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EX-32.0 - EXHIBIT 32.0 - QUAINT OAK BANCORP INCex320.htm
EX-31.1 - EXHIBIT 31.1 - QUAINT OAK BANCORP INCexh311.htm
EX-31.2 - EXHIBIT 31.2 - QUAINT OAK BANCORP INCex312.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
 _____________________________
 
FORM 10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2015
OR
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from
 
to
   
 
Commission file number: 000-52694
 
QUAINT OAK BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Pennsylvania
35-2293957
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
   
 
501 Knowles Avenue, Southampton, Pennsylvania  18966
(Address of Principal Executive Offices)
 
(215) 364-4059
(Registrant's Telephone Number, Including Area Code)
 
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X]  Yes
[   ]  No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X]  Yes
[   ]  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer
[   ]
Accelerated filer
[   ]
Non-accelerated filer
[   ]
Smaller reporting company
[X]
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[   ]  Yes
 
[X]  No
 
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  As of August 11, 2015, 913,232 shares of the Registrant's common stock were issued and outstanding.
 
 
 

PART I - FINANCIAL INFORMATION
Page
 
Item 1 -      Financial Statements
 
 
Consolidated Balance Sheets as of June 30, 2015 and
December 31, 2014 (Unaudited)                                                                                                                                      
 
1
 
Consolidated Statements of Income for the Three and Six Months
Ended June 30, 2015 and 2014 (Unaudited)    
 
2
Consolidated Statements of Comprehensive Income for the Three
and Six Months Ended June 30, 2015 and 2014 (Unaudited)                                                       
 
3
 
Consolidated Statement of Stockholders' Equity for the Six Months
Ended June 30, 2015 (Unaudited)      
 
4
 
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2015 and 2014 (Unaudited)      
 
5
 
Notes to the Unaudited Consolidated Financial Statements    
6
   
Item 2 -      Management's Discussion and Analysis of Financial Condition and Results of Operations
32
 
Item 3 -      Quantitative and Qualitative Disclosures About Market Risk              
43
 
Item 4 -      Controls and Procedures   
43
 
PART II - OTHER INFORMATION
 
Item 1 -      Legal Proceedings   
44
 
Item 1A -   Risk Factors     
44
 
Item 2 -      Unregistered Sales of Equity Securities and Use of Proceeds   
44
 
Item 3 -      Defaults Upon Senior Securities    
44
 
Item 4 -      Mine Safety Disclosures          
44
 
Item 5 -      Other Information    
45
 
Item 6 -      Exhibits     
45
 
SIGNATURES
 
 
 

ITEM 1. FINANCIAL STATEMENTS
 
Quaint Oak Bancorp, Inc.
Consolidated Balance Sheets (Unaudited)
 
 
   
At June 30,
   
At December 31,
 
   
2015
   
2014
 
Assets
   
(In thousands, except share data)
 
Due from banks, non-interest-bearing
   
$
90
   
$
696
 
Due from banks, interest-bearing
     
4,957
     
13,241
 
Cash and cash equivalents
     
5,047
     
13,937
 
Investment in interest-earning time deposits
     
5,884
     
6,660
 
 Investment securities available for sale
     
1,726
     
1,706
 
Loans held for sale
     
5,332
     
2,556
 
Loans receivable, net of allowance for loan losses (2015 $1,276; 2014 $1,148)
      141,277       123,331  
Accrued interest receivable
     
893
     
788
 
Investment in Federal Home Loan Bank stock, at cost
     
618
     
527
 
Bank-owned life insurance
     
3,592
     
3,549
 
Premises and equipment, net
     
1,729
     
1,639
 
Other real estate owned, net
     
508
     
111
 
Prepaid expenses and other assets
     
1,117
     
839
 
Total Assets
   
$
167,723
   
$
155,643
 
                     
Liabilities and Stockholders' Equity
 
Liabilities
                 
Deposits:
                 
Non-interest bearing
   
$
942
   
$
640
 
Interest-bearing
     
133,074
     
123,765
 
Total deposits
     
134,016
     
124,405
 
Federal Home Loan Bank short-term borrowings
     
8,000
     
7,000
 
Federal Home Loan Bank long-term borrowings
     
5,500
     
4,500
 
Accrued interest payable
     
112
     
108
 
Advances from borrowers for taxes and insurance
     
1,488
     
1,592
 
Accrued expenses and other liabilities
     
410
     
463
 
Total Liabilities
     
149,526
     
138,068
 
                     
Stockholders' Equity
                 
Preferred stock – $0.01 par value, 1,000,000 shares authorized;
          none issued or outstanding
     
-
     
-
 
      Common stock – $0.01 par value; 9,000,000 shares
authorized; 1,388,625 issued; 913,163 and 909,285
outstanding at June 30, 2015 and December 31, 2014, respectively
14 14
Additional paid-in capital
     
13,896
     
13,828
 
Treasury stock, at cost: 2015 475,462 shares; 2014 479,340 shares
     
(4,938
)
   
(4,973
)
       Unallocated common stock held by:
          Employee Stock Ownership Plan (ESOP)
     
(421
)
   
(455
)
Recognition & Retention Plan Trust (RRP)
     
(70
)
   
(94
)
Accumulated other comprehensive loss
     
(40
)
   
(36
)
Retained earnings
     
9,756
     
9,291
 
Total Stockholders' Equity
     
18,197
     
17,575
 
Total Liabilities and Stockholders' Equity
   
$
167,723
   
$
155,643
 
 
 
See accompanying notes to the unaudited consolidated financial statements.
1

Quaint Oak Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
 
 
    
For the Three
Months Ended
   
For the Six
Months Ended
 
   
June 30,
   
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
Interest Income
 
(In thousands, except for share data)
 
  Interest on loans
 
$
2,083
   
$
1,732
   
$
4,011
   
$
3,450
 
  Interest and dividends on short-term investments and investment securities
   
47
     
46
     
109
     
87
 
  Total Interest Income
   
2,130
     
1,778
     
4,120
     
3,537
 
                                 
Interest Expense
                               
  Interest on deposits
   
481
     
405
     
937
     
791
 
  Interest on Federal Home Loan Bank borrowings
   
24
     
5
     
43
     
8
 
  Total Interest Expense
   
505
     
410
     
980
     
799
 
                                 
  Net Interest Income
   
1,625
     
1,368
     
3,140
     
2,738
 
                                 
Provision for Loan Losses
   
121
     
126
     
209
     
226
 
                                 
  Net Interest Income after Provision for Loan Losses
   
1,504
     
1,242
     
2,931
     
2,512
 
                                 
Non-Interest Income
                               
  Mortgage banking and title abstract fees
   
116
     
88
     
220
     
160
 
  Other fees and services charges
   
49
     
9
     
71
     
33
 
  Income from bank-owned life insurance
   
22
     
4
     
43
     
4
 
  Net gain on sales of loans
   
376
     
444
     
636
     
678
 
  Gain on sale of SBA loan
   
-
     
16
     
7
     
16
 
  Loss on sale of other real estate owned
   
(2
)
   
(15
)
   
(2
)
   
(38
)
  Other
   
11
     
11
     
16
     
15
 
 Total Non-Interest Income
   
572
     
557
     
991
     
868
 
                                 
Non-Interest Expense
                               
  Salaries and employee benefits
   
998
     
821
     
2,038
     
1,641
 
  Directors' fees and expenses
   
52
     
53
     
104
     
106
 
  Occupancy and equipment
   
137
     
135
     
286
     
269
 
  Professional fees
   
95
     
114
     
172
     
196
 
  FDIC deposit insurance assessment
   
30
     
23
     
58
     
51
 
  Other real estate owned expense
   
(5
)
   
9
     
3
     
17
 
  Advertising
   
31
     
26
     
62
     
52
 
  Other
   
138
     
95
     
253
     
189
 
 Total Non-Interest Expense
   
1,476
     
1,276
     
2,976
     
2,521
 
                                 
 Income before Income Taxes
   
600
     
523
     
946
     
859
 
                                 
Income Taxes
   
226
     
198
     
363
     
334
 
                                 
 Net Income
 
$
374
   
$
325
   
$
583
   
$
525
 
                                 
  Earnings per share - basic
 
$
0.44
   
$
0.38
   
$
0.68
   
$
0.62
 
  Average shares outstanding - basic
   
857,291
     
845,612
     
854,557
     
851,753
 
  Earnings per share - diluted
 
$
0.40
   
$
0.36
   
$
0.63
   
$
0.58
 
  Average shares outstanding - diluted
   
934,779
     
896,142
     
930,545
     
897,961
 
 
 
 
See accompanying notes to the unaudited consolidated financial statements.
2

Quaint Oak Bancorp, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
 
 
   
For the Three
Months Ended
   
For the Six
Months Ended
 
   
June 30,
   
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
(In thousands)
     
Net Income
 
$
374
   
$
325
   
$
583
   
$
525
 
                                 
Other Comprehensive Income  (Loss):
                               
Unrealized gains (losses) on investment securities available-for-sale
   
(11
)
   
5
     
(7
)
   
5
 
            Income tax effect
   
4
     
2
     
3
     
(2
)
                                 
Other comprehensive income (loss)
   
(7
)
   
3
     
(4
)
   
3
 
                                 
Total Comprehensive Income
 
$
367
   
$
328
   
$
579
   
$
528
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to the unaudited consolidated financial statements.
3

Quaint Oak Bancorp, Inc.
Consolidated Statements of Stockholders' Equity (Unaudited)
 
 
For the Six Months Ended June 30, 2015
                         
                             
  Unallocated
  Common Stock Common Accumulated
  Number of Additional Stock Held Other Total
  Shares Paid-in Treasury by Benefit Comprehensive Retained
Stockholders'
 
Outstanding
   
Amount
   
Capital
   
Stock
   
Plans
   
 Loss
   
Earnings
   
Equity
 
   
(In thousands, except share data)
 
BALANCE – DECEMBER 31, 2014
   
909,285
   
$
14
   
$
13,828
   
$
(4,973
)
 
$
(549
)
 
$
(36
)
 
$
9,291
   
$
17,575
 
                                                                 
Common stock allocated by ESOP
     -       -      
39
      -      
34
      -       -      
73
 
                                                                 
Treasury stock purchased
   
(478
)
    -       -      
(10
)
    -       -       -      
(10
)
                                                               
Reissuance of treasury stock under 401(k) Plan
   
1,618
      -      
16
     
17
      -       -       -      
33
 
                                                                 
Reissuance of treasury stock under
   stock incentive plan
   
2,738
      -      
(28
)
   
28
      -       -       -      
-
 
                                                                 
Stock based compensation expense
    -       -      
65
      -       -       -       -      
65
 
                                                                 
Release of 2,554 vested RRP shares
    -       -      
(24
)
    -      
24
      -       -      
-
 
                                                                 
Cash dividends declared ($0.13 per
   share)
-       -       -       -     -       -      
(118
)
   
(118
)
                                                                 
Net income
    -       -       -       -       -       -      
583
     
583
 
                                                                 
Other comprehensive loss, net
    -       -       -       -       -      
(4
)
     -      
(4
)
                                                                 
 
BALANCE – June 30, 2015
   
913,163
   
$
14
   
$
13,896
   
$
(4,938
)
 
$
(491
)
 
$
(40
)
 
$
9,756
   
$
18,197
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to the unaudited consolidated financial statements.
4

Quaint Oak Bancorp, Inc.
Consolidated Statements of Cash Flows (Unaudited)
 
 
   
For the Six Months
Ended June 30,
 
   
2015
   
2014
 
Cash Flows from Operating Activities
 
(In Thousands)
 
Net income
 
$
583
   
$
525
 
Adjustments to reconcile net income to net cash used in operating activities:
               
Provision for loan losses
   
209
     
226
 
Depreciation expense
   
85
     
82
 
Accretion of deferred loan fees and costs, net
   
(175
)
   
(120
)
Stock-based compensation expense
   
138
     
115
 
       Net gain on the sale of loans
   
(636
)
   
(678
)
       Gain on the sale of SBA loans
   
(7
)
   
(16
)
       Net loss on sale of other real estate owned
   
2
     
38
 
       Increase in the cash surrender value of bank-owned life insurance
   
(43
)
   
(4
)
       Changes in assets and liabilities which provided (used) cash:
               
     Loans held for sale-originations
   
(23,160
)
   
(22,856
)
     Loans held for sale-proceeds
   
21,020
     
20,777
 
            Accrued interest receivable
   
(105
)
   
(69
)
            Prepaid expenses and other assets
   
(275
)
   
(448
)
    Accrued interest payable
   
4
     
20
 
    Accrued expenses and other liabilities
   
(53
)
   
37
 
Net Cash Used in Operating Activities
   
(2,413
)
   
(2,371
)
Cash Flows from Investing Activities
       
Net decrease in investment in interest-earning time deposits
   
776
     
222
 
Purchase of investment securities available for sale
   
(27
)
   
(26
)
Net increase in loans receivable
   
(18,418
)
   
(10,104
)
Net increase in investment in Federal Home Loan Bank stock
   
(91
)
   
(194
)
Purchase of bank-owned life insurance
   
-
     
(3,500
)
Proceeds from the sale of other real estate owned
   
106
     
428
 
Capitalized expenditures on other real estate owned
   
(60
)
   
(20
)
Purchase of premises and equipment
   
(175
)
   
(49
)
Net Cash Used in Investing Activities
   
(17,889
)
   
(13,243
)
Cash Flows from Financing Activities
       
Net increase in demand deposits and savings accounts
   
473
     
913
 
Net increase in certificate accounts
   
9,138
     
8,360
 
Proceeds from Federal Home Loan Bank short-term borrowings
   
1,000
     
4,000
 
        Proceeds from Federal Home Loan Bank long-term borrowings 1,000 -
Dividends paid
   
(118
)
   
(101
)
Purchase of treasury stock
   
(10
)
   
(612
)
Proceeds from the reissuance of treasury stock
   
33
     
-
 
Decrease in advances from borrowers for taxes and insurance
   
(104
)
   
(43
)
Net Cash Provided by Financing Activities
   
11,412
     
12,517
 
Net Decrease in Cash and Cash Equivalents
   
(8,890
)
   
(3,097
)
Cash and Cash Equivalents – Beginning of Year
   
13,937
     
6,184
 
Cash and Cash Equivalents – End of Year
 
$
5,047
   
$
3,087
 
Cash payments for interest
 
$
976
   
$
779
 
Cash payments for income taxes
 
$
475
   
$
596
 
Transfer of loans to other real estate owned
 
$
445
   
$
111
 
 
 
 
See accompanying notes to the unaudited consolidated financial statements.
5

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies
Basis of Financial Presentation. The consolidated financial statements include the accounts of Quaint Oak Bancorp, Inc. (the "Company") and its wholly-owned subsidiary, Quaint Oak Bank (the "Bank") along with its wholly-owned subsidiaries.  At June 30, 2015, the Bank has five wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Real Estate, LLC, Quaint Oak Abstract, LLC, Quaint Oak Insurance Agency, LLC, and QOB Properties, LLC, each a Pennsylvania limited liability company.  The mortgage, real estate and abstract companies offer mortgage banking, real estate sales and title abstract services, respectively, and began operation in July 2009.  QOB Properties, LLC began operations in July 2012 and holds Bank properties acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure.  Quaint Oak Insurance Agency, LLC is currently inactive.  All significant intercompany balances and transactions have been eliminated.
The Bank is subject to regulation by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation.  Pursuant to the Bank's election under Section 10(l) of the Home Owners' Loan Act, the Company is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System.  The market area served by the Bank's two branch offices includes Bucks, Montgomery, Lehigh and Northampton Counties, Pennsylvania, and northeast Philadelphia and the surrounding area.  The principal deposit products offered by the Bank are certificates of deposit, passbook savings accounts, savings accounts and money market accounts.  Loan products offered are fixed and adjustable rate residential and commercial mortgages, construction loans, home equity loans, auto loans, and lines of credit.
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP) for interim information and with the instructions to Form 10-Q, as applicable to a smaller reporting company.  Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements.
The foregoing consolidated financial statements are unaudited; but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof.  The balances as of December 31, 2014 have been derived from the audited financial statements.  These financial statements should be read in conjunction with the financial statements and notes thereto included in Quaint Oak Bancorp's 2014 Annual Report on Form 10-K.  The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
Use of Estimates in the Preparation of Financial Statements. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.  Actual results could differ from those estimates.  The Company's most significant estimates are the determination of the allowance for loan losses, the assessment of other-than-temporary impairment of investment and mortgage-backed securities, valuation of other real estate owned, and the valuation of deferred tax assets.
 
 
 
 
 
6

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
Loans Receivable.  Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees and costs.  Interest income is accrued on the unpaid principal balance.  Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans.  The Bank is generally amortizing these amounts over the contractual life of the loan.
The loans receivable portfolio is segmented into residential loans, commercial real estate loans, construction loans and consumer loans.  The residential loan segment has two classes: one-to-four family residential owner occupied loans and one-to-four residential family non-owner occupied loans.  The commercial real estate loan segment consists of the following classes: multi-family (five or more) residential, commercial real estate and commercial lines of credit.  Construction loans are generally granted for the purpose of building a single residential home.  Commercial business loans are loans to businesses primarily for purchase of business essential equipment. Business essential equipment is equipment necessary for a business to support or assist with the day-to-day operation or profitability of the business.  The consumer loan segment consists of the following classes: home equity loans and other consumer loans.  Included in the home equity class are home equity loans and home equity lines of credit.  Included in the other consumer are loans secured by saving accounts and auto loans.
The accrual of interest is generally discontinued when principal or interest has become 90 days past due unless the loan is in the process of collection and is either guaranteed or well secured.  When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses.  Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectability of principal.  Generally, a loan is restored to accrual status when the obligation is brought current, it has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.
Allowance for Loan Losses.  The allowance for loan losses represents management's estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans receivable. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Because all identified losses are immediately charged off, no portion of the allowance for loan losses is restricted to any individual loan or groups of loans, and the entire allowance is available to absorb any and all loan losses.
The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.
 
 
 
7

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
The allowance consists of specific, general and unallocated components. The specific component relates to loans that are designated as impaired. For loans that are designated as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These significant factors may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary lending areas, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience in particular segments of the portfolio, duration of the current business cycle and bank regulatory examination results. The applied loss factors are reevaluated quarterly to ensure their relevance in the current economic environment.  Residential owner occupied mortgage lending generally entails a lower risk of default than other types of lending. Consumer loans and commercial real estate loans generally involve more risk of collectability because of the type and nature of the collateral and, in certain cases, the absence of collateral. It is the Company's policy to establish a specific reserve for loss on any delinquent loan when it determines that a loss is probable. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not considered impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent.  An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. The estimated fair values of substantially all of the Company's impaired loans are measured based on the estimated fair value of the loan's collateral.

A loan is identified as a troubled debt restructuring ("TDR") if the Company, for economic or legal reasons related to a debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider. Concessions granted under a TDR typically involve a temporary or permanent reduction in payments or interest rate or an extension of a loan's stated maturity date at less than a current market rate of interest. Loans identified as TDRs are designated as impaired.

 
 
8

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
 
For loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower's overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for all loans (except one-to-four family residential owner-occupied loans) where the total amount outstanding to any borrower or group of borrowers exceeds $500,000, or when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans criticized as special mention have potential weaknesses that deserve management's close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. In addition, Federal regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses and may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management's comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.

Loans Held for SaleLoans originated by the Bank's mortgage banking subsidiary, Quaint Oak Mortgage, LLC, are intended for sale in the secondary market and are carried at the lower of cost or fair value (LOCOM). Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan.

Federal Home Loan Bank StockFederal law requires a member institution of the Federal Home Loan Bank (FHLB) system to hold restricted stock of its district Federal Home Loan Bank according to a predetermined formula.  FHLB stock is carried at cost and evaluated for impairment. When evaluating FHLB stock for impairment, its value is determined based on the ultimate recoverability of the par value of the stock. We evaluate our holdings of FHLB stock for impairment each reporting period. No impairment charges were recognized on FHLB stock during the three or six months ended June 30, 2015 and 2014.

Bank Owned Life Insurance (BOLl).  The Company purchases bank owned life insurance as a mechanism for funding various employee benefit costs.  The Company is the beneficiary of these policies that insure the lives of certain officers of its subsidiaries. The Company has recognized the cash surrender value under the insurance policies as an asset in the consolidated balance sheets. Changes in the cash surrender value are recorded in non-interest income in the consolidated statements of income.

 
 
 
 
9

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
Other Real Estate Owned.  Other real estate owned or foreclosed assets are comprised of property acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure and loans classified as in-substance foreclosures.  A loan is classified as in-substance foreclosure when the Bank has taken possession of the collateral regardless of whether formal foreclosure proceedings take place.  Other real estate properties are initially recorded at fair value, net of estimated selling costs at the date of foreclosure, establishing a new cost basis. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of cost or fair value less estimated costs to sell.  Net revenue and expenses from operations and additions to the valuation allowance are included in other expenses. As of June 30, 2015, the Company has initiated formal foreclosure proceedings on a $588,000 consumer residential mortgage, which has not yet been transferred into foreclosed assets.
Share-Based Compensation.  Compensation expense for share-based compensation awards is based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.
At June 30, 2015, the Company has three share-based plans: the 2008 Recognition and Retention Plan ("RRP"), the 2008 Stock Option Plan, and the 2013 Stock Incentive Plan.  Awards under these plans were made in May 2008 and 2013.  These plans are more fully described in Note 9.
The Company also has an employee stock ownership plan ("ESOP").  This plan is more fully described in Note 9.  As ESOP shares are committed to be released and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares over the period earned.
Comprehensive Income (Loss).  Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains and losses be included in net income.  Certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the consolidated balance sheet and  along with net income, are components of comprehensive income.
Earnings per Share.  Amounts reported in earnings per share reflect earnings available to common stockholders' for the period divided by the weighted average number of shares of common stock outstanding during the period, exclusive of unearned ESOP shares, unvested restricted stock (RRP) shares and treasury shares.  Stock options and unvested restricted stock are regarded as potential common stock and are considered in the diluted earnings per share calculations to the extent they would have a dilutive effect if converted to common stock, computed using the "treasury stock" method.
Recent Accounting Pronouncements.  In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method.  This Update did not have a significant impact on the Company's financial statements.

 
10

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update's core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is evaluating the effect of adopting this new accounting Update.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40).  The amendments in this Update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met:  (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed.  Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor.  The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014.  This Update did not have a significant impact on the Company's financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement –Extraordinary and Unusual Items, as part of its initiative to reduce complexity in accounting standards.  This Update eliminates from GAAP the concept of extraordinary items.  The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.  This Update is not expected to have a significant impact on the Company's financial statements.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this Update.  This Update is not expected to have a significant impact on the Company's financial statements.

 
11

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
Reclassifications.  Certain items in the 2014 consolidated financial statements have been reclassified to conform to the presentation in the 2015 consolidated financial statements. Such reclassifications did not have a material impact on the presentation of the overall financial statements.  The reclassifications had no effect on net income or stockholders' equity.

Note 2 – Earnings Per Share

Earnings per share ("EPS") consists of two separate components, basic EPS and diluted EPS.  Basic EPS is computed based on the weighted average number of shares of common stock outstanding for each period presented.  Diluted EPS is calculated based on the weighted average number of shares of common stock outstanding plus dilutive common stock equivalents ("CSEs").  CSEs consist of shares that are assumed to have been purchased with the proceeds from the exercise of stock options, as well as unvested restricted stock (RRP) shares. Common stock equivalents which are considered antidilutive are not included for the purposes of this calculation. For the three months and six months ended June 30, 2015 and 2014, all unvested restricted stock program awards and outstanding stock options representing shares were dilutive.

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computations.

   
For the Three Months Ended
June 30,
   
For the Six Months Ended
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
Net Income
 
$
374,000
   
$
325,000
   
$
583,000
   
$
525,000
 
                                 
Weighted average shares outstanding – basic
   
857,291
     
845,612
     
854,557
     
851,753
 
Effect of dilutive common stock equivalents
   
77,488
     
50,530
     
75,988
     
46,208
 
Adjusted weighted average shares outstanding – diluted
   
934,779
     
896,142
     
930,545
     
897,961
 
                                 
Basic earnings per share
 
$
0.44
   
$
0.38
   
$
0.68
   
$
0.62
 
Diluted earnings per share
 
$
0.40
   
$
0.36
   
$
0.63
   
$
0.58
 

Note 3 – Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss by component, net of tax, for the three months and the six months ended June 30, 2015 and 2014 (in thousands):

   
Unrealized Gains (Losses) on Investment Securities
Available for Sale (1)
 
   
For the Three Months
Ended June 30,
   
For the Six Months Ended
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
Balance at the beginning of the period
 
$
(33
)
 
$
(18
)
 
$
(36
)
 
$
(18
)
Other comprehensive income (loss) before classifications
   
(7
)
   
3
     
(4
)
   
3
 
Amount reclassified from accumulated other comprehensive loss
   
-
     
-
     
-
     
-
 
Total other comprehensive income (loss)
   
(7
)
   
3
     
(4
)
   
3
 
Balance at the end of the period 
 
$
(40
)
 
$
(15
)
 
$
(40
)
 
$
(15
)
 _______________
(1)       All amounts are net of tax.  Amounts in parentheses indicate debits.
 
 
There were no amounts reclassified out of accumulated other comprehensive loss for the three and six months ended June 30, 2015 and 2014.
 
 
 
12

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
Note 4 – Investment in Interest-Earning Time Deposits
The investment in interest-earning time deposits as of June 30, 2015 and December 31, 2014, by contractual maturity, are shown below:
   
June 30,
2015
   
December 31,
2014
 
   
(In Thousands)
 
Due in one year or less
 
$
1,548
   
$
2,337
 
Due after one year through five years
   
4,336
     
4,323
 
  $ 5,884 $ 6,660

Note 5 – Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses and fair value of investment securities available for sale at June 30, 2015 and December 31, 2014 are summarized below (in thousands): 
   
June 30, 2015
 
   
Amortized Cost
   
Gross Unrealized Gains
   
Gross Unrealized Losses
   
Fair Value
 
Available for Sale:
               
    Short-term bond fund
 
$
1,237
     
-
   
$
(40
)
 
$
1,197
 
    Limited-term bond fund
   
550
     
-
     
(21
)
   
529
 
   
$
1,787
   
$
-
   
$
(61
)
 
$
1,726
 

   
December 31, 2014
 
   
Amortized Cost
   
Gross Unrealized Gains
   
Gross Unrealized Losses
   
Fair Value
 
Available for Sale:
               
    Short-term bond fund
 
$
1,214
   
$
-
   
$
(34
)
 
$
1,180
 
    Limited-term bond fund
   
546
     
-
     
(20
)
   
526
 
   
$
1,760
   
$
-
   
$
(54
)
 
$
1,706
 

The following table shows the Company's gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at June 30, 2015 and December 31, 2014 (in thousands):
 
 
June 30, 2015
 
       
Less than Twelve Months
   
Twelve Months or Greater
   
Total
 
 
 
Number of
Securities
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
 
               
Short-term bond fund
   
1
   
$
-
   
$
-
   
$
1,197
   
$
(40
)
 
$
1,197
   
$
(40
)
Limited-term bond fund
   
1
     
-
     
-
     
529
     
(21
)
   
529
     
(21
)
Total
   
2
   
$
-
   
$
-
   
$
1,726
   
$
(61
)
 
$
1,726
   
$
(61
)
                                                         
                                                         
                                                         

 
 
13

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 5 – Investment Securities Available for Sale (Continued)
 
December 31, 2014
 
       
Less than Twelve Months
   
Twelve Months or Greater
   
Total
 
 
Number of
Securities
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
 
               
Short-term bond fund 
   
1
   
$
-
   
$
-
   
$
1,180
   
$
(34
)
 
$
1,180
   
$
(34
)
Limited-term bond fund
   
1
     
-
     
-
     
526
     
(20
)
   
526
     
(20
)
Total
   
2
   
$
-
   
$
-
   
$
1,706
   
$
(54
)
 
$
1,706
   
$
(54
)

At June 30, 2015, there were two bond funds in an unrealized loss position that at such date had an aggregate depreciation of 3.40% from the Company's amortized cost basis. Management believes that the estimated fair value of the securities disclosed above is primarily dependent on the movement of market interest rates.  Management evaluated the length and time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer.  The Company has the ability and intent to hold the security until the anticipated recovery of fair value occurs. Management does not believe any individual unrealized loss as of June 30, 2015 represents an other-than-temporary impairment.

There were no impairment charges recognized during the three and six months ended June 30, 2015 or 2014.

Note 6 - Loans Receivable, Net and Allowance for Loan Losses

The composition of net loans receivable is as follows:
   
June 30,
2015
   
December 31,
2014
 
   
(In Thousands)
 
Real estate loans:
       
One-to-four family residential:
       
Owner occupied
 
$
6,726
   
$
7,085
 
Non-owner occupied
   
50,513
     
48,554
 
Total one-to-four family residential
   
57,239
     
55,639
 
                 
Multi-family (five or more) residential
   
10,523
     
10,132
 
Commercial real estate
   
42,631
     
35,523
 
Commercial lines of credit
   
2,211
     
1,623
 
Construction
   
20,958
     
14,303
 
Home equity loans
   
6,886
     
6,961
 
Total real estate loans
   
140,448
     
124,181
 
                 
Commercial business
   
2,569
     
749
 
Other consumer
   
65
     
41
 
Total Loans
   
143,082
     
124,971
 
                 
Deferred loan fees and costs
   
(529
)
   
(492
)
Allowance for loan losses
   
(1,276
)
   
(1,148
)
                 
Net Loans
 
$
141,277
   
$
123,331
 
 
 
 
14

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 6 - Loans Receivable, Net and Allowance for Loan Losses (Continued)

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of June 30, 2015 and December 31, 2014  (in thousands): 

   
June 30, 2015
 
   
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Total
 
     
One-to-four family residential owner occupied
 
$
5,905
   
$
-
   
$
821
   
$
-
   
$
6,726
 
One-to-four family residential non-owner occupied
   
48,888
     
393
     
977
     
255
     
50,513
 
Multi-family residential
   
10,454
     
69
     
-
     
-
     
10,523
 
Commercial real estate and lines of credit
   
43,042
     
1,051
     
417
     
332
     
44,842
 
Construction
   
20,958
     
-
     
-
     
-
     
20,958
 
Home equity
   
6,754
     
-
     
87
     
45
     
6,886
 
Commercial business and other consumer
   
2,634
     
-
     
-
     
-
     
2,634
 
   
$
138,635
   
$
1,513
   
$
2,302
   
$
632
   
$
143,082
 


   
December 31, 2014
 
   
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Total
 
     
One-to-four family residential owner occupied
 
$
6,132
   
$
116
   
$
837
   
$
-
   
$
7,085
 
One-to-four family residential non-owner occupied
   
46,971
     
38
     
1,317
     
228
     
48,554
 
Multi-family residential
   
10,065
     
-
     
67
     
-
     
10,132
 
Commercial real estate and lines of credit
   
35,984
     
293
     
537
     
332
     
37,146
 
Construction
   
14,303
     
-
     
-
     
-
     
14,303
 
Home equity
   
6,654
     
172
     
90
     
45
     
6,961
 
Commercial business and other consumer
   
790
     
-
     
-
     
-
     
790
 
   
$
120,899
   
$
619
   
$
2,848
   
$
605
   
$
124,971
 


 
 
 
 
 
 
 
 
 
 
 
 
 
15

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 6 - Loans Receivable, Net and Allowance for Loan Losses (Continued)

The following tables summarize information in regards to impaired loans by loan portfolio class as of June 30, 2015 and December 31, 2014 (in thousands):


   
June 30, 2015
 
   
Recorded
Investment
   
Unpaid
Principal
 Balance
   
Related
Allowance
   
Average
 Recorded
 Investment
   
Interest
Income
Recognized
 
 
With no related allowance recorded:
                   
One-to-four family residential owner occupied
 
$
821
   
$
833
   
$
-
   
$
835
   
$
-
 
One-to-four family residential non-owner occupied
   
1,081
     
1,087
     
-
     
1,081
     
26
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
418
     
431
     
-
     
435
     
6
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
87
     
87
     
-
     
89
     
3
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
                                         
With an allowance recorded:
                                       
One-to-four family residential owner occupied
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
One-to-four family residential non-owner occupied
   
152
     
154
     
13
     
154
     
3
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
332
     
332
     
29
     
332
     
5
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
45
     
45
     
34
     
45
     
-
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
                                         
Total:
                                       
One-to-four family residential owner occupied
 
$
821
   
$
833
   
$
-
   
$
835
   
$
-
 
One-to-four family residential non-owner occupied
   
1,233
     
1,241
     
13
     
1,235
     
29
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
750
     
763
     
29
     
767
     
11
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
132
     
132
     
34
     
134
     
3
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
    Total
 
$
2,936
   
$
2,969
   
$
76
   
$
2,971
   
$
43
 

 
 
 
 
 
 
 
 
 
 
 
 
 
16

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 6 - Loans Receivable, Net and Allowance for Loan Losses (Continued)

   
December 31, 2014
 
   
Recorded
 Investment
   
Unpaid
Principal
Balance
   
Related
Allowance
   
Average
Recorded
 Investment
   
Interest
 Income
Recognized
 
 
With no related allowance recorded:
                   
One-to-four family residential owner occupied
 
$
837
   
$
837
   
$
-
   
$
839
   
$
15
 
One-to-four family residential non-owner occupied
   
1,317
     
1,333
     
-
     
1,341
     
39
 
Multi-family residential
   
67
     
72
     
-
     
74
     
-
 
Commercial real estate and lines of credit
   
537
     
537
     
-
     
542
     
17
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
90
     
90
     
-
     
93
     
7
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
                                         
With an allowance recorded:
                                       
One-to-four family residential owner occupied
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
One-to-four family residential non-owner occupied
   
228
     
231
     
29
     
231
     
-
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
332
     
332
     
29
     
331
     
10
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
45
     
45
     
8
     
46
     
-
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
                                         
Total:
                                       
One-to-four family residential owner occupied
 
$
837
   
$
837
   
$
-
   
$
839
   
$
15
 
One-to-four family residential non-owner occupied
   
1,545
     
1,564
     
29
     
1,572
     
39
 
Multi-family residential
   
67
     
72
     
-
     
74
     
-
 
Commercial real estate and lines of credit
   
869
     
869
     
29
     
873
     
27
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
135
     
135
     
8
     
139
     
7
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
    Total
 
$
3,453
   
$
3,477
   
$
66
   
$
3,497
   
$
88
 

The loan portfolio also includes certain loans that have been modified in a troubled debt restructuring, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from loss mitigation activities and could include reductions in the interest rate, payment extensions, forbearance, or other actions.  At June 30, 2015, the Company had thirteen loans totaling $1.1 million that were identified as troubled debt restructurings.  One of these loans totaling $51,000 was on non-accrual and twelve loans totaling $1.1 million were performing in accordance with their modified terms.  At December 31, 2014, the Company had eleven loans totaling $951,000 that were identified as troubled debt restructurings.  Two of these loans totaling $155,000 were on non-accrual, three loans totaling $215,000 were 30-89 days delinquent, and six loans totaling $581,000 were performing in accordance with their modified terms. If a TDR is placed on non-accrual it is not reverted back to accruing status until the borrower makes timely payments as contracted for at least six months and future collection under the revised terms is probable.

 
 
 
 
 
 
 
 
17

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 6 - Loans Receivable, Net and Allowance for Loan Losses (Continued)

The following tables present the Company's TDR loans as of June 30, 2015 and December 31, 2014 (dollar amounts in thousands):
 
   
June 30, 2015
 
   
Number of
Contracts
   
Recorded
Investment
   
Non-
Accrual
   
Accruing
   
Related
Allowance
 
One-to-four family residential owner occupied
   
-
   
$
-
   
$
-
   
$
-
   
$
-
 
One-to-four family residential non-owner occupied
   
9
     
895
     
51
     
844
     
13
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
1
     
133
     
-
     
133
     
7
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
3
     
88
     
-
     
88
     
-
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
Total
   
13
   
$
1,116
   
$
51
   
$
1,065
   
$
20
 

   
December 31, 2014
 
   
Number of
Contracts
   
Recorded
Investment
   
Non-
Accrual
   
Accruing
   
Related
Allowance
 
One-to-four family residential owner occupied
   
-
   
$
-
   
$
-
   
$
-
   
$
-
 
One-to-four family residential non-owner occupied
   
7
     
728
     
155
     
573
     
10
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
1
     
133
     
-
     
133
     
7
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
3
     
90
     
-
     
90
     
-
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
Total
   
11
   
$
951
   
$
155
   
$
796
   
$
17
 

The contractual aging of the TDRs in the table above as of June 30, 2015 and December 31, 2014 is as follows (in thousands):

   
June 30, 2015
 
   
Current &
Past Due
Less than 30
Days
   
Past Due
30-89 Days
   
Greater
than 90
Days
   
Non-
Accrual
   
Total
 
One-to-four family residential owner occupied
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
One-to-four family residential non-owner occupied
   
844
     
-
     
-
     
51
     
895
 
Multi-family residential
   
-
     
-
     
-
     
-
     
-
 
Commercial real estate and lines of credit
   
133
     
-
     
-
     
-
     
133
 
Construction
   
-
     
-
     
-
     
-
     
-
 
Home equity
   
88
     
-
     
-
     
-
     
88
 
Commercial business and other consumer
   
-
     
-
     
-
     
-
     
-
 
Total
 
$
1,065
   
$
-
   
$
-
   
$
51
   
$
1,116
 

 
 
 
 
 
 
 
 
 
 
18

Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
 
 
Note 6 - Loans Receivable, Net and Allowance for Loan Losses (Continued)

   
December 31, 2014
 
   
Current &
Past Due
Less than 30
Days
   
Past Due