Quaint Oak Bancorp, Inc. Announces Third Quarter Earnings

Southampton, PA, Oct. 26, 2022 (GLOBE NEWSWIRE) — Quaint Oak Bancorp, Inc. (the “Company”) (OTCQB: QNTO), the holding firm for Quaint Oak Bank (the “Bank”), introduced right this moment that web earnings for the quarter ended September 30, 2022 was $2.6 million, or $1.29 per primary and $1.22 per diluted share, in comparison with $1.8 million, or $0.89 per primary and $0.85 per diluted share for a similar interval in 2021. Net earnings for the 9 months ended September 30, 2022 was $6.7 million, or $3.27 per primary and $3.09 per diluted share, in comparison with $4.3 million, or $2.17 per primary and $2.07 per diluted share for a similar interval in 2021.

Robert T. Strong, President and Chief Executive Officer said, “It is my pleasure to present our earnings release for the third quarter of 2022. Net income for the quarter ended September 30, 2022 was $2.6 million. This result has established a new benchmark as the highest earning quarter in the Company’s history.”

Mr. Strong added, “Additionally, the cumulative earnings over the nine months ended September 30, 2022 experienced a 54.0% increase when compared to the same nine month period of 2021. The increased earnings have been driven, in part, by a 43.4% increase in loans receivable, net, when compared to loan balances of December 31, 2021.”

Mr. Strong continued, “Our loan portfolio continues to perform well with both non-performing loans as a percent of total loans receivable, net, along with non-performing assets as a percent of total assets being 0.30% and 0.24%, respectively, as of September 30, 2022. Our Texas Ratio declined slightly from 3.42% previously reported at June 30, 2022 to 3.10% at the third quarter end 2022.”

Mr. Strong commented, “As we enter the fourth quarter of 2022 it appears that the competition for and the cost of funds will be challenging moving forward. We have, as a result, managed our asset growth, accordingly. This has enabled us to reduce costly excess funding requirements. Having said that, we continue to focus on our expansion into the area of fee income growth through our subsidiary companies. Additionally, as mentioned in our second quarter 2022 earnings release, we continue to seek to expand the Bank’s entry into the Banking as a Service sector (“BaaS”) with potential FinTech firm partnerships and correspondent banking relationships.”

Mr. Strong concluded, “With the Company’s reduction in asset size at September quarter-end as compared to June 30, 2022, we have been able to moderate the timing of additional capital needs. We expect, however, to focus on the opportunity to enhance our capital in the current period rather than later in our planning horizon due to rising costs to acquire capital. The Company’s Board of Directors and executive management continue to focus on our capital needs along with appropriate timing in order to support the Company’s continued growth. We are very pleased to report an increase in stockholders’ equity over the nine months ending September 30, 2022 when compared to December 31, 2021, by approximately $8.7 million or 23.6%. As always, in conjunction with historically having maintained a strong repurchase plan, our current and continued business strategy focuses on long-term growth, profitability and payment of dividends reflecting our strong commitment to shareholder value.”

As it has for the reason that begin of the COVID-19 pandemic, the Company continues to evaluate the results of the pandemic on its staff, clients and the communities we serve. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted. The CARES Act comprises many provisions associated to banking, lending, mortgage forbearance and taxation. Since March 2020, the Company has continued to work diligently to assist assist its present and new clients by the SBA Paycheck Protection Program (“PPP”), mortgage modifications, mortgage deferrals and charge waivers. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) turned regulation. The Economic Aid Act opened a brand new PPP mortgage interval for first loans and applied a second mortgage draw for sure PPP debtors, every by May 31, 2021. Under the primary spherical, the Company funded 854 PPP loans totaling $95.1 million. As of September 30, 2022, all of those first spherical PPP loans had been forgiven below the SBA forgiveness program. Under the second spherical of PPP the Company funded 985 PPP loans totaling $88.4 million. As of September 30, 2022, 922 of the second spherical PPP loans totaling $85.4 million have been forgiven below the SBA forgiveness program.

On January 4, 2021, Quaint Oak Bank, the wholly-owned subsidiary of Quaint Oak Bancorp, Inc., invested $2.3 million for a 51% majority possession curiosity in Oakmont Capital Holdings, LLC (“Oakmont”), a multi-state gear finance firm primarily based in West Chester, Pennsylvania with a second important facility positioned in Albany, Minnesota. The monetary outcomes that comply with embrace Quaint Oak Bank’s funding in Oakmont. Quaint Oak Bank displays the 49% curiosity it doesn’t maintain in Oakmont in its consolidated monetary statements as noncontrolling curiosity.

Comparison of Quarter-over-Quarter Operating Results

Net earnings amounted to $2.6 million for the three months ended September 30, 2022, a rise of $853,000, or 47.9%, in comparison with web earnings of $1.8 million for the three months ended September 30, 2021. The enhance in web earnings on a comparative quarterly foundation was primarily the results of a rise in non-interest earnings of $2.4 million, and a rise in web curiosity earnings of $1.6 million, partially offset by a rise in non-interest expense of $1.9 million, a rise within the provision for mortgage losses of $98,000, and a rise within the provision for earnings taxes of $310,000.

The $1.6 million, or 32.8%, enhance in web curiosity earnings for the three months ended September 30, 2022 over the comparable interval in 2021 was pushed by a $3.0 million, or 49.5%, enhance in curiosity earnings, partially offset by a $1.3 million, or 133.2%, enhance in curiosity expense. The enhance in curiosity earnings was primarily resulting from a $178.0 million enhance in common loans receivable, web, together with loans held on the market, which elevated from a mean steadiness of $488.5 million for the three months ended September 30, 2021 to a mean steadiness of $666.5 million for the three months ended September 30, 2022, and had the impact of accelerating curiosity earnings $2.2 million. Also contributing to the rise in curiosity earnings was a 33 foundation level enhance within the yield on common loans receivable, web, together with loans held on the market, which elevated from 4.87% for the three months ended September 30, 2021 to five.20% for the three months ended September 30, 2022, and had the impact of accelerating curiosity earnings $561,000.

The $1.3 million, or 133.2%, enhance in curiosity expense for the three months ended September 30, 2022 over the comparable interval in 2021 was primarily attributable to a 95 foundation level enhance within the price on common cash market accounts, which elevated from 0.55% for the three months ended September 30, 2021 to 1.50% for the three months ended September 30, 2022, and had the impact of accelerating curiosity expense by $736,000.   Also contributing to the rise in cash market curiosity expense was a $117.2 million enhance in common cash market accounts which elevated from $192.5 million for the three months ended September 30, 2021 to a mean steadiness of $309.7 million for the three months ended September 30, 2022, and had the impact of accelerating curiosity expense by $160,000. Both the rise in cash market common steadiness and price was impacted by a $150.0 million deposit in May, 2022 by a deposit placement settlement with a 3rd social gathering financial institution. Also contributing to the rise in curiosity expense was a $64.1 million enhance in common FHLB long-term borrowings which elevated from a mean steadiness of $24.2 million for the three months ended September 30, 2021 to a mean steadiness of $88.3 million for the three months ended September 30, 2022, and had the impact of accelerating curiosity expense by $329,000. The common rate of interest unfold decreased from 3.62% for the three months ended September 30, 2021 to three.50% for the three months ended September 30, 2022 whereas the online curiosity margin decreased from 3.82% for the three months ended September 30, 2021 to three.75% for the three months ended September 30, 2022.  

The $98,000, or 17.6%, enhance within the provision for mortgage losses for the three months ended September 30, 2022 over the three months ended September 30, 2021 was primarily based on an analysis of the allowance relative to such components as quantity of the mortgage portfolio, concentrations of credit score danger, prevailing financial circumstances, which incorporates the impression of the COVID-19 pandemic, prior mortgage loss expertise and quantity of non-performing loans at September 30, 2022.

The $2.4 million, or 66.6%, enhance in non-interest earnings for the three months ended September 30, 2022 over the comparable interval in 2021 was primarily attributable to a $2.4 million, or 129.4%, enhance in web acquire on loans held on the market, a $156,000, or 25.8%, enhance in mortgage banking, gear lending, and title summary charges, a $93,000, or 244.7%, enhance in different charges and repair fees, a $19,000, or 14.3%, enhance in insurance commissions, and a $9,000, or 11.4%, enhance in actual property commissions, web. The enhance in web acquire on loans held on the market was primarily as a result of sale of $97.5 million of apparatus loans in the course of the three months ended September 30, 2022. These will increase had been partially offset by a $311,000, or 84.3%, lower in acquire on sale of SBA loans.

The $1.9 million, or 34.9%, enhance in non-interest expense for the three months ended September 30, 2022 over the comparable interval in 2021 was primarily resulting from a $1.2 million, or 30.1%, enhance in salaries and worker advantages expense, a $310,000, or 95.1%, enhance in different expense, a $150,000, or 140.2%, enhance in skilled charges, a $128,000, or 132.0%, enhance in FDIC deposit insurance evaluation, a $98,000, or 25.9%, enhance in occupancy and gear expense, a $59,000, or 53.6%, enhance in promoting expense, and a $9,000, or 15.5%, enhance in Directors’ charges and bills. The enhance in salaries and worker advantages expense is primarily resulting from increasing and bettering the extent of workers on the Bank and its subsidiary corporations, together with Oakmont. Oakmont’s outcomes for the three months ended September 30, 2022 additionally contributed to the will increase in occupancy and gear expense, skilled charges, promoting expense, and different expense. The enhance in non-interest expense was partially offset by a $94,000, or 40.2%, lower in information processing expense, and a $2,000, or 100.0%, lower in different actual property owned bills.

The provision for earnings tax elevated $310,000, or 44.2%, from $702,000 for the three months ended September 30, 2021 to $1.0 million for the three months ended September 30, 2022 due primarily to the rise in pre-tax earnings.

Comparison of Nine-Month Operating Results

Net earnings amounted to $6.7 million for the 9 months ended September 30, 2022, a rise of $2.3 million, or 54.0%, in comparison with web earnings of $4.3 million for the 9 months ended September 30, 2021. The enhance in web earnings on a comparative nine-month foundation was primarily the results of a rise in non-interest earnings of $6.9 million, and a rise in web curiosity earnings of $4.6 million, partially offset by a rise in non-interest expense of $5.1 million, a rise within the provision for earnings taxes of $838,000, and a rise within the provision for mortgage losses of $674,000.

The $4.6 million, or 34.1%, enhance in web curiosity earnings for the 9 months ended September 30, 2022 over the comparable interval in 2021 was pushed by a $5.9 million, or 35.4%, enhance in curiosity earnings, partially offset by a $1.4 million, or 40.4%, enhance in curiosity expense. The enhance in curiosity earnings was primarily resulting from a $116.5 million enhance in common loans receivable, web, together with loans held on the market, which elevated from a mean steadiness of $478.9 million for the 9 months ended September 30, 2021 to a mean steadiness of $595.4 million for the 9 months ended September 30, 2022, and had the impact of accelerating curiosity earnings $4.0 million. Also contributing to the rise in curiosity earnings was a 40 foundation level enhance within the yield on common loans receivable, web, together with loans held on the market, which elevated from 4.57% for the 9 months ended September 30, 2021 to 4.97% for the 9 months ended September 30, 2022, and had the impact of accelerating curiosity earnings $1.8 million. Contributing to each the rise in common steadiness of loans receivable, web and yield was the acquisition of a $55.5 million business actual property mortgage portfolio by the Bank’s wholly-owned subsidiary, Oakmont Commercial, LLC in April, 2022.

The $1.4 million, or 40.4%, enhance in curiosity expense was primarily attributable to a 33 foundation level enhance within the price on common cash market accounts, which elevated from 0.63% for the 9 months ended September 30, 2021 to 0.96% for the 9 months ended September 30, 2022, and had the impact of accelerating curiosity expense by $633,000. Also contributing to the rise in curiosity expense was an $87.9 million enhance in common cash market accounts which elevated from a mean steadiness of $166.8 million for the 9 months ended September 30, 2021 to a mean steadiness of $254.7 million for the 9 months ended September 30, 2022, and had the impact of accelerating curiosity expense by $417,000. The enhance in cash market common steadiness was impacted by a $150.0 million deposit in May, 2022 by a deposit placement settlement with a 3rd social gathering financial institution. Also contributing to the rise in curiosity expense is a $37.5 million enhance in common FHLB long-term borrowings which elevated from $26.3 million for the 9 months ended September 30, 2021 to $63.7 million for the 9 months ended September 30, 2022, and had the impact of accelerating curiosity expense by $560,000. This enhance in curiosity expense was partially offset by a 19 foundation level lower within the price on common certificates of deposit accounts, which decreased from 1.17% for the 9 months ended September 30, 2021 to 0.98% for the 9 months ended September 30, 2022, and had the impact of reducing curiosity expense by $259,000. The common rate of interest unfold elevated from 3.20% for the 9 months ended September 30, 2021 to three.54% for the 9 months ended September 30, 2022, whereas the online curiosity margin elevated from 3.41% for the 9 months ended September 30, 2021 to three.73% for the 9 months ended September 30, 2022.  

The $674,000, or 53.5%, enhance within the provision for mortgage losses for the 9 months ended September 30, 2022 over the 9 months ended September 30, 2021 was primarily based on an analysis of the allowance relative to such components as quantity of the mortgage portfolio, concentrations of credit score danger, prevailing financial circumstances, which incorporates the impression of the COVID-19 pandemic, prior mortgage loss expertise and quantity of non-performing loans at September 30, 2022.

The $6.9 million, or 78.0%, enhance in non-interest earnings for the 9 months ended September 30, 2022 over the comparable interval in 2021 was primarily attributable to a $6.9 million, or 157.0%, enhance in web acquire on loans held on the market, a $564,000, or 34.0%, enhance in mortgage banking, gear lending, and title summary charges, a $168,000, or 79.6%, enhance in different charges and repair fees, a $70,000, or 49.0%, enhance in actual property commissions, web, and a $34,000, or 9.1%, enhance in insurance commissions. The enhance in web acquire on loans held on the market was primarily as a result of sale of $274.4 million of apparatus loans in the course of the 9 months ended September 30, 2022. These will increase had been partially offset by a $411,000, or 64.6%, lower in acquire on sale of SBA loans, a $362,000, or 100.0%, lower in acquire on sale of funding securities obtainable on the market, and a $72,000, or 7.0%, lower in web mortgage servicing earnings.

The $5.1 million, or 34.1%, enhance in non-interest expense for the 9 months ended September 30, 2022 over the comparable interval in 2021 was primarily resulting from a $3.9 million, or 35.5%, enhance in salaries and worker advantages expense, a $535,000, or 54.9%, enhance in different expense, a $194,000, or 57.6%, enhance in promoting expense, a $220,000, or 19.2%, enhance in occupancy and gear expense, a $233,000, or 105.4%, enhance in FDIC deposit insurance evaluation, a $181,000, or 37.1%, enhance in skilled charges, and a $24,000, or 12.9%, enhance in Directors’ charges and bills. The enhance in salaries and worker advantages is primarily resulting from increasing and bettering the extent of workers on the Bank and its subsidiary corporations, together with Oakmont. Oakmont’s outcomes for the 9 months ended September 30, 2022 additionally contributed to the will increase in occupancy and gear expense, skilled charges, promoting expense, and different expense. The enhance in non-interest expense was partially offset by a $141,000, or 22.0%, lower in information processing expense, and a $14,000, or 100.0%, lower in different actual property owned bills.

The provision for earnings tax elevated $838,000, or 49.5%, from $1.7 million for the 9 months ended September 30, 2021 to $2.5 million for the 9 months ended September 30, 2022 due primarily to the rise in pre-tax earnings.

Comparison of Financial Condition

The Company’s complete belongings at September 30, 2022 had been $707.3 million, a rise of $153.1 million, or 27.6%, from $554.1 million at December 31, 2021.   This progress in complete belongings was primarily resulting from a $175.2 million, or 43.4%, enhance in loans receivable, web. This enhance was partially offset by a $19.4 million, or 18.0%, lower in loans held on the market. The largest will increase throughout the mortgage portfolio occurred in business actual property loans which elevated $129.3 million, or 70.4%, multi-family residential loans which elevated $19.1 million, or 65.2%, building loans which elevated $10.0 million, or 63.1%, business business loans which elevated $8.5 million, or 6.6%, and one-to-four household proprietor occupied loans which elevated $7.6 million, or 78.2%, The enhance in business actual property loans was primarily as a result of buy of a $55.5 million mortgage portfolio by the Bank’s wholly-owned subsidiary, Oakmont Commercial, LLC in April, 2022.

Loans held on the market decreased $19.4 million, or 18.0%, from $107.8 million at December 31, 2021 to $88.4 million at September 30, 2022 because the Bank originated $277.6 million in gear loans held on the market and offered $274.4 million of apparatus loans in the course of the 9 months ended September 30, 2022. Also contributing to the lower in loans held on the market is $11.2 million of mortgage amortization and prepayments. Additionally, the Bank’s mortgage banking subsidiary, Quaint Oak Mortgage, LLC, originated $100.0 million of one-to-four household residential loans in the course of the 9 months ended September 30, 2022 and offered $111.4 million of loans within the secondary market throughout this identical interval.

Total deposits elevated $99.9 million, or 22.4%, to $547.1 million at September 30, 2022 from $447.2 million at December 31, 2021. This enhance in deposits was primarily attributable to will increase of $88.7 million, or 44.2%, in cash market accounts, and $15.1 million, or 23.3%, in non-interest bearing checking accounts. The enhance in deposits was partially offset by a $3.7 million, or 2.0%, lower in certificates of deposit, a $166,000, or 9.0%, lower in financial savings accounts and a $6,000, or 63.5%, lower in passbook accounts. The enhance in cash market accounts was primarily resulting from a $150.0 million deposit in May, 2022 by a deposit placement settlement with a 3rd social gathering financial institution.

Total Federal Home Loan Bank (FHLB) borrowings elevated $43.8 million, or 89.1%, to $93.0 million at September 30, 2022 from $49.2 million at December 31, 2021. During the 9 months ended September 30, 2022, the Company borrowed $115.3 million of FHLB short-term borrowings and $80.0 million of FHLB long-term borrowings and paid down $131.3 million of FHLB short-term borrowings and $20.2 million of FHLB long-term borrowings. Federal Reserve Bank (FRB) long-term borrowings decreased $3.9 million, or 100.0%, to none at September 30, 2022 from $3.9 million at December 31, 2021 because the Company paid off first spherical PPP loans pledged as collateral below the FRB’s Paycheck Protection Program Liquidity Facility (PPPLF). The Company didn’t make the most of the FRB’s PPPLF to fund second spherical PPP loans.

Total stockholders’ fairness elevated $8.7 million, or 23.6%, to $45.6 million at September 30, 2022 from $36.9 million at December 31, 2021. Contributing to the rise was web earnings for the 9 months ended September 30, 2022 of $6.7 million, web earnings attributable to noncontrolling curiosity of $2.6 million, frequent inventory earned by members within the worker inventory possession plan of $259,000, amortization of inventory awards and choices below our inventory compensation plans of $126,000, the reissuance of treasury inventory below the Bank’s 401(ok) Plan of $48,000 and the reissuance of treasury inventory for exercised inventory choices of $181,000. These will increase had been partially offset by dividends paid of $751,000, noncontrolling curiosity distribution of $279,000, different complete loss, web of $42,000, and the acquisition of treasury inventory of $45,000.

Non-performing loans at September 30, 2022 consisted of two loans on non-accrual standing within the mixture quantity of $1.7 million. The non-performing loans at September 30, 2022 are usually well-collateralized or adequately reserved for. The allowance for mortgage losses as a p.c of complete loans receivable, web was 1.22% at September 30, 2022 and 1.30% at December 31, 2021. Non-performing belongings amounted to $1.7 million, or 0.24% of belongings at September 30, 2022 in comparison with $9,000 at December 31, 2021.

Quaint Oak Bancorp, Inc., a Financial Services Company, is the mother or father firm for the Quaint Oak Family of Companies. Quaint Oak Bank, a Pennsylvania-chartered inventory financial savings financial institution and wholly-owned subsidiary of the Company, is headquartered in Southampton, Pennsylvania and conducts business by three regional workplaces positioned within the Delaware Valley, Lehigh Valley and Philadelphia markets. Quaint Oak Bank’s subsidiary corporations embrace, Quaint Oak Abstract, LLC, Quaint Oak Insurance Agency, LLC, Quaint Oak Mortgage, LLC, Quaint Oak Real Estate, LLC, and Oakmont Commercial, LLC, a specialty business actual property financing firm. All corporations are multi-state operations except for Quaint Oak Real Estate, LLC, which operates solely in Pennsylvania. Quaint Oak Bank additionally has a majority fairness place in Oakmont Capital Holdings, LLC, a multi-state gear finance firm primarily based in West Chester, Pennsylvania with a second important facility positioned in Albany, Minnesota.

Statements contained on this information launch which aren’t historic information could also be forward-looking statements as that time period is outlined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are topic to dangers and uncertainties which may trigger precise outcomes to vary materially from these at present anticipated resulting from quite a few components. Factors which may lead to materials variations embrace, however will not be restricted to, modifications in rates of interest which may have an effect on web curiosity margins and web curiosity earnings, aggressive components which may have an effect on web curiosity earnings and noninterest earnings, modifications in demand for loans, deposits and different monetary companies within the Company’s market space; modifications in asset high quality, basic financial circumstances in addition to different components mentioned in paperwork filed by the Company with the Securities and Exchange Commission every now and then. The Company undertakes no obligation to replace these forward-looking statements to mirror occasions or circumstances that happen after the date on which such statements had been made.

In addition to components beforehand disclosed within the experiences filed by the Company with the Securities and Exchange Commission and people recognized elsewhere on this press launch, the next components, amongst others, may trigger precise outcomes to vary materially from forward-looking statements or historic efficiency: the energy of the United States economy generally and the energy of the native economies through which the Company conducts its operations; basic financial circumstances; the scope and period of the COVID-19 pandemic; the results of the COVID-19 pandemic, together with on the Company’s credit score high quality and operations in addition to its impression on basic financial circumstances; legislative and regulatory modifications together with actions taken by governmental authorities in response to the COVID-19 pandemic; financial and monetary insurance policies of the federal authorities; modifications in tax insurance policies, charges and laws of federal, state and native tax authorities together with the results of the Tax Reform Act; modifications in rates of interest, deposit flows, the price of funds, demand for mortgage merchandise and the demand for monetary companies, in every case as could also be affected by the COVID-19 pandemic, competitors, modifications within the high quality or composition of the Company’s mortgage, funding and mortgage-backed securities portfolios; geographic focus of the Company’s business; fluctuations in actual property values; the adequacy of mortgage loss reserves; the danger that goodwill and intangibles recorded within the Company’s monetary statements will change into impaired; modifications in accounting rules, insurance policies or pointers and different financial, aggressive, governmental and technological components affecting the Company’s operations, markets, merchandise, companies and charges.

QUAINT OAK BANCORP, INC.
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QUAINT OAK BANCORP, INC.
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(1) Asset high quality ratios are finish of interval ratios.
(2) Total non-performing belongings divided by tangible frequent fairness plus the allowance for mortgage losses.
* n/m – not significant