The Pennsylvania community bank holding company posted wider net interest margins and shed a compliance overhang, even as its balance sheet contracted nearly 5%.

May 5, 2026

Quaint Oak Bancorp, Inc., the parent company of Pennsylvania-chartered Quaint Oak Bank, returned to profitability in the first quarter of 2026, posting net income of $166,000 — a $249,000 swing from the same period a year earlier, when the Southampton-based holding company recorded a loss of $83,000.

Earnings per share came in at six cents on both a basic and diluted basis for the quarter ended March 31, 2026, compared with a three-cent loss per share a year prior. Chief Executive Officer Robert T. Strong attributed the turnaround to disciplined balance sheet pricing, improved funding cost management, and stronger production of higher-yielding assets over the past twelve months.

Strong also flagged a notable governance milestone. During the first quarter, regulators lifted a previously disclosed consent order against the company, signaling that all required corrective actions had been completed. Professional fees tied to that remediation work weighed on first-quarter expenses, but management indicated those costs are not expected to recur at comparable levels going forward.

Reported results were further affected by other non-recurring items, including a $142,000 write-down of the bank’s SBA servicing asset and the write-off of $199,000 in deferred SBA loan origination costs tied to loan sales completed during the quarter.

Margins and Funding Mix

The clearest improvement came from the liability side of the balance sheet. Interest expense fell by $580,000, or 10%, year over year, driven primarily by:

• A sharp decline in average money market deposits, which fell from $159.4 million to $72.3 million;
• The complete elimination of Federal Home Loan Bank borrowings, which averaged $45 million a year ago and have since been paid down to zero;
• A reduction in average subordinated debt to $8 million from $18.6 million.

Those funding shifts helped widen the average interest rate spread to 2.26% from 2.13%, and pushed net interest margin to 2.90% from 2.63%. The company attributed lower wholesale funding needs to increased loan sales activity.

Non-interest income inched up by $53,000. The standout line was gain on sale of SBA loans, which jumped 166% to $817,000 from $307,000 a year earlier. Loan servicing income also climbed, reflecting servicing retained on sold loans.

Non-interest expense, however, rose by $580,000, or 10.5%, on higher salaries and bonus accruals, increased professional fees connected to a buildout of the bank’s international correspondent banking compliance program, and rising software-as-a-service subscription costs as the bank continues phasing in third-party platforms supporting compliance and risk infrastructure.

Balance Sheet Contraction

Total assets fell to $643.2 million at March 31, 2026, down 4.8% from $675.9 million at year-end 2025. The decline was driven by a $14.3 million decrease in loans receivable, a $9.1 million reduction in loans held for sale, and an $8.9 million drop in cash and equivalents.

Within the loan book, the largest reductions came from:

• Commercial business loans — down 6.1%;
• Construction loans — down 23.1%;
• Multi-family residential loans — down 9.4%.

Commercial real estate loans and one-to-four family owner-occupied residential loans posted modest gains, partially offsetting the broader contraction.

Total deposits declined 5.3% to $565.4 million, with interest-bearing checking accounts taking the largest hit amid heightened competition for deposits. Money market accounts grew by 4.2%. Stockholders’ equity ticked up to $52.5 million from $52.3 million, supported by net income, stock-compensation amortization, and option exercises, partially offset by dividends and treasury stock activity.

Credit Quality

Asset quality softened during the quarter. Non-performing loans rose to $9.9 million, or 1.87% of total loans receivable net of allowance, compared with $7.3 million, or 1.36%, at year-end 2025. The bank reported that all non-performing loans are either well-collateralized or adequately reserved against. Non-performing assets, including other real estate owned, totaled $10.2 million, or 1.59% of total assets.

Quaint Oak Bank operates from three regional offices serving the Delaware Valley, Lehigh Valley, and Philadelphia markets, with subsidiaries spanning mortgage banking, abstract services, insurance, and specialty commercial real estate lending through Oakmont Commercial, LLC.