Day: October 31, 2024

DENVER, Oct. 31, 2024 /PRNewswire/ – Energy Fuels Inc. UUUU EFR (“Energy Fuels” or the “Company”), an industry leader in uranium and rare earth elements (“REE“) production, today reported its financial results for the quarter ended September 30, 2024. The Company previously announced details for its upcoming November 1, 2024, earnings call, which are also included in this news release.

“Uranium drives our current financial outlook, while rare earth elements and heavy mineral sand products are significantly adding to our long-term value and growth strategy,” said Mark Chalmers, Energy Fuels’ President and Chief Executive Officer. “This quarter, we maintained our clean balance sheet while adding a new long-term U.S. utility customer, completing another spot sale of U₃O₈, and commencing processing of the large inventory stockpile of uranium feedstock at the White Mesa Mill, which is expected to continue well into 2025 and beyond. Uranium production is, and will remain, the core of the Energy Fuels’ business, as we leverage our unique permits, facilities and expertise to process uranium-bearing materials to produce a variety of critical materials that advance the global energy transition through an American-based supply chain. We have long been a leading U.S. uranium producer, and we have now proven our ability to produce important rare earth materials at commercial scale with the completion and successful commissioning of our REE separation circuit this quarter. We are also aggressively moving forward with our plans to secure rare earth feedstocks globally and expand our processing capacity domestically in order to capture market share and achieve profitability. Our acquisition of Base Resources Limited and its world-class Toliara heavy mineral sands/monazite project in Madagascar on October 2, 2024 is an exciting step in achieving these objectives.

“We invite all stakeholders to join us in our upcoming November 1, 2024, earnings call, details of which are below, to learn more about these exciting achievements.”

Q3-2024 Highlights

Unless noted otherwise, all dollar amounts are in U.S. dollars.

• Robust Balance Sheet with Over $180 million of Liquidity and No Debt: As of September 30, 2024, the Company had $183.16 million of working capital including $47.46 million of cash and cash equivalents, $101.15 million of marketable securities (interest-bearing securities and uranium stocks), $35.91 million of inventory, and no debt.
• Over $10 Million of Additional Liquidity from Market Value of Inventory: At October 28, 2024 commodity prices, the Company’s product inventory has a market value of approximately $23.79 million, while the balance sheet reflects product inventory carried at cost of $13.38 million.
• Incurred Net Loss of $12 Million: During the three months ended September 30, 2024, the Company incurred a net loss of $12.08 million, or $0.07 per common share, primarily due to transaction and integrations costs related to the Donald Project joint venture (described below), the acquisition of Base Resources (described below) and recurring operating expenses, partially offset by sales of natural uranium concentrates (“U₃O₈“).
• Uranium Continues to Drive Revenue: The Company sold 50,000 pounds of U₃O₈ on the spot market at a realized sales price of $80.00 per pound of U₃O₈ for total proceeds of $4.00 million, which resulted in a gross profit of $2.15 million and a gross margin of 54%.
• New Long-Term Uranium Sales Contract with U.S. Utility: The Company added a fourth long-term uranium sales contract to its existing portfolio. Under the contract, the Company expects to deliver a total of 270,000 to 330,000 pounds of uranium between 2026 and 2027, and potentially an additional 180,000 to 220,000 pounds until 2029, under a “hybrid” pricing formula, subject to floor and ceiling prices, that maintains exposure to further uranium market upside and protection from inflation.
• “Phase 1” REE Separation Circuit Successfully Commissioned: Final commissioning of the Phase 1 REE separation circuit at the Company’s White Mesa Mill (the “Mill“) was successfully completed during the quarter resulting in the production of approximately 38 tonnes of ‘on-spec’ separated NdPr.
• Samples of NdPr Actively Being Qualified by Potential Customers: NdPr produced at the Mill is currently being qualified with permanent magnet manufacturers and other potential customers to set the stage for potential offtake in the future.
• Well-Stocked to Capture Market Opportunities: As of September 30, 2024, the Company held 235,000 pounds of finished U₃O₈ and 805,000 pounds of U₃O₈ in ore and raw materials and work-in-progress inventory for a total of 1,040,000 pounds of U₃O₈ in inventory. This inventory increased from last quarter due to Pinyon Plain, La Sal and Pandora mine ore production and additional alternate feed materials received, partially offset by our spot sale during Q3-2024. The Company expects these uranium inventories to continue increasing as we continue to mine additional ore. The Company also held 905,000 pounds of finished vanadium (“V₂O₅“), 38 tonnes of finished separated neodymium praseodymium (“NdPr“) and 9 tonnes of finished high purity, partially separated mixed rare earth carbonate (“RE Carbonate“) in inventory.

Capitalizing on Strong Uranium Pricing:

• Due to uranium market tailwinds and upcoming commitments in long-term contracts with U.S. nuclear utilities, the Company is currently mining and stockpiling uranium ore from its Pinyon Plain, La Sal and Pandora mines and plans to ramp up to a production run-rate of approximately 1.1 to 1.4 million pounds of U₃O₈ per year by late-2024.
• The Company expects to produce a total of 150,000 to 200,000 pounds of finished U₃O₈ during 2024 from stockpiled alternate feed materials and newly mined ore, which is at the lower end of our previous guidance of 150,000 to 500,000 pounds of finished U₃O₈ during 2024, due to delays in transporting ore from the Pinyon Plain mine to the White Mesa Mill, which is expected to be resolved in Q4-2024. Mining continues at the Pinyon Plain mine, with mined ore being stockpiled at the mine site, containing approximately 180,000 pounds of U₃O₈ at September 30, 2024, which is expected to be processed at the Mill later in 2024 or in early 2025.
• During Q3-2024, the Company received positive results from drill holes during ongoing preparations at its Nichols Ranch in situ recovery (“ISR“) Project in Wyoming. Both the Nichols Ranch Project and Whirlwind Mine in Colorado are being prepared for production and are within one year of a “go” decision, as market conditions warrant. Production from these mines, when combined with alternate feed materials, uranium from monazite, and 3^rd party uranium ore purchases, would be expected to increase the Company’s production run-rate to roughly two million pounds per year by as early as 2026.
• The Company continued advancing permitting and other pre-development activities on its large-scale Roca Honda, and Bullfrog uranium projects in Q3-2024, which together with its Sheep Mountain Project, have the potential to expand the Company’s uranium production to a run-rate of up to five million pounds of U₃O₈ per year in the coming years.
• As of October 28, 2024, the spot price of U₃O₈ was $81.00 per pound and the long-term price of U₃O₈ was $82.00 per pound, according to data from TradeTech.

Rare Earth Element Production Milestones:

• The Company produced about 38 tonnes of separated NdPr from its newly commissioned Phase 1 REE separation circuit at the Mill in Q2- and Q3-2024.
• Samples of the Company’s NdPr product have been sent to permanent magnet and other companies around the world for product qualification, and initial testing responses have been positive.
• The Company is currently in the process of updating the White Mesa Mill’s AACE International (“AACE“) Class 4 Pre-Feasibility Study (not a Pre-Feasibility Study subject to or intended to be compliant with NI 43-101 or S-K 1300), originally released in Q2-2024 to increase throughput to a total of 60,000 tpa of monazite, producing roughly 6,000 tpa of NdPr, 150 to 225 tpa of Dy, and 50 to 75 tpa of Tb, of which the existing commissioned Phase 1 circuit will constitute about 17% of this amount (10,000 tpa of monazite). The Mill PFS referenced above can be viewed on the Company’s website, www.energyfuels.com.

Heavy Mineral Sands:

• On October 2, 2024, the Company announced it completed its previously announced acquisition of all the issued and outstanding shares of Base Resources Ltd. (“Base Resources“), which is expected to transform the Company into a global leader in critical minerals production, including HMS (titanium and zirconium), REEs and uranium. The acquisition of Base includes the advanced, world-class Toliara HMS project in Madagascar. In addition to its stand-alone, ilmenite, rutile (titanium) and zircon (zirconium) production capability, the Toliara Project also contains a long-life, high-value and low-cost monazite (REEs) stream, produced as a byproduct of primary titanium and zirconium production. Toliara’s monazite is expected to be processed at the Mill into separated REE products, along with uranium, at globally competitive capital and operating costs. The Toliara Project is subject to negotiation of fiscal terms with the Madagascar government and the receipt of certain Madagascar government approvals and actions before a current suspension on activities at the Toliara Project will be lifted and development may occur. The transaction also includes Base’s management, mine development and operations teams, who have a successful track-record of designing, constructing, and profitably operating a world-class HMS operation in Kenya.
• The Company continued to advance the Donald Project (the “Donald Project“), a large monazite-rich HMS project in Australia, pursuant to its joint venture with Astron Corporation limited, announced in Q2-2024. The Company expects that a final investment decision (“FID“) will be made on the Donald Project as early as 2025.
• During Q3-2024, the Company also continued to advance its wholly owned Bahia HMS project in Brazil (the “Bahia Project“) with its Phase 2 drilling campaign, which is expected to continue through the rest of the year. Additionally, the Company completed bulk test work on a 2.5 tonne sample in March 2024, and recently shipped a larger 15 tonne sample to the U.S. for additional process test work. The Company expects to complete a U.S. Subpart 1300 of Regulation S-K (“S-K 1300“) and Canadian National Instrument 43-101 (“NI 43-101“) compliant mineral resource estimate on the Bahia Project during 2024.

Vanadium Highlights:

• The Company chose not to execute any vanadium sales during Q3-2024 and holds about 905,000 pounds of V₂O₅ in inventory.
• As of October 28, 2024, the spot price of V₂O₅ was $5.25 per pound, according to data from Fastmarkets.

Medical Isotope Highlights:

• On August 19, 2024, the Company announced it acquired RadTran LLC (“RadTran“), a private company specializing in the separation of critical radioisotopes, to further the Company’s plans for development and production of medical isotopes used in cancer treatments. RadTran’s expertise includes separation of radium-226 (“Ra-226“) and radium-228 (“Ra-228“) from uranium and thorium process streams. This acquisition is expected to significantly enhance Energy Fuels’ planned capabilities to address the global shortage of these essential isotopes used in emerging targeted alpha therapies (“TAT“) for cancer treatment.
• The Company continues to utilize its research and development (“R&D“) license for the recovery of R&D quantities of Ra-226 at the Mill. Activities to set up the pilot facility at the Mill continued in Q3-2024 and are expected to progress through the end of the year, with the goal of producing R&D quantities of Ra-226 for testing by end-users of the product in late 2024 or early 2025.

Mr. Chalmers continued:

“During the quarter, we achieved numerous additional milestones to bring the Energy Fuels’ vision to fruition for our innovative, low-cost, U.S.-centered critical mineral supply chain. As previously announced, shortly after the close of the quarter, we successfully completed our acquisition of Base Resources. This is a major piece of our strategic puzzle, bringing to the Company the Base Resources management and operations team and the world-class Toliara Project in Madagascar, which is considered by industry experts to be one of the best HMS projects in the world. With the Toliara Project, our joint venture on the Donald Project in Australia, and our 100% ownership of the Bahia Project, we have secured a leading position in the titanium and zirconium mineral industry, in addition to a low-cost source of REE feedstock that will be processed in the United States.

“These developments have the potential to transform Energy Fuels into a world leader in titanium, zirconium, and rare earth elements production, while maintaining our position as a U.S. leader in uranium and vanadium production. All these materials are critical to the global energy transition and to our vision of creating a leading diversified critical minerals company.”

Conference Call and Webcast at 10:00 AM MT (12:00 pm ET) on November 1, 2024:

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The Company’s Quarterly Report on Form 10-Q has been filed with the U.S. Securities and Exchange Commission (“SEC“) and may be viewed on the Electronic Document Gathering and Retrieval System (“EDGAR“) at www.sec.gov/edgar, on the System for Electronic Data Analysis and Retrieval + (“SEDAR+“) at www.sedarplus.ca, and on the Company’s website at www.energyfuels.com. Unless noted otherwise, all dollar amounts are in U.S. dollars.

Selected Summary Financial Information:

ABOUT ENERGY FUELS

Energy Fuels is a leading US-based critical minerals company, focused on uranium, REEs, HMS, vanadium and medical isotopes. The Company has been the leading U.S. producer of natural uranium concentrate for the past several years, which is sold to nuclear utilities that process it further for the production of carbon-free nuclear energy and owns and operates several conventional and in situ recovery uranium projects in the western United States. The Company also owns the White Mesa Mill in Utah, which is the only fully licensed and operating conventional uranium processing facility in the United States. At the Mill, the Company also produces advanced REE products, vanadium oxide (when market conditions warrant), and is preparing to begin pilot-scale recovery of certain medical isotopes from existing uranium process streams needed for emerging cancer treatments. The Company also owns the operating Kwale HMS project in Kenya which is nearing the end of its life and is developing three (3) additional HMS projects, including the Toliara Project in Madagascar, the Bahia Project in Brazil, and the Donald Project in Australia in which the Company has the right to earn up to a 49% interest in a joint venture with Astron Corporation Limited. The Company is based in Lakewood, Colorado, near Denver, with its heavy mineral sands operations managed from Perth, Australia. The primary trading market for Energy Fuels’ common shares is the NYSE American under the trading symbol “UUUU,” and the Company’s common shares are also listed on the Toronto Stock Exchange under the trading symbol “EFR.” For more information on all we do, please visit http://www.energyfuels.com

Cautionary Note Regarding Forward-Looking Statements: This news release contains certain “Forward Looking Information” and “Forward Looking Statements” within the meaning of applicable United States and Canadian securities legislation, which may include, but are not limited to, statements with respect to: any expectation that the Company will maintain its position as a leading U.S.-based critical minerals company or as the leading producer of uranium in the U.S.; any expectation with respect to timelines to production; any expectation as to rates or quantities of production; any expectation as to costs of production or gross profits or gross margins; any expectation as to future sales or sales prices; any expectation that the Company will be profitable; any expectation that the Company’s permitting efforts will be successful and as to any potential future production from any properties that are in the permitting or development stage; any expectation with respect to the Company’s planned exploration programs; any expectation that the Company will achieve its business objective of becoming a long-term, profitable U.S. critical minerals company; any expectation that Energy Fuels will be successful in expanding its U.S. separation, or other value-added U.S. REE production capabilities at the Mill, or otherwise, including the timing of any facilities or other initiatives and the expected production capacity associated with any such production capabilities; any expectation that the Mill’s REE products will meet commercial expectations or result in commercial offtake agreements; any expectation that the Company will update the Mill PFS to increase throughput of the planned Phase 2 separation circuit; any expectation that the Company’s planned Phase 2 separation facility will complete engineering design and will receive all required permits and licenses on a timely basis or at all; any expectation that the Company is well-stocked to capture market opportunities; any expectation that the Bahia Project, Donald Project and/or Toliara Project will be low-cost sources of monazite feed for the Mill and/or also potentially produce significant standalone cashflow from the sale of ilmenite, rutile, zircon and other minerals; any expectation as to the exploration program to be conducted at the Bahia Project during 2024; any expectation that the Company will complete an S-K 1300 and NI 43-101 compliant mineral resource estimate for the Bahia Project during 2024, or otherwise; any expectation that a FID will be made on the Donald Project or that the Company will earn its full 49% interest in the Donald JV; any expectation that any production at the Bahia Project, Donald Project and/or Toliara Project or Mill will be world or globally competitive; any expectation that the Base Resources team will continue to have a successful track-record of designing, constructing, and profitably operating any of the Company’s HMS projects; any expectation that Energy Fuels will be successful in agreeing on fiscal terms with the Government of Madagascar or in achieving sufficient fiscal and legal stability for the Toliara Project; any expectation that the current suspension relating to the Toliara Project will be lifted in the near future or at all; any expectation that the additional permits for the recovery of Monazite at the Toliara Project will be acquired on a timely basis or at all; any expectation that the Toliara Project will become a world-class HMS project; any expectation about the long-term opportunity in REEs; any expectation that the Company will be globally competitive in its markets; any expectation that the Company will complete engineering on its R&D pilot facility for the production of Ra-226 at the Mill, will set up the first stage of the pilot facility, and produce R&D quantities of Ra-226 at the Mill for testing by end-users of the product or at all; any expectation that the Company’s evaluation of radioisotope recovery at the Mill will be successful; any expectation that any radioisotopes that can be recovered at the Mill will be sold on a commercial basis; any expectation as to the quantities to be delivered under existing uranium sales contracts; any expectation that the Company will be successful in completing any additional contracts for the sale of uranium to U.S. utilities on commercially reasonable terms or at all; and any expectation as to future uranium, vanadium, HMS or REE prices or market conditions. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans,” “expects,” “does not expect,” “is expected,” “is likely,” “budgets,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” “does not anticipate,” or “believes,” or variations of such words and phrases, or state that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “occur,” “be achieved” or “have the potential to.” All statements, other than statements of historical fact, herein are considered to be forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements express or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include risks associated with: commodity prices and price fluctuations; engineering, construction, processing and mining difficulties, upsets and delays; permitting and licensing requirements and delays; changes to regulatory requirements; legal challenges; the availability of feed sources for the Mill; competition from other producers; public opinion; government and political actions; the failure of the Government of Madagascar to agree on fiscal terms for the Toliara Project or provide the approvals necessary to achieve sufficient fiscal and legal stability on acceptable terms and conditions or at all; the failure of the current suspension affecting the Toliara Project to be lifted on a timely basis or at all; the failure of the Company to obtain the required permits for the recovery of Monazite from the Toliara Project; the failure of the Company to provide or obtain the necessary financing required to develop the Toliara Project, the Donald Project, the Bahia Project and/or its expanded REE separations capacity; available supplies of monazite; the ability of the Mill to produce RE Carbonate, REE oxides or other REE products to meet commercial specifications on a commercial scale at acceptable costs or at all; market factors, including future demand for REEs; actual results differing from estimates and projections; the ability of the Mill to recover radium or other radioisotopes at reasonable costs or at all; market prices and demand for medical isotopes; and the other factors described under the caption “Risk Factors” in the Company’s most recently filed Annual Report on Form 10-K, which is available for review on EDGAR at www.sec.gov/edgar, on SEDAR+ at www.sedarplus.ca, and on the Company’s website at www.energyfuels.com. Forward-looking statements contained herein are made as of the date of this news release, and the Company disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management’s estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements. The Company assumes no obligation to update the information in this communication, except as otherwise required by law.

¹ The information relating to the Donald Project’s estimated monazite production is based on the Donald DFS prepared on June 27, 2023. This study constituted a “Feasibility Study” for the purposes of JORC, and the Ore Reserves underpinning this study were estimated in accordance with JORC. The results from this study may not be comparable to (as the case may be) data or estimates under either NI 43-101 or S-K 1300– see disclosure under “Technical Information.”

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SOURCE Energy Fuels Inc.

Southampton, PA , Oct. 31, 2024 (GLOBE NEWSWIRE) — Quaint Oak Bancorp, Inc. (the “Company”) QNTO, the holding company for Quaint Oak Bank (the “Bank”), announced today net income for the quarter ended September 30, 2024 of $243,000, or $0.09 per basic and diluted share, compared to net loss of $255,000, or $(0.11) per basic and diluted share, net, for the same period in 2023. Net income for the nine months ended September 30, 2024 of $1.2 million, or $0.47 per basic and diluted share, net, compared to net income of $878,000, or $0.40 per basic and $0.39 per diluted share, for the same period in 2023.

Robert T. Strong, President and Chief Executive Officer stated, “Our earnings for the quarter ended September 30, 2024, have improved over the same period of one year ago. Although we have not yet achieved our historic levels, this report signals a significant improvement. Similarly, our net income for the nine months ended September 30, 2024, registers a 38.5% improvement over the same period of one year ago.”

Mr. Strong added, “We are pleased to have experienced significant improvement in non-interest income during the quarter ended September 30, 2024, and the nine-month period ended September 30, 2024, when compared to the same periods of one year ago, excluding discontinued operations.”

Mr. Strong continued, “Although, there appears to be some market weakness in the small business lending category and although we have increased our allowance for credit losses as a percent of total loans receivable to 1.24% at September 30, 2024; our non-performing loans as a percent of total loans receivable, net along with our non-performing assets as a percent of total assets both remain below 1.00%.”

Mr. Strong commented, “We are pleased to report that our total risk-based capital ratio at this quarter end is 13.86%. Additionally, total stockholder equity increased $2.9 million at September 30, 2024, when compared to that of year end December 31, 2023. As previously reported, our Board of Directors approved the payment of a dividend, in the amount of $0.13 per share to shareholders of record on October 28, 2024, payable on November 12, 2024.”

Mr. Strong concluded, “As always, our current and continued business strategy focuses on maintaining healthy capital ratios coupled with long-term profitability and payment of dividends, each of which reflect our strong commitment to shareholder value.”

On March 29, 2024, Quaint Oak Bank sold its 51% interest in Oakmont Capital Holdings, LLC (“OCH”). The decision was based on a number of strategic priorities and other factors. As a result of this action, the Company classified the operations of OCH as discontinued operations under ASC 205-20. The Consolidated Balance Sheets and Consolidated Statements of Income present discontinued operations for the current period and retrospectively for prior periods.

Also on March 29, 2024, the Company discontinued the operations of Quaint Oak Real Estate, LLC (“Quaint Oak Real Estate”), a 100% wholly owned subsidiary of the Bank. Quaint Oak Real Estate was engaged in the real estate brokerage business. The Bank agreed to cease operations of Quaint Oak Real Estate and discontinue utilizing the services of the real estate agents it had been doing business with and had developed relationships with.

Comparison of Quarter-over-Quarter Operating Results

Net income amounted to $243,000 for the three months ended September 30, 2024, an increase of $498,000, or 195.3%, compared to net loss of $255,000 for the three months ended September 30, 2023. The increase in net income on a comparative quarterly basis was primarily the result of a decrease in interest expense of $427,000, a decrease in net loss from discontinued operations of $300,000, a decrease in non-interest expense of $221,000, an increase in non-interest income of $188,000, and a decrease in the provision for credit losses of $134,000, partially offset by a decrease in interest income of $639,000, and an increase in the net provision for income taxes of $133,000.

The $639,000, or 5.8%, decrease in interest income was primarily due to a decrease in the average balance of loans receivable, net, which decreased $114.7 million from $722.4 million for the three months ended September 30, 2023 to $607.6 million for the three months ended September 30, 2024 and had the effect of decreasing interest income $1.7 million. This decrease was partially offset by a 50 basis point increase in the average yield on loans receivable, net from 6.01% for the three months ended September 30, 2023 to 6.51% for the three months ended September 30, 2024, and had the effect of increasing interest income $767,000, and a $39.3 million increase in the average balance of due from banks – interest earning, which increased from $6.6 million for the three months ended September 30, 2023 to $45.9 million for the three months ended September 30, 2024, and had the effect of increasing interest income $413,000.

The $427,000, or 6.4%, decrease in interest expense for the three months ended September 30, 2024 over the comparable period in 2023 was driven by a $751,000, or 95.9%, decrease in the interest on Federal Home Loan Bank short-term borrowings due to a $52.4 million, or 97.1%, decrease in the average balance of Federal Home Loan Bank short-term borrowings which decreased from $54.0 million for the three months ended September 30, 2023 to $1.6 million for the three months ended September 30, 2024. Also contributing to the decreases in interest expense for the three months ended September 30, 2024 was $310,000, or 83.3%, decrease in the interest on Federal Home Loan Bank long-term borrowings due to a $33.7 million, or 81.0%, decrease in the average balance of Federal Home Loan Bank long-term borrowings which decreased from $41.7 million for the three months ended September 30, 2023 to $8.0 million for the three months ended September 30, 2024. Partially offsetting these decreases in interest expense for the three months ended September 30, 2024 was a $573,000, or 11.3%, increase in interest expense on deposits, primarily attributable to a 92 basis point increase in average rate of certificates of deposit, which increased from 3.35% for the three months ended September 30, 2023 to 4.27% for the three months ended September 30, 2024, and had the effect of increasing interest expense by $513,000. The average interest rate spread increased from 1.73% for the three months ended September 30, 2023 to 1.87% for the three months ended September 30, 2024 while the net interest margin increased from 2.42% for the three months ended September 30, 2023 to 2.58% for the three months ended September 30, 2024.

The $134,000, or 52.1%, decrease in the provision for credit losses for the three months ended September 30, 2024 over the three months ended September 30, 2023 was due to a decrease in loans receivable, net, partially offset by an increase in individually evaluated loans which increased the provision for credit losses by $259,000.

The $188,000, or 18.4%, increase in non-interest income for the three months ended September 30, 2024 over the comparable period in 2023 was primarily attributable to a $122,000, or 32.0%, increase in net gain on sale of loans, a $79,000, or 50.0%, increase in mortgage banking, equipment lending, and title abstract fees, a $29,000, or 30.5%, increase in gain on sale of SBA loans, and an $8,000, or 4.2%, increase in insurance commissions. These increases were partially offset by a $38,000, or 24.7%, decrease in other fees and service charges, and a $16,000, or 100.0%, decrease in real estate sales commissions, net.

The $221,000, or 4.3%, decrease in non-interest expense for the three months ended September 30, 2024 over the comparable period in 2023 was primarily due to a $229,000, or 89.8%, decrease in professional fees, a $116,000, or 26.0%, decrease in occupancy and equipment expense, a $56,000, or 51.9%, decrease in directors’ fees and expenses, and a $39,000, or 19.8%, decrease in FDIC deposit insurance assessment. These decreases were partially offset by a $182,000, or 5.5%, increase in salaries and employee benefits expense, a $27,000, or 5.7%, increase in other expense, and a $10,000, or 3.2%, increase in data processing expense. The decrease in professional fees was due to a $98,000 recovery of legal fees due to a loan payoff.

The provision for income tax from continuing operations increased $133,000, or 380.0%, from $35,000 for the three months ended September 30, 2023 to $168,000 for the three months ended September 30, 2024 due primarily to an increase in taxable income from continuing operations.

Comparison of Nine-Month Operating Results

Net income amounted to $1.2 million for the nine months ended September 30, 2024, an increase of $338,000, or 38.5%, compared to net income of $878,000 for the nine months ended September 30, 2023. The increase in net income on a comparative quarterly basis was primarily the result of an increase in non-interest income of $2.4 million, a decrease in non-interest expense of $207,000, and a decrease in net loss from discontinued operations of $28,000, partially offset by an increase in interest expense of $849,000, an increase in the provision for credit losses of $758,000, a decrease in interest income of $442,000, and an increase in the net provision for income taxes from continuing operations of $254,000.

The $442,000, or 1.3%, decrease in interest income was primarily due to a decrease in the average balance of loans receivable, net, which decreased $123.7 million from $748.6 million for the nine months ended September 30, 2023 to $624.9 million for the nine months ended September 30, 2024 and had the effect of decreasing interest income $5.5 million. These decreases were partially offset by a 59 basis point increase in the yield on average loans receivable, net, including loans held for sale, which increased from 5.91% for the nine months ended September 30, 2023 to 6.50% for the nine months ended September 30, 2024, and had the effect of increasing interest income $2.7 million, and a $66.7 million increase in the average balance of due from banks – interest earning, which increased from $6.1 million for the nine months ended September 30, 2023 to $72.7 million for the nine months ended September 30, 2024, and had the effect of increasing interest income $2.1 million, and a 93 basis point increase in the average yield on due from banks – interest earning which increased from 4.20% for the nine months ended September 30, 2023 to 5.13% for the nine months ended September 30, 2024, and had the effect of increasing interest income $504,000.

The $849,000, or 4.5%, increase in interest expense for the nine months ended September 30, 2024 over the comparable period in 2023 was driven by a $4.5 million, or 34.1%, increase in interest on average deposits. Also contributing to the increase in interest expense was a 51 basis point increase in the rate on average money market accounts which increased from 4.04% for the nine months ended September 30, 2023 to 4.55% for the nine months ended September 30, 2024 and had the effect of increasing interest expense by $828,000. Partially offsetting the increase in interest expense for the nine months ended September 30, 2024 was a $3.6 million, or 99.1%, decrease in the interest on Federal Home Loan Bank short-term borrowings due to an $89.3 million, or 99.0%, decrease in the average balance of Federal Home Loan Bank short-term borrowings which decreased from $90.1 million for the nine months ended September 30, 2023 to $861,000 for the nine months ended September 30, 2024. The average interest rate spread decreased from 2.03% for the nine months ended September 30, 2023 to 1.83% for the nine months ended September 30, 2024 while the net interest margin decreased from 2.62% for the nine months ended September 30, 2023 to 2.61% for the nine months ended September 30, 2024.

The $758,000, or 164.8%, increase in the provision for credit losses for the nine months ended September 30, 2024 over the nine months ended September 30, 2023 was due to an increase in the amount of non-performing loans. There were nineteen individually evaluated loans which increased the provision for credit losses by $913,000. This increase was partially offset by a decrease in the average balance of loans receivable, net.

The $2.4 million, or 78.4%, increase in non-interest income for the nine months ended September 30, 2024 over the comparable period in 2023 was primarily attributable to a $1.4 million gain on sale of Oakmont Capital Holdings, LLC, a $789,000, or 65.3%, increase in net gain on sale of loans, a $286,000, or 96.6%, increase in other fees and services charges, a $206,000, or 48.9%, increase in mortgage banking, equipment lending, and title abstract fees, and a $40,000, or 8.2%, increase in insurance commissions. These increases were partially offset by a $142,000 or 96.6%, decrease in net loan servicing income, a $95,000, or 27.5%, decrease in gain on sale of SBA loans, and a $68,000, or 77.3%, decrease in real estate sales commissions, net.

The $207,000, or 1.3%, decrease in non-interest expense for the nine months ended September 30, 2024 over the comparable period in 2023 was primarily due to a $274,000, or 45.9%, decrease in professional fees, a $175,000, or 26.2%, decrease in FDIC deposit insurance assessment, a $162,000, or 51.4%, decrease in directors’ fees and expenses, and a $142,000, or 12.5%, decrease in occupancy and equipment expense. The decrease in directors’ fees and expenses was primarily due to a reduction in director rates for the nine months ended September 30, 2024. The decrease in non-interest expense was partially offset by a $394,000, or 3.8%, increase in salaries and employee benefits expense, and a $157,000, or 21.3%, increase in data processing expense.

The provision for income tax on continuing operations increased $254,000, or 39.2%, from $648,000 for the nine months ended September 30, 2023 to $902,000 for the nine months ended September 30, 2024 due primarily to an increase in taxable income from continuing operations.

Comparison of Financial Condition

The Company’s total assets at September 30, 2024 were $701.6 million, a decrease of $52.5 million, or 7.0%, from $754.1 million at December 31, 2023. This decrease in total assets was primarily due to a $70.4 million, or 11.4%, decrease in loans receivable, net of allowance for credit losses. The largest decreases within the loan portfolio occurred in commercial real estate loans which decreased $31.0 million, or 9.4%, commercial business loans which decreased $23.4 million, or 16.5%, construction loans which decreased $11.7 million, or 32.9%, and one-to-four family non-owner occupied loans which decreased $6.2 million, or 15.3%. Partially offsetting these decreases were one-to-four family owner occupied loans which increased $1.5 million, or 6.4%, and multi-family residential which increased $783,000, or 1.7%. Partially offsetting the decrease in total assets was a $34.4 million, or 94.4%, increase in loans held for sale, a $3.3 million, or 5.8%, increase in cash and cash equivalents, an $899,000, or 25.7%, increase in accrued interest receivable, a $380,000, or 25.8%, increase in investment in Federal Home Loan Bank stock, at cost, and a $275,000, or 10.4%, increase in premises and equipment, net.

Loans held for sale increased $34.4 million, or 94.4%, from $36.4 million at December 31, 2023 to $70.9 million at September 30, 2024 as the Bank originated $51.6 million in equipment loans held for sale and sold $71.6 million of equipment loans during the nine months ended September 30, 2024. Partially offsetting this increase was $8.5 million of loan amortization and prepayments. On March 29, 2024, the Bank transferred $4.4 million of equipment loans held for sale into loans receivable as part of the discontinued operations of OCH. Additionally, the Bank’s mortgage banking subsidiary, Quaint Oak Mortgage, LLC, originated $99.6 million of one-to-four family residential loans during the nine months ended September 30, 2024 and sold $93.1 million of loans in the secondary market during this same period. In the third quarter of 2024, management identified $51.0 million of commercial real estate loans and $9.9 million of SBA loans within the loan portfolio and transferred to loans held for sale at amortized cost.

Total deposits decreased $48.3 million, or 7.6%, to $583.4 million at September 30, 2024 from $631.7 million at December 31, 2023. This decrease in deposits was primarily attributable to a decrease of $36.5 million, or 35.0%, in interest bearing checking accounts, a decrease of $23.8 million, or 25.8%, in non-interest bearing checking accounts, a decrease of $5.5 million, or 2.5%, in money market accounts, and a $236,000, or 28.1%, decrease in savings accounts. These decreases in deposits were partially offset by an increase of $17.6 million, or 8.2%, in certificates of deposit. The total decrease in interest bearing checking accounts was due to reduced correspondent banking activity.

Total Federal Home Loan Bank (FHLB) borrowings increased $9.8 million, or 33.9%, to $38.9 million at September 30, 2024 from $29.0 million at December 31, 2023. During the nine months ended September 30, 2024, the Company borrowed $65.0 million of FHLB short-term borrowings, paid down $25.2 million of FHLB long-term borrowings, and paid down $30.0 million of FHLB short-term borrowings.

Total stockholders’ equity from continuing operations increased $2.9 million, or 6.0%, to $51.4 million at September 30, 2024 from $48.5 million at December 31, 2023. Contributing to the increase was net income for the nine months ended September 30, 2024 of $1.2 million, shares issued of $2.4 million, amortization of stock awards and options under our stock compensation plans of $182,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of $91,000, and other comprehensive income, net of $10,000. The increase in stockholders’ equity was partially offset by dividends paid of $996,000, and $48,000 purchase of treasury stock. In addition, there was a $3.1 million, or 100.0%, decrease in noncontrolling interest from discontinued operations. The $2.5 million of shares issued were due to two private placement offerings to two investors.

Non-performing loans at September 30, 2024 totaled $5.4 million, or 0.99%, of total loans receivable, net of allowance for credit losses, consisting of $5.0 million of loans on non-accrual status and $400,000 of loans 90-days or more delinquent. Non-accrual loans consist of one commercial real estate loan, one pool of equipment loans, and nine commercial business loans. Loans 90-days or more past due include one commercial real estate loan, which is still accruing. All non-performing loans are either well-collateralized or adequately reserved for. During the nine months ended September 30, 2024, 13 commercial business loans totaling $907,000, and one construction loan of $187,000, that were previously on non-accrual were charged-off through the allowance for credit losses. The allowance for credit losses as a percent of total loans receivable was 1.24% at September 30, 2024 and 1.11% at December 31, 2023. Non-performing loans at December 31, 2023 consisted of one SBA loan on non-accrual status in the amount of $51,000 and one one-to-four family owner occupied loan that was 90 days or more past due but still accruing in the amount of $401,000. During the year ended December 31, 2023, two commercial business loans, one SBA loan, one multi-family residential loan, and two equipment loans totaling $272,000 that were previously on non-accrual were charged-off through the allowance for credit losses. In addition, there was one commercial business loan in the amount of $652,000 that was partially charged off by $603,000.

Quaint Oak Bancorp, Inc., a Financial Services Company, is the parent company for the Quaint Oak Family of Companies. Quaint Oak Bank, a Pennsylvania-chartered stock savings bank and wholly-owned subsidiary of the Company, is headquartered in Southampton, Pennsylvania and conducts business through three regional offices located in the Delaware Valley, Lehigh Valley and Philadelphia markets. Quaint Oak Bank’s subsidiary companies include Quaint Oak Abstract, LLC, Quaint Oak Insurance Agency, LLC, Quaint Oak Mortgage, LLC, and Oakmont Commercial, LLC, a specialty commercial real estate financing company. All companies are multi-state operations.

Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. Factors which could result in material variations include, but are not limited to, changes in interest rates which could affect net interest margins and net interest income, competitive factors which could affect net interest income and noninterest income, changes in demand for loans, deposits and other financial services in the Company’s market area; changes in asset quality, general economic conditions as well as other factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, competition, changes in the quality or composition of the Company‘s loan, investment and mortgage-backed securities portfolios; geographic concentration of the Company‘s business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company‘s financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company‘s operations, markets, products, services and fees.

QUAINT OAK BANCORP, INC.
Consolidated Statements of Income
(In Thousands, except share data)

(1)   Asset quality ratios are end of period ratios.
(2)   Total non-performing assets divided by tangible common equity plus the allowance for loan losses.
n/m – not meaningful

Quaint Oak Bancorp, Inc.
Robert T. Strong, President and Chief Executive Officer
(215) 364-4059

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