On July 26, 2024, Affinity Bancshares Inc (AFBI, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Affinity Bancshares Inc is the holding company for Affinity Bank, which offers a variety of deposit accounts and invests in various loan types and securities.
Net Income and Earnings Per Share
Affinity Bancshares Inc reported a net income of $1.0 million for the three months ended June 30, 2024, a decrease from $1.6 million for the same period in 2023. Diluted earnings per share also declined to $0.16 from $0.24 in the previous year.
Key Financial Metrics
| Metric | June 30, 2024 | June 30, 2023 |
|---|---|---|
| Net Income (in thousands) | $1,031 | $1,590 |
| Diluted Earnings Per Share | $0.16 | $0.24 |
| Return on Average Assets | 0.48% | 0.71% |
| Return on Average Equity | 3.33% | 5.37% |
| Net Interest Margin | 3.71% | 3.17% |
| Efficiency Ratio | 78.74% | 71.68% |
Income Statement Highlights
Net interest income for the quarter was $7.6 million, up from $6.7 million in the same period last year. This increase was driven by higher interest income on loans and investment securities, partially offset by rising deposit and borrowing costs. The net interest margin improved to 3.71% from 3.17% in Q2 2023.
Noninterest income saw a modest increase to $706,000, while noninterest expenses rose significantly by $1.4 million to $6.7 million. The increase in expenses was primarily due to higher professional fees related to the merger with Atlanta Postal Credit Union and increased salaries and employee benefits.
Balance Sheet and Asset Quality
Total assets grew to $872.6 million as of June 30, 2024, up from $843.3 million at the end of 2023. This growth was mainly attributed to a $32.7 million increase in total gross loans, driven by strong demand in construction and commercial non-owner occupied properties.
Non-performing loans decreased significantly to $3.0 million from $7.4 million at the end of 2023. The allowance for credit losses as a percentage of non-performing loans improved to 282.0%, compared to 120.1% at the end of 2023.
Liquidity and Capital
Deposits increased by $15.3 million to $689.7 million, with a notable $18.4 million rise in demand deposits. Borrowings also increased by $11.8 million to $51.8 million, reflecting the company's efforts to enhance liquidity.
Common book value per share rose to $19.49, and tangible book value per share increased to $16.64. The equity to assets ratio stood at 14.33%, while the tangible equity to tangible assets ratio was 12.50%.
Commentary
“The increase in net interest income and margin reflects our strategic focus on optimizing our earning assets and managing our funding costs effectively,” said the company in its earnings release.
Conclusion
While Affinity Bancshares Inc (AFBI, Financial) faced challenges with rising noninterest expenses, the company demonstrated resilience through improved net interest income and a stronger balance sheet. The significant decrease in non-performing loans and the strategic growth in assets and deposits highlight the company's ongoing efforts to strengthen its financial position.
Explore the complete 8-K earnings release (here) from Affinity Bancshares Inc for further details.
