Affinity Bancshares(US:AFBI)2025-05-01 20:30markdown [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)