QNTO Swings to Q3 Loss Amid Strategic Divestitures

TL;DR

**QNTO's Q3 loss and significant income drop signal a tough transition post-divestiture; avoid until a clear path to profitability emerges.**

AI Summary

QUAINT OAK BANCORP, INC. (QNTO) reported a net loss of $41 thousand for the three months ended September 30, 2025, a significant decline from the net income of $243 thousand in the same period of 2024. For the nine months ended September 30, 2025, net income also decreased substantially to $148 thousand, down from $1.216 million in 2024, largely due to the discontinuation of operations from Oakmont Capital Holdings, LLC and Quaint Oak Real Estate, LLC in March 2024, which contributed $406 thousand to net income in 2024. Total interest and dividend income decreased to $10.170 million for the three months ended September 30, 2025, from $10.472 million in 2024, while total interest expense decreased to $5.776 million from $6.224 million. Non-interest income saw a positive increase, rising to $1.748 million for the three months ended September 30, 2025, from $1.210 million in 2024, driven by a net gain on sale of loans of $950 thousand and gain on the sale of SBA loans of $266 thousand. Total assets decreased to $677.131 million as of September 30, 2025, from $685.168 million at December 31, 2024, primarily due to a reduction in cash and cash equivalents and loans held for sale. The company also saw an increase in non-interest bearing deposits to $76.134 million from $59.783 million, while interest-bearing deposits decreased to $478.060 million from $493.469 million.

Why It Matters

QNTO's shift to a net loss in Q3 2025 and a substantial drop in nine-month net income signals a challenging period for investors, reflecting the impact of strategic divestitures like Oakmont Capital Holdings, LLC. While these moves aim to streamline operations, they have immediately reduced profitability and introduced uncertainty regarding future revenue streams. Employees of the divested entities have been directly affected, and customers may experience changes in service offerings. In a competitive banking landscape, QNTO's ability to offset lost income from discontinued operations with growth in core banking services will be critical for its long-term viability and market positioning.

Risk Assessment

Risk Level: high — The company reported a net loss of $41 thousand for the three months ended September 30, 2025, a sharp decline from a net income of $243 thousand in the prior year. Furthermore, net income for the nine months ended September 30, 2025, plummeted to $148 thousand from $1.216 million in 2024, largely due to the discontinuation of profitable operations, indicating significant earnings volatility and a challenging financial outlook.

Analyst Insight

Investors should exercise caution and closely monitor QNTO's next few quarters for signs of stabilization and growth in continuing operations. Await evidence of successful integration of new senior debt and a clear strategy to offset the income loss from discontinued operations before considering investment.

Financial Highlights

debt To Equity

11.98

revenue

$11,918 thousand

operating Margin

N/A

total Assets

$677,131 thousand

total Debt

$62,575 thousand

net Income

-$41 thousand

eps

-$0.02

gross Margin

N/A

cash Position

$52,292 thousand

revenue Growth

-1.5%

Revenue Breakdown

Key Numbers

• $41 thousand — Net Loss (For the three months ended September 30, 2025, compared to $243 thousand net income in 2024.)
• $148 thousand — Net Income (For the nine months ended September 30, 2025, down from $1.216 million in 2024.)
• $10.170 million — Total Interest and Dividend Income (For the three months ended September 30, 2025, a decrease from $10.472 million in 2024.)
• $5.776 million — Total Interest Expense (For the three months ended September 30, 2025, a decrease from $6.224 million in 2024.)
• $1.748 million — Total Non-Interest Income (For the three months ended September 30, 2025, an increase from $1.210 million in 2024.)
• $677.131 million — Total Assets (As of September 30, 2025, a decrease from $685.168 million at December 31, 2024.)
• $76.134 million — Non-interest bearing deposits (As of September 30, 2025, an increase from $59.783 million at December 31, 2024.)
• $9.575 million — Senior debt, net (New debt as of September 30, 2025, compared to zero at December 31, 2024.)
• $14.103 million — Net repayments from subordinated debt (For the nine months ended September 30, 2025, reducing total subordinated debt to $8.000 million.)
• $0.02 — Basic Earnings Per Share (Loss) (For the three months ended September 30, 2025, compared to $0.09 earnings per share in 2024.)

Key Players & Entities

• QUAINT OAK BANCORP, INC. (company) — Registrant
• Quaint Oak Bank (company) — Wholly owned subsidiary of Quaint Oak Bancorp, Inc.
• Oakmont Capital Holdings, LLC (company) — Divested multi-state equipment finance company
• Quaint Oak Real Estate, LLC (company) — Discontinued real estate brokerage business
• Federal Reserve System (regulator) — Regulates Quaint Oak Bancorp, Inc. as a savings and loan holding company
• $41 thousand (dollar_amount) — Net loss for the three months ended September 30, 2025
• $148 thousand (dollar_amount) — Net income for the nine months ended September 30, 2025
• $1.216 million (dollar_amount) — Net income for the nine months ended September 30, 2024
• $677.131 million (dollar_amount) — Total Assets as of September 30, 2025
• $9.575 million (dollar_amount) — Net proceeds from senior debt for the nine months ended September 30, 2025

FAQ

Risk Factors

• Deterioration in Profitability [high — financial]: The company reported a net loss of $41 thousand for the three months ended September 30, 2025, a sharp decline from a net income of $243 thousand in the prior year period. For the nine months, net income fell to $148 thousand from $1.216 million. This decline is partly attributed to the discontinuation of operations from subsidiaries in March 2024.
• Increased Borrowing Costs [medium — financial]: Interest expense on Federal Home Loan Bank (FHLB) borrowings increased significantly by 470.2% to $536 thousand for the three months ended September 30, 2025, compared to $94 thousand in the prior year. This indicates rising costs associated with secured borrowings.
• Asset Reduction [medium — financial]: Total assets decreased to $677.131 million as of September 30, 2025, from $685.168 million at December 31, 2024. This reduction was primarily driven by decreases in cash and cash equivalents and loans held for sale.
• Shift in Deposit Composition [medium — financial]: While total deposits remained relatively stable, there was a notable increase in non-interest-bearing deposits to $76.134 million from $59.783 million, alongside a decrease in interest-bearing deposits to $478.060 million from $493.469 million. This shift could impact net interest margin depending on the cost of non-interest-bearing funds.
• Increased Senior Debt [medium — financial]: The company has taken on $9.575 million in senior debt as of September 30, 2025, compared to zero at December 31, 2024. This increases the company's leverage and fixed interest obligations.
• Discontinuation of Operations [medium — operational]: The discontinuation of operations from Oakmont Capital Holdings, LLC and Quaint Oak Real Estate, LLC in March 2024 impacted prior year results, contributing $406 thousand to net income in 2024. Managing the wind-down and integration of these changes presents ongoing operational challenges.
• Interest Rate Sensitivity [medium — regulatory]: As a financial institution, QNTO is exposed to interest rate risk. Changes in interest rates can affect net interest income, the value of investment securities, and loan demand. The increase in FHLB borrowings suggests a potential reliance on wholesale funding, which can be more sensitive to rate changes.
• Competitive Banking Environment [medium — market]: The banking industry is highly competitive, with pressure on margins from both traditional banks and non-bank financial institutions. QNTO must navigate this environment while managing its profitability and asset quality.

Industry Context

The banking sector is characterized by intense competition, evolving regulatory landscapes, and sensitivity to interest rate fluctuations. Banks like QUAINT OAK BANCORP, INC. must manage net interest margins, non-interest income streams, and credit risk effectively. Recent trends include a focus on digital transformation, consolidation, and adapting to changing customer behaviors, all while navigating macroeconomic uncertainties.

Regulatory Implications

Financial institutions are subject to stringent regulatory oversight, including capital adequacy requirements, liquidity rules, and consumer protection laws. Changes in interest rates and economic conditions can trigger increased scrutiny from regulators regarding asset quality and risk management practices. The company's increased reliance on FHLB borrowings and new senior debt may attract attention regarding its leverage and funding stability.

What Investors Should Do

1. Monitor profitability trends closely.
2. Analyze the drivers of non-interest income.
3. Assess the impact of increased borrowing costs and new debt.
4. Evaluate the shift in deposit composition.
5. Review management's strategy for operational changes.

Key Dates

• 2024-03-31: Discontinuation of operations from Oakmont Capital Holdings, LLC and Quaint Oak Real Estate, LLC — Impacted prior year financial results and requires ongoing management of wind-down activities.
• 2024-12-31: Total Assets: $685.168 million — Baseline for comparison of asset changes in the current reporting period.
• 2024-12-31: Senior debt, net: $0 — Indicates no senior debt outstanding at the end of the prior fiscal year.
• 2024-12-31: Non-interest bearing deposits: $59.783 million — Baseline for comparison of non-interest bearing deposit changes.
• 2025-09-30: Net Loss: $41 thousand — Represents the current quarter's profitability, a significant shift from prior year income.
• 2025-09-30: Senior debt, net: $9.575 million — Indicates new senior debt issuance during the period.

Glossary

Non-interest bearing deposits

Deposits held by a bank that do not earn interest, such as certain checking accounts. (An increase in these deposits can lower a bank's funding costs, but may also indicate a shift in customer preferences or economic conditions.)

Loans held for sale

Loans that a financial institution intends to sell in the near future, rather than hold on its balance sheet. (A decrease in this category suggests the company is reducing its pipeline of loans intended for sale, potentially impacting future fee income.)

Allowance for credit losses

An estimate of the amount of uncollectible loans in a company's loan portfolio. (A slight increase in the allowance for credit losses from $6.476 million to $6.492 million suggests a minor increase in expected loan defaults.)

Federal Home Loan Bank (FHLB) borrowings

Advances from the Federal Home Loan Bank system, a government-sponsored enterprise that provides funding to member financial institutions. (An increase in FHLB borrowings, coupled with a significant rise in interest expense, indicates greater reliance on this funding source and higher associated costs.)

Senior debt, net

Debt that ranks higher than other debt in the event of bankruptcy or liquidation. 'Net' typically refers to the debt amount after deducting unamortized costs. (The introduction of $9.575 million in senior debt signifies a change in the company's capital structure and an increase in its fixed obligations.)

Subordinated debt

Debt that ranks below senior debt in priority of payment. It is often used as Tier 2 capital for regulatory purposes. (Net repayments of $14.103 million indicate a reduction in this form of debt, lowering total subordinated debt to $8.000 million.)

Net gain on sale of loans

The profit realized from selling loans for more than their carrying value. (A significant driver of non-interest income, contributing $950 thousand to the current quarter's results.)

Gain on the sale of SBA loans

Profit generated from selling Small Business Administration (SBA) guaranteed loans. (Another component of non-interest income, adding $266 thousand to the current quarter's results.)

Year-Over-Year Comparison

Compared to the prior year, QUAINT OAK BANCORP, INC. has experienced a significant downturn in profitability, reporting a net loss of $41 thousand for the three months ended September 30, 2025, versus a net income of $243 thousand in the same period of 2024. Total interest and dividend income has slightly decreased, while interest expense has also seen a reduction, though interest on FHLB borrowings has surged. A key positive development is the substantial increase in non-interest income, driven by gains on loan sales, which partially offset the weaker interest income performance. The company's balance sheet shows a modest decrease in total assets and a notable increase in senior debt, alongside a shift towards non-interest-bearing deposits.

Filing Documents

• qnto20250930_10q.htm (10-Q) — 3772KB
• ex_884479.htm (EX-31.1) — 11KB
• ex_884480.htm (EX-31.2) — 14KB
• ex_884481.htm (EX-32.0) — 10KB
• 0000927089-25-000207.txt ( ) — 16513KB
• qnto-20250930.xsd (EX-101.SCH) — 70KB
• qnto-20250930_cal.xml (EX-101.CAL) — 76KB
• qnto-20250930_def.xml (EX-101.DEF) — 515KB
• qnto-20250930_lab.xml (EX-101.LAB) — 463KB
• qnto-20250930_pre.xml (EX-101.PRE) — 554KB
• qnto20250930_10q_htm.xml (XML) — 4697KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Page

- Financial Statements

Item 1 - Financial Statements Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (Unaudited) 1 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 2 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 4 Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) 7 Notes to the Unaudited Consolidated Financial Statements 9

- Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 32

- Quantitative and Qualitative Disclosures About Market Risk

Item 3 - Quantitative and Qualitative Disclosures About Market Risk 46

- Controls and Procedures

Item 4 - Controls and Procedures 46

- OTHER INFORMATION

PART II - OTHER INFORMATION

- Legal Proceedings

Item 1 - Legal Proceedings 46

- Risk Factors

Item 1A - Risk Factors 47

- Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 47

- Defaults Upon Senior Securities

Item 3 - Defaults Upon Senior Securities 47

- Mine Safety Disclosures

Item 4 - Mine Safety Disclosures 47

- Other Information

Item 5 - Other Information 47

- Exhibits

Item 6 - Exhibits 48

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Quaint Oak Bancorp, Inc. Consolidated Balance Sheets (Unaudited) At September 30, At December 31, 2025 2024 (In thousands, except share and per share data) Assets Due from banks, non-interest-bearing $ 967 $ 345 Due from banks, interest-bearing 51,325 62,644 Cash and cash equivalents 52,292 62,989 Investment in interest-earning time deposits 912 912 Investment securities available for sale 1,071 1,666 Loans held for sale 54,508 64,281 Loans receivable, net of allowance for credit losses (2025 $ 6,492 ; 2024 $ 6,476 ) 547,116 534,693 Accrued interest receivable 4,339 3,961 Investment in Federal Home Loan Bank stock, at cost 2,091 2,214 Bank-owned life insurance 4,542 4,447 Premises and equipment, net 1,587 1,626 Goodwill 515 515 Other intangible, net of accumulated amortization 40 77 Prepaid expenses and other assets 8,118 7,787 Total Assets $ 677,131 $ 685,168 Liabilities and Stockholders ' Equity Liabilities Deposits: Non-interest bearing $ 76,134 $ 59,783 Interest-bearing 478,060 493,469 Total deposits 554,194 553,252 Federal Home Loan Bank borrowings 45,000 47,855 Senior debt, net of unamortized costs 9,575 - Subordinated debt 8,000 22,000 Accrued interest payable 786 937 Advances from borrowers for taxes and insurance 1,975 3,122 Accrued expenses and other liabilities 5,428 5,385 Total Liabilities 624,958 632,551 Stockholders ' Equity Preferred stock – $ 0.01 par value, 1,000,000 shares authorized; none issued or outstanding - - Common stock – $ 0.01 par value; 9,000,000 shares authorized; 3,108,993 issued as of both September 30, 2025 and December 31, 2024; 2,636,079 and 2,626,535 outstanding at September 30, 2025 and December 31, 2024, respectively 31 31 Additional paid-in capital 23,123 22,976 Treasury stock, at cost: 472,914 and 482,458 shares at September 30, 2025 and December 31, 2024, respectively ( 3,542 ) ( 3,588 )

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