Quaint Oak Bancorp, Inc. (the "Company") (OTCQB: QNTO), the holding
company for Quaint Oak Bank (the "Bank"), announced today that net
income for the quarter ended September 30, 2013 was $131,000, or
$0.15 per basic and $0.14 per diluted share, compared to $242,000,
or $0.27 per basic and diluted share for the same period in 2012.
Net income for the nine months ended September 30, 2013 was
$444,000, or $0.50 per basic and $0.48 per diluted share, compared
to $791,000 or $0.89 per basic and diluted share for the same
period in 2012. The decrease in net income for the nine months
ended September 30, 2013 was attributable in part to a one-time
$200,000 after-tax gain on the sale of investment securities during
the quarter ended June 30, 2012.
Robert T. Strong, President and Chief Executive Officer stated,
"Our net income declined on a comparative quarterly basis as we are
finding loan originations to be inconsistent at the Bank and lower
than expected at the mortgage company subsidiary in recent periods.
As a result, non-interest income is down for the quarter by reason
of reduced activity in the residential mortgage markets during this
quarter. Although, our outstanding loans receivable, net of
allowance for loan losses, has increased year to date by $14.6
million, the number of new loans closed this quarter came in below
expectations."
Mr. Strong continued, "We intend to continue to add loan
production personnel at the Bank and mortgage company in order to
provide every opportunity to add to outstanding loan balances. Our
production pipelines have improved as we entered the fourth quarter
and we hope to see improved market consistency through year
end."
Mr. Strong added, "Our non-performing loans as a percent of
total loans receivable, our non-performing assets as a percent of
total assets, and our Texas Ratio are all at an improved level when
compared to the same period one year ago. We had during the current
quarter taken the opportunity to address certain non-performing
assets that provided continued improvement in these
statistics."
In closing, Mr. Strong commented, "As always, in conjunction
with our stock repurchase plan, our current and continued business
strategy includes long term profitability and payment of dividends
reflecting our strong commitment to shareholder value."
Net income amounted to $131,000 for the three months ended
September 30, 2013, a decrease of $111,000 or 45.9%, compared to
net income of $242,000 for three months ended September 30, 2012.
The decrease in net income on a comparative quarterly basis was
primarily the result of an increase in non-interest expense of
$163,000, a decrease in non-interest income of $85,000, and an
increase in the provision for loan losses of $23,000, offset by an
increase in net interest income of $117,000, and a decrease in the
provision for income taxes of $43,000.
The $117,000, or 11.4% increase in net interest income for the
three months ended September 30, 2013 over the comparable period in
2012 was driven by a $118,000, or 8.2% increase in interest income,
offset by a $1,000, or 0.2% increase in interest expense. The
increase in interest income was primarily due to a $13.5 million
increase in average loans receivable, net, including loans held for
sale, which increased from an average balance of $82.9 million for
the three months ended September 30, 2012 to an average balance of
$96.4 million for the three months ended September 30, 2013, which
had the effect of increasing net interest income $222,000. Also
contributing to the increase was a $1.1 million increase in average
short-term investments and investment securities available for sale
from an average balance of $19.9 million for the three months ended
September 30, 2012 to an average balance of $21.0 million for the
comparable period in 2013, which had the effect of increasing
interest income by $4,000. Offsetting these increases was a 38
basis point decline in the yield on average loans receivable, net,
including loans held for sale, from 6.59% for the three months
ended September 30, 2012 to 6.21% for the three months ended
September 30, 2013, which had the effect of decreasing interest
income by $90,000, and a 33 basis point decline in the yield on
average short-term investments and investment securities available
for sale from 1.59% for the three months ended September 30, 2012
to 1.26% for the same period in 2013, which had the effect of
decreasing interest income $18,000. The increase in interest
expense was primarily attributable to a $13.8 million increase in
average interest-bearing liabilities, which increased from an
average balance of $90.8 million for the three months ended
September 30, 2012 to an average balance of $104.5 million for the
three months ended September 30, 2013, which had the effect of
increasing interest expense $46,000. Offsetting this increase was a
decrease in the cost of interest-bearing liabilities, which
decreased 24 basis points from 1.85% for the three months ended
September 30, 2012 to 1.61% for the three months ended September
30, 2013, which had the effect of decreasing interest expense
$45,000. The average interest rate spread decreased from 3.77% for
the three months ended September 30, 2012, to 3.72% for the same
period in 2013 while the net interest margin decreased from 3.99%
for the three months ended September 30, 2012 to 3.90% for the
three months ended September 30, 2013.
The $23,000, or 71.9% increase in the provision for loan losses
for the three months ended September 30, 2013 over the three months
ended September 30, 2012 was based on an evaluation of the
allowance relative to such factors as volume of the loan portfolio,
concentrations of credit risk, prevailing economic conditions,
prior loan loss experience and amount of non-performing loans.
The $85,000, or 23.5% decrease in non-interest income for the
three months ended September 30, 2013 over the comparable period in
2012 was primarily attributable to a $53,000 decrease in the gain
on sales of loans, a $31,000 increase in the loss on the sale of
other real estate owned, and a $24,000 decrease in other income,
partially offset by a $23,000 increase in other fees and service
charges.
The $163,000, or 16.6% increase in non-interest expense for the
three months ended September 30, 2013 compared to the same period
in 2012 was primarily attributable to a $163,000 increase in
salaries and employee benefits expense, a $26,000 increase in
occupancy and equipment expense, an $11,000 increase in directors'
fees and expenses, and a $9,000 increase in advertising. Offsetting
these increases was a $13,000 decrease in professional fees, a
$13,000 decrease in other real estate owned expense, an $11,000
decrease in other expenses, and a $9,000 decrease in FDIC deposit
insurance expense. The increase in salaries and employee benefits
expense for the 2013 period compared to 2012 was primarily
attributable to increased staff as the Company expanded its
mortgage banking and lending operations. The increase in occupancy
and equipment expense was primarily related to the move of our
Delaware Valley office in March 2012 from 607 Lakeside Office Park,
Southampton, PA to a larger facility at 501 Knowles Avenue,
Southampton, PA and computer system upgrades.
The $43,000 or 32.6% decrease in the provision for income taxes
for the three months ended September 30, 2013 over the three month
period ended September 30, 2012 was due primarily to the decrease
in pre-tax income. Our effective tax rate increased to 40.5% during
the three months ended September 30, 2013 from 35.3% for the
comparable period in 2012 primarily due to the utilization of a
state tax credit during the 2012 period.
For the nine months ended September 30, 2013, net income
decreased $347,000, or 43.9% from $791,000 for the nine months
ended September 30, 2012 to $444,000 for the nine months ended
September 30, 2013. This decrease in net income was primarily the
result of an increase in non-interest expense of $778,000 and a
decrease in non-interest income of $60,000, offset by an increase
in net interest income of $265,000 and decreases in the provision
for loan losses of $20,000 and the provision for income taxes of
$206,000.
The $265,000, or 8.7% increase in net interest income for the
nine months ended September 30, 2013 over the comparable period in
2012 was driven by a $261,000, or 6.0% increase in interest income
and a $4,000, or 0.3% decrease in interest expense. The increase in
interest income was primarily due to a $13.0 million increase in
average loans receivable, net, including loans held for sale, which
increased from an average balance of $81.1 million for the nine
months ended September 30, 2012 to an average balance of $94.1
million for the nine months ended September 30, 2013, which had the
effect of increasing interest income $645,000. Also contributing to
the increase was a $2.4 million increase in average short-term
investments and investment securities available for sale from an
average balance of $20.4 million for the nine months ended
September 30, 2012 to an average balance of $22.8 million for the
same period in 2013, which had the effect of increasing interest
income by $29,000. Offsetting these increases was a 40 basis point
decline in the yield on average loans receivable, net, including
loans held for sale, from 6.65% for the nine months ended September
30, 2012 to 6.25% for the nine months ended September 30, 2013,
which had the effect of decreasing interest income by $277,000, and
a 48 basis point decline in the yield on average short-term
investments and investment securities available for sale from 1.63%
for the nine months ended September 30, 2012 to 1.15% for same
period in 2013, which had the effect of decreasing interest income
$83,000. Also contributing to offsetting the increases in interest
income was the $1.5 million decrease in average mortgage-backed
securities held to maturity which had the effect of decreasing
interest income $53,000. The decrease in average mortgage-backed
securities held to maturity was due to the sale of mortgage-backed
securities in the second quarter of 2012 after their transfer to
the available for sale category at the end of the first quarter of
2012. The decrease in interest expense was primarily attributable
to a 26 basis point decline in the overall cost of average
interest-bearing liabilities from 1.91% for the nine months ended
September 30, 2012 to 1.65% for the nine months ended September 30,
2013, which had the effect of decreasing interest expense by
$136,000. This decrease due to rate combined with a decrease of
$1.9 million in average FHLB advances had the effect of decreasing
interest expense by $58,000. These decreases were offset by an
increase of $8.9 million in average certificates of deposits which
had the effect of increasing interest expense by $138,000, and an
increase of $7.3 million in average eSavings accounts which had the
effect of increasing interest expense by $52,000. The average
interest rate spread decreased from 3.71% for the nine months ended
September 30, 2012, to 3.61% for the same period in 2013 while the
net interest margin decreased from 3.95% for the nine months ended
September 30, 2012 to 3.79% for the nine months ended September 30,
2013.
The $20,000, or 11.0% decrease in the provision for loan losses
for the nine months ended September 30, 2013 over the nine months
ended September 30, 2012 was based on an evaluation of the
allowance relative to such factors as volume of the loan portfolio,
concentrations of credit risk, prevailing economic conditions,
prior loan loss experience and amount of non-performing loans.
The $60,000, or 5.5% decrease in non-interest income for the
nine months ended September 30, 2013 over the comparable period in
2012 was primarily attributable to a $331,000 decrease in the gains
on sale of investment securities, a $32,000 decrease in the gain on
the sale of an SBA loan, a $35,000 increase in loss on the sale of
other real estate owned, and a $27,000 decrease in other income.
These decreases were partially offset by a $221,000 increase in net
gains on the sales of loans, a $123,000 increase in fee income
generated by Quaint Oak Bank's mortgage banking and title abstract
subsidiaries, and a $21,000 increase in other fees and service
charges.
The $778,000, or 29.0% increase in non-interest expense for the
nine months ended September 30, 2013 compared to the same period in
2012 was primarily attributable to a $601,000 increase in salaries
and employee benefits expense, a $101,000 increase in occupancy and
equipment expense, a $50,000 increase in other expense, a $25,000
increase in professional fees, an $18,000 increase in advertising
expense, a $16,000 increase in directors' fees and expenses, and a
$6,000 increase in other real estate owned expense. Offsetting
these increases was a $39,000 decrease in FDIC deposit insurance
expense primarily attributable to a refund of unused prepaid
assessment credits during the quarter ended June 30, 2013. As was
the case with the quarter, the increase in salaries and employee
benefits expense for the 2013 period compared to 2012 was primarily
attributable to increased staff as the Company expanded its
mortgage banking and lending operations. The increase in occupancy
and equipment expense was primarily related to the move of our
Delaware Valley office in March 2012 from 607 Lakeside Office Park,
Southampton, PA to a larger facility at 501 Knowles Avenue,
Southampton, PA and computer system upgrades.
The $206,000, or 42.8% decrease in the provision for income
taxes for the nine months ended September 30, 2013 over the nine
month period ended September 30, 2012 was due primarily to the
decrease in pre-tax income as our effective tax rate remained
relatively consistent at 38.2% for the 2013 period compared to
37.8% for the comparable period in 2012.
The Company's total assets at September 30, 2013 were $121.2
million, an increase of $3.8 million, or 3.3%, from $117.4 million
at December 31, 2012. This growth in total assets was primarily due
to an increase in loans receivable, net of $14.6 million.
Offsetting this increase were decreases in cash and cash
equivalents of $7.1 million, loans held for sale of $2.5 million,
investment in interest-earning time deposits of $499,000,
investment securities available for sale of $498,000, and
investment in Federal Home Loan Bank stock of $236,000. The
liquidity resulting from these decreases, when combined with the
increase in deposits, was used to fund loan growth and pay off
Federal Home Loan Bank term borrowings in the amount of $2.0
million.
Total interest-bearing deposits increased $6.1 million, or 6.3%,
to $103.2 million at September 30, 2013 from $97.0 million at
December 31, 2012. This increase in deposits was primarily
attributable to increases of $3.9 million in eSavings accounts and
$3.0 million in certificates of deposit.
Total stockholders' equity increased $196,000 to $17.0 million
at September 30, 2013 from $16.8 million at December 31, 2012.
Contributing to the increase was net income for the nine months
ended September 30, 2013 of $444,000, amortization of stock awards
and options under our stock compensation plans of $95,000, and
common stock earned by participants in the employee stock ownership
plan of $115,000. These increases were offset by the purchase of
19,372 shares of the Company's stock as part of the Company's stock
repurchase programs, for an aggregate purchase price of $297,000,
dividends paid of $136,000, and a decrease in accumulated other
comprehensive income of $25,000.
Non-performing loans amounted to $2.1 million, or 2.11% of net
loans receivable at September 30, 2013, consisting of nineteen
loans, thirteen of which are on non-accrual status and six of which
are 90 days or more past due and accruing interest. Comparably,
non-performing loans amounted to $2.1 million, or 2.54% of net
loans receivable at December 31, 2012, consisting of twenty-six
loans, seventeen of which were on non-accrual status and nine of
which were 90 days or more past due and accruing interest. The
non-performing loans at September 30, 2013 include ten one-to-four
family non-owner occupied residential loans, four one-to-four
family owner-occupied residential loans, three commercial real
estate loans, and two home equity loans, and all are generally
well-collateralized or adequately reserved for. During the quarter
ended September 30, 2013, three loans were placed on non-accrual
status resulting in the reversal of approximately $10,000 of
previously accrued interest income, one loan that was on
non-accrual was returned to accrual status, and two loans totaling
$69,000 that were on non-accrual were charged-off. In addition,
three loans that were on non-accrual were transferred to other real
estate owned, one loan was paid off in a short-sale transaction
that resulted in a charge-off of $20,000, and one loan was paid off
with no loss. At September 30, 2013, the Company had ten loans
totaling $633,000 that were identified as troubled debt
restructurings. None of these loans were delinquent and were all
performing in accordance with their modified terms. The allowance
for loan losses as a percent of total loans receivable was 0.88% at
September 30, 2013 and 1.01% at December 31, 2012.
Other real estate owned (OREO) amounted to $337,000 at September
30, 2013, consisting of five properties. This compares to three
properties that totaled $170,000 at December 31, 2012. During the
quarter-ended September 30, 2013, three properties that had been
collateral for three loans previously classified as non-accrual
were transferred to OREO. In conjunction with this transfer,
$60,000 of the outstanding loan balance was charged-off through the
allowance for loan losses. Also during the quarter, the Company
sold one OREO property and realized a loss of approximately $13,000
on the transaction. For the nine months ended, the Company
transferred four properties into OREO totaling $241,000, made
$42,000 of capital improvements to the properties, and sold two
properties totaling $116,000. Non-performing assets amounted to
$2.3 million, or 1.86% of total assets at September 30, 2013
compared to $2.3 million, or 1.97% of total assets at December 31,
2012.
Quaint Oak Bancorp, Inc. is the holding company for Quaint Oak
Bank. Quaint Oak Bank is a Pennsylvania-chartered stock savings
bank headquartered in Southampton, Pennsylvania and conducts
business through its two banking offices located in Bucks County
and Lehigh County, Pennsylvania.
Statements contained in this news release which are not
historical facts may be forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors.
Factors which could result in material variations include, but are
not limited to, changes in interest rates which could affect net
interest margins and net interest income, competitive factors which
could affect net interest income and noninterest income, changes in
demand for loans, deposits and other financial services in the
Company's market area; changes in asset quality, general economic
conditions as well as other factors discussed in documents filed by
the Company with the Securities and Exchange Commission from time
to time. The Company undertakes no obligation to update these
forward-looking statements to reflect events or circumstances that
occur after the date on which such statements were made.
QUAINT OAK BANCORP, INC.
Consolidated Balance Sheets
(In Thousands)
|
|
At September 30,
2013 |
|
|
At December 31,
2012 |
|
Assets |
|
(Unaudited) |
|
|
(Unaudited) |
|
Cash and cash equivalents |
|
$ |
5,282 |
|
|
$ |
12,400 |
|
Investment in interest-earning time
deposits |
|
|
7,633 |
|
|
|
8,132 |
|
Investment securities available for sale at
fair value |
|
|
3,496 |
|
|
|
3,994 |
|
Loans held for sale |
|
|
2,410 |
|
|
|
4,875 |
|
Loans receivable, net of allowance for loan
losses (2013: $878; 2012: $860) |
|
|
98,865 |
|
|
|
84,291 |
|
Accrued interest receivable |
|
|
663 |
|
|
|
657 |
|
Investment in Federal Home Loan Bank stock,
at cost |
|
|
201 |
|
|
|
437 |
|
Premises and equipment, net |
|
|
1,657 |
|
|
|
1,608 |
|
Other real estate owned, net |
|
|
337 |
|
|
|
170 |
|
Prepaid expenses and other assets |
|
|
679 |
|
|
|
811 |
|
Total Assets |
|
$ |
121,223 |
|
|
$ |
117,375 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
Liabilities |
|
|
|
|
|
|
|
|
Deposits, interest-bearing |
|
$ |
103,168 |
|
|
$ |
97,038 |
|
Federal Home Loan Bank advances |
|
|
-- |
|
|
|
2,000 |
|
Accrued interest payable |
|
|
70 |
|
|
|
81 |
|
Advances from borrowers for taxes and
insurance |
|
|
696 |
|
|
|
991 |
|
Accrued expenses and other liabilities |
|
|
256 |
|
|
|
428 |
|
Total Liabilities |
|
|
104,190 |
|
|
|
100,538 |
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
17,033 |
|
|
|
16,837 |
|
Total Liabilities and Stockholders'
Equity |
|
$ |
121,223 |
|
|
$ |
117,375 |
|
QUAINT OAK BANCORP, INC.
Consolidated Statements of
Income
(In Thousands, except share data)
|
|
For the Three
Months Ended September 30, |
|
|
For the Nine
Months Ended September 30, |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Interest Income |
|
$ |
1,563 |
|
|
$ |
1,445 |
|
|
$ |
4,609 |
|
|
$ |
4,348 |
|
Interest Expense |
|
|
420 |
|
|
|
419 |
|
|
|
1,290 |
|
|
|
1,294 |
|
Net Interest Income |
|
|
1,143 |
|
|
|
1,026 |
|
|
|
3,319 |
|
|
|
3,054 |
|
Provision for Loan Losses |
|
|
55 |
|
|
|
32 |
|
|
|
162 |
|
|
|
182 |
|
Net Interest Income after Provision
for Loan Losses |
|
|
1,088 |
|
|
|
994 |
|
|
|
3,157 |
|
|
|
2,872 |
|
Non-Interest Income |
|
|
277 |
|
|
|
362 |
|
|
|
1,023 |
|
|
|
1,083 |
|
Non-Interest Expense |
|
|
1,145 |
|
|
|
982 |
|
|
|
3,461 |
|
|
|
2,683 |
|
Income before Income
Taxes |
|
|
220 |
|
|
|
374 |
|
|
|
719 |
|
|
|
1,272 |
|
Income Taxes |
|
|
89 |
|
|
|
132 |
|
|
|
275 |
|
|
|
481 |
|
Net Income |
|
$ |
131 |
|
|
$ |
242 |
|
|
$ |
444 |
|
|
$ |
791 |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30, |
|
|
Nine Months
Ended September 30, |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Per Common Share Data: |
|
(Unaudited) |
|
|
(Unaudited) |
|
Earnings per share - basic |
|
$ |
0.15 |
|
|
$ |
0.27 |
|
|
$ |
0.50 |
|
|
$ |
0.89 |
|
Average shares outstanding - basic |
|
|
892,266 |
|
|
|
891,168 |
|
|
|
890,495 |
|
|
|
886,014 |
|
Earnings per share - diluted |
|
$ |
0.14 |
|
|
$ |
0.27 |
|
|
$ |
0.48 |
|
|
$ |
0.89 |
|
Average shares outstanding - diluted |
|
|
933,809 |
|
|
|
894,975 |
|
|
|
927,987 |
|
|
|
890,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per share, end of
period |
|
$ |
17.66 |
|
|
$ |
16.86 |
|
|
$ |
17.66 |
|
|
$ |
16.86 |
|
Shares outstanding, end of period |
|
|
964,449 |
|
|
|
983,821 |
|
|
|
964,449 |
|
|
|
983,821 |
|
|
|
|
Three
Months Ended September 30, |
|
Three
Months Ended September 30, |
|
|
|
2013 |
2012 |
|
2013 |
2012 |
Selected Operating
Ratios: |
|
|
(Unaudited) |
|
(Unaudited) |
Average yield on interest-earning assets |
|
|
5.33 |
% |
|
|
5.62 |
% |
|
|
5.26 |
% |
|
|
5.62 |
% |
Average rate on interest-bearing
liabilities |
|
|
1.61 |
% |
|
|
1.85 |
% |
|
|
1.65 |
% |
|
|
1.91 |
% |
Average interest rate spread |
|
|
3.72 |
% |
|
|
3.77 |
% |
|
|
3.61 |
% |
|
|
3.71 |
% |
Net interest margin |
|
|
3.90 |
% |
|
|
3.99 |
% |
|
|
3.79 |
% |
|
|
3.95 |
% |
Average interest-earning assets to average
interest-bearing liabilities |
|
|
112.31 |
% |
|
|
113.23 |
% |
|
|
112.19 |
% |
|
|
113.82 |
% |
Efficiency ratio |
|
|
80.65 |
% |
|
|
70.80 |
% |
|
|
79.72 |
% |
|
|
64.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios
(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans as a percent of total
loans receivable, net |
|
|
2.11 |
% |
|
|
2.68 |
% |
|
|
2.11 |
% |
|
|
2.68 |
% |
Non-performing assets as a percent of total
assets |
|
|
1.86 |
% |
|
|
2.22 |
% |
|
|
1.86 |
% |
|
|
2.22 |
% |
Allowance for loan losses as a percent of
non-performing loans |
|
|
42.17 |
% |
|
|
45.01 |
% |
|
|
42.17 |
% |
|
|
45.01 |
% |
Allowance for loan losses as a percent of
total loans receivable |
|
|
0.88 |
% |
|
|
1.19 |
% |
|
|
0.88 |
% |
|
|
1.19 |
% |
Texas Ratio (2) |
|
|
14.90 |
% |
|
|
15.16 |
% |
|
|
14.90 |
% |
|
|
15.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Asset quality ratios are end
of period ratios. (2) Total non-performing assets divided by
tangible common equity plus the allowance for loan losses. |
Contact: |
|
|
Quaint Oak Bancorp, Inc. |
|
Robert T. Strong |
|
President and Chief Executive
Officer |
|
(215) 364-4059 |
|
Quaint Oak Bancorp (QB) (USOTC:QNTO)
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