QUAINT OAK BANCORP, INC.

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.

Our Banking Segment reported a pre-tax segment profit (“PTSP”) for the year ended December 31, 2024 of $2.2 million, a $714,000, or 24.9%, decrease from the year ended December 31, 2023. This decrease in PTSP was due to a $1.7 million, or 8.9%, decrease in net interest income, and a $1.7 million, or 694.0%, increase in the provision for credit losses, partially offset by a $2.5 million, or 61.8%, increase in non-interest income, and a $188,000, or 1.0%, decrease in non-interest expense. The increase in non-interest income was primarily due to a $1.5 million increase in gain on the sale-leaseback of 1710 Union Boulevard, a $684,000, or 45.5%, increase in net gain on loans held for sale, a $309,000, or 51.5%, increase in mortgage banking, equipment lending and title abstract fees, a $118,000, or 32.9%, increase in other fees and service charges, an $81,000, or 12.2%, increase in insurance commissions, and a $16,000, or 15.7%, increase in income from bank-owned life insurance, partially offset by a $119,000, or 50.6%, decrease in loan servicing income, a $74,000, or 78.7% decrease in real estate sales commissions, net, and a $15,000, or 3.2%, decrease in gain on the sale of SBA loans.

The decrease in non-interest expense was due primarily to a $253,000, or 29.2%, decrease in FDIC deposit insurance assessment, a $233,000, or 14.1%, decrease in occupancy and equipment expense, a $197,000, or 10.4%, decrease in other expense, a $115,000, or 36.4%, decrease in directors’ fees and expenses, a $159,000, or 18.8%, decrease in professional fees, partially offset by a $504,000, or 4.0%, increase in salaries and benefits expense, a $247,000, or 23.5%, increase in data processing expense, and an $18,000, or 6.9%, increase in advertising expense.

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, 2024 of $1.3 million, a $523,000, or 70.0%, increase from the year ended December 31, 2023. The increase in PTSP was primarily due to a $344,000, or 378.0%, increase in the recovery of credit losses, a $379,000, or 29.9%, increase in non-interest income, and an $89,000, or 13.0%, increase in net interest income, partially offset by a $289,000, or 22.3%, increase in non-interest expense. The increase in non-interest income was primarily due to a $395,000, or 35.4%, increase in net gain on loans held for sale, partially offset by a $16,000, or 10.6%, decrease in other fees and services charges. The increase in non-interest expense was primarily due to a $282,000, or 24.3%, increase in salaries and employee benefits expense, and a $15,000, or 68.2%, increase in other expenses, partially offset by a $5,000, or 100.0%, decrease in occupancy and equipment expense, and a $4,000, or 4.7%, decrease in professional fees.