QUAINT OAK BANCORP, INC.

Recent Accounting PronouncementsNot Yet Adopted

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): 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.*The Company is currently evaluating the impact of this new guidance on its financial statements.

In* March 2024,the FASB issued ASU2024*-01, Compensation – Stock Compensation (Topic718), amended the guidance in ASC718 to add an example showing how to apply the scope guidance to determine whether profits interest and similar awards should be accounted for as share-based payment arrangements. For public business entities, the guidance is effective for fiscal years beginning after* December 15, 2024,and interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after December 15, 2025,*and interim periods within those fiscal years. The Company is currently evaluating the impact of this new guidance on its financial statements.

In* November 2024,the FASB issued ASU2024*-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 donot 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 ASU2024-03 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 ASU2025*-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40), which revises the effective date of ASU2024-03 (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

Quaint Oak Bancorp, Inc.

Note3 – 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 ASC205*-20. The Consolidated Balance Sheets, Consolidated Statements of Income and Consolidated Statements of Cash Flows present discontinued operations for the current period and retrospectively for prior periods.

No assets or liabilities for OCH were held at* December 31, 2024.The following is a summary of the assets and liabilities of the discontinued operations of OCH at December 31, 2023 (*in thousands):

36

Quaint Oak Bancorp, Inc.

Note3 – Discontinued Operations (Continued)

The following presents operating results of the discontinued operations OCH for the year ended* December 31, 2024and December 31, 2023 (*in thousands):

37

Quaint Oak Bancorp, Inc.

Note4 – Earnings Per Share

Earnings per share (“EPS”) consists oftwo 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 arenot included for the purposes of this calculation. For the year ended* December 31, 2023,all outstanding stock options granted under the2023* Stock Incentive Plan were anti-dilutive. For the year ended* December 31, 2023,all outstanding stock options granted under the2018* Stock Incentive Plan representing shares were dilutive. For the year ended* December 31, 2024,all outstanding stock options granted under the2018* 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.

Note5 – 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, 2024and2023* (in thousands):

38

Quaint Oak Bancorp, Inc.

Note6 – Investment in Interest-Earning Time Deposits

The investment in interest-earning time deposits as of* December**31,* 2024 and2023, by contractual maturity, is shown below (in thousands):

Note7 – 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, 2024and2023* are summarized below (in thousands):

The amortized cost and fair value of mortgage-backed and debt securities at* December 31, 2024,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):

39

Quaint Oak Bancorp, Inc.

Note7 – Investment Securities Available for Sale (Continued)

The following tables show 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, 2024and2023* (in thousands):

Management believes that the estimated fair value of the securities disclosed above is primarily dependent on the movement of market interest rates. Management evaluated the extent to which the fair value has been less than cost and the financial condition and near-term prospects of the issuer, including any specific events which* mayinfluence the operations of the issuer. The Company has the ability and intent to hold the securities until the anticipated recovery of fair value occurs. There wasno allowance for credit losses at December 31, 2024or2023.*

Note8 – Loans Receivable, Net and Allowance for Credit Losses

The composition of net loans receivable is as follows (in thousands):

40

Quaint Oak Bancorp, Inc.

The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of* December 31, 2024 (*in thousands):

41

Quaint Oak Bancorp, Inc.

Note8 – 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, 2023 (*in thousands):

42

Quaint Oak Bancorp, Inc.

The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of* December 31, 2023 (*in thousands):

43

Quaint Oak Bancorp, Inc.

Note8 – Loans Receivable, Net and Allowance for Credit Losses (Continued)

The following table presents non-accrual loans by classes of the loan portfolio as of* December 31, 2024and December 31, 2023 (*in thousands):

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.

44

Quaint Oak Bancorp, Inc.

As of* December 31, 2024,there wereno loans whose terms were modified for borrowers who may*be experiencing financial difficulties.

The 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):

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.

45

Quaint Oak Bancorp, Inc.

Note8 - Loans Receivable, Net and Allowance for Credit Losses (Continued)

The following is a summary, by loan portfolio class, of changes in the allowance for credit losses for the year ended* December 31, 2023 (*in thousands):

The Bank allocated decreased allowance for credit loss provisions to the commercial real estate loan portfolio class for the year ended* December 31, 2023,due primarily to changes in qualitative factors 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, 2023,due primarily to changes in qualitative factors in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the construction loan portfolio class for the year ended December 31, 2023,*due primarily to changes in qualitative 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, 2024and December 31, 2023 (*in thousands):

46

Quaint Oak Bancorp, Inc.

Notes to Consolidated Financial Statements (Continued) Note 8 - Loans Receivable, Net and Allowance for Credit Losses (Continued)

Non-performing loans, which consist of non-accruing loans plus accruing loans90 days or more past due, amounted to $6.3 million and $452,000 at* December 31, 2024and2023,* respectively. 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.

For the years ended* December 31, 2024and2023* there wasno interest income recognized on non-accrual loans on a cash basis. Interest income foregone on non-accrual loans was approximately $564,000 for the year ended* December 31, 2024and $9,000 for the year ended December 31, 2023.*

Note9 - Premises and Equipment

The components of premises and equipment at* December**31,* 2024 and2023 are as follows (in thousands):

Depreciation expense for the years ended* December 31, 2024and2023* amounted to approximately $602,000 and $425,000, respectively.

47

Quaint Oak Bancorp, Inc.

Note10 – 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 aten year period based upon the annual retention rate of the book of business. The balance of other intangible assets at December 31, 2024was $77,000, net of accumulated amortization of $408,000. Amortization expense for both years ended December 31, 2024and2023* amounted to approximately $49,000.

Estimated amortization expense of other intangible for the remainingthree years is as follows (in thousands):

Note11 - Deposits

Deposits at* December**31,* 2024 and2023 consist of the following (in thousands):

A summary of certificates of deposit by maturity at* December**31,* 2024 is as follows (in thousands):

The aggregate amount of certificates of deposit with a minimum denomination of*$250,000* was $71.6 million and $40.8 million at* December**31,* 2024 and2023, respectively.

48

Quaint Oak Bancorp, Inc.

Note12 - Borrowings

As of* December 31, 2024,Quaint Oak Bank has a maximum borrowing capacity with the Federal Home Loan Bank of approximately $266.6 million. Quaint Oak Bank’s Federal Home Loan Bank advances outstanding were $47.9 million and $29.0 million at December 31, 2024and2023,* respectively. As of* December 31, 2024,Quaint Oak Bank has $15.8 million in borrowing capacity with the Federal Reserve Bank of Philadelphia (FRB) under the discount window program. As of December 31, 2024,*Quaint Oak Bank hadno outstanding advances with the FRB.

Short-term borrowings and the weighted interest rates consist of the following at* December 31, 2024and2023* (dollars in thousands):

Federal Home Loan Bank long-term borrowings and the weighted interest rate consist of the following at* December 31, 2024and2023* (in thousands):

Note13 – Subordinated Debt

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 thefirst* five years of their term and a floating rate for the remainingfive years. The Company* may,at its option, at any time on an interest payment date on or after December 31, 2024,*redeem the notes, in whole or in part, at par plus accrued interest to the date of redemption.

49

Quaint Oak Bancorp, Inc.

Note13 – Subordinated Debt (Continued)

On* March 2, 2023,the Company issued $12.0 million in aggregate principal amount of fixed rate subordinated notes due March 15, 2025 (the “Notes”) to certain qualified institutional buyers. On March 16, 2023,the Company issued an additional $2.0 million in aggregate principal amount of subordinated debt to certain accredited investors under the same terms. The Notes bear interest at a fixed annual rate of 8.50%, payable semi-annually in arrears on March 15and September 15of each year, beginning September 15, 2023.The Notes’ maturity date is March 15, 2025.The Company is entitled to redeem the Notes, in whole or in part, on or after March 15, 2024,and to redeem the Notes at any time in whole upon certain other events, at a redemption price equal to100%* of the outstanding principal amount of the Notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date.

The balance and unamortized issuance costs of subordinated debt at* December 31, 2024*are as follows (in thousands):

All subordinated notes arenot 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.

Note14 - Income Taxes

The components of income tax expense for the years ended* December**31,* 2024 and2023 are as follows (in thousands):

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 of21% to income before taxes for the years ended* December**31,* 2024 and2023, respectively, as follows (in thousands):

50

Quaint Oak Bancorp, Inc.

Note14 - Income Taxes (Continued)

The components of the net deferred tax asset at* December**31,* 2024 and2023 are as follows (in thousands):

The net deferred tax asset at* December 31, 2024and2023* of $1.2 million and $1.3 million, respectively, is included in other assets. No valuation allowance was established at* December 31, 2024and2023,* in view of the Company’s tax strategies and anticipated future taxable income as evidenced by the Company’s earnings potential.

Note15 – Stock Compensation Plans