Equibles

10-Q

Affinity Bancshares, Inc. (AFBI)

10-Q 2025-05-09 For: 2025-03-31
View Original
Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period

Commission File No. 001-39914

Affinity Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland 82-1147778
(State or Other Jurisdiction of<br><br>Incorporation or Organization) (I.R.S. Employer<br><br>Identification No.)
3175 Highway 278<br><br>Covington, Georgia 30014
(Address of Principal Executive Offices) (Zip Code)

(770) 786-7088

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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, par value $0.01 per share AFBI The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2025, 6,316,088 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding.

Affinity Bancshares, Inc.

Form 10-Q

Table of Contents

Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 2
Consolidated Balance Sheets at March 31, 2025 (unaudited) and December 31, 2024 2
Consolidated Statements of Income for the Three Months Ended March 31, 2025 and 2024 (unaudited) 3
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 (unaudited) 4
Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024 (unaudited) 5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited) 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22
Item 3. Quantitative and Qualitative Disclosures About Market Risk 30
Item 4. Controls and Procedures 30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 31
Item 1A. Risk Factors 31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31
Item 3. Defaults Upon Senior Securities 31
Item 4. Mine Safety Disclosures 31
Item 5. Other Information 31
Item 6. Exhibits 31
SIGNATURES 32

AFFINITY BANCSHARES, INC.

Consolidated Statements of Income

(unaudited)

Three Months Ended March 31,
2025 2024
(Dollars in thousands except per share amounts)
Interest income:
Loans, including fees $ 10,648 $ 9,499
Investment securities 842 1,075
Interest-earning deposits 615 647
Total interest income 12,105 11,221
Interest expense:
Deposits 4,246 4,002
FHLB advances and other borrowings 522 470
Total interest expense 4,768 4,472
Net interest income before provision for credit losses 7,337 6,749
Provision for credit losses 50 —
Net interest income after provision for credit losses 7,287 6,749
Noninterest income:
Service charges on deposit accounts 316 395
Other 165 189
Total noninterest income 481 584
Noninterest expenses:
Salaries and employee benefits 3,359 3,179
Occupancy 605 618
Data processing 543 511
Other 852 1,262
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
Weighted average common shares outstanding
Basic 6,405,702 6,416,628
Diluted 6,547,817 6,524,332
Basic earnings per share $ 0.29 $ 0.21
Diluted earnings per share $ 0.28 $ 0.20

See accompanying notes to unaudited consolidated financial statements.

AFFINITY BANCSHARES, INC.

Consolidated Statements of Comprehensive Income

(unaudited)

Three Months Ended March 31,
2025 2024
Net income $ 1,831 $ 1,335
Other comprehensive income:
Net unrealized gains on available-for-sale securities, net of taxes of 213, and 5 634 14
Total other comprehensive income 634 14
Total comprehensive income $ 2,465 $ 1,349

All values are in US Dollars.

See accompanying notes to unaudited consolidated financial statements.

AFFINITY BANCSHARES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

Three Months Ended March 31, 2025 and 2024
Accumulated
Additional Other
Common Paid In Unearned Retained Comprehensive
Stock Capital ESOP Shares Earnings Income (Loss) Total
(In thousands)
Beginning balance December 31, 2024 $ 64 $ 62,355 $ (4,378 ) $ 76,786 $ (5,712 ) $ 129,115
ESOP loan payment and release of ESOP shares — 243 290 (216 ) — 317
Stock-based compensation expense — 305 — — — 305
Exercise of stock options — 59 — — — 59
Change in unrealized gain on investment securities available-for-sale, net of tax — — — — 634 634
Common stock repurchase — (1,181 ) — — — (1,181 )
Dividend — — — (8,801 ) — (8,801 )
Net income — — — 1,831 — 1,831
Ending balance March 31, 2025 $ 64 $ 61,781 $ (4,088 ) $ 69,600 $ (5,078 ) $ 122,279
Beginning balance December 31, 2023 $ 64 $ 61,026 $ (4,587 ) $ 71,345 $ (6,332 ) $ 121,516
ESOP loan payment and release of ESOP shares — 34 52 — — 86
Stock-based compensation expense — 349 — — — 349
Change in unrealized loss on investment securities available-for-sale, net of tax — — — — 14 14
Net income — — — 1,335 — 1,335
Ending balance March 31, 2024 $ 64 $ 61,409 $ (4,535 ) $ 72,680 $ (6,318 ) $ 123,300

See accompanying notes to unaudited consolidated financial statements.

AFFINITY BANCSHARES, INC.

Consolidated Statements of Cash Flows

(unaudited)

Three Months Ended March 31,
2025 2024
(In thousands)
Cash flows from operating activities:
Net income $ 1,831 $ 1,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, (accretion) and amortization 193 162
Stock-based compensation expense 305 349
Deferred income tax expense — 241
Provision for credit losses 50 —
ESOP expense 317 86
Increase in cash surrender value of bank owned life insurance (100 ) (98 )
Change in:
Accrued interest receivable and other assets (1,198 ) (525 )
Accrued interest payable and other liabilities 519 (333 )
Net cash provided by operating activities 1,917 1,217
Cash flows from investing activities:
Purchases of investment securities available-for-sale (3,915 ) —
Purchases of premises and equipment (145 ) (132 )
Proceeds from paydowns of investment securities available-for-sale 288 375
Proceeds from paydowns of investment securities held-to-maturity 6 24
Purchases of other investments (27 ) (46 )
Net change in loans (6,917 ) (14,906 )
Net cash used in investing activities (10,710 ) (14,685 )
Cash flows from financing activities:
Net change in deposits 56,811 13,001
Common stock repurchase (1,181 ) —
Dividends paid to shareholders (8,801 ) —
Exercise of stock options 59 —
Proceeds from other borrowings — 11,837
Repayment of other borrowings (4,815 ) —
Net cash provided by financing activities 42,073 24,838
Net change in cash and cash equivalents 33,280 11,370
Cash and cash equivalents at beginning of period 41,425 50,025
Cash and cash equivalents at end of period $ 74,704 $ 61,395
Supplemental disclosures of cash flow information:
Cash paid for interest 4,746 4,791
Change in unrealized gain on investment securities available-for-sale, net of tax 634 14

See accompanying notes to unaudited consolidated financial statements.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

(1) Nature of Operations

Affinity Bancshares, Inc. (the “Company”) is a bank holding company, headquartered in Covington, Georgia. The Company has one operating subsidiary, Affinity Bank, National Association (the “Bank”, and formerly named “Affinity Bank”), a national bank, conducting banking activities primarily in Newton County, Georgia and surrounding counties and in Cobb and Fulton Counties, Georgia and surrounding counties, and originating dental practice loans and indirect automobile loans throughout the Southeastern United States. The Bank offers such customary banking services as consumer and commercial checking accounts, savings accounts, certificates of deposit, mortgage, commercial and consumer loans, including indirect automobile loans, money transfers and a variety of other banking services. The Company was incorporated in 2020 to be the successor corporation to Community First Bancshares, Inc., a federal corporation, upon completion of the second-step mutual-to-stock conversion of Community First Bancshares, MHC, the top tier mutual holding company of Community First Bancshares, Inc, the former mid-tier holding company for the Bank.

Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the financial position of the Company as of March 31, 2025 and the results of its operations and its cash flows for the periods presented. The interim consolidated financial information should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for a full year or for any other period. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for credit losses, the valuation of other real estate acquired in connection with foreclosure or in satisfaction of loans and valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income. Summary of Significant Accounting Policies – The accounting and reporting policies of the Company conform to GAAP and general practices within the banking industry. There have been no material changes or developments in the application of principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies as disclosed in the Company’s financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K.

Earnings per Share

Basic earnings per common share are calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are calculated by dividing net income available to common shareholders by the weighted average number of shares adjusted for the dilutive effect of common stock awards (outstanding stock options), if any. Presented below are the calculations for basic and diluted earnings per common share.

Three Months Ended March 31,
2025 2024
(Dollars in thousands except per share data)
Net income $ 1,831 $ 1,335
Weighted average common shares outstanding 6,405,702 6,416,628
Effect of dilutive common stock awards 142,115 107,704
Diluted weighted average common shares outstanding 6,547,817 6,524,332
Basic earnings per common share $ 0.29 $ 0.21
Diluted earnings per common share 0.28 0.20

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

There were 110,000 anti-dilutive options for the three months ended March 31, 2025 and 379,500 anti-dilutive options for the three months ended March 31, 2024.

(2) Investment Securities

Investment securities available-for-sale at March 31, 2025 and December 31, 2024 are as follows: (in thousands)

March 31, 2025 Amortized Cost Gross <br>Unrealized Gains Gross <br>Unrealized Losses Estimated Fair Value
U.S. Treasury securities $ 5,197 $ — $ (517 ) $ 4,680
Municipal securities - tax exempt 519 — (89 ) 430
Municipal securities - taxable 2,041 — (334 ) 1,707
U. S. Government sponsored enterprises 11,837 — (3,121 ) 8,716
Government agency mortgage-backed securities 18,688 37 (2,396 ) 16,329
Corporate securities 9,495 53 (431 ) 9,117
Total $ 47,777 $ 90 $ (6,888 ) $ 40,979
December 31, 2024
U.S. Treasury securities $ 5,187 $ — $ (620 ) $ 4,567
Municipal securities - tax exempt 520 — (87 ) 433
Municipal securities - taxable 2,041 — (370 ) 1,671
U. S. Government sponsored enterprises 11,837 — (3,356 ) 8,481
Government agency mortgage-backed securities 15,076 — (2,732 ) 12,344
Corporate securities 9,486 67 (547 ) 9,006
Total $ 44,147 $ 67 $ (7,712 ) $ 36,502

Investment securities held-to-maturity at March 31, 2025 and December 31, 2024 are as follows: (in thousands)

March 31, 2025 Amortized Cost Gross <br>Unrealized Gains Gross <br>Unrealized Losses Fair Value Estimated Allowance for Credit Losses
U.S. Treasury securities $ — $ — $ — $ — $ —
Government agency mortgage-backed securities 711 — (92 ) 619 —
Corporate securities 26,672 268 (54 ) 26,886 (45 )
Total $ 27,383 $ 268 $ (146 ) $ 27,505 $ (45 )
December 31, 2024
U.S. Treasury securities $ — $ — $ — $ — $ —
Government agency mortgage-backed securities 715 — (103 ) 612 —
Corporate securities 26,629 211 (166 ) 26,674 (45 )
Total $ 27,344 $ 211 $ (269 ) $ 27,286 $ (45 )

Corporate securities account for the majority of the held-to-maturity portfolio as of March 31, 2025. These corporate securities are accounted for as securities, but are underwritten as loans with features that are typically found in commercial loans. Accordingly, the Bank monitors the credit quality of these corporate bonds through quarterly credit reviews to determine impairment, if any. At March 31, 2025, these securities are all rated as investment grade and the $45,000 of allowance for credit losses associated with these securities was calculated using a Moody's report on the cumulative default rates of corporate issuers.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Investment securities available-for-sale in an unrealized loss position at March 31, 2025 and December 31, 2024 are as follows: (in thousands)

Less Than 12 Months 12 Months or More Total
March 31, 2025 Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
U.S. Treasury securities $ — $ — $ 4,680 $ (517 ) $ 4,680 $ (517 )
Municipal securities - tax exempt — — 430 (89 ) 430 (89 )
Municipal securities - taxable — — 1,707 (334 ) 1,707 (334 )
U. S. Government sponsored enterprises — — 8,716 (3,121 ) 8,716 (3,121 )
Government agency mortgage-backed securities — — 12,377 (2,396 ) 12,377 (2,396 )
Corporate securities — — 5,066 (431 ) 5,066 (431 )
Total $ — $ — $ 32,976 $ (6,888 ) $ 32,976 $ (6,888 )
December 31, 2024
U.S. Treasury securities $ — $ — $ 4,567 $ (620 ) $ 4,567 $ (620 )
Municipal securities - tax exempt — — 433 (87 ) 433 (87 )
Municipal securities - taxable — — 1,671 (370 ) 1,671 (370 )
U. S. Government sponsored enterprises — — 8,481 (3,356 ) 8,481 (3,356 )
Government agency mortgage-backed securities — — 12,344 (2,732 ) 12,344 (2,732 )
Corporate securities — — 5,446 (547 ) 5,446 (547 )
Total $ — $ — $ 32,942 $ (7,712 ) $ 32,942 $ (7,712 )

There were 46 available-for-sale securities in an unrealized loss position for 12 months or greater totaling $6.9 million as of March 31, 2025. The unrealized losses on the debt securities arose due to changing interest rates and market conditions and are considered to be temporary because of acceptable investment grades and are reviewed regularly. Four of the securities are agency bonds and five are U.S. Treasury bonds, so all of these are direct obligations of the U.S. Government. Twenty-four of the securities are mortgage-backed bonds that have the direct or implied backing of the U.S. Government. Three of the bonds are municipal securities and the remaining ten securities are corporate securities that are either trust preferred securities or subordinated debentures where the Bank performs a credit review regularly and such review has raised no concerns.

Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises ("GSEs"), and the U.S. Treasury, including notes and mortgage-backed securities, accounted for the majority of the available-for-sale portfolio as of March 31, 2025, and the Bank expects no credit losses on these securities, given the explicit and implicit guarantees provided by the U.S. federal government. The available-for-sale portfolio also includes corporate securities, but are underwritten as loans with features that are typically found in commercial loans. Accordingly, the Bank monitors the credit quality of these corporate bonds through quarterly credit reviews to determine impairment, if any. The decline in fair value is attributable to changes in interest rates, and not credit quality, and the Bank does not have the intent to sell the U.S. government and agencies debt securities and the corporate securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Bank does not consider impairments on these securities to be credit related as of March 31, 2025.

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at March 31, 2025, by contractual maturity, are shown below. Maturities of mortgage-backed securities may differ from contractual maturities

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties. Therefore, these securities are not included in the maturity categories. (in thousands)

Available-for-Sale Held-to-Maturity
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
Within 1 year $ — $ — $ 4,954 $ 4,965
Greater than 1 to 5 years 8,092 7,754 9,432 9,544
Greater than 5 to 10 years 10,663 9,416 12,286 12,377
Greater than 10 years 10,334 7,480 — —
29,089 24,650 26,672 26,886
Government agency mortgage-backed securities 18,688 16,329 711 619
Total $ 47,777 $ 40,979 $ 27,383 $ 27,505

There were no sales of investment securities available-for-sale during the three months ended March 31, 2025 or 2024.

Available-for-sale securities with a carrying value of approximately $6.1 million and $9.6 million were pledged to secure public deposits at March 31, 2025 and December 31, 2024, respectively.

(3) Loans and Allowance for Credit Losses

Major classifications of loans, by collateral code, at March 31, 2025 and December 31, 2024 are summarized as follows:(in thousands)

March 31, 2025 December 31, 2024
Commercial (secured by real estate - owner occupied) $ 157,550 $ 156,923
Commercial (secured by real estate - non-owner occupied) 166,606 166,662
Commercial and industrial 149,009 148,150
Construction, land and acquisition & development 71,624 67,622
Residential mortgage 1-4 family 52,327 54,142
Consumer installment 123,864 120,616
Total 720,980 714,115
Less allowance for credit losses (8,457 ) (8,496 )
Total loans, net $ 712,523 $ 705,619

The Bank grants loans and extensions of credit to individuals and a variety of firms and corporations located primarily in the Atlanta, Georgia Metropolitan Statistical Area. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. The Bank also conducts lending within professional markets, with a primary focus on the dental industry in Georgia and adjoining states. The majority of these loans are commercial and industrial credits for practice acquisitions and equipment financing with the remainder being owner-occupied real estate. Accrued interest on loans totaled $2.3 million on March 31, 2025 and $2.3 million on December 31, 2024 and is included in other assets on the consolidated balance sheet.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The following table presents the balance in the allowance for credit losses as of and for the three months ended March 31, 2025 and 2024 (in thousands)

Commercial<br>(Secured by Real<br>Estate - Owner Occupied) Commercial<br>(Secured by Real Estate - Non-Owner Occupied) Commercial <br>and Industrial Construction, <br>Land and<br>Acquisition & Development Residential<br> Mortgage Consumer<br>Installment Unallocated Total
Allowance for Credit Loss
Allowance for Credit Loss
Beginning balance December 31, 2024 $ 1,082 $ 1,115 $ 1,753 $ 1,134 $ 1,227 $ 1,632 $ 553 $ 8,496
Provision (7 ) (148 ) 22 116 (73 ) 148 (8 ) 50
Charge-offs — — — — — (106 ) — (106 )
Recoveries — — — — — 17 — 17
Ending balance March 31, 2025 $ 1,075 $ 967 $ 1,775 $ 1,250 $ 1,154 $ 1,691 $ 545 $ 8,457
Allowance for Credit Loss
Beginning balance, December 31, 2023 $ 1,397 $ 1,298 $ 1,806 $ 927 $ 1,038 $ 1,534 $ 921 $ 8,921
Provision 167 (6 ) (70 ) 152 (31 ) 139 (351 ) —
Charge-offs (160 ) — — — (5 ) (193 ) — (358 )
Recoveries — — — — — 32 — 32
Ending balance, March 31, 2024 $ 1,404 $ 1,292 $ 1,736 $ 1,079 $ 1,002 $ 1,512 $ 570 $ 8,595

Allowance for credit loss on unfunded commitments for the three months ended March 31, 2025 and 2024 is summarized below:

For the three Months Ended
March 31, 2025 March 31, 2024
(in thousands)
Beginning balance $ 744 $ 531
Provision — —
Ending Balance $ 744 $ 531

The Bank individually evaluates loans meeting a certain threshold for impairment that are on nonaccrual status or are rated substandard (as described below).

Collateral-Dependent Loans We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate. There were no significant changes in the extent to which collateral secures our collateral-dependent loans as of March 31, 2025 and December 31, 2024, respectively, and we had $1.8 million and $2.0 million, respectively, of collateral-dependent loans without an allowance and no collateral-dependent loans with an allowance at March 31, 2025 and December 31, 2024.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The following table presents the aging of the recorded investment in past due loans, as well as the recorded investment in nonaccrual loans, as of March 31, 2025 and December 31, 2024 by class of loans: (in thousands)

March 31, 2025 30 -59 <br>Days<br> Past Due 60- 89 <br>Days<br> Past Due 90 Days<br>or Greater<br>Past Due Total Accruing Loans<br>Past Due Nonaccrual with Allowance Nonaccrual without Allowance Current Total
Commercial (secured by real estate - owner occupied) $ — $ — $ — $ — $ — $ 1,841 $ 155,709 $ 157,550
Commercial (secured by real estate - non-owner occupied) — — — — — 145 166,461 166,606
Commercial and industrial — — — — — — 149,009 149,009
Construction, land and acquisition &<br>   development — — — — — 16 71,608 71,624
Residential mortgage 1,310 — — 1,310 — 2,217 48,800 52,327
Consumer installment 220 20 — 240 — 225 123,399 123,864
Total $ 1,530 $ 20 $ — $ 1,550 $ — $ 4,444 $ 714,986 $ 720,980
December 31, 2024 30 -59 <br>Days<br> Past Due 60- 89 <br>Days<br> Past Due 90 Days<br>or Greater<br>Past Due Total Accruing Loans<br>Past Due Nonaccrual with Allowance Nonaccrual without Allowance Current Total
Commercial (secured by real estate - owner occupied) $ 370 $ 320 $ — $ 690 $ — $ 1,996 $ 154,237 $ 156,923
Commercial (secured by real estate - non-owner occupied) — — — — — 152 166,510 166,662
Commercial and industrial 1 — — 1 — — 148,149 148,150
Construction, land and acquisition &<br>   development — — — — — 17 67,605 67,622
Residential mortgage 1,117 97 — 1,214 — 2,313 50,615 54,142
Consumer installment 526 76 — 602 — 299 119,715 120,616
Total $ 2,014 $ 493 $ — $ 2,507 $ — $ 4,777 $ 706,831 $ 714,115

During the three months ended March 31, 2025, there was one commercial (secured by real estate - owner occupied) loan modification to a borrower with financial difficulty for $1.8 million that was previously modified in third quarter of 2024. The loan modification provided for a six-month period with reduced fixed payments of $5,000 for the first three months and $7,500 for the second three months. There were no loan modifications to a borrower with financial difficulty during the three months ended March 31, 2024.

No loan modifications made to a borrower with financial difficulty subsequently defaulted during the three months ended March 31, 2025 and 2024.

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for its risk ratings:

Special Mention. Loans have potential weaknesses that may, if not corrected, weaken or inadequately protect the Bank's credit position at some future date. Weaknesses are generally the result of deviation from prudent lending practices, such as over

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

advances on collateral. Credits in this category should, within a 12-month period, move to Pass if improved or drop to Substandard if poor trends continue.

Substandard. Inadequately protected by the current net worth and paying capacity of the obligor, or by the collateral pledged, if any. Loans have a well-defined weakness or weaknesses such as primary source of repayment is gone or severely impaired or cash flow is insufficient to reduce debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans have the same weaknesses as those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable. The likelihood of a loss on an asset or portion of an asset classified Doubtful is high.

Loss. Loans considered uncollectible and of such little value that the continuance as a Bank asset is not warranted. This does not mean that the loan has no recovery or salvage value, but rather the asset should be charged off even though partial recovery may be possible in the future.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of March 31, 2025 and December 31, 2024, and based on the most recent analysis performed, the risk category and year of origination of loans by class of loans is as follows: (in thousands)

March 31, 2025 2025 2024 2023 2022 2021 Prior Revolvers Total
Pass
Commercial (secured by real estate - owner occupied) $ 3,983 $ 14,662 $ 13,765 $ 24,545 $ 20,283 $ 74,238 $ 3,941 $ 155,417
Commercial (secured by real estate - non-owner occupied) 2,189 38,733 24,226 38,931 26,995 27,553 7,277 165,904
Commercial and industrial 5,929 26,836 20,795 18,499 24,518 44,432 8,000 149,009
Construction, land and acquisition & development 5,347 50,337 11,720 2,750 983 471 — 71,608
Residential mortgage 1,191 4,379 4,749 5,643 1,919 25,040 6,705 49,626
Consumer installment 17,243 46,193 24,518 25,407 7,991 1,930 188 123,470
Total pass 35,882 181,140 99,773 115,775 82,689 173,664 26,111 715,034
Special Mention
Commercial (secured by real estate - owner occupied) — — — — — 292 — 292
Commercial (secured by real estate - non-owner occupied) — — — — — 531 — 531
Commercial and industrial — — — — — — — —
Construction, land and acquisition & development — — — — — — — —
Residential mortgage — — — — — 210 — 210
Consumer installment 5 88 — 60 11 5 — 169
Total special mention 5 88 — 60 11 1,038 — 1,202
Substandard
Commercial (secured by real estate - owner occupied) — — — — — 1,841 — 1,841
Commercial (secured by real estate - non-owner occupied) — — — — — 171 — 171
Commercial and industrial — — — — — — — —
Construction, land and acquisition & development — — — — — 16 — 16
Residential mortgage — — — 180 181 2,130 — 2,491
Consumer installment — — 42 70 102 11 — 225
Total substandard — — 42 250 283 4,169 — 4,744
Total $ 35,887 $ 181,228 $ 99,815 $ 116,085 $ 82,983 $ 178,871 $ 26,111 $ 720,980
Current year to date period gross charge-offs
Commercial (secured by real estate - owner occupied) $ — $ — $ — $ — $ — $ — $ — $ —
Commercial (secured by real estate - non-owner occupied) — — — — — — — —
Commercial and industrial — — — — — — — —
Construction, land and acquisition & development — — — — — — — —
Residential mortgage — — — — — — — —
Consumer installment — 12 35 44 15 — — 106
Total current period gross write-offs $ — $ 12 $ 35 $ 44 $ 15 $ — $ — $ 106

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

December 31, 2024 2024 2023 2022 2021 2020 Prior Revolvers Total
Pass
Commercial (secured by real estate - owner occupied) $ 14,663 $ 13,787 $ 24,695 $ 20,821 $ 20,742 $ 55,399 $ 4,519 $ 154,626
Commercial (secured by real estate - non-owner occupied) 39,237 24,280 39,334 27,344 4,710 24,269 6,776 165,950
Commercial and industrial 24,559 20,808 18,352 26,309 13,280 33,914 10,928 148,150
Construction, land and acquisition & development 43,503 16,831 5,770 1,026 101 374 — 67,605
Residential mortgage 4,127 6,605 5,970 2,022 1,478 24,811 6,345 51,358
Consumer installment 50,830 27,834 29,226 9,488 2,022 597 101 120,098
Total pass 176,919 110,145 123,347 87,010 42,333 139,364 28,669 707,787
Special Mention
Commercial (secured by real estate - owner occupied) — — — — — 301 — 301
Commercial (secured by real estate - non-owner occupied) — — — — — 534 — 534
Commercial and industrial — — — — — — — —
Construction, land and acquisition & development — — — — — — — —
Residential mortgage — — — — — 212 — 212
Consumer installment 6 80 76 48 8 — — 218
Total special mention 6 80 76 48 8 1,047 — 1,265
Substandard
Commercial (secured by real estate - owner occupied) — — — — — 1,996 — 1,996
Commercial (secured by real estate - non-owner occupied) — — — — — 178 — 178
Commercial and industrial — — — — — — — —
Construction, land and acquisition & development — — — — 17 — — 17
Residential mortgage — — 185 185 96 2,106 — 2,572
Consumer installment — 90 50 153 3 4 — 300
Total substandard — 90 235 338 116 4,284 — 5,063
Total $ 176,925 $ 110,315 $ 123,658 $ 87,396 $ 42,457 $ 144,695 $ 28,669 $ 714,115
Gross charge-offs
Commercial (secured by real estate - owner occupied) $ — $ — $ — $ — $ — $ — $ — $ —
Commercial (secured by real estate - non-owner occupied) — — — — — 164 — 164
Commercial and industrial — — — — — — — —
Construction, land and acquisition & development — — — — — — — —
Residential mortgage — — 5 — — 45 — 50
Consumer installment 6 76 361 79 — 5 — 527
Total current period gross write-offs $ 6 $ 76 $ 366 $ 79 $ — $ 214 $ — $ 741

(4) Intangible Assets

The core deposit premium intangible asset had a gross carrying amount of $1.9 million and accumulated amortization of $956,000 at March 31, 2025. The core deposit premium intangible asset had a gross carrying amount of $1.9 million and accumulated amortization of $908,000 at December 31, 2024. Aggregate amortization expense was $48,000 and $48,000 for the three months ended March 31, 2025 and 2024.

Goodwill acquired through acquisition was $17.2 million at March 31, 2025 and 2024. No impairment loss was recognized during the three months ended March 31, 2025 and 2024.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

(5) Deposits

The aggregate amount of certificates of deposit ("CDs") of $250,000 or more, the standard FDIC deposit insurance coverage limit per depositor, was approximately $34.6 million at March 31, 2025, and $35.2 million at December 31, 2024. Due to the FDIC insurance coverage rules and limits for a depositor's specific group of deposit accounts, it is important to note that not all deposits in excess of $250,000 are uninsured.

Brokered CDs totaled $106.8 million and had a weighted average rate of 4.32% and a weighted average maturity of 21 months at March 31, 2025 and $106.3 million and had a weighted average rate of 4.50% and a weighted average maturity of 19 months at December 31, 2024.

(6) Borrowings

The following Federal Home Loan Bank ("FHLB") advances, which required monthly or quarterly interest payments, were outstanding at March 31, 2025.

Advance Date Advance Interest Rate Maturity Rate Call Feature
1/6/2023 $ 10,000,000 4.22 % 1/6/2026 Fixed N/A
1/6/2023 10,000,000 3.94 % 1/6/2028 Fixed N/A
10/25/2023 10,000,000 3.99 % 10/25/2028 Convertible 4/25/2025
7/11/2024 14,000,000 3.50 % 7/11/2029 Convertible 4/11/2025
12/13/2024 10,000,000 3.55 % 12/13/2029 Convertible 6/13/2025
$ 54,000,000

At March 31, 2025 and December 31, 2024, the FHLB advances were collateralized by certain loans which totaled approximately $436.6 million and $434.5 million, and by the Company’s investment in FHLB stock which totaled approximately $3.2 million and $3.2 million at March 31, 2025 and December 31, 2024, respectively.

The Company had one FHLB letter of credit of $13.0 million and $12.5 million, used to collateralize public deposits, outstanding at March 31, 2025 and December 31, 2024.

The Company has Federal Funds unsecured lines of credit totaling $32.5 million. No amount was borrowed under these lines as of March 31, 2025 and December 31, 2024.

The Company also has a line of $60.1 million and $65.1 million with the Federal Reserve Bank secured by $83.5 million and $84.0 million in loans and investment securities as of March 31, 2025 and December 31, 2024, respectively. There was $0 and $4.8 million outstanding under the Federal Reserve's Bank Term Funding Program at March 31, 2025 and December 31, 2024, respectively. The advance was paid in full on maturity date in the first quarter of 2025.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

(7) Employee Stock Ownership Plan

The Company sponsors an employee stock ownership plan (“ESOP”) that covers all employees who meet certain service requirements. The Company makes annual contributions to the ESOP in amounts as defined by the plan document. These contributions are used to pay debt service and purchase additional shares. Certain ESOP shares are pledged as collateral for debt. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid in the year.

In 2017, the ESOP borrowed $3.0 million payable to the Company for the purpose of purchasing shares of the Company’s common stock. A total of 295,499 shares were purchased with the loan proceeds as part of the Company’s initial stock offering. In 2021, the ESOP borrowed $3.0 million payable to the Company for the purpose of purchasing additional shares of the Company’s common stock. A total of 225,721 shares were purchased with the loan proceeds as part of the Company’s second stock offering. Total ESOP expense for the three months ended March 31, 2025 was approximately $317,000 with $211,000 of the expense related to the special dividend paid in first quarter of 2025. Total ESOP expense for the three months ended March 31, 2024 was approximately $86,000. The balance of the note payable of the ESOP was approximately $4.2 million and $5.0 million at March 31, 2025 and December 31, 2024, respectively. Because the source of the loan payments is contributions received by the ESOP from the Company, the related note receivable is shown as a reduction of stockholders’ equity. As of March 31, 2025 and December 31, 2024, 122,000 shares had been released.

(8) Stock-Based Compensation

In 2018, shareholders approved the Company’s 2018 Equity Incentive Plan, which authorizes the issuance of up to 133,987 shares of common stock pursuant to restricted stock grants and up to 334,970 shares of common stock pursuant to the exercise of options.

In May 2022, shareholders approved the Company’s 2022 Equity Incentive Plan, which authorizes the issuance of up to 148,060 shares of common stock pursuant to restricted stock grants and up to 370,150 shares of common stock pursuant to the exercise of options.

A Black-Scholes model is utilized to estimate the fair value of stock option grants, while the market price of the Company’s stock at the date of grant is used to estimate the fair value of restricted stock awards.

A summary of the Company’s stock option activity is summarized below.

Stock Options Option Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value (in thousands)
Outstanding - December 31, 2023 640,766 $ 12.58 7.75 $ 1,419
Outstanding - March 31, 2024 640,766 12.58 7.51 2,476
Outstanding - December 31, 2024 640,766 12.58 6.75 $ 5,724
Exercised 11,921 12.98
Forfeited 13,406 14.38
Outstanding March 31, 2025 615,439 12.53 6.49 $ 3,582
Exercisable - March 31, 2025 361,473 $ 11.56 5.72 $ 2,453

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock options.

A summary of the Company’s restricted stock activity is summarized below.

Restricted Stock Restricted Shares Outstanding Weighted Average Grant Date Fair Value
Outstanding - December 31, 2023 166,591 $ 13.46
Vested (3,467 )
Outstanding, March 31, 2024 163,124 $ 13.44
Outstanding, December 31, 2024 107,609 $ 13.88
Vested * (3,466 )
Outstanding March 31, 2025 104,143 $ 13.86

* The terms of the restricted stock agreements permit the surrender of shares to the Company upon vesting in order to satisfy applicable tax withholding requirements at the minimum statutory withholding rate, and accordingly, 274 shares were surrendered during the three months ended March 31, 2025.

The Company recognized approximately $305,000 and $349,000, of stock-based compensation expense during the three months ended March 31, 2025 and 2024 respectively, associated with its common stock awards granted to directors and officers. This expense is net of approximately $5,000 and $0 during the three months ended March 31, 2025 and 2024, respectively for shares surrendered to satisfy applicable tax withholding requirements.

As of March 31, 2025, there was approximately $2.1 million of unrecognized compensation cost related to equity award grants. The cost is expected to be recognized over the weighted average remaining vesting period of approximately

1.40

years.

(9) Fair Value Measurements and Disclosures

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. From time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent loans and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Following are descriptions of valuation methodologies used for assets and liabilities recorded at fair value.

Cash and Cash Equivalents

The carrying value of cash and cash equivalents is a reasonable estimate of fair value.

Investment Securities Available-for-Sale

Available-for-sale securities are recorded at market value. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds. Level 2 securities include mortgage-backed securities issued by government sponsored enterprises and state, county and municipal bonds. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Other Investments

The carrying value of other investments includes FHLB stock and First National Bankers Bank stock and approximates fair value.

Loans

The Company does not record loans at fair value on a recurring basis, unless a loan is considered collateral dependent and a specific reserve may be required to be established within the allowance for credit losses. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered individually evaluated. Once a loan is identified as collateral dependent, management measures impairment in accordance with GAAP. The fair value of collateral dependent loans is estimated using one of three methods, including collateral value, market value of similar debt, and discounted cash flows. Those collateral dependent loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceeds the recorded investments in such loans. In accordance with GAAP, collateral dependent loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, the Company records the collateral dependent loan as nonrecurring Level 2. When an appraised value is used or an appraisal is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the collateral dependent loan as nonrecurring Level 3. For disclosure purposes, the fair value of fixed rate loans which are not considered collateral dependent is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For non collateral dependent variable rate loans, the carrying amount is a reasonable estimate of fair value for disclosure purposes.

Other Real Estate Owned

Other real estate owned properties are adjusted to fair value upon transfer of the loans to other real estate. Subsequently, other real estate assets are carried at fair value less estimated selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price, the Bank records the other real estate as nonrecurring Level 2. When an appraised value is used or an appraisal is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Bank records the other real estate asset as nonrecurring Level 3.

Deposits

The fair value of savings accounts, interest bearing checking accounts, non-interest bearing checking accounts and market rate checking accounts is the amount payable on demand at the reporting date, while the fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using current rates at which comparable certificates would be issued.

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

FHLB Advances and Other Borrowings

FHLB advances are carried at cost and the fair value is obtained from the Federal Home Loan Bank of Atlanta. Federal Funds

Purchased are carried at cost and because they are overnight funds, the carrying value is a reasonable estimate of fair value.

Commitments to Extend Credit

Commitments to extend credit are short-term and, therefore, the carrying value and the fair value are considered immaterial for disclosure.

Assets Recorded at Fair Value on a Recurring Basis

The Company’s only assets recorded at fair value on a recurring basis are available-for-sale securities that had fair values of approximately $41.0 million and $36.5 million at March 31, 2025 and December 31, 2024, respectively. They are classified as Level 2.

Assets Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below as of March 31, 2025 and December 31, 2024 (in thousands).

March 31, 2025 Level 1 Level 2 Level 3 Total
Other real estate owned $ — $ — $ — $ —
Collateral dependent loans — — 1,841 1,841
Total assets at fair value $ — $ — $ 1,841 $ 1,841
December 31, 2024 Level 1 Level 2 Level 3 Total
Other real estate owned $ — $ — $ — $ —
Collateral dependent loans — — 2,000 2,000
Total assets at fair value $ — $ — $ 2,000 $ 2,000

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at March 31, 2025 and December 31, 2024 are as follows:

March 31, 2025 December 31, 2024
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
Financial assets:
Cash and cash equivalents Level 1 $ 74,704 $ 74,704 $ 41,425 $ 41,425
Investment securities available-for-sale Level 2 40,979 40,979 36,502 36,502
Investment securities held-to-maturity Level 2 27,338 27,505 27,299 27,286
Other investments Level 3 6,202 6,202 6,175 6,175
Loans, net Level 3 712,523 705,320 705,619 693,346
Financial liabilities:
Deposits Level 3 730,292 730,322 673,481 672,708
FHLB advances and other borrowings Level 3 54,000 53,851 58,815 58,944

AFFINITY BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of financial condition and results of operations at March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025 and 2024 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which 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. These forward-looking statements include, but are not limited to:

  • statements of our goals, intentions and expectations;
  • statements regarding our business plans, prospects, growth and operating strategies;
  • statements regarding the quality of our loan and investment portfolios; and
  • estimates of our risks and future costs and benefits.

These 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.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

  • general economic conditions, either nationally or in our market areas, that are worse than expected;

  • changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;

  • our ability to access cost-effective funding;

  • changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

  • fluctuations in real estate values and both residential and commercial real estate market conditions;

  • demand for loans and deposits in our market area;

  • our ability to implement and change our business strategies;

  • competition among depository and other financial institutions, including with respect to service charges and fees;

  • inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

  • adverse changes in the securities or secondary mortgage markets;

  • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

  • changes in tax laws;

  • changes in the quality or composition of our loan or investment portfolios;

  • technological changes that may be more difficult or expensive than expected;

  • failure or breaches of our IT security systems;

  • the inability of third-party providers to perform as expected;

  • our ability to manage market risk, credit risk and operational risk in the current economic environment;

  • our ability to introduce new products and services, enter new markets successfully and capitalize on growth opportunities;

  • our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

  • changes in consumer spending, borrowing and savings habits;

  • changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

  • our ability to retain key employees;

  • the effects of global or national war, conflict or acts of terrorism;

  • the potential effects of new or increased tariffs and trade restrictions;

  • changes in the value of our goodwill or other intangible assets;

  • risks related to the COVID-19 pandemic or any other public health emergency;

  • the effects of any Federal government shutdown;

  • our compensation expense associated with equity allocated or awarded to our employees; and

  • changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Summary of Significant Accounting Policies

A summary of our accounting policies is described in Note 1 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Comparison of Financial Condition at March 31, 2025 and December 31, 2024

Total assets increased $45.7 million, or 5.3%, to $912.5 million at March 31, 2025 from $866.8 million at December 31, 2024, due primarily to an increase in loans and cash.

Gross loans increased $6.9 million, or 1.0%, to $721.0 million at March 31, 2025 from $714.1 million at December 31, 2024. Construction loans increased $4.0 million, or 5.9%, to $71.6 million at March 31, 2025 from $67.6 million at December 31, 2024. Commercial and industrial loans increased $859,000, or 0.6%, owner-occupied commercial real estate loans increased $627,000 or 0.4%, and consumer installment loans increased $3.2 million or 2.7%. We experienced a decrease in residential mortgage loans of $1.8 million or 3.4%.

Total deposits increased $56.8 million, or 8.4%, to $730.3 million at March 31, 2025 from $673.5 million at December 31, 2024, reflecting increases in all deposit types. Demand deposits increased $12.5 million, or 5.5%, and money market accounts increased $15.7 million or, 10.6% as a result of our business customers' cyclical demands at year-end. Our certificates of deposit include brokered deposits at March 31, 2025, totaling $106.8 million, which had an average life of 21 months and an average interest rate of 4.32%. The loan-to-deposit ratio at March 31, 2025 was 98.7%, as compared to 97.8% at December 31, 2024.

We had $54.0 million of FHLB advances at March 31, 2025, and $54.0 million of FHLB advances and $4.8 million in other borrowings at December 31, 2024.

Stockholders’ equity decreased by $6.8 million, or 5.3% to $122.3 million at March 31, 2025 compared to $129.1 million at December 31, 2024, primarily due to a special dividend payment in the first quarter of $1.50 per share totaling $8.8 million, as well as $1.2 million in common stock repurchased, offset by net income of $1.8 million during the first quarter of 2025, ESOP related and

stock compensation expense of $622,000 and a change in unrealized gain on investment securities available-for-sale, net of tax, of $634,000

Average Balance Sheets

The following table sets 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,
2025 2024
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 $ 713,878 $ 10,648 6.05 % $ 664,660 $ 9,499 5.75 %
Investment securities held-to-maturity 27,313 421 6.25 % 34,213 528 6.21 %
Investment securities available-for-sale 38,188 324 3.44 % 48,169 463 3.87 %
Interest-earning deposits and federal funds 59,305 615 4.21 % 50,083 647 5.20 %
Other investments 6,185 97 6.36 % 5,447 84 6.20 %
Total interest-earning assets 844,869 12,105 5.81 % 802,572 11,221 5.62 %
Non-interest-earning assets 48,093 52,145
Total assets $ 892,962 $ 854,717
Interest-bearing liabilities:
Interest-bearing checking accounts $ 81,598 $ 84 0.42 % $ 88,057 $ 103 0.47 %
Money market accounts 156,548 1,163 3.01 % 140,600 1,086 3.11 %
Savings accounts 79,222 555 2.84 % 74,412 528 2.85 %
Certificates of deposit 238,904 2,444 4.15 % 219,806 2,285 4.18 %
Total interest-bearing deposits 556,272 4,246 3.10 % 522,875 4,002 3.08 %
FHLB advances and other borrowings 54,856 522 3.86 % 52,615 470 3.59 %
Total interest-bearing liabilities 611,128 4,768 3.16 % 575,490 4,472 3.13 %
Non-interest-bearing liabilities 151,121 156,697
Total liabilities 762,249 732,187
Total stockholders' equity 130,713 122,530
Total liabilities and stockholders' equity $ 892,962 $ 854,717
Net interest rate spread 2.65 % 2.49 %
Net interest income $ 7,337 $ 6,749
Net interest margin 3.52 % 3.38 %

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

Three Months Ended March 31,<br>2025 vs. 2024
Increase (Decrease) Due to Total
Increase
Volume Rate (Decrease)
(In thousands)
Interest-earning assets:
Loans $ 1,101 $ 48 $ 1,149
Investment securities held-to-maturity (131 ) 24 (107 )
Investment securities available-for-sale (137 ) (2 ) (139 )
Interest-earning deposits and federal funds 1,074 (1,106 ) (32 )
Other investments 13 — 13
Total interest-earning assets 1,920 (1,036 ) 884
Interest-bearing liabilities:
Interest-bearing checking accounts (19 ) — (19 )
Market rate checking accounts 367 (290 ) 77
Savings accounts 47 (20 ) 27
Certificates of deposit 305 (146 ) 159
Total interest-bearing deposits 700 (456 ) 244
FHLB advances and other borrowings 49 3 52
Total interest-bearing liabilities 749 (453 ) 296
Change in net interest income $ 1,171 $ (583 ) $ 588

Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

General. 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. The increase was caused by an increase in net interest income offset by a decrease in noninterest income.

Interest Income. Interest income increased $884,000, or 7.9%, to $12.1 million for the three months ended March 31, 2025 from $11.2 million for the three months ended March 31, 2024. The increase was primarily due to an increase in income from loans. Interest income on loans increased $1.1 million, or 12.1%, to $10.6 million for the three months ended March 31, 2025 from $9.5 million for the three months ended March 31, 2024. The average yield on loans increased 30 basis points to 6.05% for the current quarter, as compared to 5.75% for the prior year period, due to the loan originations in the quarter of approximately $36.5 million with a weighted average rate of 7.32%. In addition, our average balance of loans increased by $49.2 million, or 7.4%, to $713.9 million for the three months ended March 31, 2025 from $664.7 million for the three months ended March 31, 2024. The average balance of loans increased due to steady loan demand.

Interest income on interest-earning deposits and federal funds decreased $32,000 to $615,000 for the three months ended March 31, 2025 from $647,000 for the three months ended March 31, 2024. The average balance of interest-earning deposits and federal funds increased $9.2 million to $59.3 million for the three months ended March 31, 2025 compared to $50.1 million for the three months ended March 31, 2024. The yields we received on these funds decreased to 4.21% from 5.20% due to the continued changes in the interest rate environment.

Interest Expense. Interest expense increased $296,000 to $4.8 million for the three months ended March 31, 2025, compared to $4.5 million for the three months ended March 31, 2024, due to increases in the average balances of interest-bearing liabilities as well as the rates paid.

Interest expense on deposits increased $244,000 to $4.2 million for the three months ended March 31, 2025 from $4.0 million for the three months ended March 31, 2024. The largest increase was in interest expense on certificates of deposits, which increased $159,000 to $2.4 million for the three months ended March 31, 2025. The average rate we paid on certificates of deposits decreased three basis points to 4.15% for the three months ended March 31, 2025 from 4.18% for the three months ended March 31, 2024, due to the continued changes in the interest rate environment, while the average balance increased by $19.1 million to $238.9 million for the three months ended March 31, 2025 from $219.8 million for the three months ended March 31, 2024.

Interest expense on borrowings increased $52,000 to $522,000 for the three months ended March 31, 2025 from $470,000 for the three months ended March 31, 2024, due to an increase in average borrowings of $2.2 million.

Net Interest Income. Net interest income before provision of credit losses increased $588,000, or 8.7%, to $7.3 million for the three months ended March 31, 2025 compared to $6.7 million for the three months ended March 31, 2024. Our net interest rate spread increased to 2.65% for the three months ended March 31, 2025 from 2.49% for the three months ended March 31, 2024, and our net interest margin increased to 3.52% for the three months ended March 31, 2025 from 3.38% for the three months ended March 31, 2024, as the yields we earned on our interest-earning assets increased faster than the rates we paid on interest-bearing liabilities.

Provision for Credit Losses. The provisions for credit losses consists of provisions for credit losses for loans and unfunded loan commitments, as well as held-to-maturity securities.

Provisions for credit losses for loans are charged to operations to establish an allowance for credit losses at a level necessary to absorb known and inherent losses in our loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. In evaluating the level of the allowance for credit losses for loans, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

Provisions for credit losses for unfunded commitments are charged to operations to establish an allowance for credit losses for contractual obligations to extend credit. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate is influenced by historical loss experience, adjusted for current risk characteristics, and economic factors.

Provisions for credit losses for held-to-maturity securities are also charged to operations to establish an allowance on a collective basis by major security type. The estimate of expected credit losses for held-to-maturity securities considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

After an evaluation of these factors, we recorded a provision for credit losses of $50,000 for the three months ended March 31, 2025, and no provision for the three months ended March 31, 2024. Our allowance for credit losses was $8.5 million at March 31, 2025, and December 31, 2024 and $8.6 million at March 31, 2024. The allowance for credit losses to total loans was 1.17% at March 31, 2025 compared to 1.19% at December 31, 2024. The allowance for credit losses to non-performing loans was 190.3% at March 31, 2025 compared to 177.8% at December 31, 2024. Net loan charge-offs were $89,000 for the three months ended March 31, 2025, compared to net loan charge-offs of $326,000 for the three months ended March 31, 2024.

To the best of our knowledge, we have recorded all credit losses that are both probable and reasonable to estimate at March 31, 2025. However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for credit losses. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, periodically reviews our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in the process of establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

Non-interest Income. Non-interest income decreased $103,000, or 17.6%, to $481,000 for the three months ended March 31, 2025 from $584,000 for the three months ended March 31, 2024 due to a decline in merchant services volume.

Non-interest Expenses. Non-interest expenses information is as follows.

Three Months Ended March 31, Change
2025 2024 Amount Percent
(Dollars in thousands)
Salaries and employee benefits $ 3,359 $ 3,179 180 5.7 %
Occupancy 605 618 (13 ) (2.1 )%
Data processing 543 511 32 6.3 %
Other 852 1,262 (410 ) (32.5 )%
Total non-interest expenses $ 5,359 $ 5,570 $ (211 ) (3.8 )%

Salaries and employee benefits expense increased due to additional stock compensation from ESOP compensation expense related to the special dividend. Other fees decreased due to a decrease in professional fees.

Income Tax Expense. We recorded income tax expense of $578,000 for the three months ended March 31, 2025 compared to $428,000 for the three months ended March 31, 2024. The effective tax rate was 24.0% and 24.3% for the respective periods.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Management Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

  • limiting our reliance on non-core/wholesale funding sources;
  • growing our volume of transaction deposit accounts;
  • increasing our investment securities portfolio, with an average maturity of less than 15 years;
  • diversifying our loan portfolio by adding more commercial-related loans and consumer loans, which typically have shorter maturities and/or balloon payments; and
  • continuing to price our one-to-four family residential real estate loan products in a way that encourages borrowers to select our balloon loans as opposed to longer-term, fixed-rate loans.

By following these strategies, we believe that we are better positioned to react to increases in market interest rates. In addition, we originate adjustable-rate, one-to-four-family residential real estate loans and home equity loans and lines of credit.

We do not engage in hedging activities, such as engaging in futures, options or swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 200 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.

The table below sets forth, as of March 31, 2025, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.

Change in Interest Rates <br>(basis points) (1) Net Interest Income<br>Year 1 Forecast Year 1 Change<br>from Level
(Dollars in thousands)
+400 $ 33,116 (3.03 )%
+200 33,727 (1.24 )%
Level 34,152 —
-200 32,996 (3.38 )%
-400 30,915 (9.48 )%

(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at March 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 1.24% decrease in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 3.38% decrease in net interest income. At March 31, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 0.68% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 3.95% decrease in net interest income.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net interest income table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net interest income table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results. Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Atlanta. At March 31, 2025, we had a $216.7 million line of credit with the Federal Home Loan Bank of Atlanta, with advances of $54.0 million outstanding and a $13.0 million letter of credit outstanding, and we had a $5.0 million unsecured federal funds line of credit, a $7.5 million unsecured federal funds line of credit, and a $20.0 million unsecured federal funds line of credit. We also had a line of $60.1 million with the Federal Reserve Bank secured by $83.5 million in loans.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $1.9 million for the three months ended March 31, 2025, compared to $1.2 million for the three months ended March 31, 2024. Net cash used in investing activities was $10.7 million for the three months ended March 31, 2025, compared to $14.7 million for the three months ended March 31, 2024. Net cash used in investing activities typically consists primarily of disbursements for loan originations and any purchases of investment securities. Net cash provided by financing activities, which consists primarily of activity in deposit accounts and proceeds/repayments of borrowings and dividends, was $42.1 million for the three months ended March 31, 2025 which reflected increases in deposits accounts of $56.8, partially offset by dividend payment of $8.8 million, repaying $4.8 million in borrowings, and repurchasing stock of $1.2 million, compared to net cash provided by financing activities of $24.8 million for the three months ended March 31, 2024.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At March 31, 2025, we exceeded all of our regulatory capital requirements and the Bank was categorized as “well capitalized.” Management is not aware of any conditions or events since the most recent notification that would change our category. The Bank’s actual capital amounts and ratios for March 31, 2025 and December 31, 2024 are presented in the table below (in thousands).

For Capital To Be Well Capitalized
Adequacy Under Prompt Corrective
Actual Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
As of March 31, 2025:
Common Equity Tier 1 (to Risk Weighted Assets) $ 93,110 11.47 % $ 36,530 4.50 % $ 52,765 6.50 %
Total Capital (to Risk Weighted Assets) 102,371 12.61 % 64,946 8.00 % 81,182 10.00 %
Tier I Capital (to Risk Weighted Assets) 93,110 11.47 % 48,706 6.00 % 64,946 8.00 %
Tier I Capital (to Average Assets) 93,110 10.57 % 35,236 4.00 % 44,044 5.00 %
As of December 31, 2024:
Common Equity Tier 1 (to Risk Weighted Assets) $ 103,955 12.96 % $ 36,095 4.50 % $ 52,138 6.50 %
Total Capital (to Risk Weighted Assets) 113,256 14.12 % 64,168 8.00 % 80,210 10.00 %
Tier I Capital (to Risk Weighted Assets) 103,955 12.96 % 48,127 6.00 % 64,168 8.00 %
Tier I Capital (to Average Assets) 103,955 12.01 % 34,623 4.00 % 43,279 5.00 %

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At March 31, 2025, we had outstanding commitments to originate loans of $88.9 million. We anticipate that we will have sufficient funds available to meet our current lending commitments. Time deposits that are scheduled to mature in less than one year from March 31, 2025 totaled $146.8 million.

Management expects that a substantial portion of the maturing time deposits will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is included in Part 1, Item 2 of this quarterly report under “Management of Market Risk.”

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2025. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended March 31, 2025, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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: May 9, 2025 /s/ Edward J. Cooney
Edward J. Cooney
President and Chief Executive Officer
Date: May 9, 2025 /s/ Brandi Pajot
Brandi Pajot
Senior Vice President and Chief Financial Officer

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Edward J. Cooney, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Affinity Bancshares, Inc.;

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  1. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2025 /s/ Edward J. Cooney
Edward J. Cooney
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Brandi Pajot, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Affinity Bancshares, Inc.;

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  1. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2025 /s/ Brandi Pajot
Brandi Pajot
Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Edward J. Cooney, Chief Executive Officer of Affinity Bancshares, Inc. (the “Company”), and Brandi Pajot, Senior Vice President and Chief Financial Officer of the Company, each certify in his or her capacity as an executive officer of the Company that he or she has reviewed the quarterly report on Form 10-Q for the quarter ended March 31, 2025 (the “Report”) and that to the best of his or her knowledge:

  1. the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

  2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2025 /s/ Edward J. Cooney
Edward J. Cooney
President and Chief Executive Officer
Date: May 9, 2025 /s/ Brandi Pajot
Brandi Pajot
Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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