8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2023

Affinity Bancshares, Inc.

(Exact name of Registrant as Specified in Its Charter)

Maryland	001-39914	82-1147778
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
3175 Highway 278
Covington, Georgia		30014
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: 770 786-7088

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	AFBI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On April 27, 2023, Affinity Bancshares, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2023. The press release is attached to this Current Report as Exhibit 99.1. This Current Report and the press release are being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for any purpose.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Exhibit
99.1	Press Release dated April 27, 2023
99.2	Supplemental Financial Information dated April 27, 2023
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			AFFINITY BANCSHARES, INC.
Date:	April 27, 2023	By:	/s/ Brandi Pajot
			Brandi Pajot Senior Vice President and Chief Financial Officer

EX-99

Affinity Bancshares, Inc.

Announces First Quarter 2023

Financial Results

Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the “Company”), the holding company for Affinity Bank (the “Bank”), today announced net income of $1.7 million for the three months ended March 31, 2023, as compared to $1.8 million for the three months ended March 31, 2022.

	At or for the three months ended,
Performance Ratios:	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Net income (in thousands)	$	1,722		$	1,699		$	1,861		$	1,783		$	1,791
Diluted earnings per share		0.26			0.26			0.27			0.27			0.26
Common book value per share		18.02			17.73			17.37			17.51			17.58
Tangible book value per share (1)		15.20			14.92			14.57			14.68			14.75
Total assets (in thousands)		932,302			791,283			776,390			766,679			760,208
Return on average assets		0.84	%		0.84	%		0.95	%		0.95	%		0.97	%
Return on average equity		5.90	%		5.78	%		6.30	%		6.13	%		5.97	%
Equity to assets		12.69	%		14.80	%		14.84	%		15.05	%		15.31	%
Tangible equity to tangible assets (1)		10.92	%		12.75	%		12.75	%		12.93	%		13.17	%
Net interest margin		3.58	%		3.85	%		4.12	%		4.06	%		4.47	%
Efficiency ratio		69.73	%		71.38	%		67.62	%		67.23	%		69.00	%
(1) Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and reconciliation to GAAP.

Net Income

•Net income was $1.7 million for the three months ended March 31, 2023, as compared to $1.8 million for the three months ended March 31, 2022, as a result of an increase in deposit interest expense offset by an increase in interest income and decreases in noninterest expenses.

•Operating net income was $1.7 million and $0.26 diluted earnings per share for the three months ended March 31, 2023, as compared to $1.5 million and $0.22 diluted earnings per share for the three months ended March 31, 2022.

Results of Operations

•Net interest income was $6.9 million for the three months ended March 31, 2023 compared to $7.8 million for the three months ended March 31, 2022, due to an increase in deposit costs and recognition of remaining purchase accounting fair value discounts upon the payoff of acquired Federal Home Loan Bank (FHLB) advances in the first quarter of 2022, partially offset by an increase in interest income on loans.

•Net interest margin for the three months ended March 31, 2023 decreased to 3.58% from 4.53% for the three months ended March 31, 2022. The Company anticipates it will experience continued margin compression in 2023 as a result of recent increases in market interest rates along with the mark on the FHLB advances from acquisition that was recognized upon payoff in first quarter 2022.

•Noninterest income was $552 thousand for the three months ended March 31, 2023 and $595 thousand for the three months ended March 31, 2022. The decrease was attributable to a decrease in mortgage fee income.

•Non-interest expense was $5.2 million and $5.8 million for the three months ended March 31, 2023 and 2022, respectively. The decrease was a result of the FHLB prepayment penalties paid in first quarter 2022.

Financial Condition

•Total assets increased $141.0 million to $932.3 million at March 31, 2023 from $791.3 million at December 31, 2022 to further enhance liquidity.

•Total net loans increased $15.3 million to $652.2 million at March 31, 2023 from $636.9 million at December 31, 2022. The increase was due to steady loan demand.

•Non-owner occupied office loans totaled $26.2 million at March 31, 2023; average LTV on these loans is 45%;

o$10.4 million medical/ dental tenants

o$15.8 million to other various tenants.

•Investment securities held-to-maturity unrealized losses were $1.3 million, net of tax. Investment securities available-for-sale unrealized losses were $6.2 million, net of tax.

•Cash and cash equivalents increased to $136.9 million at March 31, 2023 from $26.3 million at December 31, 2023, primarily due to an increase in deposits.

•Deposits increased by $93.6 million to $750.8 million at March 31, 2023 compared to $657.2 million at December 31, 2022, in part due to increases in certificates of deposits of $116.2 million offset by $22.6 million decreases in non-time deposits, as customers increased deposits in higher-yielding accounts during the current interest rate environment. The certificates of deposits increase included brokered deposits totaling $85.6 million with an average life of three years and an average interest rate of 5.07%.

•Uninsured deposits were approximately $91.9 million and represented 12.1% of total deposits.

•Borrowings increased by $45.0 million to $55.0 million at March 31, 2023 compared to $10.0 million at December 31, 2022 as we continue to evaluate borrowing needs related to enhancing bank liquidity.

Asset Quality

•Non-performing loans increased to $6.9 million at March 31, 2023 from $6.7 million at December 31, 2022.

•The allowance for credit losses as a percentage of non-performing loans was 145.49% at March 31, 2023, as compared to 138.8% at December 31, 2022.

•Allowance for credit losses decreased to 1.40% at March 31, 2023 from 1.46% of total loans at December 31, 2022.

•Net loan charge-offs were $91 thousand for the three months ended March 31, 2023, as compared to $3 thousand for the three months ended March 31, 2022.

About Affinity Bancshares, Inc.

The Company is a Maryland corporation based in Covington, Georgia. The Company’s banking subsidiary, Affinity Bank, opened in 1928 and currently 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.

Forward-Looking Statements

In addition to historical information, this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which describe the future plans, strategies and expectations of the Company. Forward-looking statements can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning. Forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Accordingly, you should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in general economic conditions, interest rates and inflation; changes in asset quality; our ability to access cost-effective funding; fluctuations in real estate values; changes in laws or regulations; changes in liquidity, including the size and

composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; changes in technology; failures or breaches of our IT security systems; our ability to introduce new products and services and capitalize on growth opportunities; our ability to successfully integrate acquired operations or assets; changes in accounting policies and practices; our ability to retain key employees; and the effects of natural disasters and geopolitical events, including terrorism, conflict and acts of war. These risks and other uncertainties are further discussed in the reports that the Company files with the Securities and Exchange Commission.

Average Balance Sheets

The following tables set forth average balance sheets, average annualized yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are monthly average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

	For the Three Months Ended March 31,
	2023							2022
	Average Outstanding Balance		Interest		Average Yield/Rate			Average Outstanding Balance		Interest			Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	651,750	$	8,291		5.16	%	$	586,762	$	6,996			4.84	%
Investment securities held-to-maturity		32,898		503		6.20	%		—		—			—
Investment securities available-for-sale		48,844		411		3.41	%		48,648		260			2.14	%
Interest-earning deposits and federal funds		45,758		488		4.32	%		48,231		17			0.14	%
Other investments		2,643		35		5.39	%		1,000		6			2.33	%
Total interest-earning assets		781,893		9,728		5.05	%		684,641		7,279			4.25	%
Non-interest-earning assets		51,044							62,343
Total assets		832,937						$	746,984
Interest-bearing liabilities:
Interest-bearing checking accounts	$	91,856	$	45		0.20	%	$	96,273	$	42			0.17	%
Money market accounts		139,495		661		1.92	%		144,455		88			0.25	%
Savings accounts		95,897		552		2.34	%		86,195		83			0.38	%
Certificates of deposit		149,058		1,056		2.87	%		94,465		290			1.23	%
Total interest-bearing deposits		476,306		2,314		1.97	%		421,388		503			0.48	%
FHLB advances and other borrowings		46,723		516		4.48	%		8,821		(975	)		(44.20	)%
Total interest-bearing liabilities		523,029		2,830		2.19	%		430,209		(472	)		(0.44	)%
Non-interest-bearing liabilities		191,659							195,024
Total liabilities		714,688							625,233
Total stockholders' equity		118,249							121,751
Total liabilities and stockholders' equity	$	832,937						$	746,984
Net interest rate spread						2.86	%							4.69	%
Net interest income			$	6,898						$	7,751
Net interest margin						3.58	%							4.53	%

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

(unaudited)

	March 31, 2023			December 31, 2022
	(Dollars in thousands except per share amounts)
Assets
Cash and due from banks	$	5,714		$	2,928
Interest-earning deposits in other depository institutions		131,172			23,396
Cash and cash equivalents		136,886			26,324
Investment securities available-for-sale		51,154			46,200
Investment securities held-to-maturity (estimated fair value of $32,507)		34,119			26,527
Other investments		2,996			1,082
Loans, net		652,192			636,909
Other real estate owned		2,901			2,901
Premises and equipment, net		4,156			4,257
Bank owned life insurance		15,811			15,724
Intangible assets		18,510			18,558
Other assets		13,577			12,801
Total assets	$	932,302		$	791,283
Liabilities and Stockholders' Equity
Liabilities:
Non-interest-bearing checking	$	183,862		$	190,297
Interest-bearing checking		97,537			91,167
Money market accounts		134,872			148,097
Savings accounts		92,382			101,622
Certificates of deposit		242,186			125,989
Total deposits		750,839			657,172
Federal Home Loan Bank advances and other borrowings		55,000			10,025
Accrued interest payable and other liabilities		8,153			6,983
Total liabilities		813,992			674,180
Stockholders' equity:
Common stock (par value $0.01 per share, 40,000,000 shares authorized;    6,566,137 issued and outstanding at March 31, 2023 and 6,605,384    issued and outstanding at December 31, 2022)		66			66
Preferred stock (10,000,000 shares authorized, no shares outstanding)		—			—
Additional paid in capital		62,549			63,130
Unearned ESOP shares		(4,743	)		(4,795	)
Retained earnings		66,619			65,357
Accumulated other comprehensive loss		(6,181	)		(6,655	)
Total stockholders' equity		118,310			117,103
Total liabilities and stockholders' equity	$	932,302		$	791,283

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

	Three Months Ended March 31,
	2023		2022
	(Dollars in thousands except per share amounts)
Interest income:
Loans, including fees	$	8,291	$	6,996
Investment securities		949		266
Interest-earning deposits		488		17
Total interest income		9,728		7,279
Interest expense:
Deposits		2,314		503
FHLB advances and other borrowings		516		(975	)
Total interest expense		2,830		(472	)
Net interest income before provision for credit losses		6,898		7,751
Provision for credit losses		7		250
Net interest income after provision for credit losses		6,891		7,501
Noninterest income:
Service charges on deposit accounts		391		392
Other		161		203
Total noninterest income		552		595
Noninterest expenses:
Salaries and employee benefits		3,004		3,008
Occupancy		644		582
Advertising		97		80
Data processing		493		494
FHLB prepayment penalties		—		647
Other		956		947
Total noninterest expenses		5,194		5,758
Income before income taxes		2,249		2,338
Income tax expense		527		547
Net income	$	1,722	$	1,791
Weighted average common shares outstanding
Basic		6,599,672		6,806,405
Diluted		6,681,680		6,908,665
Basic earnings per share	$	0.26	$	0.26
Diluted earnings per share	$	0.26	$	0.26

Explanation of Certain Unaudited Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table below for details on the earnings impact of these items.

	At or For the Period Ending
Non-GAAP Reconciliation	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Operating net income reconciliation
Net income (GAAP)	$	1,722		$	1,699		$	1,861		$	1,783		$	1,791
FHLB mark from called borrowings		—			—			—			—			988
FHLB prepayment penalties		—			—			—			—			647
Income tax expense		—			—			—			—			(87	)
Operating net income	$	1,722		$	1,699		$	1,861		$	1,783		$	1,537
Weighted average diluted shares		6,681,680			6,708,922			6,752,152			6,684,721			6,908,665
Adjusted earnings per share	$	0.26		$	0.26		$	0.27		$	0.27		$	0.22
Tangible book value per common share reconciliation
Book Value per common share (GAAP)	$	18.02		$	17.73		$	17.37		$	17.51		$	17.58
Effect of goodwill and other intangibles		(2.82	)		(2.81	)		(2.80	)		(2.83	)		(2.83	)
Tangible book value per common share	$	15.20		$	14.92		$	14.57		$	14.68		$	14.75
Tangible equity to tangible assets reconciliation
Equity to assets (GAAP)		12.69	%		14.80	%		14.84	%		15.05	%		15.31	%
Effect of goodwill and other intangibles		(1.77	)%		(2.05	)%		(2.09	)%		(2.12	)%		(2.14	)%
Tangible equity to tangible assets (1)		10.92	%		12.75	%		12.75	%		12.93	%		13.17	%
(1) Tangible assets is total assets less intangible assets. Tangible equity is total equity less intangible assets.

EX-99

AFBI Share Information Book and Tangible Value Per Share * See Non-GAAP Reconciliation

AFBI Selected Data ($ in thousands) Net Earnings 12% increase in Adjusted Net Earnings 18% increase in Adjusted diluted earnings per share * See Non-GAAP reconciliation on Slide 7

AFBI Selected Data Loan Composition As of March 31, 2023

AFBI Selected Data Deposit Composition As of March 31, 2023

AFBI Selected Deposit Data Deposits (in thousands) * All deposits are held at Affinity Bank and include the Company’s own funds. Estimated uninsured deposits are approximately $91.9 million or 12.2% of total deposits.* Consumer deposits total $20.8 million or 22.4 % of estimated uninsured deposits. Business deposits total $71.1 million or 77.6% of estimated uninsured deposits. Consumer and Business demand deposits each represent approximately 50% of total demand deposits. Dental deposits total $130.1 million and represent 17.1 % of total deposits.

AFBI Share Information NON GAAP RECONCILIATION

XML

Document And Entity Information	Apr. 27, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Apr. 27, 2023
Entity Registrant Name	Affinity Bancshares, Inc.
Entity Central Index Key	0001823406
Entity Emerging Growth Company	false
Securities Act File Number	001-39914
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	82-1147778
Entity Address, Address Line One	3175 Highway 278
Entity Address, City or Town	Covington
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30014
City Area Code	770
Local Phone Number	786-7088
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	AFBI
Security Exchange Name	NASDAQ