10-Q
QUAINT OAK BANCORP, INC. (QNTO)
| SECURITIES AND EXCHANGE COMMISSION | ||
|---|---|---|
| Washington, D.C. 20549 | ||
| FORM 10-Q | ||
| (Mark One) | ||
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended | September 30, 2025 | |
| --- | --- | |
| OR | ||
| --- | --- | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from | to | |
| --- | --- | |
| Commission file number: | 000-52694 | |
| --- | --- | |
| QUAINT OAK BANCORP, INC. | ||
| --- | ||
| (Exact Name of Registrant as Specified in Its Charter) | ||
| Pennsylvania | 35-2293957 | |
| --- | --- | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| 501 Knowles Avenue, Southampton, Pennsylvania | 18966 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| (215) 364-4059 | ||
| --- | ||
| (Registrant’s Telephone Number, Including Area Code) | ||
| Not applicable | ||
| --- | ||
| (Former name, former address and former fiscal year, if changed since last report) | ||
| Securities registered pursuant to Section 12(b) of the Act: None | ||
| Title of each Class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No | ||
| --- | ||
| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No | ||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | ||
| Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ | ||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No<br> <br><br> <br>Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 10, 2025, 2,635,559 shares of the issuer’s common stock were issued and outstanding. |
INDEX
| PART I - FINANCIAL INFORMATION | Page |
|---|---|
| Item 1 - Financial Statements | |
| Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (Unaudited) | 1 |
| Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 2 |
| Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 4 |
| Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 5 |
| Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 7 |
| Notes to the Unaudited Consolidated Financial Statements | 9 |
| Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 |
| Item 3 - Quantitative and Qualitative Disclosures About Market Risk | 46 |
| Item 4 - Controls and Procedures | 46 |
| PART II - OTHER INFORMATION | |
| Item 1 - Legal Proceedings | 46 |
| Item 1A - Risk Factors | 47 |
| Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds | 47 |
| Item 3 - Defaults Upon Senior Securities | 47 |
| Item 4 - Mine Safety Disclosures | 47 |
| Item 5 - Other Information | 47 |
| Item 6 - Exhibits | 48 |
| SIGNATURES |
ITEM 1. FINANCIAL STATEMENTS
Quaint Oak Bancorp, Inc.
Consolidated Balance Sheets (Unaudited)
| At December 31, | |||||
|---|---|---|---|---|---|
| 2024 | |||||
| Assets | |||||
| Due from banks, non-interest-bearing | 967 | $ | 345 | ||
| Due from banks, interest-bearing | 51,325 | 62,644 | |||
| Cash and cash equivalents | 52,292 | 62,989 | |||
| Investment in interest-earning time deposits | 912 | 912 | |||
| Investment securities available for sale | 1,071 | 1,666 | |||
| Loans held for sale | 54,508 | 64,281 | |||
| Loans receivable, net of allowance for credit losses (2025 6,492; 2024 6,476) | 547,116 | 534,693 | |||
| Accrued interest receivable | 4,339 | 3,961 | |||
| Investment in Federal Home Loan Bank stock, at cost | 2,091 | 2,214 | |||
| Bank-owned life insurance | 4,542 | 4,447 | |||
| Premises and equipment, net | 1,587 | 1,626 | |||
| Goodwill | 515 | 515 | |||
| Other intangible, net of accumulated amortization | 40 | 77 | |||
| Prepaid expenses and other assets | 8,118 | 7,787 | |||
| Total Assets | 677,131 | $ | 685,168 | ||
| Liabilities and Stockholders’ Equity | |||||
| Liabilities | **** | **** | **** | **** | **** |
| Deposits: | |||||
| Non-interest bearing | 76,134 | $ | 59,783 | ||
| Interest-bearing | 478,060 | 493,469 | |||
| Total deposits | 554,194 | 553,252 | |||
| Federal Home Loan Bank borrowings | 45,000 | 47,855 | |||
| Senior debt, net of unamortized costs | 9,575 | - | |||
| Subordinated debt | 8,000 | 22,000 | |||
| Accrued interest payable | 786 | 937 | |||
| Advances from borrowers for taxes and insurance | 1,975 | 3,122 | |||
| Accrued expenses and other liabilities | 5,428 | 5,385 | |||
| Total Liabilities | 624,958 | 632,551 | |||
| Stockholders’ Equity | **** | **** | **** | **** | **** |
| Preferred stock – 0.01 par value, 1,000,000 shares authorized; none issued or outstanding | - | - | |||
| Common stock – 0.01 par value; 9,000,000 shares authorized; 3,108,993 issued as of both September 30, 2025 and December 31, 2024; 2,636,079 and 2,626,535 outstanding at September 30, 2025 and December 31, 2024, respectively | 31 | 31 | |||
| Additional paid-in capital | 23,123 | 22,976 | |||
| Treasury stock, at cost: 472,914 and 482,458 shares at September 30, 2025 and December 31, 2024, respectively | (3,542 | ) | (3,588 | ) | |
| Accumulated other comprehensive income | 3 | - | |||
| Retained earnings | 32,558 | 33,198 | |||
| Total Stockholders' Equity | 52,173 | 52,617 | |||
| Total Liabilities and Stockholders’ Equity | 677,131 | $ | 685,168 |
All values are in US Dollars.
See accompanying notes to the unaudited consolidated financial statements.
1
Quaint Oak Bancorp, Inc.
Consolidated Statements of Operations (Unaudited)
| **** | **** **** <br>For the Three<br> <br>Months Ended | For the Nine<br> <br>Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | **** **** September 30, | September 30, | ||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| **** | **** **** (Unaudited) | (Unaudited) | ||||||||||
| Interest and Dividend Income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest on loans, including fees | $ | 9,808 | $ | 9,895 | $ | 29,026 | $ | 30,445 | ||||
| Interest and dividends on time deposits, investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock | 362 | 577 | 1,264 | 3,046 | ||||||||
| Total Interest and Dividend Income | 10,170 | 10,472 | 30,290 | 33,491 | ||||||||
| Interest Expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest on deposits | 4,789 | 5,641 | 14,116 | 17,795 | ||||||||
| Interest on FHLB borrowings | 536 | 94 | 1,669 | 503 | ||||||||
| Interest on senior debt | 170 | - | 672 | - | ||||||||
| Interest on subordinated debt | 281 | 489 | 790 | 1,461 | ||||||||
| Total Interest Expense | 5,776 | 6,224 | 17,247 | 19,759 | ||||||||
| Net Interest Income | 4,394 | 4,248 | 13,043 | 13,732 | ||||||||
| Provision for Credit Losses – Loans | 433 | 143 | 1,223 | 1,227 | ||||||||
| (Recovery of) Provision for Credit Losses – Unfunded Commitments | (8 | ) | (20 | ) | 80 | (9 | ) | |||||
| Total Provision for Credit Losses | 425 | 123 | 1,303 | 1,218 | ||||||||
| Net Interest Income after Provision for Credit Losses | 3,969 | 4,125 | 11,740 | 12,514 | ||||||||
| Non-Interest Income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Mortgage banking, equipment lending and title abstract fees | 289 | 237 | 715 | 627 | ||||||||
| Real estate sales commissions, net | - | - | - | 20 | ||||||||
| Insurance commissions | 196 | 198 | 577 | 526 | ||||||||
| Other fees and services charges | 14 | 116 | (73 | ) | 582 | |||||||
| Net loan servicing income | - | 2 | 5 | 5 | ||||||||
| Income from bank-owned life insurance | 33 | 30 | 95 | 87 | ||||||||
| Net gain on sale of loans | 950 | 503 | 3,052 | 1,998 | ||||||||
| Gain on the sale of SBA loans | 266 | 124 | 1,084 | 251 | ||||||||
| Total Non-Interest Income | 1,748 | 1,210 | 5,455 | 4,096 | ||||||||
| Non-Interest Expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Salaries and employee benefits | 3,993 | 3,483 | 11,285 | 10,818 | ||||||||
| Directors' fees and expenses | 66 | 52 | 196 | 153 | ||||||||
| Occupancy and equipment | 489 | 330 | 1,352 | 996 | ||||||||
| Data processing | 436 | 321 | 1,277 | 894 | ||||||||
| Professional fees | 134 | 26 | 531 | 323 | ||||||||
| FDIC deposit insurance assessment | 131 | 158 | 387 | 494 | ||||||||
| Advertising | 28 | 42 | 227 | 202 | ||||||||
| Amortization of other intangible | 12 | 12 | 36 | 36 | ||||||||
| Other | 439 | 500 | 1,514 | 1,368 | ||||||||
| Total Non-Interest Expense | 5,728 | 4,924 | 16,805 | 15,284 | ||||||||
| (Loss) Income from Continuing Operations Before Income Taxes | $ | (11 | ) | $ | 411 | $ | 390 | $ | 1,326 | |||
| Income Taxes | 30 | 168 | 242 | 516 | ||||||||
| Net (Loss) Income from Continuing Operations | $ | (41 | ) | $ | 243 | $ | 148 | $ | 810 | |||
| Income from Discontinued Operations | - | - | - | 564 | ||||||||
| Income Taxes | - | - | - | 158 | ||||||||
| Net Income from Discontinued Operations | $ | - | $ | - | $ | - | 406 | |||||
| Net (Loss) Income | $ | (41 | ) | $ | 243 | $ | 148 | $ | 1,216 |
See accompanying notes to the unaudited consolidated financial statements.
2
Quaint Oak Bancorp, Inc.
Consolidated Statements of Operations (Unaudited)
| Three Months Ended<br> <br>September 30, | Nine Months Ended<br> <br>September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | ||||||
| Per Common Share Data: | (Unaudited) | (Unaudited) | |||||||
| Earnings per share from continuing operations – basic | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.32 |
| Earnings per share from discontinued operations – basic | $ | - | $ | - | $ | - | $ | 0.15 | |
| Earnings per share, net – basic | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.47 |
| Average shares outstanding – basic | 2,635,983 | 2,631,048 | 2,631,227 | 2,560,993 | |||||
| Earnings per share from continuing operations – diluted | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.32 |
| Earnings per share from discontinued operations – diluted | $ | - | $ | - | $ | - | $ | 0.15 | |
| Earnings per share, net – diluted | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.47 |
| Average shares outstanding - diluted | 2,635,983 | 2,631,048 | 2,631,227 | 2,560,993 | |||||
| Book value per share, end of period | $ | 19.79 | $ | 19.52 | $ | 19.79 | $ | 19.52 | |
| Shares outstanding, end of period | 2,636,079 | 2,633,374 | 2,636,079 | 2,633,374 |
See accompanying notes to the unaudited consolidated financial statements.
3
Quaint Oak Bancorp, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
| For the Three<br> <br>Months Ended | For the Nine<br> <br>Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| (In thousands) | ||||||||||||
| Net (Loss) Income from Continuing Operations | $ | (41 | ) | $ | 243 | $ | 148 | $ | 810 | |||
| Other Comprehensive Income: | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Unrealized gains on investment securities available-for-sale | 1 | 4 | 4 | 14 | ||||||||
| Income tax effect | (1 | ) | (1 | ) | (1 | ) | (3 | ) | ||||
| Other comprehensive income | - | 3 | 3 | 11 | ||||||||
| Total Comprehensive (Loss) Income | $ | (41 | ) | $ | 246 | $ | 151 | $ | 821 | |||
| Comprehensive Income from Discontinued Operations | $ | - | $ | - | $ | - | $ | 406 | ||||
| Comprehensive (Loss) Income Attributable to Quaint Oak Bancorp, Inc. | $ | (41 | ) | $ | 246 | $ | 151 | $ | 1,227 |
See accompanying notes to the unaudited consolidated financial statements.
4
Quaint Oak Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity (Unaudited)
| For the Three Months Ended September 30, 2025 | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | ||||||
| Amount | Additional<br> <br>Paid-in<br> <br>Capital | Treasury Stock | Accumulated<br> <br>Other Comprehensive Income | Retained<br> <br>Earnings | Total<br> <br>Stockholders’<br> <br>Equity | |||||||||||||
| BALANCE – JUNE 30, 2025 | 2,635,866 | $ | 31 | $ | 23,057 | $ | (3,538 | ) | $ | 3 | $ | 32,704 | $ | 52,257 | ||||
| Treasury stock purchase | (1,301 | ) | (14 | ) | (14 | ) | ||||||||||||
| Reissuance of treasury stock under 401(k) plan | 1,514 | 5 | 10 | 15 | ||||||||||||||
| Stock based compensation expense | 61 | 61 | ||||||||||||||||
| Cash dividends declared (0.04 per share) | (105 | ) | (105 | ) | ||||||||||||||
| Net loss | (41 | ) | (41 | ) | ||||||||||||||
| BALANCE – SEPTEMBER 30, 2025 | 2,636,079 | $ | 31 | $ | 23,123 | $ | (3,542 | ) | $ | 3 | $ | 32,558 | $ | 52,173 |
All values are in US Dollars.
| For the Three Months Ended September 30, 2024 | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | |||||
| Amount | Additional<br> <br>Paid-in<br> <br>Capital | Treasury Stock | Accumulated<br> <br>Other Comprehensive Income (Loss) | Retained<br> <br>Earnings | Total<br> <br>Stockholders’<br> <br>Equity | |||||||||||||
| BALANCE – JUNE 30, 2024 | 2,629,289 | $ | 31 | $ | 22,828 | $ | (3,527 | ) | $ | (2 | ) | $ | 32,060 | $ | 51,390 | |||
| Treasury stock purchase | (333 | ) | (4 | ) | (4 | ) | ||||||||||||
| Reissuance of treasury stock under 401(k) Plan | 4,418 | 16 | 29 | 45 | ||||||||||||||
| Stock based compensation expense | 60 | 60 | ||||||||||||||||
| Cash dividends declared (0.13 per share) | (342 | ) | (342 | ) | ||||||||||||||
| Net income | 243 | 243 | ||||||||||||||||
| Other comprehensive income, net | 3 | 3 | ||||||||||||||||
| BALANCE – SEPTEMBER 30, 2024 | 2,633,374 | $ | 31 | $ | 22,904 | $ | (3,502 | ) | $ | 1 | $ | 31,961 | $ | 51,395 |
All values are in US Dollars.
See accompanying notes to the unaudited consolidated financial statements.
5
Quaint Oak Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity (Unaudited)
| For the Nine Months Ended September 30, 2025 | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | |||||
| Amount | Additional<br> <br>Paid-in<br> <br>Capital | Treasury Stock | Accumulated<br> <br>Other Comprehensive Income | Retained<br> <br>Earnings | Total<br> <br>Stockholders’<br> <br>Equity | |||||||||||||
| **** | **** | (In thousands, except share and per share data) | ||||||||||||||||
| BALANCE – DECEMBER 31, 2024 | 2,626,535 | $ | 31 | $ | 22,976 | $ | (3,588 | ) | $ | - | $ | 33,198 | $ | 52,617 | ||||
| Treasury stock purchase | (4,221 | ) | (45 | ) | (45 | ) | ||||||||||||
| Reissuance of treasury stock under 401(k) Plan | 5,265 | 21 | 35 | 56 | ||||||||||||||
| Reissuance of treasury stock under stock incentive plan | 8,500 | (56 | ) | 56 | - | |||||||||||||
| Stock based compensation expense | 182 | 182 | ||||||||||||||||
| Cash dividends declared (0.30 per share) | (788 | ) | (788 | ) | ||||||||||||||
| Net income | 148 | 148 | ||||||||||||||||
| Other comprehensive income | 3 | 3 | ||||||||||||||||
| BALANCE – SEPTEMBER 30, 2025 | 2,636,079 | $ | 31 | $ | 23,123 | $ | (3,542 | ) | $ | 3 | $ | 32,558 | $ | 52,173 |
All values are in US Dollars.
| For the Nine Months Ended September 30, 2024 | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | |||||
| Amount | Additional<br> <br>Paid-in<br> <br>Capital | Treasury Stock | Accumulated<br> <br>Other Comprehensive Income (Loss) | Retained<br> <br>Earnings | Total<br> <br>Stockholders’<br> <br>Equity | ||||||||||||||
| BALANCE – DECEMBER 31, 2023 | 2,407,048 | $ | 29 | $ | 20,299 | $ | (3,568 | ) | $ | (10 | ) | $ | 31,741 | $ | 48,491 | ||||
| Treasury stock purchase | (4,575 | ) | (48 | ) | (48 | ) | |||||||||||||
| Issued from authorized and unallocated | 213,318 | 2 | 2,446 | 2,448 | |||||||||||||||
| Reissuance of treasury stock under 401(k) Plan | 8,583 | 35 | 56 | 91 | |||||||||||||||
| Reissuance of treasury stock under stock incentive plan | 9,000 | (58 | ) | 58 | |||||||||||||||
| Stock based compensation expense | 182 | 182 | |||||||||||||||||
| Cash dividends declared (0.39 per share) | (996 | ) | (996 | ) | |||||||||||||||
| Net income | 1,216 | 1,216 | |||||||||||||||||
| Other comprehensive income | 11 | 11 | |||||||||||||||||
| BALANCE – SEPTEMBER 30, 2024 | 2,633,374 | $ | 31 | $ | 22,904 | $ | (3,502 | ) | $ | 1 | $ | 31,961 | $ | 51,395 |
All values are in US Dollars.
See accompanying notes to the unaudited consolidated financial statements.
6
Quaint Oak Bancorp, Inc.
Consolidated Statements of Cash Flows (Unaudited)
| For the Nine Months | ||||||
|---|---|---|---|---|---|---|
| Ended September 30, | ||||||
| 2025 | 2024 | |||||
| (In Thousands) | ||||||
| Cash Flows from Operating Activities | ||||||
| Net income from continuing operations | $ | 148 | $ | 810 | ||
| Net income from discontinued operations | - | 406 | ||||
| Net income | $ | 148 | $ | 1,216 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Provision for credit losses | 1,303 | 1,218 | ||||
| Depreciation expense | 527 | 433 | ||||
| Amortization, net | 323 | 44 | ||||
| Accretion of deferred loan fees and costs, net | (151 | ) | (411 | ) | ||
| Stock-based compensation expense | 182 | 182 | ||||
| Net gain sale of loans | (3,052 | ) | (1,998 | ) | ||
| Loans held for sale-originations | (129,613 | ) | (99,590 | ) | ||
| Loans held for sale-proceeds | 142,438 | 95,128 | ||||
| Gain on the sale of SBA loans | (1,084 | ) | (251 | ) | ||
| Increase in the cash surrender value of bank-owned life insurance | (95 | ) | (87 | ) | ||
| Changes in assets and liabilities which provided (used) cash: | ||||||
| Accrued interest receivable | (379 | ) | (899 | ) | ||
| Prepaid expenses and other assets | (513 | ) | 21 | |||
| Accrued interest payable | (151 | ) | (34 | ) | ||
| Accrued expenses and other liabilities | 44 | 116 | ||||
| Net Cash Provided by (Used in) Operating Activities of Continuing Operations | 9,927 | (4,912 | ) | |||
| Net Cash Provided by Operating Activities of Discontinued Operations | - | 32,350 | ||||
| Net Cash Provided by Operating Activities | 9,927 | 27,438 | ||||
| Cash Flows from Investing Activities | **** | **** | **** | **** | **** | **** |
| Redemption of interest-earning time deposits | - | 1,000 | ||||
| Principal repayments of investment securities available for sale | 597 | 514 | ||||
| Net decrease (increase) in loans receivable | (12,491 | ) | 8,980 | |||
| Proceeds from the sale of Oakmont Capital Holdings, LLC | - | 4,300 | ||||
| Purchase of Federal Home Loan Bank stock | (4,206 | ) | (2,627 | ) | ||
| Redemption of Federal Home Loan Bank stock | 4,329 | 2,247 | ||||
| Purchase of premises and equipment | (488 | ) | (708 | ) | ||
| Net Cash (Used in) Provided by Investing Activities | (12,259 | ) | 13,706 | |||
| Cash Flows from Financing Activities | **** | **** | **** | **** | **** | **** |
| Net decrease in demand deposits, money markets, and savings accounts | (55,959 | ) | (65,928 | ) | ||
| Net increase in certificate accounts | 56,901 | 17,648 | ||||
| Decrease in advances from borrowers for taxes and insurance | (1,147 | ) | (856 | ) | ||
| Net (decrease) increase in Federal Home Loan Bank borrowings | (2,855 | ) | 9,833 | |||
| Net repayments from subordinated debt | (14,103 | ) | - | |||
| Net proceeds from senior debt | 9,575 | - | ||||
| Dividends paid | (788 | ) | (996 | ) | ||
| Proceeds from the reissuance of treasury stock under 401(k) plan | 56 | 91 | ||||
| Proceeds from shares issued from authorized and unallocated | - | 2,448 | ||||
| Acquisition of treasury stock | (45 | ) | (48 | ) | ||
| Net Cash Used in Financing Activities | $ | (8,365 | ) | $ | (37,808 | ) |
| Net (Decrease) Increase in Cash and Cash Equivalents | (10,697 | ) | 3,336 | |||
| Cash and Cash Equivalents – Beginning of Year | 62,989 | 58,006 | ||||
| Cash and Cash Equivalents – End of Year | $ | 52,292 | $ | 61,342 |
See accompanying notes to the unaudited consolidated financial statements.
7
Quaint Oak Bancorp, Inc.
Consolidated Statements of Cash Flows (Unaudited)
| For the Nine Months | ||||
|---|---|---|---|---|
| Ended September 30, | ||||
| 2025 | 2024 | |||
| (In Thousands) | ||||
| Supplementary Disclosure of Cash Flow and Non-Cash Information: | **** | **** | **** | **** |
| Cash payments for interest | $ | 17,398 | $ | 19,792 |
| Cash payments for income taxes | $ | 540 | $ | 630 |
| Transfer of loans from Oakmont Capital Holdings, LLC | $ | - | $ | 4,388 |
| Transfer of loans held for investment to loans held for sale | $ | 49,502 | $ | - |
See accompanying notes to the unaudited consolidated financial statements.
8
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 1 – Financial Statement Presentation and Significant Accounting Policies
Basis of Financial Presentation. The consolidated financial statements include the accounts of Quaint Oak Bancorp, Inc., a Pennsylvania chartered corporation (the “Company” or “Quaint Oak Bancorp”) and its wholly owned subsidiary, Quaint Oak Bank, a Pennsylvania chartered stock savings bank (the “Bank”), along with its wholly owned subsidiaries. At September 30, 2025, the Bank has five wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, QOB Properties, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, each a Pennsylvania limited liability company. Quaint Oak Mortgage offers mortgage banking in the Lehigh Valley, Delaware Valley and Philadelphia County regions of Pennsylvania and began operations in February, 2019. Quaint Oak Abstract offers title abstract services primarily in the Lehigh Valley region of Pennsylvania and began operation in July 2009. QOB Properties, LLC began operations in July 2012 and holds Bank properties acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure. Quaint Oak Insurance Agency, LLC began operations in August 2016 and provides a broad range of personal and commercial insurance coverage solutions. Oakmont Commercial, LLC was formed in October 2021 and operates as a nationwide specialty commercial real estate financing company. On March 29, 2024, Quaint Oak Bank sold its 51% interest in Oakmont Capital Holdings, LLC (“OCH”), a multi-state equipment finance company based in West Chester, Pennsylvania. The decision was based on a number of strategic priorities and other factors. As a result of this action, Quaint Oak Bancorp classified the operations of OCH as discontinued operations under ASC 205-20 and ceased all equipment loan originations. Also on March 29, 2024, the Company discontinued the operations of Quaint Oak Real Estate, LLC (“Quaint Oak Real Estate”), a 100% wholly owned subsidiary of the Bank. Quaint Oak Real Estate was engaged in the real estate brokerage business. All significant intercompany balances and transactions have been eliminated.
The Bank is subject to regulation by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation. Pursuant to the Bank’s election under Section 10(l) of the Home Owners’ Loan Act, the Company is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System. The market area served by the Bank is principally Bucks, Montgomery and Philadelphia Counties in Pennsylvania and the Lehigh Valley area in Pennsylvania, although the Bank has customers in all fifty states, the District of Columbia and Puerto Rico. The Bank has three regional offices located in the Delaware Valley, Lehigh Valley and Philadelphia markets. The principal deposit products offered by the Bank are money market accounts, certificates of deposit, non-interest bearing checking accounts for businesses and consumers, and savings accounts. The principal loan products offered by the Bank are fixed and adjustable rate residential and commercial mortgages, construction loans, commercial business loans, home equity loans, and lines of credit.
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP) for interim information and with the instructions to Form 10-Q, as applicable to a smaller reporting company. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements.
The foregoing consolidated financial statements are unaudited; but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof. The balances as of December 31, 2024 have been derived from the audited financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in Quaint Oak Bancorp’s 2024 Annual Report on Form 10-K. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
9
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)
Use of Estimates in the Preparation of Financial Statements. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The Company’s most significant estimates are the determination of the allowance for credit losses and the valuation of deferred tax assets.
Critical Accounting Policies. The Company’s critical accounting policies involving significant judgments and assumptions used in the preparation of the consolidated financial statements as of September 30, 2025 have remained unchanged from the disclosures presented in our Annual Report on Form 10-K.
Accounting Pronouncements Not Yet Adopted. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance is effective for public business entities for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this new guidance on its financial statements.
Reclassifications. Certain items in the prior period consolidated financial statements have been reclassified to conform to the presentation in the current period consolidated financial statements. Such reclassifications did not have a material impact on the presentation of the overall financial statements. The reclassifications had no effect on net income or stockholders’ equity.
Note 2 – 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 ASC 205-20. The Consolidated Statements of Operations and Consolidated Statements of Cash Flows present discontinued operations for the current period and retrospectively for prior periods.
10
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 2 – Discontinued Operations (Continued)
The following presents operating results of the discontinued operations OCH for the nine months ended September 30, 2025 and *September 30, 2024 (*in thousands):
| For the Nine Months Ended | |||||
|---|---|---|---|---|---|
| September 30, | |||||
| 2025 | 2024 | ||||
| (In thousands, except for share data) | |||||
| Interest and Dividend Income | **** | **** | **** | **** | **** |
| Interest on loans, including fees | $ | - | $ | 70 | |
| Interest and dividends on time deposits, investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock | - | - | |||
| Total Interest and Dividend Income | - | 70 | |||
| Interest Expense | **** | **** | **** | **** | **** |
| Interest on other borrowings | - | 295 | |||
| Total Interest Expense | - | 295 | |||
| Net Interest Loss | - | (225 | ) | ||
| Non-Interest Income | **** | **** | **** | **** | **** |
| Mortgage banking, equipment lending and title abstract fees | - | 404 | |||
| Other fees and services charges | - | 197 | |||
| Net loan servicing income | - | 726 | |||
| Net gain on sale of loans | - | 366 | |||
| Gain on sale of OCH | - | 1,378 | |||
| Total Non-Interest Income | - | 3,071 | |||
| Non-Interest Expense | **** | **** | **** | **** | **** |
| Salaries and employee benefits | - | 1,681 | |||
| Occupancy and equipment | - | 219 | |||
| Professional fees | - | 31 | |||
| Advertising | - | 146 | |||
| Other | - | 987 | |||
| Total Non-Interest Expense | - | 3,064 | |||
| Total net loss from discontinued operations | $ | - | $ | (218 | ) |
| Income attributable to non-controlling interest | - | 782 | |||
| Net income from discontinued operations | $ | - | $ | 564 |
11
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 3 – Earnings Per Share
Earnings per share (“EPS”) consists of two 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 be 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 are not included for the purposes of this calculation. For the three and nine months ended September 30, 2025 and September 30, 2024, all unvested restricted stock program awards and outstanding stock options representing shares were anti-dilutive.
The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computations.
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | ||||||
| Net (Loss) Income Attributable to Quaint Oak Bancorp, Inc. | $ | (41,000 | ) | $ | 243,000 | $ | 148,000 | $ | 1,216,000 |
| Weighted average shares outstanding – basic | 2,635,983 | 2,631,048 | 2,631,227 | 2,560,993 | |||||
| Effect of dilutive common stock equivalents | - | - | - | - | |||||
| Adjusted weighted average shares outstanding – diluted | 2,635,983 | 2,631,048 | 2,631,227 | 2,560,993 | |||||
| Basic earnings per share from continuing operations | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.32 |
| Basic earnings per share from discontinued operations | $ | - | $ | - | $ | - | $ | 0.15 | |
| Basic earnings per share, net | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.47 |
| Diluted earnings per share from continuing operations | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.32 |
| Diluted earnings per share from discontinued operations | $ | - | $ | - | $ | - | $ | 0.15 | |
| Diluted earnings per share, net | $ | (0.02 | ) | $ | 0.09 | $ | 0.06 | $ | 0.47 |
Note 4 – Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in accumulated other comprehensive income (loss) by component, net of tax, for the three and nine months ended September 30, 2025 and 2024 (in thousands):
| Unrealized Gains (Losses) on Investment Securities Available for Sale (1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||
| Balance at the beginning of the period | $ | 3 | $ | (2 | ) | $ | - | $ | (10 | ) |
| Other comprehensive income | - | 3 | 3 | 11 | ||||||
| Balance at the end of the period | $ | 3 | $ | 1 | $ | 3 | $ | 1 |
_________________
(1) All amounts are net of tax. Amounts in parentheses indicate debits.
There were no reclassifications from accumulated other comprehensive income by component for the three or nine months ended September 30, 2025 and 2024.
12
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 5 – Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses, and fair value of investment securities available for sale at September 30, 2025 and December 31, 2024 are summarized below (in thousands):
| September 30, 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||
| Available for Sale: | |||||||||
| Mortgage-backed securities: | |||||||||
| Government National Mortgage Association securities | $ | 1,035 | $ | 2 | $ | - | $ | 1,037 | |
| Federal National Mortgage Association securities | 33 | 1 | - | 34 | |||||
| Total available-for-sale-securities | $ | 1,068 | $ | 3 | $ | - | $ | 1,071 | |
| December 31, 2024 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||
| Available for Sale: | |||||||||
| Mortgage-backed securities: | |||||||||
| Government National Mortgage Association securities | $ | 1,631 | $ | 1 | $ | (2 | ) | $ | 1,630 |
| Federal National Mortgage Association securities | 35 | 1 | - | 36 | |||||
| Total available-for-sale-securities | $ | 1,666 | $ | 2 | $ | (2 | ) | $ | 1,666 |
The amortized cost and fair value of mortgage-backed securities at September 30, 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):
| Available for Sale | ||||
|---|---|---|---|---|
| Amortized Cost | Fair Value | |||
| Due after ten years | $ | 1,068 | $ | 1,071 |
| Total | $ | 1,068 | $ | 1,071 |
There were no securities in a loss position at September 30, 2025.
The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at *December 31, 2024 (*in thousands):
| December 31, 2024 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Less than Twelve Months | Twelve Months or Greater | Total | ||||||||||||
| Number of <br> Securities | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||
| Government National Mortgage Association securities | 8 | $ | 376 | $ | - | $ | 718 | $ | (2 | ) | $ | 1,094 | $ | (2 | ) |
13
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 5 – Investment Securities Available for Sale (Continued)
The Company’s mortgage-backed securities have contractual terms that generally do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. The change in fair value of these securities is attributable to changes in interest rates and not credit quality, and the Company does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost. Therefore, the Company does not have an allowance for credit losses for these investments as of September 30, 2025.
There were no credit losses recognized during the three and nine months ended September 30, 2025 and 2024. There were no sales during the three and nine months ended September 30, 2025 and 2024.
Note 6 - Loans Receivable, Net and Allowance for Credit Losses
The composition of net loans receivable is as follows (in thousands):
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||||
|---|---|---|---|---|---|---|
| Real estate loans: | ||||||
| One-to-four family residential: | ||||||
| Owner occupied | $ | 43,078 | $ | 25,927 | ||
| Non-owner occupied | 31,447 | 33,573 | ||||
| Total one-to-four family residential | 74,525 | 59,500 | ||||
| Multi-family (five or more) residential | 41,121 | 45,412 | ||||
| Commercial real estate | 307,489 | 297,627 | ||||
| Construction | 23,484 | 18,320 | ||||
| Home equity | 5,412 | 5,739 | ||||
| Total real estate loans | 452,031 | 426,598 | ||||
| Commercial business | 100,969 | 114,921 | ||||
| Other consumer | 37 | 46 | ||||
| Total Loans | 553,037 | 541,565 | ||||
| Deferred loan (fees) and costs, net | 571 | (396 | ) | |||
| Allowance for credit losses | (6,492 | ) | (6,476 | ) | ||
| Net Loans | $ | 547,116 | $ | 534,693 |
14
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 - Loans Receivable, Net and Allowance for Credit Losses (Continued)
The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of *September 30, 2025 (*in thousands):
| Term Loans Amortized Cost by Origination Year | **** | **** | **** | **** | **** | **** | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of September 30, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans Amortized Cost Basis | Total | ||||||||
| One-to-four family residential owner occupied | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 19,244 | $ | 7,147 | $ | 5,137 | $ | 4,608 | $ | 2,731 | $ | 3,912 | $ | - | $ | 42,779 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | 299 | - | 299 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total one-to-four family residential owner occupied | $ | 19,244 | $ | 7,147 | $ | 5,137 | $ | 4,608 | $ | 2,731 | $ | 4,211 | $ | - | $ | 43,078 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| One-to-four family residential non-owner occupied | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 630 | $ | 1,285 | $ | 1,899 | $ | 5,912 | $ | 11,654 | $ | 9,970 | $ | - | $ | 31,350 |
| Special mention | - | - | - | - | - | 97 | - | 97 | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total one-to-four family residential non-owner occupied | $ | 630 | $ | 1,285 | $ | 1,899 | $ | 5,912 | $ | 11,654 | $ | 10,067 | - | $ | 31,447 | |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Multi-family residential | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | - | $ | 5,257 | $ | 909 | $ | 12,462 | $ | 10,145 | $ | 12,348 | $ | - | $ | 41,121 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total multi-family residential | $ | - | $ | 5,257 | $ | 909 | $ | 12,462 | $ | 10,145 | $ | 12,348 | $ | - | $ | 41,121 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Commercial real estate | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 26,904 | $ | 34,358 | $ | 41,234 | $ | 75,441 | $ | 52,591 | $ | 59,477 | $ | 9,643 | $ | 299,648 |
| Special mention | - | 124 | - | 678 | - | 3,443 | - | 4,245 | ||||||||
| Substandard | - | 919 | 1,115 | 1,124 | 264 | - | 174 | 3,596 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total commercial real estate | $ | 26,904 | $ | 35,401 | $ | 42,349 | $ | 77,243 | $ | 52,855 | $ | 62,920 | $ | 9,817 | $ | 307,489 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Construction | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 16,426 | $ | 5,641 | $ | 102 | $ | 1,218 | $ | - | $ | - | $ | - | $ | 23,387 |
| Special mention | - | - | 97 | - | - | - | - | 97 | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total construction | $ | 16,426 | $ | 5,641 | $ | 199 | $ | 1,218 | $ | - | $ | - | $ | - | $ | 23,484 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
15
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 - Loans Receivable, Net and Allowance for Credit Losses (Continued)
| Term Loans Amortized Cost by Origination Year | **** | **** | **** | **** | **** | **** | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of September 30, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans Amortized Cost Basis | Total | ||||||||
| Home equity | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | - | $ | 524 | $ | 495 | $ | - | $ | 108 | $ | 143 | $ | 4,142 | $ | 5,412 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total home equity | $ | - | $ | 524 | $ | 495 | $ | - | $ | 108 | $ | 143 | $ | 4,142 | $ | 5,412 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Commercial business | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 5,005 | $ | 14,529 | $ | 2,792 | $ | 31,365 | $ | 11,614 | $ | 2,659 | $ | 22,605 | $ | 90,569 |
| Special mention | - | 538 | 435 | 763 | 1,065 | 1,037 | 463 | 4,301 | ||||||||
| Substandard | - | 1,245 | - | 2,035 | 2,123 | 390 | 306 | 6,099 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total commercial business | $ | 5,005 | $ | 16,312 | $ | 3,227 | $ | 34,163 | $ | 14,802 | $ | 4,086 | $ | 23,374 | $ | 100,969 |
| Current period gross charge-offs | $ | - | $ | 799 | $ | - | $ | 473 | $ | - | $ | 29 | $ | - | $ | 1,301 |
| Other consumer | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | - | $ | - | $ | 37 | $ | - | $ | - | $ | - | $ | - | $ | 37 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total other consumer | $ | - | $ | - | $ | 37 | $ | - | $ | - | $ | - | $ | - | $ | 37 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Total | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 68,209 | $ | 68,741 | $ | 52,605 | $ | 131,006 | $ | 88,843 | $ | 88,509 | $ | 36,390 | $ | 534,303 |
| Special mention | - | 662 | 532 | 1,441 | 1,065 | 4,577 | 463 | 8,740 | ||||||||
| Substandard | - | 2,164 | 1,115 | 3,159 | 2,387 | 689 | 480 | 9,994 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total | $ | 68,209 | $ | 71,567 | $ | 54,252 | $ | 135,606 | $ | 92,295 | $ | 93,775 | $ | 37,333 | $ | 553,037 |
| Current period gross charge-offs | $ | - | $ | 799 | $ | - | $ | 473 | $ | - | $ | 29 | $ | - | $ | 1,301 |
16
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 - Loans Receivable, Net and Allowance for Credit Losses (Continued)
The following table summarizes designated internal risk categories by portfolio segment and loan class, by origination year, as of *December 31, 2024 (*in thousands):
| Term Loans Amortized Cost by Origination Year | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of December 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans Amortized Cost Basis | Total | ||||||||
| One-to-four family residential owner occupied | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 7,290 | $ | 5,508 | $ | 5,078 | $ | 3,719 | $ | 1,632 | $ | 2,401 | $ | - | $ | 25,628 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | 299 | - | - | - | - | 299 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total one-to-four family residential owner occupied | $ | 7,290 | $ | 5,508 | $ | 5,377 | $ | 3,719 | $ | 1,632 | $ | 2,401 | $ | - | $ | 25,927 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| One-to-four family residential non- owner occupied | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 1,363 | $ | 1,920 | $ | 6,049 | $ | 11,949 | $ | 1,835 | $ | 10,457 | $ | - | $ | 33,573 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total one-to-four family residential non-owner occupied | $ | 1,363 | $ | 1,920 | $ | 6,049 | $ | 11,949 | $ | 1,835 | $ | 10,457 | - | $ | 33,573 | |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Multi-family residential | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 5,274 | $ | 923 | $ | 12,713 | $ | 13,087 | $ | 4,068 | $ | 9,347 | $ | - | $ | 45,412 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total multi-family residential | $ | 5,274 | $ | 923 | $ | 12,713 | $ | 13,087 | $ | 4,068 | $ | 9,347 | $ | - | $ | 45,412 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Commercial real estate | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 35,478 | $ | 47,329 | $ | 80,933 | $ | 57,927 | $ | 22,637 | $ | 46,912 | $ | 4,394 | $ | 295,610 |
| Special mention | - | 746 | 333 | 116 | - | - | 50 | 1,245 | ||||||||
| Substandard | - | - | 772 | - | - | - | - | 772 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total commercial real estate | $ | 35,478 | $ | 48,075 | $ | 82,038 | $ | 58,043 | $ | 22,637 | $ | 46,912 | $ | 4,444 | $ | 297,627 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Construction | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 4,498 | $ | 3,748 | $ | 5,546 | $ | 4,113 | $ | - | $ | - | $ | - | $ | 17,905 |
| Special mention | - | 415 | - | - | - | - | - | 415 | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total construction | $ | 4,498 | $ | 4,163 | $ | 5,546 | $ | 4,113 | $ | - | $ | - | $ | - | $ | 18,320 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 187 | $ | - | $ | 187 |
17
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 – Loans Receivable, Net and Allowance for Credit Losses (Continued)
| Term Loans Amortized Cost by Origination Year | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of December 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans Amortized Cost Basis | Total | ||||||||
| Home equity | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 529 | $ | 364 | $ | - | $ | 114 | $ | - | $ | 169 | $ | 4,563 | $ | 5,739 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total home equity | $ | 529 | $ | 364 | $ | - | $ | 114 | $ | - | $ | 169 | $ | 4,563 | $ | 5,739 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Commercial business | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 16,655 | $ | 4,056 | $ | 48,619 | $ | 18,554 | $ | 3,205 | $ | 1,826 | $ | 17,854 | $ | 110,769 |
| Special mention | - | - | - | - | 574 | - | 100 | 674 | ||||||||
| Substandard | 296 | - | 702 | 2,387 | 33 | - | 60 | 3,478 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total commercial business | $ | 16,951 | $ | 4,056 | $ | 49,321 | $ | 20,941 | $ | 3,812 | $ | 1,826 | $ | 18,014 | $ | 114,921 |
| Current period gross charge-offs | $ | 388 | $ | - | $ | 1,167 | $ | 56 | $ | - | $ | - | $ | - | $ | 1,611 |
| Other consumer | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 46 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 46 |
| Special mention | - | - | - | - | - | - | - | - | ||||||||
| Substandard | - | - | - | - | - | - | - | - | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total other consumer | $ | 46 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 46 |
| Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
| Total | ||||||||||||||||
| Risk rating | ||||||||||||||||
| Pass | $ | 71,133 | $ | 63,848 | $ | 158,938 | $ | 109,463 | $ | 33,377 | $ | 71,112 | $ | 26,811 | $ | 534,682 |
| Special mention | - | 1,161 | 333 | 116 | 574 | - | 150 | 2,334 | ||||||||
| Substandard | 296 | - | 1,773 | 2,387 | 33 | - | 60 | 4,549 | ||||||||
| Doubtful | - | - | - | - | - | - | - | - | ||||||||
| Total | $ | 71,429 | $ | 65,009 | $ | 161,044 | $ | 111,966 | $ | 33,984 | $ | 71,112 | $ | 27,021 | $ | 541,565 |
| Current period gross charge-offs | $ | 388 | $ | - | $ | 1,167 | $ | 56 | $ | - | $ | 187 | $ | - | $ | 1,798 |
The following tables present non-performing loans by classes of the loan portfolio as of September 30, 2025 and *December 31, 2024 (*in thousands):
| September 30, 2025 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Non-accrual loans | **** | **** | **** | **** | ||||||
| With a Related Allowance | Without a Related Allowance | Total | 90 Days<br> <br>or More Past Due and Accruing^(1)^ | Total Non-Performing | ||||||
| One-to-four family residential owner-occupied | $ | - | $ | 299 | $ | 299 | $ | 390 | $ | 689 |
| Commercial real estate | - | 1,501 | 1,501 | 1,170 | 2,671 | |||||
| Commercial business | 1,005 | 1,425 | 2,430 | 539 | 2,969 | |||||
| Total | $ | 1,005 | $ | 3,225 | $ | 4,230 | $ | 2,099 | $ | 6,329 |
__________________________
| (1) | These loans are well secured and in the process of collection. |
|---|
As part of the discontinued operations of OCH, the Bank retained approximately 60 commercial business loans totaling $4.4 million, which were classified as non-accrual. As of September 30, 2025, the value of these total $860,000, made up of approximately 24 loans. The Bank continues to monitor these loans for collectability.
18
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 - Loans Receivable, Net and Allowance for Credit Losses (Continued)
| December 31, 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Non-accrual loans | ||||||||||
| With a Related Allowance | Without a Related Allowance | Total | 90 Days<br> <br>or More Past Due and Accruing | Total Non-Performing | ||||||
| One-to-four family residential owner occupied | $ | - | $ | 299 | $ | 299 | $ | 395 | $ | 694 |
| Commercial real estate | - | 1,519 | 1,519 | 167 | 1,686 | |||||
| Commercial business | 1,097 | 2,680 | 3,777 | 164 | 3,941 | |||||
| Total | $ | 1,097 | $ | 4,498 | $ | 5,595 | $ | 726 | $ | 6,321 |
For the three and nine months ended September 30, 2025 and September 30, 2024 there was no interest income recognized on non-accrual loans on a cash basis. There was $54,000 and $346,000 of interest income foregone on non-accrual loans for the three and nine months ended September 30, 2025, and $124,000 and $279,000 for the three and nine months ended September 30, 2024.
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 on one 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 September 30, 2025, there was one 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 2027 to 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 three and nine months ended *September 30, 2025 (*in thousands):
| September 30, 2025 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1-4 Family<br> <br>Residential Owner Occupied | 1-4 Family<br> <br>Residential Non-Owner Occupied | Multi-Family<br> <br>Residential | Commercial Real Estate | Construction | Home Equity | Commercial Business and Other Consumer | Total | ||||||||||||||
| For the Three Months Ended<br> <br>September 30, 2025 | |||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||
| Beginning balance | $ | 270 | $ | 168 | $ | 311 | $ | 2,364 | $ | 403 | $ | 75 | $ | 2,735 | $ | 6,326 | |||||
| Charge-offs | - | - | - | - | - | - | (278 | ) | (278 | ) | |||||||||||
| Recoveries | - | - | - | - | - | - | 11 | 11 | |||||||||||||
| Provision | 45 | (4 | ) | (8 | ) | 134 | 86 | (21 | ) | 201 | 433 | ||||||||||
| Ending balance | $ | 315 | $ | 164 | $ | 303 | $ | 2,498 | $ | 489 | $ | 54 | $ | 2,669 | $ | 6,492 | |||||
| For the Nine Months Ended<br> <br>September 30, 2025 | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Allowance for credit losses: | |||||||||||||||||||||
| Beginning balance | $ | 177 | $ | 178 | $ | 442 | $ | 2,337 | $ | 156 | $ | 56 | $ | 3,130 | $ | 6,476 | |||||
| Charge-offs | - | - | - | - | - | - | (1,301 | ) | (1,301 | ) | |||||||||||
| Recoveries | - | - | - | - | - | - | 96 | 96 | |||||||||||||
| Provision | 138 | (14 | ) | (139 | ) | 161 | 333 | (2 | ) | 744 | 1,221 | ||||||||||
| Ending balance | $ | 315 | $ | 164 | $ | 303 | $ | 2,498 | $ | 489 | $ | 54 | $ | 2,669 | $ | 6,492 |
19
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 - Loans Receivable, Net and Allowance for Credit Losses (Continued)
The Bank allocated decreased allowance for credit loss provisions to the multi-family residential loan portfolio classes for the three and nine months ended September 30, 2025, due primarily to changes in quantitative factors and qualitative factors associated with the current economic environment in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the commercial real estate loan portfolio class for the three and nine months ended September 30, 2025, due primarily to changes in qualitative and quantitative factors associated with the current economic environment in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the construction loan portfolio classes for the three and nine months ended September 30, 2025, due primarily to changes in qualitative factors associated with the current economic environment in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the commercial business loan portfolio class for the three and nine months ended September 30, 2025, due primarily to changes in qualitative factors associated with the current economic environment in this portfolio class.
Following is a summary, by loan portfolio class, of changes in the allowance for credit losses for the three and nine months ended *September 30, 2024 (*in thousands):
| September 30, 2024 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the Three Months Ended<br> September 30, 2024 | 1-4 Family<br> <br>Residential Owner Occupied | 1-4 Family<br> <br>Residential Non-Owner Occupied | Multi-Family<br> <br>Residential | Commercial Real Estate | Construction | Home Equity | Commercial Business and Other Consumer | Total | ||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||
| Beginning balance | $ | 166 | $ | 210 | $ | 427 | $ | 2,881 | $ | 563 | $ | 66 | $ | 3,191 | $ | 7,504 | ||||||
| Charge-offs | - | - | - | - | - | - | (114 | ) | (114 | ) | ||||||||||||
| Recoveries | - | - | - | - | - | - | 3 | 3 | ||||||||||||||
| Provision | 13 | (4 | ) | 374 | (112 | ) | (104 | ) | (3 | ) | (164 | ) | - | |||||||||
| Ending balance | $ | 179 | $ | 206 | $ | 801 | $ | 2,769 | $ | 459 | $ | 63 | $ | 2,916 | $ | 7,393 | ||||||
| For the Nine Months Ended<br> September 30, 2024 | ||||||||||||||||||||||
| Allowance for credit losses | ||||||||||||||||||||||
| Beginning balance | $ | 153 | $ | 219 | $ | 420 | $ | 2,784 | $ | 583 | $ | 61 | $ | 2,538 | $ | 6,758 | ||||||
| Charge-offs | - | - | - | - | - | - | (452 | ) | (452 | ) | ||||||||||||
| Recoveries | - | - | - | - | - | - | 3 | 3 | ||||||||||||||
| Provision | 26 | (13 | ) | 381 | (15 | ) | (124 | ) | 2 | 827 | 1,084 | |||||||||||
| Ending balance | $ | 179 | $ | 206 | $ | 801 | $ | 2,769 | $ | 459 | $ | 63 | $ | 2,916 | $ | 7,393 |
The Bank allocated decreased allowance for credit loss provisions to the commercial real estate loan portfolio classes for the three and nine months ended September 30, 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 three and nine months ended September 30, 2024, due primarily to decrease in loan balances and changes in qualitative factors associated with the current economic environment in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the multi-family residential loan portfolio classes for the three and nine months ended September 30, 2024, due primarily to changes in qualitative factors associated with the current economic environment in this portfolio class. The Bank allocated increased allowance for credit loss provisions to the commercial business loan portfolio classes for the nine months ended September 30, 2024, due primarily to changes in qualitative 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.
20
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 6 - Loans Receivable, Net and Allowance for Credit Losses (Continued)
The following tables present the classes of the loan portfolio summarized by the past due status as of September 30, 2025 and *December 31, 2024 (*in thousands):
| September 30, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 30-89 Days Past Due | 90 Days or More Past Due | Current | Total Loans<br> <br>Receivable | |||||
| One-to-four family residential owner occupied | $ | 663 | $ | 689 | $ | 41,726 | $ | 43,078 |
| One-to-four family residential non-owner occupied | 404 | - | 31,043 | 31,447 | ||||
| Multi-family residential | 1,870 | - | 39,251 | 41,121 | ||||
| Commercial real estate | 7,563 | 2,671 | 297,255 | 307,489 | ||||
| Construction | 97 | - | 23,387 | 23,484 | ||||
| Home equity | - | - | 5,412 | 5,412 | ||||
| Commercial business | 1,318 | 2,969 | 96,682 | 100,969 | ||||
| Other consumer | - | - | 37 | 37 | ||||
| Total | $ | 11,915 | $ | 6,329 | $ | 534,793 | $ | 553,037 |
| December 31, 2024 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 30-89 Days Past Due | 90 Days or More Past Due | Current | Total Loans Receivable | |||||
| One-to-four family residential owner occupied | $ | 209 | $ | 694 | $ | 25,024 | $ | 25,927 |
| One-to-four family residential non-owner occupied | 569 | - | 33,004 | 33,573 | ||||
| Multi-family residential | 85 | - | 45,327 | 45,412 | ||||
| Commercial real estate | 10,063 | 1,686 | 285,878 | 297,627 | ||||
| Construction | 4,528 | - | 13,792 | 18,320 | ||||
| Home equity | 35 | - | 5,704 | 5,739 | ||||
| Commercial business | 873 | 3,941 | 110,107 | 114,921 | ||||
| Other consumer | - | - | 46 | 46 | ||||
| Total | $ | 16,362 | $ | 6,321 | $ | 518,882 | $ | 541,565 |
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 September 30, 2025, the Company has initiated formal foreclosure proceedings on $699,000 of one-to-four family residential owner occupied loans and commercial real estate loans, which have not yet been transferred into foreclosed assets.
Note 7 – 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 a ten year period based upon the annual retention rate of the book of business. The balance of other intangible asset at September 30, 2025 and 2024 was $40,000, and $89,000, respectively, which is net of accumulated amortization of $445,000 and $396,000, respectively. Amortization expense for both the three and nine months ended September 30, 2025 and 2024 amounted to approximately $12,000 and $36,000, respectively.
21
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 8 – Deposits
Deposits consist of the following classifications (in thousands):
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||
|---|---|---|---|---|
| Non-interest bearing checking accounts | $ | 61,133 | $ | 59,783 |
| Interest bearing checking accounts^(1)^ | 40,860 | 47,802 | ||
| Savings accounts | 729 | 492 | ||
| Money market accounts^(2)^ | 111,681 | 162,285 | ||
| Certificates of deposit | 339,791 | 282,890 | ||
| Total deposits | $ | 554,194 | $ | 553,252 |
_______________________________
| (1) | The Company has identified five interest bearing brokered checking account deposit customers that accounted for approximately 7.4% of total deposits at September 30, 2025, and one major interest bearing checking account deposit customer, a different customer than the brokered checking account deposit customer, that accounted for approximately 8.6% of total deposits at December 31, 2024. At September 30, 2025, the outstanding balance of the five deposit customer’s interest bearing brokered checking account totaled approximately $40.9 million. At December 31, 2024, the outstanding balance of the major deposit customer’s interest bearing checking account totaled approximately $47.8 million. |
|---|---|
| (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 6.3% and 18.1% of total deposits at September 30, 2025 and December 31, 2024, respectively. At September 30, 2025 and December 31, 2024, the combined outstanding balances of the major deposit customer’s money market accounts totaled approximately $35.0 million and $100.0 million, respectively. |
| --- | --- |
Note 9 – Borrowings
Federal Home Loan Bank (“FHLB”) advances consist of the following at September 30, 2025 and *December 31, 2024 (*in thousands):
| September 30, 2025 | December 31, 2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Amount | Weighted Interest Rate | Amount | Weighted Interest Rate | |||||||
| FHLB Borrowings | $ | 45,000 | 4.69 | % | $ | 47,855 | 4.50 | % |
The following table presents the balance and unamortized issuance costs of the subordinated debt and senior debt at September 30, 2025 are as follows (in thousands):
| Principal | Unamortized Debt Issuance Costs | Net | ||||
|---|---|---|---|---|---|---|
| 6.5% subordinated notes, due December 31, 2028 | $ | 8,000 | $ | - | $ | 8,000 |
| 11.0% senior notes, due March 1, 2028 | $ | 9,750 | $ | 414 | $ | 9,336 |
| 11.0% senior notes, due March 1, 2028 | $ | 250 | $ | 11 | $ | 239 |
The balance of senior debt, net of unamortized debt issuance costs, was $9.6 million at September 30, 2025.
The balance of subordinated debt was $8.0 million and $22.0 million at September 30, 2025 and December 31, 2024, respectively.
22
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 10 – Stock Compensation Plans
Employee Stock Ownership Plan ****
The Company maintains an Employee Stock Ownership Plan (ESOP) for the benefit of employees who meet the eligibility requirements of the plan. The Bank may make cash contributions to the ESOP on a quarterly basis which are allocated to participant accounts on an annual basis.
During the three and nine months ended September 30, 2025 and 2024, the Company did not make a discretionary contribution of shares to the ESOP. During the nine months ended September 30, 2025 and 2024, the Company recognized $108,000 and $94,000 of ESOP expense, respectively.
Stock Incentive Plans – Share Awards ****
In May 2018, the shareholders of Quaint Oak Bancorp approved the adoption of the 2018 Stock Incentive Plan (the “2018 Stock Incentive Plan”). The 2018 Stock Incentive Plan approved by shareholders in May 2018 covered a total of 155,000 shares, of which 38,750, or 25%, may be restricted stock awards, for a balance of 116,250 stock options assuming all the restricted shares are awarded.
In May 2023, the shareholders of Quaint Oak Bancorp approved the adoption of the 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”). The 2023 Stock Incentive Plan approved by shareholders in May 2023 covered a total of 175,000 shares, of which 43,750, or 25%, may be restricted stock awards, for a balance of 131,250 stock options assuming all the restricted shares are awarded. In September 2025, 12,500 shares that were available under the 2023 Stock Incentive Plan were granted.
As of September 30, 2025, a total of 38,000 share awards were unvested under the 2018 and 2023 Stock Incentive Plan and no share awards were available for future grant under the 2023 Stock Incentive Plan and the 2018 Stock Incentive Plan. The 2018 and 2023 Stock Incentive Plan share awards have vesting periods of five years.
23
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 10 – Stock Compensation Plans
Stock Incentive Plans – Share Awards ****
A summary of share award activity under the Company’s 2018 and 2023 Stock Incentive Plans as of September 30, 2025 and changes during the nine months ended September 30, 2025 is as follows:
| September 30, 2025 | |||||
|---|---|---|---|---|---|
| Number of Shares | Weighted<br> <br>Average Grant Date Fair Value | ||||
| Unvested at the beginning of the period | 36,000 | $ | 18.00 | ||
| Granted | 12,500 | 10.15 | |||
| Vested | (8,500 | ) | 18.00 | ||
| Forfeited | (2,000 | ) | 18.00 | ||
| Unvested at the end of the period | 38,000 | $ | 15.42 |
Compensation expense on the restricted stock awards is recognized ratably over the five-year vesting period in an amount which is equal to the fair value of the common stock at the date of grant. During both the three months ended September 30, 2025 and 2024, the Company recognized approximately $41,000 of compensation expense. During both the three months ended September 30, 2025 and 2024, the Company recognized a tax benefit of approximately $9,000. During both the nine months ended September 30, 2025 and 2024, the Company recognized approximately $122,000 of compensation expense. During both the nine months ended September 30, 2025 and 2024, the Company recognized a tax benefit of approximately $26,000. As of September 30, 2025, approximately $552,000 in additional compensation expense will be recognized over the remaining service period of approximately 3.8 years.
Stock Incentive Plans – Stock Options ****
The 2018 Stock Incentive Plan approved by shareholders in May 2018 covered a total of 155,000 shares, of which 116,250 may be stock options assuming all the restricted shares are awarded. The outstanding options granted in 2018 remain exercisable until May 2028, to the extent still outstanding. In May 2023, the shareholders of Quaint Oak Bancorp approved the adoption of the 2023 Stock Incentive Plan. The 2023 Stock Incentive Plan approved by shareholders in May 2018 covered a total of 175,000 shares, of which 131,250 may be stock options assuming all the restricted shares are awarded.
All incentive stock options issued under the 2018 and 2023 Stock Incentive Plans are intended to comply with the requirements of Section 422 of the Internal Revenue Code. Options will become vested and exercisable over a five-year period and are generally exercisable for a period of ten years after the grant date.
In September 2025, 42,000 shares that were available under the 2023 Stock Incentive Plan were granted. As of September 30, 2025, a total of 254,033 grants of stock options were outstanding under the 2018 and 2023 Stock Incentive Plans and no stock options were available for future grant under the 2018 and 2023 Stock Incentive Plans. Options will become vested and exercisable over a five-year period and are generally exercisable for a period of ten years after the grant date.
24
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 10 – Stock Compensation Plans (Continued)
Stock Incentive Plans – Stock Options ****
A summary of option activity under the Company’s 2018 and 2023 Stock Incentive Plans as of September 30, 2025 and changes during the nine months ended September 30, 2025 is as follows:
| September 30, 2025 | |||||||
|---|---|---|---|---|---|---|---|
| Number of<br> <br>Shares | Weighted<br> <br>Average Exercise Price | Weighted<br> <br>Average Remaining Contractual Life (in years) | |||||
| Outstanding at the beginning of the period | 224,033 | $ | 15.98 | 6.3 | |||
| Granted | 42,000 | 10.15 | 9.9 | ||||
| Exercised | - | - | - | ||||
| Forfeited | (12,000 | ) | 15.65 | 6.3 | |||
| Outstanding at end of period | 254,033 | $ | 15.03 | 6.3 | |||
| Exercisable at end of period | 136,533 | $ | 15.05 | 4.5 |
During both the three months ended September 30, 2025 and 2024, the Company recognized approximately $20,000 of compensation expense on stock options. During both three months ended September 30, 2025 and 2024, the Company recognized a tax benefit of approximately $1,000. During both the nine months ended September 30, 2025 and 2024, the Company recognized approximately $60,000 of compensation expense on stock options. During both the nine months ended September 30, 2025 and 2024, the Company recognized a tax benefit of approximately $4,000. As of September 30, 2025, approximately $313,000 in additional compensation expense will be recognized over the remaining service period of approximately 3.8 years.
Note 11 – Fair Value Measurements and Fair Values of Financial Instruments
Fair value estimates are based on quoted market prices, if available, quoted market prices of similar assets or liabilities, or the present value of expected future cash flows and other valuation techniques. These valuations are significantly affected by discount rates, cash flow assumptions, and risk assumptions used. Therefore, fair values estimates may not be substantiated by comparison to independent markets and are not intended to reflect the proceeds that may be realizable in an immediate settlement of the instruments.
Fair value is determined at one point in time and is not representative of future value. These amounts do not reflect the total value of a going concern organization. Management does not have the intention to dispose of a significant portion of its assets and liabilities and therefore, the unrealized gains or losses should not be interpreted as a forecast of future earnings and cash flows.
25
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 11 – Fair Value Measurements and Fair Values of Financial Instruments (Continued)
The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels of pricing are as follows:
| Level I: | Quoted prices are available in active markets for identical assets or liabilities as of the reported date. |
|---|---|
| Level II: | Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed. |
| Level III: | Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
This hierarchy requires the use of observable market data when available.
The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 20 of the Company’s 2024 Annual Report on Form 10-K, as the fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit and non-performance risk. Loans are considered a Level 3 classification.
The following is a discussion of assets and liabilities measured at fair value on a recurring and non-recurring basis and valuation techniques applied:
Investment Securities Available For Sale: The fair value of securities available for sale are determined by using matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
We may be required from time to time to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 11 – Fair Value Measurements and Fair Values of Financial Instruments (Continued)
Individually Evaluated Loans: Individually evaluated loans are carried at the lower of cost or the fair value of the collateral for collateral-dependent loans less estimated costs to sell. The use of independent appraisals, discounted cash flow models and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral and impaired loans are therefore classified within Level 3 of the fair value hierarchy.
The following table presents the collateral-dependent loans by portfolio segment and collateral type at September 30, 2025:
| September 30, 2025 | ||||||
|---|---|---|---|---|---|---|
| Real Estate | Business Assets | Total | ||||
| One-to-four family residential owner occupied | $ | 299 | $ | - | $ | 299 |
| Commercial real estate | 1,500 | - | 1,500 | |||
| Commercial business | - | 1,426 | 1,426 | |||
| Total | $ | 1,799 | $ | 1,426 | $ | 3,225 |
The table below sets forth the financial assets and liabilities that were accounted for on a recurring and nonrecurring basis by level within the fair value hierarchy as of *September 30, 2025 (*in thousands):
| September 30, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fair Value Measurements Using: | ||||||||
| Total Fair Value | Quoted Prices in Active Markets for Identical Assets<br> <br>(Level 1) | Significant Other Observable Inputs<br> <br>(Level 2) | Unobservable Inputs<br> <br>(Level 3) | |||||
| Recurring fair value measurements: | **** | **** | **** | **** | **** | **** | **** | **** |
| Investment securities available for sale | ||||||||
| Government National Mortgage Association mortgage-backed securities | $ | 1,037 | $ | - | $ | 1,037 | $ | - |
| Federal National Mortgage Association mortgage- backed securities | 34 | - | 34 | - | ||||
| Total investment securities available for sale | $ | 1,071 | $ | - | $ | 1,071 | $ | - |
| Total recurring fair value measurements | $ | 1,071 | $ | - | $ | 1,071 | $ | - |
| Nonrecurring fair value measurements | **** | **** | **** | **** | **** | **** | **** | **** |
| Collateral-dependent loans | $ | 3,225 | $ | - | $ | - | $ | 3,225 |
| Total nonrecurring fair value measurements | $ | 3,225 | $ | - | $ | - | $ | 3,225 |
The table below sets forth the financial assets and liabilities that were accounted for on a recurring and nonrecurring basis by level within the fair value hierarchy as of *December 31, 2024 (*in thousands):
| December 31, 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fair Value Measurements Using: | ||||||||
| Total Fair Value | Quoted Prices in Active Markets for Identical Assets<br> <br>(Level 1) | Significant Other Observable Inputs<br> <br>(Level 2) | Unobservable Inputs<br> <br>(Level 3) | |||||
| Recurring fair value measurements: | ||||||||
| Investment securities available for sale | ||||||||
| Government National Mortgage Association mortgage-backed securities | $ | 1,630 | $ | - | $ | 1,630 | $ | - |
| Federal National Mortgage Association mortgage- backed securities | 36 | - | 36 | - | ||||
| Total investment securities available for sale | $ | 1,666 | $ | - | $ | 1,666 | $ | - |
| Total recurring fair value measurements | $ | 1,666 | $ | - | $ | 1,666 | $ | - |
27
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 11 – Fair Value Measurements and Fair Values of Financial Instruments (Continued)
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has used Level 3 inputs to determine fair value as of *September 30, 2025 (*in thousands):
| September 30, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Quantitative Information About Level 3 Fair Value Measurements | ||||||||
| Total Fair Value | Valuation Techniques | Unobservable Input | Range (Weighted Average) | |||||
| Collateral-dependent loans | $ | 3,225 | Appraisal of collateral (1) | Appraisal adjustments (2) | 8% | (8% | ) |
_______________
| (1) | Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are identifiable. |
|---|---|
| (2) | Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percentage of the appraisal. |
| --- | --- |
The fair values of the Company’s financial instruments that are not required to be measured or reported at fair value were as follows at September 30, 2025 and December 31, 2024 (in thousands):
| **** | **** | **** | **** | Fair Value Measurements at | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| **** | **** | **** | **** | September 30, 2025 | ||||||
| Carrying Amount | Fair Value Estimate | Quoted Prices in Active Markets for Identical Assets<br> <br>(Level 1) | Significant Other Observable Inputs<br> <br>(Level 2) | Unobservable Inputs<br> <br>(Level 3) | ||||||
| Financial Assets | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Investment in interest-earning time deposits | $ | 912 | $ | 951 | $ | - | $ | - | $ | 951 |
| Loans held for sale | 54,508 | 56,970 | - | 56,970 | - | |||||
| Loans receivable, net | 547,116 | 540,252 | - | - | 540,252 | |||||
| Financial Liabilities | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Deposits | 554,194 | 561,506 | 214,402 | - | 347,104 | |||||
| Senior Debt | 9,575 | 9,817 | - | - | 9,817 | |||||
| Subordinated debt | 8,000 | 7,840 | - | - | 7,840 |
28
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 11 – Fair Value Measurements and Fair Values of Financial Instruments (Continued)
| Fair Value Measurements at | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | ||||||||||
| Carrying Amount | Fair Value Estimate | Quoted Prices in Active Markets for Identical Assets<br> <br>(Level 1) | Significant Other Observable Inputs<br> <br>(Level 2) | Unobservable Inputs<br> <br>(Level 3) | ||||||
| Financial Assets | ||||||||||
| Investment in interest-earning time deposits | $ | 912 | $ | 964 | $ | - | $ | - | $ | 964 |
| Loans held for sale | 64,281 | 65,624 | - | 65,624 | - | |||||
| Loans receivable, net | 534,693 | 518,295 | - | - | 518,295 | |||||
| Financial Liabilities | ||||||||||
| Deposits | 553,252 | 560,701 | 270,361 | - | 290,340 | |||||
| FHLB long-term borrowings | 2,855 | 2,848 | - | - | 2,848 | |||||
| Subordinated debt | 22,000 | 21,733 | - | - | 21,733 |
For cash and cash equivalents, accrued interest receivable, investment in FHLB stock, bank-owned life insurance, accrued interest payable, FHLB short term borrowings, and advances from borrowers for taxes and insurance, the carrying value is a reasonable estimate of the fair value and are considered Level 1 measurements.
Note 12 – Operating Segments
ASC Topic 820 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Company’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company has applied the aggregation criterion set forth in this codification to the results of its operations. The Company's operations currently consist of two reportable operating segments: Banking and Oakmont Commercial. The Company offers different products and services through its two segments. The accounting policies of the segments are generally the same as those of the consolidated company.
The Banking Segment generates its revenues primarily from its lending, deposit gathering and fee business activities. The profitability of this segment's operations depends primarily on its net interest income after provision for credit losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for credit losses. The provision for credit losses is almost entirely dependent on changes in the Banking Segment's loan portfolio and management’s assessment of the collectability of the loan portfolio as well as prevailing economic and market conditions. The profitability of this segment’s operations also depends on the generation of non-interest income which includes fees and commissions generated by Quaint Oak Bank and its wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, and Quaint Oak Insurance Agency, LLC, which are included in the Banking Segment for segment reporting purposes as the operating results are monitored by the Chief Operating Decision Maker collectively. The Banking Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of depositors and other customers, federal deposit insurance funds and the banking system as a whole. These laws and regulations govern such areas as capital, permissible activities, allowance for credit losses, loans and investments, and rates of interest that can be charged on loans. For segment reporting purposes, Quaint Oak Bancorp, Inc. is included as part of the Company’s Banking segment.
29
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 12 – Operating Segments (Continued)
The Oakmont Commercial Segment originates commercial real estate loans which are sold into the secondary market along with the loans’ servicing rights. The profitability of this segment’s operations depends primarily on the gains realized from the sale of loans and processing fees. The Oakmont Commercial Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of consumers.
The following tables presents summary financial information for the reportable segments (in thousands):
| As of or for the Three Months Ended September 30, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||||||||||||
| Quaint Oak Bank(1) | Oakmont Commercial, LLC | Consolidated | Quaint Oak Bank(2) | Oakmont Commercial, LLC | Consolidated | |||||||||||
| Net Interest Income | $ | 4,193 | $ | 201 | $ | 4,394 | $ | 3,902 | $ | 346 | $ | 4,248 | ||||
| Provision for (Recovery of) Credit Losses | 425 | - | 425 | **** | 504 | **** | (381 | ) | **** | 123 | ||||||
| Net Interest Income after Provision for (Recovery of) Credit Losses | 3,768 | 201 | 3,969 | **** | 3,398 | **** | 727 | **** | 4,125 | |||||||
| Non-Interest Income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Mortgage banking, equipment lending and title abstract fees | 289 | - | 289 | 237 | - | 237 | ||||||||||
| Insurance commissions | 196 | - | 196 | 198 | - | 198 | ||||||||||
| Other fees and services charges | (6 | ) | 20 | 14 | 106 | 10 | 116 | |||||||||
| Net loan servicing income | - | - | - | 2 | - | 2 | ||||||||||
| Income from bank-owned life insurance | 33 | - | 33 | 30 | - | 30 | ||||||||||
| Net gain on loans held for sale | 633 | 317 | 950 | 503 | - | 503 | ||||||||||
| Gain on the sale of SBA loans | 266 | - | 266 | 124 | - | 124 | ||||||||||
| Total Non-Interest Income | 1,411 | 337 | 1,748 | 1,200 | 10 | 1,210 | ||||||||||
| Non-Interest Expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Salaries and employee benefits | 3,692 | 301 | 3,993 | 3,308 | 175 | 3,483 | ||||||||||
| Directors’ fees and expenses | 66 | - | 66 | 52 | - | 52 | ||||||||||
| Occupancy and equipment | 488 | 1 | 489 | 330 | - | 330 | ||||||||||
| Data processing | 436 | - | 436 | 321 | - | 321 | ||||||||||
| Professional fees | 119 | 15 | 134 | 17 | 9 | 26 | ||||||||||
| FDIC deposit insurance assessment | 131 | - | 131 | 158 | - | 158 | ||||||||||
| Advertising | 25 | 3 | 28 | 39 | 3 | 42 | ||||||||||
| Amortization of other intangible | 12 | - | 12 | 12 | - | 12 | ||||||||||
| Other | 436 | 3 | 439 | 491 | 9 | 500 | ||||||||||
| Total Non-Interest Expense | 5,405 | 323 | 5,728 | 4,728 | 196 | 4,924 | ||||||||||
| Pretax Segment Profit (Loss) | $ | (226 | ) | $ | 215 | $ | (11 | ) | $ | (130 | ) | $ | 541 | $ | 411 | |
| Segment Assets | $ | 628,171 | $ | 48,960 | $ | 677,131 | $ | 628,521 | $ | 73,084 | $ | 701,605 |
____________________________
| (1) | Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Abstract, Quaint Oak Insurance Agency and QOB Properties. |
|---|---|
| (2) | Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency and QOB Properties. |
| --- | --- |
30
Quaint Oak Bancorp, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 12 – Operating Segments (Continued)
| As of or for the Nine Months Ended September 30, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | ||||||||||||||||
| Quaint Oak Bank(1) | Oakmont Commercial, LLC | Consolidated | Quaint Oak Bank(2) | Oakmont Commercial, LLC | Consolidated | ||||||||||||
| Net Interest Income | $ | 12,208 | $ | 835 | $ | 13,043 | $ | 13,011 | $ | 721 | $ | 13,732 | |||||
| Provision for (Recovery of) Credit Losses | 1,303 | - | 1,303 | **** | 1,514 | **** | (296 | ) | **** | 1,218 | |||||||
| Net Interest Income after Provision for (Recovery of) Credit Losses | 10,905 | 835 | 11,740 | **** | 11,497 | **** | 1,017 | **** | 12,514 | ||||||||
| Non-Interest Income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Mortgage banking, equipment lending and title abstract fees | 715 | - | 715 | 627 | - | 627 | |||||||||||
| Real estate sales commissions, net | - | - | - | 20 | - | 20 | |||||||||||
| Insurance commissions | 577 | - | 577 | 526 | - | 526 | |||||||||||
| Other fees and services charges | (96 | ) | 23 | (73 | ) | 452 | 130 | 582 | |||||||||
| Net loan servicing income | 5 | - | 5 | 5 | - | 5 | |||||||||||
| Income from bank-owned life insurance | 95 | - | 95 | 87 | - | 87 | |||||||||||
| Net gain on loans held for sale | 1,633 | 1,419 | 3,052 | 1,669 | 329 | 1,998 | |||||||||||
| Gain on the sale of SBA loans | 1,084 | - | 1,084 | 251 | - | 251 | |||||||||||
| Total Non-Interest Income | 4,013 | 1,442 | 5,455 | 3,637 | 459 | 4,096 | |||||||||||
| Non-Interest Expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Salaries and employee benefits | 10,337 | 948 | 11,285 | 9,923 | 895 | 10,818 | |||||||||||
| Directors’ fees and expenses | 196 | - | 196 | 153 | - | 153 | |||||||||||
| Occupancy and equipment | 1,350 | 2 | 1,352 | 996 | - | 996 | |||||||||||
| Data processing | 1,277 | - | 1,277 | 894 | - | 894 | |||||||||||
| Professional fees | 486 | 45 | 531 | 298 | 25 | 323 | |||||||||||
| FDIC deposit insurance assessment | 387 | - | 387 | 494 | - | 494 | |||||||||||
| Advertising | 209 | 18 | 227 | 191 | 11 | 202 | |||||||||||
| Amortization of other intangible | 36 | - | 36 | 36 | - | 36 | |||||||||||
| Other | 1,494 | 20 | 1,514 | 1,343 | 25 | 1,368 | |||||||||||
| Total Non-Interest Expense | 15,772 | 1,033 | 16,805 | 14,328 | 956 | 15,284 | |||||||||||
| Pretax Segment (Loss) Profit | $ | (854 | ) | $ | 1,244 | $ | 390 | $ | 806 | $ | 520 | $ | 1,326 | ||||
| Net Loss Attributable to Noncontrolling Interest | $ | - | $ | - | $ | - | $ | (406 | ) | $ | - | $ | (406 | ) | |||
| Segment Assets | $ | 628,171 | $ | 48,960 | $ | 677,131 | $ | 628,521 | $ | 73,084 | $ | 701,605 |
__________________________________
| (1) | Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Abstract, Quaint Oak Insurance Agency and QOB Properties. |
|---|---|
| (2) | Includes Quaint Oak Bancorp, Inc. and the Bank’s subsidiaries, Quaint Oak Mortgage, Quaint Oak Real Estate, Quaint Oak Abstract, Quaint Oak Insurance Agency and QOB Properties. |
| --- | --- |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements Are Subject to Change
This Quarterly Report contains certain forward-looking statements (as defined in the Securities Exchange Act of 1934 and the regulations thereunder). Forward-looking statements are not historical facts but instead represent only the beliefs, expectations or opinions of the Company and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, or words of similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly.” Forward-looking statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks, uncertainties and assumptions, many of which are difficult to predict and generally are beyond the control of and its management, that could cause actual results to differ materially from those expressed in, or implied or projected by, forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) economic and competitive conditions which could affect the volume of loan originations, deposit flows and real estate values; (2) the levels of non-interest income and expense and the amount of credit losses; (3) competitive pressure among depository institutions increasing significantly; (4) changes in the interest rate environment causing reduced interest margins; (5) general economic conditions, either nationally or in the markets in which the Company is or will be doing business, being less favorable than expected; (6) political and social unrest, including acts of war or terrorism or (7) legislation or changes in regulatory requirements adversely affecting the business in which the Company is or will be engaged. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
General
The Company was formed in connection with the Bank’s conversion to a stock savings bank completed on July 3, 2007. The Company’s results of operations are dependent primarily on the results of the Bank, which is a wholly owned subsidiary of the Company, along with the Bank’s wholly owned subsidiaries. The Bank’s results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on its loan and investment portfolios and the cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by provisions for credit losses, fee income and other non-interest income and non-interest expense. Non-interest expense principally consists of compensation, directors’ fees and expenses, office occupancy and equipment expense, data processing expense, professional fees, advertising expense, FDIC deposit insurance assessment, and other expenses. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial condition and results of operations.
32
At September 30, 2025 the Bank has five wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Abstract, LLC, QOB Properties, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, each a Pennsylvania limited liability company. Quaint Oak Mortgage offers mortgage banking in the Lehigh Valley, Delaware Valley and Philadelphia County regions of Pennsylvania and began operations in February, 2019. Quaint Oak Abstract offers title abstract services primarily in the Lehigh Valley region of Pennsylvania and began operation in July 2009. QOB Properties, LLC began operations in July 2012 and holds Bank properties acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure. Quaint Oak Insurance Agency, LLC began operations in August 2016 and provides a broad range of personal and commercial insurance coverage solutions. Oakmont Commercial, LLC was formed in October 2021 and operates as a nationwide specialty commercial real estate financing company. On March 29, 2024, Quaint Oak Bank sold its 51% interest in Oakmont Capital Holdings, LLC (“OCH”), a multi-state equipment finance company based in West Chester, Pennsylvania. The decision was based on a number of strategic priorities and other factors. As a result of this action, Quaint Oak Bancorp classified the operations of OCH as discontinued operations under ASC 205-20 and ceased all equipment loan originations. Also on March 29, 2024, the Company discontinued the operations of Quaint Oak Real Estate, LLC (“Quaint Oak Real Estate”), a 100% wholly owned subsidiary of the Bank. Quaint Oak Real Estate was engaged in the real estate brokerage business. All significant intercompany balances and transactions have been eliminated.
Critical Accounting Policies
The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the consolidated financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. Critical accounting policies comprise those that management believe are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the current period, or in future periods.
Our critical accounting policies involving significant judgments and assumptions used in the preparation of the consolidated financial statements as of September 30, 2025 have remained unchanged from the disclosures presented in our 2024 Annual Report on Form 10-K.
Comparison of Financial Condition at September 30, 2025 and December 31, 2024
General. The Company’s total assets at September 30, 2025 were $677.1 million, a decrease of $8.0 million, or 1.2%, from $685.2 million at December 31, 2024. This decrease in total assets was primarily due to a $10.7 million, or 17.0%, decrease in cash and cash equivalents, a $9.8 million, or 15.2%, decrease in loans held for sale, and a $595,000, or 35.7%, decrease in investment securities available for sale. Also contributing to the decrease in assets was a $123,000, or 5.6%, decrease in investment in Federal Home Loan Bank stock, at cost, a $39,000, or 2.4%, decrease in premises and equipment, net, and a $37,000, or 48.1%, decrease in other intangible, net of accumulated amortization. Partially offsetting the decrease in total assets was a $12.4 million, or 2.3%, increase in loans receivable, net of allowance for credit losses, a $378,000, or 9.5%, increase in accrued interest receivable, a $331,000, or 4.3%, increase in prepaid expenses and other assets, and a $95,000, or 2.1%, increase in bank-owned life insurance.
Cash and Cash Equivalents. Cash and cash equivalents decreased $10.7 million, or 17.0%, from $63.0 million at December 31, 2024 to $52.3 million at September 30, 2025, as a result of reduced correspondent banking activity and reduction in a money market deposit through a deposit placement agreement as the Company exited one of its correspondent banking relationships.
Investment in Interest-Earning Time Deposits. Investment in interest-earning time deposits remained at $912,000 at both September 30, 2025 and December 31, 2024.
33
Investment Securities Available for Sale. Investment securities available for sale decreased $595,000, or 35.7%, from $1.7 million at December 31, 2024 to $1.1 million at September 30, 2025, due primarily to the principal repayments on these securities during the nine months ended September 30, 2025.
Loans Held for Sale. Loans held for sale decreased $9.8 million, or 15.2%, from $64.3 million at December 31, 2024 to $54.5 million at September 30, 2025 as the Bank’s commercial real estate subsidiary, Oakmont Commercial, LLC, originated $32.7 million of commercial real estate loans during the nine months ended September 30, 2025 and sold $37.5 million of loans in the secondary market during this same period. The Bank’s mortgage banking subsidiary, Quaint Oak Mortgage, LLC, originated $88.3 million of one-to-four family residential loans during the nine months ended September 30, 2025 and sold $89.5 million of loans in the secondary market. Additionally, the Bank originated $10.4 million of SBA loans and sold $14.2 million of SBA loans in the secondary market in the same period.
Loans Receivable, Net. Loans receivable, net, increased $12.4 million, or 2.3%, to $547.1 million at September 30, 2025 from $534.7 million December 31, 2024. The largest increases within the loan portfolio occurred in one-to-four family owner occupied loans which increased $17.2 million, or 66.2%, construction loans which increased $5.2 million, or 28.2%, and commercial real estate loans, which increased $9.9 million, or 3.3%. Partially offsetting these increases were commercial business loans which decreased $14.0 million, or 12.1%, multi-family residential loans which decreased $4.3 million, or 9.5%, one-to-four family non-owner occupied loans which decreased $2.1 million, or 6.3%, and home equity loans which decreased $327,000, or 5.7%.
The following table summarizes the industry concentrations within the multi-family and commercial real estate portfolios:
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||
|---|---|---|---|---|
| (in Thousands) | ||||
| Real Estate Rental and Leasing | $ | 129,026 | $ | 135,874 |
| Health Care and Social Assistance | **** | 36,712 | 35,864 | |
| Accommodation and food services | **** | 33,352 | 33,811 | |
| Construction | **** | 23,150 | 25,087 | |
| Manufacturing | **** | 22,529 | 16,515 | |
| Other services (except public administration) | **** | 20,032 | 21,321 | |
| Retail trade | **** | 15,828 | 24,657 | |
| Wholesale trade | **** | 15,224 | 8,349 | |
| Arts, entertainment, and recreation | **** | 14,564 | 14,497 | |
| Finance and insurance | **** | 11,105 | 6,162 | |
| Administrative and support – waste services | **** | 9,635 | 4,612 | |
| Professional, scientific and technical services | **** | 7,198 | 5,686 | |
| Transportation and warehousing | **** | 4,343 | 5,901 | |
| Other | **** | 5,912 | 4,703 | |
| Total | $ | 348,610 | $ | 343,039 |
The commercial real estate and multi-family portfolio consists of 56% owner occupied commercial real estate loans and 44% of non-owner occupied commercial real estate loans as of September 30, 2025.
34
The following table summarizes the non-owner occupied commercial real estate portfolio and the percent of total loans receivable, net.
| September 30, 2025 | December 31, 2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Balance | Percent of<br> <br>Total Loans Receivable, net | Balance | Percent of<br> <br>Total Loans Receivable, net | |||||||
| (Dollars in Thousands) | ||||||||||
| Real estate rental and leasing | $ | 118,188 | 21.6 | % | $ | 123,103 | 23.0 | % | ||
| Construction | 11,079 | 2.0 | 14,987 | 2.8 | ||||||
| Health care and social assistance | 5,022 | 0.9 | 8,345 | 1.6 | ||||||
| Finance and insurance | 4,836 | 0.9 | 4,948 | 0.9 | ||||||
| Other services (except public administration) | 4,208 | 0.8 | 4,347 | 0.8 | ||||||
| Retail Trade | 2,550 | 0.5 | 2,153 | 0.4 | ||||||
| Accommodation and Food Services | 1,602 | 0.3 | 1,733 | 0.3 | ||||||
| Other | 2,094 | 0.4 | 2,172 | 0.5 | ||||||
| Total | $ | 149,579 | 27.4 | % | $ | 161,788 | 30.3 | % |
The following table summarizes the non-owner occupied commercial real estate rental and leasing loan portfolio outstanding balance, total commitment and loan to value (“LTV”) ratio by geographic location:
| September 30, 2025 | December 31, 2024 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance | Total Commitment | Weighted Average LTV | Balance | Total Commitment | Weighted Average LTV | |||||||||
| (Dollars in Thousands) | ||||||||||||||
| Pennsylvania ^(1)^ | $ | 40,253 | $ | 81,307 | 49.5 | % | $ | 44,959 | $ | 86,035 | 52.3 | % | ||
| Philadelphia | 36,883 | 75,760 | 48.7 | 36,142 | 77,810 | 46.4 | ||||||||
| Delaware | 15,287 | 32,125 | 47.6 | 15,583 | 32,125 | 48.5 | ||||||||
| New Jersey | 9,368 | 19,315 | 48.5 | 9,705 | 19,315 | 50.2 | ||||||||
| Ohio | 6,768 | 10,100 | 67.0 | 6,914 | 10,100 | 68.5 | ||||||||
| New York | 6,008 | 10,410 | 57.7 | 6,133 | 10,410 | 58.9 | ||||||||
| Other | 3,621 | 6,020 | 60.2 | 3,667 | 6,020 | 60.9 | ||||||||
| Total | $ | 118,188 | $ | 235,037 | 50.3 | % | $ | 123,103 | $ | 241,815 | 50.9 | % |
_______________________
| (1) | Pennsylvania excluding Philadelphia |
|---|
The following table summarizes the non-owner occupied commercial real estate construction loan portfolio outstanding balance, total commitment and LTV ratio by geographic location:
| September 30, 2025 | **** | **** | December 31, 2024 **** **** **** **** **** **** | **** | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance | Total Commitment | Weighted Average LTV | Balance | Total Commitment | Weighted Average LTV | |||||||||
| (Dollars in Thousands) | ||||||||||||||
| Pennsylvania ^(1)^ | $ | 6,394 | $ | 11,567 | 55.3 | % | $ | 7,477 | $ | 13,996 | 53.4 | % | ||
| Philadelphia | 4,685 | 9,685 | 48.4 | 4,782 | 9,685 | 49.4 | ||||||||
| New Jersey | - | - | - | 2,728 | 8,200 | 33.3 | ||||||||
| Total | $ | 11,079 | $ | 21,252 | 52.1 | % | $ | 14,987 | $ | 31,881 | 47.0 | % |
___________________
| (1) | Pennsylvania excluding Philadelphia |
|---|
35
Deposits. Total deposits increased $942,000, or 0.2%, to $554.2 million at September 30, 2025 from $553.3 million at December 31, 2024. This increase in deposits was primarily attributable to an increase of $56.9 million, or 20.1%, in certificates of deposit, an increase of $1.4 million, or 2.3%, in non-interest bearing checking accounts, and a $237,000, or 48.2%, increase in savings accounts. These increases in deposits were partially offset by a decrease of $50.6 million, or 31.2%, in money market accounts, and a decrease of $6.9 million, or 14.5%, in interest bearing checking accounts as the Company reduced its correspondent banking activity and exited one of its correspondent banking relationships.
The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was $250.4 million, or 45.2% of total deposits at September 30, 2025.
Borrowings. Total Federal Home Loan Bank (FHLB) borrowings decreased $2.9 million, or 6.0%, to $45.0 million at September 30, 2025 from $47.9 million at December 31, 2024 as the Bank paid down $2.9 million of borrowings.
Senior debt. Senior debt, net of unamortized debt issuance costs, increased $9.5 million from none at December 31, 2024 as 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, 2025 for 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 1 and September 1 of each year, beginning September 1, 2025. The maturity date of the Senior Debt Notes is March 1, 2028.
Subordinated debt. Subordinated debt, net of unamortized debt issuance costs, decreased $14.0 million, or 63.6%, to $8.0 million at September 30, 2025 from $22.0 million at December 31, 2024 as the Company used the net proceeds from the sale of the Senior Debt Notes to repay a portion of the outstanding $14.0 million aggregate principal amount of its 8.5% Fixed Rate Subordinated Notes upon their maturity on March 15, 2025. The remaining $8.0 million of subordinated debt matures on December 31, 2028.
Stockholders’ Equity. Total stockholders’ equity from continuing operations decreased $444,000, or 0.8%, to $52.2 million at September 30, 2025 from $52.6 million at December 31, 2024. Contributing to the decrease were dividends paid of $788,000, and purchase of treasury stock of $45,000. The decrease in stockholders’ equity was partially offset by net income for the nine months ended September 30, 2025 of $148,000, amortization of stock awards and options under our stock compensation plans of $182,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of $56,000, and other comprehensive income, net of $3,000.
Asset Quality. Non-performing loans at September 30, 2025, totaled $6.3 million, or 1.16%, of total loans receivable, net of allowance for credit losses, consisting of $4.2 million of loans on non-accrual status and $2.1 million of loans 90-days or more delinquent. Non-accrual loans consist of one one-to-four family residential owner occupied loan, nine commercial real estate loans, and 18 commercial business loans. Included in the 18 commercial business loans is one pool of equipment loans. Loans 90-days or more past due include one one-to-four family residential owner occupied loan, one one-to-four family residential non-owner occupied loan, one commercial real estate loan, and one commercial business loan, all of which are still accruing. All non-performing loans are either well-collateralized or adequately reserved for. During the nine months ended September 30, 2025, 21 commercial business loans totaling $1.3 million that were previously on non-accrual were charged-off through the allowance for credit losses. Non-performing loans at December 31, 2024, totaled $5.7 million, or 1.07%, of total loans receivable, net of allowance for credit losses, consisting of $3.9 million of loans on non-accrual status and $1.8 million of loans 90-days or more delinquent. Non-accrual loans consisted of one commercial real estate loan, and ten commercial business loans. Included in the ten commercial business loans is one pool of equipment loans. Loans 90-days or more past due included one one-to-four family residential owner occupied loan and two commercial real estate loans, all of which were still accruing. All non-performing loans were either well-collateralized or adequately reserved for. During the year ended December 31, 2024, 19 commercial business loans totaling $1.6 million, and one construction loan of $187,000, that were previously on non-accrual were charged-off through the allowance for credit losses.
Comparison of Operating Results for the Three Months Ended September 30, 2025 and 2024
General. Net loss amounted to $41,000 for the three months ended September 30, 2025, a decrease of $284,000, or 116.9%, compared to net income of $243,000 for the three months ended September 30, 2024. The decrease in net income on a comparative quarterly basis was primarily the result of an increase in non-interest expense of $804,000, a decrease in interest and dividend income of $302,000, and an increase in the provision for credit losses of $302,000, partially offset by an increase in non-interest income of $538,000, a decrease in interest expense of $448,000, and a decrease in the net provision for income taxes from continuing operations of $138,000.
36
Net Interest Income. Net interest income increased $146,000, or 3.4% to $4.4 million for the three months ended September 30, 2025 from $4.3 million for the three months ended September 30, 2024. The increase was driven by a $448,000, or 7.2%, decrease in interest expense, partially offset by a $302,000, or 2.9%, decrease in interest and dividend income.
Interest and Dividend Income. The $302,000, or 2.9%, decrease in interest and dividend income for the quarter was primarily due to a $15.0 million decrease in the average balance of due from banks – interest earning, which decreased from $45.9 million for the three months ended September 30, 2024 to $30.8 million for the three months ended September 30, 2025, and had the effect of decreasing interest income $167,000, a decrease in the average balance of loans receivable, net, which decreased $8.3 million from $607.6 million for the three months ended September 30, 2024 to $599.3 million for the three months ended September 30, 2025 and had the effect of decreasing interest income $136,000, and a 99 basis point decrease in the average yield on due from banks – interest earning, which decreased from 4.42% for the three months ended September 30, 2024 to 3.43% for the three months ended September 30, 2025 and had the effect of decreasing interest income $78,000. Partially offsetting the decrease in interest and dividend income was a four basis point increase in the average yield on loans receivable, net from 6.51% for the three months ended September 30, 2024 to 6.55% for the three months ended September 30, 2025, and had the effect of increasing interest income $49,000. The $15.0 million decrease in the average balance of due from banks – interest bearing was due to a higher level of balances during 2024 due to proceeds from the sale of the Bank’s 51% ownership of Oakmont Capital Holdings, LLC on March 29, 2024.
Interest Expense. The $448,000, or 7.2%, decrease in interest expense for the three months ended September 30, 2025 over the comparable period in 2024 was driven by an $852,000, or 15.1%, decrease in interest expense on deposits, which was primarily attributable to a $95.7 million decrease in the average balance of money market deposits which decreased from $212.2 million for the three months ended September 30, 2024 to $116.5 million for the three months ended September 30, 2025, and a $60.6 million decrease in the average balance of business checking accounts which decreased from $85.7 million for the three months ended September 30, 2024 to $25.1 million for the three months ended September 30, 2025. The decrease in average balances of interest-bearing deposits was a result of reduced correspondent banking activity and reduction in a money market deposit through a deposit placement agreement. Also contributing to the decrease in interest expense for the three months ended September 30, 2025 was a $319,000, or 65.2%, decrease in interest expense on subordinated debt. These decreases in interest expense were partially offset by a $1.1 million increase in the interest expense for certificates of deposit due to a $104.0 million increase in the average balance of certificates of deposit which increased from $223.6 million at September 30, 2024 to $327.7 million at September 30, 2025. Also partially offsetting these decreases in interest expense was a $442,000, or 470.2%, increase in the interest expense on Federal Home Loan Bank borrowings due to a $31.6 million, or 332.4%, increase in the average balance of Federal Home Loan Bank borrowings which increased from $9.5 million for the three months ended September 30, 2024 to $41.1 million for the three months ended September 30, 2025, and a $281,000 increase in interest expense on senior debt. The $104.0 million increase in the average balance of certificates of deposits was primarily due to the Bank’s competitive rate offerings in our market area. The average interest rate spread increased from 1.87% for the three months ended September 30, 2024 to 2.07% for the three months ended September 30, 2025 and the net interest margin increased from 2.58% for the three months ended September 30, 2024 to 2.77% for the three months ended September 30, 2025.
37
Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. All average balances are based on daily balances.
| Three Months Ended September 30, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||||||||||
| Average<br> <br>Balance | Interest | Average<br> <br>Yield/<br> <br>Rate | Average<br> <br>Balance | Interest | Average<br> <br>Yield/<br> <br>Rate | |||||||||
| (Dollars in thousands) | ||||||||||||||
| Interest-earning assets: | ||||||||||||||
| Due from banks, interest-earning | $ | 30,830 | $ | 264 | 3.43 | % | $ | 45,870 | $ | 507 | 4.42 | % | ||
| Investment in interest-earning time deposits | 912 | 9 | 3.95 | 912 | 9 | 3.95 | ||||||||
| Investment securities available for sale | 1,180 | 31 | 10.51 | 1,962 | 39 | 7.95 | ||||||||
| Loans receivable, net (1) (2) | 599,322 | 9,808 | 6.55 | 607,648 | 9,895 | 6.51 | ||||||||
| Investment in FHLB stock | 1,983 | 58 | 11.70 | 837 | 22 | 10.51 | ||||||||
| Total interest-earning assets | 634,227 | 10,170 | 6.41 | % | 657,229 | 10,472 | 6.37 | % | ||||||
| Non-interest-earning assets | 17,996 | 15,370 | ||||||||||||
| Total assets | $ | 652,223 | $ | 672,599 | ||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Savings accounts | $ | 808 | $ | - | 0.00 | % | $ | 642 | $ | - | 0.00 | % | ||
| Money market accounts | 116,526 | 948 | 3.25 | 212,229 | 2,437 | 4.59 | ||||||||
| Checking accounts | 29,186 | 339 | 4.64 | 85,727 | 819 | 3.82 | ||||||||
| Certificate of deposit accounts | 327,673 | 3,502 | 4.27 | 223,645 | 2,385 | 4.27 | ||||||||
| Total deposits | 474,193 | 4,789 | 4.07 | 522,243 | 5,641 | 4.32 | ||||||||
| FHLB borrowings | 41,109 | 536 | 5.22 | 9,508 | 94 | 3.95 | ||||||||
| Subordinated debt | 8,000 | 170 | 8.50 | 22,000 | 489 | 8.89 | ||||||||
| Senior debt | 9,550 | 281 | 11.77 | - | - | - | ||||||||
| Total interest-bearing liabilities | 532,852 | 5,776 | 4.34 | % | 553,751 | 6,224 | 4.50 | % | ||||||
| Non-interest-bearing liabilities | 67,236 | 67,983 | ||||||||||||
| Total liabilities | 600,088 | 621,734 | ||||||||||||
| Stockholders’ Equity | 52,135 | 50,865 | ||||||||||||
| Total liabilities and Stockholders’ Equity | $ | 652,223 | $ | 672,599 | ||||||||||
| Net interest-earning assets | $ | 101,375 | $ | 103,478 | ||||||||||
| Net interest income; average interest rate spread | $ | 4,394 | 2.07 | % | $ | 4,248 | 1.87 | % | ||||||
| Net interest margin (3) | 2.77 | % | 2.58 | % | ||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 119.03 | % | 118.69 | % |
________________________
(1) Includes loans held for sale.
(2) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for credit losses.
(3) Equals net interest income divided by average interest-earning assets.
Provision for Credit Losses. The $302,000, or 245.5%, increase in the provision for credit losses for the three months ended September 30, 2025 over the three months ended September 30, 2024 was primarily due to an increase in non-performing loans during the three months ended September 30, 2025.
Non-Interest Income. The $538,000, or 44.5%, increase in non-interest income for the three months ended September 30, 2025 over the comparable period in 2024 was primarily attributable to a $447,000, or 88.9%, increase in net gain on sale of loans, a $142,000, or 114.5%, increase in gain on sale of SBA loans, and a $52,000, or 21.9%, increase in mortgage banking, equipment lending and title abstract fees. These increases were partially offset by a $102,000, or 87.9%, decrease in other fees and service charges, a $2,000, or 1.0%, decrease in insurance commissions and a $2,000 decrease in net loan servicing income. The reduction in other fees and service charges is attributable to reduced correspondent banking activities.
38
Non-Interest Expense. The $804,000, or 16.3%, increase in non-interest expense for the three months ended September 30, 2025 over the comparable period in 2024 was primarily due to a $510,000, or 14.6%, increase in salaries and employee benefits expense, a $159,000, or 48.2%, increase in occupancy and equipment expense, a $115,000, or 35.8%, increase in data processing expense, a $108,000, or 415.4%, increase in professional fees, and a $14,000, or 26.9%, increase in directors’ fees and expenses. These increases were partially offset by a $61,000, or 12.2%, decrease in other expense, a $27,000, or 17.1%, decrease in FDIC deposit insurance assessment, and a $14,000, or 33.3%, decrease in advertising expense. The increases in salaries and employee benefits expense, professional fees, occupancy and equipment expense, data processing expense, and other expense were primarily due to implementing the Bank’s international correspondent banking initiative.
Provision for Income Tax. The provision for income tax from continuing operations decreased $138,000, or 82.1%, from $168,000 for the three months ended September 30, 2024 to $30,000 for the three months ended September 30, 2025 due primarily to a decrease in pre-tax income.
Comparison of Operating Results for the Nine Months Ended September 30, 2025 and 2024
General. Net income amounted to $148,000 for the nine months ended September 30, 2025, a decrease of $1.1 million, or 87.8%, compared to net income of $1.2 million for the nine months ended September 30, 2024. The decrease in net income on a comparative year to date basis was primarily the result of a decrease in interest and dividend income of $3.2 million, an increase in non-interest expense of $1.5 million, a decrease in net income from discontinued operations of $406,000, and an increase in the provision for credit losses of $85,000, partially offset by a decrease in interest expense of $2.5 million, an increase in non-interest income of $1.4 million, and a decrease in the net provision for income taxes from continuing operations of $432,000.
Net Interest Income. Net interest income decreased $689,000, or 5.0% to $13.0 million for the nine months ended September 30, 2025 from $13.7 million for the nine months ended September 30, 2024. The decrease was driven by a $3.2 million, or 9.6%, decrease in interest and dividend income, partially offset by a $2.5 million, or 12.7%, decrease in interest expense.
Interest and Dividend Income. The $3.2 million, or 9.6%, decrease in interest and dividend income was primarily due to a decrease in the average balance of loans receivable, net, which decreased $32.4 million from $624.9 million for the nine months ended September 30, 2024 to $592.5 million for the nine months ended September 30, 2025 and had the effect of decreasing interest income $1.6 million, a $38.2 million decrease in the average balance of due from banks – interest earning, which decreased from $72.7 million for the nine months ended September 30, 2024 to $34.6 million for the nine months ended September 30, 2025, and had the effect of decreasing interest income $1.5 million, and a 123 basis point decrease in the average yield on due from banks - interest earning from 5.13% for the nine months ended September 30, 2024 to 3.90% for the nine months ended September 30, 2025, and had the effect of decreasing interest income $317,000. Similar to the quarter, the $38.2 million decrease in the average balance of due from banks – interest bearing was due to a higher level of balances during 2024 due to proceeds from the sale of the Bank’s 51% ownership of Oakmont Capital Holdings, LLC on March 29, 2024.
Interest Expense. The $2.5 million, or 12.7%, decrease in interest expense for the nine months ended September 30, 2025 over the comparable period in 2024 was driven by a $3.7 million, or 20.7%, decrease in interest expense on deposits, which was primarily attributable to a $75.6 million decrease in the average balances of money market deposits which decreased from $215.1 million for the nine months ended September 30, 2024 to $139.5 million for the nine months ended September 30, 2025, and a $65.9 million decrease in the average balances of business checking accounts which decreased from $102.5 million for the nine months ended September 30, 2024 to $36.6 million for the nine months ended September 30, 2025. The decrease in average balances of interest-bearing deposits was a result of reduced correspondent banking activity and reduction in a money market deposit through a deposit placement agreement. Also contributing to the decrease in interest expense for the nine months ended September 30, 2025 was a $671,000, or 45.9% decrease in interest expense on subordinated debt. These decreases in interest expense were partially offset by $2.5 million increase in the interest expense on certificates of deposit due to an $83.1 million increase in the average balance of certificates of deposit which increased from $223.2 million for the nine months ended September 30, 2024 to $306.2 million for the nine months ended September 30, 2025. These decreases in interest expense were also partially offset by a $1.2 million, or 231.8% increase in the interest expense on Federal Home Loan Bank borrowings due to a $29.9 million, or 171.0%, increase in the average balance of Federal Home Loan Bank borrowings which increased from $17.5 million for the nine months ended September 30, 2024 to $47.4 million for the nine months ended September 30, 2025, and a $672,000 increase in interest expense on senior debt. Similar to the quarter, the $83.1 million increase in the average balance of certificates of deposits was primarily due to the Bank’s competitive rate offerings in our market area. The average interest rate spread increased from 1.83% for the nine months ended September 30, 2024 to 2.22% for the nine months ended September 30, 2025 while the net interest margin increased from 2.61% for the nine months ended September 30, 2024 to 2.75% for the nine months ended September 30, 2025.
39
Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. All average balances are based on daily balances.
| Nine Months Ended September 30, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||||||||||
| Average<br> <br>Balance | Interest | Average<br> <br>Yield/<br> <br>Rate | Average<br> <br>Balance | Interest | Average<br> <br>Yield/<br> <br>Rate | |||||||||
| (Dollars in thousands) | ||||||||||||||
| Interest-earning assets: | ||||||||||||||
| Due from banks, interest-earning | $ | 34,576 | $ | 1,012 | 3.90 | % | $ | 72,735 | $ | 2,796 | 5.13 | % | ||
| Investment in interest-earning time deposits | 912 | 44 | 6.43 | 1,075 | 35 | 4.34 | ||||||||
| Investment securities available for sale | 1,379 | 95 | 9.19 | 2,133 | 116 | 7.25 | ||||||||
| Loans receivable, net (1) (2) | 592,519 | 29,026 | 6.53 | 624,873 | 30,445 | 6.50 | ||||||||
| Investment in FHLB stock | 2,298 | 113 | 6.56 | 1,077 | 99 | 12.26 | ||||||||
| Total interest-earning assets | 631,684 | 30,290 | 6.39 | % | 701,893 | 33,491 | 6.36 | % | ||||||
| Non-interest-earning assets | 19,201 | 17,238 | ||||||||||||
| Total assets | $ | 650,885 | $ | 719,131 | ||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Savings accounts | $ | 607 | $ | 1 | 0.22 | % | $ | 788 | $ | 1 | 0.17 | % | ||
| Money market accounts | 139,453 | 3,656 | 3.50 | 215,079 | 7,344 | 4.55 | ||||||||
| Checking accounts | 36,580 | 693 | 2.53 | 102,486 | 3,615 | 4.70 | ||||||||
| Certificate of deposit accounts | 306,235 | 9,766 | 4.25 | 223,175 | 6,835 | 4.08 | ||||||||
| Total deposits | 482,875 | 14,116 | 3.90 | 541,528 | 17,795 | 4.96 | ||||||||
| FHLB short-term borrowings | 47,447 | 1,668 | 4.69 | 17,510 | 503 | 3.77 | ||||||||
| FRB long-term borrowings | 16 | 1 | 8.33 | - | - | - | ||||||||
| Subordinated debt | 11,495 | 790 | 9.16 | 21,995 | 1,461 | 8.86 | ||||||||
| Senior debt | 9,582 | 672 | 9.35 | - | - | - | ||||||||
| Total interest-bearing liabilities | 551,415 | 17,247 | 4.17 | % | 581,033 | 19,759 | 4.53 | % | ||||||
| Non-interest-bearing liabilities | 46,771 | 87,561 | ||||||||||||
| Total liabilities | 598,186 | 668,594 | ||||||||||||
| Stockholders’ Equity | 52,699 | 50,537 | ||||||||||||
| Total liabilities and Stockholders’ Equity | $ | 650,885 | $ | 719,131 | ||||||||||
| Net interest-earning assets | $ | 80,269 | $ | 120,860 | ||||||||||
| Net interest income; average interest rate spread | $ | 13,043 | 2.22 | % | $ | 13,732 | 1.83 | % | ||||||
| Net interest margin (3) | 2.75 | % | 2.61 | % | ||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 114.56 | % | 120.80 | % |
________________________
| (1) | Includes loans held for sale. |
|---|---|
| (2) | Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for credit losses. |
| --- | --- |
| (3) | Equals net interest income divided by average interest-earning assets. |
| --- | --- |
Provision for Credit Losses. The $85,000, or 7.0%, increase in the provision for credit losses for the nine months ended September 30, 2025 over the nine months ended September 30, 2024 was primarily due to an increase in loans receivable, net, and an increase in charge-offs during the nine months ended September 30, 2025.
Non-Interest Income. The $1.4 million, or 33.2%, increase in non-interest income for the nine months ended September 30, 2025 over the comparable period in 2024 was primarily attributable to a $1.1 million, or 52.8%, increase in net gain on sale of loans, an $833,000, or 331.9%, increase in gain on sale of SBA loans, an $88,000, or 14.0%, increase in mortgage banking, equipment lending and title abstract fees, and a $51,000, or 9.7%, increase in insurance commissions. These increases were partially offset by a $655,000, or 112.5%, decrease in other fees and service charges, and a $20,000, or 100.0%, decrease in real estate sales commissions, net.
40
Non-Interest Expense. The $1.5 million, or 10.0%, increase in non-interest expense for the nine months ended September 30, 2025 over the comparable period in 2024 was primarily due to a $467,000, or 4.3%, increase in salaries and employee benefits expense, a $383,000, or 42.8%, increase in data processing expense, a $356,000, or 35.7%, increase in occupancy and equipment expense, a $208,000, or 64.4%, increase in professional fees, a $146,000, or 10.7%, increase in other expense, a $43,000, or 28.1%, increase in directors’ fees and expenses, and a $25,000, or 12.4%, increase in advertising expense. These increases were partially offset by a $107,000, or 21.7%, decrease in FDIC deposit insurance assessment. The increases in salaries and employee benefits expense, professional fees, occupancy and equipment expense, data processing expense, and other expense were primarily due to implementing the Bank’s international correspondent banking initiative.
Provision for Income Tax. The provision for income tax from continuing operations decreased $274,000, or 53.1%, from $516,000 for the nine months ended September 30, 2024 to $242,000 for the nine months ended September 30, 2025 due primarily to a decrease in pre-tax income.
Operating Segments
The Company’s operations consist of two reportable operating segments: Banking and Oakmont Commercial. Our Banking Segment generates revenues primarily from its lending, deposit gathering and fee business activities. Our Oakmont Commercial Segment originates commercial real estate loans which are sold into the secondary market along with the loans’ servicing rights. The profitability of this segment’s operations depends primarily on the gains realized from the sale of loans, processing fees, and service fees. Detailed segment information appears in Note 12 in the Notes to Unaudited Consolidated Financial Statements.
Our Banking Segment reported a pre-tax segment loss (“PTSL”) for the three months ended September 30, 2025 of $226,000, a $96,000, or 73.8%, increase from the same period in 2024. This increase in PTSL was primarily due to a $677,000, or 14.3%, increase in non-interest expense. This decrease was partially offset by a $291,000, or 7.5%, increase in net interest income, a $211,000, or 17.6%, increase in non-interest income, and a $79,000, or 15.7%, decrease in the provision for credit losses. The increase in non-interest expense was primarily due to a $384,000, or 11.6%, increase in salaries and employee benefits expense, a $158,000, or 47.9% increase in occupancy and equipment expense, a $115,000, or 35.8%, increase in data processing expense, and a $102,000, or 600.0%, increase in professional fees expense, partially offset by a $55,000, or 11.2% decrease in other expenses. The increase in non-interest income is primarily attributable to a $142,000, or 114.5%, increase in gain on sale of SBA loans, a $130,000, or 25.8%, increase in the net gain on loans held for sale, and a $52,000, or 21.9%, increase in mortgage banking, equipment lending and title abstract fees, partially offset by a $112,000, or 105.7% decrease in other fees and service charges.
Our Oakmont Commercial, LLC Segment reported a pre-tax segment profit (“PTSP”) for the three months ended September 30, 2025 of $215,000, a $326,000, or 60.3%, decrease from the same period in 2024. The decrease in PTSP was primarily due to a $381,000, recovery in the provision for credit losses for the 2024 period, a $145,000, or 41.9%, decrease in net interest income, and a $127,000, or 64.8%, increase in non-interest expense, partially offset by a $327,000, or 3,270.0%, increase in non-interest income. The increase in non-interest income was primarily due to a $317,000, or 100.0%, increase net gain on loans held for sale, and a $10,000, or 50.0%, increase in other fees and service charges. The increase in non-interest expense was primarily due to a $126,000, or 72.0%, increase in salaries and employee benefits expense, and a $6,000, or 66.7% increase in professional fees, partially offset by a $6,000, or 66.7%, decrease in other non-interest expense.
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Our Banking Segment reported a pre-tax segment loss (“PTSL”) for the nine months ended September 30, 2025 of $854,000, a $1.7 million, or 206.0%, decrease from the same period in 2024. This increase in PTSL was primarily due to a $1.4 million, or 10.1%, increase in non-interest expense, an $803,000, or 6.2%, decrease in net interest income, and a $211,000, or 13.9%, decrease in the provision for credit losses partially offset by a $376,000, or 10.3%, increase in non-interest income. The increase in non-interest expense was primarily due to a $414,000, 4.2%, increase in salaries and employee benefits expense, a $383,000, or 42.8%, increase in data processing expense, a $354,000, or 35.5% increase in occupancy and equipment expense, a $188,000, or 63.1%, increase in professional fees, a $151,000, or 11.2%, increase in other non-interest expense, and a $43,000, or 28.1%, increase in directors' fees and expenses. The increase in non-interest income is primarily attributable to a $833,000, or 331.9%, increase in gain on sale of SBA loans, an $88,000, or 14.0%, increase in mortgage banking, equipment lending and title abstract fees, and a $51,000, or 9.7%, increase in insurance commissions, partially offset by a $548,000, or 121.2% decrease in other fees and service charges, and a $36,000, or 2.2%, decrease in the net gain on loans held for sale.
Our Oakmont Commercial, LLC Segment reported a pre-tax segment profit (“PTSP”) for the nine months ended September 30, 2025 of $1.2 million, a $724,000 increase from the same period in 2024. The increase in PTSP was primarily due to a $983,000, or 214.2%, increase in non-interest income, a $296,000, recovery of the provision for credit losses for the 2024 period, and a $114,000, or 15.8%, increase in net interest income, partially offset by a $77,000, or 8.1%, increase in non-interest expense. The increase in non-interest income was primarily due to a $1.1 million, or 331.3%, increase net gain on loans held for sale, partially offset by a $107,000, or 82.3%, decrease in other fees and service charges. The increase in non-interest expense was primarily due to a $53,000, 5.9%, increase in salaries and employee benefits expense, a $20,000, or 80.0% increase in professional fees, a $7,000, or 63.6%, increase in advertising expense, and a $2,000, or 100.0%, increase in occupancy and equipment expense, partially offset by a $5,000, or 20.0%, decrease in other non-interest expense.
Liquidity and Capital Resources
The Company’s primary sources of funds are deposits, amortization and prepayment of loans and to a lesser extent, loan sales and other funds provided from operations. While scheduled principal and interest payments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company sets the interest rates on its deposits to maintain a desired level of total deposits. 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. In addition, the Company invests excess funds in short-term interest-earning assets that provide additional liquidity. At September 30, 2025, the Company's cash and cash equivalents amounted to $52.3 million.
The Company uses its liquidity to fund existing and future loan commitments, to fund deposit outflows, to invest in other interest-earning assets and to meet operating expenses. At September 30, 2025, Quaint Oak Bank had outstanding commitments to originate loans of $18.7 million, commitments under unused lines of credit of $50.8 million, and $1.1 million under standby letters of credit.
At September 30, 2025, certificates of deposit scheduled to mature in one year or less totaled $238.5 million. Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case.
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In addition to cash flow from loan payments and prepayments and deposits, the Company has significant borrowing capacity available to fund liquidity needs. If the Company requires funds beyond its ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Pittsburgh (FHLB), which provide an additional source of funds. As of September 30, 2025, we had $45.0 million of borrowings from the FHLB and had $268.8 million in borrowing capacity. Under terms of the collateral agreement with the FHLB of Pittsburgh, we pledge residential mortgage loans as well as Quaint Oak Bank’s FHLB stock as collateral for such advances. In addition, as of September 30, 2025, Quaint Oak Bank had $27.5 million in borrowing capacity with the Federal Reserve Bank of Philadelphia. We also use brokered deposits as a funding source. As of September 30, 2025, the Company had $72.9 million of brokered deposits, $25.1 million of which were sourced from one brokered interest-bearing checking account deposit relationship.
The Company identified one major money market deposit customer that accounted for approximately 6.3% of total deposits at September 30, 2025. The outstanding balance of the major deposit customer totaled approximately $35.0 million at September 30, 2025. The Company identified five major interest bearing brokered checking deposit customers that accounted for approximately 7.4% of total deposits at September 30, 2025. The outstanding balance of the major deposit customers’ interest bearing brokered checking account totaled approximately $40.9 million at September 30, 2025. If these deposits were to be withdrawn in whole or in part, replacement of the funds may require us to pay higher interest rates on retail deposits or brokered deposits which would have an adverse effect on our net interest income and net income. The replacement of these deposits with other sources of funding such as borrowings could also increase our overall cost of funds and would negatively impact our results of operations. The Company has significant borrowing capacity available to fund liquidity needs, including borrowing agreements with the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia described above.
Any requirements that we increase our capital ratios or liquidity could require our seeking additional sources of capital through a capital raise that would necessitate issuing additional securities, which could dilute our outstanding shares of our common stock. We may also raise capital through the issuance of preferred stock and senior or subordinated debt, or liquidate certain assets, perhaps on terms that are unfavorable to us or contrary to our business plan. In March 2024, we sold our 51% ownership interest in OCH, and recognized a $1.4 million gain on sale. In December 2024, the Company recorded a pre-tax gain, after deduction of transaction-related expenses, of $1.5 million in connection with a sale/leaseback transaction on its property that it owned at 1710 Union Blvd, Allentown, PA 18109.
The Company and Quaint Oak Bank are subject to the regulation and supervision of the Board of Governors of the Federal Reserve System (the “FRB”), the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking and Securities, each of which may impose restrictions on our ability to pay dividends, repurchase shares or incur additional indebtedness. As the subsidiary of a stock saving and loan holding company, Quaint Oak must file a notice with the appropriate Federal Reserve Bank at least 20 days before a proposed declaration of a dividend to the Company. Under applicable banking regulations, Quaint Oak Bank must file an application for FDIC approval of a capital distribution if: the total capital distributions for the calendar year exceed the sum of Quaint Oak Bank’s net income for that year to date plus the retained net income for the preceding two years; Quaint Oak Bank would not be at least adequately capitalized following the distribution; the distribution would violate any applicable statute, regulation, agreement or FDIC-imposed condition; or Quaint Oak Bank is not otherwise eligible for expedited treatment of its filings with the FDIC. The inability to pay dividends from Quaint Oak Bank to the Company could negatively impact our ability to pay dividends to shareholders, pay interest on our debt or engage in stock repurchases. The Company currently is restricted in declaring or paying dividends, engaging in share repurchases or directly or indirectly, incurring, increasing, or guaranteeing any debt, including any interest payments due on subordinated debentures, without the prior written approval of the FRB. To date, the FRB has approved all requests to pay dividends and interest on subordinated debt, however, no assurance can be given that such approvals will be received in the future.
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The following table summarizes the Company's primary and secondary sources of liquidity which were available at September 30, 2025 (dollars in thousands).
| September 30, 2025 | ||
|---|---|---|
| (Dollars in thousands) | ||
| Cash and cash equivalents | $ | 52,292 |
| Unpledged investment securities, amortized cost | 1,071 | |
| FHLB advance availability | 268,798 | |
| Federal Reserve discount window availability | 27,549 | |
| Total primary and secondary sources of available liquidity | $ | 349,710 |
Total stockholders’ equity from continuing operations decreased $444,000, or 0.8%, to $52.2 million at September 30, 2025 from $52.6 million at December 31, 2024. Contributing to the decrease were dividends paid of $788,000, and purchase of treasury stock of $45,000. The decrease in stockholders’ equity was partially offset by net income for the nine months ended September 30, 2025 of $148,000, amortization of stock awards and options under our stock compensation plans of $182,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of $56,000, and other comprehensive income, net of $3,000.
For further discussion of the stock compensation plans, see Note 10 in the Notes to Unaudited Consolidated Financial Statements contained elsewhere herein.
Quaint Oak Bank is required to maintain regulatory capital sufficient to meet tier 1 leverage, common equity tier 1 capital, tier 1 risk-based and total risk-based capital ratios of at least 4.00%, 4.50%, 6.00%, and 8.00%, respectively. At September 30, 2025, Quaint Oak Bank exceeded each of its capital requirements with ratios of 10.11%, 12.31%, 12.31% and 13.56%, respectively. As a small savings and loan holding company eligible for exemption, the Company is not currently subject to any regulatory capital requirements.
Off-Balance Sheet Arrangements
In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage customers' requests for funding and take the form of loan commitments and lines of credit. Our exposure to credit loss from non-performance by the other party to the above-mentioned financial instruments is represented by the contractual amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. In general, we do not require collateral or other security to support financial instruments with off–balance sheet credit risk.
Commitments. At September 30, 2025, we had unfunded commitments under lines of credit of $50.8 million, $18.7 million of commitments to originate loans, and $1.1 million under standby letters of credit. We had no commitments to advance additional amounts pursuant to outstanding lines of credit or undisbursed construction loans.
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The ACL for off balance sheet credit exposures is recorded in other liabilities on the Consolidated Balance Sheet. This ACL represents management’s estimate of expected losses in its unfunded loan commitments and other off balance sheet credit exposures, such as letters of credit and credit recourse on sold residential mortgage loans. The balance of off balance sheet credit exposures was a provision of $80,000 at September 30, 2025.
Impact of Inflation and Changing Prices
The consolidated financial statements and related financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of the Company’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on the Company’s performance than does the effect of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of September 30, 2025. Based on their evaluation of the Company’s disclosure controls and procedures, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and regulations are operating in an effective manner.
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the second fiscal quarter of fiscal 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition and operating results of the Company.
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ITEM 1A. RISK FACTORS
There have been no material changes in the Risk Factors previously disclosed in Item 1A of our 2024 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
| (a) | Not applicable. |
|---|---|
| (b) | Not applicable. |
| --- | --- |
| (c) | Purchases of Equity Securities |
| --- | --- |
The Company’s repurchases of its common stock made during the quarter ended September 30, 2025 including stock-for-stock option exercises of outstanding stock options, are set forth in the table below:
| Period | Total Number of Shares<br> <br>Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||
|---|---|---|---|---|---|---|---|---|
| July 1, 2025 – July 31, 2025 | - | $ | - | - | 24,375 | |||
| August 1, 2025 – August 31, 2025 | 1,301 | 10.15 | - | 24,375 | ||||
| September 1, 2025 – September 30, 2025 | - | - | - | 24,375 | ||||
| Total | 1,301 | $ | 10.15 | - | 24,375 |
Notes to this table:
| (1) | On December 12, 2018, the Board of Directors of Quaint Oak Bancorp approved its fifth share repurchase program which provides for the repurchase of up to 50,000 shares, or approximately 2.5% of the Company’s then issued and outstanding shares of common stock and announced the fifth repurchase program on Form 8-K filed on December 13, 2018. The repurchase program does not have an expiration date. |
|---|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS
| No. | Description |
|---|---|
| 31.1 | Rule 13a-14(d) and 15d-14(d) Certification of the Chief Executive Officer. |
| 31.2 | Rule 13a-14(d) and 15d-14(d) Certification of the Chief Financial Officer. |
| 32.0 | Section 1350 Certification. |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definitions Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 13, 2025 | By: | /s/ Robert T. Strong |
|---|---|---|
| Robert T. Strong | ||
| Chief Executive Officer | ||
| Date: November 13, 2025 | By: | /s/ John J. Augustine |
| --- | --- | --- |
| John J. Augustine | ||
| Executive Vice President and<br> <br>Chief Financial Officer |
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Robert T. Strong, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Quaint Oak Bancorp, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: November 13, 2025 | By: | /s/ Robert T. Strong |
|---|---|---|
| Robert T. Strong | ||
| Chief Executive Officer |
HTML Editor
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, John J. Augustine certify that:
1. I have reviewed this quarterly report on Form 10-Q of Quaint Oak Bancorp, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: November 13, 2025 | By: | /s/ John J. Augustine |
|---|---|---|
| John J. Augustine | ||
| Executive Vice President and<br><br> <br>Chief Financial Officer |
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Exhibit 32.0
SECTION 1350 CERTIFICATION
Each of Robert T. Strong, President and Chief Executive Officer and John J. Augustine, Executive Vice President and Chief Financial Officer of Quaint Oak Bancorp, Inc. (the "Company"), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The quarterly report on Form 10-Q of the Company for the period ended September 30, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: November 13, 2025 | By: | /s/ Robert T. Strong |
|---|---|---|
| Robert T. Strong | ||
| Chief Executive Officer | ||
| Date: November 13, 2025 | By: | /s/ John J. Augustine |
| --- | --- | --- |
| John J. Augustine | ||
| Executive Vice President and<br><br> <br>Chief Financial Officer |
Note: A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Quaint Oak Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.