Note 12 - Operating Segments

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

12

– Operating Segments

The Company's operations currently consist of

two

reportable operating segments: Banking and Mortgage Banking. 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.

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 portfolio and management's assessment of the collectability of the loan 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 Real Estate, LLC, Quaint Oak Abstract, LLC, and Quaint Oak Insurance Agency, 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 Mortgage Banking Segment originates residential mortgage loans which are sold into the secondary market along with the loans' servicing rights. The profitability of this segment's operations depends primarily on the gains realized from the sale of loans and processing fees. The Mortgage Banking Segment

is also subject to an extensive system of laws and regulations that are intended primarily for the protection of consumers.

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

	As of or f or the Three Months Ended September 30 ,
	20 20									2 019
	Quaint Oak Bank (1)			Quaint Oak Mortgage			Consolidated			Quaint Oak Bank (1)			Quaint Oak Mortgage			Consolidated
Net Interest Income	$	2,948		$	(82	)	$	2,866		$	2,225		$	(54	)	$	2,171
Provision for Loan Losses		201			-			201			157			-			157
Net Interest Income after Provision for Loan Losses		2,747			(82	)		2,665			2,068			(54	)		2,014
Non-Interest Income
Mortgage banking and title abstract fees		250			150			400			181			168			349
Real estate sales commissions, net		68			-			68			77			-			77
Insurance commissions		130			-			130			109			-			109
Other fees and services charges		144			-			144			(5	)		-			(5	)
Income from bank-owned life insurance		20			-			20			21			-			21
Net gain on loans held for sale		-			1,209			1,209			-			996			996
Net gain on sale of other real estate owned		(110	)		-			(110	)		-			-			-
Gain on the sale of SBA loans		19			-			19			98			-			98
Total Non-Interest Income		521			1,359			1,880			481			1,164			1,645
Non-Interest Expense
Salaries and employee benefits		1,761			384			2,145			1,485			291			1,776
Directors' fees and expenses		61			-			61			54			-			54
Occupancy and equipment		175			76			251			126			55			181
Data processing		119			58			177			92			29			121
Professional fees		95			17			112			96			12			108
FDIC deposit insurance assessment		38			-			38			-			-			-
Other real estate owned expenses		11			-			11			12			-			12
Advertising		61			14			75			60			10			70
Amortization of other intangible		12			-			12			13			-			13
Other		248			11			259			185			15			200
Total Non-Interest Expense		2,581			560			3,141			2,123			412			2,535
Pretax Segment Profit	$	687		$	717		$	1,404		$	426		$	698		$	1,124
Segment Assets	$	382,939		$	39,364		$	422,303		$	270,502		$	23,318		$	293,820

( 1 ) Includes Quaint Oak Bancorp, Inc. and the Bank's Subsidiaries, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency, and QOB Properties.

	As of or f or the Nine Months Ended September 30 ,
	20 20									201 9
	Quaint Oak Bank (1)			Quaint Oak Mortgage			Consolidated			Quaint Oak Bank (1)		Quaint Oak Mortgage			Consolidated
Net Interest Income	$	7,935		$	(169	)	$	7,766		$	6,504	$	(98	)	$	6,406
Provision for Loan Losses		621			-			621			318		-			318
Net Interest Income after Provision for Loan Losses		7,314			(169	)		7,145			6,186		(98	)		6,088
Non-Interest Income
Mortgage banking and title abstract fees		602			443			1,045			442		377			819
Real estate sales commissions, net		131			-			131			128		-			128
Insurance commissions		347			-			347			307		-			307
Other fees and services charges		178			-			178			85		-			85
Income from bank-owned life insurance		59			-			59			60		-			60
Net gain on loans held for sale		-			2,816			2,816			-		2,296			2,296
Net gain on sale of other real estate owned		(92	)		-			(92	)		-		-			-
Gain on sale of SBA loans		71			-			71			238		-			238
Total Non-Interest Income		1,296			3,259			4,555			1,260		2,673			3,933
Non-Interest Expense
Salaries and employee benefits		4,894			1,014			5,908			4,272		901			5,173
Directors' fees and expenses		175			-			175			167		-			167
Occupancy and equipment		461			212			673			354		161			515
Data processing		345			129			474			253		88			341
Professional fees		287			52			339			244		38			282
FDIC deposit insurance assessment		85			-			85			40		-			40
Other real estate owned expenses		34			-			34			23		-			23
Advertising		183			41			224			182		30			212
Amortization of other intangible		37			-			37			37		-			37
Other		672			42			714			538		41			579
Total Non-Interest Expense		7,173			1,490			8,663			6,110		1,259			7,369
Pretax Segment Profit	$	1,437		$	1,600		$	3,037		$	1,336	$	1,316		$	2,652
Segment Assets	$	382,939		$	39,364		$	422,303		$	270,502	$	23,318		$	293,820

( 1 ) Includes Quaint Oak Bancorp, Inc. and the Bank's Subsidiaries, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency, and QOB Properties.