QUAINT OAK BANCORP, INC.

Recent Accounting PronouncementsNot Yet Adopted (Continued)

In* November 2025,the FASB issued ASU2025*-08, Financial Instruments – Credit Losses (Topic326), which amends the guidance in Topic326 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 least90 days after origination and the acquirer wasnot involved in the origination of the loans. ASU2025-08 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 ASU2025*-11, Interim Reporting (Topic270*): Narrow-Scope Improvements*, to clarify interim disclosure requirements, the form and content of interim financial statements, and when ASC Topic270 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 disclosuresnot specified in Topic270 should be provided in interim reporting periods. ASU2025-11 * maybe 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.

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 years ended* December 31, 2025or2024.*

No assets or liabilities for OCH were held at* December 31, 2025or2024.*

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Note3 – Discontinued Operations (Continued)

There wereno 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):

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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 years ended* December 31, 2025and December 31, 2024,all outstanding stock options granted under the2018* Stock Incentive Plan and the2023 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, 2025and2024* (in thousands):

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Note6 – Investment in Interest-Earning Time Deposits

The investment in interest-earning time deposits as of* December**31,* 2025 and2024, 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, 2025and2024* are summarized below (in thousands):

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):

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Note7 – 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):

There wereno securities in a loss position at* December 31, 2025.*

There wasno allowance for credit losses at* December 31, 2025or2024.*

Note8 – Loans Receivable, Net and Allowance for Credit Losses

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

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The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of* December 31, 2025 (*in thousands):

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

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The following tables present non-performing loans by classes of the loan portfolio as of* December 31, 2025and December 31, 2024 (*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, 2025,*the value of these total $854,000, made up of approximately 24 loans. The Bank continues to monitor these loans for collectability.

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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 onone 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 wasone 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 2027to 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):

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 theone*-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.

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Note8 - 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):

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, 2025and December 31, 2024 (*in thousands):

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

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, 2025and2024* there wasno 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, 2025and $564,000 for the year ended December 31, 2024.*

Note9 - Premises and Equipment

The components of premises and equipment at* December**31,* 2025 and2024 are as follows (in thousands):

Depreciation expense for the years ended* December 31, 2025and2024* amounted to approximately $718,000 and $602,000, respectively.

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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, 2025was $28,000, net of accumulated amortization of $457,000. Amortization expense was $48,000 and $49,000 for the years ended December 31, 2025and2024,* respectively. The remaining estimated amortization expense of other intangible for2026 is $28,000.

Note11 - Deposits

Deposits at* December**31,* 2025 and2024 consist of the following (in thousands):

A summary of certificates of deposit by maturity at* December**31,* 2025 is as follows (in thousands):

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 and2024, respectively.

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Note12 - 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, 2025and2024,* 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, 2025and 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, 2025and2024* (dollars in thousands):

Federal Home Loan Bank borrowings and the weighted interest rate consist of the following at* December 31, 2025and2024* (in thousands):

Note13 – 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, 2025for 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 1and September 1of 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 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, 2025,*redeem the notes, in whole or in part, at par plus accrued interest to the date of redemption.

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Note13 – 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):

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, 2025and December 31, 2024,*respectively.

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,* 2025 and2024 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,* 2025 and2024, respectively, as follows (in thousands):

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Note14 - Income Taxes (Continued)

The components of the net deferred tax asset at* December**31,* 2025 and2024 are as follows (in thousands):

The net deferred tax asset at* December 31, 2025and2024* of $991 thousand and $1.2 million, respectively, is included in other assets. No valuation allowance was established at* December 31, 2025and2024,* 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 doesnot represent a tax benefit for state or local income taxes.

Note15 – Stock Compensation Plans