage balloon options[152](index=152&type=chunk)[154](index=154&type=chunk) - The Company does not engage in hedging activities or invest in high-risk mortgage derivatives[155](index=155&type=chunk) Estimated Changes in Net Interest Income (June 30, 2025) | Change in Interest Rates (basis points) | Year 1 Forecast (in thousands) | Year 1 Change from Level (%) | | :-------------------------------------- | :----------------------------- | :--------------------------- | | +400 | $32,754 | -3.45% | | +200 | $33,428 | -1.46% | | Level | $33,924 | — | | -200 | $32,797 | -3.32% | | -400 | $31,187 | -8.07% | - At June 30, 2025, an instantaneous **200 basis points** increase in interest rates would result in a **1.46%** decrease in net interest income, while a **200 basis points** decrease would lead to a **3.32%** decrease[159](index=159&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company maintains strong liquidity, with primary funding sources including deposits, loan/security payments, and FHLB borrowings. At June 30, 2025, it had a **$216.7 million** FHLB line of credit (with **$54.0 million** outstanding), a **$13.0 million** FHLB letter of credit, and **$32.5 million** in unsecured Federal Funds lines of credit[163](index=163&type=chunk)[166](index=166&type=chunk) - Net cash provided by operating activities was **$5.7 million** for the six months ended June 30, 2025, while net cash used in investing activities was **$17.6 million**. Net cash provided by financing activities was **$60.2 million**, driven by a **$75.9 million** increase in deposits[165](index=165&type=chunk) - At June 30, 2025, the Bank exceeded all regulatory capital requirements and was categorized as 'well capitalized,' with a Common Equity Tier 1 ratio of **11.66%** and a Total Capital ratio of **12.79%**[167](index=167&type=chunk)[168](index=168&type=chunk) [Off-Balance Sheet Arrangements and Aggregate Contractual Obligations](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Aggregate%20Contractual%20Obligations) - Outstanding commitments to originate loans totaled **$83.3 million** at June 30, 2025. Time deposits maturing within one year amounted to **$149.3 million**, with management expecting a substantial portion to be renewed[169](index=169&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Refers to market risk disclosures in 'Management's Discussion and Analysis' under 'Management of Market Risk' - The required information for quantitative and qualitative disclosures about market risk is included in the 'Management of Market Risk' section of Item 2[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, and no material changes to internal controls occurred during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[171](index=171&type=chunk) - No material changes to internal controls over financial reporting occurred during the quarter ended June 30, 2025[172](index=172&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) No material legal proceedings were ongoing as of June 30, 2025, that would impact financial condition or results - No material legal proceedings were ongoing as of June 30, 2025[174](index=174&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable for smaller reporting companies - Risk Factors are not applicable for smaller reporting companies[175](index=175&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company repurchased 53,708 common shares at $17.95 average price during Q2 2025 under an approved program Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------------------- | :----------------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | 32,959 | $17.77 | | May 1, 2025 through May 31, 2025 | 5,017 | $18.22 | | June 1, 2025 through June 30, 2025 | 15,732 | $18.24 | | Total | 53,708 | $17.95 | - As of June 30, 2025, the Company had repurchased **119,523** shares under the stock repurchase program approved on March 7, 2025, which authorized up to **320,480** shares[176](index=176&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[177](index=177&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable[178](index=178&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers during the quarter - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers during the quarter[179](index=179&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including organizational documents, CEO/CFO certifications, and XBRL financial data - Exhibits include organizational documents, CEO/CFO certifications (Sarbanes-Oxley Sections 302 and 906), and financial statements formatted in inline XBRL[181](index=181&type=chunk) SIGNATURES - Report signed on August 12, 2025, by CEO Edward J. Cooney and CFO Brandi Pajot, pursuant to Securities Exchange Act of 1934[183](index=183&type=chunk)[185](index=185&type=chunk)

Core Insights - Affinity Bancshares reported significant growth in net income and adjusted earnings per share for Q2 2025, with net income reaching $2.2 million and adjusted diluted EPS at $0.36, marking increases of 120.0% and 33.3% year-over-year respectively [1][2] - The bank's focus on commercial lending, particularly in the dental and medical sectors, has contributed to its growth, alongside a strong performance in deposit gathering [3][4] Financial Performance - The diluted EPS increased from $0.16 in Q2 2024 to $0.33 in Q2 2025, reflecting a 106.3% year-over-year change [2] - Net interest income rose to $7.8 million, a 2.6% increase from $7.6 million in the previous year, while net interest margin decreased slightly to 3.57% from 3.71% [2] - Total assets grew by 6.9% to $933.8 million compared to $873.6 million in Q2 2024 [2] Operational Highlights - The company saw a more than doubling of net income compared to the same quarter last year, attributed to higher net interest income and reduced noninterest expenses [5] - Noninterest income declined due to lower deposit service charges and fewer gains on real estate sales, indicating a need for monitoring this area [5][12] Loan and Deposit Growth - Total loan balances increased by $17.0 million from December 31, 2024, to June 30, 2025, with significant exposure to commercial real estate and medical sectors [6] - Deposits rose by $75.9 million to $749.3 million as of June 30, 2025, supported by both interest-bearing and demand accounts [7] Asset Quality - Non-performing loans decreased to $4.6 million, with minimal net loan charge-offs of $79,000 for the first half of 2025, indicating solid asset quality [8] - The allowance for credit losses was 1.17% of total loans, with coverage of non-performing loans at 187.1% [8] Business Model and Strategy - Affinity Bancshares operates through its digital platform, FitnessBank, which enhances its deposit gathering capabilities beyond physical branches [9][10] - The bank's lending focus on commercial real estate, particularly in the dental sector, leads to sector concentration, which could pose risks if these sectors weaken [10][12] Future Outlook - Management did not provide explicit financial guidance for upcoming quarters, leaving investors to monitor trends in net interest margin and noninterest income [11][12]

[Affinity Bancshares, Inc. Second Quarter 2025 Financial Results Overview](index=1&type=section&id=Affinity%20Bancshares%2C%20Inc.%20Second%20Quarter%202025%20Financial%20Results%20Overview) [Executive Summary](index=1&type=section&id=Executive%20Summary) Affinity Bancshares, Inc. achieved significant net income growth in Q2 2025, reaching $2.2 million, more than doubling from $1.0 million in Q2 2024, driven by increased net interest income and reduced noninterest expenses - Net income for Q2 2025 was **$2.2 million**, compared to **$1.0 million** in the same period of 2024[2](index=2&type=chunk) [Performance Ratios Summary](index=1&type=section&id=Performance%20Ratios%20Summary) The company demonstrated strong financial performance in Q2 2025, with growth in diluted earnings per share and operating income, significant improvements in return on average assets and equity, and a better efficiency ratio Performance Ratios Key Data | Performance Ratios: | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Net income (in thousands) | $ 2,152 | $ 1,831 | $ 1,345 | $ 1,730 | $ 1,031 | | Diluted earnings per share | 0.33 | 0.28 | 0.20 | 0.26 | 0.16 | | Operating income (in thousands) | 2,316 | 1,996 | 1,738 | 1,883 | 1,763 | | Adjusted diluted earnings per share | 0.36 | 0.30 | 0.26 | 0.29 | 0.27 | | Common book value per share | 19.66 | 19.25 | 20.14 | 20.02 | 19.49 | | Tangible book value per share | 16.80 | 16.40 | 17.30 | 17.18 | 16.64 | | Total assets (in thousands) | 933,799 | 912,496 | 866,817 | 878,561 | 873,582 | | Return on average assets | 0.94% | 0.83% | 0.61% | 0.78% | 0.48% | | Return on average equity | 7.01% | 5.68% | 4.14% | 5.43% | 3.33% | | Equity to assets | 13.29% | 13.40% | 14.90% | 14.61% | 14.32% | | Tangible equity to tangible assets | 11.58% | 11.65% | 13.08% | 12.80% | 12.49% | | Net interest margin | 3.57% | 3.52% | 3.56% | 3.52% | 3.71% | | Efficiency ratio | 65.72% | 68.55% | 75.95% | 71.48% | 78.74% | [Results of Operations](index=1&type=section&id=Results%20of%20Operations) [Net Income and Operating Income](index=1&type=section&id=Net%20Income%20and%20Operating%20Income) The company achieved significant growth in net income and operating income for both Q2 and H1 2025, primarily driven by increased net interest income and reduced noninterest expenses - Net income for Q2 2025 was **$2.2 million**, a **113.6% increase** from **$1.0 million** in Q2 2024[2](index=2&type=chunk)[6](index=6&type=chunk) - Net income for H1 2025 was **$4.0 million**, a **66.7% increase** from **$2.4 million** in H1 2024[6](index=6&type=chunk) - Operating income for Q2 2025 was **$2.3 million**, a **27.8% increase** from **$1.8 million** in Q2 2024[6](index=6&type=chunk) - Operating income for H1 2025 was **$4.3 million**, a **38.7% increase** from **$3.1 million** in H1 2024[6](index=6&type=chunk) [Net Interest Income and Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased in H1 2025, but the net interest margin slightly declined in Q2, primarily due to a larger decrease in earning asset yields than in deposit and borrowing costs - Net interest income for H1 2025 increased to **$15.1 million** from **$14.3 million** in H1 2024, driven by higher interest income from loans and interest-bearing deposits, partially offset by increased deposit and borrowing costs and reduced investment securities interest income[6](index=6&type=chunk) - Net interest margin for H1 2025 remained stable at **3.55%**[6](index=6&type=chunk) - Net interest income for Q2 2025 increased to **$7.8 million** from **$7.6 million** in Q2 2024[9](index=9&type=chunk) - Net interest margin for Q2 2025 decreased to **3.57%** from **3.71%** in Q2 2024, primarily due to an **11 basis point decline** in earning asset yields, while deposit and borrowing costs only decreased by **3 basis points**[9](index=9&type=chunk) [Noninterest Income and Expense](index=3&type=section&id=Noninterest%20Income%20and%20Expense) Noninterest income decreased in both Q2 and H1 2025 due to lower deposit account service charges and the absence of real estate sales gains from 2024, while noninterest expense significantly reduced, mainly from lower other expenses - Noninterest income for H1 2025 decreased by **$269 thousand** to **$1.0 million**, primarily due to lower deposit account service charges and the absence of other real estate sales gains recorded in 2024[9](index=9&type=chunk) - Noninterest expense for H1 2025 decreased by **$1.5 million** to **$10.8 million**, mainly due to a reduction in other expenses[9](index=9&type=chunk) - Noninterest income for Q2 2025 decreased by **$166 thousand** to **$540 thousand**, primarily due to lower deposit account service charges and the absence of other real estate sales gains recorded in 2024[9](index=9&type=chunk) - Noninterest expense for Q2 2025 decreased by **$1.3 million** to **$5.5 million**, mainly due to a reduction in other expenses[9](index=9&type=chunk) [Financial Position and Asset Quality](index=3&type=section&id=Financial%20Position%20and%20Asset%20Quality) [Financial Condition Overview](index=3&type=section&id=Financial%20Condition%20Overview) As of June 30, 2025, total assets significantly increased, driven by growth in loans and interest-bearing deposits funded by increased deposits, while borrowings decreased - As of June 30, 2025, total assets increased by **$67.0 million** to **$933.8 million** from **$866.8 million** on December 31, 2024, primarily due to loan growth and increased interest-bearing deposits, funded by deposit growth[9](index=9&type=chunk) - As of June 30, 2025, cash and cash equivalents significantly increased by **$48.2 million** to **$89.7 million** from **$41.4 million** on December 31, 2024[9](index=9&type=chunk) - As of June 30, 2025, deposits increased by **$75.9 million** to **$749.3 million** from **$673.5 million** on December 31, 2024, with a **$42.5 million** net increase in demand deposits and a **$33.4 million** increase in time deposits[9](index=9&type=chunk) - As of June 30, 2025, borrowings decreased by **$4.8 million** to **$54.0 million** from **$58.8 million** on December 31, 2024, primarily due to the full repayment of Bank Term Funding Program advances in Q1 2025[9](index=9&type=chunk) [Loan Portfolio and Asset Quality](index=3&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality) Total loans continued to grow, the non-owner-occupied office loan portfolio remained stable, non-performing loans decreased, allowance for credit losses coverage improved, and net loan charge-offs significantly reduced, indicating strong asset quality management - As of June 30, 2025, total loans increased by **$17.0 million** to **$731.1 million** from **$714.1 million** on December 31, 2024, driven by consistent demand for construction, consumer, and owner-occupied commercial real estate loans[9](index=9&type=chunk) - As of June 30, 2025, non-owner-occupied office loans totaled **$39.9 million** with an average loan-to-value (LTV) of **48.8%**, including **$15.8 million** in medical/dental tenant loans and **$24.1 million** in other diversified tenant loans[9](index=9&type=chunk) - As of June 30, 2025, non-performing loans decreased to **$4.6 million** from **$4.8 million** on December 31, 2024[9](index=9&type=chunk) - As of June 30, 2025, the allowance for credit losses as a percentage of non-performing loans increased to **187.1%** from **177.9%** on December 31, 2024[9](index=9&type=chunk) - Net loan charge-offs for H1 2025 were **$79 thousand**, a significant reduction from **$460 thousand** in H1 2024[9](index=9&type=chunk) [Investment Securities and Equity](index=3&type=section&id=Investment%20Securities%20and%20Equity) The company held-to-maturity investment securities had unrealized gains, while available-for-sale investment securities had unrealized losses, and shareholders' equity decreased due to dividend payments and share repurchases - As of June 30, 2025, held-to-maturity investment securities had **$240 thousand** in unrealized gains (after tax)[9](index=9&type=chunk) - As of June 30, 2025, available-for-sale investment securities had **$5.0 million** in unrealized losses (after tax)[9](index=9&type=chunk) - As of June 30, 2025, shareholders' equity decreased by **$5.0 million** to **$124.1 million** from **$129.1 million** on December 31, 2024, primarily due to a **$1.50 per share dividend** paid in Q1 and **$2.1 million** in common stock repurchases[9](index=9&type=chunk) [Company Information and Disclosures](index=4&type=section&id=Company%20Information%20and%20Disclosures) [About Affinity Bancshares, Inc.](index=4&type=section&id=About%20Affinity%20Bancshares%2C%20Inc.) Affinity Bancshares, Inc. is a Maryland corporation headquartered in Covington, Georgia, with its banking subsidiary, Affinity Bank, established in 1928, operating multiple service and loan production offices across Georgia - The company is a Maryland corporation headquartered in Covington, Georgia[10](index=10&type=chunk) - Its banking subsidiary, Affinity Bank, was established in **1928** and operates full-service offices in Atlanta and Covington, with loan production offices in the Alpharetta and Cumming markets[10](index=10&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements regarding the company's future plans, strategies, and expectations, which are based on current beliefs and subject to significant business, economic, and competitive uncertainties and contingencies, with no obligation to update them, and lists risk factors that could materially adversely affect operations - Forward-looking statements describe the company's future plans, strategies, and expectations, subject to significant business, economic, and competitive uncertainties and contingencies[11](index=11&type=chunk) - The company undertakes no obligation to update any forward-looking statements[11](index=11&type=chunk) - Risk factors include, but are not limited to, general economic conditions, changes in interest rates and inflation, asset quality changes, ability to obtain funding, real estate value fluctuations, legal and regulatory changes, liquidity changes, technological changes, and IT security system failures or breaches[11](index=11&type=chunk) [Supplemental Financial Data](index=5&type=section&id=Supplemental%20Financial%20Data) [Average Balance Sheets Analysis](index=5&type=section&id=Average%20Balance%20Sheets%20Analysis) The company provides detailed average balance sheets, including average balances, yields, and costs for earning assets and interest-bearing liabilities, along with net interest income and net interest margin, for investor financial assessment - Average balance sheets provide average balances, interest income/expense, and average yields/costs for earning assets (e.g., loans, investment securities, interest-bearing deposits) and interest-bearing liabilities (e.g., deposits, FHLB borrowings)[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) - For Q2 2025, total earning assets had an average balance of **$874.2 million** with an average yield of **5.88%**; total interest-bearing liabilities had an average balance of **$643.8 million** with an average cost of **3.14%**[13](index=13&type=chunk) - For H1 2025, total earning assets had an average balance of **$859.6 million** with an average yield of **5.85%**; total interest-bearing liabilities had an average balance of **$627.6 million** with an average cost of **3.15%**[14](index=14&type=chunk) [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets detail the company's assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024, reflecting growth in total assets and deposits, and a decrease in shareholders' equity Consolidated Balance Sheet Key Data (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | **Assets:** | | | | Cash and cash equivalents | $ 89,666 | $ 41,425 | | Total loans | 731,135 | 714,115 | | Allowance for credit losses on loans | (8,542) | (8,496) | | Net loans | 722,593 | 705,619 | | Total assets | 933,799 | 866,817 | | **Liabilities:** | | | | Total deposits | 749,338 | 673,481 | | FHLB advances and other borrowings | 54,000 | 58,815 | | Total liabilities | 809,699 | 737,702 | | **Shareholders' Equity:** | | | | Total shareholders' equity | 124,100 | 129,115 | | Total liabilities and shareholders' equity | 933,799 | 866,817 | [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income detail the company's interest income, interest expense, net interest income, noninterest income and expense, and net income for Q2 and H1 2025 compared to the same periods in 2024 Consolidated Statements of Income Key Data (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Total interest income | $ 12,823 | $ 12,222 | $ 24,928 | $ 23,443 | | Total interest expense | 5,045 | 4,654 | 9,813 | 9,125 | | Net interest income before provision for credit losses | 7,778 | 7,568 | 15,115 | 14,318 | | Provision for credit losses | 17 | 213 | 67 | 213 | | Net interest income after provision for credit losses | 7,761 | 7,355 | 15,048 | 14,105 | | Total noninterest income | 540 | 706 | 1,021 | 1,290 | | Total noninterest expense | 5,467 | 6,719 | 10,826 | 12,290 | | Income before income tax expense | 2,834 | 1,342 | 5,243 | 3,105 | | Income tax expense | 682 | 311 | 1,260 | 739 | | Net income | $ 2,152 | $ 1,031 | $ 3,983 | $ 2,366 | | Diluted earnings per share | $ 0.33 | $ 0.16 | $ 0.61 | $ 0.36 | [Explanation of Certain Unaudited Non-GAAP Financial Measures](index=10&type=section&id=Explanation%20of%20Certain%20Unaudited%20Non-GAAP%20Financial%20Measures) The company provides explanations and reconciliation tables for non-GAAP financial measures, including operating net income, adjusted diluted earnings per share, tangible book value per common share, and tangible equity to tangible assets ratio, to supplement GAAP reporting and offer additional investor perspectives - The company provides non-GAAP financial measures such as operating net income, adjusted diluted earnings per share, tangible book value per common share, and tangible equity to tangible assets ratio to supplement GAAP reporting[19](index=19&type=chunk) Non-GAAP Reconciliation Key Data (in thousands) | Non-GAAP Reconciliation | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | June 30, 2025 (Year) | June 30, 2024 (Year) | | :----------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | :------------------- | :------------------- | | Net income (GAAP) | $2,152 | $1,831 | $1,345 | $1,730 | $1,031 | $3,983 | $2,366 | | Operating net income | $2,316 | $1,996 | $1,738 | $1,883 | $1,763 | $4,311 | $3,137 | | Adjusted diluted earnings per share | $0.36 | $0.30 | $0.26 | $0.29 | $0.27 | $0.66 | $0.48 | | Book Value per common share (GAAP) | $19.66 | $19.25 | $20.14 | $20.02 | $19.49 | $19.52 | $19.49 | | Tangible book value per common share | $16.80 | $16.40 | $17.30 | $17.18 | $16.64 | $16.68 | $16.64 | | Equity to assets (GAAP) | 13.29% | 13.40% | 14.90% | 14.61% | 14.32% | 13.29% | 14.32% | | Tangible equity to tangible assets | 11.58% | 11.65% | 13.08% | 12.80% | 12.49% | 11.58% | 12.49% |

Core Insights - The financial sector is experiencing a trend of oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Group 1: Oversold Stocks - LPL Financial Holdings Inc (LPLA) has an RSI of 28.5, with a stock price decline of approximately 7% over the past month, reaching a 52-week low of $187.19 [7] - Affinity Bancshares Inc (AFBI) has an RSI of 24.4, with a stock price decrease of around 15% over the past six months, hitting a 52-week low of $17.00 [7] - Landmark Bancorp Inc (LARK) has an RSI of 21.9, with a stock price drop of about 16% over the past month, reaching a 52-week low of $17.86 [7] Group 2: Company Performance - LPL Financial's shares closed at $354.10 after a 5.4% decline [7] - Affinity Bancshares' shares closed at $18.50 [7] - Landmark Bancorp reported a first-quarter EPS of 81 cents, an increase from 49 cents a year ago, and its shares closed at $24.13 after a 0.4% gain [7]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q1 2025, covering balance sheets, income, comprehensive income, equity, cash flows, and accounting notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Balance Sheet Summary | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | :------- | | Total Assets | $912,496 | $866,817 | $45,679 | 5.27% | | Cash and cash equivalents | $74,704 | $41,425 | $33,279 | 80.34% | | Net Loans | $712,523 | $705,619 | $6,904 | 0.98% | | Total Deposits | $730,292 | $673,481 | $56,811 | 8.43% | | Total Liabilities | $790,217 | $737,702 | $52,515 | 7.12% | | Total Stockholders' Equity | $122,279 | $129,115 | $(6,836) | -5.29% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Income Statement Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total Interest Income | $12,105 | $11,221 | $884 | 7.88% | | Total Interest Expense | $4,768 | $4,472 | $296 | 6.62% | | Net Interest Income before provision for credit losses | $7,337 | $6,749 | $588 | 8.71% | | Provision for credit losses | $50 | $0 | $50 | N/A | | Total Noninterest Income | $481 | $584 | $(103) | -17.64% | | Total Noninterest Expenses | $5,359 | $5,570 | $(211) | -3.79% | | Net Income | $1,831 | $1,335 | $496 | 37.15% | | Basic Earnings Per Share | $0.29 | $0.21 | $0.08 | 38.10% | | Diluted Earnings Per Share | $0.28 | $0.20 | $0.08 | 40.00% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive Income Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Income | $1,831 | $1,335 | | Net unrealized gains on available-for-sale securities, net of taxes | $634 | $14 | | Total Comprehensive Income | $2,465 | $1,349 | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' Equity Changes | Item | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Beginning balance December 31 | $129,115 | $121,516 | | ESOP loan payment and release of ESOP shares | $317 | $86 | | Stock-based compensation expense | $305 | $349 | | Exercise of stock options | $59 | $0 | | Change in unrealized gain on investment securities available-for-sale, net of tax | $634 | $14 | | Common stock repurchase | $(1,181) | $0 | | Dividend | $(8,801) | $0 | | Net income | $1,831 | $1,335 | | Ending balance March 31 | $122,279 | $123,300 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | $1,917 | $1,217 | | Net cash used in investing activities | $(10,710) | $(14,685) | | Net cash provided by financing activities | $42,073 | $24,838 | | Net change in cash and cash equivalents | $33,280 | $11,370 | | Cash and cash equivalents at end of period | $74,704 | $61,395 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [(1) Nature of Operations](index=9&type=section&id=%281%29%20Nature%20of%20Operations) - Affinity Bancshares, Inc. is a bank holding company headquartered in Covington, Georgia, with its operating subsidiary, Affinity Bank, primarily conducting banking activities in Newton, Cobb, and Fulton Counties, Georgia, and originating dental practice and indirect automobile loans throughout the Southeastern U.S[26](index=26&type=chunk) - The financial statements are unaudited and prepared in accordance with GAAP, with results for the three months ended March 31, 2025, not necessarily indicative of a full year[27](index=27&type=chunk) Earnings Per Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Basic earnings per common share | $0.29 | $0.21 | | Diluted earnings per common share | $0.28 | $0.20 | [(2) Investment Securities](index=11&type=section&id=%282%29%20Investment%20Securities) Available-for-Sale Securities | Investment Securities Available-for-Sale | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :---------------------------- | :------------------------------- | | Amortized Cost | $47,777 | $44,147 | | Estimated Fair Value | $40,979 | $36,502 | | Gross Unrealized Losses | $(6,888) | $(7,712) | Held-to-Maturity Securities | Investment Securities Held-to-Maturity | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------- | :---------------------------- | :------------------------------- | | Amortized Cost | $27,383 | $27,344 | | Estimated Fair Value | $27,505 | $27,286 | | Gross Unrealized Losses | $(146) | $(269) | | Allowance for Credit Losses | $(45) | $(45) | - As of March 31, 2025, there were **46 available-for-sale securities** with unrealized losses totaling **$6.9 million**, primarily due to changing interest rates, not credit quality. The Bank does not intend to sell these securities and expects recovery[36](index=36&type=chunk)[37](index=37&type=chunk) [(3) Loans and Allowance for Credit Losses](index=14&type=section&id=%283%29%20Loans%20and%20Allowance%20for%20Credit%20Losses) Loan Classification Breakdown | Loan Classification | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------ | :---------------------------- | :------------------------------- | | Commercial (secured by real estate - owner occupied) | $157,550 | $156,923 | | Commercial (secured by real estate - non-owner occupied) | $166,606 | $166,662 | | Commercial and industrial | $149,009 | $148,150 | | Construction, land and acquisition & development | $71,624 | $67,622 | | Residential mortgage 1-4 family | $52,327 | $54,142 | | Consumer installment | $123,864 | $120,616 | | Total Loans | $720,980 | $714,115 | | Less allowance for credit losses | $(8,457) | $(8,496) | | Total loans, net | $712,523 | $705,619 | Allowance for Credit Loss Movement | Allowance for Credit Loss (ACL) | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :------------------------------ | :---------------------------- | :---------------------------- | | Beginning balance | $8,496 | $8,921 | | Provision | $50 | $0 | | Charge-offs | $(106) | $(358) | | Recoveries | $17 | $32 | | Ending balance | $8,457 | $8,595 | - As of March 31, 2025, total past due loans (30 days or more) were **$1.55 million**, with nonaccrual loans totaling **$4.44 million**. There was one commercial loan modification for **$1.8 million** to a borrower with financial difficulty during the three months ended March 31, 2025[48](index=48&type=chunk) [(4) Intangible Assets](index=20&type=section&id=%284%29%20Intangible%20Assets) - The core deposit premium intangible asset had a gross carrying amount of **$1.9 million** with accumulated amortization of **$956,000** at March 31, 2025. Amortization expense was **$48,000** for the three months ended March 31, 2025 and 2024[61](index=61&type=chunk) - Goodwill remained at **$17.2 million** at March 31, 2025 and 2024, with no impairment loss recognized[62](index=62&type=chunk) [(5) Deposits](index=22&type=section&id=%285%29%20Deposits) - Certificates of deposit of **$250,000** or more totaled approximately **$34.6 million** at March 31, 2025, down from **$35.2 million** at December 31, 2024[64](index=64&type=chunk) - Brokered CDs amounted to **$106.8 million** at March 31, 2025, with a weighted average rate of **4.32%** and a **21-month** weighted average maturity[65](index=65&type=chunk) [(6) Borrowings](index=22&type=section&id=%286%29%20Borrowings) FHLB Advances Details | FHLB Advance Date | Advance Amount | Interest Rate | Maturity Date | Call Feature | | :---------------- | :------------- | :------------ | :------------ | :----------- | | 1/6/2023 | $10,000,000 | 4.22% | 1/6/2026 | N/A | | 1/6/2023 | $10,000,000 | 3.94% | 1/6/2028 | N/A | | 10/25/2023 | $10,000,000 | 3.99% | 10/25/2028 | 4/25/2025 | | 7/11/2024 | $14,000,000 | 3.50% | 7/11/2029 | 4/11/2025 | | 12/13/2024 | $10,000,000 | 3.55% | 12/13/2029 | 6/13/2025 | | **Total** | **$54,000,000** | | | | - FHLB advances were collateralized by approximately **$436.6 million** in loans and **$3.2 million** in FHLB stock at March 31, 2025[67](index=67&type=chunk) - The Company had **$0** outstanding under the Federal Reserve's Bank Term Funding Program at March 31, 2025, after repaying a **$4.8 million** advance in the first quarter of 2025[69](index=69&type=chunk) [(7) Employee Stock Ownership Plan](index=23&type=section&id=%287%29%20Employee%20Stock%20Ownership%20Plan) - Total ESOP expense for the three months ended March 31, 2025, was approximately **$317,000**, including **$211,000** related to a special dividend[73](index=73&type=chunk) - The ESOP's note payable balance was approximately **$4.2 million** at March 31, 2025, down from **$5.0 million** at December 31, 2024[73](index=73&type=chunk) [(8) Stock-Based Compensation](index=23&type=section&id=%288%29%20Stock-Based%20Compensation) Stock Options Summary | Stock Options | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | Outstanding Shares | 615,439 | 640,766 | | Weighted Average Exercise Price | $12.53 | $12.58 | | Aggregate Intrinsic Value (in thousands) | $3,582 | $5,724 | Restricted Stock Summary | Restricted Stock | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Outstanding Shares | 104,143 | 107,609 | | Weighted Average Grant Date Fair Value | $13.86 | $13.88 | - The Company recognized **$305,000** in stock-based compensation expense for the three months ended March 31, 2025, compared to **$349,000** for the same period in 2024[81](index=81&type=chunk) [(9) Fair Value Measurements and Disclosures](index=24&type=section&id=%289%29%20Fair%20Value%20Measurements%20and%20Disclosures) - The Company classifies assets and liabilities at fair value into three levels based on observability of inputs: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) Assets Recorded at Fair Value (Nonrecurring) | Assets Recorded at Fair Value on a Nonrecurring Basis | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------------------------- | :---------------------------- | :------------------------------- | | Collateral dependent loans (Level 3) | $1,841 | $2,000 | | Total assets at fair value | $1,841 | $2,000 | Financial Instrument Fair Values | Financial Instrument | March 31, 2025 Estimated Fair Value (in thousands) | December 31, 2024 Estimated Fair Value (in thousands) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Cash and cash equivalents (Level 1) | $74,704 | $41,425 | | Investment securities available-for-sale (Level 2) | $40,979 | $36,502 | | Investment securities held-to-maturity (Level 2) | $27,505 | $27,286 | | Loans, net (Level 3) | $705,320 | $693,346 | | Deposits (Level 3) | $730,322 | $672,708 | | FHLB advances and other borrowings (Level 3) | $53,851 | $58,944 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operating results, covering key financial changes, forward-looking statements, market risk, liquidity, and capital [General](index=28&type=section&id=General) - This section aims to help readers understand the Company's financial condition and results of operations for the periods ended March 31, 2025, and December 31, 2024, and for the three months ended March 31, 2025, and 2024[104](index=104&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=28&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to significant business, economic, and competitive uncertainties and contingencies, including general economic conditions, changes in loan delinquencies, funding access, liquidity, real estate values, competition, interest rate environment, regulatory changes, and technological changes[105](index=105&type=chunk)[107](index=107&type=chunk) [Summary of Significant Accounting Policies](index=30&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) - There have been no material changes to the Company's significant accounting policies as described in its Annual Report on Form 10-K for the year ended December 31, 2024[109](index=109&type=chunk) [Comparison of Financial Condition at March 31, 2025 and December 31, 2024](index=30&type=section&id=Comparison%20of%20Financial%20Condition%20at%20March%2031%2C%202025%20and%20December%2031%2C%202024) Financial Condition Comparison | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | Change (in millions) | % Change | | :------------------------- | :--------------------------- | :----------------------------- | :------------------- | :------- | | Total Assets | $912.5 | $866.8 | $45.7 | 5.3% | | Gross Loans | $721.0 | $714.1 | $6.9 | 1.0% | | Total Deposits | $730.3 | $673.5 | $56.8 | 8.4% | | FHLB Advances | $54.0 | $54.0 | $0.0 | 0.0% | | Other Borrowings | $0.0 | $4.8 | $(4.8) | -100.0% | | Stockholders' Equity | $122.3 | $129.1 | $(6.8) | -5.3% | - The decrease in stockholders' equity was primarily due to an **$8.8 million special dividend payment** and **$1.2 million in common stock repurchases**, partially offset by **$1.8 million in net income**[114](index=114&type=chunk) [Average Balance Sheets](index=32&type=section&id=Average%20Balance%20Sheets) Average Balance Sheet Metrics | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Average Outstanding Balance - Loans | $713,878 (in thousands) | $664,660 (in thousands) | | Average Yield - Loans | 6.05% | 5.75% | | Average Outstanding Balance - Total Interest-Earning Assets | $844,869 (in thousands) | $802,572 (in thousands) | | Average Yield - Total Interest-Earning Assets | 5.81% | 5.62% | | Average Outstanding Balance - Total Interest-Bearing Liabilities | $611,128 (in thousands) | $575,490 (in thousands) | | Average Rate - Total Interest-Bearing Liabilities | 3.16% | 3.13% | | Net Interest Rate Spread | 2.65% | 2.49% | | Net Interest Margin | 3.52% | 3.38% | [Rate/Volume Analysis](index=32&type=section&id=Rate%2FVolume%20Analysis) Interest Income and Expense Rate/Volume Analysis | Item | Volume Change (in thousands) | Rate Change (in thousands) | Total Increase (Decrease) (in thousands) | | :---------------------------------- | :--------------------------- | :------------------------- | :--------------------------------------- | | Interest Income - Loans | $1,101 | $48 | $1,149 | | Interest Income - Total Interest-Earning Assets | $1,920 | $(1,036) | $884 | | Interest Expense - Total Interest-Bearing Deposits | $700 | $(456) | $244 | | Interest Expense - FHLB advances and other borrowings | $49 | $3 | $52 | | Interest Expense - Total Interest-Bearing Liabilities | $749 | $(453) | $296 | | Change in Net Interest Income | $1,171 | $(583) | $588 | [Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024](index=34&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) [General](index=34&type=section&id=General) - Net income increased by **$496,000**, or **37.15%**, to **$1.8 million** for the three months ended March 31, 2025, compared to **$1.3 million** for the prior year period, driven by higher net interest income partially offset by lower noninterest income[119](index=119&type=chunk) [Interest Income](index=34&type=section&id=Interest%20Income) - Total interest income rose by **$884,000**, or **7.9%**, to **$12.1 million**, primarily due to a **$1.1 million (12.1%) increase** in loan interest income[120](index=120&type=chunk) - The average yield on loans increased by **30 basis points to 6.05%**, and the average balance of loans grew by **$49.2 million (7.4%) to $713.9 million**[120](index=120&type=chunk) - Interest income from interest-earning deposits decreased by **$32,000**, as yields declined to **4.21% from 5.20%**, despite a **$9.2 million increase** in average balance[121](index=121&type=chunk) [Interest Expense](index=35&type=section&id=Interest%20Expense) - Total interest expense increased by **$296,000 to $4.8 million**, driven by higher average balances and rates on interest-bearing liabilities[122](index=122&type=chunk) - Interest expense on deposits rose by **$244,000 to $4.2 million**, with certificates of deposit contributing the largest increase of **$159,000**, despite a slight decrease in average rate[123](index=123&type=chunk) - Interest expense on borrowings increased by **$52,000 to $522,000** due to a **$2.2 million increase** in average borrowings[124](index=124&type=chunk) [Net Interest Income](index=35&type=section&id=Net%20Interest%20Income) - Net interest income before provision for credit losses increased by **$588,000**, or **8.7%**, to **$7.3 million**[125](index=125&type=chunk) - Net interest rate spread improved to **2.65% from 2.49%**, and net interest margin increased to **3.52% from 3.38%**, as asset yields grew faster than liability rates[125](index=125&type=chunk) [Provision for Credit Losses](index=35&type=section&id=Provision%20for%20Credit%20Losses) - A provision for credit losses of **$50,000** was recorded for the three months ended March 31, 2025, compared to **no provision** in the prior year period[130](index=130&type=chunk) - The allowance for credit losses to total loans was **1.17%** at March 31, 2025, down from **1.19%** at December 31, 2024[130](index=130&type=chunk) - Net loan charge-offs were **$89,000** for the three months ended March 31, 2025, a decrease from **$326,000** in the prior year period[130](index=130&type=chunk) [Non-interest Income](index=36&type=section&id=Non-interest%20Income) - Non-interest income decreased by **$103,000**, or **17.6%**, to **$481,000**, primarily due to a decline in merchant services volume[132](index=132&type=chunk) [Non-interest Expenses](index=36&type=section&id=Non-interest%20Expenses) Non-interest Expenses Breakdown | Expense Category | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Salaries and employee benefits | $3,359 | $3,179 | $180 | 5.7% | | Occupancy | $605 | $618 | $(13) | -2.1% | | Data processing | $543 | $511 | $32 | 6.3% | | Other | $852 | $1,262 | $(410) | -32.5% | | Total non-interest expenses | $5,359 | $5,570 | $(211) | -3.8% | - Salaries and employee benefits increased due to additional stock compensation from ESOP, while other fees decreased due to lower professional fees[134](index=134&type=chunk) [Income Tax Expense](index=36&type=section&id=Income%20Tax%20Expense) - Income tax expense was **$578,000** for the three months ended March 31, 2025, up from **$428,000** in the prior year, with effective tax rates of **24.0%** and **24.3%**, respectively[135](index=135&type=chunk) [Management of Market Risk](index=36&type=section&id=Management%20of%20Market%20Risk) [General](index=36&type=section&id=General) - The Company's primary market risk is interest rate risk, managed by the Asset/Liability Management Committee to limit exposure of financial condition and results of operations to interest rate changes[136](index=136&type=chunk) - Strategies include limiting reliance on wholesale funding, growing transaction deposit accounts, increasing investment securities with shorter maturities, diversifying the loan portfolio with more commercial and consumer loans, and pricing residential loans to encourage balloon options[137](index=137&type=chunk)[138](index=138&type=chunk) - The Company does not engage in hedging activities or invest in high-risk mortgage derivatives[139](index=139&type=chunk) [Net Interest Income](index=37&type=section&id=Net%20Interest%20Income) Net Interest Income Sensitivity to Interest Rates | Change in Interest Rates (basis points) | Year 1 Forecast Net Interest Income (in thousands) | Year 1 Change from Level (%) | | :-------------------------------------- | :----------------------------------------------- | :--------------------------- | | +400 | $33,116 | -3.03% | | +200 | $33,727 | -1.24% | | Level | $34,152 | — | | -200 | $32,996 | -3.38% | | -400 | $30,915 | -9.48% | - At March 31, 2025, an instantaneous **200 basis point increase** in interest rates would result in a **1.24% decrease** in net interest income, while a **200 basis point decrease** would lead to a **3.38% decrease**[143](index=143&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary funding sources include deposits, loan/security payments, and proceeds from loan sales and security maturities. The Company also has access to FHLB lines of credit (**$216.7 million**, with **$54.0 million outstanding**) and Federal Reserve Bank lines (**$60.1 million**)[147](index=147&type=chunk) Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $1.9 | $1.2 | | Net cash used in investing activities | $(10.7) | $(14.7) | | Net cash provided by financing activities | $42.1 | $24.8 | Capital Ratios | Capital Ratio | March 31, 2025 Actual Ratio | December 31, 2024 Actual Ratio | Well Capitalized Ratio | | :--------------------------------- | :-------------------------- | :--------------------------- | :--------------------- | | Common Equity Tier 1 (to RWA) | 11.47% | 12.96% | 6.50% | | Total Capital (to RWA) | 12.61% | 14.12% | 10.00% | | Tier I Capital (to RWA) | 11.47% | 12.96% | 8.00% | | Tier I Capital (to Average Assets) | 10.57% | 12.01% | 5.00% | [Off-Balance Sheet Arrangements and Aggregate Contractual Obligations](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Aggregate%20Contractual%20Obligations) - Outstanding commitments to originate loans totaled **$88.9 million** at March 31, 2025[153](index=153&type=chunk) - Time deposits maturing within one year from March 31, 2025, totaled **$146.8 million**, with management expecting a substantial portion to be renewed[153](index=153&type=chunk)[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Refers to market risk disclosures within Item 2, 'Management's Discussion and Analysis,' specifically the 'Management of Market Risk' section - The required information for this item is included in Part I, Item 2 of this quarterly report under 'Management of Market Risk'[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal controls over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[156](index=156&type=chunk) - No material changes to internal controls over financial reporting occurred during the quarter ended March 31, 2025[157](index=157&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) No material legal proceedings were ongoing as of March 31, 2025, that would impact financial condition or results - No material legal proceedings were ongoing as of March 31, 2025[160](index=160&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable for smaller reporting companies, as per SEC regulations - Risk Factors are not applicable for smaller reporting companies[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the Company for the reporting period - This item is not applicable[162](index=162&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable[164](index=164&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[165](index=165&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including articles, bylaws, officer certifications, and XBRL financial statements - Exhibits include Articles of Incorporation, Bylaws, Certifications of Principal Executive and Financial Officers (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL formatted financial statements[166](index=166&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) Report signed by President & CEO Edward J. Cooney and SVP & CFO Brandi Pajot for Affinity Bancshares, Inc. on May 9, 2025 - The report was signed by Edward J. Cooney, President and CEO, and Brandi Pajot, Senior Vice President and CFO, on May 9, 2025[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)

```markdown [Executive Summary](index=1&type=section&id=Executive%20Summary) Affinity Bancshares, Inc. reported a significant increase in Q1 2025 net income to $1.8 million, driven by improved net interest income and lower noninterest expenses - Affinity Bancshares, Inc. announced a significant increase in net income for the first quarter of 2025, reaching **$1.8 million** compared to **$1.3 million** in the prior year, driven by improved net interest income and reduced noninterest expenses[1](index=1&type=chunk) [Performance Ratios](index=1&type=section&id=Performance%20Ratios) Q1 2025 performance ratios improved across profitability and efficiency metrics, including higher diluted EPS and return on assets, and a lower efficiency ratio - The company's performance ratios for Q1 2025 show improvements across key profitability and efficiency metrics compared to previous quarters and the prior year, including higher diluted EPS and return on assets, alongside a lower efficiency ratio[2](index=2&type=chunk) | Performance Ratios | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :-------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net income (in thousands) | $1,831 | $1,345 | $1,730 | $1,031 | $1,335 | | Diluted earnings per share | **0.28** | **0.20** | **0.26** | **0.16** | **0.20** | | Operating income | 1,996 | 1,738 | 1,883 | 1,763 | 1,374 | | Adjusted diluted earnings per share | **0.30** | **0.26** | **0.29** | **0.27** | **0.21** | | Common book value per share | 19.25 | 20.14 | 20.02 | 19.49 | 19.21 | | Tangible book value per share | **$16.40** | **$17.30** | 17.18 | **$16.64** | **$16.36** | | Total assets (in thousands) | 912,496 | 866,817 | 878,561 | 873,582 | 869,547 | | Return on average assets | **0.83%** | **0.61%** | **0.78%** | **0.48%** | **0.63%** | | Return on average equity | **5.68%** | **4.14%** | **5.43%** | **3.33%** | **4.38%** | | Equity to assets | **13.40%** | **14.90%** | **14.61%** | **14.32%** | **14.18%** | | Tangible equity to tangible assets | **11.65%** | **13.08%** | **12.80%** | **12.49%** | **12.33%** | | Net interest margin | **3.52%** | **3.56%** | **3.52%** | **3.71%** | **3.38%** | | Efficiency ratio | **68.55%** | **75.95%** | **71.48%** | **78.74%** | **75.96%** | [Results of Operations](index=1&type=section&id=Results%20of%20Operations) The company's Q1 2025 operations saw increased net income and net interest income, alongside decreased noninterest expenses, despite a slight dip in noninterest income [Net Income and Operating Income](index=1&type=section&id=Net%20Income%20and%20Operating%20Income) Net income for Q1 2025 increased to $1.8 million from $1.3 million in Q1 2024, primarily due to higher net interest income and lower noninterest expenses, partially offset by decreased noninterest income. Operating income also saw a substantial increase - Net income was **$1.8 million** for the three months ended March 31, 2025, compared to **$1.3 million** for the three months ended March 31, 2024[5](index=5&type=chunk) - Operating income for the three months ended March 31, 2025, was **$2.0 million**, compared to **$1.4 million** for the three months ended March 31, 2024[5](index=5&type=chunk) [Net Interest Income and Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income grew to $7.3 million in Q1 2025 from $6.7 million in Q1 2024, driven by increased interest income on loans. The net interest margin improved to 3.52% from 3.38%, as the yield on earning assets increased more significantly than funding costs - Net interest income was **$7.3 million** for the three months ended March 31, 2025, compared to **$6.7 million** for the three months ended March 31, 2024[5](index=5&type=chunk) - Net interest margin for the three months ended March 31, 2025, increased to **3.52%** from **3.38%** for the three months ended March 31, 2024[5](index=5&type=chunk) - The increase in net interest margin relates to increases in the yield on earning assets by **19 basis points**, while deposit and borrowing cost of funds only increased **three basis points**[5](index=5&type=chunk) [Noninterest Income and Expenses](index=1&type=section&id=Noninterest%20Income%20and%20Expenses) Noninterest income decreased by $103,000 to $481,000 in Q1 2025, primarily due to lower service charges on deposit accounts. Conversely, noninterest expenses decreased by $211,000 to $5.4 million, mainly attributable to reduced professional fees - Noninterest income decreased **$103,000** to **$481,000** for the three months ended March 31, 2025, as a result of a decrease in service charges on deposit accounts[5](index=5&type=chunk) - Non-interest expense decreased **$211,000** to **$5.4 million** for the three months ended March 31, 2025, compared to the 2024 period, due mainly to a decrease in professional fees[6](index=6&type=chunk) [Financial Condition and Asset Quality](index=2&type=section&id=Financial%20Condition%20and%20Asset%20Quality) The company's financial condition improved with asset growth and enhanced asset quality, marked by decreased non-performing loans and increased allowance coverage [Balance Sheet Overview](index=2&type=section&id=Balance%20Sheet%20Overview) The company experienced growth in total assets, loans, and deposits, while borrowings decreased. Equity saw a reduction due to dividend payments and stock repurchases - Total assets increased **$45.7 million** to **$912.5 million** at March 31, 2025, from **$866.8 million** at December 31, 2024, driven by loan growth and an increase in interest-earning deposits funded by deposit growth[10](index=10&type=chunk) - Total gross loans increased **$6.9 million** to **$721.0 million** at March 31, 2025, from **$714.1 million** at December 31, 2024, due to steady loan demand in construction and consumer loans[10](index=10&type=chunk) - Deposits increased by **$56.8 million** to **$730.3 million** at March 31, 2025, compared to **$673.5 million** at December 31, 2024, with a **$33.5 million** net increase in demand deposits and a **$23.3 million** increase in certificates of deposits[10](index=10&type=chunk) - Borrowings decreased by **$4.8 million** to **$54.0 million** at March 31, 2025, compared to **$58.8 million** at December 31, 2024, as an advance from the Bank Term Funding program was paid in full[10](index=10&type=chunk) - Equity decreased **$6.8 million** to **$122.3 million** at March 31, 2025, from **$129.1 million** at December 31, 2024, from payment of a **$1.50 per share** dividend and **$1.2 million** common stock repurchases[10](index=10&type=chunk) [Asset Quality](index=2&type=section&id=Asset%20Quality) Asset quality improved with a decrease in non-performing loans and an increase in the allowance for credit losses as a percentage of non-performing loans, alongside lower net loan charge-offs - Non-performing loans decreased to **$4.4 million** at March 31, 2025, from **$4.8 million** at December 31, 2024[10](index=10&type=chunk) - The allowance for credit losses as a percentage of non-performing loans was **190.3%** at March 31, 2025, as compared to **177.9%** at December 31, 2024[10](index=10&type=chunk) - Net loan charge-offs were **$89,000** for the three months ended March 31, 2025, as compared to net loan charge-offs of **$326,000** for the three months ended March 31, 2024[10](index=10&type=chunk) [Detailed Financial Statements](index=4&type=section&id=Detailed%20Financial%20Statements) This section presents comprehensive financial statements, including average balance sheets, consolidated balance sheets, and income statements, detailing the company's financial performance and position [Average Balance Sheets and Yields/Costs](index=4&type=section&id=Average%20Balance%20Sheets%20and%20Yields%2FCosts) The average balance sheet data illustrates the composition of interest-earning assets and interest-bearing liabilities, along with their respective yields and rates, highlighting the net interest rate spread and margin for the periods | Category | March 31, 2025 (Avg Balance) | March 31, 2025 (Avg Yield/Rate) | March 31, 2024 (Avg Balance) | March 31, 2024 (Avg Yield/Rate) | | :-------------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :------------------------------ | | **Interest-earning assets:** | | | | | | Loans | $713,878 | **6.05%** | $664,660 | **5.75%** | | Total interest-earning assets | $844,869 | **5.81%** | $802,572 | **5.62%** | | **Interest-bearing liabilities:** | | | | | | Total interest-bearing deposits | $556,272 | **3.10%** | $522,875 | **3.08%** | | Total interest-bearing liabilities | $611,128 | **3.16%** | $575,490 | **3.13%** | | Net interest rate spread | | **2.65%** | | **2.49%** | | Net interest income | | $7,337 | | $6,749 | | Net interest margin | | **3.52%** | | **3.38%** | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet provides a snapshot of the company's financial position at quarter-end, detailing assets, liabilities, and stockholders' equity, showing growth in total assets and deposits | Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Total assets | $912,496 | $866,817 | | Total deposits | $730,292 | $673,481 | | Federal Home Loan Bank advances and other borrowings | $54,000 | $58,815 | | Total liabilities | $790,217 | $737,702 | | Total stockholders' equity | $122,279 | $129,115 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income detail the company's revenues and expenses, showing the components contributing to the net income increase for the first quarter of 2025 compared to the prior year | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Total interest income | $12,105 | $11,221 | | Total interest expense | $4,768 | $4,472 | | Net interest income before provision for credit losses | $7,337 | $6,749 | | Provision for credit losses | $50 | $0 | | Total noninterest income | $481 | $584 | | Total noninterest expenses | $5,359 | $5,570 | | Income before income taxes | $2,409 | $1,763 | | Income tax expense | $578 | $428 | | Net income | $1,831 | $1,335 | | Diluted earnings per share | **$0.28** | **$0.20** | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP financial measures are provided with reconciliations to GAAP, offering additional insights into the company's operating performance and financial health [Explanation and Reconciliations](index=7&type=section&id=Explanation%20and%20Reconciliations) The company provides non-GAAP financial measures, such as operating net income, adjusted diluted EPS, tangible book value per share, and tangible equity to tangible assets, to offer additional insights into its financial condition and performance, with detailed reconciliations to GAAP measures - Non-GAAP financial measures are utilized by regulators and market analysts to evaluate a company's financial condition and are useful to investors, but should not be viewed as a substitute for GAAP results[18](index=18&type=chunk) | Non-GAAP Measure | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------ | :------------- | :---------------- | :------------- | | Operating net income (in thousands) | $1,996 | $1,738 | $1,374 | | Adjusted diluted earnings per share | **$0.30** | **$0.26** | **$0.21** | | Tangible book value per common share | **$16.40** | **$17.30** | **$16.36** | | Tangible equity to tangible assets | **11.65%** | **13.08%** | **12.33%** | [Company Information and Forward-Looking Statements](index=2&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) This section provides background on Affinity Bancshares, Inc. and includes important disclosures regarding forward-looking statements and associated risks [About the Company](index=2&type=section&id=About%20the%20Company) Affinity Bancshares, Inc. is a Maryland corporation based in Covington, Georgia, operating through its banking subsidiary, Affinity Bank, which has a history dating back to 1928 and maintains several offices across Georgia - Affinity Bancshares, Inc. is a Maryland corporation based in Covington, Georgia, and its banking subsidiary, Affinity Bank, opened in 1928[8](index=8&type=chunk) - Affinity Bank operates a full-service office in Atlanta, Georgia, two full-service offices in Covington, Georgia, and a loan production office serving the Alpharetta and Cumming, Georgia markets[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements regarding future plans, strategies, and expectations, which are subject to significant business, economic, and competitive uncertainties and contingencies, and the company is not obligated to update them - This release may contain forward-looking statements describing future plans, strategies, and expectations, identifiable by words such as 'estimate,' 'project,' 'believe,' 'intend,' 'anticipate,' 'assume,' 'plan,' 'seek,' 'expect,' 'will,' 'may,' 'should,' 'indicate,' 'would,' 'contemplate,' 'continue,' 'target' and words of similar meaning[9](index=9&type=chunk) - Forward-looking statements are based on current beliefs and expectations and are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the company's control[9](index=9&type=chunk) - Factors that could have a material adverse effect on operations include changes in general economic conditions, interest rates and inflation, asset quality, funding access, real estate values, laws or regulations, liquidity, technology, IT security, ability to introduce new products, value of goodwill, ability to integrate acquired operations, accounting policies, ability to retain key employees, and effects of natural disasters and geopolitical events[11](index=11&type=chunk) ```

Financial Performance - Net income decreased by $1.0 million, or 15.6%, to $5.4 million for the year ended December 31, 2024, compared to $6.4 million for the year ended December 31, 2023, attributed to higher deposit costs and noninterest expenses [190]. - Net income decreased by $1.0 million, or 15.6%, to $5.4 million for the year ended December 31, 2024, compared to $6.4 million for 2023 [210]. - Noninterest income decreased by $451,000, or 18.3%, to $2.0 million for the year ended December 31, 2024, from $2.5 million for 2023 [221]. - Income tax expense decreased to $1.5 million for the year ended December 31, 2024, compared to $1.9 million for the year ended December 31, 2023, due to decreased income before income taxes [224]. Asset and Liability Management - Total assets increased by $23.6 million, or 2.8%, to $866.8 million at December 31, 2024, from $843.3 million at December 31, 2023, primarily due to an increase in net loans of $54.7 million, or 8.4% [189]. - Total deposits decreased by $962,000, or 0.1%, to $673.5 million at December 31, 2024, with increases in certificates of deposit and money market accounts offset by decreases in non-interest-bearing checking accounts [202]. - Cash and cash equivalents decreased by $8.6 million, or 17.2%, to $41.4 million at December 31, 2024, due to loan funding at year end [199]. - Securities held-to-maturity decreased to $27.3 million at December 31, 2024, from $34.2 million at December 31, 2023, as securities were called throughout the year [201]. - The loan-to-deposit ratio at December 31, 2024, was 106.0%, compared to 97.8% at December 31, 2023, indicating a higher reliance on loans relative to deposits [202]. Income and Expense Analysis - Interest income increased by $5.3 million, or 12.3%, to $48.0 million for the year ended December 31, 2024, driven by a $5.9 million increase in interest income on loans [190]. - Interest income increased by $5.3 million, or 12.3%, to $48.0 million for the year ended December 31, 2024, from $42.7 million for 2023 [211]. - Interest expense increased by $3.3 million, or 21.3%, to $18.8 million for the year ended December 31, 2024, reflecting increases across all interest expense categories [190]. - Interest expense increased by $3.3 million, or 21.3%, to $18.8 million for the year ended December 31, 2024, compared to $15.5 million for 2023 [214]. - Net interest income before provision for credit losses increased by $2.0 million, or 7.2%, to $29.2 million for the year ended December 31, 2024, from $27.2 million for 2023 [217]. - Net interest margin improved to 3.54% for the year ended December 31, 2024, compared to 3.35% for 2023 [217]. - Non-interest expenses increased by $2.4 million, or 11.5%, to $23.8 million for the year ended December 31, 2024, from $21.3 million for the year ended December 31, 2023 [223]. Credit and Provisions - Provisions for credit losses recorded were $438,000 for the year ended December 31, 2024, compared to a recovery of $42,000 for 2023 [219]. - Allowance for credit losses to total loans was 1.19% at December 31, 2024, compared to 1.35% at December 31, 2023 [219]. Capital and Liquidity - Stockholders' equity increased by $7.6 million, or 6.3%, to $129.1 million at December 31, 2024, from $121.5 million at December 31, 2023 [204]. - The liquidity ratio was maintained at 12.0% or greater, with compliance confirmed at December 31, 2024 [233]. - The company is categorized as well capitalized and exceeded all regulatory capital requirements as of December 31, 2024 [238]. Future Projections and Commitments - Net interest income is projected to decrease by 6.87% to $29.6 million with a 400 basis point increase in interest rates [230]. - As of December 31, 2024, the company had outstanding commitments to originate loans of $91.2 million [239]. Other Information - The company had a $40.0 million line of credit with the Federal Home Loan Bank of Atlanta, with $54.0 million in borrowings as of December 31, 2024 [233]. - The company does not engage in hedging activities, such as futures or options [227]. - A special cash dividend of $1.50 per share was declared on February 27, 2025, to be paid on March 27, 2025 [243].

Financial Performance - Net income for the year ended December 31, 2024, was $5.4 million, a decrease of 15.6% from $6.4 million in 2023[2] - Operating income for the year ended December 31, 2024, increased to $6.8 million from $6.4 million in 2023[4] - Net interest income for the year ended December 31, 2024, was $28.7 million, up from $27.2 million in 2023, reflecting an increase in interest income on loans[7] - Net interest income rose to $29,166 thousand in 2024, compared to $27,198 thousand in 2023, marking an increase of 7.24%[13] - Net interest income after provision for credit losses for the year ended December 31, 2024, was $28,728,000, up from $27,240,000 in 2023, reflecting a growth of 5.5%[19] - Net income for Q4 2024 was $1,345,000, down 11.2% from $1,514,000 in Q4 2023[19] - Basic earnings per share for Q4 2024 was $0.21, a decrease from $0.24 in Q4 2023, reflecting a decline of 12.5%[19] - Operating net income for Q4 2024 was $1,738,000, compared to $1,514,000 in Q4 2023, indicating an increase of 14.9%[21] - Adjusted diluted earnings per share for Q4 2024 was $0.26, compared to $0.23 in Q4 2023, an increase of 13%[21] Asset and Liability Management - Total assets increased by $23.6 million to $866.8 million at December 31, 2024, from $843.3 million at December 31, 2023[7] - Total assets grew to $872,350 thousand in 2024, compared to $863,253 thousand in 2023, an increase of 1.27%[13] - Total liabilities increased to $746,606 thousand in 2024 from $744,452 thousand in 2023, a slight increase of 0.15%[13] - Cash and cash equivalents decreased by $8.6 million to $41.4 million at December 31, 2024, from $50.0 million at December 31, 2023[7] - Deposits decreased by $1.0 million to $673.5 million at December 31, 2024, with a net decrease in demand deposits[7] Loan Performance - Total gross loans rose by $54.2 million to $714.1 million at December 31, 2024, driven by steady demand in various loan categories[7] - Loans outstanding increased to $687,487 thousand in 2024 from $660,045 thousand in 2023, representing a growth of 4.23%[13] - The average yield on loans was 6.01% in 2024, up from 5.37% in 2023, showing improved loan pricing[13] - Non-performing loans decreased to $4.8 million at December 31, 2024, from $7.4 million at December 31, 2023[11] Expense Management - Non-interest expense increased by $2.4 million to $23.8 million for the year ended December 31, 2024, primarily due to merger-related professional fees[7] - Total noninterest expenses increased to $5,768,000 in Q4 2024, compared to $5,432,000 in Q4 2023, representing a rise of 6.2%[19] Profitability Metrics - Net interest margin improved to 3.54% in 2024, up from 3.35% in 2023, indicating enhanced profitability on interest-earning assets[13] - The net interest rate spread improved to 2.59% in 2024, compared to 2.50% in 2023, indicating better management of interest-earning assets and liabilities[13] - The allowance for credit losses as a percentage of non-performing loans was 177.9% at December 31, 2024, compared to 120.1% at December 31, 2023[11] Equity and Book Value - Total stockholders' equity rose to $125,744 thousand in 2024, up from $118,801 thousand in 2023, reflecting a growth of 5.43%[13] - Tangible book value per common share increased to $17.30 in Q4 2024 from $16.08 in Q4 2023, a growth of 7.6%[21] - Equity to assets ratio (GAAP) was 14.90% in Q4 2024, up from 14.41% in Q4 2023[21]

Financial Performance - Net income for the three months ended September 30, 2024, was $1.7 million, an increase from $1.6 million for the same period in 2023 [82]. - Net income for the nine months ended September 30, 2024, was $4.1 million, down from $4.9 million for the same period in 2023, a decrease of 16.3% [98]. - Interest income increased by $4.1 million, or 13.1%, to $35.7 million for the nine months ended September 30, 2024, due to higher income from loans and investment securities [99]. - Net interest income increased by $1.2 million, or 6.1%, to $21.7 million for the nine months ended September 30, 2024, with a net interest margin of 3.54% [106]. - Net interest income increased by $513,000, or 7.4%, to $7.4 million for the three months ended September 30, 2024 [88]. Asset and Loan Growth - Total assets increased by $35.3 million, or 4.2%, to $878.6 million at September 30, 2024, from $843.3 million at December 31, 2023, primarily due to an increase in loans [70]. - Gross loans increased by $37.7 million, or 5.7%, to $697.6 million at September 30, 2024, with construction loans rising by $16.0 million, or 33.6% [70]. - Average balance of loans increased by $38.4 million, or 5.8%, to $698.9 million for the three months ended September 30, 2024 [83]. - Commitments to originate loans outstanding as of September 30, 2024, totaled $80.9 million [132]. Deposits and Funding - Total deposits increased by $9.3 million, or 1.4%, to $683.8 million at September 30, 2024, driven by increases in demand deposits and money market accounts [71]. - Demand deposits increased by $9.2 million, or 3.9%, reflecting cyclical demands from business customers [71]. - The loan-to-deposit ratio at September 30, 2024, was 102.0%, compared to 97.8% at December 31, 2023 [71]. - The company had a $218.6 million line of credit with the Federal Home Loan Bank of Atlanta, with $54.0 million in advances outstanding [123]. Interest Income and Expense - Interest income rose by $1.3 million, or 11.6%, to $12.3 million for the three months ended September 30, 2024, primarily driven by a $1.5 million increase in loan income [83]. - Interest expense increased by $2.9 million to $14.0 million for the nine months ended September 30, 2024, primarily due to additional borrowings [102]. - Interest expense increased by $765,000 to $4.9 million for the three months ended September 30, 2024, due to higher average balances of interest-bearing liabilities [85]. - Interest expense on money market accounts increased by $251,000 to $1.2 million for the three months ended September 30, 2024 [86]. Credit Quality - Provisions for credit losses are established to absorb known and inherent losses in the loan portfolio [90]. - No provision for credit losses was recorded for the three months ended September 30, 2024, with an allowance for credit losses of $8.4 million, down from $9.2 million at September 30, 2023, representing a decrease of 8.7% [93]. - Net charge-offs for the three months ended September 30, 2024, were $63,000, compared to $41,000 for the same period in 2023, indicating an increase of 53.7% [93]. - The allowance for credit losses to total loans was 1.20% at September 30, 2024, compared to 1.35% at December 31, 2023 [107]. Non-Interest Income and Expenses - Non-interest income decreased by $64,000, or 10.2%, to $566,000 for the three months ended September 30, 2024, primarily due to a decline in merchant services volume [95]. - Total non-interest expenses increased by $298,000, or 5.5%, to $5.7 million for the three months ended September 30, 2024, driven by an increase in salaries and employee benefits [96]. Capital and Liquidity - Stockholders' equity rose by $6.9 million, or 5.7%, to $128.4 million at September 30, 2024, primarily due to net income of $4.1 million during the first nine months of 2024 [73]. - As of September 30, 2024, the Bank's Common Equity Tier 1 capital ratio was 12.82%, exceeding the regulatory requirement of 4.50% [130]. - The total capital ratio as of September 30, 2024, was 13.97%, above the required minimum of 8.00% [130]. - The company is committed to maintaining a strong liquidity position and anticipates sufficient funds to meet current funding commitments [126]. Tax and Cash Flow - The effective tax rate for the nine months ended September 30, 2024, was 23.9%, compared to 23.6% for the same period in 2023 [110]. - For the nine months ended September 30, 2024, net cash provided by operating activities was $5.9 million, compared to $6.1 million for the same period in 2023 [125]. - Net cash used in investing activities was $31.8 million for the nine months ended September 30, 2024, compared to $29.7 million for the same period in 2023 [125]. - Net cash provided by financing activities was $28.1 million for the nine months ended September 30, 2024, which included net proceeds from borrowing of $18.8 million from the Federal Reserve Bank [125]. Interest Rate Sensitivity - As of September 30, 2024, a 200 basis point increase in interest rates would result in a 0.15% increase in net interest income, while a decrease of the same magnitude would lead to a 4.20% decrease [119].