8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 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): July 27, 2023

Affinity Bancshares, Inc.

(Exact name of Registrant as Specified in Its Charter)

Maryland	001-39914	82-1147778
(State or Other Jurisdiction<br>of Incorporation)	(Commission File Number)	(IRS Employer<br>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
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Not Applicable
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(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<br>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 July 27, 2023, Affinity Bancshares, Inc. issued a press release announcing its financial results for the quarter ended June 30, 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 July 27, 2023
99.2	/exhibitSupplemental Financial Information dated July 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:	July 27, 2023	By:	/s/ Brandi Pajot
			Brandi Pajot<br>Senior Vice President and Chief Financial Officer

EX-99.1

Affinity Bancshares, Inc.

Announces Second Quarter 2023

Financial Results

Affinity Bancshares, Inc. (NASDAQ:“AFBI”) (the “Company”), the holding company for Affinity Bank (the “Bank”), today announced net income of $1.6 million for the three months ended June 30, 2023, as compared to $1.8 million for the three months ended June 30, 2022.

	At or for the three months ended,
Performance Ratios:	June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
Net income (in thousands)	$	1,590		$	1,722		$	1,699		$	1,861		$	1,783
Diluted earnings per share		0.24			0.26			0.26			0.27			0.27
Common book value per share		18.34			18.02			17.73			17.37			17.51
Tangible book value per share (1)		15.47			15.20			14.92			14.57			14.68
Total assets (in thousands)		876,905			932,302			791,283			776,390			766,679
Return on average assets		0.71	%		0.84	%		0.84	%		0.95	%		0.95	%
Return on average equity		5.37	%		5.90	%		5.78	%		6.30	%		6.13	%
Equity to assets		13.45	%		12.69	%		14.80	%		14.84	%		15.05	%
Tangible equity to tangible assets (1)		11.59	%		10.92	%		12.75	%		12.75	%		12.93	%
Net interest margin		3.17	%		3.58	%		3.85	%		4.12	%		4.06	%
Efficiency ratio		71.68	%		69.73	%		71.38	%		67.62	%		67.23	%
(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 $1.6 million for the three months ended June 30, 2023, as compared to $1.8 million for the three months ended June 30, 2022, as a result of an increase in deposit interest expense offset by an increase in interest income.

• Net income was $3.3 million for six months ended June 30, 2023 as compared to $3.6 million for the six months ended June 30, 2022 as a result of an increase in deposit interest expense and recognition of the remaining fair value mark on the acquired Federal Home Loan Bank advances that was recognized upon payoff in first quarter 2022, partially offset by an increase in interest income.

.

Results of Operations

• Net interest income was $6.7 million for the three months ended June 30, 2023 compared to $7.1 million for the three months ended June 30, 2022. The decrease was due to an increase in deposit costs generally offset by an increase in interest income.

• Net interest income was $13.6 million for the six months ended June 30, 2023 compared to $14.9 million for the six months ended June 30, 2022. The decrease was due to an increase in deposit costs and recognition of the remaining fair value mark on acquired FHLB advances that was recognized upon payoff in the first quarter of 2022, partially offset by an increase in interest income.

• Net interest margin for the three months ended June 30, 2023 decreased to 3.17% from 4.06% for the three months ended June 30, 2022. Net interest margin for the six months ended June 30, 2023 decreased to 3.37% from 4.27% for the six months ended June 30, 2022. The decreases in the margin relate to increases in cost of funds exceeding

our increases in interest income. The decrease in the margin for the six months ended June 30, 2023 was also impacted by the fair value mark on the FHLB advances from acquisition that was recognized upon payoff in first quarter 2022.

o Adjusted Net interest margin for the six months ended June 30, 2023 (see Non-GAAP reconciliation) decreased 61 basis points from 3.98% at six months ended June 30, 2022 to 3.37%.

• Noninterest income increased $30,000 to $678,000 for the three months ended June 30, 2023 and remained stable at $1.2 million for the six months ended June 30, 2023 and 2022.

• Non-interest expense increased $47,000 to $5.3 million for the three months ended June 30, 2023 due to an increase in occupancy expense, and decreased $517,000 to $10.5 million for the six months ended June 30, 2023 and 2022, respectively. The decrease was a result of the FHLB prepayment penalties paid in first quarter 2022.

Financial Condition

• Total assets increased $85.6 million to $876.9 million at June 30, 2023 from $791.3 million at December 31, 2022, as we increased cash to further enhance liquidity.

• Total gross loans increased $16.9 million to $663.1 million at June 30, 2023 from $646.2 million at December 31, 2022. The increase was due to steady loan demand.

• Non-owner occupied office loans totaled $25.1 million at June 30, 2023; average LTV on these loans is 43%;

o $9.6 million medical/ dental tenants

o $15.5 million to other various tenants.

• Investment securities held-to-maturity unrealized losses were $847,000, net of tax. Investment securities available-for-sale unrealized losses were $6.7 million, net of tax.

• Cash and cash equivalents increased to $82.9 million at June 30, 2023 from $26.3 million at December 31, 2022, primarily due to an increase in deposits.

• Deposits increased by $73.9 million to $731.0 million at June 30, 2023 compared to $657.2 million at December 31, 2022 , in part due to increases in certificates of deposits of $109.9 million offset by $36.1 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 $81.6 million. Brokered deposits have an average life of 2.7 years and an average interest rate of 4.90%.

• Uninsured deposits were approximately $93.9 million at June 30, 2023 and represented 12.8% of total deposits.

• Borrowings increased by $10.0 million to $20.0 million at June 30, 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 decreased to $6.2 million at June 30, 2023 from $6.7 million at December 31, 2022.

• The allowance for credit losses as a percentage of non-performing loans was 150.0% at June 30, 2023, as compared to 138.8% at December 31, 2022.

• Allowance for credit losses decreased to 1.40% at June 30, 2023 from 1.46% of total loans at December 31, 2022.

• Net loan charge-offs were $72,000 for the six months ended June 30, 2023, as compared to $25,000 for the six months ended June 30, 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 June 30,
	2023							2022
	Average<br>Outstanding<br>Balance		Interest		Average<br>Yield/Rate			Average<br>Outstanding<br>Balance		Interest		Average<br>Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	665,921	$	8,727		5.26	%	$	613,396	$	7,283		4.76	%
Investment securities held-to-maturity		34,131		521		6.13	%		—		—		—
Investment securities available-for-sale		50,758		428		3.38	%		46,461		279		2.40	%
Interest-earning deposits and federal funds		93,116		1,150		4.95	%		41,856		79		0.76	%
Other investments		2,167		37		6.90	%		1,187		12		3.95	%
Total interest-earning assets		846,093		10,863		5.15	%		702,900		7,653		4.36	%
Non-interest-earning assets		52,023							51,662
Total assets	$	898,116						$	754,562
Interest-bearing liabilities:
Interest-bearing checking accounts	$	95,317	$	56		0.23	%	$	97,618	$	45		0.19	%
Money market accounts		137,306		825		2.41	%		150,863		93		0.25	%
Savings accounts		88,152		558		2.54	%		82,478		87		0.42	%
Certificates of deposit		240,954		2,346		3.91	%		90,194		259		1.15	%
Total interest-bearing deposits		561,729		3,785		2.70	%		421,153		484		0.46	%
FHLB advances and other borrowings		35,495		385		4.35	%		14,478		28		0.78	%
Total interest-bearing liabilities		597,224		4,170		2.80	%		435,631		512		0.47	%
Non-interest-bearing liabilities		182,140							202,296
Total liabilities		779,364							637,927
Total stockholders' equity		118,752							116,635
Total liabilities and stockholders' equity	$	898,116						$	754,562
Net interest rate spread						2.35	%						3.89	%
Net interest income			$	6,693						$	7,141
Net interest margin						3.17	%						4.06	%
	For the Six Months Ended June 30,
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	2023							2022
	Average<br>Outstanding<br>Balance		Interest		Average<br>Yield/Rate			Average<br>Outstanding<br>Balance		Interest			Average<br>Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	658,887	$	17,018		5.21	%	$	604,464	$	14,279			4.76	%
Investment securities held-to-maturity		33,518		1,025		6.17	%		—		—			—
Investment securities available-for-sale		49,806		838		3.39	%		47,549		539			2.26	%
Interest-earning deposits and federal funds		69,568		1,638		4.75	%		45,026		97			0.43	%
Other investments		2,403		72		6.07	%		1,094		17			3.21	%
Total interest-earning assets		814,182		20,591		5.10	%		698,133		14,932			4.28	%
Non-interest-earning assets		51,524							52,661
Total assets	$	865,706						$	750,794
Interest-bearing liabilities:
Interest-bearing checking accounts	$	93,596	$	100		0.22	%	$	96,949	$	87			0.18	%
Money market accounts		138,394		1,486		2.17	%		147,677		182			0.25	%
Savings accounts		92,003		1,110		2.43	%		84,326		169			0.40	%
Certificates of deposit		195,260		3,403		3.51	%		92,318		549			1.19	%
Total interest-bearing deposits		519,253		6,099		2.37	%		421,270		987			0.47	%
FHLB advances and other borrowings		41,078		901		4.42	%		11,665		(947	)		-16.37	%
Total interest-bearing liabilities		560,331		7,000		2.52	%		432,935		40			0.02	%
Non-interest-bearing liabilities		186,874							198,680
Total liabilities		747,205							631,615
Total stockholders' equity		118,501							119,179
Total liabilities and stockholders' equity	$	865,706						$	750,794
Net interest rate spread						2.58	%							4.26	%
Net interest income			$	13,591						$	14,892
Net interest margin						3.37	%							4.27	%

AFFINITY BANCSHARES, INC.

Consolidated Balance Sheets

(unaudited)

			December 31, 2022
Assets
Cash and due from banks	7,061		$	2,928
Interest-earning deposits in other depository institutions	75,833			23,396
Cash and cash equivalents	82,894			26,324
Investment securities available-for-sale	49,931			46,200
Investment securities held-to-maturity (estimated fair value of 33,053, net of allowance for credit losses of 42 at June 30, 2023 and estimated fair value of 26,251 at December 31, 2022)	34,145			26,527
Other investments	1,508			1,082
Loans	663,141			646,234
Allowance for credit loss on loans	(9,252	)		(9,325	)
Net loans	653,889			636,909
Other real estate owned	2,901			2,901
Premises and equipment, net	4,052			4,257
Bank owned life insurance	15,899			15,724
Intangible assets	18,462			18,558
Other assets	13,224			12,801
Total assets	876,905		$	791,283
Liabilities and Stockholders' Equity
Liabilities:
Non-interest-bearing checking	174,752		$	190,297
Interest-bearing checking	93,358			91,167
Money market accounts	141,157			148,097
Savings accounts	85,845			101,622
Certificates of deposit	235,930			125,989
Total deposits	731,042			657,172
Federal Home Loan Bank advances and other borrowings	20,000			10,025
Accrued interest payable and other liabilities	7,924			6,983
Total liabilities	758,966			674,180
Stockholders' equity:
Common stock (par value 0.01 per share, 40,000,000 shares authorized;    6,430,300 issued and outstanding at June 30, 2023 and 6,605,384    issued and outstanding at December 31, 2022)	64			66
Preferred stock (10,000,000 shares authorized, no shares outstanding)	—			—
Additional paid in capital	61,027			63,130
Unearned ESOP shares	(4,692	)		(4,795	)
Retained earnings	68,209			65,357
Accumulated other comprehensive loss	(6,669	)		(6,655	)
Total stockholders' equity	117,939			117,103
Total liabilities and stockholders' equity	876,905		$	791,283

All values are in US Dollars.

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands except per share amounts)
Interest income:
Loans, including fees	$	8,727	$	7,283	$	17,018	$	14,279
Investment securities		986		291		1,935		556
Interest-earning deposits		1,150		79		1,638		97
Total interest income		10,863		7,653		20,591		14,932
Interest expense:
Deposits		3,785		484		6,099		987
FHLB advances and other borrowings		385		28		901		(947	)
Total interest expense		4,170		512		7,000		40
Net interest income before provision for credit losses		6,693		7,141		13,591		14,892
Provision for credit losses		—		217		7		467
Net interest income after provision for credit losses		6,693		6,924		13,584		14,425
Noninterest income:
Service charges on deposit accounts		405		393		796		785
Other		273		255		434		458
Total noninterest income		678		648		1,230		1,243
Noninterest expenses:
Salaries and employee benefits		3,036		3,023		6,040		6,032
Occupancy		638		541		1,282		1,123
Advertising		82		118		179		198
Data processing		487		497		980		990
FHLB prepayment penalties		—		—		—		647
Other		1,041		1,058		1,997		2,005
Total noninterest expenses		5,284		5,237		10,478		10,995
Income before income taxes		2,088		2,335		4,336		4,673
Income tax expense		497		552		1,024		1,099
Net income	$	1,590	$	1,783	$	3,312	$	3,574
Weighted average common shares outstanding
Basic		6,486,260		6,591,627		6,542,653		6,698,423
Diluted		6,546,382		6,684,721		6,616,294		6,791,517
Basic earnings per share	$	0.25	$	0.27	$	0.51	$	0.53
Diluted earnings per share	$	0.24	$	0.27	$	0.50	$	0.53

Explanation of Certain Unaudited Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. Additionally, the Company believes the following 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	June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
Tangible book value per common share reconciliation
Book Value per common share (GAAP)	$	18.34		$	18.02		$	17.73		$	17.37		$	17.51
Effect of goodwill and other intangibles		(2.87	)		(2.82	)		(2.81	)		(2.80	)		(2.83	)
Tangible book value per common share	$	15.47		$	15.20		$	14.92		$	14.57		$	14.68
Tangible equity to tangible assets reconciliation
Equity to assets (GAAP)		13.45	%		12.69	%		14.80	%		14.84	%		15.05	%
Effect of goodwill and other intangibles		(1.86	)%		(1.77	)%		(2.05	)%		(2.09	)%		(2.12	)%
Tangible equity to tangible assets (1)		11.59	%		10.92	%		12.75	%		12.75	%		12.93	%
(1) Tangible assets is total assets less intangible assets. Tangible equity is total equity less intangible assets.
	For the
---	---	---	---	---	---	---
	Six months ended June 30,
	2023			2022
Operating net income reconciliation
Net income (GAAP)	$	3,312		$	3,574
FHLB mark from called borrowings		—			(988	)
FHLB prepayment penalties		—			647
Income tax expense		—			87
Operating net income	$	3,312		$	3,320
Weighted average diluted shares		6,616,294			6,791,517
Adjusted earnings per share	$	0.50		$	0.49
Net interest income	$	13,591		$	14,892
FHLB mark from called borrowings		—			(988	)
Adjusted Net interest income	$	13,591		$	13,904
Adjusted Net interest income reconciliation
Net interest margin (GAAP)		3.37	%		4.27	%
Effect of FHLB mark from called borrowings		0.00			(0.29	)
Adjusted Net interest margin		3.37	%		3.98	%

AFBI Selected Data Company Highlights $877 million in assets $663 million in loans $731 million in deposits 10.8% growth in assets 2.6% growth in loans 11.2% growth in deposits As of 2023Q2 YTD

AFBI Selected Data June 30, 2023 Company Highlights $25.1 million in NOO office loans 43% avg LTV on NOO office loans 37% DDA/Total Deposits $3.3 million in YTD earnings 12.8% uninsured deposits approximately $0.50 YTD diluted earnings per share

AFBI Selected Data Tangible Book Value Calculation Tangible Equity Shares Outstanding Tangible Book Value* Ending balance December 31, 2022 $98,545 6,605 $14.92 Stock Activity including repurchase (2,106) Unearned stock comp change 104 AOCI Change (14) Effect of goodwill and other intangibles 96 Adoption of new accounting pronouncement (460) Net earnings before stock compensation 3,821 Stock Compensation, net of taxes (509) Ending balance June 30, 2023 $99,477 6,430 $15.47 (in thousands, other than per-share data) * See Non-GAAP Reconciliation

AFBI Selected Data NIM, NI, and EPS – Adjusted for 1st Quarter 2022 FHLB Advance Prepayments For the six months ended June 30, 2023 2022 Adjusted Net Interest Margin* 3.37% 3.98% Adjusted Net Income (in thousands)* $3,312 $3,320 Adjusted Earnings Per Share* $0.50 $0.49 * See Non-GAAP Reconciliation

AFBI Selected Data Loan Composition as of June 30, 2023

AFBI Selected Data Deposit Composition as of June 30, 2023

AFBI Selected Deposit Data Deposits * All deposits are held at AFBI and include the Company’s own funds Estimated uninsured deposits are approximately $93.9 million or 12.8% of total deposits.* Consumer deposits total $19.7 million or 20.9% of estimated uninsured deposits. Business deposits total $74.2 million or 79.1% of estimated uninsured deposits. Demand deposits represent 37% of total deposits. Consumer and Business demand deposits each represent approximately 48% and 52% of total demand deposits. Dental deposits total $123.8 million and represent 16.8% of total deposits. Cost of Funds – 2.17% 2Q23, 1.61% 1Q23, 1.92% YTD

AFBI Share Information NON-GAAP RECONCILIATION (in thousands)