Affinity Bancshares(AFBI) - 2024 Q2 - Quarterly Report

Financial Performance - Net income for the three months ended June 30, 2024, was $1.0 million, a decrease from $1.6 million for the same period in 2023, primarily due to increased interest and noninterest expenses [118]. - Net income decreased to $2.4 million for the six months ended June 30, 2024, down from $3.3 million for the same period in 2023 [135]. - Interest income increased by $2.9 million, or 13.9%, to $23.4 million for the six months ended June 30, 2024, compared to $20.6 million for the same period in 2023 [136]. - Net interest income increased by $727,000, or 5.3%, to $14.3 million for the six months ended June 30, 2024, compared to $13.6 million for the same period in 2023 [143]. Asset and Loan Growth - Total assets increased by $30.3 million, or 3.6%, to $873.6 million at June 30, 2024, from $843.3 million at December 31, 2023, primarily due to an increase in loans [106]. - Gross loans increased by $32.7 million, or 5.0%, to $692.6 million at June 30, 2024, with construction loans rising by $14.7 million, or 30.7% [107]. - The average balance of loans increased by $16.0 million, or 2.4%, to $681.9 million for the three months ended June 30, 2024, reflecting steady loan demand [119]. Deposits and Funding - Total deposits increased by $15.3 million, or 2.3%, to $689.7 million at June 30, 2024, driven by increases in demand deposits and money market accounts [109]. - Demand deposits increased by $9.9 million, or 4.1%, reflecting business customers' cyclical demands at year-end [109]. - The company had $40.0 million of FHLB advances and $11.8 million in other borrowings at June 30, 2024 [110]. Interest Income and Expense - Interest income increased by $1.4 million, or 12.5%, to $12.2 million for the three months ended June 30, 2024, driven by a $1.8 million increase in loan income, which rose 20.1% to $10.5 million [119]. - Interest expense increased by $484,000 to $4.7 million for the three months ended June 30, 2024, due to higher average balances of interest-bearing liabilities and increased rates [121]. - Interest expense increased by $2.1 million to $9.1 million for the six months ended June 30, 2024, compared to $7.0 million for the same period in 2023 [139]. Non-Interest Income and Expenses - Non-interest income increased by $28,000, or 4.1%, to $706,000 for the three months ended June 30, 2024, from $678,000 at December 31, 2023 [131]. - Total non-interest expenses rose by $1,435,000, or 27.2%, to $6,719,000 for the three months ended June 30, 2024, compared to $5,284,000 for the same period in 2023 [133]. Credit Quality - The allowance for credit losses was $8.5 million at June 30, 2024, down from $8.9 million at December 31, 2023, with the allowance to total loans ratio at 1.22% [129]. - Net charge-offs were $134,000 for the three months ended June 30, 2024, compared to net loan recoveries of $18,000 for the same period in 2023 [129]. - Provisions for credit losses were recorded at $213,000 for the six months ended June 30, 2024, compared to $7,000 for the same period in 2023 [145]. Capital and Liquidity - The company exceeded all regulatory capital requirements as of June 30, 2024, with a Common Equity Tier 1 ratio of 12.47% [164]. - Total capital to risk-weighted assets was 13.64% as of June 30, 2024, compared to 13.65% as of December 31, 2023 [165]. - As of June 30, 2024, the company had a liquidity position with a $217.4 million line of credit from the Federal Home Loan Bank of Atlanta, with $40.0 million in advances outstanding [159]. Operational Activities - Net cash provided by operating activities was $1.8 million for the six months ended June 30, 2024, a decrease from $4.3 million for the same period in 2023 [161]. - Net cash used in investing activities was $28.6 million for the six months ended June 30, 2024, compared to $28.9 million for the same period in 2023 [161]. - Net cash provided by financing activities was $27.1 million for the six months ended June 30, 2024, a significant decrease from $81.2 million for the same period in 2023 [161]. Management and Governance - The company anticipates retaining a significant portion of maturing time deposits based on current pricing strategy [162]. - The company’s management concluded that the disclosure controls and procedures were effective as of June 30, 2024 [168].