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 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.

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.