Affinity Bancshares, Inc. (NASDAQ: AFBI)

Sector: Financial Services Industry: Banks - Regional CIK: 0001823406
Market Cap 129.79 Mn
P/B 1.03
P/E 17.20
P/S 4.08
ROIC (Qtr) 4.15
Div Yield % 7.33
Rev 1y % (Qtr) 4.59
Total Debt (Qtr) 54.00 Mn
Debt/Equity (Qtr) 0.43

About

Affinity Bancshares, Inc., represented by the ticker symbol AFBI, operates as a national bank through its wholly-owned subsidiary, Affinity Bank, National Association. This Maryland corporation was established in 2020, following a mutual-to-stock conversion of Community First Bancshares, Inc. and Community First Bancshares, MHC. Affinity Bank's primary business activities involve accepting deposits from the general public and investing these funds in various loan products, such as commercial real estate loans, commercial and industrial loans, residential...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 907.19M provides 16.80x coverage of total debt 54M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 9.89M exceeds capital expenditure of 352000 by 28.10x, indicating strong organic growth funding capability.
  • Retained earnings of 73.98M represent substantial 0.59x of equity 125.41M, indicating strong internal capital generation.
  • Operating cash flow of 10.24M provides strong 2.35x coverage of operating expenses 4.36M, showing operational efficiency.
  • Retained earnings of 73.98M provide strong 4.10x coverage of intangibles 18.03M, indicating quality earnings retention.

Bear case

  • Operating cash flow of 10.24M barely covers its investment activities of (15.66M), with a coverage ratio of -0.65, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 10.24M provides thin coverage of dividend payments of (8.80M) with a -1.16 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 9.89M represents just -2.05x of debt issuance (4.82M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 73.98M provide limited buffer against comprehensive income items of (4.47M), which is -16.53x, indicating elevated exposure to market risks.
  • Operating cash flow of 10.24M is outpaced by equity issuance of (4.03M) (-2.54 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 USB Us Bancorp \De\ 84.44 Bn 12.40 3.25 77.98 Bn
2 PNC Pnc Financial Services Group, Inc. 84.36 Bn 13.61 3.73 62.34 Bn
3 NU Nu Holdings Ltd. 81.47 Bn 32.21 5.79 4.49 Bn
4 NWG NatWest Group plc 66.53 Bn 9.88 3.05 169.04 Bn
5 TFC Truist Financial Corp 64.60 Bn 13.18 3.53 71.11 Bn
6 MTB M&T Bank Corp 32.73 Bn 12.47 3.60 14.99 Bn
7 FITB Fifth Third Bancorp 31.96 Bn 14.15 3.93 18.94 Bn
8 FCNCA First Citizens Bancshares Inc /De/ 28.98 Bn 12.78 3.26 40.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.10 0.14
EV to Cash from Ops. EV/CFO 9.19 7.21
EV to Debt EV to Debt 1.74 5.20
EV to EBIT EV/EBIT 9.64 14.98
EV to EBITDA EV/EBITDA 8.89 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 9.51 8.87
EV to Market Cap EV to Market Cap 0.73 1.04
EV to Revenue EV/Rev 2.96 -3.76
Price to Book Value [P/B] P/B 1.03 1.17
Price to Earnings [P/E] P/E 17.20 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.86 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 126.10 35.28
Dividend per Basic Share Div per Share (Qtr) 1.50 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 94.88 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 38.68 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 62.23 15.78
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 34.52 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 32.65 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 33.55 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 33.55 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 35.23 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 38.12 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.41 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.83 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 0.53
Interest Cover Ratio Interest Cover Ratio 0.00 -0.05
Times Interest Earned Times Interest Earned 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 33.30 147.97
EBIT Margin % EBIT Margin % (Qtr) 30.71 155.41
EBT Margin % EBT Margin % (Qtr) 30.71 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 23.70 115.63