Sign in

You're signed outSign in or to get full access.

QO

QUAINT OAK BANCORP, INC. (QNTO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 posted a net loss of $0.083M, or $(0.03) diluted EPS, vs net income of $0.873M ($0.36 EPS) in Q1 2024 and $1.579M ($0.60 EPS) in Q4 2024, driven by lower interest income, higher operating costs, and the absence of discontinued ops gains; sequential spread and NIM improved but not enough to offset headwinds .
  • Interest and dividend income fell 18.1% YoY to $9.93M as average loans declined $69.8M and loan yields contracted 35 bps; deposits interest expense declined 21.0% YoY tied to reduced correspondent banking activity, while new senior debt added $0.116M interest expense .
  • Balance sheet mix shifted: deposits fell 8.3% Q/Q to $507.6M as the Company exited a correspondent banking relationship; FHLB short-term borrowings rose to $65.0M, senior notes of $10.0M (11% coupon) replaced $14.0M subordinated notes at maturity .
  • Asset quality mixed: NPLs were 1.13% of loans (up sequentially vs 1.07% at YE 2024), while Texas Ratio improved YoY to 9.22%; total risk-based capital ratio was 13.92% (vs 14.34% at YE 2024) .
  • Dividend catalyst: Board declared a $0.13 quarterly cash dividend payable May 5, 2025; near-term stock narrative likely centers on deposit mix changes, funding costs (11% senior notes), and execution on the commercial/SBA/mortgage pipeline to re-accelerate earnings .

What Went Well and What Went Wrong

What Went Well

  • Net interest spread expanded YoY to 2.13% (from 2.06%), and NIM stabilized at 2.63% vs 2.54% in Q4 2024, reflecting improved pricing/funding mix despite loan balance contraction .
  • Non-interest income rose 11.3% YoY on stronger gains in SBA loan sales (+996%) and higher net gain on sale of loans (+12.9%) with mortgage/commercial secondary market activity supporting fee generation .
  • Capital/credit cushions: allowance coverage of NPLs at 107.45% and total risk-based capital at 13.92%, with the Texas Ratio improved YoY to 9.22%, signaling resilience despite small business loan weakness .

What Went Wrong

  • Earnings inflected to a loss: net loss $(0.083)M driven by an 18.1% YoY drop in interest income, higher non-interest expense (+8.2%), and lack of discontinued ops contribution present last year .
  • Deposit outflows and mix deterioration: total deposits fell $45.7M Q/Q; interest-bearing checking plunged $47.8M due to the exit of a correspondent banking relationship, increasing reliance on FHLB short-term funding .
  • Credit costs remained a drag: provision for credit losses (loans and unfunded commitments) totaled $0.441M, with charge-offs on seven commercial business loans; NPLs ticked up sequentially to 1.13% of loans .

Financial Results

Income Statement Snapshot

MetricQ1 2024Q4 2024Q1 2025
Total Interest & Dividend Income ($USD Millions)$12.12 $9.95 $9.93
Net Interest Income ($USD Millions)$5.41 $4.09 $4.14
Non-Interest Income ($USD Millions)$1.58 $4.06 $1.76
Total Non-Interest Expense ($USD Millions)$5.13 $5.73 $5.54
Provision for Credit Losses – Loans ($USD Millions)$1.08 $0.28 $0.33
Net Income (Loss) ($USD Millions)$0.87 $1.58 $(0.08)
Diluted EPS ($USD)$0.36 $0.60 $(0.03)

Operating Ratios

MetricQ1 2024Q4 2024Q1 2025
Net Interest Margin (%)2.96% 2.54% 2.63%
Avg Interest Rate Spread (%)2.06% 1.88% 2.13%
Efficiency Ratio (%)73.29% 70.40% 70.40%

Asset Quality & Capital

MetricQ1 2024Q4 2024Q1 2025
NPLs / Loans (%)1.28% 1.07% 1.13%
NPAs / Assets (%)1.00% 0.83% 0.91%
ACL / NPLs (%)97.24% 113.61% 107.45%
ACL / Loans (%)1.23% 1.20% 1.20%
Texas Ratio (%)11.96% 8.77% 9.22%
Total Risk-Based Capital Ratio (%)13.61% 14.34% 13.92%

Balance Sheet Highlights (End of Period)

MetricDec 31, 2024Mar 31, 2025
Total Assets ($USD Millions)$685.17 $650.37
Total Deposits ($USD Millions)$553.25 $507.58
Non-Interest Bearing Deposits ($USD Millions)$59.78 $60.93
Interest-Bearing Deposits ($USD Millions)$493.47 $446.65
FHLB Short-Term Borrowings ($USD Millions)$45.00 $65.00
FHLB Long-Term Borrowings ($USD Millions)$2.86 $0.00
Senior Debt ($USD Millions)$0.00 $9.49
Subordinated Debt ($USD Millions)$22.00 $8.00
Cash & Equivalents ($USD Millions)$62.99 $48.86
Loans Receivable, Net ($USD Millions)$534.69 $526.37
Loans Held for Sale ($USD Millions)$64.28 $50.95

Non-Interest Income Components

Component ($USD Millions)Q1 2024Q4 2024Q1 2025
Mortgage banking, equipment lending & title fees$0.21 $0.28 $0.15
Insurance commissions$0.15 $0.22 $0.19
Other fees & service charges$0.23 $0.03 $0.03
Net loan servicing income$0.00 $0.11 $0.00
Income from bank-owned life insurance$0.03 $0.03 $0.03
Net gain on sale of loans$0.94 $1.70 $1.06
Gain on sale of SBA loans$0.03 $0.20 $0.31
Real estate sales commissions, net$0.00 $0.00 $0.00
Total Non-Interest Income$1.58 $4.06 $1.76

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Cash Dividend ($/share)Q2 2025 payable May 5, 2025Not disclosed$0.13 per share (record date Apr 21, 2025; payable May 5, 2025) Announced
Revenue2025Not providedNot providedMaintained (no guidance)
Margins (NIM, spread)2025Not providedNot providedMaintained (no guidance)
OpEx2025Not providedNot providedMaintained (no guidance)
Tax rate2025Not providedNot providedMaintained (no guidance)
Segment guidance (Mortgage/SBA/CRE)2025Not providedNot providedMaintained (no guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Small business lending/portfolio health“Some market weakness… NPLs <1%” “Continuing minor weakness… NPLs 1.07%” “Weakness still exists; NPLs 1.13%” Slight deterioration Q/Q, improved YoY
Non-interest income driversGains in loan sales and fees One-time $1.5M sale-leaseback gain; robust loan sale gains SBA gains and loan sale gains up YoY; mortgage fees softer Normalizing post one-time Q4
Deposit strategy/correspondent bankingLower interest-bearing checking due to reduced correspondent activity Continued decline; reduced correspondent activity Exit of a correspondent relationship (-$47.8M interest-bearing checking) Strategic exit; mix shift
Funding & liquidityFHLB borrowings down vs 2023 FHLB borrowings increased to $47.9M FHLB short-term borrowings at $65.0M; long-term repaid Higher near-term wholesale funding
Capital ratiosTRBC ~13.86% TRBC 14.34% TRBC 13.92% Solid; modest Q/Q decline
Macro/housing——CEO: GDP shrinkage; housing “failed to thrive” dampened mortgage production Macro headwind
SBA lending platformPLP designation (Oct 2024) Active SBA loan sales SBA originations $4.9M; sales $3.7M Operational strength continues

Management Commentary

  • “First quarter results historically are not the best of our calendar year… slightly less than a breakeven performance. The trends in the country’s real gross domestic product shrinkage of -0.3%… is a testament to the reality we have experienced.” — Robert T. Strong, CEO .
  • “Uncertainty of the country’s direction in world trade and other domestic issues… The housing market has failed to thrive… Small Business loans… are slow to close with business owners waiting to gauge the momentum of 2025.” .
  • “On a more positive note, the Bank’s pipeline for commercial loans, SBA loans and mortgage loans is relatively strong… prospects for loan closings should improve.” .
  • “Weakness in the small business sector… Our Texas Ratio is 9.22%… Total Risk-Based Capital Ratio improved to 13.92% at March 31, 2025 from 13.61% at March 31, 2024.” .
  • Strategy: “focuses on long-term profitability and maintaining healthy capital ratios” .

Q&A Highlights

  • No earnings call transcript was filed for Q1 2025; no Q&A details or guidance clarifications were available [SearchDocuments: none found].

Estimates Context

  • Coverage appears limited; S&P Global consensus EPS and revenue estimates for Q1 2025 were unavailable, so a formal beat/miss assessment cannot be made (EPS consensus: N/A*) (Revenue consensus: N/A*).
  • S&P Global shows Q1 2025 “Revenue actual” $5.463M*, which may reflect a standardized “total revenue” definition differing from net interest income plus non-interest income reported in company materials ($4.144M + $1.760M = $5.904M) .
  • Values retrieved from S&P Global.*

Q1 2025 Actual vs Consensus

MetricQ1 2025 ActualQ1 2025 Consensus
Diluted EPS ($)$(0.03) N/A*
Revenue ($USD Millions)$5.463*N/A*

Key Takeaways for Investors

  • Earnings volatility: loss in Q1 versus strong Q4 underscores sensitivity to loan balances, mortgage volumes, and fee mix; watch for pipeline conversion to restore net interest and fee momentum .
  • Deposit mix reset: exit of a correspondent relationship drove a sharp decline in interest-bearing checking, pressuring funding strategy and increasing FHLB reliance; stabilization of core deposits is pivotal .
  • Funding cost overhang: introduction of $10.0M senior notes at 11% raises interest expense; deleveraging or margin expansion needed to offset higher fixed funding costs .
  • Margin signals improving: spread and NIM improved sequentially vs Q4; sustaining this trend alongside asset growth is key to rebuilding earnings power .
  • Credit normalization: NPLs up slightly Q/Q but improved YoY, with ACL coverage >100%; continued vigilance in small business exposures and equipment pools warranted .
  • Fee engine intact: SBA and loan sale gains provided meaningful support; mortgage and CRE secondary market activity remains a lever for non-interest income even amid housing softness .
  • Capital adequate: TRBC ~13.9% and Texas Ratio ~9.2% underpin resilience; dividend maintained at $0.13 suggests confidence in medium-term capital generation despite near-term earnings pressure .

Additional Context and Drivers

  • Interest income decline was primarily tied to a $69.8M drop in average loans and a 35 bps decline in loan yields, plus a $31.1M reduction in interest-earning bank balances; deposit interest expense fell with reduced correspondent activity .
  • Operating expense pressures included occupancy/equipment (+72%), data processing (+53%), and professional fees (+58%); FDIC assessment declined (-30%) and salaries were flat YoY .
  • Loan production/sales in Q1: Mortgage originations $19.6M with $24.8M sold; CRE originations $9.4M with $17.8M sold; SBA originations $4.9M with $3.7M sold .
  • Balance sheet actions: paid down $2.9M of FHLB long-term debt; raised $10.0M senior notes; used proceeds to repay $14.0M subordinated notes at maturity .