SOUTHAMPTON, PA — Quaint Oak Bancorp Inc. (OTCQB: QNTO) recently reported a 76.8% increase in second-quarter profit as lower funding costs and stronger fee income outweighed reduced interest income, while non-performing assets continued to rise.
Net income increased to $481,000, or 18 cents per diluted share, from $272,000, or 10 cents per share, a year earlier. First-half profit more than tripled to $647,000, or 24 cents per share, from $189,000, or 7 cents per share.
Quarterly interest expense declined $760,000, or 13.4%, reflecting the elimination of Federal Home Loan Bank borrowings, lower money-market balances and reduced rates paid on money-market accounts and certificates of deposit.
The bank carried no average FHLB borrowings during the quarter, compared with $56.3 million a year earlier. Average money-market deposits fell to $72.3 million from $142.9 million, while their average rate declined to 2.44% from 3.58%.
Those savings helped net interest margin widen to 2.93% from 2.85%, even as the average interest-rate spread narrowed to 2.14% from 2.19%.
Interest and dividend income decreased $694,000, or 6.8%, primarily because average loans declined by $17.3 million and the average loan yield fell 15 basis points to 6.43%.
Non-interest income rose $361,000, or 18.5%, supported by higher gains from mortgage and Oakmont Commercial loan sales and increased servicing income. Those gains were partly offset by lower SBA loan-sale income, mortgage banking fees and insurance commissions.
Non-interest expense increased 2% to reflect higher compensation, professional fees and other operating costs. The company attributed part of the increase in professional fees to compliance work tied to its developing international correspondent banking business.
Credit quality weakened during the first half. Non-performing loans rose to $9.8 million, or 1.88% of loans, from $7.3 million, or 1.36%, at the end of 2025.
Including other real estate owned, non-performing assets increased to $10.3 million, or 1.64% of total assets, from $7.7 million, or 1.20%. Quaint Oak indicated that the affected loans were either adequately collateralized or reserved.
The bank charged off 10 previously identified commercial business loans totaling $392,000 during the six-month period.
Chief Executive Officer Robert T. Strong characterized credit quality as manageable while acknowledging the increase in troubled assets.
“These assets are either well-collateralized or appropriately reserved for, and we continue to actively pursue resolution strategies,” Strong stated.
Total assets declined 6.7% from year-end to $630.3 million, driven by lower loans held for sale, portfolio loans and cash. Net loans fell 3.6%, while loans held for sale decreased 34.9%.
Deposits declined 7.8% to $550.8 million amid lower checking-account and certificate-of-deposit balances, partially offset by growth in money-market accounts. The company attributed some of the decline to increased competition for deposits.
Stockholders’ equity increased 1.2% to $53 million, supported by first-half earnings and stock-compensation activity, partly offset by dividends and treasury-stock purchases.
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