Annual report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: December 31, 2025 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 (I.R.S. Employer Incorporation or Organization) Identification Number) 501 Knowles Avenue, Southampton, Pennsylvania 18966 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (215) 364-4059 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value per share Title of Class Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ 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. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the e ff ectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of the Common Stock held by non-affiliates of the Registrant based on a closing price of $10.96 on June 30, 2025, the last day of the Registrant’s second quarter was $19.6 million (2,635,866 shares outstanding less 844,028 shares held by affiliates at $10.96 per share). Shares of Common Stock held by each executive officer and director and certain employee stock
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ownership plans have been excluded from the calculation since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. Number of shares of Common Stock outstanding as of March 23, 2026: 2,640,997 DOCUMENTS INCORPORATED BY REFERENCE Set forth below are the documents incorporated by reference and the part of the Form 10-K into which the document is incorporated: (1) Portions of the Annual Report to Shareholders for the year ended December 31, 2025 are incorporated by reference into Part II, Items 6-8 and Part IV, Item 15 of this Form 10-K. (2) Portions of the definitive Proxy Statement for the 2026 Annual Meeting of Shareholders are incorporated by reference into Part III, Items 10-14 of this Form 10-K.
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QUAINT OAK BANCORP, INC. 2025 ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 28 Item 1B. Unresolved Staff Comments 44 Item 1C. Cybersecurity 44 Item 2. Properties 46 Item 3. Legal Proceedings 46 Item 4. Mine Safety Disclosures 46 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 Item 6. [Reserved] 47 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47 Item 8. Financial Statements and Supplementary Data 47 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 47 Item 9A. Controls and Procedures 48 Item 9B. Other Information 48 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 48 PART III Item 10. Directors, Executive Officers and Corporate Governance 49 Item 11. Executive Compensation 49 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 49 Item 13. Certain Relationships and Related Transactions, and Director Independence 50 Item 14. Principal Accountant Fees and Services 50 PART IV Item 15. Exhibits and Financial Statement Schedules 50 Item 16. Form 10-K Summary 52 SIGNATURES 53 i
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Forward-Looking Statements This Annual Report contains certain forward-looking statements (as defined in the Securities Exchange Act of 1934 and the regulations thereunder). Forward-looking statements are not historical facts but instead represent only the beliefs, expectations or opinions of the Company and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, or words of similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly.” Forward-looking statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks, uncertainties and assumptions, many of which are difficult to predict and generally are beyond the control of and its management, that could cause actual results to differ materially from those expressed in, or implied or projected by, forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) economic and competitive conditions which could affect the volume of loan originations, deposit flows and real estate values; (2) the levels of non-interest income and expense and the amount of credit losses; (3) competitive pressure among depository institutions increasing significantly; (4) changes in the interest rate environment causing reduced interest margins; (5) general economic conditions, either nationally or in the markets in which the Company is or will be doing business, being less favorable than expected;(6) political and social unrest, including acts of war or terrorism; or (7) legislation or changes in regulatory requirements adversely affecting the business in which the Company is or will be engaged. 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. As used in this report the terms “we,” “us,” and “our” refer to Quaint Oak Bancorp, a Pennsylvania corporation, or Quaint Oak Bank, a Pennsylvania chartered savings bank and wholly owned subsidiary of Quaint Oak Bancorp, as the context requires. In addition, unless the context otherwise requires, references to the operations of Quaint Oak Bancorp include the operations of Quaint Oak Bank and its subsidiary companies. PART I Item 1. Business. General Quaint Oak Bancorp, Inc., a Pennsylvania corporation headquartered in Southampton, Pennsylvania, was organized in 2007 as the holding company for Quaint Oak Bank. Quaint Oak Bank, originally incorporated in 1926, converted from a Pennsylvania chartered building and loan association to a Pennsylvania chartered mutual savings bank named Quaint Oak Savings Bank in January 2000 and converted to a stock savings bank in July 2007. Following its mutual to stock conversion, Quaint Oak Bank shifted its focus to commercial and business customers. Quaint Oak Bank is headquartered in Southampton in Bucks County, Pennsylvania and operates through three banking locations: the main office location in Southampton, Pennsylvania and regional banking offices in Allentown, located in the Lehigh Valley area of Pennsylvania, and a Philadelphia, Pennsylvania location. The Bank also has a mortgage office in Philadelphia and an insurance agency in Southampton, Pennsylvania. Quaint Oak Bank, through its subsidiary companies, conducts mortgage banking, multi-state specialty commercial real estate financing, title abstract and insurance businesses. On March 29, 2024, Quaint Oak Bank sold its 51% interest in Oakmont Capital Holdings, LLC (“OCH”), a multi-state equipment finance company based in West Chester, Pennsylvania. The decision was based on a number of strategic priorities and other factors. As a result of this action, Quaint Oak Bancorp classified the operations of OCH as discontinued operations under ASC 205-20. Also on March 29, 2024, the Company discontinued the operations of Quaint Oak Real Estate, LLC, a 100% wholly owned subsidiary of the Bank. Quaint Oak Real Estate was engaged in the real estate brokerage business. All significant intercompany balances and transactions have been eliminated. 1
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As of December 31, 2025, Quaint Oak Bank’s primary market area includes Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania. As of December 31, 2025, Quaint Oak Bancorp had $675.9 million of total assets, $597.3 million of total deposits and $52.3 million of stockholders’ equity. Quaint Oak Bancorp’s stockholders’ equity constituted 7.7% of total assets as of December 31, 2025. Quaint Oak Bank’s primary business consists of attracting deposits from the general public through a variety of deposit programs and investing such deposits principally in commercial real estate loans, commercial business loans, one-to-four family residential owner occupied loans and multi-family residential loans. The market for our deposit customers is generated primarily through local market certificates of deposit and business checking and money market accounts. At December 31, 2025, approximately 42.0% of Quaint Oak Bank’s total deposits were held by customers outside the Commonwealth of Pennsylvania. Our branch offices are primarily cashless. Cash transactions at our branch offices are facilitated through a correspondent banking relationship with another Pennsylvania-based national commercial bank. Our real estate loans are primarily secured by properties in the mid-Atlantic region and are originated through Quaint Oak Mortgage and our subsidiary, Oakmont Commercial, although we have originated loans throughout the continental United States through other relationships we have with brokers. In addition, Quaint Oak Bank offers mortgage banking, multi-state specialty commercial real estate financing, title abstract and insurance services through its subsidiary companies. Quaint Oak Mortgage provides a variety of mortgage loans, including conventional, FHA, VA, and USDA loans almost all of which are underwritten to GSE-guidelines for sale in the secondary market. Oakmont Commercial specializes in providing loans for commercial real estate purchases, refinancing, and development projects to small businesses primarily on the East Coast and generally in the Mid- Atlantic and Southeast. Oakmont Commercial focuses on originations of low loan-to-value, high yield, primarily owner-occupied commercial real estate collateralized loans to be sold in the secondary market to institutional and bank buyers. Quaint Oak Insurance offers comprehensive coverage, including home, auto, life, and business insurance. Quaint Oak Abstract offers title insurance. Quaint Oak Mortgage cross-sells products from Quaint Oak Bank’s title and insurance businesses, Quaint Oak Abstract and Quaint Oak Insurance, to its mortgage customers. Quaint Oak Bank serves its customers through its offices as well as through correspondence, telephone and on-line banking. During the year ended December 31, 2025, the Company adopted ASU 2023-09, “Improvements to Income Tax Disclosure”, which expands the disclosure requirements for income taxes. The amendment in this update improves financial reporting by requiring disclosure of greater disaggregation of information in the income tax rate reconciliation. The amendment in this update also improves financial reporting by requiring disclosure of income taxes paid by jurisdiction to improve visibility of income taxes paid information. The adoption did not have a material impact on the Company’s consolidated financial statements. See Note 14 - Income Taxes in the notes to our financial statements included in Exhibit 13.0 hereto for more information. Quaint Oak Bank established international correspondent banking operations in March 2022 and maintains a partnership with one international banking entity that utilized Quaint Oak Bank to help facilitate U.S. dollar payments. As of December 31, 2025, the international correspondent banking division had $4.4 million of deposits with the Bank, amounting to 0.7%, of total deposits. 2
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Deposits with Quaint Oak Bank are insured to the maximum extent provided by law through the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”). Quaint Oak Bank is subject to examination and comprehensive regulation by the FDIC and the Pennsylvania Department of Banking and Securities. Quaint Oak Bancorp, which elected to be treated as a savings and loan holding company, is subject to examination and regulation by the Board of Governors of the Federal Reserve System (“Federal Reserve Board”). Quaint Oak Bank is also a member of the Federal Home Loan Bank of Pittsburgh (“FHLB of Pittsburgh” or “FHLB”), which is one of the 11 regional banks comprising the Federal Home Loan Bank System (“FHLB System”). Quaint Oak Bank is also subject to regulations of the Federal Reserve Board governing reserves required to be maintained against deposits and certain other matters. Quaint Oak Bancorp’s principal executive offices are located at 501 Knowles Avenue, Southampton, Pennsylvania 18966, its telephone number is (215) 364-4059 and Internet address is www.quaintoak.com. Quaint Oak Bank’s Lending Activities General. At December 31, 2025, the net loan portfolio of Quaint Oak Bank amounted to $540.7 million, representing approximately 80.0% of its total assets at that date. The principal lending activity of Quaint Oak Bank is the origination of commercial real estate loans, commercial business loans, and one-to-four family residential non-owner occupied loans, multi-family residential loans, construction loans, one-to-four family residential owner occupied loans, and home equity loans. At December 31, 2025, commercial real estate loans amounted to $309.7 million, or 56.7% of its total loan portfolio. Commercial business loans totaled $96.3 million, or 17.6%, of the total loan portfolio at December 31, 2025. At December 31, 2025, total one-to-four family residential loans amounted to $70.5 million or 12.9% of its total loan portfolio of which $41.6 million, or 7.6%, of the total loan portfolio consisted of owner occupied properties, and $28.9 million, or 5.3%, of the total loan portfolio consisted of non-owner occupied properties. Multi- family residential loans totaled $40.8 million, or 7.5%, of the total loan portfolio at December 31, 2025. Construction loans totaled $23.5 million, or 4.3%, of the total loan portfolio at December 31, 2025. Home equity loans totaled $5.4 million, or 1.0%, of the total loan portfolio at December 31, 2025. Included in commercial real estate loans are SBA loans which totaled $17.2 million at December 31, 2025. At December 31, 2025, the loans held for sale of Quaint Oak Bank amounted to $61.0 million, representing approximately 9.0% of its total assets at that date. At December 31, 2025, loans held for sale was comprised of $50.3 million, or 82.6%, of commercial real estate loans, $6.1 million, or 9.9%, of SBA loans, and $4.6 million, or 7.5%, of one-to-four family residential loans. The types of loans that Quaint Oak Bank may originate are subject to federal and state laws and regulations. Interest rates charged on loans are affected principally by the demand for such loans, the supply of money available for lending purposes and the rates offered by our competitors. These factors are, in turn, affected by general and economic conditions, the monetary policy of the federal government, including the Federal Reserve Board, legislative and tax policies, and governmental budgetary matters. Quaint Oak Bank is subject to a regulatory loans to one borrower limit of 15% of the Bank’s Tier 1 capital which amounts to $10.1 million at December 31, 2025. At December 31, 2025, Quaint Oak Bank’s five largest loans or groups of loans-to-one borrower, including related entities, were $10.1 million, $10.0 million, $9.9 million, $8.3 million, and $8.1 million. The loans consisted of three commercial real estate loans, one commercial business loan, and one multi-family residential loan. Each of Quaint Oak Bank’s five largest loans or groups of loans was performing in accordance with its terms at December 31, 2025. 3
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Loan Portfolio Composition. The following table shows the composition of our loan portfolio by type of loan at the dates indicated. December 31, 2025 2024 Amount % Amount % (Dollars in Thousands) Real estate loans: One-to-four family residential (1): Owner occupied $ 41,627 7.6% $ 25,927 4.8% Non-owner occupied 28,870 5.3 33,573 6.2 Total one-to-four family residential loans 70,497 12.9 59,500 11.0 Multi-family (five or more) residential (2) 40,772 7.5 45,412 8.4 Commercial real estate (3) 309,745 56.7 297,627 55.0 Construction 23,461 4.3 18,320 3.4 Home equity loans (4) 5,374 1.0 5,739 1.1 Total real estate loans 449,849 82.4 426,598 78.9 Commercial business 96,318 17.6 114,921 21.1 Other consumer 33 - 46 - Total loans 546,200 100.0% 541,565 100.0% Less: Deferred loan fees and costs 664 (396) Allowance for credit losses (6,166) (6,476) Net loans $ 540,698 $ 534,693 __________________________ (1) Does not include mortgage loans held for sale of $4.6 million and $6.1 million at December 31, 2025 and 2024, respectively. (2) Does not include multi-family residential loans held for sale of $693,000 at December 31, 2024. (3) Does not include commercial real estate loans held for sale of $50.3 million and $56.9 million at December 31, 2025 and 2024, respectively. Does not include SBA loans held for sale of $6.1 million and $10.3 million at December 31, 2025 and 2024, respectively. (4) Does not include home equity loans held for sale of $496,000 at December 31, 2024. Origination of Loans. The lending activities of Quaint Oak Bank are subject to the written underwriting standards and loan origination procedures established by the board of directors and management. New loans are generated primarily through the efforts of Quaint Oak Bank’s loan officers, referrals from brokers and existing customers. Loan applications are underwritten and processed by Quaint Oak Bank’s credit administration department. All loans are presented to the loan committee for review. Quaint Oak Bank’s loan approval process is intended to evaluate the borrower’s ability to repay the loan, the overall viability of the credit, and the value of the collateral that will secure the loan. Loan approvals are granted in accordance with the Bank’s lending authority policy, which establishes approval authority based on individual loan size and total relationship exposure. The loan committee provides its recommendation for each credit request; however, final approval authority resides with designated officers in accordance with the applicable lending authority limits. Any loan request or increase in relationship exposure that exceeds an individual officer’s delegated lending authority must receive approval at the appropriate higher level, up to and including joint approval by the Chief Executive Officer and the President/Chief Operating Officer, as required under the lending authority policy. 4
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The following table shows our total portfolio loans and loans held for sale originated and repaid during the periods indicated. Year Ended December 31, 2025 2024 (In Thousands) Loan balance, beginning of period: $ 598,274 $ 654,149 Loan originations: One-to-four family residential owner occupied (1) 132,092 141,675 One-to-four family residential non-owner occupied 890 1,457 Multi-family residential 3,340 5,657 Commercial real estate (2) 110,254 83,929 Construction 19,691 11,409 Home equity 951 972 Commercial business (3) 91,805 77,812 Other consumer - - Total loan originations 359,023 322,911 Loans sold (187,192) (203,088) Loan principal repayments (162,949) (168,126) Total loans sold and principal repayments (350,141) (371,214) Decreases due to other items, net (4) (5,502) (6,872) Net increase (decrease) in loan portfolio $ 3,380 $ (55,175) Loan balance, end of period: $ 601,654 $ 598,974 ____________________ (1) Includes $112.3 million and $134.3 million of loans originated for sale in 2025 and 2024, respectively. (2) Includes $52.0 million of commercial real estate loans and $51.6 million of equipment loans originated for sale in 2025 and 2024, respectively. (3) Includes $14.7 million and $13.9 million of SBA loans originated for sale in 2025 and 2024 respectively. (4) Other items consist of deferred fees and the allowance for credit losses. Although Pennsylvania laws and regulations permit savings banks to originate loans secured by real estate located throughout the United States, Quaint Oak Bank concentrates its lending activity in its primary market area in Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania. Contractual Terms to Final Maturities. The following table shows the scheduled contractual maturities of our loans as of December 31, 2025, before giving effect to net items, and excluding loans held for sale. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below do not take into account loan prepayments. 1-4 Family Residential Owner Occupied 1-4 Family Residential Non- Owner Occupied Multi- Family Residential Commercial Real Estate Construction Home Equity Commercial Business and Other Consumer Total (In Thousands) Amounts due in: One year or less $ - $ 5,452 $ 4,144 $ 56,767 $ 2,300 $ - $ 15,601 $ 84,264 After one year through three years - 10,313 8,432 89,463 5,832 107 42,990 157,137 After three years through five years - 4,816 9,655 90,100 3,351 772 26,968 135,662 After five years through 15 years 808 7,884 17,255 65,787 10,729 4,001 10,792 117,256 After 15 years 40,819 405 1,286 7,628 1,249 494 - 51,881 Total $ 41,627 $ 28,870 $ 40,772 $ 309,745 $ 23,461 $ 5,374 $ 96,351 $546,200 5
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The following table shows the dollar amount of our loans at December 31, 2025 due after December 31, 2026 as shown in the preceding table, which have fixed interest rates, or which have floating or adjustable interest rates. Fixed-Rate Floating or Adjustable-Rate Total (In Thousands) One-to-four family residential owner occupied $ 2,310 $ 39,317 $ 41,627 One-to-four family residential non-owner occupied 14,455 8,963 23,418 Multi-family residential 19,011 17,617 36,628 Commercial real estate 149,102 103,876 252,978 Construction - 21,161 21,161 Home equity 1,151 4,223 5,374 Commercial business and other consumer 60,804 19,946 80,750 Total $ 246,833 $ 215,103 $ 461,936 Scheduled contractual maturities of loans do not necessarily reflect the actual expected term of the loan portfolio. The average life of mortgage loans is substantially less than their average contractual terms because of prepayments. The average life of mortgage loans tends to increase when current mortgage loan rates are higher than rates on existing mortgage loans and, conversely, decrease when rates on current mortgage loans are lower than existing mortgage loan rates (due to refinancing of adjustable-rate and fixed-rate loans at lower rates). Under the latter circumstance, the weighted average yield on loans decreases as higher yielding loans are repaid or refinanced at lower rates. One-to-Four Family Residential Owner Occupied Real Estate Loans. As part of our strategy of diversifying our loan portfolio with higher yielding and shorter-term loan products, Quaint Oak Bank does not actively market the origination of one-to-four family owner occupied residential loans to be held in our loan portfolio. However, the Bank did originate $20.5 million of adjustable rate mortgages in 2025 which are held in the loan portfolio. At December 31, 2025, $41.6 million, or 7.6%, of our total loan portfolio, before net items, consisted of one-to-four family owner occupied residential loans. One-to-Four Family Residential Non-Owner Occupied Real Estate Loans. As part of our strategy of diversifying our loan portfolio with higher yielding and shorter-term loan products, Quaint Oak Bank does not actively market the origination of one-to-four family residential non-owner occupied real estate loans to be held in our loan portfolio. At December 31, 2025, $28.9 million, or 5.3%, of our total loan portfolio, before net items, consisted of one-to-four family residential non-owner occupied loans. It is our policy to lend in a first lien position on non-owner occupied residential property with fixed and variable rates and terms generally up to 15 years or longer amortizations. Generally, such loans are originated with a three-year or five-year maturity. Such loans are generally limited to 75%, or less, of the appraised value, or sales price plus improvement costs of the secured real estate property. One-to-Four Family Residential Loans Originated for Sale. Quaint Oak Bank through its subsidiary, Quaint Oak Mortgage LLC, originates one-to-four family residential fixed and variable rate first mortgages with amortizing terms less than or equal to 30 years in accordance with secondary market standards. Loans originated by Quaint Oak Mortgage LLC are sold into the secondary market along with the loans’ servicing rights. For the year ended December 31, 2025, Quaint Oak Mortgage LLC originated $112.3 million of owner and non-owner occupied residential loans for sale and sold $113.8 million of these loans in the secondary market, realizing gains of $2.0 million. For the year ended December 31, 2024, Quaint Oak Mortgage LLC originated $134.3 million of owner and non-owner occupied residential loans for sale and sold $131.4 million of these loans in the secondary market, realizing gains of $1.9 million. 6
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Multi-Family Residential Loans. Quaint Oak Bank originates loans for multi-unit (five or more) residential properties. These loans are offered with fixed and adjustable interest rates and amortizations not to exceed 25 years. Generally, the loan-to-value ratio does not exceed 75%. These loans are underwritten with the same criteria and procedures as commercial real estate loans. At December 31, 2025, $40.8 million, or 7.5%, of our total loan portfolio, before net items, consisted of multi-family residential loans. Commercial Real Estate Loans. A significant part of Quaint Oak Bank’s lending activity is the origination of loans secured by commercial real estate. Commercial real estate loans are originated by Quaint Oak Bank and its subsidiary, Oakmont Commercial. At December 31, 2025, $309.7 million, or 56.7% of our total loan portfolio, before net items, consisted of commercial real estate loans. Although commercial real estate loans are generally considered to have greater credit risk than other certain types of loans, we intend to continue to originate such loans in our market area. At December 31, 2025, approximately 62.0% of total commercial real estate loans were owner occupied. At December 31, 2025, management identified $50.3 million of commercial real estate loans and $6.1 million of SBA loans within the loan portfolio and transferred these loans to loans held for sale at amortized cost which was less than fair value. It is generally our policy to lend in a first lien position on real property occupied as a commercial business property or mixed- use properties. However, in rare instances, we may take a second lien position if approved by the loan committee. Quaint Oak Bank offers fixed and variable rate mortgage loans with amortization not to exceed 25 years. Commercial real estate loans are limited to 75%, or less, of non-owner occupied residential loans, and 80%, or less, of owner occupied residential loans, of the appraised value, or sales price plus improvement costs of the secured real estate property, whichever is less. Commercial real estate loans are presented to the loan committee for review and approval, including analysis of the creditworthiness of the borrower. The loan committee reviews the cash flows from the property to determine if the proceeds will adequately cover debt service. Quaint Oak Bank uses a Debt Service Coverage Ratio (DSCR) of 1.20. We require the collection of various documents to verify income, including personal tax returns, business tax returns, and copies of current leases. Assignments of rents and leases as well as the requirement to provide annual updates of financial information and rent rolls are included in the loan documentation. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or the overall economy and accordingly, conservative loan to value ratios are required at origination. Construction Loans. Our construction loans are generally originated for the purpose of building or providing funds for leasehold improvements to a business’s primary place of operation. On occasion the Bank may provide funds for building or renovating a single-family residential home. Generally, we do not make construction loans for speculative development. Funds are advanced incrementally as work is completed. The borrower is required to make monthly interest payments. When the construction is finished, the amount of the outstanding loan is generally less than 70% of the completed value of the property. Quaint Oak Bank is paid in full when the borrower seeks permanent financing or the property is sold. At December 31, 2025, $23.5 million, or 4.3% of Quaint Oak Bank’s total loan portfolio, before net items, consisted of construction loans. Home Equity Loans. Quaint Oak Bank is authorized to originate loans for a wide variety of personal or consumer purposes, however, the Bank made a business decision to sunset the product offering on September 30, 2024, due to low loan volume. Historically, Quaint Oak Bank originated home equity lines of credit in order to accommodate its customers and due to the short-term nature of the loan product when compared to residential mortgage loans. At December 31, 2025, $5.4 million, or 1.0% of Quaint Oak Bank’s total loan portfolio, before net items, consisted of home equity loans. 7
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Commercial Business Loans. Quaint Oak Bank originates loans to businesses for working capital, purchase of a business, tenant improvements, receivables, purchase of inventory, and for the 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. At December 31, 2025, $96.3 million, or 17.6% of Quaint Oak Bank’s total loan portfolio, before net items, consisted of commercial business loans. Other Consumer Loans. Quaint Oak Bank originates loans secured by savings accounts in order to accommodate its existing customers. At December 31, 2025, $33,000 of Quaint Oak Bank’s total loan portfolio, before net items, consisted of other consumer loans. Loan Origination and Other Fees. In addition to interest earned on loans, Quaint Oak Bank generally receives loan origination fees or “points” for originating loans. Loan points are a percentage of the principal amount of the mortgage loan and are charged to the borrower in connection with the origination of the loan. Such origination fees, net of certain direct loan origination costs, are deferred and recognized as an adjustment to the yield (interest income) of the related loans over the contractual life of the loans. Asset Quality General. Quaint Oak Bank’s collection procedures provide that when a loan is 17 days past due, the Bank’s collection specialist contacts the borrower to determine the reason for the delinquency and to work out a possible solution. Late charges will be assessed based on the number of days specified in the note beyond the due date. The Board of Directors is notified of all delinquencies 30 days past due. In most cases, deficiencies are cured promptly. While we generally prefer to work with borrowers to resolve such problems, we will institute foreclosure or other collection proceedings when necessary to minimize any potential loss. Loans are placed on non-accrual status when management believes the probability of collection of interest is doubtful. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. Quaint Oak Bank discontinues the accrual of interest income when the loan becomes 90 days past due as to principal or interest unless the credit is well secured and we believe we will fully collect. There were $5.8 million and $5.6 million of non-accrual loans at December 31, 2025 and 2024, respectively. Real estate and other assets acquired by Quaint Oak Bank as a result of foreclosure or by deed-in-lieu of foreclosure are classified as real estate owned until sold. The Company had one property in OREO with a fair value of $360,000 at December 31, 2025. The Company had no OREO at December 31, 2024. 8
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Delinquent Loans. The following table shows the delinquencies in our loan portfolio as of December 31, 2025. December 31, 2025 30-89 Days Overdue 90 or More Days Overdue Number of Loans Principal Balance Number of Loans Principal Balance (Dollars in Thousands) One-to-four family residential-owner occupied - $ - 2 $ 954 One-to-four family residential-non-owner occupied 3 189 - - Multi-family residential 1 1,660 - - Commercial real estate 10 8,653 14 3,570 Construction 1 97 - - Home equity 1 25 - - Commercial business 26 1,705 15 2,816 Total delinquent loans 42 $ 12,329 31 $ 7,340 Delinquent loans to total net loans 2.28% 1.36% Delinquent loans to total loans 2.25% 1.34% The following table shows the delinquencies in our loan portfolio as of December 31, 2024. December 31, 2024 30-89 Days Overdue 90 or More Days Overdue Number of Loans Principal Balance Number of Loans Principal Balance (Dollars in Thousands) One-to-four family residential-owner occupied 2 $ 209 2 $ 694 One-to-four family residential-non-owner occupied 7 569 - - Multi-family residential 1 85 - - Commercial real estate 18 10,063 6 1,686 Construction 2 4,528 - - Home equity 1 35 - - Commercial business 5 873 14 3,941 Total delinquent loans 36 $ 16,362 22 $ 6,321 Delinquent loans to total net loans 3.06% 1.18% Delinquent loans to total loans 3.02% 1.17% Non-Performing Assets. The following table shows the amounts of our non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due and other real estate owned) at the dates indicated. December 31, 2025 2024 (Dollars in Thousands) Total non-accruing loans $ 5,834 $ 5,595 Total accruing loans 90 days or more past due 1,506 726 Total non-performing loans (1) 7,340 6,321 Other real estate owned, net 360 - Total non-performing assets 7,700 6,321 Total non-performing assets as a percentage of loans, net 1.42% 1.18% Total non-performing assets as a percentage of total assets 1.14% 0.92% __________________ (1) Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due. 9
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Classified Assets. Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful” and “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a higher possibility of loss. An asset classified loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “special mention” also must be established and maintained for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for credit losses. If an asset or portion thereof is classified as a loss, the insured institution must either establish specific allowances for credit losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for credit losses do not qualify as regulatory capital. Federal examiners may disagree with an insured institution’s classifications and amounts reserved. Allowance for Credit Losses. At December 31, 2025, Quaint Oak Bank’s allowance for credit losses amounted to $6.2 million. The Company adopted uses the weighted average maturity method (WARM) for all financial assets measured at amortized cost, net of investments in leases and off balance sheet credit exposures. 10
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The following table shows changes in our allowance for credit losses during the periods presented. December 31, 2025 2024 (Dollars in Thousands) Total loans outstanding at end of period, net $ 540,698 $ 534,693 Average loans outstanding (1) $ 597,184 $ 621,015 Allowance for credit losses, beginning of period $ 6,476 $ 6,758 Provision for credit losses 1,196 1,506 Net charge-offs: Construction - (187) Commercial real estate (41) - Commercial business (1,566) (1,611) Total charge-offs (1,607) (1,798) Recoveries on loans previously charged-off 101 10 Allowance for credit losses, end of period $ 6,166 $ 6,476 Non-accrual loans $ 5,834 $ 5,595 Allowance for credit losses as a percent of non-performing loans 84.01% 102.45% Allowance for credit losses as a percent of total loans receivable 1.13% 1.20% Non-performing loans as a percent of total loans receivable, net 1.36% 1.18% Ratio of net charge-offs during the period to average loans outstanding during the period: Construction 0.01% 0.03% Commercial business 0.26% 0.26% Total charge-offs 0.27% 0.29% Non-accrual loans to total loans outstanding, net 1.08% 1.05% Allowance for credit losses to non-accrual loans 105.7% 115.7% ____________________ (1) Excludes loans held for sale. 11
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The following table shows how our allowance for credit losses is allocated by loan class at each of the dates indicated. December 31, 2025 2024 Amount of Allowance Loan Category as a % of Total Loans Amount of Allowance Loan Category as a % of Total Loans (Dollars in Thousands) One-to-four family residential owner occupied $ 299 4.8% $ 177 2.7% One-to-four family residential non-owner occupied 149 2.4 178 2.7 Multi-family residential 298 4.8 442 6.8 Commercial real estate 2,422 39.3 2,337 36.1 Construction 540 8.8 156 2.4 Home equity 48 0.8 56 0.9 Commercial business and other consumer 2,410 39.1 3,130 48.4 Total $ 6,166 100.0% $ 6,476 100.0% Investment Activities General. We invest in securities pursuant to our investment policy, which has been approved by our Board of Directors. Our investment policy is reviewed annually by our Asset-Liability Committee (ALCO). All policy changes recommended by ALCO must be approved by the Board of Directors. ALCO is authorized by the Board to make investments consistent with the investment policy. While general investment strategies are developed and authorized by ALCO, the execution of specific actions rests with the Chief Financial Officer and the Chief Executive Officer. Our investment policy is designed primarily to manage the interest rate sensitivity of our assets and liabilities, to generate a favorable return without incurring undue interest rate and credit risk, to complement our lending activities and to provide and maintain liquidity. Our securities are classified as available for sale, held to maturity, or trading, at the time of acquisition. Securities classified as held to maturity must be purchased with the intent and ability to hold that security until its final maturity and can be sold prior to maturity only under rare circumstances. Held to maturity securities are accounted for based upon the amortized cost of the security. Available for sale securities can be sold at any time based upon our needs or market conditions. Available for sale securities are accounted for at fair value, with unrealized gains and losses on these securities, net of income tax provisions, reflected in stockholders’ equity as accumulated other comprehensive income. At December 31, 2025, we had $882,000 of securities classified as available for sale and no securities classified as held to maturity or trading. The Company also invests excess liquidity in interest-earning time deposits with other banks, laddering the maturities. As of December 31, 2025, the Company held $912,000 in interest-earning time deposits. Federal Home Loan Bank (FHLB) stock is a restricted investment security, carried at cost. The purchase of FHLB stock provides banks with the right to be a member of the FHLB and to receive the products and services that the FHLB provides to member banking institutions. Unlike other types of stock, FHLB stock is acquired primarily for the right to receive advances from the FHLB, rather than for the purpose of maximizing dividends or stock growth. FHLB stock is an activity-based stock that is directly proportional to the volume of advances taken by a member institution. The FHLB will repurchase capital stock at $1.00 per share from Quaint Oak Bank. The FHLB has paid dividends on the capital stock in each quarter of 2025 and 2024. 12
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The following table sets forth our investment portfolio at carrying value as of the dates indicated. December 31, 2025 2024 (In Thousands) Interest-earning time deposits with other financial institutions $ 912 $ 912 Mortgage-backed securities: Government National Mortgage Association 848 1,630 Federal National Mortgage Association 34 36 Investment in FHLB stock 291 2,214 Total $ 2,085 $ 4,792 The following table sets forth the amount of investment securities which mature during each of the periods indicated and the weighted average yields for each range of maturities at December 31, 2025. The weighted average yield is calculated by dividing income within each contractual maturity range by the outstanding amount of the related investment. Amounts at December 31, 2025 Which Mature In One Year or Less Weighted Average Yield Over One Year Through Five Years Weighted Average Yield Over Five Years Through Ten Years Weighted Average Yield Over Ten Years Weighted Average Yield (Dollars in Thousands) Interest-earning time deposits with other financial institutions $ - -% $ 912 5.70% $ - -% $ - -% Mortgage-backed securities: Government National Mortgage Association - - - - - - 848 4.72 Federal National Mortgage Association - - - - - -% 34 6.05 Total $ - -% $ 912 5.70% $ - -% $ 882 4.77% Sources of Funds General. The Company’s primary sources of funds are deposits, amortization and prepayment of loans, loan sales and other funds provided from operations. While scheduled principal and interest payments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company sets the interest rates on its deposits to maintain a desired level of total deposits. Borrowings may also be used on a short- term basis to compensate for reductions in the availability of funds from other sources and on a longer-term basis for general business purposes. Deposits. Deposits are attracted by Quaint Oak Bank principally from Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania, although we also attract deposits from outside our market area and the Commonwealth of Pennsylvania. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit, and the interest rate. Quaint Oak Bank offers a variety of deposit accounts with a range of rates and terms. Our deposit accounts consist of certificates of deposit, money market and other savings products, including interest- bearing business checking accounts, and non-interest bearing business and consumer checking accounts. Quaint Oak Bank generally does not actively solicit deposits from outside the Commonwealth of Pennsylvania or pay fees to brokers to solicit deposits; however, the Bank utilizes wholesale deposits obtained through third ‑ party listing and certificate of deposit placement services and other third ‑ party relationships and has correspondent banking relationships with three international banking entities chartered in Puerto Rico for non-interest and interest bearing checking accounts. At December 31, 2025, Quaint Oak Bank managed an aggregate of $4.4 million of deposits for the international banking entities. At December 31, 2025, approximately 42.0% of Quaint Oak Bank’s total deposits were held by customers outside the Commonwealth of Pennsylvania. 13
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Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Management determines the rates and terms based on rates paid by competitors, the need for funds or liquidity, growth goals and federal regulations. Management attempts to control the flow of deposits by pricing the accounts to remain generally competitive with other financial institutions in our market area. The following table shows the distribution of, and certain other information relating to, our deposits by type of deposit, as of the dates indicated. December 31, 2025 2024 Amount % Amount % (Dollars in Thousands) Certificate accounts: 0.00% - 0.99% $ 3,002 0.5% $ 6,936 1.3% 1.00% - 1.99% 1,082 0.2 6,262 1.1 2.00% - 2.99% 1,938 0.3 5,559 1.0 3.00% - 3.99% 115,366 19.3 34,878 6.3 4.00% - 4.99% 233,330 39.1 218,101 39.4 5.00% - 5.99% - - 11,154 2.0 Total certificate accounts 354,718 59.4 282,890 51.1 Transaction accounts: Interest bearing checking accounts (1) 105,713 17.7 47,802 8.6 Non-interest bearing checking accounts 65,665 11.0 59,783 10.9 Savings accounts 699 0.1 492 0.0 Money market accounts 70,483 11.8 162,285(2) 29.4 Total transaction accounts 242,560 40.6 270,362 48.9 Total deposits $ 597,278 100.0% $ 553,252 100.0% (1) The Company has identified one major interest bearing checking account deposit customer that accounted for approximately $35.0 million, or 5.9% of total deposits at December 31, 2025, and had a separate major interest bearing checking account deposit customer that accounted for approximately $47.8 million, or 8.6% of total deposits at December 31, 2024. (2) The Company has identified one major money market deposit customer, a separate customer than the interest bearing checking account deposit customer referred to above in footnote (1), that accounted for approximately 18.1% of total deposits at December 31, 2024. At December 31, 2024, the combined outstanding balances of the major deposit customer’s money market accounts totaled approximately $100.0 million. Uninsured deposits as of December 31, 2025 and 2024 are estimated based on regulatory reporting requirements to be $244.3 million and $156.3 million, respectively. The following table shows the average balance of each type of deposit and the average rate paid on each type of deposit for the periods indicated. 2025 2024 Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid (Dollars in Thousands) Savings accounts $ 632 $ 1 0.16% $ 730 $ 1 0.20% Money market accounts 128,977 4,330 3.36 210,977 9,372 4.44 Business checking accounts 54,280 1,271 2.34 93,328 4,200 4.50 Certificates of deposit 316,026 13,364 4.23 230,499 9,568 4.15 Total interest-bearing deposits $ 499,915 $ 18,966 3.79% $ 535,534 $ 23,141 4.32% Non-interest bearing deposits $ 40,795 $ - -% $ 81,436 $ - -% Total deposits $ 540,710 $ 18,966 3.79% $ 616,970 $ 23,141 4.32% 14
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The following table presents, by various interest rate categories and maturities, the amount of certificates of deposit at December 31, 2025. Balance at December 31, 2025 Maturing in the Twelve Months Ending December 31, Certificates of Deposit 2026 2027 2028 Thereafter Total (In Thousands) 0.00% - 0.99% $ 2,773 $ 229 $ - $ - $ 3,002 1.00% - 1.99% 273 809 - - 1,082 2.00% - 2.99% 1,196 742 - - 1,938 3.00% - 3.99% 71,186 28,975 5,197 10,008 115,366 4.00% - 4.99% 169,949 20,201 34,349 8,831 233,330 Total certificate accounts $ 245,377 $ 50,956 $ 39,546 $ 18,839 $ 354,718 The following table shows the maturities of our certificates of deposit of more than $250,000 at December 31, 2025 by time remaining to maturity. Quarter Ending: Amount Weighted Average Rate (Dollars in Thousands) 3 months or less $ 14,759 4.10% 3 to 6 months 11,860 4.12 6 to 12 months 33,344 3.92 After 12 months 15,080 3.99 Total certificates of deposit with balances of more than $250,000 $ 75,043 4.00% Borrowings. Quaint Oak Bank may obtain advances from the Federal Home Loan Bank of Pittsburgh upon the security of the common stock it owns in that bank and certain of its residential mortgage loans and mortgage-backed and other investment securities, provided certain standards related to creditworthiness have been met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. Federal Home Loan Bank advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending. As of December 31, 2025, Quaint Oak Bank has a maximum borrowing capacity with the Federal Home Loan Bank of approximately $269.3 million. Quaint Oak Bank’s Federal Home Loan Bank advances outstanding were none and $47.9 million at December 31, 2025 and 2024, respectively. As of December 31, 2025, Quaint Oak Bank has $24.2 million in borrowing capacity with the Federal Reserve Bank (FRB) of Philadelphia under the discount window program. There were no borrowings with the FRB as of December 31, 2025 or 2024. Federal Home Loan Bank borrowings and the weighted interest rate consist of the following at December 31, 2025 and 2024 (in thousands): December 31, 2025 December 31, 2024 Fixed rate borrowings maturing: Amount Weighted Interest Rate Amount Weighted Interest Rate 2025 $ - -% $ 47,855 4.50% Total Employees There were 134 full-time employees at Quaint Oak Bancorp and its subsidiary companies at December 31, 2025. None of these employees are represented by a collective bargaining agreement, and we believe that we enjoy good relations with our personnel. 15
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Market Area As of December 31, 2025, our primary market area for loans and deposits is in Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania, although we also attract loans and deposits from outside our market area and the Commonwealth of Pennsylvania. Our operating strategy is based on strong personal service and operating efficiency. Quaint Oak Bank is headquartered in Southampton in Bucks County, Pennsylvania and operates through its main office and two regional offices located in the Lehigh Valley and Philadelphia markets. Bucks County lies north of Philadelphia, bordering Montgomery County on the west and New Jersey to the east. In recent years, population growth has been above Pennsylvania averages in both Bucks and Montgomery Counties. We expect population growth and new housing growth will likely remain above the state average in the near term. Income and wealth demographics are also above both national and Pennsylvania averages. The Lehigh Valley area is one of the fastest growing regions in Pennsylvania due in part to its reasonable business climate and lower cost of living in comparison to its surrounding areas and states. The Lehigh Valley is particularly noteworthy for its unusually balanced and multi- faceted economy. Far from depending on a single industry, the top four sub-sectors of the regional GDP are all extremely close to one another, which ultimately means a healthier and more vibrant regional economy. Philadelphia is the largest city in the Commonwealth of Pennsylvania and the sixth most populous city in the United States. Philadelphia's diverse economic sectors include higher education, manufacturing, oil refining, food processing, health care and biotechnology, telecommunications, tourism and financial services. Competition Quaint Oak Bank faces significant competition both in attracting deposits and in making loans. Its most direct competition for deposits has come historically from commercial banks, credit unions and other savings institutions located in its primary market area, including many large financial institutions which have greater financial and marketing resources available to them. In addition, Quaint Oak Bank faces significant competition for investors’ funds from short-term money market securities, mutual funds and other corporate and government securities. Also, given Quaint Oak Bank’s operating strategies and reliance on savings accounts and certificates of deposit, Quaint Oak Bank also faces intense competition from money market mutual funds and national savings products. Quaint Oak Bank does not rely upon any individual group or entity for a material portion of its deposits, with the exception of deposits obtained through third-party listing and certificate of deposit placement services and other third-party relationships. The ability of Quaint Oak Bank to attract and retain deposits depends on its ability to generally provide a rate of return, liquidity and risk comparable to that offered by competing investment opportunities. Quaint Oak Bank’s competition for loans comes principally from commercial banks, mortgage banking companies, other savings institutions and credit unions. Quaint Oak Bank competes for loan originations primarily through the interest rates and loan fees it charges, and the efficiency and quality of services it provides borrowers. Factors that affect competition include general and local economic conditions, current interest rate levels and volatility in the mortgage markets. REGULATION Regulation of Quaint Oak Bancorp General. Quaint Oak Bancorp is subject to regulation as a savings and loan holding company under the Home Owners’ Loan Act, as amended, because we made an election under Section 10(l) of the Home Owners’ Loan Act to be treated as a “savings association” for purposes of Section 10 of the Home Owners’ Loan Act. Quaint Oak Bancorp is regulated by the Federal Reserve Board and is subject to the regulations, examinations, supervision and reporting requirements relating to savings and loan holding companies. Quaint Oak Bancorp is also required to file certain reports with, and otherwise comply with the rules and regulations of, the Pennsylvania Department of Banking and Securities and the Securities and Exchange Commission. As a subsidiary of a savings and loan holding company, Quaint Oak Bank is subject to certain restrictions in its dealings with Quaint Oak Bancorp and affiliates thereof, including the Federal Reserve Board’s Qualified Thrift Lender test, dividend restrictions and transactions with affiliates regulations. 16
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In the last several years, Quaint Oak Bancorp has experienced heightened regulatory requirements and scrutiny following the global financial crisis and as a result of the enactment in 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Resulting reforms have caused Quaint Oak Bancorp’s compliance and risk management processes, and the costs thereof, to increase. Permissible Activities of Quaint Oak Bancorp. As a non-grandfathered savings and loan holding company, Quaint Oak Bancorp is permitted to engage only in the following activities: ● furnishing or performing management services for a subsidiary savings institution; ● conducting an insurance agency or escrow business; ● holding, managing, or liquidating assets owned or acquired from a subsidiary savings institution; ● holding or managing properties used or occupied by a subsidiary savings institution; ● acting as trustee under a deed of trust; ● any other activity (i) that the Federal Reserve Board, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the Federal Reserve Board, by regulation, prohibits or limits any such activity for savings and loan holding companies, or (ii) in which multiple savings and loan holding companies were authorized by regulation to directly engage in on March 5, 1987; ● purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such holding company is approved by the Federal Reserve Board; and ● any activity permissible for financial holding companies under section 4(k) of the Bank Holding Company Act. Permissible activities which are deemed to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act include: ● lending, exchanging, transferring, investing for others, or safeguarding money or securities; ● insurance activities or providing and issuing annuities, and acting as principal, agent, or broker; ● financial, investment, or economic advisory services; ● issuing or selling instruments representing interests in pools of assets that a bank is permitted to hold directly; ● underwriting, dealing in, or making a market in securities; ● activities previously determined by the Federal Reserve Board to be closely related to banking; ● activities that bank holding companies are permitted to engage in outside of the U.S.; and ● portfolio investments made by an insurance company. 17
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In addition, Quaint Oak Bancorp cannot be acquired unless the acquirer is engaged solely in financial activities or acquire a company unless the company is engaged solely in financial activities. If a savings and loan holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in the activities listed above, and it has a period of two years to cease any non-conforming activities and divest any non-conforming investments. As of December 31, 2025 Quaint Oak Bancorp was not engaged in any non-conforming activities and it did not have any non-conforming investments. Qualified Thrift Lender Test. For Quaint Oak Bancorp to be regulated by the Federal Reserve Board as a savings and loan holding company rather than as a bank holding company, Quaint Oak Bank must qualify as a “qualified thrift lender” under federal regulations or satisfy the “domestic building and loan association” test under the Internal Revenue Code. Under the qualified thrift lender test, a savings institution is required to maintain at least 65% of its “portfolio assets” (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangible assets, including goodwill; and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine out of each 12 month period. At December 31, 2025, Quaint Oak Bank maintained approximately 84.3% of its portfolio assets in qualified thrift investments and was in compliance with the qualified thrift lender requirement. Regulatory Capital Requirements. Savings and loan holding companies historically have not been subject to consolidated regulatory capital requirements. The Dodd-Frank Act requires the Federal Reserve Board to establish minimum consolidated capital requirements for all depository institution holding companies that are as stringent as those required for the insured depository subsidiaries. However, legislation was enacted in May 2018 that required the Federal Reserve Board to amend its “Small Bank Holding Company” exemption from consolidated holding company capital requirements to generally extend its applicability to bank and savings and loan holding companies of up to $3.0 billion in assets. Regulations implementing this amendment were effective in August 2018. Consequently, savings and loan holding companies of under $3.0 billion in consolidated assets remain exempt from consolidated regulatory capital requirements, unless the Federal Reserve determines otherwise in particular cases. However, if Quaint Oak Bancorp had been subject to the requirements, it would have been in compliance with such requirements. Source of Strength. The Dodd-Frank Act extended the “source of strength” doctrine to savings and loan holding companies. The Federal Reserve Board has promulgated regulations implementing the “source of strength” policy that require holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. Transactions with Related Parties. A savings association’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulations. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as Quaint Oak Bank. Quaint Oak Bancorp is an affiliate of Quaint Oak Bank and it controls Quaint Oak Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non- affiliates. 18
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Quaint Oak Bank’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require extensions of credit to insiders: ● be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons that do not involve more than the normal risk of repayment or present other unfavorable features; or ● not exceed certain limitations on the amount of credit extended to such persons, individually or in the aggregate, which limits are based in part on the amount of Quaint Oak Bank’s capital. In addition, extensions of credit in excess of certain limits must be approved by Quaint Oak Bank’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. At December 31, 2025, Quaint Oak Bank was in compliance with the above restrictions. Restrictions on Acquisitions. Except under limited circumstances, savings and loan holding companies are prohibited from acquiring, without prior approval of the Federal Reserve Board, (i) control of any other savings association or savings and loan holding company or substantially all the assets thereof or (ii) more than 5% of the voting shares of a savings association or holding company thereof which is not a subsidiary. Except with the prior approval of the Federal Reserve Board, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such company’s stock, may acquire control of any savings association, other than a subsidiary savings association, or of any other savings and loan holding company. The Federal Reserve Board may only approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings associations in more than one state if (i) the multiple savings and loan holding company involved controls a savings association which operated a home or branch office located in the state of the association to be acquired as of March 5, 1987; (ii) the acquirer is authorized to acquire control of the savings association pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act; or (iii) the statutes of the state in which the association to be acquired is located specifically permit associations to be acquired by the state-chartered associations or savings and loan holding companies located in the state where the acquiring entity is located (or by a holding company that controls such state-chartered savings associations). Federal Securities Laws. Quaint Oak Bancorp’s common stock is registered with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934, as amended. Quaint Oak Bancorp is subject to information, proxy solicitation, insider trading restrictions, and other requirements under the Securities Exchange Act of 1934. 19
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The Sarbanes-Oxley Act. As a public company, Quaint Oak Bancorp is subject to the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act is intended to improve corporate reporting to provide for enhanced penalties for improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to securities laws. The rules adopted by the Securities and Exchange Commission under the Sarbanes-Oxley Act have several requirements, including having the principal executive officer and the principal financial officer certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting; they have made certain disclosures to our auditors and the audit committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting. Regulation of Quaint Oak Bank Pennsylvania Banking Law. The Pennsylvania Banking Code contains detailed provisions governing the organization, location of offices, rights and responsibilities of directors, officers and employees, as well as corporate powers, savings and investment operations and other aspects of Quaint Oak Bank and its affairs. The Pennsylvania Banking Code delegates extensive rulemaking power and administrative discretion to the Pennsylvania Department of Banking and Securities so that the supervision and regulation of state-chartered savings banks may be flexible and readily responsive to changes in economic conditions and in savings and lending practices. One of the purposes of the Pennsylvania Banking Code is to provide savings banks with the opportunity to be competitive with each other and with other financial institutions existing under other Pennsylvania laws and other state, federal and foreign laws. A Pennsylvania savings bank may locate or change the location of its principal place of business and establish an office anywhere in the Commonwealth, with the prior approval of the Pennsylvania Department of Banking and Securities. The Pennsylvania Department of Banking and Securities generally examines each savings bank not less frequently than once every two years. Although the Pennsylvania Department of Banking and Securities may accept the examinations and reports of the Federal Deposit Insurance Corporation in lieu of its own examination, the present practice is for the Pennsylvania Department of Banking and Securities to conduct individual examinations. The Pennsylvania Department of Banking and Securities may order any savings bank to discontinue any violation of law or unsafe or unsound business practice and may direct any director, trustee, officer, attorney or employee of a savings bank engaged in an objectionable activity, after the Pennsylvania Department of Banking and Securities has ordered the activity to be terminated, to show cause at a hearing before the Pennsylvania Department of Banking and Securities why such person should not be removed. Insurance of Accounts. Quaint Oak Bank is a member of the Deposit Insurance Fund, which is administered by the FDIC. Its deposit accounts are insured by the FDIC, generally up to a maximum of $250,000 per depositor. The FDIC imposes deposit insurance assessments against all insured depository institutions. An institution’s assessment rate depends upon the perceived risk of the institution to the Deposit Insurance Fund, with institutions deemed less risky paying lower rates. Under the FDIC’s risk-based assessment system, institutions deemed less risky of failure pay lower assessments. Assessments for institutions of less than $10 billion of assets are based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of an institution’s failure within three years. The assessment range (inclusive of possible adjustments) for institutions of Quaint Oak Bank’s size is currently 2.5 basis points to 32 basis points. 20
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The FDIC has the authority to increase insurance assessments. A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of Quaint Oak Bank. We cannot predict what deposit insurance assessment rates will be in the future. Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition or violation that might lead to termination of deposit insurance for Quaint Oak Bank Capital Requirements. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio. At December 31, 2025, Quaint Oak Bank’s capital exceeded all applicable capital requirements. See Note 19 to the notes to our financial statements included in Exhibit 13.0 hereto. In determining the amount of risk-weighted assets for calculating risk-based capital ratios, all assets, including certain off- balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain non-cumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock, senior debt and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk- weighted assets. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. In assessing an institution’s capital adequacy, the Federal Deposit Insurance Corporation takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary. In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The federal banking agencies have established a community bank leverage ratio (“CBLR”) for financial institutions with total consolidated assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio is deemed compliant with all other capital requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the CBLR requirement. The federal banking agencies must set the minimum CBLR ratio at not less than 8% and not more than 10%, and since January 1, 2022, it is set at 9%. 21
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On November 25, 2025, the federal banking agencies, including the Federal Deposit Insurance Corporation, proposed a lower CBLR requirement of 8%. Community Banks that fail to meet the qualifying criteria after opting into the CBLR framework would have four reporting periods to meet the qualifying criteria again, provided they maintain a leverage ratio above 7% and have not used the grace period for more than eight of the prior 20 quarters. The federal banking agencies also proposed removing the provisions under the CBLR framework that provided temporary relief for qualifying community banks during the COVID-19 outbreak. A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report. Quaint Oak Bank has not utilized the community bank leverage ratio. Any savings bank that fails any of the capital requirements is subject to possible enforcement action by the Federal Deposit Insurance Corporation. Such action could include a capital directive, a cease and desist order, civil money penalties, the establishment of restrictions on the institution’s operations, termination of federal deposit insurance and the appointment of a conservator or receiver. The Federal Deposit Insurance Corporation’s capital regulations provide that such actions, through enforcement proceedings or otherwise, could require one or more of a variety of corrective actions. Pennsylvania Department of Banking and Securities Capital Requirements. Quaint Oak Bank is also subject to more stringent Pennsylvania Department of Banking and Securities capital guidelines. Although not adopted in regulation form, the Pennsylvania Department of Banking and Securities utilizes capital standards requiring a minimum of 6% leverage capital and 10% risk-based capital. The components of leverage and risk-based capital are substantially the same as those defined by the Federal Deposit Insurance Corporation. At December 31, 2025, Quaint Oak Bank’s tier 1 leverage ratio and total risk-based capital were well- capitalized. Prompt Corrective Action. The following table shows the amount of capital associated with the different capital categories set forth in the prompt corrective action regulations. Capital Category Total Risk- Based Capital Tier 1 Risk- Based Capital Tier 1 Common Equity Capital Tier 1 Leverage Capital Well capitalized 10% or more 8% or more 6.5% or more 5% or more Adequately capitalized 8% or more 6% or more 4.5% or more 4% or more Undercapitalized Less than 8% Less than 6% Less than 4.5% Less than 4% Significantly undercapitalized Less than 6% Less than 4% Less than 3% Less than 3% In addition, an institution is “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. Under specified circumstances, a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category (except that the Federal Deposit Insurance Corporation may not reclassify a significantly undercapitalized institution as critically undercapitalized). An institution generally must file a written capital restoration plan which meets specified requirements within 45 days of the date that the institution receives notice or is deemed to have notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized. A federal banking agency must provide the institution with written notice of approval or disapproval within 60 days after receiving a capital restoration plan, subject to extensions by the agency. An institution which is required to submit a capital restoration plan must concurrently submit a performance guaranty by each company that controls the institution. In addition, undercapitalized institutions are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions. 22
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At December 31, 2025, Quaint Oak Bank was deemed a well-capitalized institution for purposes of the prompt corrective regulations and as such is not subject to the above mentioned restrictions. Activities and Investments of Insured State-Chartered Savings Banks. The activities and equity investments of Federal Deposit Insurance Corporation-insured, state-chartered savings banks are generally limited to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank is not prohibited from, among other things: ● acquiring or retaining a majority interest in a subsidiary; ● investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets; ● acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions; and ● acquiring or retaining the voting shares of a depository institution if certain requirements are met. The Federal Deposit Insurance Corporation has adopted regulations pertaining to the other activity restrictions imposed upon insured state banks and their subsidiaries. Pursuant to such regulations, insured state banks engaging in impermissible activities may seek approval from the Federal Deposit Insurance Corporation to continue such activities. State banks not engaging in such activities but that desire to engage in otherwise impermissible activities either directly or through a subsidiary may apply for approval from the Federal Deposit Insurance Corporation to do so; however, if such bank fails to meet the minimum capital requirements or the activities present a significant risk to the Deposit Insurance Fund, such application will not be approved by the Federal Deposit Insurance Corporation. Pursuant to this authority, the Federal Deposit Insurance Corporation has determined that investments in certain majority- owned subsidiaries of insured state banks do not represent a significant risk to the deposit insurance funds. Investments permitted under that authority include real estate activities and securities activities. Brokered Deposits. A brokered deposit is any deposit obtained through the mediation or assistance of a deposit broker, who typically attracts deposits from individuals and companies seeking the highest interest rates. Federal Deposit Insurance Corporation regulations limit the ability of insured depository institutions, such as Quaint Oak Bank, to accept, renew, or roll over brokered deposits unless the institution is well-capitalized under the prompt corrective action framework, or is adequately capitalized with an FDIC waiver. Institutions that are less than well-capitalized face restrictions on the interest rates they may pay on deposits, and brokered deposits may carry higher deposit insurance assessments. Under the Economic Growth Act, certain reciprocal deposits—up to the lesser of $5 billion or 20% of an institution’s deposits —are excluded from the definition of brokered deposits if the institution is well-capitalized and has a composite rating of 1 or 2 (or is adequately capitalized with an FDIC waiver). 23
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In 2021, the FDIC clarified and modernized its brokered deposit regulations by establishing clear standards for determining whether an entity qualifies as a deposit broker, identifying business relationships that automatically qualify for the “primary purpose exception,” creating a transparent application process for entities seeking that exception, and confirming that third parties with exclusive deposit-placement arrangements with one institution are not considered deposit brokers. Restrictions on Capital Distributions. Federal Reserve Board and Federal Deposit Insurance Corporation regulations govern capital distributions by savings institutions, which include cash dividends, stock repurchases and other transactions charged to the capital account of a savings institution to make capital distributions. These regulations apply to Quaint Oak Bancorp because Quaint Oak Bank is considered a savings association for certain purposes under Home Owners’ Loan Act, as amended. Under applicable regulations, a savings association must file an application for Federal Deposit Insurance Corporation approval of the capital distribution if: ● the total capital distributions for the applicable calendar year exceed the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years; ● the institution would not be at least adequately capitalized following the distribution; ● the distribution would violate any applicable statute, regulation, agreement or Federal Deposit Insurance Corporation- imposed condition; or ● the institution is not eligible for expedited treatment of its filings with the Federal Deposit Insurance Corporation. If an application is not required to be filed, state savings banks that elect to be treated as savings associations such as Quaint Oak Bank must still file a notice with the Federal Deposit Insurance Corporation at least 30 days before the board of directors declares a dividend or approves a capital distribution if either (1) the institution would not be well-capitalized following the distribution; or (2) the proposed distribution would reduce the amount or retire any part of its common or preferred stock or retire any part of a debt instrument included in its regulatory capital. In addition, a savings institution, such as Quaint Oak Bank, that is the subsidiary of a stock saving and loan holding company, must also file a notice with the appropriate Federal Reserve Bank at least 30 days before the proposed declaration of a dividend by its board of directors. A savings association that either before or after a proposed capital distribution fails to meet its then applicable minimum capital requirement or that has been notified that it needs more than normal supervision may not make any capital distributions without the prior written approval of the Federal Deposit Insurance Corporation. In addition, the Federal Deposit Insurance Corporation may prohibit a proposed capital distribution, which would otherwise be permitted by Federal Deposit Insurance Corporation regulations, if the Federal Deposit Insurance Corporation determines that such distribution would constitute an unsafe or unsound practice. The Federal Deposit Insurance Corporation prohibits an insured depository institution from paying dividends on its capital stock or interest on its capital notes or debentures (if such interest is required to be paid only out of net profits) or distributing any of its capital assets while it remains in default in the payment of any assessment due the Federal Deposit Insurance Corporation. Quaint Oak Bank is currently not in default in any assessment payment to the Federal Deposit Insurance Corporation. In addition, Quaint Oak Bancorp has agreed not to declare or pay dividends or engage in share repurchases or to make any other capital distributions or payments due on subordinated debentures without the prior written approval of the Federal Reserve Bank. 24
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Commercial Real Estate Lending Concentration Guidance. Under guidance issued by the federal banking agencies, the agencies have expressed concerns with institutions that ease commercial real estate underwriting standards and have directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks. The agencies have also issued guidance that requires a financial institution to employ enhanced risk management practices if the institution is exposed to significant concentration risk in its commercial real estate portfolio. Under that guidance, an institution is potentially exposed to significant concentration risk if: (i) total reported loans for construction, land development, and other land represent 100% or more of total capital or (ii) total reported loans secured by multi-family and non-farm residential properties, loans for construction, land development, and other land loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital, and the outstanding balance of the institution's commercial real estate loan portfolio has increased by 50% or more during the prior 36 months. At December 31, 2025, the balance of these real estate loans represented 591.9% of Quaint Oak Bank’s total capital and our commercial real estate loan portfolio. Institutions, which are deemed to have concentrations in commercial real estate lending, are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios and may be required to hold higher levels of capital. See “We have a high concentration of commercial real estate loans, which involve credit risks that could adversely affect our financial condition and results of operations” in Item 1A. Risk Factors below. Privacy Requirements of the Gramm-Leach-Bliley Act and Cyber Security. Federal law places limitations on financial institutions like Quaint Oak Bank regarding the sharing of consumer financial information with unaffiliated third parties. Specifically, these provisions require all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of personal financial information with unaffiliated third parties. Quaint Oak Bank currently has a privacy protection policy in place and believes such policy is in compliance with the regulations. In addition, on November 18, 2021, the federal banking agencies announced the adoption of a final rule providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents. Specifically, the new rule requires a banking organization to notify its primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization determines that a “computer-security incident” rising to the level of a “notification incident” has occurred. Notification is required for incidents that have materially affected or are reasonably likely to materially affect the viability of a banking organization’s operations, its ability to deliver banking products and services, or the stability of the financial sector. Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization’s customers for four or more hours. Compliance with the new rule was required by May 1, 2022. Non-compliance with federal or similar state privacy and cybersecurity laws and regulations could lead to substantial regulatory imposed fines and penalties, damages from private causes of action and/or reputational harm. In addition, the Securities and Exchange Commission adopted rules requiring registrants to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance. The new rules require registrants to disclose on the new Item 1.05 of Form 8-K any cybersecurity incident they determine to be material and to describe the material aspects of the incident's nature, scope, and timing, as well as its material impact or reasonably likely material impact on the registrant. An Item 1.05 Form 8-K will generally be due four business days after a registrant determines that a cybersecurity incident is material. See Item 1C. Cybersecurity for annual disclosures. 25
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Consumer Financial Services. The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly with the establishment of the Consumer Financial Protection Bureau (“CFPB”) as part of the Dodd-Frank Act reforms. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including Quaint Oak Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets. FDIC-insured institutions with $10 billion or less in assets, like Quaint Oak Bank, continue to be examined by their applicable bank regulators. Anti-Money Laundering. Federal anti-money laundering rules impose various requirements on financial institutions intended to prevent the use of the U.S. financial system to fund terrorist activities. These provisions include a requirement that financial institutions operating in the United States have anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such compliance programs supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control Regulations. Quaint Oak Bank has established policies and procedures to ensure compliance with the federal anti-laundering provisions. In May 2025, the Bank entered into substantially identical Consent Orders (the “Orders”) with the Federal Deposit Insurance Corporation and the Pennsylvania Department of Banking and Securities that became effective immediately and relate primarily to the Bank’s Bank Secrecy Act compliance program. Although the Bank consented to the issuance of the Orders, it neither admitted nor denied any charges of unsafe or unsound banking practices or violations of law or regulations. The Orders do not impose restrictions on the Bank’s activities or include fines or penalties. The Orders arose from an on-site examination that commenced on February 20, 2024 and were based on the Bank’s financial condition as of and for the year ended December 31, 2023. The Orders identify areas for improvement in the Bank’s anti-money laundering and countering the financing of terrorism (“AML/CFT”) program and require the Bank’s Board of Directors to enhance oversight and monitoring of Bank Secrecy Act compliance. Among other requirements, the Bank must develop and implement policies and procedures relating to third-party risk management, AML/CFT controls, independent testing, suspicious activity review, Office of Foreign Assets Control compliance, and related training. The Bank has undertaken a number of actions to address the requirements of the Orders, including establishing a Financial Crime Management Department and appointing a new Vice President, Financial Crimes; enhancing its AML/CFT policies and procedures; increasing AML/CFT staffing through new hires and specialized consultants; strengthening training, third-party risk management, and independent audit processes; and enhancing Board and senior management oversight of the AML/CFT program. The Bank is committed to complying with the Orders within the prescribed timeframes and believes it has made significant progress in addressing the identified matters. Regulatory Enforcement Authority. The federal banking laws provide substantial enforcement powers available to federal banking regulators. This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease- and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities. 26
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Community Reinvestment Act. All insured depository institutions have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. An institution’s failure to comply with the provisions of the Community Reinvestment Act could result in restrictions on its activities. Quaint Oak Bank received an “Outstanding” Community Reinvestment Act rating in its most recently completed examination. Federal Home Loan Bank System. Quaint Oak Bank is a member of the Federal Home Loan Bank of Pittsburgh, which is one of 11 regional Federal Home Loan Banks. Each Federal Home Loan Bank serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds from the sale of consolidated obligations of the Federal Home Loan Bank System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the board of directors of the Federal Home Loan Bank. As a member, Quaint Oak Bank is required to purchase and maintain stock in the Federal Home Loan Bank of Pittsburgh in an amount in accordance with the Federal Home Loan Bank’s capital plan and sufficient to ensure that the Federal Home Loan Bank remains in compliance with its minimum capital requirements. At December 31, 2025, Quaint Oak Bank was in compliance with this requirement. Federal Reserve Board System. The Federal Reserve Board requires all depository institutions to maintain non-interest bearing reserves at specified levels against their transaction accounts, which are primarily checking and NOW accounts, and non- personal time deposits. The balances maintained to meet the reserve requirements imposed by the Federal Reserve Board may be used to satisfy the liquidity requirements that are imposed by the Pennsylvania Department of Banking and Securities. At December 31, 2025, Quaint Oak Bank was in compliance with these reserve requirements. TAXATION Federal Taxation General. Quaint Oak Bancorp and Quaint Oak Bank are subject to federal income tax provisions of the Internal Revenue Code of 1986, as amended, in the same general manner as other corporations with some exceptions listed below. For federal income tax purposes, Quaint Oak Bancorp files a consolidated federal income tax return with its wholly owned subsidiaries on a fiscal year basis. The applicable federal income tax expense or benefit will be properly allocated to each entity based upon taxable income or loss calculated on a separate company basis. Method of Accounting. For federal income tax purposes, income and expenses are reported on the accrual method of accounting and Quaint Oak Bancorp files its federal income tax return using a December 31 fiscal year end. Taxable Distributions and Recapture. Prior to the Small Business Job Protection Act, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income if a savings bank failed to meet certain thrift asset and definitional tests. New federal legislation eliminated these thrift related recapture rules. However, under current law, pre-1988 reserves remain subject to recapture should a savings bank make certain non-dividend distributions or cease to maintain a savings bank charter. At December 31, 2025, Quaint Oak Bank did not have federal pre-1988 reserves subject to recapture. Corporate Dividends Received Deduction. Quaint Oak Bancorp may exclude from income 100% of dividends received from a member of the same affiliated group of corporations. The corporate dividends received deduction is 80% in the case of dividends received from corporations, which a corporate recipient owns less than 80%, but at least 20% of the distribution corporation. Corporations that own less than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received. 27
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Other Matters. The Company is no longer subject to examination by taxing authorities for the years before January 1, 2022. State and Local Taxation Pennsylvania Taxation. Quaint Oak Bancorp is subject to the Pennsylvania Corporate Net Income Tax. The Corporation Net Income Tax rate for 2025 is 9.99% and is imposed on unconsolidated taxable income for federal purposes with certain adjustments. Quaint Oak Bank is subject to tax under the Pennsylvania Mutual Thrift Institutions Tax Act (the “MTIT”), as amended to include thrift institutions having capital stock. Pursuant to the MTIT, the tax rate is 11.5%. The MTIT exempts Quaint Oak Bank from other taxes imposed by the Commonwealth of Pennsylvania for state income tax purposes and from all local taxation imposed by political subdivisions, except taxes on real estate and real estate transfers. The MTIT is a tax upon net earnings, determined in accordance with U.S. generally accepted accounting principles with certain adjustments. The MTIT, in computing income under U.S. generally accepted accounting principles, allows for the deduction of interest earned on state and federal obligations, while disallowing a percentage of thrift’s interest expense deduction in the proportion of interest income on those securities to the overall interest income of Quaint Oak Bank. Net operating losses, if any, thereafter can be carried forward three years for MTIT purposes. Item 1A. Risk Factors. The following paragraphs describe what we believe are the material risks of an investment in the common stock of Quaint Oak Bancorp, Inc. (the “Company”). We may face other risks as well, which we have not anticipated. The risk factors listed below are not intended to represent a complete list of the general or specific risks that may affect us, our banking subsidiary, Quaint Oak Bank (the “Bank”) or the Bank’s subsidiaries. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. The realization of any of the risks described below could have a material adverse effect on our business, financial condition, results of operations or future prospects. The order of these risk factors does not reflect their relative importance or likelihood of occurrence. All references to “we” “our” and “us” include the Company and the Bank, depending on the context. We have entered into correspondent banking relationships with international banking entities and other business arrangements, and these activities involve risks and uncertainties that could affect our liquidity. A failure of any such relationship or the exit from any such relationship may cost more than anticipated, subject us to additional risk, and could have a material adverse effect on our business and results of operations. As a part of our liquidity management, we utilize correspondent banking relationships with international banking entities and deposit placement agreements with third party banks as funding sources in addition to core deposit growth, repayments and maturities of loans, and interest-bearing deposits in other banks. The deposits obtained through these relationships and agreements have resulted in significant concentrations of deposits. For additional detail regarding such concentrations, see “-The Company’s operations could be impaired by liquidity risk and deposit concentration.” We provide oversight of these relationships, which must meet all internal and regulatory requirements. We may elect to exit relationships where such requirements are not met or we are required by our regulators to exit such relationships. Also, our partner(s) could terminate a relationship with us for many reasons. If a relationship were to be terminated, it could be costly to the Bank, materially reduce our deposits and adversely impact our liquidity. Further, the withdrawal of such deposits or adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available. If we are required to rely more heavily on more expensive funding sources, our operating margins and profitability could be adversely affected. 28
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The Company’s operations could be impaired by liquidity risk and deposit concentration. Liquidity is essential to the Company’s business. The Company’s primary funding source is consumer deposits, a substantial portion of which consist of certificates of deposit. As of December 31, 2025, approximately 61.3% of our total deposits were comprised of certificates of deposit. As noted above, the Company has identified one major interest-bearing checking account deposit customer that accounted for approximately 5.9% of total deposits at December 31, 2025. The outstanding balances of the major deposit customer totaled approximately $35.0 million at December 31, 2025. The amount of uninsured deposits (deposits greater than $250,000) was approximately $244.3 million, or 40.9% of total deposits at December 31, 2025. If these deposits were to be withdrawn in whole or in part, replacement of the funds may require us to pay higher interest rates on retail deposits or brokered deposits which would have an adverse effect on our net interest income and net income. If the Bank is less than well capitalized, the Federal Deposit Insurance Act restricts the Bank from accepting brokered deposits absent a waiver from the FDIC. The replacement of these deposits with other sources of funding, such as borrowings, could also increase our overall cost of funds and would negatively impact our results of operations. The Company has significant borrowing capacity available to fund liquidity needs, including borrowing agreements with the Federal Home Loan Bank of Pittsburgh (the “FHLB”) and the Federal Reserve Bank of Philadelphia. As of December 31, 2025, we had $269.3 million in borrowing capacity from the FHLB and $24.2 million in borrowing capacity with the Federal Reserve Bank of Philadelphia. Although the Company has historically been able to replace maturing deposits and advances as necessary, it might not be able to replace such funds in the future on a timely basis. An inability to raise funds through traditional deposits, brokered deposits, borrowings, and the sale of securities or loans could have a substantial negative effect on the Company’s liquidity. The Company’s access to funding sources on terms which are acceptable to the Company could be impaired by factors that affect the Company specifically or the financial services industry or economy in general. However, the Company’s ability to borrow or attract and retain deposits in the future could be adversely affected by the Company’s financial condition or regulatory restrictions, or impaired by factors that are not specific to the Company, such as FDIC insurance changes, disruption in the financial markets or negative views and expectations about the prospects for the banking industry. Liquidity also may be affected by the Bank’s routine commitments to extend credit. Sources of funds may not remain adequate for liquidity needs and the Bank may be compelled to seek additional sources of financing in the future. Additional borrowings, if sought, may not be available or, if available, may not be on favorable terms. If additional financing sources are unavailable or not available on reasonable terms to provide necessary liquidity, the Company’s financial condition, results of operations and future prospects could be materially and adversely affected. We rely on short-term funding, which can be adversely affected by local and general economic conditions. As of December 31, 2025, approximately $354.7 million of total deposits consisted of certificates of deposit, approximately $245.4 million of which, or approximately 41.1% of our total deposits, are due to mature within one year. Certificates of deposit obtained through a national listing service totaled $62.3 million, or approximately 17.6% of our certificates of deposit at December 31, 2025. These customers and in particular, those in the listing service, are interest-rate conscious and may be willing to move funds into higher- yielding investment alternatives. Historically, a majority of our certificates of deposit are renewed upon maturity as long as we pay competitive interest rates. Our ability to attract and maintain deposits, as well as our cost of funds, has been, and will continue to be significantly affected by financial markets and general economic conditions. Given recent economic challenges, if we have to increase interest rates paid to retain deposits, our earnings may be adversely affected. 29
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We may need to raise additional capital or increase our liquidity in the future, but sufficient capital may not be available when it is needed. We face significant capital and other regulatory requirements as a financial institution. We may need to raise additional capital/liquidity in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, particularly if our asset quality or earnings were to deteriorate significantly. Our ability to raise additional capital/liquidity, if needed, will depend on, among other things, conditions in the capital and financial markets at that time, which are outside of our control, and our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital/liquidity, including depositors, other financial institution borrowings, repurchase agreements and borrowings from the discount window of the FRB. Any occurrence that may limit our access to the capital/liquidity markets, such as a decline in the confidence of other financial institutions, depositors or counterparties participating in the capital markets, may adversely affect our costs and our ability to raise capital/liquidity. An inability to raise additional capital/liquidity on acceptable terms when needed could have a materially adverse effect on our financial condition, results of operations and liquidity. If the Company fails to maintain sufficient capital and liquidity under regulatory requirements, whether due to losses, an inability to raise additional capital or otherwise, that failure would adversely affect the Company’s financial condition and results of operations, as well as the Company’s ability to maintain regulatory compliance. The Bank must meet regulatory capital requirements and maintain sufficient liquidity, and its regulators may modify and adjust such requirements in the future. Pursuant to FDIC regulations, all state nonmember banks, such as the Bank, must maintain certain minimum capital ratios to be deemed adequately capitalized (common equity Tier 1 capital of at least 4.5%, Tier 1 risk-weighted capital of at least 6.0%, total risk-weighted capital of at least 8.0%, and Tier 1 leverage ratio of at least 4.0%). Notwithstanding the minimum requirements, all FDIC-supervised institutions are required to maintain capital commensurate with the level and nature of all risks to which they are exposed. As of December 31, 2025, the Bank’s common equity Tier 1 capital ratio was 12.36%, its Tier 1 risk- weighted capital ratio was 12.36%, its total risk-weighted capital ratio was 13.55% and its Tier 1 leverage ratio was 10.26% and it was deemed to be “well-capitalized.” The Company’s ability to raise additional capital, when and if needed, will depend on conditions in the capital markets, economic conditions and a number of other factors, including investor preferences regarding the banking industry, market conditions and governmental activities, many of which are outside the Company’s control, and on the Company’s financial condition and performance. Accordingly, the Company may not be able to raise additional capital if needed or on terms acceptable to the Company. If the Company fails to meet the minimum capital and other regulatory requirements, the Company’s regulators could take formal or informal actions against the Company and the Company’s growth prospects, financial condition, liquidity and results of operations would be materially and adversely affected. 30
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Regulatory scrutiny of correspondent banking partnerships and related technology considerations have recently increased. We provide correspondent banking services to our international correspondent bank partners, which may include facilitating U.S. dollar payments and providing other financial services infrastructure. Recently, federal bank regulators have increasingly focused on the risks related to international correspondent banking partnerships, raising concerns regarding risk management, oversight, internal controls, information security, change management, and information technology operational resilience. We could be subject to additional regulatory scrutiny with respect to our correspondent banking business that could have a material adverse effect on the business, financial condition, results of operations and growth prospects of the Company. Our relationships with correspondent banks located in Puerto Rico create increased Office of Foreign Assets Control (“OFAC”), Bank Secrecy Act and Anti-Money Laundering compliance risk. The Company has correspondent banking relationships, including one major interest-bearing checking account customer, located in Puerto Rico. The correspondent banking entities acquire deposits from individuals located in various international jurisdictions including Europe, Latin America, the Caribbean, and Asia. These cross-border correspondent banking relationships pose unique risks because it creates situations in which a U.S. financial institution will be handling funds from individuals in these jurisdictions who may not be transparent to us. Accordingly, these foreign individuals may pose higher money laundering risk to us. Because of the large amount of funds, multiple transactions, and our potential lack of familiarity with a foreign customer, these customers may be able to more easily conceal the source and use of illicit funds. Consequently, we may have a higher risk of non-compliance with the Bank Secrecy Act and other Anti-Money Laundering rules and regulations due to our correspondent banking relationships with these banking entities. In recent years, sanctions that the regulators have imposed on banks that have not complied with all Bank Secrecy Act and Anti-Money Laundering requirements have been especially severe. In order to comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our Anti Money Laundering/Combating the Financing of Terrorism Program (“AML/CFT Program”). If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as additional restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plans, such as acquisitions and de novo branching. Further, our failure to strictly adhere to the terms and requirements of our OFAC license or our failure to adequately manage our AML/CFT Program in light of our correspondent banking relationships could result in regulatory or other actions being taken against us, including the imposition of civil money penalties, formal agreements and cease and desist orders. Lastly, failure to meet regulatory requirements could require the Bank to incur additional significant costs in order to bring our AML/CFT Program and operations into compliance, negatively impact our reputation, and have a material adverse effect on our business, financial condition and results of operations. 31
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Potential gaps in our risk management policies and internal audit procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business. Our enterprise risk management and internal audit programs are designed to mitigate material risks and loss to us. We have developed and continue to develop comprehensive risk management policies and procedures to identify, mitigate and provide a sound operational environment for the types of risk to which we are subject, including credit risk, market risk (interest rate and liquidity risks), operational risk, information security risk, compliance risk (including Bank Secrecy Act and Anti-Money Laundering and OFAC compliance), strategic risk, and reputational risk. In addition, we have designed and implemented internal audit policies and procedures to reflect ongoing reviews of our risks and expect to continue to do so in the future. Nonetheless, as with any risk management framework, there are inherent limitations to our current and future risk management strategies, including risks that we have not appropriately anticipated or identified, and our internal audit process may fail to detect such weaknesses or deficiencies in our risk management framework. Many of our methods for managing risk and exposures are based upon the use of observed historical market behavior to model or project potential future exposure. Models used by our business are based on assumptions and projections. These models may not operate properly or our inputs and assumptions may be inaccurate or may not be adopted quickly enough to reflect changes in behavior, markets or technology. As a result, these methods may not fully predict future exposures, which can be significantly different and greater than historical measures indicate. In addition, our business and the markets in which we operate are continuously evolving and we may fail to fully understand the implications of changes in our business or the financial markets or fail to adequately or timely enhance our enterprise risk framework to address those changes. Furthermore, there can be no assurance that we can effectively review and monitor all risks or that all of our employees will closely follow our risk management policies and procedures, nor can there be any assurance that our risk management policies and procedures will enable us to accurately identify all risks and limit timely our exposures based on our assessments. If our enterprise risk management framework proves ineffective, we could suffer unexpected losses, which could materially adversely affect our financial condition and results of operations. Our operations are subject to third-party risk. We rely on third-party service providers and partners, including other financial institutions, who, in turn, rely on their own networks of vendors, to deliver goods and services to us, our affiliates, and our customers. Our third-party service providers and partners are subject to the same or similar risks as we are, including technology failures, capacity constraints, and inadequate data management or privacy protections, the risk of which we may not be able to effectively monitor or mitigate. Any of these risks could impede their ability to provide products or services to us and materially disrupt our business (including our ability to process transactions and communicate with customers and counterparties), damage our reputation, and expose us to financial and regulatory consequences. Additionally, failures experienced by shared financial market systems and providers, such as central banks, clearinghouses, custodians, exchanges and other shared technology infrastructure providers could have a material adverse effect on market participants, including us, and could disrupt the functioning of the overall financial system. The FDIC requires financial institutions to maintain third-party and service provider risk management programs, which include due diligence requirements for third parties and service providers as well as for our affiliates who may perform services for us. In June 2023, the federal banking agencies issued updated guidance on managing risks associated with third-party relationships. The guidance sets forth considerations and a framework with respect to the management of risks arising from third-party relationships and replaces the federal banking agencies’ existing guidance on the topic. The guidance broadly applies to business arrangements between a banking organization and a third party. If our third-party risk and service provider management and due diligence program is not sufficiently robust, this could lead to regulatory intervention. Any of these occurrences could diminish our ability to operate one or more of our business lines, and may result in potential liability to clients, reputational damage or regulatory intervention, all of which could materially adversely affect us. 32
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A decline in general business conditions and economic trends and any regulatory responses to such conditions and trends could adversely affect the Company’s business, financial condition and results of operations. Our business and operations, which primarily consist of real estate mortgage loans and borrowing money from customers in the form of deposits, are sensitive to general business and economic conditions in the U.S., generally. Uncertainty about the federal fiscal policymaking process, and the medium- and long-term fiscal outlook of the U.S. government and U.S. economy, is a concern for businesses, consumers and investors in the U.S. In addition, economic conditions in foreign countries, including global political hostilities, U.S. and foreign tariff policies and uncertainty over the stability of the other currencies, could affect the stability of global financial markets, which could hinder domestic economic growth. A significant outbreak of disease pandemics or other adverse public health developments in the population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could adversely affect our customers’ businesses and results of operations. The resurgence of elevated levels of inflation may have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The inflationary outlook in the United States remains uncertain. The consumer price index increased 2.7% for the twelve (12) months ended December 31, 2025. While this is a significant reduction to the rate of inflation experienced in the past year, it is still above the FRB’s targeted rate. The risks to our business from inflation depend on the durability of the inflationary pressures in our markets. Although the FRB has reduced the federal fund rate three times in 2025, no assurance can be given that it will continue to do so. The resurgence of elevated levels of inflation could lead the FRB to cease reducing its benchmark rate or potentially starting to increase it again which could, in turn, increase the borrowings costs of our customers, making it more difficult for them to repay their loans or other obligations. Elevated interest rates may be needed to tame inflationary price pressures, which could also push down asset prices, including collateral values, and weaken economic activity. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non- performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations. Changes in the FRB’s monetary or fiscal policies could adversely affect the Company’s results of operations and financial condition. The Company’s results of operations will be affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The FRB has, and is likely to continue to have, an important impact on the operating results of depository institutions through its power to implement national monetary policy, among other things, in order to curb inflation or combat a recession. The FRB affects the levels of bank loans, investments and deposits through its control over the issuance of U.S. government securities, its purchases of government and other securities, its regulation of the discount rate applicable to member banks and its influence over reserve requirements to which member banks are subject. The Company cannot predict the nature or impact of future changes in monetary and fiscal policies. 33
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Changes in interest rates may adversely affect the Company’s net interest income and profitability. The Company’s results of operations are highly dependent on the difference between the interest earned on loans and investments and the interest paid on deposits and borrowings. We rely on in-market consumer certificates of deposit that are often priced at “top of market.” Changes in market interest rates impact the rates earned on loans and investment securities and the rates paid on deposits and borrowings. In addition, changes to the market interest rates may impact the level of loans, deposits and investments and the credit quality of existing loans. These rates may be affected by many factors beyond the Company’s control, including general economic conditions and the monetary and fiscal policies of various governmental and regulatory authorities. Changes in interest rates may negatively impact the Company’s ability to attract deposits, make loans and achieve satisfactory interest rate spreads, which could adversely affect the Company’s financial condition or results of operations. The amount of nonperforming assets may increase, resulting in losses, costs and expenses that would negatively affect the Bank’s operations. At December 31, 2025, the Bank’s nonperforming loans represented approximately 1.36% of our total loans. However, the economic outlook in the United States continues to remain uncertain. The Bank’s level of nonperforming assets could increase if industry or economic conditions deteriorate. Nonperforming asset levels could also increase due to a change in lending strategy, underwriting errors, a deterioration in our ability to effectively collect our loans, or due to other factors. Going forward, as the amount of nonperforming assets, classified assets, and special mention assets increase, the Bank’s losses, and the costs and expenses to maintain collateral likewise may increase as well. Any additional increase in losses related to such assets may have material adverse effects on the Bank’s business, financial condition, and results of operations. Nonperforming assets take significant time and resources to resolve and adversely affect our results of operations and financial condition. Nonperforming assets adversely affect our net income in various ways. We could incur losses relating to an increase in nonperforming assets. We generally do not record interest income on nonperforming loans or other real estate owned (“OREO”), thereby adversely affecting our income, and increasing our loan administration costs. An increase in the level of nonperforming assets increases our risk profile and may impact the capital levels our regulators believe are appropriate in light of the ensuing risk profile. While we reduce problem assets through loan extensions, workouts, restructurings and otherwise, decreases in the value of the underlying collateral, or in these borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond our control, could adversely affect our business, results of operations and financial condition. In addition, the resolution of nonperforming assets requires significant commitments of time from management, which may materially and adversely impact their ability to perform their other responsibilities and can distract management from daily operations and other income producing activities. There can be no assurance that we will not experience future increases in nonperforming assets. Additionally, there are legal fees associated with the resolution of problem assets as well as carrying costs such as taxes, insurance and maintenance related to assets acquired through foreclosure. Finally, if our estimate of the allowance for credit losses is inadequate, we would have to increase the allowance for credit losses accordingly, which would have an adverse effect on our earnings. Significant increases in the level of our nonperforming assets from current levels, or greater than anticipated costs to resolve these credits, would have an adverse effect on our earnings. 34
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Our allowance for credit losses may not be adequate to cover actual losses. Like all financial institutions, we maintain an allowance for credit losses, which is a reserve established through a provision for credit losses charged to expense, that we believe is appropriate to provide for lifetime expected credit losses on loans in our loan portfolio. The allowance is evaluated on a regular basis by management. Management’s determination of the adequacy of the allowance for credit losses is based on the assessment of the expected credit losses on loans over the expected life of the loans (using the weighted average maturity method). Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change. At December 31, 2025, the ratio of the allowance for credit losses to total loans and total nonperforming loans were 1.13% and 84.01%, respectively. The determination of the appropriate level of the allowance for credit losses is complex, inherently involves a high degree of subjectivity and requires us to make significant assumptions, judgments and estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses. Increases in nonperforming loans have a significant impact on the Company’s reserve for credit losses. Generally, the Company’s nonperforming loans reflect difficulties of individual borrowers resulting from continued financial stress on the borrowers’ asset values and cash flow abilities. If the real estate market or the economy in general deteriorate, the Company may experience increased delinquencies and credit losses. While the Company strives to monitor credit quality and to identify adversely risk rated loans on a consistent and timely basis, including those that may become nonperforming, at any time there are loans in the portfolio that could result in losses that have not been identified as problem or nonperforming loans. The Company cannot be certain that it will be able to identify deteriorating loans before they become nonperforming assets or that it will be able to limit losses on those loans that have been identified. The reserve for credit losses may not be sufficient to cover actual loan-related losses. In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for possible credit losses or the recognition of further loan charge-offs, based on judgments different than those of management. In addition, if charge-offs in future periods exceed the allowance for credit losses, we will need additional provisions to increase the allowance for credit losses. Any increases in the allowance for credit losses due to increased provisions will result in a decrease in net income and, possibly, capital, and may have a material negative effect on our financial condition and results of operations. We have a high concentration of commercial real estate loans, which involve credit risks that could adversely affect our financial condition and results of operations. At December 31, 2025, commercial real estate loans totaled $309.7 million, or 56.7% of our total loan portfolio. Commercial real estate loans consisted of $200.6 million, or 64.8%, of owner occupied loans and $109.1 million or 35.2% of non-owner occupied loans at December 31, 2025. Given their larger balances and the complexity of the underlying collateral, commercial real estate loans generally have more risk than the owner-occupied one- to four-family residential real estate loans we originate. Because the repayment of commercial real estate loans depends on the successful management and operation of the borrower’s properties or related businesses, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. If we foreclose on these loans, our holding period for the collateral typically is longer than for a one- to four-family residential property because there are fewer potential purchasers of the collateral. In addition, commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential loans. Accordingly, charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. 35
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As our commercial real estate loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase, which would adversely affect our business, financial condition and results of operations. Our concentration of real estate loans in a limited market area exposes us to lending risks. At December 31, 2025, approximately $449.8 million, or 82.4%, of our total loan portfolio, was secured by real estate, most of which is located in our primary lending market area of Bucks, Montgomery and Philadelphia counties and the Lehigh Valley area of Pennsylvania and surrounding areas. Future declines in the real estate values in our primary lending market and surrounding markets could significantly impair the value of the particular real estate collateral securing our loans and our ability to sell the collateral upon foreclosure for an amount necessary to satisfy the borrower’s obligations to us. This could require increasing our allowance for credit losses to address the decrease in the value of the real estate securing our loans, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in our local market area. Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market area. Local economic conditions have a significant impact on our residential real estate, commercial real estate, commercial and industrial and consumer lending, including, the ability of borrowers to repay these loans and the value of the collateral securing these loans. A deterioration in economic conditions in our primary market area could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations: ● demand for our products and services may decrease; ● loan delinquencies, problem assets and foreclosures may increase; ● collateral for loans, especially real estate, may decline in value, thereby reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; ● the value of our securities portfolio may decrease; and ● the net worth and liquidity of loan guarantors may decrease, thereby impairing their ability to honor commitments made to us. Moreover, a significant decline in general economic conditions, caused by inflation, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, or other factors beyond our control could further impact these local economic conditions and could further negatively affect our financial performance. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance. 36
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The imposition of further limits by the bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings. The FDIC, the FRB and the Office of the Comptroller of the Currency have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under this guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations. Regulatory guidance on concentrations in commercial real estate lending provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total commercial real estate loans, including loans secured by multi- family residential properties, owner-occupied and nonowner-occupied investor real estate, and construction and land loans, represent 300% or more of an institution’s total risk- based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months. As of December 31, 2025, our total commercial investor real estate loans, including loans secured by apartment buildings, commercial real estate, and construction and land loans represented 235.9% of the Bank’s total risk-based capital. The particular focus of the guidance is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or as an abundance of caution). The purpose of the guidance is to guide institutions in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations. Management has established a commercial real estate lending framework to monitor specific exposures and limits by types within the commercial real estate portfolio and takes appropriate actions, as necessary. While we believe we have implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with this guidance, the FDIC, the Bank’s primary federal regulator, could require us to implement additional policies and procedures pursuant to their interpretation of the guidance that may result in additional costs to us. In addition, if the FDIC were to impose restrictions on the amount of commercial real estate loans we can hold in our portfolio, our earnings would be adversely affected. The banking industry and the Company operate under certain regulatory requirements that may change significantly and in a manner that further impairs revenues, operating income and financial condition. The Company operates in a highly regulated industry and is subject to examination, supervision and comprehensive regulation by the FRB, the FDIC and the Pennsylvania Department of Banking and Securities. The regulations affect the Company’s investment practices, lending activities and dividend policy, among other things. Moreover, federal and state banking laws and regulations undergo frequent and often significant changes and have been subject to significant change in recent years, sometimes retroactively applied, and may change significantly in the future. Changes to these laws and regulations or other actions by regulatory agencies could, among other things, make regulatory compliance more difficult or expensive for the Company, limit the products the Company can offer or increase the ability of non-banks to compete and could adversely affect the Company in significant but unpredictable ways, which in turn could have a material adverse effect on the Company’s financial condition or results of operations. 37
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The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes in light of the performance of and government intervention in the financial services sector. Included in the Dodd-Frank Act are, for example, changes related to deposit insurance assessments, executive compensation and corporate governance requirements, payment of interest on demand deposits, interchange fees and overdraft services. The Dodd-Frank Act also requires the implementation of the Volcker Rule for banks and bank holding companies, which prohibits proprietary trading, investment in and sponsorship of hedge funds and private equity funds, and otherwise limits the relationships with such funds. The Company cannot predict the substance or impact of pending or future legislation or regulation. The Company’s compliance with these laws and regulations is costly and may restrict certain activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits, access to capital and brokered deposits and locations of banking offices. Failure to comply with these laws or regulations could result in fines, penalties, sanctions and damage to the Company’s reputation which could have an adverse effect on the Company’s business and financial results. The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect the Company’s business, operating results and financial condition. While we are currently not involved in any legal proceedings except nonmaterial litigation incidental to the ordinary course of business, from time to time, we may be involved in a variety of litigation, investigations or similar matters arising out of our business. It is inherently difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation. Our insurance may not cover all claims that may be asserted against us and indemnification rights to which we are entitled may not be honored, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation or investigation significantly exceed our insurance coverage or to the extent that we incur civil money penalties that are not covered by insurance, they could have a material adverse effect on our business, financial condition and results of operations. In addition, premiums for insurance covering the financial and banking sectors are rising. We may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms or at historic rates, if at all. Our business activities and operations are subject to regulation, supervision and examination, and can be limited and proscribed, by our federal and state regulators. Under applicable laws, the FDIC and the Pennsylvania Department, as the Bank’s primary regulators, and the FRB, as the Company’s primary federal regulator, have the ability to impose substantial sanctions, restrictions and requirements on us if they find, upon examination or otherwise, weaknesses with respect to our operations. Applicable law prohibits disclosure of specific examination findings by the regulators. As of December 31, 2025, the Bank’s total risk-based capital ratio was 13.55%, and the Bank was therefore considered “well- capitalized” under the regulatory framework for prompt corrective action. However, the FDIC and the Pennsylvania Department have the authority to classify any bank as not “well- capitalized” based on unsafe and unsound practices discovered during an examination. If additional regulatory restrictions were imposed as a result of such reclassification, they could have a material adverse effect on our business, financial condition, results of operations, cash flows and/or future prospects. 38
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If a state non-member bank is classified as undercapitalized, the bank is required to submit a capital restoration plan to the FDIC. Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), an undercapitalized bank is prohibited from increasing its assets, engaging in a new line of business, acquiring any interest in any company or insured depository institution, or opening or acquiring a new branch office, except under certain circumstances, including the acceptance by the FDIC of a capital restoration plan for the bank. Furthermore, if a state non-member bank is classified as undercapitalized, the FDIC may take certain actions to correct the capital position of the bank. If a bank is classified as significantly undercapitalized or critically undercapitalized, the FDIC would be required to take one or more prompt corrective actions. These actions would include, among other things, requiring sales of new securities to bolster capital; improvements in management; limits on interest rates paid; prohibitions on transactions with affiliates; termination of certain risky activities and restrictions on compensation paid to executive officers. If a bank is classified as critically undercapitalized, FDICIA requires the bank to be placed into conservatorship or receivership within ninety days, unless the FDIC determines that other action would better achieve the purposes of FDICIA regarding prompt corrective action with respect to undercapitalized banks. Under FDICIA, banks may be restricted in their ability to accept brokered deposits, depending on their capital classification. While “well-capitalized” banks are permitted to accept brokered deposits, banks that are not well-capitalized are subject to restrictions on accepting such deposits. The FDIC may, on a case-by-case basis, permit banks that are adequately capitalized to accept brokered deposits if the FDIC determines that acceptance of such deposits would not constitute an unsafe or unsound banking practice with respect to the bank. Finally, the capital classification of a bank affects the frequency of examinations of the bank, the deposit insurance premiums paid by such bank, and the ability of the bank to engage in certain activities, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and/or future prospects. Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations. The Bank is subject to extensive regulation, supervision and examination by the Pennsylvania Department and the FDIC, and the Company is subject to extensive regulation, supervision and examination by the FRB. Such regulation and supervision governs the activities in which an insured depository institution and its holding company may engage and are intended primarily for the protection of the federal deposit insurance fund and the depositors and borrowers of the Bank, rather than for our security holders. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for credit losses. These regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent registered public accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations. 39
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We are subject to the Community Reinvestment Act (the “CRA”) and fair lending laws, and failure to comply with these laws could lead to material penalties. The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. A successful challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity, and restrictions on expansion activity. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Significantly heightened regulatory and supervisory expectations and scrutiny in the U.S. have increased our compliance, regulatory and other risks and costs and subject us to legal and regulatory examinations, investigations and enforcement actions. The regulatory and political environment has generally been challenging for U.S. financial institutions, which have been subject to increased regulatory scrutiny, including in the wake of the failures of several regional banks and other banking stresses in recent periods. The general heightened scrutiny and expectations from regulators could lead to a more stringent regulatory posture by the regulators, investigations and other inquiries, as well as remediation requirements, regulatory and operational restrictions, more regulatory or other enforcement proceedings, civil litigation and substantial compliance, regulatory and other risks and costs. Our regulators have broad powers and discretion under their supervisory authority. A failure to comply with regulators’ expectations and requirements, even if inadvertent, or to resolve any identified deficiencies in a timely and sufficiently satisfactory manner to regulators, could result in increased regulatory oversight; material restrictions, including, among others, imposition of limitations on capital distributions or other business activities or operations; enforcement proceedings; penalties; and fines. Responding to regulatory inquiries and proceedings can be time consuming and costly and divert management attention from our other business activities. As a result of these regulatory efforts and pressures, like many other financial institutions, from time to time, we may be subject to public and non-public written agreements, cease and desist orders, consent orders, memoranda of understanding or other enforcement or supervisory actions by our regulators. The Company is leveraged and therefore may be unable to serve as a source of strength to the Bank. As of December 31, 2025, the Company’s double leverage ratio was 128.4%. The double leverage ratio reflects the extent to which equity in subsidiaries is financed by debt at the savings and loan holding company level and is calculated by dividing the Company’s equity investments in its subsidiaries by the Company’s equity. The FRB uses the double leverage ratio as an indicator of a savings and loan holding company’s exposure to risk related to high levels of debt. The FRB may take supervisory action to require the Company to reduce its debt, and therefore its double leverage ratio, if it believes the Company is unable to manage such risk. 40
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As a matter of policy, the FRB expects a savings and loan holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. The Dodd-Frank Act codified the FRB’s policy on serving as a source of financial strength. Under the “source of strength” doctrine, the FRB may require a savings and loan holding company to make capital injections into a troubled subsidiary bank, even if the company would not ordinarily do so and even if such contribution is to its detriment or the detriment of its shareholders. The FRB may charge the savings and loan holding company with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary bank. A capital injection may be required at times when the savings and loan holding company may not have the resources to provide it and therefore may be required to borrow the funds or raise capital. The Bank’s deposit insurance premium could be higher in the future, which could have a material adverse effect on its future results of operations. The FDIC insures deposits at FDIC-insured financial institutions, including the Bank. The FDIC charges the insured financial institutions assessments to maintain the Deposit Insurance Fund (the “DIF”) at a certain level; if an FDIC-insured financial institution fails, payments of deposits up to insured limits are made from the DIF. An increase in the risk category of the Bank, adjustments to assessment rates and/or a special assessment could have an adverse effect on the Company’s results of operations. In order to maintain a strong funding position and restore the reserve ratios of the DIF, the FDIC has, in the past, increased deposit insurance assessment rates and charged a special assessment to all FDIC- insured financial institutions. Although the DIF reserve ratio currently exceeds targeted levels, further increases in assessment rates or special assessments may occur in the future, especially if there are significant additional financial institution failures. Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce profitability or limit the Company’s ability to pursue certain business opportunities, which could have an adverse effect on its business, financial condition, and results of operations. The Company may not be able to attract or retain key banking employees, which could adversely impact our business and operations. Much of our future success will be strongly influenced by our ability to attract and retain management experienced in banking and financial services and familiarity with the communities in our market areas. Our ability to retain executive officers, the functional area managers, branch managers and loan officers of the Bank will continue to be important to the successful implementation of our strategy. It is also critical to be able to attract and retain qualified management and loan officers with the appropriate level of experience and knowledge about our market areas to implement our community-based operating strategy. The Company strives to attract and retain key banking professionals, management and staff. Even the existence of employment agreements does not necessarily ensure that the Company will be able to continue to retain employees’ services. Banking-related revenues and net income could be adversely affected in the event of the unexpected loss of key personnel. Competition to attract the best professionals in the industry can be intense which will limit the Company’s ability to hire new professionals. The unexpected loss of services of key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, results of operations and financial condition. 41
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The soundness of other financial institutions could adversely affect the Company. Our ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, and other institutional clients. Defaults by, or even rumors or questions about, one or more financial institutions or market utilities, or the financial services industry generally, may lead to market-wide liquidity problems, losses of depositor, creditor and counterparty confidence and losses or defaults by us or by other institutions. These losses or defaults could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Additionally, if our competitors were extending credit on terms we found to pose excessive risks, or at interest rates which we believed did not warrant the credit exposure, we may not be able to maintain our business volume and could experience deteriorating financial performance. Changes in accounting standards could affect reported earnings. The bodies responsible for establishing accounting standards, including FASB, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of the Company’s consolidated financial statements. These changes can be hard to predict and can materially impact how the Company records and reports its financial condition and results of operations. In some cases, the Company could be required to apply new or revised guidance retroactively. The financial services business is intensely competitive, and the Company may not be able to compete effectively. The Company faces competition for its services from a variety of competitors. The Company’s future growth and success depend on its ability to compete effectively. The Company competes for deposits, loans and other financial services with numerous financial service providers including banks, thrifts, credit unions, mortgage companies, broker dealers and insurance companies. To the extent these competitors have less regulatory constraints, lower cost structures or increased economies of scale, they may be able to offer a greater variety of products and services or more favorable pricing for such products and services. In addition, improvements in technology, communications and the Internet have intensified competition. As a result, the Company’s competitive position could be weakened, which could adversely affect the Company’s financial condition and results of operations. The Bank is a community bank and its ability to maintain its reputation is critical to the success of its business and the failure to do so may materially adversely affect the Company’s performance. The Bank is a community bank, and its reputation is one of the most valuable components of its business. A key component of the Bank’s business strategy is to rely on its reputation for customer service and knowledge of local markets to expand its presence by capturing new business opportunities from existing and prospective customers in its market area and contiguous areas. As such, the Bank strives to conduct its business in a manner that enhances its reputation. This is done, in part, by recruiting, hiring and retaining employees who share the Bank’s core values of being an integral part of the communities the Bank serves, delivering superior service to its customers and caring about its customers and associates. If the Company’s or the Bank’s reputation is negatively affected, by the actions of their employees, by their inability to conduct their operations in a manner that is appealing to current or prospective customers, or otherwise, the Company’s business and, therefore, its operating results may be materially adversely affected. 42
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We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption or security breaches. Information technology systems are critical to our business. Our business requires us to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees, business, operations, plans and business strategies. We use various technology systems to manage our customer relationships, general ledger, securities investments, deposits, and loans. Our computer systems, data management and internal processes, as well as those of third parties, are integral to our performance. Our operational risks include the risk of malfeasance by employees or persons outside the Bank, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. There have been increasing efforts by third parties to breach data security at financial institutions. Such attacks include computer viruses, malicious or destructive code, phishing attacks, denial of service or information or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary, personal and other information, damage to systems, or other material disruptions to network access or business operations. Although we take protective measures and believe that we have not experienced any of the data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code or cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures. If there is a breakdown in our internal control systems, improper operation of systems or improper employee actions, or a breach of our security systems, including if confidential, personal or proprietary information were to be mishandled, misused or lost, we could suffer financial loss, loss of customers and damage to our reputation, and face regulatory action or civil litigation. Any of these events could have a material adverse effect on our financial condition and results of operations. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. If we are not able to invest successfully and introduce digital and other technological developments across all our business, our financial performance may suffer. Our industry is subject to rapid and significant technological changes and our ability to meet our customers’ needs and expectations is key to our ability to grow revenue and earnings. We expect digital technologies to have a significant impact on banking over time. Consumers expect robust digital experiences from their financial services providers. The ability for customers to access their accounts and conduct financial transactions using digital technology, including mobile applications, is an important aspect of the financial services industry and financial institutions are rapidly introducing new digital and other technology-driven products and services that aim to offer a better customer experience and to reduce costs. We continue to invest in digital technology designed to attract new customers, facilitate the ability of existing customers to conduct financial transactions and enhance the customer experience related to our products and services. Our continued success depends, in part, upon our ability to address the needs of our customers by using digital technology to provide products and services that meet their expectations. The development and launch of new digital products and services depends in large part on our capacity to invest in and build the technology platforms that can enable them, in a cost effective and timely manner. Some of our competitors are substantially larger than we are, which may allow those competitors to invest more money into their technology infrastructure and digital innovation than we do. A failure to maintain or enhance our competitive position with respect to digital products and services, whether because we fail to anticipate customer expectations or because our technological developments fail to perform as desired or are not implemented in a timely or successful manner, could negatively impact our business and financial results. 43
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Risks associated with the Company’s internet-based systems and online commerce security, including “hacking” and “identify theft,” could adversely affect the Company’s business. The Company has a website and conducts a portion of its business over the Internet. The Company relies heavily upon data processing, including loan servicing and deposit processing software, communications systems and information systems from a number of third parties to conduct its business. Third party, or internal, systems and networks may fail to operate properly or become disabled due to deliberate attacks or unintentional events. The Company’s operations are vulnerable to disruptions from human error, natural disasters, power loss, computer viruses, spam attacks, denial of service attacks, unauthorized access and other unforeseen events. Undiscovered data corruption could render the Company’s customer information inaccurate. These events may obstruct the Company’s ability to provide services and process transactions. While the Company believes that it is in compliance with all applicable privacy and data security laws, an incident could put its confidential customer information at risk. Although the Company has not experienced a cyber-incident that has been successful in compromising its data or systems, the Company can never be certain that all of its systems are entirely free from vulnerability to breaches of security or other technological difficulties or failures. The Company monitors and modifies, as necessary, its protective measures in response to the perpetual evolution of cyber threats. A breach in the security of any of the Company’s information systems, or other cyber incident, could have an adverse impact on, among other things, its revenue, ability to attract and maintain customers and business reputation. In addition, as a result of any breach, the Company could incur higher costs to conduct its business, to increase protection, or related to remediation. Furthermore, the Company’s customers could incorrectly blame the Company and terminate their accounts with the Company for a cyber-incident which occurred on their own system or with that of an unrelated third party. In addition, a security breach could also subject the Company to additional regulatory scrutiny and expose the Company to civil litigation and possible financial liability. Past Bank performance is not a meaningful financial indicator upon which to base an estimate of our future financial performance. Although the Bank has a long operational history, the past financial performance of the Bank is not a complete indicator of the future financial performance of the Bank. As described in these Risk Factors, we face a wide variety of economic, financial, operational, regulatory and other risks which could have a material negative effect on our financial condition and results of operations. Item 1B. Unresolved Staff Comments. Not applicable. Item 1C. Cybersecurity. Overview. Our Board of Directors and management consider information security and cybersecurity as high priorities in our strategic and operational plans. We understand the critical nature of the confidentiality, integrity, and availability of customer and bank sensitive information. Any loss of confidentiality, integrity, or availability introduces operational, compliance, strategic, transactional, reputational, legal, and capital risks which we actively seek to avoid. It is understood that any one of these risks, if realized, will have a negative impact upon Quaint Oak Bancorp and Quaint Oak Bank. Our approach to information and cybersecurity is proactive and strives to avoid incidents where possible through the use of technical, administrative, and physical controls. 44
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Governance. Our efforts for increased information and cybersecurity readiness are driven from the top of the organization. The Enterprise Risk Management Committee has the responsibility of assessing risks associated with technology and information security, including cybersecurity. The Enterprise Risk Management Committee reports directly to our Board of Directors. The Board of Directors reviews and approves Information Security Risk Assessments and performance reviews which guides the actions of the management team, staff members, and supporting third-party service providers. In addition, the Board is active in the review and approval of all policies concerning information technology and information security. The Board further reviews reports provided by the management team regarding the status of Quaint Oak Bank’s GLBA compliance, risk management program, Third Party Risk Management program, and the results of tests and exercises conducted for business continuity, disaster recovery, cybersecurity incident response, and pandemic response. Lastly, the Board of Directors reviews and approves the budget for information and cybersecurity, ensuring that we have sufficient resources to properly address all current and foreseeable information and cybersecurity threats. Management and Strategy. Senior management takes the guidance provided by the Board of Directors and transforms this guidance into operational priorities which are implemented and maintained by the staff members and third-party service providers. In addition, the senior management team ensures that budgeted resources are allocated in a timely manner to support the various security initiatives. Operational Information Technology and Information Security staff members, and third-party service providers utilize the direction and resources provided by the senior management team to develop procedures, standards, and guidelines to achieve the strategic goals defined by the Board of Directors. Operational and security health is reported quarterly to the IT Steering Committee, Enterprise Risk Management Committee, and the Board of Directors. Recommendations for improvements are shared between operational staff and the senior management team as part of a continuous improvement program for information security and cybersecurity. Operational staff members actively maintain, review, update, and exercise plans and procedures designed to enhance our overall business resiliency. Incident Response team members are trained annually on current information and cybersecurity trends, techniques, and their responsibilities to keep our information confidential, accurate, and available. We also utilize the services of third-party providers to conduct an IT audit, external and internal vulnerability testing, external and internal penetration testing, and social engineering testing on at least an annual basis. The results of these independent audits and tests are sent to the Board of Directors for review. Finally, Quaint Oak Bank complies with its regulatory requirements by having Federal and State safety and security examinations performed on a schedule dictated by the regulatory agencies. The results of these examinations are reviewed and approved by the Board of Directors. Additionally, all findings from these examinations are recorded and prioritized for remediation. Conclusion. Our Board of Directors and management take very seriously the information security and cybersecurity obligations Quaint Oak Bancorp and Quaint Oak Bank have to their respective customers, shareholders, staff members, and regulatory agencies. In support of these obligations, we have and actively maintain a robust information security and cybersecurity program based upon industry best practices, regulatory requirements, and the expertise of staff members and supporting third-party vendors. 45
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To our knowledge, we have not had a cybersecurity incident that has materially affected Quaint Oak Bancorp, its business strategy, financial condition, or results of operation. Item 2. Properties. The following table provides certain information as of December 31, 2025 with respect to our main office located in Southampton, Pennsylvania, our regional offices located in Allentown and Philadelphia, Pennsylvania, mortgage banking, insurance agency and title abstract property in Allentown, Pennsylvania, and a mortgage loan production office in Philadelphia. Description/Address Leased/Owned Date of Lease Expiration Net Book Value of Property Amount of Deposits (In Thousands) 501-503 Knowles Avenue Southampton, Pennsylvania 18966 Leased 02/28/2031(1) $ 67 $ 444,880 1710 Union Boulevard Allentown, Pennsylvania 18019 Leased 11/30/2039 - 130,638 117-21 Spring Garden Street (Suite A) Philadelphia, Pennsylvania 19123 Leased 2/28/2040 52 37,665 100 Spring Garden Street Philadelphia, Pennsylvania 19123 Leased 8/31/2038(2) - Not applicable _________________ (1) Such lease has a five year renewal option which would commence on March 1, 2031 and end on February 28, 2036. (2) Such lease has a five year renewal option which would commence on September 1, 2039 and end on August 31, 2044. Item 3. Legal Proceedings. Quaint Oak Bancorp is not involved in any legal proceedings except nonmaterial litigation incidental to the ordinary course of business. Item 4. Mine Safety Disclosures. Not applicable. PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Quaint Oak Bancorp’s common shares are quoted on the OTCQB, the OTC market tier for companies that report to the SEC or a U.S. banking or insurance regulator, under the symbol “QNTO.” As of March 23, 2026 Quaint Oak Bancorp had 2,640,997common shares outstanding held of record by 139 shareholders. The number of shareholders does not reflect the number of persons or entities who may hold stock in nominee or “street” name through brokerage firms or others. (b) Not applicable. 46
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(c) Purchases of Equity Securities Quaint Oak Bancorp’s repurchases of its common stock during the quarter ended December 31, 2025, including stock for stock option exercises of outstanding stock options, are set forth in the table below: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1, 2025 – October 31, 2025 - $ - - 24,375 November 1, 2025 – November 30, 2025 - - - 24,375 December 1, 2025 – December 31, 2025 - - - 24,375 Total - $ - - 24,375 Notes to this table: (1) On December 12, 2018, the Board of Directors of Quaint Oak Bancorp approved its fifth share repurchase program which provides for the repurchase of up to 50,000 shares, or approximately 2.5% of the Company’s then issued and outstanding shares of common stock and announced the fifth repurchase program on Form 8-K filed on December 13, 2018. The repurchase program does not have an expiration date. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The information required herein is incorporated by reference from pages 1 to 16 of the Annual Report attached hereto as Exhibit 13.0 (“Annual Report”). Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company (as defined) we are not required to provide this information. Item 8. Financial Statements and Supplementary Data. The information required herein is incorporated by reference from pages 19 to 66 of the Annual Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not Applicable. 47
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Item 9A. Controls and Procedures (a) Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2025. Based on their evaluation of Quaint Oak Bancorp’s disclosure controls and procedures, Quaint Oak Bancorp’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by Quaint Oak Bancorp in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and regulations are operating in an effective manner. (b) Management’s Annual Report on Internal Control over Financial Reporting Management of Quaint Oak Bancorp is responsible for establishing and maintaining an adequate system of internal control over financial reporting. An adequate system of internal control encompasses the processes and procedures that have been established by management to: ● Maintain records that accurately reflect Quaint Oak Bancorp’s transactions; ● Prepare financial statements and footnote disclosures in accordance with GAAP that can be relied upon by external users; ● Prevent and detect unauthorized acquisition, use or disposition of Quaint Oak Bancorp’s assets that could have a material effect on the financial statements. Management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of Quaint Oak Bancorp’s controls over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on our evaluation under the framework in Internal Control – Integrated Framework, management concluded that Quaint Oak Bancorp’s internal control over financial reporting was effective as of December 31, 2025. Furthermore, during the conduct of its assessment, management identified no material weakness in its financial reporting control system. (c) No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the fourth fiscal quarter of fiscal 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. During the three months ended December 31, 2025, none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's common stock that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" as such term is defined in Item 408(c) of Regulation S-K. Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 48
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PART III Item 10. Directors and Executive Officers and Corporate Governance. The information required herein is incorporated by reference from the information contained in the sections captioned “Information with Respect to Nominees for Director, Continuing Directors and Executive Officers,” "Insider Trading Policy" and “Beneficial Ownership of Common Stock by Certain Owners and Management – Delinquent Section 16(a) Reports” in Quaint Oak Bancorp’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 13, 2026 (the “Proxy Statement”), a copy of which will be filed with the Securities and Exchange Commission. Quaint Oak Bancorp has adopted a Code of Conduct and Ethics that applies to its principal executive officer and principal financial officer, as well as other officers and employees of Quaint Oak Bancorp and Quaint Oak Bank. A copy of the Code of Ethics is available on the Company’s website at www.quaintoak.com. Item 11. Executive Compensation. The information required herein is incorporated by reference from the information contained in the sections captioned “Information with Respect to Nominees for Director, Continuing Directors and Executive Officers – Director Compensation,” "Practices Related to the Grant of Equity Awards" and “Executive Compensation” in the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required herein is incorporated by reference from the information contained in the section captioned “Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management” in the Proxy Statement. Equity Compensation Plan Information. The following table provides information as of December 31, 2025 with respect to shares of common stock that may be issued under our existing equity compensation plans, which consist of the 2018 and 2023 Stock Incentive Plans. Both of these plans were approved by our shareholders. Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted- average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 292,033 $ 15.03 - Equity compensation plans not approved by security holders - - - Total 292,033 $ 15.03 - 49
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Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required herein is incorporated by reference from the information contained in the section captioned “Information with Respect to Nominees for Director, Continuing Directors and Executive Officers – Transactions with Certain Related Persons” in the Proxy Statement. Item 14. Principal Accountant Fees and Services. The information required herein is incorporated by reference from the information contained in the section captioned “Ratification of Appointment of Independent Registered Public Accounting Firm – Audit Fees” in the Proxy Statement. PART IV Item 15. Exhibit and Financial Statement Schedules. (a)(1) The following financial statements are incorporated by reference from Item 8 hereof (see Exhibit 13.0): Report of Independent Registered Public Accounting Firm (S.R. Snodgrass, P.C., Cranberry Township, Pennsylvania, PCAOB Firm ID 74) Consolidated Balance Sheets as of December 31, 2025 and 2024 Consolidated Statements of Income for the Years Ended December 31, 2025 and 2024 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025 and 2024 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025 and 2024 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 Notes to Consolidated Financial Statements (2) All schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto. 50
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(3) Exhibits The following exhibits are filed as part of this Form 10-K and this list includes the Exhibit Index. No. Exhibits Location 3.1 Articles of Incorporation of Quaint Oak Bancorp, Inc. (1) 3.2 Amended and Restated Bylaws of Quaint Oak Bancorp, Inc. (2) 4.1 Form of Stock Certificate of Quaint Oak Bancorp, Inc. (1) 4.2 Form of Subordinated Note due December 31, 2028 (3) 4.5 Form of Senior Unsecured Note due 2028. (4) 4.6 Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (5) 10.1 Amended and Restated Employment Agreement among Quaint Oak Bancorp, Inc., Quaint Oak Bank and Robert T. Strong* (6) 10.2 Amended and Restated Employment Agreement among Quaint Oak Bancorp, Inc., Quaint Oak Bank and John J. Augustine* (6) 10.3 Amended and Restated Employment Agreement among Quaint Oak Bancorp, Inc., Quaint Oak Bank and William R. Gonzalez* (6) 10.4 Employment Agreement among Quaint Oak Bancorp, Inc., Quaint Oak Bank and Aimee K. Ott* (6) 10.5 Quaint Oak Bancorp, Inc. 2018 Stock Incentive Plan* (7) 10.6 Form of Subordinated Note Purchase Agreement dated December 27, 2018 (3) 10.7 Quaint Oak Bancorp, Inc. 2023 Stock Incentive Plan (8) 10.8 Form of Senior Unsecured Note Purchase Agreement dated February 21, 2025 (4) 13.0 Annual Report to Shareholders Filed herewith 19.1 Insider Trading Policy (9) 21.0 Subsidiaries of the Registrant Filed herewith 23.1 Consent of S.R. Snodgrass, P.C. Filed herewith 31.1 Certification of Chief Executive Officer Filed herewith 31.2 Certification of Chief Financial Officer Filed herewith 32.0 Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer Filed herewith 101.INS Inline XBRL Instance Document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document Filed herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 10) Filed herewith _______________________ * Denotes management compensation plan or arrangement. (1) Incorporated by reference from the Company’s Registration Statement on Form SB-2, filed on March 21, 2007, as amended, and declared effective on May 14, 2007 (File No. 333-141474). (2) Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 12, 2026 (File No. 000- 52694). (3) Incorporated by reference from the Company’s Current Report on Form 8-K, filed on December 28, 2018 (File No. 000- 52694). (4) Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 21, 2025 (File No. 000- 52694). (5) Incorporated by reference from the Company’s Annual Report on Form 10-K, filed with the Commission on March 27, 2020 (File No. 000-52694). (6) Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 19, 2025 (File No. 000- 52694). (7) Incorporated by reference from the Company’s definitive proxy statement for the Annual Meeting of Shareholders held on May 9, 2018 (Commission File No. 000-526341) filed with the Commission on April 6, 2018. (8) Incorporated by reference from the Company’s definitive proxy statement for the Annual Meeting of Shareholders held on May 10, 2023 (Commission File No. 000-526341) filed with the Commission on April 5, 2023. (9) Incorporated by reference from the Company’s Annual Report on Form 10-K, filed on March 28, 2025 (File No. 000- 52694). 51
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.Item 16. Form 10-K Summary. None. 52
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. QUAINT OAK BANCORP, INC. March 27, 2026 By:/s/ Robert T. Strong Robert T. Strong Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Name Title Date /s/ Robert T. Strong Chief Executive Officer March 27, 2026 Robert T. Strong (Principal Executive Officer) /s/ John J. Augustine Executive Vice President and March 27, 2026 John J. Augustine Chief Financial Officer (Principal Financial and Accounting Officer) /s/ William R. Gonzalez Director and President March 27, 2026 William R. Gonzalez /s/ Robert J. Phillips Chairman March 27, 2026 Robert J. Phillips /s/ James J. Clarke Director March 27, 2026 James J. Clarke /s/ Andrew E. DiPiero, Jr. Director March 27, 2026 Andrew E. DiPiero, Jr. /s/ Kenneth R. Gant Director March 27, 2026 Kenneth R. Gant /s/ Bora Ozkan Director March 27, 2026 Bora Ozkan /s/ Susan M. Vettori Director March 27, 2026 Susan M. Vettori 53
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EXHIBIT 13.0
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Quaint Oak Bancorp, Inc. Fueling the Growth of Business CEO’S LETTER TO SHAREHOLDERS To Our Valued Shareholders: On behalf of the Board of Directors, Senior Management and Team Members of the Quaint Oak Family of Companies, I am pleased to present our 2025 Annual Report to Shareholders. The year 2025 was defined by disciplined execution, strategic expansion, and a continued commitment to building the future of Quaint Oak. In an operating environment that has remained dynamic and competitive, our team delivered steady performance while advancing the core initiatives that position us for long term, sustainable growth. Throughout the year, we strengthened our foundation as a diversified financial services company—one that balances the stability of traditional community banking with the additional reach and capabilities of our specialty platforms. Our SBA initiative continued to scale, supported by expanding production capacity and deepening referral networks. Specialty real estate financing remained a key contributor, and our international correspondent banking platform was further enhanced to serve customers with speed, expertise, and tailored solutions going forward. We continued investing in our talent, technology, and risk management infrastructure—areas that are essential to maintaining the strong internal controls and regulatory compliance our shareholders expect. These investments ensure that as we grow, we do so with financial resilience, efficiency, and a clear focus on regulatory expectations and best practices. As we look ahead, we remain focused on executing the strategic priorities that will drive value creation: expanding our specialty capabilities, enhancing operational efficiency, strengthening core banking performance, and fostering a culture rooted in teamwork, transparency, and excellence. While the financial services industry continues to evolve in correspondent banking, our overall strategy is built for consistency and adaptability—qualities that define who we are and how we operate. This progress is made possible by the dedication of our employees, the trust of our customers, and the continued support of our shareholders. I remain deeply proud of our team and confident in the opportunities before us. As always, our current and continued business strategy focuses on long-term profitability, sound credit quality, and maintaining healthy capital ratios, reflecting our strong commitment to shareholder value. Thank you for your continued confidence in Quaint Oak Bancorp, Inc. I look forward to the year ahead and to building, together, on the momentum we have created. Sincerely, Robert T. Strong Chief Executive Officer
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TABLE OF CONTENTS Page Management’s Discussion and Analysis of Financial Condition and Results of Operations 1 Reports of Independent Registered Public Accounting Firm 17 Consolidated Balance Sheets 19 Consolidated Statements of Income 20 Consolidated Statements of Comprehensive Income 22 Consolidated Statements of Stockholders’ Equity 23 Consolidated Statements of Cash Flows 24 Notes to Consolidated Financial Statements 26 General Information 65 Locations 66
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations General Quaint Oak Bancorp, Inc. (the “Company”) was formed in connection with Quaint Oak Bank’s (the “Bank”) conversion to a stock savings bank completed on July 3, 2007. The Company’s results of operations are dependent primarily on the results of Quaint Oak Bank, a wholly owned subsidiary of the Company, along with the Bank’s wholly owned subsidiaries. The Bank, a Pennsylvania- chartered stock savings bank, is headquartered in Southampton, Pennsylvania and conducts business through three regional offices located in the Delaware Valley, Lehigh Valley and Philadelphia markets. At December 31, 2025, the Bank has five active wholly- owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, QOB Properties, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, each a Pennsylvania limited liability company. On March 29, 2024, Quaint Oak Bank sold its 51% interest in Oakmont Capital Holdings, LLC (“OCH”), a multi-state equipment finance company based in West Chester, Pennsylvania. The decision was based on a number of strategic priorities and other factors. As a result of this action, Quaint Oak Bancorp classified the operations of OCH as discontinued operations under ASC 205-20. Also on March 29, 2024, the Company discontinued the operations of Quaint Oak Real Estate, LLC, a 100% wholly owned subsidiary of the Bank engaged in the real estate brokerage business. All significant intercompany balances and transactions have been eliminated. Quaint Oak Mortgage offers mortgage banking services in the Lehigh Valley, Delaware Valley and Philadelphia County region of Pennsylvania, including conventional, FHA, VA, and USDA loans, almost all of which are underwritten to GSE-guidelines for sale in the secondary market. In February 2019, Quaint Oak Mortgage opened a mortgage banking office in Philadelphia, Pennsylvania. Oakmont Commercial, LLC began operations in October 2021 and operates as a multi-state specialty commercial real estate financing company, providing loans for commercial real estate purchases, refinancing, and development projects to small businesses primarily on the East Coast and generally in the Mid-Atlantic and Southeast. Oakmont Commercial focuses on originations of low loan-to-value, high yield, primarily owner-occupied commercial real estate collateralized loans to be sold in the secondary market to institutional and bank buyers. Quaint Oak Abstract began operation in July 2009 offering title insurance, primarily in the Lehigh Valley and Bucks County regions of Pennsylvania. 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, located in Southampton, Pennsylvania, began operations in August 2016 and offers comprehensive coverage, including home, auto, life, and business insurance. Quaint Oak Mortgage cross-sells products from Quaint Oak Bank’s title and insurance businesses, Quaint Oak Abstract and Quaint Oak Insurance, to its mortgage customers. Quaint Oak Bank established international correspondent banking operations in March 2022 and maintains a partnership with one international banking entity based in Puerto Rico that utilizes Quaint Oak Bank to help facilitate U.S. dollar payments. As of December 31, 2025, the international correspondent banking division had $4.4 million, or 0.7%, of deposits. Quaint Oak Bank’s profitability depends, to a large extent, on net interest income, which is the difference between the income earned on its loan and investment portfolios and the cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by provisions for credit losses, fee income and other non-interest income and non-interest expense. Non- interest expense principally consists of compensation, directors’ fees and expenses, office occupancy and equipment expense, data processing expense, professional fees, advertising expense, FDIC deposit insurance assessment, and other expenses. 1
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Quaint Oak Bank’s business consists primarily of originating commercial real estate loans, commercial business loans, one-to- four family residential owner occupied loans and multi-family residential loans, generally within its market area. The market for our deposit customers is generated primarily through local market certificates of deposit and business checking and money market accounts. At December 31, 2025, approximately 42.0% of Quaint Oak Bank’s total deposits were held by customers outside the Commonwealth of Pennsylvania. Our branch offices are primarily cashless. Cash transactions at our branch offices are facilitated through a correspondent banking relationship with another Pennsylvania-based national commercial bank. Our real estate loans are primarily secured by properties in the mid-Atlantic region and are originated through Quaint Oak Mortgage and our subsidiary, Oakmont Commercial, although we have originated loans throughout the continental United States through other relationships we have with brokers. At December 31, 2025, commercial real estate loans and commercial business loans comprise the largest percentage of Quaint Oak Bank’s loan portfolio, before net items, at 56.7% and 17.6%, respectively. Quaint Oak Bank’s loans are primarily funded by certificates of deposit, money market accounts and business checking. At December 31, 2025, certificates of deposit amounted to 59.4% of total deposits compared to 51.1% of total deposits at December 31, 2024. At December 31, 2025, interest bearing checking accounts amounted to 17.7% of total deposits compared to 8.6% at December 31, 2024. At December 31, 2025, money market accounts amounted to 11.8% of total deposits compared to 29.3% of total deposits at December 31, 2024. At December 31, 2025, non- interest bearing checking accounts amounted to 11.0% of total deposits compared to 10.8% of total deposits at December 31, 2024. Management anticipates that certificates of deposit, money market accounts, interest bearing checking, and business checking will continue to be the primary sources of funding for Quaint Oak Bank’s assets. Our results of operations are significantly affected by general economic and competitive conditions, particularly with respect to changes in interest rates, government policies and actions of regulatory authorities as well as other factors beyond our control. Future changes in applicable law, regulations or government policies may materially affect our financial condition and results of operations. Forward-Looking Statements Are Subject to Change This Annual Report contains certain forward-looking statements (as defined in the Securities Exchange Act of 1934 and the regulations thereunder). Forward-looking statements are not historical facts but instead represent only the beliefs, expectations or opinions of the Company and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, or words of similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly.” Forward-looking statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks, uncertainties and assumptions, many of which are difficult to predict and generally are beyond the control of and its management, that could cause actual results to differ materially from those expressed in, or implied or projected by, forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) economic and competitive conditions which could affect the volume of loan originations, deposit flows and real estate values; (2) the levels of non-interest income and expense and the amount of credit losses; (3) competitive pressure among depository institutions increasing significantly; (4) changes in the interest rate environment causing reduced interest margins; (5) general economic conditions, either nationally or in the markets in which the Company is or will be doing business, being less favorable than expected;(6) political and social unrest, including acts of war or terrorism; or (7) legislation or changes in regulatory requirements adversely affecting the business in which the Company is or will be engaged. 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. Critical Accounting Estimates In reviewing and understanding financial information for the Company, you are encouraged to read and understand the significant accounting policies used in preparing our financial statements. These policies are described in Note 2 of the notes to our financial statements. The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the consolidated financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. The following accounting estimates comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods. Management evaluates the credit quality of the Company’s loan portfolio on an ongoing basis and performs a formal review of the adequacy of the allowance for credit losses (“ACL”) on a quarterly basis. The ACL is established through a provision for credit losses charged to earnings and is maintained at a level that management considers to be an estimate of the lifetime expected credit
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losses of the portfolio as of the evaluation date. Loans, or portions of loans, determined by management to be uncollectible are charged off against the ACL, while recoveries of amounts previously charged off are credited to the ACL. Determining the amount of the ACL is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows, estimated losses on pools of homogeneous loans based on historical loss experience and reasonable and supportable forecasts, as well as consideration of current economic trends and conditions, all of which may be susceptible to significant change. Banking regulators, as an integral part of their examination of the Company, also review the ACL, and may require, based on information available to them at the time of their examination, that management make the necessary adjustments to bring the ACL balance to an appropriate level. Additionally, the ACL is determined, in part, by the composition and size of the loan portfolio. 2
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Selected Consolidated Financial and Other Data. Set forth below is selected financial and other data of Quaint Oak Bancorp, Inc. You should read the financial statements and related notes contained in this Annual Report which provide more detailed information. At or For the Years Ended December 31, 2025 2024 (Dollars in Thousands) Selected Financial and Other Data: Total assets $ 675,853 $ 685,168 Cash and cash equivalents 53,547 62,989 Investment in interest-earning time deposits 912 912 Investment securities available for sale at fair value 882 1,666 Loans held for sale 60,956 64,281 Loans receivable, net 540,698 534,693 Investment in Federal Home Loan Bank stock, at cost 291 2,214 Premises and equipment, net 1,540 1,626 Deposits 597,278 553,252 Federal Home Loan Bank borrowings - 47,855 Senior debt, net of amortized costs 9,619 - Subordinated debt 8,000 22,000 Total Stockholders’ Equity 52,329 52,617 Selected Operating Data: Total interest income $ 40,629 $ 43,437 Total interest expense 22,726 25,620 Net interest income 17,903 17,817 Provision for credit losses 1,217 1,534 Net interest income after provision for credit losses 16,686 16,283 Total non-interest income 7,159 8,156 Total non-interest expense 23,201 21,018 Income before income taxes 644 3,421 Income taxes 322 1,032 Net income $ 322 $ 2,389 Net income from discontinued operations $ - $ 406 Net income attributable to Quaint Oak Bancorp, Inc. $ 322 $ 2,795 Selected Operating Ratios (1): Average yield on interest-earning assets 6.41% 6.32% Average rate on interest-bearing liabilities 4.06 4.48 Average interest rate spread (2) 2.35 1.84 Net interest margin (2) 2.83 2.59 Average interest-earning assets to average interest-bearing liabilities 113.19 120.08 Net interest income after provision for credit losses to non-interest expense 71.92 77.47 Total non-interest expense to average assets 3.55 2.99 Efficiency ratio (3) 92.58 80.93 Return on average assets 0.07 0.40 Return on average equity 0.82 5.53 Asset Quality Ratios (4): Non-performing loans as a percent of loans receivable, net (5) 1.36% 1.18% Non-performing assets as a percent of total assets(5) 1.14 0.92 Allowance for credit losses as a percent of non-performing loans 84.01 102.45 Allowance for credit losses as a percent of total loans receivable 1.13 1.20 Net charge-offs to average loans receivable 0.27 0.29 3
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations At or For the Years Ended December 31, 2025 2024 Capital Ratios (4): Tier 1 leverage ratio 10.26% 10.80% Common Tier 1 capital ratio 12.36 13.09 Tier 1 risk-based capital ratio 12.36 13.09 Total risk-based capital ratio 13.55 14.34 ___________________ (1) With the exception of end of period ratios, all ratios are based on average daily balances during the indicated periods. (2) Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest- earning assets. (3) The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income. (4) Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable. (5) Non-performing assets consist of non-performing loans at December 31, 2025 and 2024. Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due. Comparison of Financial Condition at December 31, 2025 and December 31, 2024 General. The Company’s total assets at December 31, 2025 were $675.9 million, a decrease of $9.3 million, or 1.4%, from $685.2 million at December 31, 2024. This decrease in total assets was primarily due to a $9.4 million, or 15.0%, decrease in cash and cash equivalents, a $3.3 million, or 5.2%, decrease in loans held for sale, a $1.9 million, or 86.9%, decrease in investment in Federal Home Loan Bank stock, at cost, and a $784,000, or 47.1%, decrease in investment securities available for sale. Partially offsetting the decrease in total assets was a $6.0 million, or 1.1%, increase in loans receivable, net of allowance for credit losses. Cash and Cash Equivalents. Cash and cash equivalents decreased $9.4 million, or 15.0%, from $63.0 million at December 31, 2024 to $53.5 million at December 31, 2025. Cash and cash equivalents decreased as excess liquidity was used to fund the repayment of FHLB borrowings. Investment Securities Available for Sale. Investment securities available for sale decreased $784,000, or 47.1%, from $1.7 million at December 31, 2024 to $882,000 at December 31, 2025 due primarily to the principal repayments on these securities during the year ended December 31, 2025. Loans Held for Sale. Loans held for sale decreased $3.3 million, or 5.2%, from $64.3 million at December 31, 2024 to $61.0 million at December 31, 2025 as the Bank’s commercial real estate subsidiary, Oakmont Commercial, LLC, originated $52.0 million of commercial real estate loans during the year ended December 31, 2025 and sold $49.5 million of loans in the secondary market during this same period. The Bank’s mortgage banking subsidiary, Quaint Oak Mortgage, LLC, originated $112.3 million of one-to-four family residential loans during the year ended December 31, 2025 and sold $113.9 million of loans in the secondary market. Additionally, the Bank originated $14.7 million of SBA loans for sale and sold $18.9 million of SBA loans in the secondary market in the same period. Loans Receivable, Net. Loans receivable, net, increased $6.0 million, or 1.1% from $534.7 million at December 31, 2024 to $540.7 million at December 31, 2025. The largest increases within the loan portfolio occurred in one-to-four family owner occupied loans which increased $15.7 million, or 60.6%, commercial real estate loans, which increased $12.1 million, or 4.1%, and construction loans which increased $5.1 million, or 28.1%. Partially offsetting these increases were commercial business loans which decreased $18.6 million, or 16.2%, one-to-four family non-owner occupied loans which decreased $4.7 million, or 14.0%, multi-family residential loans which decreased $4.6 million, or 10.2%, and home equity loans which decreased $365,000, or 6.4%. The Company continues its strategy of diversifying its loan portfolio with higher yielding and shorter-term loan products and selling substantially all its newly originated one-to-four family owner-occupied loans into the secondary market. 4
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table summarizes the industry concentrations within the multi-family and commercial real estate portfolios: December 31, 2025 2024 (in Thousands) Real Estate Rental and Leasing $ 126,316 $ 135,874 Health Care and Social Assistance 37,681 35,864 Accommodation and food services 33,665 33,811 Construction 28,131 25,087 Manufacturing 22,404 16,515 Other services (except public administration) 21,558 21,321 Retail trade 16,340 24,657 Arts, entertainment, and recreation 14,354 14,497 Wholesale trade 14,166 8,349 Administrative and Support and Waste Services 9,516 4,703 Finance and insurance 9,106 6,162 Professional, scientific and technical services 7,297 5,686 Transportation and warehousing 4,202 5,901 Other 5,781 4,612 Total $ 350,517 $ 343,039 The commercial real estate and multi-family portfolio consists of 57% owner occupied commercial real estate loans and 43% of non-owner occupied commercial real estate loans as of December 31, 2025. The following table summarizes the non-owner occupied commercial real estate portfolio and the percent of total loans receivable, net. December 31, 2025 2024 Balance Percent of Total Loans Receivable, net Balance Percent of Total Loans Receivable, net (Dollars in Thousands) Real estate rental and leasing $ 115,747 21.4% $ 123,103 23.0% Construction 11,002 2.0 14,987 2.8 Health care and social assistance 5,002 0.9 8,345 1.6 Finance and insurance 4,792 0.9 4,948 0.9 Other services (except public administration) 4,135 0.8 4,347 0.8 Arts, entertainment, and recreation 3,069 0.6 72 0.0 Other 6,110 1.1 5,986 1.2 Total $ 149,857 27.7% $ 161,788 30.3% 5
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table summarizes the commercial real estate rental and leasing non-owner occupied loan portfolio outstanding balance, total commitment and loan to value (“LTV”) ratio by geographic location: 2025 2024 Balance Total Commitment Weighted Average LTV Balance Total Commitment Weighted Average LTV (Dollars in Thousands) Pennsylvania (1) $ 38,515 $ 78,601 49.0% $ 44,959 $ 86,035 52.3% Philadelphia 36,598 76,095 48.1 36,142 77,810 46.4 Delaware 15,187 32,125 47.3 15,583 32,125 48.5 New Jersey 9,156 19,145 47.8 9,705 19,315 50.2 Ohio 6,719 10,100 66.5 6,914 10,100 68.5 Other 9,572 16,430 58.3 9,800 16,430 59.6 Total $ 115,747 $ 232,496 49.8% $ 123,103 $ 241,815 50.9% (1) Pennsylvania excluding Philadelphia. The following table summarizes the commercial real estate construction non-owner occupied loan portfolio outstanding balance, total commitment and LTV ratio by geographic location: 2025 2024 Balance Total Commitment Weighted Average LTV Balance Total Commitment Weighted Average LTV (Dollars in Thousands) Pennsylvania (1) $ 6,351 $ 11,567 54.9% $ 7,477 $ 13,996 53.4% Philadelphia 4,651 9,685 48.0 4,782 9,685 49.4 New Jersey - - - 2,728 8,200 33.3 Total $ 11,002 $ 21,252 51.8% $ 14,987 $ 31,881 47.0% (1) Pennsylvania excluding Philadelphia. Investment in Federal Home Loan Bank Stock. The Company’s investment in Federal Home Loan Bank stock decreased $1.9 million, or 86.9%, from $2.2 million at December 31, 2024 to $291,000 at December 31, 2025 as the Bank decreased its level of FHLB borrowings. Bank-Owned Life Insurance. The Company holds bank-owned life insurance (BOLI) 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 cash surrender value of the insurance policies amounted to $4.6 million and $4.4 million at December 31, 2025 and 2024, respectively. Premises and Equipment, Net. Premises and equipment, net, decreased $86,000, or 5.3%, to $1.5 million at December 31, 2025 from $1.6 million at December 31, 2024. Goodwill and Other Intangible, Net. The Bank recognized $2.1 million of goodwill as part of the acquisition of Oakmont Capital Holdings, LLC in January 2021. The Bank sold its 51% interest in OCH on March 29, 2024. See Note 3 – Discontinued Operations. Goodwill and other intangible assets, net of accumulated amortization, is also related to the acquisition by Quaint Oak Insurance Agency of the renewal rights to a book of business on August 1, 2016 at a total cost of $1.0 million, a portion of which is being amortized. The balance of other intangible assets at December 31, 2025 was $28,000, net of accumulated amortization of $457,000. Other Real Estate Owned, Net. At December 31, 2025, other real estate owned (OREO) amounted to $360,000, consisting of one property that was collateral for a non-performing construction loan. There was no other real estate owned as of December 31, 2024. 6
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Prepaid Expenses and Other Assets. Prepaid expenses and other assets decreased $27,000, or 0.3%, to $7.76 million at December 31, 2025 from $7.79 million at December 31, 2024. Deposits. Total deposits increased $44.0 million, or 8.0%, to $597.3 million at December 31, 2025 from $553.3 million at December 31, 2024. This increase in deposits was primarily attributable to an increase of $71.8 million, or 25.4%, in certificates of deposit, an increase of $57.9 million, or 121.1%, in interest bearing checking accounts, an increase of $5.9 million, or 9.8%, in non- interest bearing checking accounts, and a $207,000, or 42.1%, increase in savings accounts. These increases in deposits were partially offset by a decrease of $91.8 million, or 56.6%, in money market accounts due to the discontinuation of a deposit placement agreement. The decrease in business checking deposits was a result of a strategic exit from a correspondent banking relationship. The increase in certificates of deposits was primarily due to the Bank’s competitive rate offerings in our market area. Borrowings. Total Federal Home Loan Bank (FHLB) borrowings decreased $47.9 million, or 100.0%, to none at December 31, 2025 from $47.9 million at December 31, 2024 as the Bank paid down the $47.9 million of borrowings. Senior Debt. Senior debt, net of unamortized debt issuance costs, increased $9.6 million from none at December 31, 2024 as the Company entered into a Senior Unsecured Note Purchase Agreement with certain institutional accredited investors pursuant to which the Company issued an aggregate of $9.75 million in aggregate principal amount of Fixed Rate Unsecured Senior Notes due March 1, 2028 (the “Senior Debt Notes”) in a private placement. The Company issued to an accredited individual investor an additional $250,000 in principal amount of the Senior Debt Notes as of March 4, 2025 for a total of $10.0 million in aggregate principal amount. The Senior Debt Notes bear interest at a fixed annual rate of 11.00%, payable semi-annually in arrears on March 1 and September 1 of each year, beginning September 1, 2025. The maturity date of the Senior Debt Notes is March 1, 2028. Subordinated Debt. Subordinated debt, net of unamortized debt issuance costs, decreased $14.0 million, or 63.6%, to $8.0 million at December 31, 2025 from $22.0 million at December 31, 2024 as the Company used the net proceeds from the sale of the Senior Debt Notes to repay a portion of the outstanding $14.0 million aggregate principal amount of its 8.5% Fixed Rate Subordinated Notes upon their maturity on March 15, 2025. The remaining $8.0 million of subordinated debt matures on December 31, 2028. Stockholders’ Equity. Total stockholders’ equity from continuing operations decreased $288,000, or 0.6%, to $52.3 million at December 31, 2025 from $52.6 million at December 31, 2024. Contributing to the decrease were dividends paid of $894,000, and purchase of treasury stock of $44,000. The decrease in stockholders’ equity was partially offset by net income for the year ended December 31, 2025 of $322,000, amortization of stock awards and options under our stock compensation plans of $251,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of $74,000, and other comprehensive income, net of $3,000. 7
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Comparison of Operating Results for the Years Ended December 31, 2025 and 2024 General. Net income amounted to $322,000 for the year ended December 31, 2025, a decrease of $2.5 million, or 88.5%, compared to net income of $2.8 million for the year ended December 31, 2024. The decrease in net income on a comparative year basis was primarily the result of a decrease in interest and dividend income of $2.8 million, an increase in non-interest expense of $2.2 million, a decrease in non-interest income of $997,000, and a decrease in net income from discontinued operations of $406,000, partially offset by a decrease in interest expense of $2.9 million, a decrease in the net provision for income taxes from continuing operations of $710,000, and a decrease in the provision for credit losses of $317,000. Net Interest Income. Net interest income increased $86,000, or 0.5%, to $17.9 million for the year ended December 31, 2025 from $17.8 million for the year ended December 31, 2024. The increase in net interest income was driven by a $2.9 million, or 11.3%, decrease in interest expense, partially offset by a $2.8 million, or 6.5%, decrease in interest income. Interest Expense. Interest expense decreased $2.9 million, or 11.3%, to $22.7 million for the year ended December 31, 2025 from $25.6 million for the year ended December 31, 2024. The decrease in interest expense was driven by a $4.2 million, or 18.0%, decrease in interest expense on deposits, which was primarily attributable to an $82.0 million decrease in the average balances of money market deposits which decreased from $211.0 million for the year ended December 31, 2024 to $129.0 million for the year ended December 31, 2025 and had the effect of decreasing interest expense by $3.6 million, and a 108 basis point decrease in average rate of money markets which decreased from 4.44% for the year ended December 31, 2024, to 3.36% for the year ended December 31, 2025. Also contributing to the decrease was a $39.0 million decrease in the average balances of business checking accounts which decreased from $93.3 million for the year ended December 31, 2024 to $54.3 million for the year ended December 31, 2025 and had the effect of decreasing interest expense by $1.8 million, and a 216 basis point decrease in the average yield on business checking accounts which decreased from 4.50% for the year ended December 31, 2024 to 2.34% for the year ended December 31, 2025 and had the effect of decreasing interest expense by $1.2 million. The decrease in average balances of interest-bearing deposits was a result of a strategic exit of a correspondent banking relationship for business checking deposits and reduction in a money market deposits through a deposit placement agreement. These decreases in interest expense were partially offset by $3.5 million increase in the interest expense on certificates of deposit due to an $85.5 million increase in the average balance of certificates of deposit which increased from $230.5 million for the year ended December 31, 2024 to $316.0 million for the year ended December 31, 2025. These decreases in interest expense were also partially offset by a $1.3 million, or 240.9% increase in the interest expense on Federal Home Loan Bank borrowings due to a $25.1 million, or 171.0%, increase in the average balance of Federal Home Loan Bank borrowings which increased from $14.6 million for the year ended December 31, 2024 to $39.7 million for the year ended December 31, 2025, and had the effect of increasing interest expense $941,000, and a 94 basis point increase on the rate on Federal Home Loan borrowings which increased from 3.74% for the year ended December 31, 2024, to 4.68% for the year ended December 31, 2025, and had the effect of increasing interest expense by $373,000. The $85.5 million increase in the average balance of certificates of deposits was primarily due to the Bank’s competitive rate offerings in our market area. The average interest rate spread increased from 1.84% for the year ended December 31, 2024 to 2.35% for the year ended December 31, 2025 while the net interest margin increased from 2.59% for the year ended December 31, 2024 to 2.83% for the year ended December 31, 2025. Interest and Dividend Income. Interest and dividend income decreased $2.8 million, or 6.5%, to $40.6 million for the year ended December 31, 2025 from $43.4 million for the year ended December 31, 2024. The decrease in interest and dividend income for the year ended December 31, 2025 over the year ended December 31, 2024 was primarily driven by a decrease in the average balance of loans receivable, net, including loans held for sale, which decreased $23.8 million from $621.0 million for the year ended December 31, 2024 to $597.2 million for the year ended December 31, 2025 and had the effect of decreasing interest income $1.5 million. Also contributing to the decrease in interest and dividend income was a $29.6 million decrease in the average balance of due from banks – interest earning, which decreased from $61.9 million for the year ended December 31, 2024 to $32.3 million for the year ended December 31, 2025, and had the effect of decreasing interest income $1.5 million, and a 108 basis point decrease in the average yield on due from banks - interest earning from 4.96% for the year ended December 31, 2024 to 3.88% for the year ended December 31, 2025, and had the effect of decreasing interest income $348,000. Partially offsetting this decrease in interest and dividend income was a nine basis point increase in the average yield on loans receivable, net from 6.45% for the year ended December 31, 2024 to 6.54% for the year ended December 31, 2025, and had the effect of increasing interest income $518,000. The $29.6 million decrease in the average balance of due from banks – interest earning was due to a higher level of balances during 2024 due to proceeds from the sale of the Bank’s 51% ownership of Oakmont Capital Holdings, LLC on March 29, 2024. 8
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. All average balances are based on daily balances. Year Ended December 31, 2025 2024 Average Balance Interest Average Yield/ Rate Average Balance Interest Average Yield/ Rate (Dollars in thousands) Interest-earning assets: Due from banks, interest-earning $ 32,328 $ 1,255 3.88% $ 61,901 $ 3,070 4.96% Investment in interest-earning time deposits 912 52 5.70 1,034 44 4.26 Investment securities available for sale 1,292 125 9.67 2,042 152 7.44 Loans receivable, net (1) (2) 597,184 39,039 6.54 621,015 40,058 6.45 Investment in FHLB stock 1,996 158 7.92 968 113 11.67 Total interest-earning assets 633,712 40,629 6.41% 686,960 43,437 6.32% Non-interest-earning assets 19,156 17,148 Total assets $ 652,868 $ 704,108 Interest-bearing liabilities: Savings accounts $ 632 $ 1 0.16% $ 730 $ 1 0.14% Money market accounts 128,977 4,330 3.36 210,977 9,372 4.44 Business checking accounts 54,280 1,271 2.34 93,328 4,200 4.50 Certificate of deposit accounts 316,026 13,364 4.23 230,499 9,568 4.15 Total deposits 499,915 18,966 3.79 535,534 23,141 4.32 FHLB borrowings 39,720 1,858 4.68 14,564 545 3.74 FRB borrowings 12 1 8.33 - - - Senior debt 9,586 947 9.88 - - - Subordinated debt 10,615 954 8.99 21,997 1,934 8.79 Total interest-bearing liabilities 559,848 22,726 4.06% 572,095 25,620 4.48% Non-interest-bearing liabilities 40,795 81,436 Total liabilities 600,643 653,531 Stockholders’ Equity 52,225 50,577 Total liabilities and Stockholders’ Equity $ 652,868 $ 704,108 Net interest-earning assets $ 73,864 $ 114,865 Net interest income; average interest rate spread $ 17,903 2.35% $ 17,817 1.84% Net interest margin (3) 2.83% 2.59% Average interest-earning assets to average interest-bearing liabilities 113.19% 120.08% ___________________ (1) Includes loans held for sale. (2) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for credit losses. (3) Equals net interest income divided by average interest-earning assets. 9
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Rate/Volume Analysis. The following table shows the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities affected our interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, (2) changes in volume, which is the change in volume multiplied by prior year rate, and (3) changes in rate/volume, which is the change in rate multiplied by the change in volume. 2025 vs. 2024 2024 vs. 2023 Increase (Decrease) Due to Total Increase (Decrease) Increase (Decrease) Due to Total Increase (Decrease) Rate Volume Rate/ Volume Rate Volume Rate/ Volume (In Thousands) Interest income: Due from banks, interest- bearing $ (666) $ (1,466) $ 318 $ (1,814) $ 2,085 $ 484 $ 94 $ 2,663 Investment in interest-earning time deposits 16 (5) (2) 9 (59) (5) 9 (55) Investment securities available for sale 45 (55) (17) (27) (36) (12) 48 - Loans receivable, net (1) (2) 538 (1,536) (21) (1,019) (6,895) (587) 3,728 (3,754) Investment in FHLB stock (38) 121 (40) 43 (365) (112) 139 (338) Total interest-earning assets (105) (2,941) 238 (2,808) (5,270) (232) 4,018 (1,484) Interest expense: Savings - - - - - (1) - (1) Money market accounts (2,290) (3,644) 890 (5,044) (62) (901) 665 (298) Business checking accounts (2,015) (1,757) 843 (2,929) (227) 2,190 (259) 1,704 Certificate of deposit accounts 180 3,551 67 3,798 163 470 2,292 2,925 Total deposits (4,125) (1,850) 1,800 (4,175) (126) 1,758 2,698 4,330 FHLB short-term borrowings 136 941 236 1,313 133 (4,753) (68) (4,688) FRB short-term borrowings - - 1 1 34 (34) (34) (34) Senior debt - - 947 947 - - - - Subordinated debt 42 (1,001) (21) (980) 34 187 264 485 Total interest-bearing liabilities (3,947) (1,910) 2,963 (2,894) 75 (2,842) 2,860 93 Increase (decrease) in net interest Income $ 3,842 $ (1,031) $ (2,725) $ 86 $ (5,345) $ 2,610 $ 1,158 $ (1,577) _______________________ (1) Includes loans held for sale. (2) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for credit losses. Provision for Credit Losses. The $317,000, or 20.7%, decrease in the provision for credit losses for the year ended December 31, 2025 over the year ended December 31, 2024 was primarily due to a decrease in the commercial business loan category, and a decrease in charge-offs during the year ended December 31, 2025. Non-performing loans at December 31, 2025 totaled $7.3 million, or 1.36%, of total loans receivable, net of allowance for credit losses, consisting of $5.8 million of loans on non-accrual status and $1.5 million of accruing loans 90-days or more delinquent. Non-accrual loans consist of two one-to-four family residential owner occupied loans, 14 commercial real estate loans, and 15 commercial business loans. Included in the 15 commercial business loans is one pool of equipment loans. Accruing loans 90-days or more past due include one one-to-four family residential owner occupied loan, one one-to-four family residential non-owner occupied loan, one commercial real estate loan, and one commercial business loan, all of which are still accruing. All non-performing loans are either well-collateralized or adequately reserved for. During the year ended December 31, 2025, one commercial real estate loan, and 11 commercial business loans totaling $1.6 million that were previously on non-accrual were charged-off through the allowance for credit losses. Non-performing loans at December 31, 2024 totaled $6.3 million, or 1.18%, of total loans receivable, net of allowance for credit losses, consisting of $5.6 million of loans on non-accrual status and $726,000 of accruing loans 90-days or more delinquent. Non-accrual loans consist of one one-to-four family residential owner occupied loan, four commercial real estate loans, and ten commercial business loans. Included in the ten commercial business loans is one pool of equipment loans. Loans 90-days or more past due include one one-to-four family residential owner occupied loan, two commercial real estate loans, and four commercial business loans, all of which are still accruing. All non-performing loans are either well-collateralized or adequately reserved for. During the year
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ended December 31, 2024, 19 commercial business loans totaling $1.6 million, and one construction loan of $187,000, that were previously on non-accrual were charged-off through the allowance for credit losses. 10
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Non-Interest Income. Non-interest income decreased $997,000, or 12.2%, from $8.2 million for the year ended December 31, 2024 to $7.2 million for the year ended December 31, 2025. The decrease was primarily attributable to the $1.5 million gain on the sale and leaseback of the Company’s office building at 1710 Union Boulevard in Allentown, Pennsylvania in October, 2024, a $640,000, or 87.9%, decrease in other fees and service charges, and a $20,000, or 100.0%, decrease in real estate sales commissions, net. These decreases were partially offset by a $978,000, or 215.9%, increase in gain on sale of SBA loans, a $76,000, or 10.2%, increase in insurance commissions, a $38,000, or 4.2%, increase in mortgage banking, equipment lending and title abstract fees, and a $10,000, or 8.5%, increase in income from bank-owned life insurance. The increase in gain on sale of SBA loans was due to increased sales of SBA loans. The reduction in other fees and service charges is attributable to reduced correspondent banking activities. Non-Interest Expense. Non-interest expense increased $2.2 million, or 10.4%, from $21.0 million for the year ended December 31, 2024 to $23.2 million for the year ended December 31, 2025. The increase in non-interest expense for the year ended December 31, 2025 over the comparable period in 2024 was primarily due to a $761,000, or 70.0%, increase in professional fees, a $522,000, or 3.6%, increase in salaries and employee benefits expense, a $462,000, or 35.6%, increase in data processing expense, a $381,000, or 26.9%, increase in occupancy and equipment expense, an $88,000, or 6.2%, increase in other expense, and a $62,000, or 30.8%, increase in directors’ fees and expenses. These increases were partially offset by an $84,000, or 13.7%, decrease in FDIC deposit insurance assessment, and an $8,000, or 2.6%, decrease in advertising expense. The increase in salaries and employee benefits expense, professional fees, occupancy and equipment expense, data processing expense, and other expense was primarily due to the implementation of international correspondent banking software and compliance related activities and expense. Provision for Income Tax. The provision for income tax from continuing operations decreased $710,000, or 68.8%, from $1.0 million for the year ended December 31, 2024 to $322,000 for the year ended December 31, 2025 due primarily to a decrease in pre-tax income. Operating Segments The Company’s operations consist of two reportable operating segments: Banking and Oakmont Commercial. Our Banking Segment generates revenues primarily from its lending, deposit gathering and fee business activities. Our Oakmont Commercial Segment originates commercial real estate loans which are sold into the secondary market along with the loans’ servicing rights. The profitability of this segment’s operations depends primarily on the gains realized from the sale of loans, processing fees, and service fees. Detailed segment information appears in Note 21 in the Notes to Consolidated Financial Statements. 11
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Banking Segment reported a pre-tax segment loss for the year ended December 31, 2025 of $(844,000), a $3.0 million, or 139.2%, decrease from the year ended December 31, 2024. This increase in pretax segment loss was due to a $2.3 million, or 11.7%, increase in non-interest expense, a $1.2 million, or 17.8%, decrease in non-interest income, and a $308,000, or 1.8%, decrease in net interest income, partially offset by a $752,000, or 38.2%, decrease in the provision for credit losses. The decrease in non-interest income was primarily due to a $1.5 million gain on the sale-leaseback of 1710 Union Boulevard in October 2024, and a $604,000, or 101.9%, decrease in other fees and service charges, partially offset by a $978,000, or 215.9%, increase in gain on the sale of SBA loans. The increase in non-interest expense was due primarily to a $703,000, or 69.9%, increase in professional fees, a $687,000, or 5.2%, increase in salaries and benefits expense, a $462,000, or 35.6%, increase in data processing expense, a $378,000, or 26.7%, increase in occupancy and equipment expense, and an $83,000, or 6.0%, increase in other expense, partially offset by an $84,000, or 13.7%, decrease in FDIC deposit insurance assessment. 12
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Oakmont Commercial Segment reported a pre-tax segment profit (“PTSP”) for the year ended December 31, 2025 of $1.5 million, a $218,000, or 17.2%, increase from the year ended December 31, 2024. The increase in PTSP was primarily due to a $394,000, or 51.0%, increase in net interest income, a $159,000, or 9.7%, increase in non-interest income, and a $100,000, or 6.3%, decrease in non-interest expense, partially offset by a $435,000, or 100.0%, increase in the recovery of credit losses. The increase in non-interest income was due to a $195,000, or 12.9%, increase in net gain on loans held for sale, partially offset by a $36,000, or 26.7%, decrease in other fees and services charges. The decrease in non-interest expense was primarily due to a $165,000, or 11.5%, decrease in salaries and employee benefits expense, partially offset by a $58,000, or 71.6%, increase in professional fees, a $5,000, or 13.5%, increase in other expenses, and a $3,000, or 100.0%, increase in occupancy and equipment expense. Exposure to Changes in Interest Rates The Company’s ability to maintain net interest income depends upon its ability to earn a higher yield on assets than the rates it pays on deposits and borrowings. The Company’s interest-earning assets consist primarily of loans collateralized by real estate which have longer maturities than our liabilities, consisting primarily of certificates of deposit, money market accounts, checking accounts, and to a lesser extent borrowings. Consequently, the Company’s ability to maintain a positive spread between the interest earned on assets and the interest paid on deposits and borrowings can be adversely affected by the movement of market rates of interest. Gap Analysis. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are "interest rate sensitive" and by monitoring the Bank's interest rate sensitivity "gap." An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate-sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to affect adversely net interest income while a positive gap would tend to result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to affect adversely net interest income. The table below sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at December 31, 2025, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown (the "GAP Table"). Except as stated below, the amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2025, on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments period and subsequent selected time intervals. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and anticipated prepayments of adjustable-rate loans and fixed-rate loans, and as a result of contractual rate adjustments on adjustable-rate loans. Certain shortcomings are inherent in the method of analysis presented in the following table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Finally, the ability of many borrowers to service their adjustable-rate loans may decrease in the event of an interest rate increase. 13
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3 Months or Less More than 3 Months to 1 Year More than 1 Year to 3 Years More than 3 Years to 5 Years More than 5 Years Total Amount (Dollars In Thousands) Interest-earning assets (1): Due from banks, interest-bearing $ 51,569 $ - $ - $ - $ - $ 51,569 Investment in interest-earning time deposits - - 912 - - 912 Investment securities available for sale 882 - - - - 882 Loans held for sale 60,956 - - - - 60,956 Loans receivable (2) 141,544 152,714 145,788 42,778 57,874 540,698 Investment in Federal Home Loan Bank stock - - - - 291 291 Total interest-earning assets $ 254,951 $ 152,714 $ 146,700 $ 42,778 $ 58,165 $ 655,308 Interest-bearing liabilities: Checking accounts $ 105,713 $ - $ - $ - $ - $ 105,713 Money market and savings accounts 13,044 - 58,138 - - 71,182 Certificate accounts 51,805 193,324 90,750 18,839 - 354,718 Senior debt - - 9,619 - - 9,619 Subordinated debt - - 8,000 - - 8,000 Total interest-bearing liabilities $ 170,562 $ 193,324 $ 166,507 $ 18,839 $ - $ 549,232 Interest-earning assets less interest- bearing liabilities $ 84,389 $ (40,610) $ (19,807) $ 23,939 $ 58,165 Cumulative interest-rate sensitivity gap (3) $ 84,389 $ 43,779 $ 23,972 $ 47,911 $ 106,076 Cumulative interest-rate gap as a percentage of total assets at December 31, 2025 12.5% 6.5% 3.5% 7.1% 15.7% Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at December 31, 2025 149.5% 112.0% 104.5% 108.7% 119.3% _____________________ (1) Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities. (2) For purposes of the gap analysis, loans receivable includes non-performing loans gross of the allowance for credit losses and deferred loan fees. (3) Interest-rate sensitivity gap represents the difference between net interest-earning assets and interest-bearing liabilities. Qualitative Analysis. Our ability to maintain a positive “spread” between the interest earned on assets and the interest paid on deposits and borrowings is affected by changes in interest rates. The Company’s fixed-rate loans generally are profitable if interest rates are stable or declining since these loans have yields that exceed its cost of funds. If interest rates increase, however, the Company would have to pay more on its deposits and new borrowings, which would adversely affect its interest rate spread. In order to counter the potential effects of dramatic increases in market rates of interest, the Company intends to continue to originate more variable rate loans and increase core deposits. The Company also intends to continue to place a greater emphasis on commercial business loans. Liquidity and Capital Resources The Company’s primary sources of funds are deposits, amortization and prepayment of loans and to a lesser extent, loan sales and other funds provided from operations. While scheduled principal and interest payments on loans are a relatively predictable
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source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company sets the interest rates on its deposits to maintain a desired level of total deposits. In addition, the Company invests excess funds in short-term interest-earning assets that provide additional liquidity. At December 31, 2025, the Company’s cash and cash equivalents amounted to $53.5 million. At such date, the Company also had no investment in interest- earning time deposits maturing in one year or less. The Company uses its liquidity to fund existing and future loan commitments, to fund deposit outflows, to invest in other interest-earning assets, and to meet operating expenses. 14
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations At December 31, 2025, certificates of deposit scheduled to mature in one year or less totaled $245.4 million. Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case. In addition to cash flow from loan payments and prepayments and deposits, the Company has a significant borrowing capacity available to fund liquidity needs. If the Company requires funds beyond its ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Pittsburgh (FHLB), which provide an additional source of funds. As of December 31, 2025, the Company had no outstanding borrowings from the FHLB and had $269.3 million in borrowing capacity. Under terms of the collateral agreement with the FHLB of Pittsburgh, we pledge residential mortgage loans as well as Quaint Oak Bank’s FHLB stock as collateral for such advances. In addition, as of December 31, 2025 Quaint Oak Bank had $24.2 million in borrowing capacity with the Federal Reserve Bank of Philadelphia (FRB). The Company had no outstanding FRB borrowings as of December 31, 2025. Total stockholders’ equity from continuing operations decreased $288,000, or 0.6%, to $52.3 million at December 31, 2025 from $52.6 million at December 31, 2024. Contributing to the decrease were dividends paid of $894,000, and purchase of treasury stock of $44,000. The decrease in stockholders’ equity was partially offset by net income for the year ended December 31, 2025 of $322,000, amortization of stock awards and options under our stock compensation plans of $251,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of $74,000, and other comprehensive income, net of $3,000. Quaint Oak Bank is required to maintain regulatory capital sufficient to meet tier 1 leverage, common equity tier 1 capital, tier 1 risk-based and total risk-based capital ratios of at least 4.00%, 4.50%, 6.00%, and 8.00%, respectively. At December 31, 2025, Quaint Oak Bank exceeded each of its capital requirements with ratios of 10.26%, 12.36%, 12.36% and 13.55%, respectively. As a small savings and loan holding company, the Company is not currently subject to any regulatory capital requirements. For further discussion of the Bank’s regulatory capital requirements, see Note 19 in the Notes to Consolidated Financial Statements contained elsewhere herein. Off-Balance Sheet Arrangements In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. Our exposure to credit loss from non-performance by the other party to the above-mentioned financial instruments is represented by the contractual amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. In general, we do not require collateral or other security to support financial instruments with off–balance sheet credit risk. Commitments. At December 31, 2025, we had unfunded commitments under lines of credit of $45.4 million, $21.1 million of commitments to originate loans, and $1.1 million under standby letters of credit. We had no commitments to advance additional amounts pursuant to outstanding lines of credit or undisbursed construction loans. 15
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Quaint Oak Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations Contractual Cash Obligations The following table summarizes our contractual cash obligations at December 31, 2025. The balances in the table do not reflect interest due on these obligations. Payments Due by Period Total To 1 Year 1-3 Years 4-5 Years After 5 Years (In Thousands) Operating leases $ 6,344 $ 492 $ 841 $ 839 $ 4,172 Certificates of deposit 354,718 245,378 105,344 3,996 - Total contractual obligations $ 361,062 $ 245,870 $ 106,185 $ 4,835 $ 4,172 Impact of Inflation and Changing Prices The consolidated financial statements and related financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of the Company’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on the Company’s performance than does the effect of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates. 16
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Quaint Oak Bancorp, Inc. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Quaint Oak Bancorp, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Quaint Oak Bancorp, Inc. and subsidiary (the “Company”) as of December 31, 2025 and 2024; the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the years then ended; and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent, with respect to the Company, in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. PITTSBURGH, PA PHILADELPHIA, PA WHEELING, WV STEUBENVILLE, OH 2009 Mackenzie Way • Suite 340 161 Washington Street • Suite 200 980 National Road 511 N. Fourth Street Cranberry Township, PA 16066 Conshohocken, PA 19428 Wheeling, WV 26003 Steubenville, OH 43952 (724) 934-0344 (610) 278-9800 (304) 233-5030 (304) 233-5030 S.R. Snodgrass, P.C. d/b/a S.R. Snodgrass, A.C. in West Virginia
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Quaint Oak Bancorp, Inc. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements; and (2) involve our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter, in any way, our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Allowance for Credit Losses (ACL) – Qualitative Factor The Company’s loan portfolio totaled $546.9 million as of December 31, 2025, and the associated ACL was $6.2 million. As discussed in Note 1 to the consolidated financial statements, determining the amount of the ACL requires significant judgment about the expected future losses, which is based on establishing portfolio segments utilizing inherent risk characteristics to capture baseline historical lifetime loss rates using a weighted average maturity method (WARM) for each segment. The loans in each individual segment are tracked over their remaining lives for loss and recovery events to identify events impacting losses and quantifying the impact of changing current and forecasted environment, both internal and external, that are different from the conditions that existed during the baseline historical loss calculation period. Management applies these qualitative adjustments to the baseline lifetime loss rate to reflect changes in the current and forecasted environment, both internal and external, that are different from the conditions that existed during the historical loss calculation period. We identified these qualitative adjustments within the ACL as critical audit matters because they involve a high degree of subjectivity. While the determination of these qualitative adjustments includes analysis of observable data over the historical loss period, the judgments required to assess the directionality and magnitude of adjustments are highly subjective. Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the nature of audit evidence and the nature and extent of effort required to address these matters. The primary procedures we performed to address this critical audit matter included: ● Testing the design, implementation, and operating effectiveness of internal controls over the calculation of the allowance for credit losses, including the qualitative factor adjustments. ● Testing the completeness and accuracy of the significant data points that management uses in their evaluation of the qualitative adjustments. ● Testing the anchoring calculation that management completes to properly align the magnitude of the adjustments with the Company’s historical loss data. ● Evaluating the directional consistency and reasonableness of management’s conclusions regarding basis points applied (whether positive or negative) based on the trends identified in the underlying data. ● Testing the mathematical accuracy of the application of the qualitative adjustments to the loan segments within the ACL calculation. We have served as the Company’s auditor since 2013. Cranberry Township, Pennsylvania March 27, 2026
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Quaint Oak Bancorp, Inc. Consolidated Balance Sheets At December 31, 2025 2024 (In thousands, except share and per share data) Assets Due from banks, non-interest-bearing $ 1,978 $ 345 Due from banks, interest-bearing 51,569 62,644 Cash and cash equivalents 53,547 62,989 Investment in interest-earning time deposits 912 912 Investment securities available for sale 882 1,666 Loans held for sale 60,956 64,281 Loans receivable, net of allowance for credit losses (2025 $6,166; 2024 $6,476) 540,698 534,693 Accrued interest receivable 3,789 3,961 Investment in Federal Home Loan Bank stock, at cost 291 2,214 Bank-owned life insurance 4,575 4,447 Premises and equipment, net 1,540 1,626 Goodwill 515 515 Other intangible, net of accumulated amortization 28 77 Other real estate owned, net 360 - Prepaid expenses and other assets 7,760 7,787 Total Assets $ 675,853 $ 685,168 Liabilities and Stockholders’ Equity Liabilities Deposits: Non-interest bearing $ 65,665 $ 59,783 Interest-bearing 531,613 493,469 Total deposits 597,278 553,252 Federal Home Loan Bank borrowings - 47,855 Senior debt, net of amortized costs 9,619 - Subordinated debt 8,000 22,000 Accrued interest payable 1,086 937 Advances from borrowers for taxes and insurance 2,643 3,122 Accrued expenses and other liabilities 4,898 5,385 Total Liabilities 623,524 632,551 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; 3,108,993 issued as of both December 31, 2025 and 2024; 2,637,978 and 2,626,535 outstanding at December 31, 2025 and 2024, respectively 31 31 Additional paid-in capital 23,199 22,976 Treasury stock, at cost: 471,015 and 482,458 shares at and December 31, 2025 and 2024, respectively (3,530) (3,588) Accumulated other comprehensive income 3 - Retained earnings 32,626 33,198 Total Stockholders’ Equity 52,329 52,617 Total Liabilities and Stockholders’ Equity $ 675,853 $ 685,168 See accompanying notes to consolidated financial statements. 19
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Quaint Oak Bancorp, Inc. Consolidated Statements of Income Year Ended December 31, 2025 2024 (In thousands, except share and per share data) Interest and Dividend Income Interest on loans, including fees $ 39,039 $ 40,058 Interest and dividends on investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock 1,590 3,379 Total Interest and Dividend Income 40,629 43,437 Interest Expense Interest on deposits 18,966 23,141 Interest on Federal Home Loan Bank borrowings 1,858 545 Interest on Federal Reserve Bank borrowings 1 - Interest on senior debt 947 - Interest on subordinated debt 954 1,934 Total Interest Expense 22,726 25,620 Net Interest Income 17,903 17,817 Provision for Credit Losses 1,197 1,506 Provision for Off-Balance Sheet Credit Exposures 20 28 Total Provision for Credit Losses 1,217 1,534 Net Interest Income after Provision for Credit Losses 16,686 16,283 Non-Interest Income Mortgage banking, equipment lending and title abstract fees 947 909 Real estate sales commissions, net - 20 Insurance commissions 820 744 Other fees and services charges 88 728 Income from bank-owned life insurance 128 118 Net gain on loans held for sale 3,745 3,699 Gain on the sale of SBA loans 1,431 453 Gain on sale-leaseback transaction - 1,485 Total Non-Interest Income, net 7,159 8,156 Non-Interest Expense Salaries and employee benefits 15,158 14,636 Directors’ fees and expenses 263 201 Occupancy and equipment 1,799 1,418 Data processing 1,760 1,298 Professional fees 1,848 1,087 FDIC deposit insurance assessment 530 614 Advertising 294 302 Amortization of other intangible 48 49 Other 1,501 1,413 Total Non-Interest Expense 23,201 21,018 See accompanying notes to consolidated financial statements. 20
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Quaint Oak Bancorp, Inc. Consolidated Statements of Income (Continued) Year Ended December 31, 2025 2024 (In thousands, except share and per share data) Income from continuing operations before income taxes $ 644 $ 3,421 Income taxes from continuing operations $ 322 $ 1,032 Net income from continuing operations $ 322 $ 2,389 Income from discontinued operations $ - $ 564 Income tax from discontinued operations $ - $ 158 Net income from discontinued operations $ - $ 406 Net income $ 322 $ 2,795 Earnings per share from continuing operations – basic $ 0.12 $ 0.92 Earnings per share from discontinued operations – basic $ - $ 0.16 Earnings per share, net – basic $ 0.12 $ 1.08 Average shares outstanding - basic 2,632,661 2,578,804 Earnings per share from continuing operations - diluted $ 0.12 $ 0.92 Earnings per share from discontinued operations - diluted $ - $ 0.16 Earnings per share, net - diluted $ 0.12 $ 1.08 Average shares outstanding - diluted 2,632,661 2,578,804 See accompanying notes to consolidated financial statements. 21
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Quaint Oak Bancorp, Inc. Consolidated Statements of Comprehensive Income Year Ended December 31, 2025 2024 (In Thousands) Net Income from Continuing Operations $ 322 $ 2,389 Other Comprehensive Income: Unrealized gains on investment securities available for sale 4 12 Income tax effect (1) (2) Net other comprehensive income 3 10 Total Comprehensive Income $ 325 $ 2,399 Comprehensive Income from Discontinued Operations $ - $ 406 Comprehensive Income Attributable to Quaint Oak Bancorp, Inc. $ 325 $ 2,805 See accompanying notes to consolidated financial statements. 22
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Quaint Oak Bancorp, Inc. Consolidated Statements of Stockholders’ Equity Number of Shares Outstanding Amount Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity BALANCE – DECEMBER 31, 2023 2,407,048 $ 29 $ 20,299 $ (3,568) $ (10) $ 31,741 $ 48,491 Issuance of stock for capital raise 213,318 2 2,446 2,448 Treasury stock purchased (13,855) (150) (150) Reissuance of treasury stock under 401(k) Plan 11,024 47 72 119 Reissuance of treasury stock under stock incentive plan 9,000 (58) 58 - Stock based compensation expense 242 242 Cash dividends declared ($0.52 per share) (1,338) (1,338) Net income 2,795 2,795 Other comprehensive income, net 10 10 BALANCE –DECEMBER 31, 2024 2,626,535 $ 31 $ 22,976 $ (3,588) $ - $ 33,198 $ 52,617 Treasury stock purchased (4,221) (44) (44) Reissuance of treasury stock under 401(k) Plan 7,164 28 46 74 Reissuance of treasury stock under stock incentive plan 8,500 (56) 56 - Stock based compensation expense 251 251 Cash dividends declared ($0.34 per share) (894) (894) Net income 322 322 Other comprehensive income, net 3 3 BALANCE –DECEMBER 31, 2025 2,637,978 $ 31 $ 23,199 $ (3,530) $ 3 $ 32,626 $ 52,329 See accompanying notes to consolidated financial statements. 23
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Quaint Oak Bancorp, Inc. Consolidated Statements of Cash Flows Year Ended December 31, 2025 2024 (In Thousands) Cash Flows from Operating Activities Net income from continuing operations $ 322 $ 2,389 Net income from discontinued operations - 406 Net income 322 2,795 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 1,217 1,534 Depreciation expense 718 602 Amortization, net 442 59 Accretion of deferred loan fees and costs, net (179) (228) Deferred income taxes 227 97 Stock-based compensation expense 251 242 Net gain on loans sold (3,745) (3,699) Loans held for sale-originations (180,122) (134,348) Loans held for sale-proceeds 187,192 135,141 Gain on the sale of SBA loans (1,431) (453) Increase in the cash surrender value of bank-owned life insurance (128) (118) Gain on sale - leaseback transaction - (1,485) Changes in assets and liabilities which provided (used) cash: Accrued interest receivable 172 (459) Prepaid expenses and other assets (445) (2,760) Accrued interest payable 149 395 Accrued expenses and other liabilities (489) 2,946 Net Cash Provided by Operating Activities of Continuing Operations 4,151 261 Net Cash Provided by Operating Activities of Discontinued Operations - 32,350 Net Cash Provided by Operating Activities 4,151 32,611 Cash Flows from Investing Activities Redemption of interest-earning time deposits - 1,000 Principal repayments on investment securities available for sale 787 688 Net (increase) decrease in loans receivable (5,972) 24,312 Proceeds from the sale of Oakmont Capital Holdings, LLC - 4,300 Purchase of Federal Home Loan Bank stock (4,206) (4,427) Redemption of Federal Home Loan Bank stock 6,129 3,687 Purchase of premises and equipment (649) (1,177) Sale of premises and equipment 17 3,091 Net Cash (Used in) Provided by Investing Activities (3,894) 31,474 Cash Flows from Financing Activities Net decrease in demand deposits, money markets, and savings accounts (27,800) (145,494) Net increase in certificate accounts 71,826 67,047 Decrease in advances from borrowers for taxes and insurance (479) (609) (Repayment of) proceeds from Federal Home Loan Bank borrowings (47,855) 18,833 Net proceeds from senior debt 9,619 - Net (repayment of) proceeds from subordinated debt (14,146) 42 Proceeds from issuance of unallocated shares from authorized shares - 2,448 Purchase of treasury stock (44) (150) Proceeds from the reissuance of treasury stock under 401(k) plan 74 119 Dividends paid (894) (1,338) Net Cash Used in Financing Activities (9,699) (59,102) Net (Decrease) Increase in Cash and Cash Equivalents (9,442) 4,983 Cash and Cash Equivalents – Beginning of Year 62,989 58,006 Cash and Cash Equivalents – End of Year $ 53,547 $ 62,989 See accompanying notes to consolidated financial statements. 24
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Quaint Oak Bancorp, Inc. Year Ended December 31, 2025 2024 (In Thousands) Supplementary Disclosure of Cash Flow and Non-Cash Information: Cash payments for interest $ 22,576 $ 25,224 Cash payments for federal income taxes $ 275 $ - Cash payments for state income taxes $ 265 $ 840 Transfer of loans into other real estate owned $ 360 $ - Initial recognition of operating lease right-of use assets $ - $ 2,728 Initial recognition of operating lease obligations $ - $ 2,728 Transfer of loans held for investment to loans held for sale $ (56,382) $ (57,843) Net increase in loans receivable from transfer of loans held for investment to loans held for sale $ 56,382 $ 57,843 Transfer of loans from Oakmont Capital Holdings, LLC $ - $ 4,388 See accompanying notes to consolidated financial statements. 25
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements Note 1 - Nature of Operations The consolidated financial statements include the accounts of Quaint Oak Bancorp, Inc., a Pennsylvania chartered corporation (the “Company” or “Quaint Oak Bancorp”) and its wholly owned subsidiary, Quaint Oak Bank, a Pennsylvania chartered stock savings bank (the “Bank”), along with its wholly owned subsidiaries. At December 31, 2025, the Bank has five wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, QOB Properties, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, each a Pennsylvania limited liability company. Quaint Oak Mortgage offers mortgage banking in the Lehigh Valley, Delaware Valley and Philadelphia County regions of Pennsylvania. In February, 2019, Quaint Oak Mortgage opened a mortgage banking office in Philadelphia, Pennsylvania. Quaint Oak Abstract offers title abstract services primarily in the Lehigh Valley region of Pennsylvania 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 began operations in August 2016 and provides a broad range of personal and commercial insurance coverage solutions. Oakmont Commercial, LLC was formed in October 2021 and operates as a multi-state specialty commercial real estate financing company. On March 29, 2024, Quaint Oak Bank sold its 51% interest in Oakmont Capital Holdings, LLC (“OCH”), a multi-state equipment finance company based in West Chester, Pennsylvania. The decision was based on a number of strategic priorities and other factors. As a result of this action, Quaint Oak Bancorp classified the operations of OCH as discontinued operations under ASC 205-20. 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 engaged in the real estate brokerage business. All significant intercompany balances and transactions have been eliminated. 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 is principally Bucks, Montgomery and Philadelphia Counties in Pennsylvania and the Lehigh Valley area in Pennsylvania. The Bank has three regional offices located in the Delaware Valley, Lehigh Valley and Philadelphia markets. The principal deposit products offered by the Bank are money market accounts, certificates of deposit, non-interest bearing checking accounts for businesses and consumers, and savings accounts. The principal loan products offered by the Bank are fixed and adjustable rate residential and commercial mortgages, construction loans, commercial business loans, home equity loans, and lines of credit. Note 2 - Summary of Significant Accounting Policies Use of Estimates 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 credit losses and valuation of deferred tax assets. Significant Group Concentrations of Credit Risk The Bank has a significant concentration of loans in Philadelphia County, Pennsylvania. The concentration of credit by type of loan is set forth in Note 8. Although the Bank has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy. During the year ended December 31, 2025, one investor purchased a total of 25% of all loans sold by the Bank from its mortgage loans held for sale, and the sales to this investor accounted for approximately 25% of the gain on mortgage loans sold during the year. 26
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include non-interest earning and interest-earning demand deposits and money market accounts with various financial institutions, all of which mature within ninety days of acquisition. Investment Securities Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Securities classified as available for sale are those securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital requirements, and other similar factors. Securities available for sale are carried at fair value. Unrealized gains and losses are reported in other comprehensive income, net of related deferred tax effects. Realized gains and losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Securities classified as held to maturity are those debt securities the Company has both the intent and ability to hold to maturity regardless of the changes in market conditions, liquidity needs, or changes in general economic conditions. These securities are carried at cost adjusted for amortization of premium and accretion of discount, which are recognized in interest income using the interest method over the terms of the securities. The Bank measures expected credit losses on available-for-sale debt securities when the Bank does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Bank evaluates whether the decline in fair value has resulted from credit losses or other factors. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. The allowance for credit losses on available-for-sale debt securities is included within Investment securities available for sale on the consolidated balance sheets. Changes in the allowance for credit losses are recorded within Provision for credit losses on the consolidated statements of income. Losses are charged against the allowance when the Bank believes the collectability of an available-for-sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale debt securities totaled $4,000 at December 31, 2025 and is included within Accrued interest receivable on the consolidated balance sheet. This amount is excluded from the estimate of expected credit losses. Available-for-sale debt securities are typically classified as nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual status, unpaid interest credited to income is reversed. 27
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Federal Home Loan Bank Stock Federal 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 years ended December 31, 2025 and 2024. 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 credit losses and any deferred fees. 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, commercial business, and consumer loans. The residential loan segment has two classes: one-to-four family residential owner occupied loans and one-to-four family residential 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. Loans are stated at their principal amount outstanding, except for loans held for sale, which are carried at fair value. Interest income on loans is accrued as earned. In general, loans are placed on non-accrual status once they become 90 days delinquent as to principal or interest. In certain cases, a loan may be placed on nonaccrual status prior to being 90 days delinquent if there is an indication that the borrower is having difficulty making payments, or the Company believes it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. When interest accruals are discontinued, unpaid interest previously credited to income is reversed. Non-accrual loans may be restored to accrual status when all delinquent principal and interest has been paid currently for six consecutive months or the loan is considered secured and in the process of collection. The Company generally applies payments received on non-accruing loans to principal until such time as the principal is paid off, after which time any payments received are recognized as interest income. If the Company believes that all amounts outstanding on a non-accrual loan will ultimately be collected, payments received subsequent to its classification as a non-accrual loan are allocated between interest income and principal. A loan that is 90 days delinquent may continue to accrue interest if the loan is both adequately secured and is in the process of collection. Past due status is determined based on contractual due dates for loan payments. An adequately secured loan is one that has collateral with a supported fair value that is sufficient to discharge the debt, and/or has an enforceable guarantee from a financially responsible party. A loan is considered to be in the process of collection if collection is proceeding through legal action or through other activities that are reasonably expected to result in repayment of the debt or restoration to current status in the near future. 28
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Loans Receivable (Continued) Loans deemed to be a loss are written off through a charge against the allowance for credit losses (ACL). All loans are evaluated for possible charge-off when it is probable that the balance will not be collected, based on the ability of the borrower to pay and the value of the underlying collateral, if any. Principal recoveries of loans previously charged off are recorded as increases to the ACL. Loan origination fees and the related direct origination costs are deferred and amortized over the life of the loan as an adjustment to interest income. Allowance for Credit Losses The allowance for credit losses is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers our historical loss experience, current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans. The Company has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on non- accrual status, any outstanding accrued interest is reversed against interest income. The accrued interest receivable was $3.8 million and $4.0 million for the years ended December 31, 2025 and December 31, 2024, respectively. The ACL for loans is an estimate of the expected losses to be realized over the life of the loans in the portfolio. The ACL is determined for two distinct categories of loans: 1) loans evaluated collectively for expected credit losses and 2) loans evaluated individually for expected credit losses. The ACL also includes certain qualitative adjustments. Loans Evaluated Collectively. Homogeneous loans are evaluated collectively for expected credit losses. Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its ACL. The Company has designated eight portfolio segments, which are one-to-four family residential owner occupied, one-to-four family residential non-owner occupied, multi-family residential, commercial real estate, construction, home equity, commercial business, and consumer. These portfolio segments are further disaggregated into classes, which represent loans and leases of similar type, risk characteristics, and methods for monitoring and assessing credit risk. Loans Evaluated Individually. Certain loans may be evaluated individually for expected credit losses. 29
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Allowance for Credit Losses (Continued) Loans evaluated individually may have specific allocations assigned if the measured value of the loan using one of the noted techniques is less than its current carrying value. For loans measured using the fair value of collateral, if the analysis determines that sufficient collateral value would be available for repayment of the debt, then no allocations would be assigned to those loans. Collateral could be in the form of real estate or business assets, such as accounts receivable or inventory, in the case of commercial and industrial loans. Commercial and industrial loans may also be secured by real estate. Management regularly reviews loans in the portfolio to assess credit quality indicators and to determine appropriate loan classification. For all loans, an internal risk rating process is used. The Company believes that internal risk ratings are the most relevant credit quality indicator for these types of loans. The migration of loans through the various internal risk rating categories is a significant component of the ACL methodology for these loans, which bases the probability of default on this migration. Assigning risk ratings involves judgment. Risk ratings may be changed based on ongoing monitoring procedures, or if specific loan review assessments identify a deterioration or an improvement in the loan. The following is a summary of the Company's internal risk rating categories: • Pass: These loans do not currently pose undue credit risk and can range from the highest to average quality, depending on the degree of potential risk. • Special Mention: These loans have a heightened credit risk, but not to the point of justifying a classification of Substandard. Loans in this category are currently acceptable but are nevertheless potentially weak. • Substandard: These loans are inadequately protected by current sound worth and paying capacity of the borrower. There exists a well-defined weakness or weaknesses that jeopardize the normal repayment of the debt. • Doubtful: These loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The allocation of the ACL is reviewed to evaluate its appropriateness in relation to the overall risk profile of the loan portfolio. The Company considers risk factors such as: local and national economic conditions; trends in delinquencies and non-accrual loans; the diversity of borrower industry types; and the composition of the portfolio by loan type. Qualitative and Other Adjustments to Allowance for Credit Losses: In addition to the quantitative credit loss estimates for loans evaluated collectively, qualitative factors that may not be fully captured in the quantitative results are also evaluated. For example, the Company considers the impact of current environmental factors at the reporting date that did not exist over the period from which historical experience was used. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), economic trends and conditions, changes in underwriting standards, experience and depth of lending staff, trends in delinquencies, and the level of criticized loans. Qualitative adjustments are judgmental and are based on management’s knowledge of the portfolio and the markets in which the Company operates. Qualitative adjustments are evaluated and approved on a quarterly basis. Additionally, the ACL includes other allowance categories that are not directly incorporated in the quantitative results. These include but are not limited to loans-in-process, trade acceptances and overdrafts. The ACL model utilizes 36-month economic forecasts which include housing starts, real estate prices, loan delinquency trends, and US GDP changes. 30
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Allowance for Credit Losses (Continued) Loans Held for Sale Loans 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. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income, and direct loan origination costs, commissions and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan. Oakmont Capital Holdings, LLC originated commercial real estate loans for the purchase of business essential equipment for sale primarily to other financial institutions and these are also classified as loans held for sale. 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. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the expected useful lives of the related assets that range from three to thirty-nine years. The costs of maintenance and repairs are expensed as incurred. Costs of major additions and improvements are capitalized. Goodwill and Other Intangible Assets Intangible assets on the consolidated balance sheets represent the acquisition by Quaint Oak Insurance Agency of the renewal rights to a book of business on August 1, 2016 at a total cost of $1.0 million. Based on a valuation, $515,000 of the purchase price was determined to be goodwill and $485,000 was determined to be related to the renewal rights to the book of business and deemed an other intangible asset. The renewal rights are being amortized over a ten year period based upon the annual retention rate of the book of business. The Company performs a goodwill and other intangible asset impairment analysis at least on an annual basis or more often if events and circumstances indicate that there may be impairment. Other Real Estate Owned Other real estate owned (OREO) 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. The Company had one property in OREO totaling $360,000 at December 31, 2025. The Company had no OREO at December 31, 2024. 31
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Loan Servicing Rights The Company sells the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. While the Company may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. These servicing assets amortize in proportion to, and over the period of, the estimated future net servicing life of the underlying loans. The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent that fair value is less than the capitalized amount of the servicing assets. Included in other assets are SBA servicing rights recognized as separate assets when the guaranteed portion of the SBA loans are sold and the servicing rights are retained. These capitalized SBA servicing rights are amortized into non- interest income in proportion to, and over the period of, the estimated future net servicing period of the underlying SBA loans. SBA servicing rights totaled $619,000 and $404,000 at December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, approximately $95,000 and $69,000 in amortization was recognized, respectively. Advertising Costs The Company expenses all advertising costs as incurred. Advertising costs are included in non-interest expense on the Consolidated Statements of Income. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Income Taxes Deferred income taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company follows guidance related to accounting for uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions. A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination presumed to occur. The amount recognized is the largest amount of tax benefit that has more than 50 percent likelihood of being realized upon examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded. The Company had no material uncertain tax positions or accrued interest and penalties as of December 31, 2025 and 2024. The Company’s policy is to account for interest as a component of interest expense and penalties as components of other expense. The Company is no longer subject to examination by taxing authorities for the years before January 1, 2022. 32
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Comprehensive Income Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains and losses be included in net income. Although 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 stockholders’ equity section of the balance sheet, such items, along with net income, are components of comprehensive income. Treasury Stock The acquisition of treasury stock by the Company is recorded under the cost method. At the date of subsequent reissue, treasury stock is reduced by the cost of such stock based on an average cost method with any excess proceeds credited to additional paid-in capital. Share-Based Compensation Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost is measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock option and restricted share plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the closing price of the Company’s common stock on the grant date is used for restricted stock awards. At December 31, 2025, the Company has outstanding equity awards under two share-based plans: the 2018 Stock Incentive Plan, and the 2023 Stock Incentive Plan. Outstanding awards under these plans were made in May 2018 and May 2023. These plans are more fully described in Note 15. The Company also has an employee stock ownership plan (“ESOP”). This plan is more fully described in Note 15. As shares are contributed to the ESOP and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares. 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. Revenue from Contracts with Customers The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. In certain circumstances, noninterest income is reported net of associated expenses. 33
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Revenue from Contracts with Customers (Continued) The Company’s primary sources of revenue are derived from interest and dividends earned on loans and investment securities, mortgage banking revenue, including gains on the sale of loans, income from bank-owned life insurance, and other financial instruments that are not within the scope of Topic 606. The main types of non-interest income within the scope of the standard are as follows: Other Fees and Service Charges: The Bank has contracts with its commercial checking deposit customers where fees are charged if the account balance falls below predetermined levels defined as compensating balances. These agreements can be cancelled at any time by either the Bank or the deposit customer. Revenue from these transactions is recognized on a monthly basis as the Bank has an unconditional right to the fee consideration. The Bank also has transaction fees related to specific transactions or activities resulting from customer request or activity that include overdraft fees, wire fees, and other transaction fees. All of these fees are attributable to specific performance obligations of the Bank where the revenue is recognized at a defined point in time, completion of the requested service/transaction. Abstract Title Fees: The Bank provides abstract title services through its wholly owned subsidiary, Quaint Oak Abstract, LLC. Fees for these services are recognized as revenue immediately after the completion of the real estate settlement. Real Estate Sales Commissions, Net: The Bank provided real estate sales services through its wholly owned subsidiary, Quaint Oak Real Estate, LLC. Commission income was earned for these services and recognized as revenue immediately after the completion of the real estate settlement. On March 29, 2024, the Company discontinued the operations of Quaint Oak Real Estate, LLC. Insurance Commissions: Insurance income generally consists of commissions from the sale of insurance policies and performance-based commissions from insurance companies. The Bank recognizes commission income from the sale of insurance policies when its wholly owned subsidiary, Quaint Oak Insurance Agency, LLC, acts as an agent between the insurance carrier and policyholder, arranging for the insurance carrier to provide policies to policyholders, and acts on behalf of the insurance carrier by providing customer service to the policyholder during the policy period. Commission income is recognized over time, using the output method of time elapsed, which corresponds with the underlying insurance policy period, for which the Bank is obligated to perform under contract with the insurance carrier. Commission income is variable, as it is comprised of a certain percentage of the underlying policy premium. The Bank estimates the variable consideration based upon the “most likely amount” method and does not expect or anticipate a significant reversal of revenue in future periods, based upon historical experience. Payment is due from the insurance carrier for commission income once the insurance policy has been sold. The Bank has elected to apply a practical expedient related to capitalizable costs, which are the commissions paid to insurance producers, and will expense these commissions paid to insurance producers as incurred, as these costs are related to the commission income and would have been amortized within one year or less if they had been capitalized, the same period over which the commission income was earned. Performance-based commissions from insurance companies are recognized at a point in time, when received, and no contingencies remain. 34
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Off-Balance Sheet Financial Instruments In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit. Such financial instruments are recorded in the Consolidated Balance Sheets when they are funded. The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Bank. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. Reclassifications Certain items in the 2024 consolidated financial statements have been reclassified to conform to the presentation in the 2025 consolidated financial statements. Such reclassifications did not have a material impact on the overall consolidated financial statements. Accounting Pronouncements Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance is effective for public business entities for annual periods beginning after December 15, 2024. See Note 15 – Income Taxes. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses. Specific disclosures are required for (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities. The amendments in this Update do not change or remove current expense disclosure requirements. However, the amendments affect where this information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. The amendments in ASU 2024-03 apply only to public business entities and are effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this new guidance on its financial statements. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) “to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU. The Company is currently evaluating the impact of this new guidance on its financial statements. 35
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 2 - Summary of Significant Accounting Policies (Continued) Recent Accounting Pronouncements Not Yet Adopted (Continued) In November 2025, the FASB issued ASU 2025-08, Financial Instruments – Credit Losses (Topic 326), which amends the guidance in Topic 326 to expand the population of acquired financial assets subject to the gross-up approach to include loans (excluding credit cards) that are acquired without credit deterioration and deemed “seasoned.” All non-purchased credit deteriorated loans (excluding credit cards) that are acquired in a business combination are deemed seasoned. Other non-purchased credit deteriorated loans (excluding credit cards) are considered to be seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans. ASU 2025-08 should be applied prospectively and is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to clarify interim disclosure requirements, the form and content of interim financial statements, and when ASC Topic 270 applies. The amendments in the ASU provide a list of specific interim disclosures that are required by generally accepted accounting principles (GAAP), which, together with the disclosure principle, represent the complete population of required disclosures in interim reporting periods. The intent of the disclosure principle is to help entities determine whether any disclosures not specified in Topic 270 should be provided in interim reporting periods. ASU 2025-11 may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements for public business entities for interim periods in fiscal years beginning after December 15, 2027, and all other entities in interim periods in fiscal years beginning after December 15, 2028. The Company is currently evaluating the impact of this new guidance on its financial statements. Note 3 – Discontinued Operations On March 29, 2024, Quaint Oak Bank sold its 51% interest in 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, Consolidated Statements of Income and Consolidated Statements of Cash Flows present discontinued operations for the years ended December 31, 2025 or 2024. No assets or liabilities for OCH were held at December 31, 2025 or 2024. 36
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 3 – Discontinued Operations (Continued) There were no operating results of the discontinued operations as of December 31, 2025. The following presents operating results of the discontinued operations OCH for the year ended December 31, 2024 (in thousands): For the Year Ended December 31, 2024 (In thousands) Interest and Dividend Income Interest on loans, including fees $ 70 Interest and dividends on time deposits, investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock - Total Interest and Dividend Income 70 Interest Expense Interest on other borrowings 295 Total Interest Expense 295 Net Interest Loss (225) Non-Interest Income Mortgage banking, equipment lending and title abstract fees 404 Other fees and services charges 197 Net loan servicing income 726 Net gain on sale of loans 366 Gain on sale of OCH (1) 1,378 Total Non-Interest Income 3,071 Non-Interest Expense Salaries and employee benefits 1,681 Occupancy and equipment 219 Professional fees 31 Advertising 146 Other 987 Total Non-Interest Expense 3,064 Total net loss from discontinued operations $ (218) Loss attributable to non-controlling interest (782) Net gain from discontinued operations $ 564 (1) The gain on sale of OCH has been reclassified from prior periods from continuing operations to discontinued operations. 37
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 4 – 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 years ended December 31, 2025 and December 31, 2024, all outstanding stock options granted under the 2018 Stock Incentive Plan and the 2023 Stock Incentive Plan 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 Year Ended December 31, 2025 2024 Net Income $ 322,000 $ 2,795,000 Weighted average shares outstanding – basic 2,632,661 2,578,804 Effect of dilutive common stock equivalents - - Adjusted weighted average shares outstanding – diluted 2,632,661 2,578,804 Basic earnings per share from continuing operations $ 0.12 $ 0.92 Basic earnings per share from discontinued operations $ 0.00 $ 0.16 Basic earnings per share, net $ 0.12 $ 1.08 Diluted earnings per share from continuing operations $ 0.12 $ 0.92 Diluted earnings per share from discontinued operations $ 0.00 $ 0.16 Diluted earnings per share, net $ 0.12 $ 1.08 Note 5 – Accumulated Other Comprehensive Income The following table presents the changes in accumulated other comprehensive income by component, net of tax, for the years ended December 31, 2025 and 2024 (in thousands): Unrealized Losses on Investment Securities Available for Sale (1) 2025 2024 Balance, beginning of the year $ - $ (10) Other comprehensive income before reclassifications 3 10 Amount reclassified from accumulated other comprehensive Total other comprehensive income 3 10 Balance, end of the year $ 3 $ - _______________________ (1) All amounts are net of tax. Amounts in parentheses indicate debits. 38
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 6 – Investment in Interest-Earning Time Deposits The investment in interest-earning time deposits as of December 31, 2025 and 2024, by contractual maturity, is shown below (in thousands): 2025 2024 Due in one year or less $ - $ - Due after one year through five years 912 912 Total $ 912 $ 912 Note 7 – Investment Securities Available for Sale The amortized cost, gross unrealized gains and losses, and fair value of investment securities available for sale at December 31, 2025 and 2024 are summarized below (in thousands): December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value Available for Sale: Mortgage-backed securities: Government National Mortgage Association securities $ 846 $ 2 $ - $ 848 Federal National Mortgage Association securities 33 1 - 34 Total available-for-sale-securities $ 879 $ 3 $ - $ 882 December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value Available for Sale: Mortgage-backed securities: Government National Mortgage Association securities $ 1,631 $ 1 $ (2) $ 1,630 Federal National Mortgage Association securities 35 1 - 36 Total available-for-sale-securities $ 1,666 $ 2 $ (2) $ 1,666 The amortized cost and fair value of mortgage-backed and debt securities at December 31, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands): Available for Sale Amortized Cost Fair Value Due after ten years $ 879 $ 882 39
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 7 – Investment Securities Available for Sale (Continued) 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 December 31, 2024 (in thousands): December 31, 2024 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 Government National Mortgage Association securities 8 $ 376 $ - $ 718 $ (2) $ 1,094 $ (2) There were no securities in a loss position at December 31, 2025. There was no allowance for credit losses at December 31, 2025 or 2024. Note 8 – Loans Receivable, Net and Allowance for Credit Losses The composition of net loans receivable is as follows (in thousands): December 31, Real estate loans: 2025 2024 One-to-four family residential: Owner occupied $ 41,627 $ 25,927 Non-owner occupied 28,870 33,573 Total one-to-four family residential 70,497 59,500 Multi-family (five or more) residential 40,772 45,412 Commercial real estate 309,745 297,627 Construction 23,461 18,320 Home equity 5,374 5,739 Total real estate loans 449,849 426,598 Commercial business 96,318 114,921 Other consumer 33 46 Total Loans 546,200 541,565 Deferred loan (fees) and costs 664 (396) Allowance for credit losses, net (6,166) (6,476) Net Loans $ 540,698 $ 534,693 40
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 – Loans Receivable, Net and Allowance for Credit Losses (Continued) The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of December 31, 2025 (in thousands): Term Loans Amortized Cost by Origination Year As of December 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Basis Total One-to-four family residential owner occupied Risk rating Pass $ 19,064 $ 6,685 $ 4,425 $ 4,566 $ 2,712 $ 3,486 $ - $ 40,938 Special mention - - - - - - - - Substandard - - - 299 - 390 - 689 Doubtful - - - - - - - - Total one-to-four family residential owner occupied $ 19,064 $ 6,685 $ 4,425 $ 4,865 $ 2,712 $ 3,876 $ - $ 41,627 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - One-to-four family residential non- owner occupied Risk rating Pass $ 640 $ 1,254 $ 1,891 $ 4,196 $ 11,555 $ 9,237 $ - $ 28,773 Special mention - - - - - 97 - 97 Substandard - - - - - - - - Doubtful - - - - - - - - Total one-to-four family residential non-owner occupied $ 640 $ 1,254 $ 1,891 $ 4,196 $ 11,555 $ 9,334 - $ 28,870 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Multi-family residential Risk rating Pass $ - $ 5,238 $ 905 $ 12,380 $ 10,072 $ 12,177 $ - $ 40,772 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total multi-family residential $ - $ 5,238 $ 905 $ 12,380 $ 10,072 $ 12,177 $ - $ 40,772 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate Risk rating Pass $ 36,974 $ 34,206 $ 39,730 $ 74,031 $ 51,938 $ 57,390 $ 8,542 $302,811 Special mention - - - 569 - 540 - 1,109 Substandard - 551 1,227 1,230 263 2,379 175 5,825 Doubtful - - - - - - - - Total commercial real estate $ 36,974 $ 34,757 $ 40,957 $ 75,830 $ 52,201 $ 60,309 $ 8,717 $309,745 Current period gross charge-offs $ - $ 41 $ - $ - $ - $ - $ - $ 41 Construction Risk rating Pass $ 16,961 $ 6,301 $ 199 $ - $ - $ - $ - $ 23,461 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total construction $ 16,961 $ 6,301 $ 199 $ - $ - $ - $ - $ 23,461 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ -
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 – Loans Receivable, Net and Allowance for Credit Losses (Continued) Term Loans Amortized Cost by Origination Year As of December 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Basis Total Home equity Risk rating Pass $ - $ 522 $ 494 $ 107 $ - $ 134 $ 4,117 $ 5,374 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total home equity $ - $ 522 $ 494 $ 107 $ - $ 134 $ 4,117 $ 5,374 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Commercial business Risk rating Pass $ 9,773 $ 3,725 $ 2,428 $ 26,784 $ 8,691 $ 2,161 $ 23,202 $ 76,764 Special mention - - 335 296 1,725 729 10 3,095 Substandard - 11,729 - 1,890 2,130 410 300 16,459 Doubtful - - - - - - - - Total commercial business $ 9,773 $ 15,454 $ 2,763 $ 28,970 $ 12,546 $ 3,300 $ 23,512 $ 96,318 Current period gross charge-offs $ 798 $ - $ 733 $ - $ 35 $ - $ 1,566 $ 1,566 Other consumer Risk rating Pass $ - $ - $ 33 $ - $ - $ - $ - $ 33 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total other consumer $ - $ - $ 33 $ - $ - $ - $ - $ 33 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Total Pass $ 83,412 $ 57,931 $ 50,105 $122,064 $ 84,968 $ 84,585 $ 35,861 $518,926 Special mention - - 335 865 1,725 1,366 10 4,301 Substandard - 12,280 1,227 3,419 2,393 3,179 475 22,973 Doubtful - - - - - - - - Total $ 83,412 $ 70,211 $ 51,667 $126,348 $ 89,086 $ 89,130 $ 36,346 $546,200 Current period gross charge-offs $ - $ 839 $ - $ 733 $ - $ 35 $ - $ 1,607 42
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 – Loans Receivable, Net and Allowance for Credit Losses (Continued) The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of December 31, 2024 (in thousands): Term Loans Amortized Cost by Origination Year As of December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total One-to-four family residential owner occupied Risk rating Pass $ 7,290 $ 5,508 $ 5,078 $ 3,719 $ 1,632 $ 2,401 $ - $ 25,628 Special mention - - - - - - - - Substandard - - 299 - - - - 299 Doubtful - - - - - - - - Total one-to-four family residential owner occupied $ 7,290 $ 5,508 $ 5,377 $ 3,719 $ 1,632 $ 2,401 $ - $ 25,927 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - One-to-four family residential non- owner occupied Risk rating Pass $ 1,363 $ 1,920 $ 6,049 $ 11,949 $ 1,835 $ 10,457 $ - $ 33,573 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total one-to-four family residential non-owner occupied $ 1,363 $ 1,920 $ 6,049 $ 11,949 $ 1,835 $ 10,457 - $ 33,573 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Multi-family residential Risk rating Pass $ 5,274 $ 923 $ 12,713 $ 13,087 $ 4,068 $ 9,347 $ - $ 45,412 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total multi-family residential $ 5,274 $ 923 $ 12,713 $ 13,087 $ 4,068 $ 9,347 $ - $ 45,412 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate Risk rating Pass $ 35,478 $ 47,329 $ 80,933 $ 57,927 $ 22,637 $ 46,912 $ 4,394 $295,610 Special mention - 746 333 116 - - 50 1,245 Substandard - - 772 - - - - 772 Doubtful - - - - - - - - Total commercial real estate $ 35,478 $ 48,075 $ 82,038 $ 58,043 $ 22,637 $ 46,912 $ 4,444 $297,627 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Construction Risk rating Pass $ 4,498 $ 3,748 $ 5,546 $ 4,113 $ - $ - $ - $ 17,905 Special mention - 415 - - - - - 415 Substandard - - - - - - - - Doubtful - - - - - - - - Total construction $ 4,498 $ 4,163 $ 5,546 $ 4,113 $ - $ - $ - $ 18,320
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Current period gross charge-offs $ - $ - $ - $ - $ - $ 187 $ - $ 187 43
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 – Loans Receivable, Net and Allowance for Credit Losses (Continued) Term Loans Amortized Cost by Origination Year As of December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Home equity Risk rating Pass $ 529 $ 364 $ - $ 114 $ - $ 169 $ 4,563 $ 5,739 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total home equity $ 529 $ 364 $ - $ 114 $ - $ 169 $ 4,563 $ 5,739 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Commercial business Risk rating Pass $ 16,655 $ 4,056 $ 48,619 $ 18,554 $ 3,205 $ 1,826 $ 17,854 $110,769 Special mention - - - - 574 - 100 674 Substandard 296 - 702 2,387 33 - 60 3,478 Doubtful - - - - - - - - Total commercial business $ 16,951 $ 4,056 $ 49,321 $ 20,941 $ 3,812 $ 1,826 $ 18,014 $114,921 Current period gross charge-offs $ 388 $ - $ 1,167 $ 56 $ - $ - $ - $ 1,611 Other consumer Risk rating Pass $ 46 $ - $ - $ - $ - $ - $ - $ 46 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total other consumer $ 46 $ - $ - $ - $ - $ - $ - $ 46 Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Total Pass $ 71,133 $ 63,848 $158,938 $109,463 $ 33,377 $ 71,112 $ 26,811 $534,682 Special mention - 1,161 333 116 574 - 150 2,334 Substandard 296 - 1,773 2,387 33 - 60 4,549 Doubtful - - - - - - - - Total $ 71,429 $ 65,009 $161,044 $111,966 $ 33,984 $ 71,112 $ 27,021 $541,565 Current period gross charge-offs $ 388 $ - $ 1,167 $ 56 $ - $ 187 $ - $ 1,798 The following tables present non-performing loans by classes of the loan portfolio as of December 31, 2025 and December 31, 2024 (in thousands): December 31, 2025 Non-accrual loans 90 Days or More Past Due and Accruing Total Non- Performing With a Related Allowance Without a Related Allowance Total One-to-four family residential owner occupied $ - $ 689 $ 689 $ 266 $ 955 Commercial real estate 427 1,905 2,332 1,238 3,570 Commercial business 964 1,849 2,813 2 2,815 Total $ 1,391 $ 4,443 $ 5,834 $ 1,506 $ 7,340 As part of the discontinued operations of OCH, the Bank retained approximately 60 loans totaling $4.4 million loans, which were classified as non-accrual. As of December 31, 2025, the value of these total $854,000, made up of approximately 24 loans. The Bank
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continues to monitor these loans for collectability. 44
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 – Loans Receivable, Net and Allowance for Credit Losses (Continued) December 31, 2024 Non-accrual loans 90 Days or More Past Due and Accruing Total Non- Performing With a Related Allowance Without a Related Allowance Total One-to-four family residential owner occupied $ - $ 299 $ 299 $ 395 $ 694 Commercial real estate - 1,519 1,519 167 1,686 Commercial business 1,097 2,680 3,777 164 3,941 Total $ 1,097 $ 4,498 $ 5,595 $ 726 $ 6,321 As part of the discontinued operations of OCH, the Bank retained approximately 60 loans totaling $4.4 million loans, which were classified as non-accrual. As of December 31, 2024, the value of these total $2.6 million, made up of approximately 30 loans. The Bank continues to monitor these loans for collectability. Occasionally, the Bank modifies loans to borrowers in financial distress by providing principal forgiveness and term extensions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. In some cases, the Bank provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. As of December 31, 2025, there was one commercial business loan with an amortized cost of $34,000 which was granted a term extension resulting in a change in the maturity date, from August 2027 to February 2030 in addition to principal forgiveness of $2,000. This loan represented 0.01% of loans receivable, net. Following is a summary, by loan portfolio class, of changes in the allowance for credit losses for the year ended December 31, 2025 (in thousands): December 31, 2025 1-4 Family Residential Owner Occupied 1-4 Family Residential Non- Owner Occupied Multi- Family Residential Commercial Real Estate Construction Home Equity Commercial Business and Other Consumer Total Allowance for credit losses: Beginning balance $ 177 $ 178 $ 442 $ 2,337 $ 156 $ 56 $ 3,130 $ 6,476 Charge-offs - - - (41) - - (1,566) (1,607) Recoveries - - - - - - 100 100 Provision 122 (29) (144) 126 384 (8) 746 1,197 Ending balance $ 299 $ 149 $ 298 $ 2,422 $ 540 $ 48 $ 2,410 $ 6,166 The Bank allocated increased allowance for credit loss provisions to the construction loan portfolio class for the year ended December 31, 2025, due primarily to changes in qualitative factors and quantitative factors in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the one-to-four family residential owner-occupied portfolio class for the year ended December 31, 2025, due primarily to increased loan balances in this portfolio class. The Bank allocated decreased allowance for credit loss provisions to the multi-family residential portfolio class for the year ended December 31, 2025, due primarily to decreased loan balances in this portfolio class. The Bank allocated decreased allowance for credit loss provisions to the commercial business loan portfolio class for the year ended December 31, 2025, due primarily to a decrease in loan balances, and a decrease in charge-offs in this portfolio class. 45
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 - Loans Receivable, Net and Allowance for Credit Losses (Continued) Following is a summary, by loan portfolio class, of changes in the allowance for credit losses for the year ended December 31, 2024 (in thousands): December 31, 2024 1-4 Family Residential Owner Occupied 1-4 Family Residential Non- Owner Occupied Multi- Family Residential Commercial Real Estate Construction Home Equity Commercial Business and Other Consumer Total Allowance for credit losses: Beginning balance $ 153 $ 219 $ 420 $ 2,784 $ 583 $ 61 $ 2,538 $ 6,758 Charge-offs - - - - (187) - (1,611) (1,798) Recoveries - - - - - - 10 10 Provision 24 (41) 22 (447) (240) (5) 2,193 1,506 Ending balance $ 177 $ 178 $ 442 $ 2,337 $ 156 $ 56 $ 3,130 $ 6,476 The Bank allocated decreased allowance for credit loss provisions to the commercial real estate loan portfolio class for the year ended December 31, 2024, due primarily to decreased loan balances in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the commercial business loan portfolio class for the year ended December 31, 2024, due primarily to changes in qualitative factors associated with the current economic environment in this portfolio class. The Bank allocated decreased allowance for credit loss provisions to the construction loan portfolio class for the year ended December 31, 2024, due primarily to changes in qualitative factors and quantitative factors in this portfolio class. The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of December 31, 2025 and December 31, 2024 (in thousands): December 31, 2025 30-89 Days Past Due 90 Days or More Past Due Current Total Loans Receivable One-to-four family residential owner occupied $ - $ 954 $ 40,673 $ 41,627 One-to-four family residential non-owner occupied 189 - 28,681 28,870 Multi-family residential 1,660 - 39,112 40,772 Commercial real estate 8,653 3,570 297,522 309,745 Construction 97 - 23,364 23,461 Home equity 25 - 5,349 5,374 Commercial business 1,705 2,816 91,797 96,318 Other consumer - - 33 33 Total $ 12,329 $ 7,340 $ 526,531 $ 546,200 46
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 8 - Loans Receivable, Net and Allowance for Credit Losses (Continued) December 31, 2024 30-89 Days Past Due 90 Days or More Past Due Current Total Loans Receivable One-to-four family residential owner occupied $ 209 $ 694 $ 25,024 $ 25,927 One-to-four family residential non-owner occupied 569 - 33,004 33,573 Multi-family residential 85 - 45,327 45,412 Commercial real estate 10,063 1,686 285,878 297,627 Construction 4,528 - 13,792 18,320 Home equity 35 - 5,704 5,739 Commercial business 873 3,941 110,107 114,921 Other consumer - - 46 46 Total $ 16,362 $ 6,321 $ 518,882 $ 541,565 For the delinquent loans in our portfolio, we have considered our ability to collect the past due interest, as well as the principal balance of the loan, in order to determine whether specific loans should be placed on non-accrual status. In cases where our evaluations have determined that the principal and interest balances are collectible, we have continued to accrue interest. As of December 31, 2025, the Company had initiated formal foreclosure procedures on $655,000 of residential mortgages. For the years ended December 31, 2025 and 2024 there was no interest income recognized on non-accrual loans on a cash basis. Interest income foregone on non-accrual loans was approximately $456,000 for the year ended December 31, 2025 and $564,000 for the year ended December 31, 2024. Note 9 - Premises and Equipment The components of premises and equipment at December 31, 2025 and 2024 are as follows (in thousands): 2025 2024 Leasehold improvements $ 617 $ 605 Furniture, fixtures and equipment 4,578 3,958 5,195 4,563 Accumulated depreciation (3,655) (2,937) Premises and equipment, net $ 1,540 $ 1,626 Depreciation expense for the years ended December 31, 2025 and 2024 amounted to approximately $718,000 and $602,000, respectively. 47
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 10 – Goodwill and Other Intangible, Net On August 1, 2016, Quaint Oak Insurance Agency, LLC began operations by acquiring the renewal rights to a book of business produced and serviced by an independent insurance agency located in New Britain, Pennsylvania, that provides a broad range of personal and commercial insurance coverage solutions. The Company paid $1.0 million for these rights. Based on a valuation, $515,000 of the purchase price was determined to be goodwill and $485,000 was determined to be related to the renewal rights to the book of business and deemed to be an other intangible asset. This other intangible asset is being amortized over a ten year period based upon the annual retention rate of the book of business. The balance of other intangible assets at December 31, 2025 was $28,000, net of accumulated amortization of $457,000. Amortization expense was $48,000 and $49,000 for the years ended December 31, 2025 and 2024, respectively. The remaining estimated amortization expense of other intangible for 2026 is $28,000. Note 11 - Deposits Deposits at December 31, 2025 and 2024 consist of the following (in thousands): 2025 2024 Non-interest bearing checking accounts $ 65,665 $ 59,783 Interest bearing checking accounts(1) 105,713 47,802 Savings accounts 699 492 Money market accounts 70,483 162,285(2) Certificate of deposit accounts 354,718 282,890 Total $ 597,278 $ 553,252 (1) The Company has identified one major interest bearing checking account deposit customer that accounted for approximately $35.0 million, or 5.9% of total deposits at December 31, 2025, and had a separate major interest bearing checking account deposit customer that accounted for approximately $47.8 million, or 8.6% of total deposits at December 31, 2024. (2) The Company has identified one major money market deposit customer, a separate customer than the interest bearing checking account deposit customer referred to above in footnote (1), that accounted for approximately 18.1% of total deposits at December 31, 2024. At December 31, 2024, the combined outstanding balances of the major deposit customer’s money market accounts totaled approximately $100.0 million. A summary of certificates of deposit by maturity at December 31, 2025 is as follows (in thousands): Years ending December 31 2026 $ 245,377 2027 50,956 2028 39,546 2029 14,843 2030 3,996 Total $ 354,718 The aggregate amount of certificates of deposit with a minimum denomination of $250,000 was $89.5 million and $71.6 million at December 31, 2025 and 2024, respectively. 48
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 12 - Borrowings As of December 31, 2025, Quaint Oak Bank has a maximum borrowing capacity with the Federal Home Loan Bank of approximately $269.3 million. Quaint Oak Bank’s Federal Home Loan Bank advances outstanding were $0 and $47.9 million at December 31, 2025 and 2024, respectively. As of December 31, 2025, Quaint Oak Bank has $24.2 million in borrowing capacity with the Federal Reserve Bank of Philadelphia (FRB) under the discount window program. As of December 31, 2025 and December 31, 2024, Quaint Oak Bank had no outstanding advances with the FRB. Short-term borrowings and the weighted interest rates consist of the following at December 31, 2025 and 2024 (dollars in thousands): FHLB Short-Term Borrowings At or For the Year Ended December 31, FRB Short-Term Borrowings At or For the Year Ended December 31, 2025 2024 2025 2024 Average balance outstanding $ 16,793 $ 1,219 $ - $ 711 Maximum amount outstanding at any month-end during the period 60,000 45,000 - 7,000 Balance outstanding at end of period - 45,000 - - Average interest rate during the period 4.53% 4.98% -% 4.78% Weighted average interest rate at end of period -% 4.71% -% -% Federal Home Loan Bank borrowings and the weighted interest rate consist of the following at December 31, 2025 and 2024 (in thousands): December 31, 2025 December 31, 2024 Fixed rate borrowings maturing: Amount Weighted Interest Rate Amount Weighted Interest Rate 2025 $ - -% $ 47,855 4.50% Note 13 – Senior Debt and Subordinated Debt On March 4, 2025, the Company entered into a Senior Unsecured Note Purchase Agreement with certain institutional accredited investors pursuant to which the Company issued an aggregate of $9.75 million in aggregate principal amount of Fixed Rate Unsecured Senior Notes due March 1, 2028 (the “Senior Debt Notes”) in a private placement. The Company issued to an accredited individual investor an additional $250,000 in principal amount of the Senior Debt Notes as of March 4, 2025 for a total of $10.0 million in aggregate principal amount. The Senior Debt Notes bear interest at a fixed annual rate of 11.00%, payable semi-annually in arrears on March 1 and September 1 of each year, beginning September 1, 2025. On December 27, 2018, the Quaint Oak Bancorp, Inc. issued $8.0 million in subordinated notes. These notes have a maturity date of December 31, 2028, and bear interest at a fixed rate of 6.50% for the first five years of their term and a floating rate for the remaining five years. The Company may, at its option, at any time on an interest payment date on or after December 31, 2025, redeem the notes, in whole or in part, at par plus accrued interest to the date of redemption. 49
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 13 – Senior Debt and Subordinated Debt (Continued) The following table presents the balance and unamortized issuance costs of the subordinated debt and senior debt at December 31, 2025 are as follows (in thousands): Principal Unamortized Debt Issuance Costs Net 6.5% subordinated notes, due December 31, 2028 $ 8,000 $ - $ 8,000 11.0% senior notes, due March 1, 2028 $ 9,750 $ 371 $ 9,379 11.0% senior notes, due March 1, 2028 $ 250 $ 10 $ 240 The balance of senior debt, net of unamortized debt issuance costs, was $9.6 million at December 31, 2025. The balance of subordinated debt was $8.0 million and $22.0 million at December 31, 2025 and December 31, 2024, respectively. All subordinated notes are not subject to repayment at the option of the noteholders. These notes are all unsecured and rank junior in right of payment to the Company’s obligations to its general creditors. Note 14 - Income Taxes The components of income tax expense for the years ended December 31, 2025 and 2024 are as follows (in thousands): 2025 2024 Federal: Current $ (145) $ 652 Deferred 227 97 Total federal 82 749 State, current 240 441 Total $ 322 $ 1,190 The following table presents the reconciliation between the reported income tax expense and the income tax expense which would be computed by applying the normal federal income tax rate of 21% to income before taxes for the years ended December 31, 2025 and 2024, respectively, as follows (in thousands): 2025 2024 Amount Rate Amount Rate Federal income tax at statutory rate $ 135 21.0% $ 837 21.0% State tax, net of federal benefit 187 29.0 349 8.7 Stock compensation expense 25 3.9 26 0.6 BOLI income (27) (4.2) (25) (0.6) Other 2 0.3 3 0.1 Total $ 322 50.0% $ 1,190 29.8% 50
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 14 - Income Taxes (Continued) The components of the net deferred tax asset at December 31, 2025 and 2024 are as follows (in thousands): 2025 2024 Deferred tax assets: Allowance for credit losses $ 1,353 $ 1,360 Deferred loan fees - 83 Stock-based compensation 26 16 Interest on non-accrual loans 96 119 Total deferred tax assets 1,475 1,578 Deferred tax liabilities: Bank premises and equipment (307) (327) Deferred loan fees (140) - Intangible (36) (32) Unrealized gains on investment securities available for sale (1) - Total deferred tax liabilities 484 359 Net Deferred Tax Asset $ 991 $ 1,219 The net deferred tax asset at December 31, 2025 and 2024 of $991 thousand and $1.2 million, respectively, is included in other assets. No valuation allowance was established at December 31, 2025 and 2024, in view of the Company’s tax strategies and anticipated future taxable income as evidenced by the Company’s earnings potential. The deferred tax asset recognized is attributable solely to federal income tax purposes and does not represent a tax benefit for state or local income taxes. Note 15 – Stock Compensation Plans Employee Stock Ownership Plan The Company maintains an Employee Stock Ownership Plan (ESOP) for the benefit of employees who meet the eligibility requirements of the plan. The Bank may make cash contributions to the ESOP on a quarterly basis which are allocated to participant accounts on an annual basis. During the years ended December 31, 2025 and 2024, the Company did not make a discretionary contribution of shares to the ESOP. However, in order to purchase shares from distribution elections by participants, the Company contributed $108,000 and $94,000 in cash to the ESOP for the years ended December 31, 2025 and 2024, respectively. These cash contributions were recognized as an ESOP expense. Stock Incentive Plans – Share Awards In May 2018, the shareholders of Quaint Oak Bancorp approved the adoption of the 2018 Stock Incentive Plan (the “2018 Stock Incentive Plan”). The 2018 Stock Incentive Plan approved by shareholders in May 2018 covered a total of 155,000 shares, of which 38,750, or 25%, may be plan share awards, for a balance of 116,250 stock options assuming all the shares are awarded. In May 2023, the shareholders of Quaint Oak Bancorp approved the adoption of the 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”). The 2023 Stock Incentive Plan approved by shareholders in May 2023 covered a total of 175,000 shares, of which 43,750, or 25%, may be plan share awards, for a balance of 131,250 stock options assuming all the shares are awarded. In September 2025, 12,500 shares that were available under the 2023 Stock Incentive Plan were awarded. 51
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 15 – Stock Compensation Plans (Continued) Stock Incentive Plans – Share Awards (Continued) As of December 31, 2025, a total of 38,000 share awards were unvested under the 2018 and 2023 Stock Incentive Plan and no share awards were available for future grant under the 2023 Stock Incentive Plan and the 2018 Stock Incentive Plan. The 2018 and 2023 Stock Incentive Plan share awards have vesting periods of five years. A summary of share award activity under the Company’s 2018 and 2023 Stock Incentive Plans as of December 31, 2025 and changes during the year ended December 31, 2025 is as follows: December 31, 2025 Number of Shares Weighted Average Grant Date Fair Value Unvested at the beginning of the period 36,000 $ 18.00 Granted 12,500 10.15 Vested (8,500) 18.00 Forfeited (2,000) 18.00 Unvested at the end of the period 38,000 $ 15.42 Compensation expense on the share awards is recognized ratably over the five year vesting period in an amount which is equal to the fair value of the common stock at the date of grant. During the years ended December 31, 2025 and 2024 the Company recognized approximately $170,000 and $162,000 of compensation expense, respectively. During the years ended December 31, 2025 and 2024, the Company recognized a tax benefit of approximately $36,000 and $34,000, respectively. As of December 31, 2025, approximately $544,000 in additional compensation expense will be recognized over the remaining service period of approximately 3.5 years. Stock Incentive Plans – Stock Options The 2018 Stock Incentive Plan approved by shareholders in May 2018 covered a total of 155,000 shares, of which 116,250 may be stock options assuming all the plan shares are awarded. The outstanding options granted in 2018 remain exercisable until May 2028, to the extent still outstanding. In May 2023, the shareholders of Quaint Oak Bancorp approved the adoption of the 2023 Stock Incentive Plan. The 2023 Stock Incentive Plan approved by shareholders in May 2018 covered a total of 175,000 shares, of which 131,250 may be stock options assuming all the shares are awarded. All incentive stock options issued under the 2018 and 2023 Stock Incentive Plans are intended to comply with the requirements of Section 422 of the Internal Revenue Code. Options will become vested and exercisable over a five-year period and are generally exercisable for a period of ten years after the grant date. In September 2025, 42,000 options that were available under the 2023 Stock Incentive Plan were granted. As of December 31, 2025, a total of 254,033 grants of stock options were outstanding under the 2018 and 2023 Stock Incentive Plans and no stock options were available for future grant under the 2018 and 2023 Stock Incentive Plans. Options will become vested and exercisable over a five-year period and are generally exercisable for a period of ten years after the grant date. 52
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 15 – Stock Compensation Plans (Continued) Stock Incentive Plans – Stock Options (Continued) A summary of option activity under the Company’s 2018 and 2023 Stock Incentive Plans for the year ended December 31, 2025 is as follows: December 31, 2025 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding at the beginning of the period 224,033 $ 15.98 6.3 Granted 42,000 10.15 9.7 Exercised - - - Forfeited (12,000) 15.65 6.3 Outstanding at end of period 254,033 $ 15.03 6.1 Exercisable at end of period 136,533 $ 15.05 4.2 The estimated fair value of the options granted in September 2025 was $2.71 per share. The fair value was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Expected dividend yield 1.58% Risk-free interest rate 3.75% Expected life of options 6.5 years Expected stock-price volatility 23.97% The dividend yield was calculated on the dividend amount and stock price existing at the grant date. The risk free interest rate used was based on the rates of United States Treasury securities with maturities equal to the expected lives of the options. Although the contractual term of the options granted is ten years, the expected term of the options is less. Management estimated the expected term of the stock options to be the average of the vesting period and the contractual term. The expected stock-price volatility was estimated by considering the Company’s own stock volatility. The actual future volatility may differ from our historical volatility. At December 31, 2025 and December 31, 2024, the aggregate intrinsic value of options outstanding and options exercisable was zero. The aggregate intrinsic value of a stock option represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holder had all option holders exercised their options on December 31, 2025 and December 31, 2024. This amount changes based on changes in the market value of the Company’s common stock. During the years ended December 31, 2025 and 2024, approximately $80,000 in compensation expense was recognized, respectively. During the years ended December 31, 2025 and December 31, 2024, the Company recognized a tax benefit of $5,000. As of December 31, 2025, approximately $293,000 in additional compensation expense will be recognized over the remaining service period of approximately 3.5 years. 53
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 16 - Transactions with Executive Officers and Directors Certain directors and executive officers of the Company, their families and their affiliates are customers of the Bank. Any transactions with such parties, including loans and commitments, are in the ordinary course of business at normal terms, including interest rate and collateralization, prevailing at the time and do not represent more than normal risks of collectability. None of these individuals were indebted to the Company for loans at December 31, 2025 and 2024, respectively. Note 17 - Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments. A summary of the Company’s financial instrument commitments at December 31, 2025 and 2024 is as follows (in thousands): 2025 2024 Commitments to originate loans $ 21,129 $ 20,130 Unfunded commitments under lines of credit 45,407 62,904 Standby letters of credit 1,050 1,938 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but includes principally residential and commercial real estate. The ACL for off balance sheet credit exposures is recorded in other liabilities on the Consolidated Balance Sheet. This ACL represents management’s estimate of expected losses in its unfunded loan commitments and other off balance sheet credit exposures, such as letters of credit and credit recourse on sold residential mortgage loans. The allowance for credit losses specific to unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws. Future draws are based on historical averages of utilization rates (i.e., the likelihood of draws taken). The ACL for off balance sheet credit exposures is increased or decreased by charges or reductions to expense, through the provision for credit losses. The balance of off balance sheet credit exposures is $277,000, and $257,000 at December 31, 2025 and December 31, 2024, respectively. Note 18 - Leases The Company leases its office at 501 Knowles Avenue in Southampton, Pennsylvania, as well as other office facilities and equipment. The Company leases four office locations under operating leases. Several assumptions and judgments were made when applying the requirements of Topic 842 to the Company’s existing lease commitments, including the allocation of consideration in the contracts between lease and nonlease components, determination of the lease term, and determination of the discount rate used in calculating the present value of the lease payments. 54
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 18 – Leases (Continued) The Company has elected to account for the variable nonlease components, such as common area maintenance charges, utilities, real estate taxes, and insurance, separately from the lease component. Such variable nonlease components are reported in net occupancy expense on the Consolidated Statements of Income when paid. These variable nonlease components were excluded from the calculation of the present value of the remaining lease payments, therefore, they are not included in the right-of-use assets and lease liabilities reported on the Consolidated Balance Sheets. The lease cost associated with the operating leases was $555,000 for the year ending December 31, 2025 and $266,000 for the year ending December 31, 2024. Cash paid for amounts included in the measurement of lease liabilities was $218,000 for the year ending December 31, 2025, and $213,000 for the year ending December 31, 2024. Certain of the Company’s leases contain options to renew the lease after the initial term. Management considers the Company’s historical pattern of exercising renewal options on leases and the positive performance of the leased locations, when determining whether it is reasonably certain that the leases will be renewed. If management concludes that there is reasonable certainty about the renewal option, it is included in the calculation of the remaining term of each applicable lease. The discount rate utilized in calculating the present value of the remaining lease payments for each lease was the Federal Home Loan Bank of Pittsburgh advance rate corresponding to the remaining maturity of the lease. The following table presents the weighted-average remaining lease term and discount rate for the leases outstanding at December 31, 2025. Operating Weighted average remaining term (years) 13.6 Weighted average discount rate 6.12% The following table presents the undiscounted cash flows due related to operating leases as of December 31, 2025, along with a reconciliation to the discounted amount recorded on the Consolidated Balance Sheets: Undiscounted cash flows due (In thousands): Operating 2026 $ 464 2027 417 2028 407 2029 415 2030 424 2031 and thereafter 4,172 Total undiscounted cash flows 6,299 Discount on cash flows (2,137) Total lease liabilities $ 4,162 Under Topic 842, the lessee can elect to not record on the Consolidated Balance Sheets a lease whose term is twelve months or less and does not include a purchase option that the lessee is reasonably certain to exercise. As of December 31, 2025, the Company had no leases that had a term of twelve months or less. Rental expense under operating leases totaled approximately $547,000 in 2025 and $308,000 in 2024. Cash paid for rents amounted to $50,000 and $40,000 for the years ended December 31, 2025 and December 31, 2024, respectively. On October 23, 2024, the Company and Mountainseed Real Estate Services, LLC entered into a sale-leaseback transaction for its office building located at 1710 Union Boulevard, which is owned by the Company and leased by the Bank as a branch and as offices for the following subsidiaries of the Bank: Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, and Quaint Oak Insurance, LLC. On December 20, 2024, the transaction settled and funded and the Bank entered into an initial lease for a term of 15 years. During the initial lease terms, the base annual rental amount of $279,300 will increase annually at a rate of 2.0%. The Company recorded a pre-tax gain, after deduction of transaction-related expenses, of $1.5 million in connection with the sale-leaseback transaction. 55
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 19 - Regulatory Matters The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth below) of total, Tier 1, and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2025, that the Bank meets all capital adequacy requirements to which it is subject. The Bank’s actual capital amounts and ratios at December 31, 2025 and 2024 and the minimum amounts and ratios required for capital adequacy purposes and to be well capitalized under the prompt corrective action provisions are as follows (dollars in thousands): Actual For Capital Adequacy Purposes To be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025: Total capital (to risk-weighted assets) $ 73,457 13.55% $ ≥43,374 ≥8.00% $ ≥54,218 ≥10.00% Tier 1 capital (to risk-weighted assets) 67,014 12.36 ≥32,531 ≥6.00 ≥43,374 ≥ 8.00 Common Equity Tier 1 capital (to risk-weighted assets) 67,014 12.36 ≥24,398 ≥4.50 ≥35,241 ≥ 6.50 Tier 1 capital (to average assets) 67,014 10.26 ≥21,687 ≥4.00 ≥32,661 ≥ 5.00 Actual For Capital Adequacy Purposes To be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2024: Total capital (to risk-weighted assets) $ 77,185 14.34% $ ≥43,064 ≥8.00% $ ≥53,831 ≥10.00% Tier 1 capital (to risk-weighted assets) 70,456 13.09 ≥32,298 ≥6.00 ≥43,064 ≥ 8.00 Common Equity Tier 1 capital (to risk-weighted assets) 70,456 13.09 ≥24,224 ≥4.50 ≥34,990 ≥ 6.50 Tier 1 capital (to average assets) 70,456 10.80 ≥26,095 ≥4.00 ≥32,619 ≥ 5.00 Under the Dodd-Frank Wall Street Reform and Consumer Protection Act the Board of Governors of the Federal Reserve System as the primary regulator for the Company is authorized to extend leverage capital requirements and risk based capital requirements applicable to depository institutions and bank holding companies to thrift holding companies. Legislation adopted in late 2014 generally exempts small savings and loan holding companies like Quaint Oak Bancorp from these capital requirements if certain conditions are met. 56
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 19 - Regulatory Matters (Continued) Banking regulations place certain restrictions on dividends paid by the Bank to the Company. The Company is dependent upon dividends from the Bank to provide funds for the payment of dividends to the Company’s shareholders, interest payments on the subordinated debt and other general corporate purposes. The Bank’s ability to pay cash dividends directly or indirectly to the Company is governed by federal law, regulations and related guidance. These include the requirement that the Bank must receive approval to declare a dividend if the total amount of all dividends, including the proposed dividend, declared by the Bank in any current year exceeds the total of the Bank’s net income for the current year to date, combined with its retained net income for the previous two years. The term “retained net income” as defined by federal regulations means the Bank’s net income for a specified period less the total amount of all dividends declared in that period. The Bank may not pay dividends to the Company if, after paying those dividends, it would fail to meet the required minimum levels under risk-based capital guidelines or if the bank regulators have notified the Bank that it is in need of more than normal supervision. Under the Federal Deposit Insurance Act, an insured depository institution such as the Bank is prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become “undercapitalized” (as such term is used in the Federal Deposit Insurance Act). Payment of dividends by the Bank also may be restricted at any time at the discretion of the appropriate regulator if it deems the payment to constitute an unsafe and unsound banking practice. The Bank paid a total of $5.5 million in cash dividends to the Company in 2025. The Bank did not pay any cash dividends to the Company in 2024. At December 31, 2025, the Bank’s retained net income for the years ended December 31, 2025 and 2024 totaled $5.1 million. Note 20 – Fair Value Measurements and Fair Values of Financial Instruments Fair value estimates are based on quoted market prices, if available, quoted market prices of similar assets or liabilities, or the present value of expected future cash flows and other valuation techniques. These valuations are significantly affected by discount rates, cash flow assumptions, and risk assumptions used. Therefore, fair values estimates may not be substantiated by comparison to independent markets and are not intended to reflect the proceeds that may be realizable in an immediate settlement of the instruments. Fair value is determined at one point in time and is not representative of future value. These amounts do not reflect the total value of a going concern organization. Management does not have the intention to dispose of a significant portion of its assets and liabilities and therefore, the unrealized gains or losses should not be interpreted as a forecast of future earnings and cash flows. The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels of pricing are as follows: Level I: Quoted prices are available in active markets for identical assets or liabilities as of the reported date. Level II: Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed. Level III:Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available. 57
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 20 – Fair Value Measurements and Fair Values of Financial Instruments (Continued) The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 19 of the Company’s Form 10-K for the fiscal year ended December 31, 2025, as the fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit and non- performance risk. Loans are considered a Level 3 classification. The following is a discussion of assets and liabilities measured at fair value on a recurring and non-recurring basis and valuation techniques applied: Investment Securities Available for Sale: The fair value of securities available for sale are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. We may be required from time to time to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. Individually Evaluated Loans: Individually evaluated loans are carried at the lower of cost or the fair value of the collateral for collateral-dependent loans less estimated costs to sell. Collateral is primarily in the form of real estate. The use of independent appraisals, discounted cash flow models and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral and impaired loans are therefore classified within Level 3 of the fair value hierarchy. The table below sets forth the financial assets and liabilities that were accounted for on a recurring and nonrecurring basis by level within the fair value hierarchy as of December 31, 2025 (in thousands): December 31, 2025 Fair Value Measurements Using: Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Recurring fair value measurements: Investment securities available for sale Government National Mortgage Association mortgage-backed securities $ 848 $ - $ 848 $ - Federal National Mortgage Association mortgage- backed securities 34 - 34 - Total investment securities available for sale $ 882 $ - $ 882 $ - Total recurring fair value measurements $ 882 $ - $ 882 $ - Nonrecurring fair value measurements: Other real estate owned $ 360 $ - $ - $ 360 58
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 20 – Fair Value Measurements and Fair Values of Financial Instruments (Continued) The table below sets forth the financial assets and liabilities that were accounted for on a recurring basis by level within the fair value hierarchy as of December 31, 2024 (in thousands): December 31, 2024 Fair Value Measurements Using: Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Recurring fair value measurements: Investment securities available for sale Government National Mortgage Association mortgage-backed securities $ 1,631 $ - $ 1,631 $ - Federal National Mortgage Association mortgage- backed securities 35 - 35 - Total investment securities available for sale $ 1,666 $ - $ 1,666 $ - Total recurring fair value measurements $ 1,666 $ - $ 1,666 $ - The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has used Level 3 inputs to determine fair value as of December 31, 2025 (in thousands): December 31, 2025 Quantitative Information About Level 3 Fair Value Measurements Total Fair Value Valuation Techniques Unobservable Input Range (Weighted Average) Collateral-dependent loans $ 5,057 Appraisal of collateral (1) Appraisal adjustments (2) 8%(8%) Other real estate owned $ 360 Appraisal of collateral (1) Appraisal adjustments (2) 0% _______________ (1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are identifiable. (2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percentage of the appraisal. The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has used Level 3 inputs to determine fair value as of December 31, 2024 (in thousands): December 31, 2024 Quantitative Information About Level 3 Fair Value Measurements Total Fair Value Valuation Techniques Unobservable Input Range (Weighted Average) Collateral-dependent loans $ 3,222 Appraisal of collateral (1) Appraisal adjustments (2) 8%(8%) _______________ (1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are identifiable. (2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percentage of the appraisal.
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 20 – Fair Value Measurements and Fair Values of Financial Instruments (Continued) The estimated fair values of the Company’s financial instruments that are not required to be measured or reported at fair value were as follows at December 31, 2025 and 2024 (in thousands): Fair Value Measurements at December 31, 2025 Carrying Amount Fair Value Estimate Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Financial Assets Investment in interest-earning time deposits $ 912 $ 936 $ - $ - $ 936 Loans held for sale 60,956 63,308 - 63,308 - Loans receivable, net 535,641 533,964 - - 533,964 Individually evaluated loans 5,057 5,057 - - 5,057 Financial Liabilities Deposits 597,278 604,465 242,561 - 361,904 Senior debt 9,619 9,763 - - 9,763 Subordinated debt 8,000 7,760 - - 7,760 Fair Value Measurements at December 31, 2024 Carrying Amount Fair Value Estimate Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Financial Assets Investment in interest-earning time deposits $ 912 $ 964 $ - $ - $ 964 Loans held for sale 64,281 65,624 - 65,624 - Loans receivable, net 531,471 515,073 - - 515,073 Individually evaluated loans 3,222 3,222 3,222 Financial Liabilities Deposits 553,252 560,701 270,361 - 290,340 FHLB long-term borrowings 2,855 2,848 - - 2,848 Subordinated debt 22,000 21,733 - - 21,733 For cash and cash equivalents, accrued interest receivable, investment in FHLB stock, bank-owned life insurance, FHLB short-term borrowings, accrued interest payable, and advances from borrowers for taxes and insurance, the carrying value is a reasonable estimate of the fair value and are considered Level 1 measurements. 60
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 21 – Operating Segments ASC Topic 820 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Company’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company has applied the aggregation criterion set forth in this codification to the results of its operations. The Company's operations currently consist of two reportable operating segments: Banking and Oakmont Commercial. The Company offers different products and services through its two segments. The accounting policies of the segments are generally the same as those of the consolidated company. The Banking Segment generates its revenues primarily from its lending, deposit gathering and fee business activities. The profitability of this segment's operations depends primarily on its net interest income after provision for credit losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for credit losses. The provision for credit losses is almost entirely dependent on changes in the Banking Segment's loan portfolio and management’s assessment of the collectability of the loan portfolio as well as prevailing economic and market conditions. The profitability of this segment’s operations also depends on the generation of non-interest income which includes fees and commissions generated by Quaint Oak Bank and its wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, Quaint Oak Insurance Agency, LLC, and Quaint Oak Properties, LLC, which are included in the Banking Segment for segment reporting purposes. The Banking Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of depositors and other customers, federal deposit insurance funds and the banking system as a whole. These laws and regulations govern such areas as capital, permissible activities, allowance for loan and lease losses, loans and investments, and rates of interest that can be charged on loans. For segment reporting purposes, Quaint Oak Bancorp, Inc. is included as part of the Company’s Banking segment. The Oakmont Commercial Segment originates commercial real estate loans which are sold into the secondary market along with the loans’ servicing rights. The profitability of this segment’s operations depends primarily on the gains realized from the sale of loans and processing fees. The Oakmont Commercial Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of consumers. 61
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 21 – Operating Segments (Continued) The following table presents summary financial information for the reportable segments (in thousands): As of or for the Year Ended December 31, 2025 2024 Quaint Oak Bank(1) Oakmont Commercial, LLC Consolidated Quaint Oak Bank(2) Oakmont Commercial, LLC Consolidated Net Interest Income $ 16,737 $ 1,166 $ 17,903 $ 17,045 $ 772 $ 17,817 Provision for (Recovery of) Credit Losses 1,217 - 1,217 1,969 (435) 1,534 Net Interest Income after Provision for (Recovery of) Credit Losses 15,520 1,166 16,686 15,076 1,207 16,283 Non-Interest Income Mortgage banking, equipment lending and title abstract fees 947 - 947 909 - 909 Real estate sales commissions, net - - - 20 - 20 Insurance commissions 820 - 820 744 - 744 Other fees and services charges (11) 99 88 593 135 728 Income from bank-owned life insurance 128 - 128 118 - 118 Net gain on sale of loans 2,038 1,707 3,745 2,187 1,512 3,699 Gain on the sale of SBA loans 1,431 - 1,431 453 - 453 Gain on the sale-leaseback transaction - - - 1,485 - 1,485 Total Non-Interest Income 5,353 1,806 7,159 6,509 1,647 8,156 Non-Interest Expense Salaries and employee benefits 13,882 1,276 15,158 13,195 1,441 14,636 Directors’ fees and expenses 263 - 263 201 - 201 Occupancy and equipment 1,796 3 1,799 1,418 - 1,418 Data processing 1,760 - 1,760 1,298 - 1,298 Professional fees 1,709 139 1,848 1,006 81 1,087 FDIC deposit insurance assessment 530 - 530 614 - 614 Advertising 270 24 294 277 25 302 Amortization of other intangible 48 - 48 49 - 49 Other 1,459 42 1,501 1,376 37 1,413 Total Non-Interest Expense 21,717 1,484 23,201 19,434 1,584 21,018 Pretax Segment (Loss) Profit $ (844) $ 1,488 $ 644 $ 2,151 $ 1,270 $ 3,421 Income from Discontinued Operations $ - $ - $ - $ 564 $ - $ 564 Income Tax from Discontinued Operations $ - $ - $ - $ 158 $ - $ 158 Net Income from Discontinued Operations $ - $ - $ - $ 406 $ - $ 406 Segment Assets $ 620,182 $ 55,671 $ 675,853 $ 632,644 $ 52,524 $ 685,168 ___________________ (1) Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Abstract, Quaint Oak Insurance Agency, and QOB Properties. (2) Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency, and QOB Properties. 62
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 22– Quaint Oak Bancorp, Inc. (Parent Company Only) Condensed financial statements of Quaint Oak Bancorp, Inc. are as follows (in thousands): Balance Sheets December 31, 2025 2024 Assets Cash and cash equivalents $ 2,839 $ 4,205 Investment in Quaint Oak Bank 67,444 70,924 Total Assets $ 70,283 $ 75,129 Liabilities and Stockholders’ Equity Senior debt $ 9,619 $ - Subordinated debt 8,000 22,000 Other liabilities 335 512 Stockholders’ equity 52,329 52,617 Total Liabilities and Stockholders’ Equity $ 70,283 $ 75,129 Statements of Income For the Year Ended December 31, 2025 2024 Income Dividends from subsidiary $ 5,500 $ - Gain on the sale of 1710 Union Boulevard - 1,485 Rental income - 364 Total Income 5,500 1,849 Expenses Occupancy and equipment expense - 103 Interest on senior debt 947 - Interest on subordinated debt 954 1,934 Other expenses 245 141 Total Expenses 2,146 2,178 Net Income Before Income Taxes 3,354 (329) Equity in Undistributed Net Income of Subsidiary, Net of Dividends (3,483) 3,055 Income Tax Benefit 451 69 Net Income $ 322 $ 2,795 Comprehensive Income $ 325 $ 2,805 63
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Quaint Oak Bancorp, Inc. Notes to Consolidated Financial Statements (Continued) Note 22 – Quaint Oak Bancorp, Inc. (Parent Company Only) (Continued) Statements of Cash Flows For the Year Ended December 31, 2025 2024 Operating Activities Net income $ 322 $ 2,795 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed net income in subsidiary, net of dividends 3,483 (3,055) Depreciation expense - 45 Amortization of senior debt issuance costs 146 - Amortization of subordinated debt issuance costs - (11) Stock-based compensation expense 251 242 (Increase) decrease in other assets (177) 331 Net cash provided by operating activities 4,025 347 Investing Activities Sale of property and equipment - 1,343 Net cash provided by investing activities - 1,343 Financing Activities Dividends paid (894) (1,338) Proceeds from the issuance of Subordinate Debt (4,527) - Proceeds from issuance of unallocated shares from authorized shares - 2,448 Purchase of treasury stock (44) (150) Proceeds from the reissuance of treasury stock under 401(k) plan 74 119 Net cash (used in) provided by financing activities (5,391) 1,079 Net (Decrease) Increase in Cash and Cash Equivalents (1,366) 2,769 Cash and Cash Equivalents-Beginning of Year 4,205 1,436 Cash and Cash Equivalents-End of Year $ 2,839 $ 4,205 64
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EXHIBIT 21.0 Subsidiaries of Registrant As of December 31, 2025 (100% direct or indirect ownership by Quaint Oak Bancorp, Inc.) Name Parent Company State of Incorporation Quaint Oak Bank Quaint Oak Bancorp, Inc. Pennsylvania Quaint Oak Mortgage, LLC Quaint Oak Bank Pennsylvania Quaint Oak Abstract, LLC Quaint Oak Bank Pennsylvania QOB Properties, LLC Quaint Oak Bank Pennsylvania Quaint Oak Insurance Agency, LLC Quaint Oak Bank Pennsylvania Oakmont Commercial, LLC Quaint Oak Bank Pennsylvania KCMI Capital, Inc. Oakmont Commercial, LLC Pennsylvania
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EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statements File No. 333-197329, File No. 333-232352, and File No. 333-276075 on Form S-8 of Quaint Oak Bancorp, Inc. of our report dated March 27, 2026, relating to our audit of the consolidated financial statements, which appears in the Annual Report to Stockholders, which is incorporated in this Annual Report on Form 10-K of Quaint Oak Bancorp, Inc. for the year ended December 31, 2025. Cranberry Township, Pennsylvania March 27, 2026
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EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Robert T. Strong, certify that: 1. I have reviewed this annual report on Form 10-K of Quaint Oak Bancorp, Inc. (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 27, 2026 /s/ Robert T. Strong Robert T. Strong Chief Executive Officer
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EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, John J. Augustine, certify that: 1. I have reviewed this annual report on Form 10-K of Quaint Oak Bancorp, Inc. (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 27, 2026 /s/ John J. Augustine John J. Augustine Executive Vice President and Chief Financial Officer
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EXHIBIT 32.0 SECTION 1350 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER Each of Robert T. Strong, President and Chief Executive Officer and John J. Augustine, Executive Vice President and Chief Financial Officer of Quaint Oak Bancorp, Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: (1) The Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d); and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 27, 2026 By:/s/ Robert T. Strong Robert T. Strong Chief Executive Officer Date: March 27, 2026 By:/s/ John J. Augustine John J. Augustine Executive Vice President and Chief Financial Officer Note: A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Quaint Oak Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.