SOUTHAMPTON, PA — Quaint Oak Bancorp, Inc. (OTCQB: QNTO) reported net income of $100,000 for the second quarter of 2024, translating to $0.04 per basic and diluted share. This marks a significant drop from the $570,000, or $0.25 per share, reported in the same period last year. For the first half of 2024, net income was $973,000, or $0.39 per share, down from $1.1 million, or $0.51 per share, in the first half of 2023.
Key Financial Highlights
- Net income for Q2 2024 fell by 82.5% year-over-year.
- Earnings per share for the first six months of 2024 decreased to $0.39 from $0.51 in the same period last year.
- Interest income decreased by $1 million, driven by a reduction in loans.
- Non-interest income saw a marginal increase due to better performance from subsidiary companies.
- Interest expense rose by $133,000 due to higher deposit costs.
- Non-performing loans increased, but the company has posted appropriate reserves.
Operational Adjustments
President and CEO Robert T. Strong attributed the flat earnings to the sale of a 51% ownership interest in Oakmont Capital Holdings, LLC in March 2024. This sale led to a substantial reduction in loans held for sale. Strong emphasized the company’s focus on rebuilding loan balances to boost interest income. He also highlighted positive results from non-interest income generated by subsidiary companies.
Cost Management Efforts
Quaint Oak has taken steps to reduce overall costs. The company exited its Chalfont office lease and discontinued operations of its real estate and equipment financing businesses. These measures are expected to cut expenses and eliminate losses from underperforming business lines.
Loan Performance
The company reported an uptick in non-performing loans, retaining approximately $4.4 million in equipment loans from Oakmont Capital Holdings. These loans were classified with reserves posted against potential losses. The market has shown moderate weakness in loan performance across various categories and locations.
Capital and Liquidity
Quaint Oak ended the quarter with a liquidity ratio of over 10% and a total capital ratio of 13.89%. During the first half of 2024, the company completed two private placement offerings totaling $2.5 million. The Board of Directors declared a second-quarter dividend of $0.13 per share, payable on August 5, 2024.
Navigating the Financial Terrain
Quaint Oak Bancorp is navigating a challenging financial landscape. The sale of interest in Oakmont Capital Holdings and other cost-cutting measures have led to short-term earnings impact but could stabilize long-term operations. Given the mixed financial performance and current market conditions, Quaint Oak Bancorp appears to be a hold. Investors should watch for improvements in loan performance and interest income before making further investment decisions.
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