QUAINT OAK BANCORP, INC. ANNOUNCES FOURTH QUARTER AND YEAR-END EARNINGS
Southampton, PA – Quaint Oak Bancorp, Inc. (the "Company") (OTCQX: QNTO), the holding company for Quaint Oak Bank (the "Bank"), announced today that net income for the quarter ended December 31, 2017 was $177,000, or $0.10 per basic and $0.09 per diluted share, compared to $455,000, or $0.25 per basic and $0.23 per diluted share for the same period in 2016. Net income for the year ended December 31, 2017 was $1.47 million, or $0.79 per basic and $0.74 per diluted share, compared to $1.50 million, or $0.84 per basic and $0.77 per diluted share for the same period in 2016. The quarterly and year-end results for the periods ending December 31, 2017 include a tax reform re-measurement charge of the Company's net deferred tax asset as a result of The Tax Cuts and Jobs Act (the "Tax Act") which was enacted on December 22, 2017. The Tax Act reduced the corporate Federal income tax rate from 35% to 21% and made other changes to U.S. corporate income tax laws. Accordingly, the incremental income tax expense recorded by the Company in the fourth quarter of 2017 related to the Tax Act was $297,000 ($0.16 per basic and $0.15 per diluted share impact). The additional tax expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate.
Robert T. Strong, President and Chief Executive Officer stated, "We closed out 2017 with several noteworthy achievements by the Bank and our Family of Companies. Despite an unusually slow first quarter, the Bank produced 242 new loans, increased checking accounts by 60% and completed its deposit product initiatives projects. We enter 2018 with the highest pipeline of loan requests in the Bank's history."
Mr. Strong continued, "All of the staff members of our title abstract company achieved the status of Pennsylvania licensed title agents, an industry standard in professionalism of which we are especially proud. Furthermore, our insurance agency subsidiary moved to new quarters in the New Britain Square Shopping Center providing it with a more visible and professional-looking location. In addition to the personal insurance lines of auto, home and term life coverages, we expanded our commercial lines to complement those consumer lines of coverage offered."
Mr. Strong added, "Our mortgage banking subsidiary was named one of 'Lehigh Valley Business's Fastest Growing Companies' for the second consecutive year by Baker Tilly. The mortgage company gained this achievement by closing over 37% more loans than the previous year. Additionally, our real estate subsidiary expanded with the acquisition of another independent real estate office in the Lehigh Valley. New management at the real estate company is now positioned to drive the success of the more than thirty-member team forward into 2018."
In closing, Mr. Strong commented, "As in the past, we hope to continue the expansion of our companies as opportunities present themselves. We established the building blocks to better position us now to begin an aggressive 2018 business plan. As always, in conjunction with having maintained a strong repurchase plan that has repurchased over 36% of our original shares issued in our initial public offering, 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 $177,000 for the three months ended December 31, 2017, a decrease of $278,000, or 61.1%, compared to net income of $455,000 for three months ended December 31, 2016. The decrease in net income on a comparative quarterly basis was primarily the result of increases in the provision for income taxes of $413,000 and non-interest expense of $427,000, partially offset by increases in non-interest income of $300,000 and net interest income of $237,000, and a decrease in the provision for loan losses of $25,000. The increase in the provision for income taxes was primarily due to the $297,000 re-measurement charge of the Company's net deferred tax asset as a result of the Tax Act signed into law on December 22, 2017.