OTC: QNTO

1

As of December 31, 2025, Quaint Oak Bank’s primary market area includes Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania. As of December 31, 2025, Quaint Oak Bancorp had $675.9 million of total assets, $597.3 million of total deposits and $52.3 million of stockholders’ equity. Quaint Oak Bancorp’s stockholders’ equity constituted 7.7% of total assets as of December 31, 2025.

Quaint Oak Bank’s primary business consists of attracting deposits from the general public through a variety of deposit programs and investing such deposits principally in commercial real estate loans, commercial business loans, one-to-four family residential owner occupied loans and multi-family residential loans. The market for our deposit customers is generated primarily through local market certificates of deposit and business checking and money market accounts. At December 31, 2025, approximately 42.0% of Quaint Oak Bank’s total deposits were held by customers outside the Commonwealth of Pennsylvania. Our branch offices are primarily cashless. Cash transactions at our branch offices are facilitated through a correspondent banking relationship with another Pennsylvania-based national commercial bank. Our real estate loans are primarily secured by properties in the mid-Atlantic region and are originated through Quaint Oak Mortgage and our subsidiary, Oakmont Commercial, although we have originated loans throughout the continental United States through other relationships we have with brokers. In addition, Quaint Oak Bank offers mortgage banking, multi-state specialty commercial real estate financing, title abstract and insurance services through its subsidiary companies. Quaint Oak Mortgage provides a variety of mortgage loans, including conventional, FHA, VA, and USDA loans almost all of which are underwritten to GSE-guidelines for sale in the secondary market. Oakmont Commercial specializes in providing loans for commercial real estate purchases, refinancing, and development projects to small businesses primarily on the East Coast and generally in the Mid- Atlantic and Southeast. Oakmont Commercial focuses on originations of low loan-to-value, high yield, primarily owner-occupied commercial real estate collateralized loans to be sold in the secondary market to institutional and bank buyers. Quaint Oak Insurance offers comprehensive coverage, including home, auto, life, and business insurance. Quaint Oak Abstract offers title insurance. Quaint Oak Mortgage cross-sells products from Quaint Oak Bank’s title and insurance businesses, Quaint Oak Abstract and Quaint Oak Insurance, to its mortgage customers. Quaint Oak Bank serves its customers through its offices as well as through correspondence, telephone and on-line banking.

During the year ended December 31, 2025, the Company adopted ASU 2023-09, “Improvements to Income Tax Disclosure”, which expands the disclosure requirements for income taxes. The amendment in this update improves financial reporting by requiring disclosure of greater disaggregation of information in the income tax rate reconciliation. The amendment in this update also improves financial reporting by requiring disclosure of income taxes paid by jurisdiction to improve visibility of income taxes paid information. The adoption did not have a material impact on the Company’s consolidated financial statements. See Note 14 - Income Taxes in the notes to our financial statements included in Exhibit 13.0 hereto for more information.

Quaint Oak Bank established international correspondent banking operations in March 2022 and maintains a partnership with one international banking entity that utilized Quaint Oak Bank to help facilitate U.S. dollar payments. As of December 31, 2025, the international correspondent banking division had $4.4 million of deposits with the Bank, amounting to 0.7%, of total deposits.

2

Deposits with Quaint Oak Bank are insured to the maximum extent provided by law through the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”). Quaint Oak Bank is subject to examination and comprehensive regulation by the FDIC and the Pennsylvania Department of Banking and Securities. Quaint Oak Bancorp, which elected to be treated as a savings and loan holding company, is subject to examination and regulation by the Board of Governors of the Federal Reserve System (“Federal Reserve Board”). Quaint Oak Bank is also a member of the Federal Home Loan Bank of Pittsburgh (“FHLB of Pittsburgh” or “FHLB”), which is one of the 11 regional banks comprising the Federal Home Loan Bank System (“FHLB System”). Quaint Oak Bank is also subject to regulations of the Federal Reserve Board governing reserves required to be maintained against deposits and certain other matters.

Quaint Oak Bancorp’s principal executive offices are located at 501 Knowles Avenue, Southampton, Pennsylvania 18966, its telephone number is (215) 364-4059 and Internet address is www.quaintoak.com.

Quaint Oak Bank’s Lending Activities

General. At December 31, 2025, the net loan portfolio of Quaint Oak Bank amounted to $540.7 million, representing approximately 80.0% of its total assets at that date. The principal lending activity of Quaint Oak Bank is the origination of commercial real estate loans, commercial business loans, and one-to-four family residential non-owner occupied loans, multi-family residential loans, construction loans, one-to-four family residential owner occupied loans, and home equity loans. At December 31, 2025, commercial real estate loans amounted to $309.7 million, or 56.7% of its total loan portfolio. Commercial business loans totaled $96.3 million, or 17.6%, of the total loan portfolio at December 31, 2025. At December 31, 2025, total one-to-four family residential loans amounted to $70.5 million or 12.9% of its total loan portfolio of which $41.6 million, or 7.6%, of the total loan portfolio consisted of owner occupied properties, and $28.9 million, or 5.3%, of the total loan portfolio consisted of non-owner occupied properties. Multi-family residential loans totaled $40.8 million, or 7.5%, of the total loan portfolio at December 31, 2025. Construction loans totaled $23.5 million, or 4.3%, of the total loan portfolio at December 31, 2025. Home equity loans totaled $5.4 million, or 1.0%, of the total loan portfolio at December 31, 2025. Included in commercial real estate loans are SBA loans which totaled $17.2 million at December 31, 2025.

At December 31, 2025, the loans held for sale of Quaint Oak Bank amounted to $61.0 million, representing approximately 9.0% of its total assets at that date. At December 31, 2025, loans held for sale was comprised of $50.3 million, or 82.6%, of commercial real estate loans, $6.1 million, or 9.9%, of SBA loans, and $4.6 million, or 7.5%, of one-to-four family residential loans.

The types of loans that Quaint Oak Bank may originate are subject to federal and state laws and regulations. Interest rates charged on loans are affected principally by the demand for such loans, the supply of money available for lending purposes and the rates offered by our competitors. These factors are, in turn, affected by general and economic conditions, the monetary policy of the federal government, including the Federal Reserve Board, legislative and tax policies, and governmental budgetary matters.

Quaint Oak Bank is subject to a regulatory loans to one borrower limit of 15% of the Bank’s Tier 1 capital which amounts to $10.1 million at December 31, 2025. At December 31, 2025, Quaint Oak Bank’s five largest loans or groups of loans-to-one borrower, including related entities, were $10.1 million, $10.0 million, $9.9 million, $8.3 million, and $8.1 million. The loans consisted of three commercial real estate loans, one commercial business loan, and one multi-family residential loan. Each of Quaint Oak Bank’s five largest loans or groups of loans was performing in accordance with its terms at December 31, 2025.

3

Loan Portfolio Composition. The following table shows the composition of our loan portfolio by type of loan at the dates indicated.

December 31,

2025

2024

Amount

%

Amount

%

(Dollars in Thousands)

Real estate loans:

One-to-four family residential (1):

Owner occupied

$
41,627

7.6
%

$
25,927

4.8
%

Non-owner occupied

28,870

5.3

33,573

6.2

Total one-to-four family residential loans

70,497

12.9

59,500

11.0

Multi-family (five or more) residential (2)

40,772

7.5

45,412

8.4

Commercial real estate (3)

309,745

56.7

297,627

55.0

Construction

23,461

4.3

18,320

3.4

Home equity loans (4)

5,374

1.0

5,739

1.1

Total real estate loans

449,849

82.4

426,598

78.9

Commercial business

96,318

17.6

114,921

21.1

Other consumer

33

-

46

-

Total loans

546,200

100.0
%

541,565

100.0
%

Less:

Deferred loan fees and costs

664

(396
)

Allowance for credit losses

(6,166
)

(6,476
)

Net loans

$
540,698

$
534,693

__________________________

(1)

Does not include mortgage loans held for sale of $4.6 million and $6.1 million at December 31, 2025 and 2024, respectively.

(2)

Does not include multi-family residential loans held for sale of $693,000 at December 31, 2024.

(3)

Does not include commercial real estate loans held for sale of $50.3 million and $56.9 million at December 31, 2025 and 2024, respectively. Does not include SBA loans held for sale of $6.1 million and $10.3 million at December 31, 2025 and 2024, respectively.

(4)

Does not include home equity loans held for sale of $496,000 at December 31, 2024.

Origination of Loans. The lending activities of Quaint Oak Bank are subject to the written underwriting standards and loan origination procedures established by the board of directors and management. New loans are generated primarily through the efforts of Quaint Oak Bank’s loan officers, referrals from brokers and existing customers. Loan applications are underwritten and processed by Quaint Oak Bank’s credit administration department.

All loans are presented to the loan committee for review. Quaint Oak Bank’s loan approval process is intended to evaluate the borrower’s ability to repay the loan, the overall viability of the credit, and the value of the collateral that will secure the loan. Loan approvals are granted in accordance with the Bank’s lending authority policy, which establishes approval authority based on individual loan size and total relationship exposure. The loan committee provides its recommendation for each credit request; however, final approval authority resides with designated officers in accordance with the applicable lending authority limits. Any loan request or increase in relationship exposure that exceeds an individual officer’s delegated lending authority must receive approval at the appropriate higher level, up to and including joint approval by the Chief Executive Officer and the President/Chief Operating Officer, as required under the lending authority policy.

4

The following table shows our total portfolio loans and loans held for sale originated and repaid during the periods indicated.

Year Ended December 31,

2025

2024

(In Thousands)

Loan balance, beginning of period:

$
598,274

$
654,149

Loan originations:

One-to-four family residential owner occupied (1)

132,092

141,675

One-to-four family residential non-owner occupied

890

1,457

Multi-family residential

3,340

5,657

Commercial real estate (2)

110,254

83,929

Construction

19,691

11,409

Home equity

951

972

Commercial business (3)

91,805

77,812

Other consumer

-

-

Total loan originations

359,023

322,911

Loans sold

(187,192
)

(203,088
)

Loan principal repayments

(162,949
)

(168,126
)

Total loans sold and principal repayments

(350,141
)

(371,214
)

Decreases due to other items, net (4)

(5,502
)

(6,872
)

Net increase (decrease) in loan portfolio

$
3,380

$
(55,175
)

Loan balance, end of period:

$
601,654

$
598,974

____________________

(1)

Includes $112.3 million and $134.3 million of loans originated for sale in 2025 and 2024, respectively.

(2)

Includes $52.0 million of commercial real estate loans and $51.6 million of equipment loans originated for sale in 2025 and 2024, respectively.

(3)

Includes $14.7 million and $13.9 million of SBA loans originated for sale in 2025 and 2024 respectively.

(4)

Other items consist of deferred fees and the allowance for credit losses.

Although Pennsylvania laws and regulations permit savings banks to originate loans secured by real estate located throughout the United States, Quaint Oak Bank concentrates its lending activity in its primary market area in Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania.

Contractual Terms to Final Maturities. The following table shows the scheduled contractual maturities of our loans as of December 31, 2025, before giving effect to net items, and excluding loans held for sale. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below do not take into account loan prepayments.

1-4 Family Residential Owner Occupied

1-4 Family Residential Non-Owner Occupied

Multi-Family

Residential

Commercial Real Estate

Construction

Home Equity

Commercial Business and Other Consumer

Total

(In Thousands)

Amounts due in:

One year or less

$
-

$
5,452

$
4,144

$
56,767

$
2,300

$
-

$
15,601

$
84,264

After one year through three years

-

10,313

8,432

89,463

5,832

107

42,990

157,137

After three years through five years

-

4,816

9,655

90,100

3,351

772

26,968

135,662

After five years through 15 years

808

7,884

17,255

65,787

10,729

4,001

10,792

117,256

After 15 years

40,819

405

1,286

7,628

1,249

494

-

51,881

Total

$
41,627

$
28,870

$
40,772

$
309,745

$
23,461

$
5,374

$
96,351

$
546,200

5

The following table shows the dollar amount of our loans at December 31, 2025 due after December 31, 2026 as shown in the preceding table, which have fixed interest rates, or which have floating or adjustable interest rates.

Fixed-Rate

Floating or

Adjustable-Rate

Total

(In Thousands)

One-to-four family residential owner occupied

$
2,310

$
39,317

$
41,627

One-to-four family residential non-owner occupied

14,455

8,963

23,418

Multi-family residential

19,011

17,617

36,628

Commercial real estate

149,102

103,876

252,978

Construction

-

21,161

21,161

Home equity

1,151

4,223

5,374

Commercial business and other consumer

60,804

19,946

80,750

Total

$
246,833

$
215,103

$
461,936

Scheduled contractual maturities of loans do not necessarily reflect the actual expected term of the loan portfolio. The average life of mortgage loans is substantially less than their average contractual terms because of prepayments. The average life of mortgage loans tends to increase when current mortgage loan rates are higher than rates on existing mortgage loans and, conversely, decrease when rates on current mortgage loans are lower than existing mortgage loan rates (due to refinancing of adjustable-rate and fixed-rate loans at lower rates). Under the latter circumstance, the weighted average yield on loans decreases as higher yielding loans are repaid or refinanced at lower rates.

One-to-Four Family Residential Owner Occupied Real Estate Loans. As part of our strategy of diversifying our loan portfolio with higher yielding and shorter-term loan products, Quaint Oak Bank does not actively market the origination of one-to-four family owner occupied residential loans to be held in our loan portfolio. However, the Bank did originate $20.5 million of adjustable rate mortgages in 2025 which are held in the loan portfolio. At December 31, 2025, $41.6 million, or 7.6%, of our total loan portfolio, before net items, consisted of one-to-four family owner occupied residential loans.

One-to-Four Family Residential Non-Owner Occupied Real Estate Loans. As part of our strategy of diversifying our loan portfolio with higher yielding and shorter-term loan products, Quaint Oak Bank does not actively market the origination of one-to-four family residential non-owner occupied real estate loans to be held in our loan portfolio. At December 31, 2025, $28.9 million, or 5.3%, of our total loan portfolio, before net items, consisted of one-to-four family residential non-owner occupied loans.

It is our policy to lend in a first lien position on non-owner occupied residential property with fixed and variable rates and terms generally up to 15 years or longer amortizations. Generally, such loans are originated with a three-year or five-year maturity. Such loans are generally limited to 75%, or less, of the appraised value, or sales price plus improvement costs of the secured real estate property.

One-to-Four Family Residential Loans Originated for Sale. Quaint Oak Bank through its subsidiary, Quaint Oak Mortgage LLC, originates one-to-four family residential fixed and variable rate first mortgages with amortizing terms less than or equal to 30 years in accordance with secondary market standards. Loans originated by Quaint Oak Mortgage LLC are sold into the secondary market along with the loans’ servicing rights. For the year ended December 31, 2025, Quaint Oak Mortgage LLC originated $112.3 million of owner and non-owner occupied residential loans for sale and sold $113.8 million of these loans in the secondary market, realizing gains of $2.0 million. For the year ended December 31, 2024, Quaint Oak Mortgage LLC originated $134.3 million of owner and non-owner occupied residential loans for sale and sold $131.4 million of these loans in the secondary market, realizing gains of $1.9 million.

6

Multi-Family Residential Loans. Quaint Oak Bank originates loans for multi-unit (five or more) residential properties. These loans are offered with fixed and adjustable interest rates and amortizations not to exceed 25 years. Generally, the loan-to-value ratio does not exceed 75%. These loans are underwritten with the same criteria and procedures as commercial real estate loans. At December 31, 2025, $40.8 million, or 7.5%, of our total loan portfolio, before net items, consisted of multi-family residential loans.

Commercial Real Estate Loans. A significant part of Quaint Oak Bank’s lending activity is the origination of loans secured by commercial real estate. Commercial real estate loans are originated by Quaint Oak Bank and its subsidiary, Oakmont Commercial. At December 31, 2025, $309.7 million, or 56.7% of our total loan portfolio, before net items, consisted of commercial real estate loans. Although commercial real estate loans are generally considered to have greater credit risk than other certain types of loans, we intend to continue to originate such loans in our market area. At December 31, 2025, approximately 62.0% of total commercial real estate loans were owner occupied. At December 31, 2025, management identified $50.3 million of commercial real estate loans and $6.1 million of SBA loans within the loan portfolio and transferred these loans to loans held for sale at amortized cost which was less than fair value.

It is generally our policy to lend in a first lien position on real property occupied as a commercial business property or mixed-use properties. However, in rare instances, we may take a second lien position if approved by the loan committee. Quaint Oak Bank offers fixed and variable rate mortgage loans with amortization not to exceed 25 years. Commercial real estate loans are limited to 75%, or less, of non-owner occupied residential loans, and 80%, or less, of owner occupied residential loans, of the appraised value, or sales price plus improvement costs of the secured real estate property, whichever is less. Commercial real estate loans are presented to the loan committee for review and approval, including analysis of the creditworthiness of the borrower. The loan committee reviews the cash flows from the property to determine if the proceeds will adequately cover debt service. Quaint Oak Bank uses a Debt Service Coverage Ratio (DSCR) of 1.20. We require the collection of various documents to verify income, including personal tax returns, business tax returns, and copies of current leases. Assignments of rents and leases as well as the requirement to provide annual updates of financial information and rent rolls are included in the loan documentation. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or the overall economy and accordingly, conservative loan to value ratios are required at origination.

Construction Loans. Our construction loans are generally originated for the purpose of building or providing funds for leasehold improvements to a business’s primary place of operation. On occasion the Bank may provide funds for building or renovating a single-family residential home. Generally, we do not make construction loans for speculative development. Funds are advanced incrementally as work is completed. The borrower is required to make monthly interest payments. When the construction is finished, the amount of the outstanding loan is generally less than 70% of the completed value of the property. Quaint Oak Bank is paid in full when the borrower seeks permanent financing or the property is sold. At December 31, 2025, $23.5 million, or 4.3% of Quaint Oak Bank’s total loan portfolio, before net items, consisted of construction loans.

Home Equity Loans. Quaint Oak Bank is authorized to originate loans for a wide variety of personal or consumer purposes, however, the Bank made a business decision to sunset the product offering on September 30, 2024, due to low loan volume. Historically, Quaint Oak Bank originated home equity lines of credit in order to accommodate its customers and due to the short-term nature of the loan product when compared to residential mortgage loans. At December 31, 2025, $5.4 million, or 1.0% of Quaint Oak Bank’s total loan portfolio, before net items, consisted of home equity loans.

7

Commercial Business Loans. Quaint Oak Bank originates loans to businesses for working capital, purchase of a business, tenant improvements, receivables, purchase of inventory, and for the purchase of business essential equipment. Business essential equipment is equipment necessary for a business to support or assist with the day-to-day operation or profitability of the business. At December 31, 2025, $96.3 million, or 17.6% of Quaint Oak Bank’s total loan portfolio, before net items, consisted of commercial business loans.

Other Consumer Loans. Quaint Oak Bank originates loans secured by savings accounts in order to accommodate its existing customers. At December 31, 2025, $33,000 of Quaint Oak Bank’s total loan portfolio, before net items, consisted of other consumer loans.

Loan Origination and Other Fees. In addition to interest earned on loans, Quaint Oak Bank generally receives loan origination fees or “points” for originating loans. Loan points are a percentage of the principal amount of the mortgage loan and are charged to the borrower in connection with the origination of the loan. Such origination fees, net of certain direct loan origination costs, are deferred and recognized as an adjustment to the yield (interest income) of the related loans over the contractual life of the loans.

Asset Quality

General. Quaint Oak Bank’s collection procedures provide that when a loan is 17 days past due, the Bank’s collection specialist contacts the borrower to determine the reason for the delinquency and to work out a possible solution. Late charges will be assessed based on the number of days specified in the note beyond the due date. The Board of Directors is notified of all delinquencies 30 days past due. In most cases, deficiencies are cured promptly. While we generally prefer to work with borrowers to resolve such problems, we will institute foreclosure or other collection proceedings when necessary to minimize any potential loss.

Loans are placed on non-accrual status when management believes the probability of collection of interest is doubtful. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. Quaint Oak Bank discontinues the accrual of interest income when the loan becomes 90 days past due as to principal or interest unless the credit is well secured and we believe we will fully collect. There were $5.8 million and $5.6 million of non-accrual loans at December 31, 2025 and 2024, respectively.

Real estate and other assets acquired by Quaint Oak Bank as a result of foreclosure or by deed-in-lieu of foreclosure are classified as real estate owned until sold. The Company had one property in OREO with a fair value of $360,000 at December 31, 2025. The Company had no OREO at December 31, 2024.

8

Delinquent Loans. The following table shows the delinquencies in our loan portfolio as of December 31, 2025.

December 31, 2025

30-89

Days Overdue

90 or More Days

Overdue

Number

of Loans

Principal

Balance

Number

of Loans

Principal

Balance

(Dollars in Thousands)

One-to-four family residential-owner occupied

-

$
-

2

$
954

One-to-four family residential-non-owner occupied

3

189

-

-

Multi-family residential

1

1,660

-

-

Commercial real estate

10

8,653

14

3,570

Construction

1

97

-

-

Home equity

1

25

-

-

Commercial business

26

1,705

15

2,816

Total delinquent loans

42

$
12,329

31

$
7,340

Delinquent loans to total net loans

2.28
%

1.36
%

Delinquent loans to total loans

2.25
%

1.34
%

The following table shows the delinquencies in our loan portfolio as of December 31, 2024.

December 31, 2024

30-89

Days Overdue

90 or More Days

Overdue

Number

of Loans

Principal

Balance

Number

of Loans

Principal

Balance

(Dollars in Thousands)

One-to-four family residential-owner occupied

2

$
209

2

$
694

One-to-four family residential-non-owner occupied

7

569

-

-

Multi-family residential

1

85

-

-

Commercial real estate

18

10,063

6

1,686

Construction

2

4,528

-

-

Home equity

1

35

-

-

Commercial business

5

873

14

3,941

Total delinquent loans

36

$
16,362

22

$
6,321

Delinquent loans to total net loans

3.06
%

1.18
%

Delinquent loans to total loans

3.02
%

1.17
%

Non-Performing Assets. The following table shows the amounts of our non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due and other real estate owned) at the dates indicated.

December 31,

2025

2024

(Dollars in Thousands)

Total non-accruing loans

$
5,834

$
5,595

Total accruing loans 90 days or more past due

1,506

726

Total non-performing loans (1)

7,340

6,321

Other real estate owned, net

360

-

Total non-performing assets

7,700

6,321

Total non-performing assets as a percentage of loans, net

1.42
%

1.18
%

Total non-performing assets as a percentage of total assets

1.14
%

0.92
%

__________________

(1)

Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due.

9

Classified Assets. Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful” and “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a higher possibility of loss. An asset classified loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “special mention” also must be established and maintained for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for credit losses. If an asset or portion thereof is classified as a loss, the insured institution must either establish specific allowances for credit losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for credit losses do not qualify as regulatory capital. Federal examiners may disagree with an insured institution’s classifications and amounts reserved.

Allowance for Credit Losses. At December 31, 2025, Quaint Oak Bank’s allowance for credit losses amounted to $6.2 million. The Company adopted uses the weighted average maturity method (WARM) for all financial assets measured at amortized cost, net of investments in leases and off balance sheet credit exposures.

10

The following table shows changes in our allowance for credit losses during the periods presented.

December 31,

2025

2024

(Dollars in Thousands)

Total loans outstanding at end of period, net

$
540,698

$
534,693

Average loans outstanding (1)

$
597,184

$
621,015

Allowance for credit losses, beginning of period

$
6,476

$
6,758

Provision for credit losses

1,196

1,506

Net charge-offs:

Construction

-

(187
)

Commercial real estate

(41
)

-

Commercial business

(1,566
)

(1,611
)

Total charge-offs

(1,607
)

(1,798
)

Recoveries on loans previously charged-off

101

10

Allowance for credit losses, end of period

$
6,166

$
6,476

Non-accrual loans

$
5,834

$
5,595

Allowance for credit losses as a percent of non-performing loans

84.01
%

102.45
%

Allowance for credit losses as a percent of total loans receivable

1.13
%

1.20
%

Non-performing loans as a percent of total loans receivable, net

1.36
%

1.18
%

Ratio of net charge-offs during the period to average loans outstanding during the period:

Construction

0.01
%

0.03
%

Commercial business

0.26
%

0.26
%

Total charge-offs

0.27
%

0.29
%

Non-accrual loans to total loans outstanding, net

1.08
%

1.05
%

Allowance for credit losses to non-accrual loans

105.7
%

115.7
%

____________________

(1)

Excludes loans held for sale.

11

The following table shows how our allowance for credit losses is allocated by loan class at each of the dates indicated.

December 31,

2025

2024

Amount of Allowance

Loan

Category

as a % of

Total Loans

Amount of Allowance

Loan

Category

as a % of

Total Loans

(Dollars in Thousands)

One-to-four family residential owner occupied

$
299

4.8
%

$
177

2.7
%

One-to-four family residential non-owner occupied

149

2.4

178

2.7

Multi-family residential

298

4.8

442

6.8

Commercial real estate

2,422

39.3

2,337

36.1

Construction

540

8.8

156

2.4

Home equity

48

0.8

56

0.9

Commercial business and other consumer

2,410

39.1

3,130

48.4

Total

$
6,166

100.0
%

$
6,476

100.0
%

Investment Activities

General. We invest in securities pursuant to our investment policy, which has been approved by our Board of Directors. Our investment policy is reviewed annually by our Asset-Liability Committee (ALCO). All policy changes recommended by ALCO must be approved by the Board of Directors. ALCO is authorized by the Board to make investments consistent with the investment policy. While general investment strategies are developed and authorized by ALCO, the execution of specific actions rests with the Chief Financial Officer and the Chief Executive Officer.

Our investment policy is designed primarily to manage the interest rate sensitivity of our assets and liabilities, to generate a favorable return without incurring undue interest rate and credit risk, to complement our lending activities and to provide and maintain liquidity.

Our securities are classified as available for sale, held to maturity, or trading, at the time of acquisition. Securities classified as held to maturity must be purchased with the intent and ability to hold that security until its final maturity and can be sold prior to maturity only under rare circumstances. Held to maturity securities are accounted for based upon the amortized cost of the security. Available for sale securities can be sold at any time based upon our needs or market conditions. Available for sale securities are accounted for at fair value, with unrealized gains and losses on these securities, net of income tax provisions, reflected in stockholders’ equity as accumulated other comprehensive income. At December 31, 2025, we had $882,000 of securities classified as available for sale and no securities classified as held to maturity or trading.

The Company also invests excess liquidity in interest-earning time deposits with other banks, laddering the maturities. As of December 31, 2025, the Company held $912,000 in interest-earning time deposits.

Federal Home Loan Bank (FHLB) stock is a restricted investment security, carried at cost. The purchase of FHLB stock provides banks with the right to be a member of the FHLB and to receive the products and services that the FHLB provides to member banking institutions. Unlike other types of stock, FHLB stock is acquired primarily for the right to receive advances from the FHLB, rather than for the purpose of maximizing dividends or stock growth. FHLB stock is an activity-based stock that is directly proportional to the volume of advances taken by a member institution. The FHLB will repurchase capital stock at $1.00 per share from Quaint Oak Bank. The FHLB has paid dividends on the capital stock in each quarter of 2025 and 2024.

12

The following table sets forth our investment portfolio at carrying value as of the dates indicated.

December 31,

2025

2024

(In Thousands)

Interest-earning time deposits with other financial institutions

$
912

$
912

Mortgage-backed securities:

Government National Mortgage Association

848

1,630

Federal National Mortgage Association

34

36

Investment in FHLB stock

291

2,214

Total

$
2,085

$
4,792

The following table sets forth the amount of investment securities which mature during each of the periods indicated and the weighted average yields for each range of maturities at December 31, 2025. The weighted average yield is calculated by dividing income within each contractual maturity range by the outstanding amount of the related investment.

Amounts at December 31, 2025 Which Mature In

One Year or Less

Weighted Average Yield

Over One Year Through Five Years

Weighted Average Yield

Over Five Years Through Ten Years

Weighted Average Yield

Over Ten Years

Weighted Average Yield

(Dollars in Thousands)

Interest-earning time deposits with other financial institutions

$
-

-
%

$
912

5.70
%

$
-

-
%

$
-

-
%

Mortgage-backed securities:

Government National Mortgage Association

-

-

-

-

-

-

848

4.72

Federal National Mortgage Association

-

-

-

-

-

-
%

34

6.05

Total

$
-

-
%

$
912

5.70
%

$
-

-
%

$
882

4.77
%

Sources of Funds

General. The Company’s primary sources of funds are deposits, amortization and prepayment of loans, 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. Borrowings may also be used on a short-term basis to compensate for reductions in the availability of funds from other sources and on a longer-term basis for general business purposes.

Deposits. Deposits are attracted by Quaint Oak Bank principally from Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania, although we also attract deposits from outside our market area and the Commonwealth of Pennsylvania. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit, and the interest rate. Quaint Oak Bank offers a variety of deposit accounts with a range of rates and terms. Our deposit accounts consist of certificates of deposit, money market and other savings products, including interest-bearing business checking accounts, and non-interest bearing business and consumer checking accounts. Quaint Oak Bank generally does not actively solicit deposits from outside the Commonwealth of Pennsylvania or pay fees to brokers to solicit deposits; however, the Bank utilizes wholesale deposits obtained through third‑party listing and certificate of deposit placement services and other third‑party relationships and has correspondent banking relationships with three international banking entities chartered in Puerto Rico for non-interest and interest bearing checking accounts. At December 31, 2025, Quaint Oak Bank managed an aggregate of $4.4 million of deposits for the international banking entities. At December 31, 2025, approximately 42.0% of Quaint Oak Bank’s total deposits were held by customers outside the Commonwealth of Pennsylvania.

13

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Management determines the rates and terms based on rates paid by competitors, the need for funds or liquidity, growth goals and federal regulations. Management attempts to control the flow of deposits by pricing the accounts to remain generally competitive with other financial institutions in our market area.

The following table shows the distribution of, and certain other information relating to, our deposits by type of deposit, as of the dates indicated.

December 31,

2025

2024

Amount

%

Amount

%

(Dollars in Thousands)

Certificate accounts:

0.00% - 0.99%

$
3,002

0.5
%

$
6,936

1.3
%

1.00% - 1.99%

1,082

0.2

6,262

1.1

2.00% - 2.99%

1,938

0.3

5,559

1.0

3.00% - 3.99%

115,366

19.3

34,878

6.3

4.00% - 4.99%

233,330

39.1

218,101

39.4

5.00% - 5.99%

-

-

11,154

2.0

Total certificate accounts

354,718

59.4

282,890

51.1

Transaction accounts:

Interest bearing checking accounts (1)

105,713

17.7

47,802

8.6

Non-interest bearing checking accounts

65,665

11.0

59,783

10.9

Savings accounts

699

0.1

492

0.0

Money market accounts

70,483

11.8

162,285
(2)

29.4

Total transaction accounts

242,560

40.6

270,362

48.9

Total deposits

$
597,278

100.0
%

$
553,252

100.0
%

(1)

The Company has identified one major interest bearing checking account deposit customer that accounted for approximately $35.0 million, or 5.9% of total deposits at December 31, 2025, and had a separate major interest bearing checking account deposit customer that accounted for approximately $47.8 million, or 8.6% of total deposits at December 31, 2024.

(2)

The Company has identified one major money market deposit customer, a separate customer than the interest bearing checking account deposit customer referred to above in footnote (1), that accounted for approximately 18.1% of total deposits at December 31, 2024. At December 31, 2024, the combined outstanding balances of the major deposit customer’s money market accounts totaled approximately $100.0 million.

Uninsured deposits as of December 31, 2025 and 2024 are estimated based on regulatory reporting requirements to be $244.3 million and $156.3 million, respectively.

The following table shows the average balance of each type of deposit and the average rate paid on each type of deposit for the periods indicated.

2025

2024

Average Balance

Interest Expense

Average Rate Paid

Average Balance

Interest Expense

Average Rate Paid

(Dollars in Thousands)

Savings accounts

$
632

$
1

0.16
%

$
730

$
1

0.20
%

Money market accounts

128,977

4,330

3.36

210,977

9,372

4.44

Business checking accounts

54,280

1,271

2.34

93,328

4,200

4.50

Certificates of deposit

316,026

13,364

4.23

230,499

9,568

4.15

Total interest-bearing deposits

$
499,915

$
18,966

3.79
%

$
535,534

$
23,141

4.32
%

Non-interest bearing deposits

$
40,795

$
-

-
%

$
81,436

$
-

-
%

Total deposits

$
540,710

$
18,966

3.79
%

$
616,970

$
23,141

4.32
%

14

The following table presents, by various interest rate categories and maturities, the amount of certificates of deposit at December 31, 2025.

Balance at December 31, 2025

Maturing in the Twelve Months Ending December 31,

Certificates of Deposit

2026

2027

2028

Thereafter

Total

(In Thousands)

0.00% - 0.99%

$
2,773

$
229

$
-

$
-

$
3,002

1.00% - 1.99%

273

809

-

-

1,082

2.00% - 2.99%

1,196

742

-

-

1,938

3.00% - 3.99%

71,186

28,975

5,197

10,008

115,366

4.00% - 4.99%

169,949

20,201

34,349

8,831

233,330

Total certificate accounts

$
245,377

$
50,956

$
39,546

$
18,839

$
354,718

The following table shows the maturities of our certificates of deposit of more than $250,000 at December 31, 2025 by time remaining to maturity.

Quarter Ending:

Amount

Weighted

Average Rate

(Dollars in Thousands)

3 months or less

$
14,759

4.10
%

3 to 6 months

11,860

4.12

6 to 12 months

33,344

3.92

After 12 months

15,080

3.99

Total certificates of deposit with balances of more than $250,000

$
75,043

4.00
%

Borrowings. Quaint Oak Bank may obtain advances from the Federal Home Loan Bank of Pittsburgh upon the security of the common stock it owns in that bank and certain of its residential mortgage loans and mortgage-backed and other investment securities, provided certain standards related to creditworthiness have been met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. Federal Home Loan Bank advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending.

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 none and $47.9 million at December 31, 2025 and 2024, respectively. As of December 31, 2025, Quaint Oak Bank has $24.2 million in borrowing capacity with the Federal Reserve Bank (FRB) of Philadelphia under the discount window program. There were no borrowings with the FRB as of December 31, 2025 or 2024.

Federal Home Loan Bank borrowings and the weighted interest rate consist of the following at December 31, 2025 and 2024 (in thousands):

December 31, 2025

December 31, 2024

Fixed rate borrowings maturing:

Amount

Weighted Interest

Rate

Amount

Weighted Interest

Rate

2025

$
-

-
%

$
47,855

4.50
%

Total Employees

There were 134 full-time employees at Quaint Oak Bancorp and its subsidiary companies at December 31, 2025. None of these employees are represented by a collective bargaining agreement, and we believe that we enjoy good relations with our personnel.

15

Market Area

As of December 31, 2025, our primary market area for loans and deposits is in Bucks, Montgomery and Philadelphia Counties, Pennsylvania, and the Lehigh Valley area of Pennsylvania, although we also attract loans and deposits from outside our market area and the Commonwealth of Pennsylvania. Our operating strategy is based on strong personal service and operating efficiency.

Quaint Oak Bank is headquartered in Southampton in Bucks County, Pennsylvania and operates through its main office and two regional offices located in the Lehigh Valley and Philadelphia markets. Bucks County lies north of Philadelphia, bordering Montgomery County on the west and New Jersey to the east. In recent years, population growth has been above Pennsylvania averages in both Bucks and Montgomery Counties. We expect population growth and new housing growth will likely remain above the state average in the near term. Income and wealth demographics are also above both national and Pennsylvania averages. The Lehigh Valley area is one of the fastest growing regions in Pennsylvania due in part to its reasonable business climate and lower cost of living in comparison to its surrounding areas and states. The Lehigh Valley is particularly noteworthy for its unusually balanced and multi-faceted economy. Far from depending on a single industry, the top four sub-sectors of the regional GDP are all extremely close to one another, which ultimately means a healthier and more vibrant regional economy. Philadelphia is the largest city in the Commonwealth of Pennsylvania and the sixth most populous city in the United States. Philadelphia's diverse economic sectors include higher education, manufacturing, oil refining, food processing, health care and biotechnology, telecommunications, tourism and financial services.

Competition

Quaint Oak Bank faces significant competition both in attracting deposits and in making loans. Its most direct competition for deposits has come historically from commercial banks, credit unions and other savings institutions located in its primary market area, including many large financial institutions which have greater financial and marketing resources available to them. In addition, Quaint Oak Bank faces significant competition for investors’ funds from short-term money market securities, mutual funds and other corporate and government securities. Also, given Quaint Oak Bank’s operating strategies and reliance on savings accounts and certificates of deposit, Quaint Oak Bank also faces intense competition from money market mutual funds and national savings products. Quaint Oak Bank does not rely upon any individual group or entity for a material portion of its deposits, with the exception of deposits obtained through third-party listing and certificate of deposit placement services and other third-party relationships. The ability of Quaint Oak Bank to attract and retain deposits depends on its ability to generally provide a rate of return, liquidity and risk comparable to that offered by competing investment opportunities.

Quaint Oak Bank’s competition for loans comes principally from commercial banks, mortgage banking companies, other savings institutions and credit unions. Quaint Oak Bank competes for loan originations primarily through the interest rates and loan fees it charges, and the efficiency and quality of services it provides borrowers. Factors that affect competition include general and local economic conditions, current interest rate levels and volatility in the mortgage markets.

REGULATION

Regulation of Quaint Oak Bancorp

General. Quaint Oak Bancorp is subject to regulation as a savings and loan holding company under the Home Owners’ Loan Act, as amended, because we made an election under Section 10(l) of the Home Owners’ Loan Act to be treated as a “savings association” for purposes of Section 10 of the Home Owners’ Loan Act. Quaint Oak Bancorp is regulated by the Federal Reserve Board and is subject to the regulations, examinations, supervision and reporting requirements relating to savings and loan holding companies. Quaint Oak Bancorp is also required to file certain reports with, and otherwise comply with the rules and regulations of, the Pennsylvania Department of Banking and Securities and the Securities and Exchange Commission. As a subsidiary of a savings and loan holding company, Quaint Oak Bank is subject to certain restrictions in its dealings with Quaint Oak Bancorp and affiliates thereof, including the Federal Reserve Board’s Qualified Thrift Lender test, dividend restrictions and transactions with affiliates regulations.

16

In the last several years, Quaint Oak Bancorp has experienced heightened regulatory requirements and scrutiny following the global financial crisis and as a result of the enactment in 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Resulting reforms have caused Quaint Oak Bancorp’s compliance and risk management processes, and the costs thereof, to increase.

Permissible Activities of Quaint Oak Bancorp. As a non-grandfathered savings and loan holding company, Quaint Oak Bancorp is permitted to engage only in the following activities:

●

furnishing or performing management services for a subsidiary savings institution;

●

conducting an insurance agency or escrow business;

●

holding, managing, or liquidating assets owned or acquired from a subsidiary savings institution;

●

holding or managing properties used or occupied by a subsidiary savings institution;

●

acting as trustee under a deed of trust;

●

any other activity (i) that the Federal Reserve Board, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the Federal Reserve Board, by regulation, prohibits or limits any such activity for savings and loan holding companies, or (ii) in which multiple savings and loan holding companies were authorized by regulation to directly engage in on March 5, 1987;

●

purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such holding company is approved by the Federal Reserve Board; and

●

any activity permissible for financial holding companies under section 4(k) of the Bank Holding Company Act.

Permissible activities which are deemed to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act include:

●

lending, exchanging, transferring, investing for others, or safeguarding money or securities;

●

insurance activities or providing and issuing annuities, and acting as principal, agent, or broker;

●

financial, investment, or economic advisory services;

●

issuing or selling instruments representing interests in pools of assets that a bank is permitted to hold directly;

●

underwriting, dealing in, or making a market in securities;

●

activities previously determined by the Federal Reserve Board to be closely related to banking;

●

activities that bank holding companies are permitted to engage in outside of the U.S.; and

●

portfolio investments made by an insurance company.

17

In addition, Quaint Oak Bancorp cannot be acquired unless the acquirer is engaged solely in financial activities or acquire a company unless the company is engaged solely in financial activities.

If a savings and loan holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in the activities listed above, and it has a period of two years to cease any non-conforming activities and divest any non-conforming investments. As of December 31, 2025 Quaint Oak Bancorp was not engaged in any non-conforming activities and it did not have any non-conforming investments.

Qualified Thrift Lender Test. For Quaint Oak Bancorp to be regulated by the Federal Reserve Board as a savings and loan holding company rather than as a bank holding company, Quaint Oak Bank must qualify as a “qualified thrift lender” under federal regulations or satisfy the “domestic building and loan association” test under the Internal Revenue Code. Under the qualified thrift lender test, a savings institution is required to maintain at least 65% of its “portfolio assets” (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangible assets, including goodwill; and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine out of each 12 month period. At December 31, 2025, Quaint Oak Bank maintained approximately 84.3% of its portfolio assets in qualified thrift investments and was in compliance with the qualified thrift lender requirement.

Regulatory Capital Requirements. Savings and loan holding companies historically have not been subject to consolidated regulatory capital requirements. The Dodd-Frank Act requires the Federal Reserve Board to establish minimum consolidated capital requirements for all depository institution holding companies that are as stringent as those required for the insured depository subsidiaries. However, legislation was enacted in May 2018 that required the Federal Reserve Board to amend its “Small Bank Holding Company” exemption from consolidated holding company capital requirements to generally extend its applicability to bank and savings and loan holding companies of up to $3.0 billion in assets. Regulations implementing this amendment were effective in August 2018. Consequently, savings and loan holding companies of under $3.0 billion in consolidated assets remain exempt from consolidated regulatory capital requirements, unless the Federal Reserve determines otherwise in particular cases. However, if Quaint Oak Bancorp had been subject to the requirements, it would have been in compliance with such requirements.

Source of Strength. The Dodd-Frank Act extended the “source of strength” doctrine to savings and loan holding companies. The Federal Reserve Board has promulgated regulations implementing the “source of strength” policy that require holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

Transactions with Related Parties. A savings association’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulations. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as Quaint Oak Bank. Quaint Oak Bancorp is an affiliate of Quaint Oak Bank and it controls Quaint Oak Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

18

Quaint Oak Bank’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require extensions of credit to insiders:

●

be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons that do not involve more than the normal risk of repayment or present other unfavorable features; or

●

not exceed certain limitations on the amount of credit extended to such persons, individually or in the aggregate, which limits are based in part on the amount of Quaint Oak Bank’s capital.

In addition, extensions of credit in excess of certain limits must be approved by Quaint Oak Bank’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. At December 31, 2025, Quaint Oak Bank was in compliance with the above restrictions.

Restrictions on Acquisitions. Except under limited circumstances, savings and loan holding companies are prohibited from acquiring, without prior approval of the Federal Reserve Board, (i) control of any other savings association or savings and loan holding company or substantially all the assets thereof or (ii) more than 5% of the voting shares of a savings association or holding company thereof which is not a subsidiary. Except with the prior approval of the Federal Reserve Board, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such company’s stock, may acquire control of any savings association, other than a subsidiary savings association, or of any other savings and loan holding company.

The Federal Reserve Board may only approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings associations in more than one state if (i) the multiple savings and loan holding company involved controls a savings association which operated a home or branch office located in the state of the association to be acquired as of March 5, 1987; (ii) the acquirer is authorized to acquire control of the savings association pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act; or (iii) the statutes of the state in which the association to be acquired is located specifically permit associations to be acquired by the state-chartered associations or savings and loan holding companies located in the state where the acquiring entity is located (or by a holding company that controls such state-chartered savings associations).

Federal Securities Laws. Quaint Oak Bancorp’s common stock is registered with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934, as amended. Quaint Oak Bancorp is subject to information, proxy solicitation, insider trading restrictions, and other requirements under the Securities Exchange Act of 1934.

19

The Sarbanes-Oxley Act. As a public company, Quaint Oak Bancorp is subject to the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act is intended to improve corporate reporting to provide for enhanced penalties for improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to securities laws. The rules adopted by the Securities and Exchange Commission under the Sarbanes-Oxley Act have several requirements, including having the principal executive officer and the principal financial officer certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting; they have made certain disclosures to our auditors and the audit committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting.

Regulation of Quaint Oak Bank

Pennsylvania Banking Law. The Pennsylvania Banking Code contains detailed provisions governing the organization, location of offices, rights and responsibilities of directors, officers and employees, as well as corporate powers, savings and investment operations and other aspects of Quaint Oak Bank and its affairs. The Pennsylvania Banking Code delegates extensive rulemaking power and administrative discretion to the Pennsylvania Department of Banking and Securities so that the supervision and regulation of state-chartered savings banks may be flexible and readily responsive to changes in economic conditions and in savings and lending practices.

One of the purposes of the Pennsylvania Banking Code is to provide savings banks with the opportunity to be competitive with each other and with other financial institutions existing under other Pennsylvania laws and other state, federal and foreign laws. A Pennsylvania savings bank may locate or change the location of its principal place of business and establish an office anywhere in the Commonwealth, with the prior approval of the Pennsylvania Department of Banking and Securities.

The Pennsylvania Department of Banking and Securities generally examines each savings bank not less frequently than once every two years. Although the Pennsylvania Department of Banking and Securities may accept the examinations and reports of the Federal Deposit Insurance Corporation in lieu of its own examination, the present practice is for the Pennsylvania Department of Banking and Securities to conduct individual examinations. The Pennsylvania Department of Banking and Securities may order any savings bank to discontinue any violation of law or unsafe or unsound business practice and may direct any director, trustee, officer, attorney or employee of a savings bank engaged in an objectionable activity, after the Pennsylvania Department of Banking and Securities has ordered the activity to be terminated, to show cause at a hearing before the Pennsylvania Department of Banking and Securities why such person should not be removed.

Insurance of Accounts. Quaint Oak Bank is a member of the Deposit Insurance Fund, which is administered by the FDIC. Its deposit accounts are insured by the FDIC, generally up to a maximum of $250,000 per depositor.

The FDIC imposes deposit insurance assessments against all insured depository institutions. An institution’s assessment rate depends upon the perceived risk of the institution to the Deposit Insurance Fund, with institutions deemed less risky paying lower rates. Under the FDIC’s risk-based assessment system, institutions deemed less risky of failure pay lower assessments. Assessments for institutions of less than $10 billion of assets are based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of an institution’s failure within three years. The assessment range (inclusive of possible adjustments) for institutions of Quaint Oak Bank’s size is currently 2.5 basis points to 32 basis points.

20

The FDIC has the authority to increase insurance assessments. A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of Quaint Oak Bank. We cannot predict what deposit insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition or violation that might lead to termination of deposit insurance for Quaint Oak Bank

Capital Requirements. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.

At December 31, 2025, Quaint Oak Bank’s capital exceeded all applicable capital requirements. See Note 19 to the notes to our financial statements included in Exhibit 13.0 hereto.

In determining the amount of risk-weighted assets for calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain non-cumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock, senior debt and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. In assessing an institution’s capital adequacy, the Federal Deposit Insurance Corporation takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

The federal banking agencies have established a community bank leverage ratio (“CBLR”) for financial institutions with total consolidated assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio is deemed compliant with all other capital requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the CBLR requirement. The federal banking agencies must set the minimum CBLR ratio at not less than 8% and not more than 10%, and since January 1, 2022, it is set at 9%.

21

On November 25, 2025, the federal banking agencies, including the Federal Deposit Insurance Corporation, proposed a lower CBLR requirement of 8%. Community Banks that fail to meet the qualifying criteria after opting into the CBLR framework would have four reporting periods to meet the qualifying criteria again, provided they maintain a leverage ratio above 7% and have not used the grace period for more than eight of the prior 20 quarters. The federal banking agencies also proposed removing the provisions under the CBLR framework that provided temporary relief for qualifying community banks during the COVID-19 outbreak.

A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report. Quaint Oak Bank has not utilized the community bank leverage ratio.

Any savings bank that fails any of the capital requirements is subject to possible enforcement action by the Federal Deposit Insurance Corporation. Such action could include a capital directive, a cease and desist order, civil money penalties, the establishment of restrictions on the institution’s operations, termination of federal deposit insurance and the appointment of a conservator or receiver. The Federal Deposit Insurance Corporation’s capital regulations provide that such actions, through enforcement proceedings or otherwise, could require one or more of a variety of corrective actions.

Pennsylvania Department of Banking and Securities Capital Requirements. Quaint Oak Bank is also subject to more stringent Pennsylvania Department of Banking and Securities capital guidelines. Although not adopted in regulation form, the Pennsylvania Department of Banking and Securities utilizes capital standards requiring a minimum of 6% leverage capital and 10% risk-based capital. The components of leverage and risk-based capital are substantially the same as those defined by the Federal Deposit Insurance Corporation. At December 31, 2025, Quaint Oak Bank’s tier 1 leverage ratio and total risk-based capital were well-capitalized.

Prompt Corrective Action. The following table shows the amount of capital associated with the different capital categories set forth in the prompt corrective action regulations.

Capital Category

Total Risk-

Based Capital

Tier 1 Risk-

Based Capital

Tier 1 Common

Equity Capital

Tier 1

Leverage

Capital

Well capitalized

10% or more

8% or more

6.5% or more

5% or more

Adequately capitalized

8% or more

6% or more

4.5% or more

4% or more

Undercapitalized

Less than 8%

Less than 6%

Less than 4.5%

Less than 4%

Significantly undercapitalized

Less than 6%

Less than 4%

Less than 3%

Less than 3%

In addition, an institution is “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. Under specified circumstances, a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category (except that the Federal Deposit Insurance Corporation may not reclassify a significantly undercapitalized institution as critically undercapitalized).

An institution generally must file a written capital restoration plan which meets specified requirements within 45 days of the date that the institution receives notice or is deemed to have notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized. A federal banking agency must provide the institution with written notice of approval or disapproval within 60 days after receiving a capital restoration plan, subject to extensions by the agency. An institution which is required to submit a capital restoration plan must concurrently submit a performance guaranty by each company that controls the institution. In addition, undercapitalized institutions are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions.

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At December 31, 2025, Quaint Oak Bank was deemed a well-capitalized institution for purposes of the prompt corrective regulations and as such is not subject to the above mentioned restrictions.

Activities and Investments of Insured State-Chartered Savings Banks. The activities and equity investments of Federal Deposit Insurance Corporation-insured, state-chartered savings banks are generally limited to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank is not prohibited from, among other things:

●

acquiring or retaining a majority interest in a subsidiary;

●

investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets;

●

acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions; and

●

acquiring or retaining the voting shares of a depository institution if certain requirements are met.

The Federal Deposit Insurance Corporation has adopted regulations pertaining to the other activity restrictions imposed upon insured state banks and their subsidiaries. Pursuant to such regulations, insured state banks engaging in impermissible activities may seek approval from the Federal Deposit Insurance Corporation to continue such activities. State banks not engaging in such activities but that desire to engage in otherwise impermissible activities either directly or through a subsidiary may apply for approval from the Federal Deposit Insurance Corporation to do so; however, if such bank fails to meet the minimum capital requirements or the activities present a significant risk to the Deposit Insurance Fund, such application will not be approved by the Federal Deposit Insurance Corporation. Pursuant to this authority, the Federal Deposit Insurance Corporation has determined that investments in certain majority-owned subsidiaries of insured state banks do not represent a significant risk to the deposit insurance funds. Investments permitted under that authority include real estate activities and securities activities.

Brokered Deposits. A brokered deposit is any deposit obtained through the mediation or assistance of a deposit broker, who typically attracts deposits from individuals and companies seeking the highest interest rates. Federal Deposit Insurance Corporation regulations limit the ability of insured depository institutions, such as Quaint Oak Bank, to accept, renew, or roll over brokered deposits unless the institution is well-capitalized under the prompt corrective action framework, or is adequately capitalized with an FDIC waiver. Institutions that are less than well-capitalized face restrictions on the interest rates they may pay on deposits, and brokered deposits may carry higher deposit insurance assessments.

Under the Economic Growth Act, certain reciprocal deposits—up to the lesser of $5 billion or 20% of an institution’s deposits—are excluded from the definition of brokered deposits if the institution is well-capitalized and has a composite rating of 1 or 2 (or is adequately capitalized with an FDIC waiver).

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In 2021, the FDIC clarified and modernized its brokered deposit regulations by establishing clear standards for determining whether an entity qualifies as a deposit broker, identifying business relationships that automatically qualify for the “primary purpose exception,” creating a transparent application process for entities seeking that exception, and confirming that third parties with exclusive deposit-placement arrangements with one institution are not considered deposit brokers.

Restrictions on Capital Distributions. Federal Reserve Board and Federal Deposit Insurance Corporation regulations govern capital distributions by savings institutions, which include cash dividends, stock repurchases and other transactions charged to the capital account of a savings institution to make capital distributions. These regulations apply to Quaint Oak Bancorp because Quaint Oak Bank is considered a savings association for certain purposes under Home Owners’ Loan Act, as amended. Under applicable regulations, a savings association must file an application for Federal Deposit Insurance Corporation approval of the capital distribution if:

●

the total capital distributions for the applicable calendar year exceed the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years;

●

the institution would not be at least adequately capitalized following the distribution;

●

the distribution would violate any applicable statute, regulation, agreement or Federal Deposit Insurance Corporation-imposed condition; or

●

the institution is not eligible for expedited treatment of its filings with the Federal Deposit Insurance Corporation.

If an application is not required to be filed, state savings banks that elect to be treated as savings associations such as Quaint Oak Bank must still file a notice with the Federal Deposit Insurance Corporation at least 30 days before the board of directors declares a dividend or approves a capital distribution if either (1) the institution would not be well-capitalized following the distribution; or (2) the proposed distribution would reduce the amount or retire any part of its common or preferred stock or retire any part of a debt instrument included in its regulatory capital. In addition, a savings institution, such as Quaint Oak Bank, that is the subsidiary of a stock saving and loan holding company, must also file a notice with the appropriate Federal Reserve Bank at least 30 days before the proposed declaration of a dividend by its board of directors.

A savings association that either before or after a proposed capital distribution fails to meet its then applicable minimum capital requirement or that has been notified that it needs more than normal supervision may not make any capital distributions without the prior written approval of the Federal Deposit Insurance Corporation. In addition, the Federal Deposit Insurance Corporation may prohibit a proposed capital distribution, which would otherwise be permitted by Federal Deposit Insurance Corporation regulations, if the Federal Deposit Insurance Corporation determines that such distribution would constitute an unsafe or unsound practice.

The Federal Deposit Insurance Corporation prohibits an insured depository institution from paying dividends on its capital stock or interest on its capital notes or debentures (if such interest is required to be paid only out of net profits) or distributing any of its capital assets while it remains in default in the payment of any assessment due the Federal Deposit Insurance Corporation. Quaint Oak Bank is currently not in default in any assessment payment to the Federal Deposit Insurance Corporation.

In addition, Quaint Oak Bancorp has agreed not to declare or pay dividends or engage in share repurchases or to make any other capital distributions or payments due on subordinated debentures without the prior written approval of the Federal Reserve Bank.

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Commercial Real Estate Lending Concentration Guidance. Under guidance issued by the federal banking agencies, the agencies have expressed concerns with institutions that ease commercial real estate underwriting standards and have directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks. The agencies have also issued guidance that requires a financial institution to employ enhanced risk management practices if the institution is exposed to significant concentration risk in its commercial real estate portfolio. Under that guidance, an institution is potentially exposed to significant concentration risk if: (i) total reported loans for construction, land development, and other land represent 100% or more of total capital or (ii) total reported loans secured by multi-family and non-farm residential properties, loans for construction, land development, and other land loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital, and the outstanding balance of the institution's commercial real estate loan portfolio has increased by 50% or more during the prior 36 months. At December 31, 2025, the balance of these real estate loans represented 591.9% of Quaint Oak Bank’s total capital and our commercial real estate loan portfolio. Institutions, which are deemed to have concentrations in commercial real estate lending, are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios and may be required to hold higher levels of capital. See “We have a high concentration of commercial real estate loans, which involve credit risks that could adversely affect our financial condition and results of operations” in