Affinity Bancshares Reports Strong Q3 2025 Earnings Driven by Loan Growth and Expense Reductions
Affinity Bancshares, Inc. (NASDAQ: AFBI), the holding company for Affinity Bank, released its financial results for the third quarter and nine months ended September 30, 2025. The company reported another solid quarter, underscoring the strength of its community banking model, disciplined expense management, and steady growth in core lending activities.
Earnings Overview
For the three months ended September 30, 2025, Affinity Bancshares posted net income of $2.2 million, compared to $1.7 million during the same period in 2024. This 29% increase was driven by higher net interest income and lower noninterest expenses, particularly as the company moved past merger-related costs recorded in the prior year.
Operating income for the third quarter rose to $2.4 million, up from $1.9 million a year earlier, reflecting solid performance in the company’s core banking operations.
For the nine-month period ended September 30, 2025, Affinity Bancshares reported net income of $6.2 million, an increase from $4.1 million during the same period in 2024. The improvement stemmed from higher interest income on loans and deposits, coupled with lower noninterest expenses. Operating income for the nine-month period rose to $6.7 million, up from $5.0 million a year earlier.
Results of Operations
Net Interest Income
Net interest income for the nine months ended September 30, 2025, totaled $22.9 million, compared to $21.7 million for the same period in 2024. This increase primarily reflected growth in interest income from loans and interest-earning deposits. However, higher deposit costs and lower yields on investment securities partially offset these gains.
The net interest margin remained stable, easing just one basis point to 3.53%, compared with 3.54% in 2024.
For the three-month period, net interest income increased to $7.8 million, up from $7.4 million in the third quarter of 2024. The quarterly net interest margin slightly declined to 3.49% from 3.52%, mainly due to lower yields on interest-earning deposits, though this was offset by lower funding costs on interest-bearing liabilities.
Noninterest Income
Noninterest income for the nine months ended September 30, 2025, decreased by $246,000 to $1.6 million, primarily due to lower service charges on deposit accounts and the absence of gains from the sale of other real estate, which benefited the 2024 period.
On a quarterly basis, however, noninterest income inched up by $22,000 to $588,000, supported by stable fee income and other recurring sources of revenue.
Noninterest Expense
Affinity Bancshares continued to demonstrate strong cost control. Noninterest expenses for the nine months ended September 30, 2025, fell by $1.7 million to $16.3 million compared to the same period in 2024. The decline was primarily due to the elimination of merger-related expenses incurred last year and lower general administrative costs.
For the third quarter, noninterest expenses totaled $5.4 million, down $275,000 from the prior year, largely due to reductions in other operational fees.
Financial Condition
Affinity Bancshares closed the quarter with a solid balance sheet and strong liquidity.
Total assets increased by $58.4 million to $925.2 million at September 30, 2025, compared with $866.8 million at year-end 2024. This growth was supported by expanded lending activity and a higher level of interest-earning deposits, funded primarily by deposit growth.
Total gross loans rose to $729.5 million, up $15.4 million from $714.1 million at December 31, 2024. The bank’s lending growth was driven by steady demand in construction, consumer, and commercial real estate loans—particularly in owner-occupied properties.
Non-owner-occupied office loans totaled $41.1 million at the end of the quarter, with an average loan-to-value (LTV) ratio of 45.5%. Within this category, $15.6 million were loans to medical and dental tenants, while $25.5 million were diversified among other tenant types.
Cash and cash equivalents grew significantly, up $43.4 million to $84.8 million from $41.4 million at year-end 2024, reflecting a strong liquidity position.
Investment securities also reflected a mixed picture. Held-to-maturity securities showed unrealized gains of $327,000 (net of tax), while available-for-sale securities carried unrealized losses of $4.5 million (net of tax)—a figure in line with industry-wide trends due to rising interest rates.
Deposits continued to grow steadily, reaching $739.4 million at September 30, 2025, compared to $673.5 million at December 31, 2024. This represents a $65.9 million increase, with $57.8 million of that growth in demand deposits and $8.1 million in certificates of deposit.
Borrowings declined by $4.8 million to $54.0 million, following the full repayment of an advance from the Bank Term Funding Program earlier in the year.
Total equity decreased modestly by $3.7 million to $125.4 million, primarily due to a $1.50 per share dividend payment and $4.1 million in share repurchases, reflecting the company’s ongoing commitment to returning capital to shareholders.
Asset Quality
Affinity Bancshares maintained a healthy loan portfolio and robust credit reserves.
Non-performing loans (NPLs) rose slightly to $5.1 million at September 30, 2025, from $4.8 million at December 31, 2024. Despite this modest increase, asset quality remains strong across the bank’s diversified lending portfolio.
The allowance for credit losses (ACL) as a percentage of non-performing loans stood at 168.4%, compared with 177.9% at year-end 2024, signifying a well-reserved position.
The ACL to total loans ratio slightly decreased to 1.17% from 1.19% as of December 31, 2024, demonstrating management’s prudent yet confident credit outlook.
Net loan charge-offs declined sharply to $129,000 for the nine months ended September 30, 2025, compared with $523,000 for the same period in 2024—a reflection of strong underwriting standards and effective credit monitoring practices.
Affinity Bancshares enters the final quarter of 2025 with solid momentum. The company’s ability to expand loans, grow deposits, and maintain cost discipline has resulted in consistent profitability and a resilient balance sheet.
Management continues to focus on prudent loan growth, maintaining strong asset quality, and optimizing its funding mix to protect margins amid a challenging rate environment. The bank’s capital management strategy—including dividends and share repurchases—underscores its commitment to delivering long-term value to shareholders.
As Affinity Bancshares looks ahead, it remains well-positioned to navigate economic fluctuations through disciplined lending, strong liquidity management, and continued emphasis on serving its core community banking markets.
