Note 11 - Operating Segments

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 11 – Operating Segments

The Company's operations currently consist of two reportable operating segments: Banking and Oakmont Capital Holdings, LLC. The Company offers different products and services through its two segments. The accounting policies of the segments are generally the same as those of the consolidated company.

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

Note 11 – Operating Segments (Continued)

The Banking Segment generates its revenues primarily from its lending, deposit gathering and fee business activities. The profitability of this segment's operations depends primarily on its net interest income after provision for credit losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for credit losses. The provision for credit losses is almost entirely dependent on changes in the Banking Segment's loan and investment portfolio and management’s assessment of the collectability of the loan and investment portfolio as well as prevailing economic and market conditions. The profitability of this segment’s operations also depends on the generation of non-interest income which includes fees and commissions generated by Quaint Oak Bank and its wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Real Estate, LLC, Quaint Oak Abstract, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, which are included in the Banking Segment for segment reporting purposes. The Banking Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of depositors and other customers, federal deposit insurance funds and the banking system as a whole. These laws and regulations govern such areas as capital, permissible activities, allowance for loan and lease losses, loans and investments, and rates of interest that can be charged on loans. For segment reporting purposes, Quaint Oak Bancorp, Inc. is included as part of the Company’s Banking segment.

The Oakmont Capital Holdings, LLC Segment originates equipment loans which are generally sold to third party institutions with the loans’ servicing rights retained. The profitability of this segment’s operations depends primarily on the gains realized from the sale of loans, processing fees, and service fees. The Bank reflects the 49% interest it does not hold in the Oakmont Capital Holdings, LLC Segment in its consolidated financial statements as noncontrolling interest. The Oakmont Capital Holdings, LLC Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of commercial customers.

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

Note 11 – Operating Segments (Continued)

The following table presents summary financial information for the reportable segments (in thousands):

	As of or for the Three Months Ended September 30,
	2023									2022
	Quaint Oak Bank(1)			Oakmont Capital Holdings, LLC			Consolidated			Quaint Oak Bank(1)		Oakmont Capital Holdings, LLC			Consolidated
Net Interest Income (Loss)	$	5,210		$	(289	)	$	4,921		$	6,766	$	(109	)	$	6,657
Provision for Credit Losses		257			-			257			655		-			655
Net Interest Income (Loss) after Provision for Credit Losses		4,953			(289	)		4,664			6,111		(109	)		6,002
Non-Interest Income
Mortgage banking, equipment lending and title abstract fees		158			281			439			173		587			760
Real estate sales commissions, net		16			-			16			88		-			88
Insurance commissions		190			-			190			152		-			152
Other fees and services charges		154			255			409			57		74			131
Net loan servicing income		3			801			804			6		474			480
Income from bank-owned life insurance		26			-			26			23		-			23
Net gain on loans held for sale		381			671			1,052			891		3,390			4,281
Gain on the sale of SBA loans		95			-			95			58		-			58
Total Non-Interest Income		1,023			2,008			3,031			1,448		4,525			5,973
Non-Interest Expense
Salaries and employee benefits		3,301			1,995			5,296			3,547		1,788			5,335
Directors’ fees and expenses		108			-			108			67		-			67
Occupancy and equipment		446			212			658			323		154			477
Data processing		312			-			312			140		-			140
Professional fees		256			22			278			240		17			257
FDIC deposit insurance assessment		197			-			197			225		-			225
Advertising		42			36			78			95		74			169
Amortization of other intangible		12			-			12			12		-			12
Other		1,222			269			1,491			314		322			636
Total Non-Interest Expense		5,896			2,534			8,430			4,963		2,355			7,318
Pretax Segment Profit (Loss)	$	80		$	(815	)	$	(735	)	$	2,596	$	2,061		$	4,657
Net (Loss) Income Attributable to Noncontrolling Interest	$	(399	)	$	-		$	(399	)	$	1,010	$	-		$	1,010
Segment Assets	$	731,519		$	30,683		$	762,202		$	683,882	$	23,378		$	707,260

(1) Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency, QOB Properties, and Oakmont Commercial.

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

Note 11 – Operating Segments (Continued)

The following table presents summary financial information for the reportable segments (in thousands):

	As of or for the Nine Months Ended September 30,
	2023									2022
	Quaint Oak Bank(1)			Oakmont Capital Holdings, LLC			Consolidated			Quaint Oak Bank(1)		Oakmont Capital Holdings, LLC			Consolidated
Net Interest Income (Loss)	$	16,485		$	(953	)	$	15,532		$	18,160	$	(216	)	$	17,944
Provision for Credit Losses		460			-			460			1,933		-			1,933
Net Interest Income (Loss) after Provision for Credit Losses		16,025			(953	)		15,072			16,227		(216	)		16,011
Non-Interest Income
Mortgage banking, equipment lending and title abstract fees		421			1,390			1,811			600		1,621			2,221
Real estate sales commissions, net		88			-			88			213		-			213
Insurance commissions		486			-			486			407		-			407
Other fees and services charges		296			556			852			221		158			379
Net loan servicing income		148			3,008			3,156			11		943			954
Income from bank-owned life insurance		75			-			75			66		-			66
Net gain on loans held for sale		1,209			1,796			3,005			2,828		8,521			11,349
Gain on the sale of SBA loans		346			-			346			225		-			225
Total Non-Interest Income		3,069			6,750			9,819			4,571		11,243			15,814
Non-Interest Expense
Salaries and employee benefits		10,425			5,741			16,166			10,213		4,604			14,817
Directors’ fees and expenses		315			-			315			210		-			210
Occupancy and equipment		1,138			608			1,746			975		388			1,363
Data processing		737			-			737			500		-			500
Professional fees		597			81			678			625		44			669
FDIC deposit insurance assessment		669			-			669			454		-			454
Advertising		208			306			514			265		266			531
Amortization of other intangible		36			-			36			36		-			36
Other		2,829			731			3,560			990		519			1,509
Total Non-Interest Expense		16,954			7,467			24,421			14,268		5,821			20,089
Pretax Segment Profit (Loss)	$	2,140		$	(1,670	)	$	470		$	6,530	$	5,206		$	11,736
Net (Loss) Income Attributable to Noncontrolling Interest	$	(818	)	$	-		$	(818	)	$	2,551	$	-		$	2,551
Segment Assets	$	731,519		$	30,683		$	762,202		$	683,882	$	23,378		$	707,260

(1) Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency, QOB Properties, and Oakmont Commercial.