QUAINT OAK BANCORP, INC.

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 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.

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.