Exhibit 99.1
[QUAINT OAK
BANCORP INC LOGO]
IMMEDIATE RELEASE
July 27, 2007
QUAINT OAK BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS
Southampton, PA - Quaint Oak Bancorp, Inc. (OTCBB: QNTO) the
recently formed holding company for Quaint Oak Bank, announced
today earnings for the second quarter of fiscal 2007. Net income
for the quarter ended June 30, 2007 was $61,000 compared to
$157,000 for the same period in 2006. The results for the second
quarter are the results of Quaint Oak Bank which completed its
conversion to the stock holding company form and the related
subscription offering for shares of the Company's common stock on
July 3, 2007. Quaint Oak Bancorp generated net proceeds of
approximately $13.3 million through the initial public offering.
Robert T. Strong, President and Chief Executive Officer,
stated, "We are gratified by the response and support of our
depositors in our recently completed subscription offering and
look forward to growing the long term value of Quaint Oak
Bancorp. The earnings of our subsidiary bank for the second
quarter of 2007 reflect the challenging interest rate environment
and market for loans that we, along with other financial
institutions, are experiencing. We look forward to deploying the
net proceeds of our initial public offering as market conditions
improve."
Net income for the three months ended June 30, 2007,
amounted to $61,000, a decrease of $96,000 or 61.1% compared to
net income of $157,000 for the three months ended June 30, 2006.
The decline was primarily due to an increase in interest expense
of $85,000 and an increase in non-interest expense of $96,000,
partially offset by an increase in interest income of $16,000, a
decrease in the provision for loan losses of $8,000 and a
decrease in income taxes of $61,000. The increase in non-
interest expense was primarily due to a $72,000 increase in
salaries and employee benefits for the three months ended June
30, 2007 compared to the three months ended June 30, 2006.
The $69,000, or 14.5%, decrease in net interest income for
the quarter ended June 30, 2007 was due primarily to an increase
in expense on average interest-bearing liabilities of $85,000 and
a decrease in interest income on the average balance of loans
receivable of $22,000, partially offset by an increase in
interest income on average interest-earning deposits with other
banks of $37,000. The average interest rate spread declined from
2.98% for the three months ended June 30, 2006 to 2.46% for the
three months ended June 30, 2007 while average net interest-
earning assets decreased from $4.2 million to $3.9 million for
the same periods.
At June 30, 2007, total assets decreased $311,000 or 0.5% to
$60.9 million compared to $61.2 million at December 31, 2006.
This decrease was due primarily to a decrease in cash and cash
equivalents and investment in interest-earning time deposits
offset by an increase in loans receivable, net of allowance for
loan losses.
Loans receivable, net, increased $1.6 million or 2.9% to
$56.2 million at June 30, 2007 from $54.6 million at December 31,
2006. The increase was due primarily to a $1.9 million or 13.4%
increase in commercial real estate loans and a $492,000 or 13.9%
increase in home equity
loans, partially offset by a $621,000 or 2.0% decrease in one-to-four
family residential loans, which isconsistent with our strategy of
diversifying the loan portfolio into higher yielding commercial
loans products. Cash and cash equivalents decreased $2.2 million
or 52.4% to $2.0 million at June 30, 2007 compared to $4.2 million
at December 31, 2006 as excess liquidity was used to fund loan growth.
Total deposits decreased $500,000 or 0.9% to $55.3 million
at June 30, 2007 compared to $55.8 million at December 31, 2006.
The decrease in interest-bearing deposits was primarily due to
decreases in passbook savings accounts and certificates of
deposits, as we determined to control deposit growth as a result
of moderate loan demand.
Total equity increased $172,000 or 3.7% to $4.9 million at
June 30, 2007 compared to $4.7 million at December 31, 2006, due
solely to net income of $172,000 for the six months ended June
30, 2007.
Non-performing loans amounted to $1.4 million or 2.5% of net
loans receivable at June 30, 2007, consisting of six loans, two
of which are 90 days or more past due and still accruing and four
of which are on non-accrual status. The non-performing loans are
primarily one-to-four family owner occupied residential loans and
all are well-collateralized. We do not anticipate any
significant losses on these loans. Three of the four loans were
placed on non-accrual status during the quarter ended June 30,
2007, resulting in the reversal of $34,000 of previously accrued
interest income. The allowance for loan losses as a percent of
total loans receivable was 1.04% at June 30, 2007 and December
31, 2006.
Quaint Oak Bancorp's employee stock ownership plan ("ESOP"),
which was in the second priority category, did not receive any
shares in the recently completed subscription offering. The
ESOP, which is authorized to purchase up to $1.1 million of
common stock, expects to purchase shares in the open-market over
time depending upon, among other things, market conditions.
Quaint Oak Bank is a Pennsylvania-chartered stock savings
bank headquartered in Southampton, Pennsylvania and conducts
business through its banking office located in Bucks 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.
Contacts
Quaint Oak Bancorp, Inc.
Robert T. Strong, President and Chief Executive Officer
(215) 364-4059
2
QUAINT OAK BANK*
Balance Sheets
(In Thousands)
At June 30, 2007 At December 31, 2006
____________________ ______________________
ASSETS (Unaudited)
Cash and cash equivalents $ 2,026 $ 4,197
Investment in interest-earning time deposits 1,571 1,711
Investment in FHLB stock, at cost 253 263
Loans receivable, net of allowance for loan losses
June 30, 2007: $592; December 31, 2006: $575 56,230 54,553
Bank premises and equipment, net 43 46
Accrued interest receivable and other assets 772 436
Total Assets $60,895 $61,206
LIABILITIES AND RETAINED EARNINGS
LIABILITIES
Deposits, interest-bearing $55,250 $55,750
Advances from borrowers for taxes and insurance 623 587
Accrued interest payable and other liabilities 113 132
Total Liabilities 55,986 56,469
RETAINED EARNINGS 4,909 4,737
Total Liabilities and Retained Earnings $60,895 $61,206
QUAINT OAK BANK*
Statements of Income
(In Thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
______________________ ____________________
2007 2006 2007 2006
__________ ___________ __________ _________
(Unaudited) (Unaudited)
Interest Income 1,005 989 2,026 1,895
Interest Expense 597 512 1,181 966
_____ ___ _____ _____
Net Interest Income 408 477 845 929
Provision for Loan Losses 28 36 18 72
_____ ___ _____ _____
Net Interest Income after Provision for Loan Losses 380 441 827 857
Non-Interest Income - Fees and service charges 9 9 17 11
Non-Interest Expense 290 194 563 392
_____ ___ _____ _____
Income before Income Taxes 99 256 281 476
Income Taxes 38 99 109 184
_____ ___ _____ _____
NET INCOME $ 61 $157 $ 172 $ 292
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Three Months Ended Six Months Ended
Ratios: June 30, June 30,
____________________ ___________________
2007 2006 2007 2006
________ ________ _________ _______
Average interest rate spread 2.46% 2.98% 2.53% 2.93%
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Net interest margin 2.75% 3.25% 2.83% 3.20%
====== ====== ====== ======
Average interest-earning assets to
average interest-bearing liabilities 107.06% 107.65% 107.58% 107.23%
====== ====== ====== ======
____________________
* The financial data presented herein is financial data for Quaint Oak Bank. Quaint Oak Bancorp, Inc.
became the holding company for Quaint Oak Bank on July 3, 2007.