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QO

QUAINT OAK BANCORP INC (QNTO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net income was $1.58M ($0.60 EPS), up 38.3% year over year, driven by an 82.6% increase in non-interest income including a one-time $1.5M gain from an office sale-leaseback and lower interest expense from reduced FHLB borrowings .
  • Net interest margin improved to 2.54% (vs. 2.39% YoY; 2.28% in Q2 and 2.58% in Q3), while the efficiency ratio strengthened to 70.40% (vs. 82.28% YoY; 97.37% in Q2 and 90.22% in Q3), reflecting better operating leverage in Q4 .
  • Credit costs rose as provision for credit losses increased 204% YoY in Q4, with non-performing loans at 1.07% of loans and allowance coverage of 113.61% of NPLs; management cited minor small-business sector weakness and continued monitoring .
  • Deposits fell 12.4% YoY (interest-bearing checking down 55.0% due to reduced correspondent banking activity), while FHLB borrowings increased to $47.9M; total risk-based capital ratio at year-end was 14.34% and a $0.13 dividend was declared (payable Feb 10, 2025) .
  • No Wall Street consensus estimates were available via S&P Global during this analysis (service limit), so beat/miss assessment to estimates is unavailable.

What Went Well and What Went Wrong

What Went Well

  • Non-interest income strength: “Our non-interest income continued to improve... We completed the sale-leaseback... that resulted in a one-time $1.5 million gain,” supporting EPS and ROE in Q4 .
  • Funding cost relief and margin improvement: Interest expense declined $756K YoY on sharply lower average FHLB borrowings; net interest margin expanded to 2.54% in Q4 and spread to 1.88% .
  • Capital and shareholder returns: Year-end risk-based capital ratio was 14.34%; stockholders’ equity from continuing operations increased by $4.1M in 2024; Board declared $0.13 quarterly dividend .

What Went Wrong

  • Loan book contraction and interest income pressure: Average loans receivable fell $94.3M YoY in Q4, reducing interest income by $1.4M despite a 27 bp yield increase; total interest and dividend income declined $1.0M YoY .
  • Rising credit costs and NPLs: Provision for credit losses increased 204% YoY in Q4; NPLs rose to 1.07% of loans with $1.8M charge-offs in 2024, reflecting pockets of small-business weakness .
  • Deposit outflows and mix shift: Total deposits fell $78.4M YoY, led by a $57.4M decline in interest-bearing checking (reduced correspondent banking activity), increasing reliance on FHLB short-term borrowings .

Financial Results

Metric (USD Thousands unless noted)Q4 2023Q2 2024Q3 2024Q4 2024
Total Interest & Dividend Income10,988 10,897 10,472 9,946
Net Interest Income4,371 4,074 4,248 4,085
Total Provision for Credit Losses(303) (41) 123 316
Non-Interest Income2,224 1,304 1,210 4,060
Non-Interest Expense5,426 5,236 4,924 5,734
Pre-tax Income (Continuing Ops)1,472 183 411 2,095
Net Income (Continuing Ops)790 100 243 1,579
Net Income (Total)1,142 100 243 1,579
EPS (Net – Basic, $)0.49 0.04 0.09 0.60
Margins & EfficiencyQ4 2023Q2 2024Q3 2024Q4 2024
Net Interest Margin (%)2.39% 2.28% 2.58% 2.54%
Average Interest Rate Spread (%)1.52% 1.48% 1.87% 1.88%
Efficiency Ratio (%)82.28% 97.37% 90.22% 70.40%
Non-Interest Income BreakdownQ4 2023Q2 2024Q3 2024Q4 2024
Mortgage banking, equipment lending, title fees179 183 237 282
Insurance commissions177 176 198 218
Other fees & service charges214 240 116 30
Net loan servicing income88 2 2 111
Net gain on sale of loans1,411 561 503 1,701
Gain on sale of SBA loans122 98 124 202
Gain on sale-leaseback———1,485
KPIs (Period-End)Q4 2023Q2 2024Q3 2024Q4 2024
Loans receivable, net ($)617,701 593,775 547,303 533,035
Loans held for sale ($)36,448 10,062 70,855 65,939
Total deposits ($)631,699 576,441 583,419 553,252
FHLB short-term borrowings ($)— 30,000 35,000 45,000
FHLB long-term borrowings ($)29,022 14,955 3,855 2,855
Non-performing loans (% of net loans)0.07% 1.46% 0.99% 1.07%
Total risk-based capital ratio (%)—13.89% 13.86% 14.34%
Book value per share ($)20.15 17.54 19.52 20.03

Notes: “—” indicates not disclosed in the referenced document for that period.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/EPS/OpEx/OI&E/Tax RateFY/Q1 2025No formal guidance providedNo formal guidance providedMaintained (no formal guidance)
Dividend per shareQ1 2025$0.13 (Q3 2024; Q2 2024) $0.13 declared; payable Feb 10, 2025 Maintained

Earnings Call Themes & Trends

Note: No earnings call transcript was available in our document set for Q4 2024; themes reflect management commentary from press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Small business sector credit quality“Experiencing an uptick in non-performing loans... retained ~$4.4M equipment loans from OCH... posting reserves” NPLs 0.99%; allowance 1.24%; charge-offs noted; below 1% NPL cited NPLs 1.07%; allowance coverage 113.61%; “continuing minor weakness in small business sector” Deteriorated then stabilized near ~1%
Non-interest income driversMortgage/sales and fees improved; gain on sale of OCH boosted NI in 1H Continued improvement; higher gain on sale of loans Strong quarter with $1.5M sale-leaseback gain; +$1.8M NI YoY Positive; Q4 boosted by one-time
Funding mix & deposit dynamicsInterest-bearing checking down (correspondent banking); deposits -$55.3M YTD Deposits -$48.3M YTD; interest-bearing checking down Deposits -$78.4M YoY; interest-bearing checking -55% Continued outflows and mix shift
BorrowingsFHLB ST borrowings increased to $45.0M; LT down to $15.0M ST $35.0M; LT $3.9M ST $45.0M; LT $2.9M; total $47.9M Higher ST reliance, LT reduced
Capital & dividendsTotal capital ratio 13.89%; $0.13 dividend declared Total capital ratio 13.86%; $0.13 dividend declared Total risk-based capital 14.34%; $0.13 dividend declared Stable to improving

Management Commentary

  • “I am pleased to report that our quarterly net income for the period ended December 31, 2024, of $1.6 million was an increase of 38.3%... our annual net income... $2.8 million was an increase of 38.4%...” — Robert T. Strong, President & CEO .
  • “Our non-interest income continued to improve... We completed the sale-leaseback... that resulted in a one-time $1.5 million gain.” — Robert T. Strong .
  • “As previously reported, we experienced a continuing minor weakness in the small business sector... we have... increased our allowance for credit losses... to 1.20%... carry... 113.61% allowance... of non-performing loans.” — Robert T. Strong .
  • “As of year-end... total risk-based capital ratio was 14.34%... Board... declared a dividend... $0.13 per share.” — Robert T. Strong .

Q&A Highlights

  • No Q&A available; the company did not furnish an earnings call transcript in our document set for Q4 2024.

Estimates Context

  • Wall Street consensus (S&P Global) estimates for Q4 2024 and FY 2024 were unavailable during this analysis due to service limits; as a result, we cannot assess beats/misses versus consensus at this time.

Key Takeaways for Investors

  • Q4 acceleration aided by one-time sale-leaseback; sustainability hinges on recurring non-interest income (mortgage/Oakmont Commercial) and maintaining lower funding costs .
  • Margin trajectory improved sequentially (Q2→Q3→Q4) and YoY, supported by deposit cost management and reduced FHLB long-term borrowings; watch ST borrowing reliance and deposit outflows .
  • Credit quality normalized higher at ~1% NPLs with increased provisioning and charge-offs; allowance coverage (113.61% of NPLs) is adequate, but small-business exposures merit monitoring .
  • Balance sheet repositioning (transfers to loans held for sale of $59.5M commercial/SBA loans) indicates active portfolio management amid credit/funding dynamics .
  • Capital remains solid (14.34% risk-based), supporting continued dividends; equity increased $4.1M YoY despite deposit contraction .
  • Near term: stock likely sensitive to signs of sustained non-interest income strength without one-offs, funding cost trends, and credit updates. Medium term: thesis rests on improving efficiency, stabilized deposit base, and disciplined credit underwriting .