UNITED STATES

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	~~March 31,~~September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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, 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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of ~~May 6,~~November 9, 2022, ~~2,031,646~~ 2,053,527

shares of the Registrant’s common stock were issued and outstanding.

INDEX

PART I - FINANCIAL INFORMATION		Page

Item 1 -	Financial Statements

	Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 and December 31, 2021 (Unaudited)	1

	Consolidated Statements of Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	2

	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	4

	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	5

	Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	68

	Notes to the Unaudited Consolidated Financial Statements	810

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3334

Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	4247

Item 4 -	Controls and Procedures	4247

PART II - OTHER INFORMATION

Item 1 -	Legal Proceedings	4347

Item 1A -	Risk Factors	4348

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	4448

Item 3 -	Defaults Upon Senior Securities	4548

Item 4 -	Mine Safety Disclosures	4548

Item 5 -	Other Information	4548

Item 6 -	Exhibits	4549

SIGNATURES		46

	At September 30,			At December 31,
	2022			2021
	(In thousands, except share data)
Assets
Due from banks, non-interest-bearing	$	830		$	854
Due from banks, interest-bearing		7,509			9,851
Cash and cash equivalents		8,339			10,705
Investment in interest-earning time deposits		5,569			7,924
Investment securities available for sale		3,193			4,033
Loans held for sale		88,400			107,823
Loans receivable, net of allowance for loan losses (2022 $7,141; 2021 $5,262)		579,154			403,966
Accrued interest receivable		3,658			3,139
Investment in Federal Home Loan Bank stock, at cost		3,953			2,178
Bank-owned life insurance		4,203			4,137
Premises and equipment, net		2,916			2,653
Goodwill		2,573			2,573
Other intangible, net of accumulated amortization		186			222
Prepaid expenses and other assets		5,116			4,762
Total Assets	$	707,260		$	554,115
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Non-interest bearing	$	79,825		$	64,731
Interest-bearing		467,289			382,435
Total deposits		547,114			447,166
Federal Home Loan Bank short-term borrowings		10,000			26,000
Federal Home Loan Bank long-term borrowings		83,022			23,193
Federal Reserve Bank long-term borrowings		-			3,895
Subordinated debt		7,958			7,933
Accrued interest payable		412			174
Advances from borrowers for taxes and insurance		3,612			2,856
Accrued expenses and other liabilities		9,532			5,989
Total Liabilities		661,650			517,206
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; 2,777,250 issued; 2,053,554 and 2,011,313 outstanding at
September 30, 2022 and December 31, 2021, respectively		28			28
Additional paid-in capital		16,024			15,685
Treasury stock, at cost: 723,696 and 765,937 shares at September 30, 2022 and December 31, 2021, respectively		(4,748	)		(4,977	)
Accumulated other comprehensive (loss) income		(19	)		23
Retained earnings		29,933			24,030
Total Quaint Oak Bancorp, Inc. Stockholders' Equity		41,218			34,789
Noncontrolling Interest		4,392			2,120
Total Stockholders' Equity	$	45,610		$	36,909
Total Liabilities and Stockholders’ Equity	$	707,260		$	554,115

At March 31,

At December 31,

2022

2021

Assets

(In thousands, except share data)

Due from banks, non-interest-bearing
$ 427 $ 854
Due from banks, interest-bearing
43,587 9,851
Cash and cash equivalents
44,014 10,705
Investment in interest-earning time deposits
6,961 7,924
Investment securities available for sale
3,774 4,033
Loans held for sale
56,867 107,823
Loans receivable, net of allowance for loan losses (2022 $5,941; 2021 $5,262)
437,307 403,966
Accrued interest receivable
2,776 3,139
Investment in Federal Home Loan Bank stock, at cost
3,098 2,178
Bank-owned life insurance
4,158 4,137
Premises and equipment, net
2,703 2,653
Goodwill
2,573 2,573
Other intangible, net of accumulated amortization
210 222
Prepaid expenses and other assets
3,694 4,762
Total Assets
$ 568,135 $ 554,115
Liabilities and Stockholders’ Equity

Liabilities

Deposits:

Non-interest bearing
$ 76,309 $ 64,731
Interest-bearing
382,326 382,435
Total deposits
458,635 447,166
Federal Home Loan Bank short-term borrowings
23,000 26,000
Federal Home Loan Bank long-term borrowings
23,193 23,193
Federal Reserve Bank long-term borrowings
3,349 3,895
Subordinated debt
7,941 7,933
Other short-term borrowings
916 0
Accrued interest payable
298 174
Advances from borrowers for taxes and insurance
2,497 2,856
Accrued expenses and other liabilities
8,342 5,989
Total Liabilities
528,171 517,206
Stockholders’ Equity

Preferred stock – $0.01 par value, 1,000,000 shares authorized; none issued or outstanding
0 0
Common stock – $0.01 par value; 9,000,000 shares authorized; 2,777,250 issued; 2,016,517 and 2,011,313 outstanding
at March 31, 2022 and December 31, 2021, respectively
28 28
Additional paid-in capital
15,813 15,685
Treasury stock, at cost: 760,733 and 765,937 shares at March 31, 2022 and December 31, 2021, respectively
(4,955 ) (4,977 )
Accumulated other comprehensive income
2 23
Retained earnings
26,057 24,030
Total Quaint Oak Bancorp, Inc. Stockholders' Equity
36,945 34,789
Noncontrolling Interest
3,019 2,120
Total Stockholders' Equity
$ 39,964 $
36,909

Total Liabilities and Stockholders’ Equity
$ 568,135 $ 554,115

See accompanying notes to the unaudited consolidated financial statements.

For the Three Months Ended

March 31,

2022

2021

(In thousands)

Interest Income

Interest on loans, including fees
$ 6,570 $ 4,743
Interest and dividends on time deposits, investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock
73 146
Total Interest Income
6,643 4,889

Interest Expense

Interest on deposits
620 876
Interest on Federal Home Loan Bank short-term borrowings
22 6
Interest on Federal Home Loan Bank long-term borrowings
112 139
Interest on Federal Reserve Bank long-term borrowings
3 40
Interest on subordinated debt
130 130
Interest on other short-term borrowings
9 70
Total Interest Expense
896 1,261
Net Interest Income
5,747 3,628
Provision for Loan Losses
679 254
Net Interest Income after Provision for Loan Losses
5,068 3,374

Non-Interest Income

Mortgage banking, equipment lending and title abstract fees
637 531
Real estate sales commissions, net
61 31
Insurance commissions
116 107
Other fees and services charges
171 345
Income from bank-owned life insurance
21 19
Net gain on loans held for sale
4,101 1,215
Gain on the sale of SBA loans
133 201
Gain on the sale of investment securities available for sale
0 317
Total Non-Interest Income
5,240 2,766

Non-Interest Expense

Salaries and employee benefits
4,591 3,400
Directors' fees and expenses
71 68
Occupancy and equipment
420 377
Data processing
197 205
Professional fees
184 163
FDIC deposit insurance assessment
116 51
Other real estate owned expenses
0 9
Advertising
208 105
Amortization of other intangible
12 12
Other
384 329
Total Non-Interest Expense
6,183 4,719

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands, except for share data)
Interest Income
Interest on loans, including fees	$	8,671	$	5,944	$	22,171	$	16,422
Interest and dividends on time deposits, investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock		325		73		506		327
Total Interest Income		8,996		6,017		22,677		16,749

Interest Expense
Interest on deposits		1,672		702		3,199		2,370
Interest on Federal Home Loan Bank short-term borrowings		58		8		133		14
Interest on Federal Home Loan Bank long-term borrowings		457		124		958		392
Interest on Federal Reserve Bank long-term borrowings		-		8		4		77
Interest on subordinated debt		130		130		390		390
Interest on other short-term borrowings		22		31		49		127
Total Interest Expense		2,339		1,003		4,733		3,370
Net Interest Income		6,657		5,014		17,944		13,379
Provision for Loan Losses		655		557		1,933		1,259
Net Interest Income after Provision for Loan Losses		6,002		4,457		16,011		12,120

Non-Interest Income
Mortgage banking, equipment lending and title abstract fees		760		604		2,221		1,657
Real estate sales commissions, net		88		79		213		143
Insurance commissions		152		133		407		373
Other fees and services charges		131		38		379		211
Net loan servicing income		480		475		954		1,026
Income from bank-owned life insurance		23		21		66		61
Net gain on loans held for sale		4,281		1,866		11,349		4,416
Gain on the sale of SBA loans		58		369		225		636
Gain on the sale of investment securities available for sale		-		-		-		362
Total Non-Interest Income		5,973		3,585		15,814		8,885

Non-Interest Expense
Salaries and employee benefits		5,335		4,100		14,817		10,939
Directors' fees and expenses		67		58		210		186
Occupancy and equipment		477		379		1,363		1,143
Data processing		140		234		500		641
Professional fees		257		107		669		488
FDIC deposit insurance assessment		225		97		454		221
Other real estate owned expenses		-		2		-		14
Advertising		169		110		531		337
Amortization of other intangible		12		12		36		36
Other		636		326		1,509		974
Total Non-Interest Expense		7,318		5,425		20,089		14,979

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2022			2021		2022			2021
	(In thousands)
Net Income	$	3,645		$	1,915	$	9,205		$	4,333

Other Comprehensive Income (Loss):
Unrealized gains (losses) on investment securities available-for-sale		(1	)		-		(54	)		257
Income tax effect		-			-		12			(55	)
Reclassification adjustment for gain on sale of investment securities included in net income		-			-		-			(362	)
Income tax effect		-			-		-			76
Other comprehensive loss		(1	)		-		(42	)		(84	)

Total Comprehensive Income	$	3,644		$	1,915	$	9,163		$	4,249
Comprehensive Income Attributable to Noncontrolling Interest	$	1,010		$	133	$	2,551		$	12
Comprehensive Income Attributable to Quaint Oak Bancorp, Inc.	$	2,634		$	1,782	$	6,612		$	4,237

For the Three Months Ended September 30, 2022
	Common Stock										Accumulated
	Number of					Additional					Other									Total
	Shares					Paid-in		Treasury			Comprehensive			Retained			Noncontrolling			Stockholders'
	Outstanding			Amount		Capital		Stock			Income (Loss)			Earnings			Interest			Equity
						(In thousands, except share and per share data)
BALANCE - JUNE 30, 2022	2,045,721		$	28	$	15,904	$	(4,784	)	$	(18	)	$	27,564		$	3,485		$	42,179

Common stock allocated by ESOP (4,000 shares)	4,000					59		25												84
Treasury stock purchase	(760	)						(18	)											(18	)
Reissuance of treasury stock under stock incentive plan																				-
Reissuance of treasury stock under 401(k) Plan	593					11		4												15

Reissuance of treasury stock for exercised stock options	4,000					8		25												33

Stock based compensation expense						42														42

Cash dividends declared ($0.13 per share)														(266	)					(266	)

Noncontrolling interest member distribution																	(103	)		(103	)

Net income														2,635			1,010			3,645

Other comprehensive loss, net											(1	)								(1	)

BALANCE – SEPTEMBER 30, 2022	2,053,554		$	28	$	16,024	$	(4,748	)	$	(19	)	$	29,933		$	4,392		$	45,610

For the Three Months Ended September 30, 2021
										Unallocated
										Common			Accumulated
	*Number of*				*Additional*					*Stock Held*			*Other*							*Total*
	*Shares*				*Paid-in*		*Treasury*			*by Benefit*			*Comprehensive*		*Retained*			*Noncontrolling*		*Stockholders'*
	*Outstanding*		*Amount*		*Capital*		*Stock*			*Plans*			*Income*		*Earnings*			*Interest*		*Equity*
							(In thousands, except share and per share data)
BALANCE – JUNE 30, 2021	2,004,015	$	28	$	15,457	$	(5,022	)	$	(17	)	$	34	$	20,606		$	2,115	$	33,201

Common stock allocated by ESOP (3,607 shares)					48					17										65
Reissuance of treasury stock under 401(k) Plan	1,080				14		6													20

Stock based compensation expense					42															42

Cash dividends declared ($0.11 per share)															(220	)				(220	)

Net income															1,782			133		1,915

Other comprehensive income, net													-							-

BALANCE – SEPTEMBER 30, 2021	2,005,095	$	28	$	15,561	$	(5,016	)	$	-		$	34	$	22,168		$	2,248	$	35,023

See accompanying notes to the ~~Three Months Ended March 31, 2021~~unaudited consolidated financial statements.

Unallocated Accumulated
Common Stock Common Other
Number of Additional Stock Held Compre- Non- Total
Shares Paid-in Treasury by Benefit hensive Retained controlling Stockholders'
Outstanding Amount Capital Stock Plans Income Earnings Interest Equity
(In thousands, except share data)
BALANCE -
DECEMBER 31, 2020 1,986,528 $ 28 $ 15,282 $ (5,114 ) $ (51 ) $ 118 $ 18,465 $ 0 $ 28,728

Common stock allocated
by ESOP (3,607 shares)
0
41
0 18 0 0 0 59

Treasury stock purchase
(276 ) 0 0 (5 ) 0 0 0 0 (5 )

Reissuance of treasury
stock under 401(k) Plan
1,231 0 12 8 0 0 0 0 20

Reissuance of treasury
stock for exercised stock
   options
2,000 0 4 12 0 0 0 0 16
Stock based compensation
  expense
0 43 0 0 0 0 0 43

Noncontrolling interest
   initial contribution
0 0 0 0 0 0 2,236 2,236

Cash dividends declared
   ($0.09 per share)
0 0 0 0 0 (179 ) 0 (179 )

Net income attributable
to Quaint Oak Bancorp,
Inc.
0 0 0 0 0 1,030 (33 ) 997

Other comprehensive loss, net
0 0 0 0 (58 ) 0 0 (58 )

BALANCE –
MARCH 31, 2021
1,989,483 $ 28 $ 15,382 $ (5,099 ) $ (33 ) $ 60 $ 19,316 $ 2,203 $ 31,857

For the Nine Months Ended September 30, 2022
	Common Stock											Accumulated
	Number of					Additional						Other									Total
	Shares					Paid-in			Treasury			Comprehensive			Retained			Noncontrolling			Stockholders'
	Outstanding			Amount		Capital			Stock			Income (Loss)			Earnings			Interest			Equity
						(In thousands, except share and per share data)
BALANCE – DECEMBER 31, 2021	2,011,313		$	28	$	15,685		$	(4,977	)	$	23		$	24,030		$	2,120		$	36,909

Common stock allocated by ESOP (12,000 shares)	12,000					184			75												259
Treasury stock purchase	(1,969	)							(46	)											(46	)
Reissuance of treasury stock under stock incentive plan	9,123					(57	)		57												-
Reissuance of treasury stock under 401(k) Plan	2,087					35			13												48

Reissuance of treasury stock for exercised stock options	21,000					51			130												181

Stock based compensation expense						126															126

Cash dividends declared ($0.37 per share)															(751	)					(751	)

Noncontrolling interest member distribution																		(279	)		(279	)

Net income															6,654			2,551			9,205

Other comprehensive loss, net												(42	)								(42	)

BALANCE – SEPTEMBER 30, 2022	2,053,554		$	28	$	16,024		$	(4,748	)	$	(19	)	$	29,933		$	4,392		$	45,610

Common Stock Accumulated
Number of Additional Other Total
Shares Paid-in Treasury Comprehensive Retained Noncontrolling Stockholders'
Outstanding Amount Capital Stock Income Earnings Interest Equity
(In thousands, except share data)
BALANCE -
DECEMBER 31, 2021
2,011,313 $ 28 $ 15,685 $ (4,977 ) $ 23 $ 24,030 $ 2,120 $ 36,909

Common stock allocated by ESOP
(4,000 shares)
4,000 0 66 25 0 0 0 91

Treasury stock purchase (638 ) 0 0 (14 ) 0 0 0 (14 )

Reissuance of treasury stock under
401(k) Plan
842 0 13 5 0 0 0 18

Reissuance of treasury stock for
exercised stock options
1,000 0 7 6 0 0 0 13

Stock based compensation expense
0 42 0 0 0 0 42

Cash dividends declared ($0.11 per
share)
0 0 0 0 (221 ) 0 (221 )

Noncontrolling interest member
distribution
0 0 0 0 0 (117 ) (117 )

Net income
0 0 0 0 2,248 1,016 3,264

Other comprehensive loss, net
0 0 0 (21 ) 0 0 (21 )

BALANCE -
MARCH 31, 2022
2,016,517 $ 28 $ 15,813 $ (4,955 ) $ 2 $ 26,057 $ 3,019 $ 39,964

For the Three Months

Ended March 31,

2022

2021

(In Thousands)

Cash Flows from Operating Activities

Net income
$ 3,264 $ 997
Adjustments to reconcile net income to net cash used in operating activities:

Provision for loan losses
679 254
Depreciation of premises and equipment
89 111
Amortization of operating right-of-use assets
71 38
Amortization of subordinated debt issuance costs
8 8
Amortization of other intangible
12 12
Net amortization of securities premiums
(2 ) 5
Accretion of deferred loan fees and costs, net
(832 ) (793 )
Stock-based compensation expense
133 102
Gain on the sale of investment securities available for sale
0 (317 )
Net gain on loans held for sale
(4,101 ) (1,215 )
Loans held for sale-originations
(102,252 ) (84,893 )
Loans held for sale-proceeds
157,309 76,471
Gain on the sale of SBA loans
(133 ) (201 )
Increase in the cash surrender value of bank-owned life insurance
(21 ) (19 )
Changes in assets and liabilities which provided (used) cash:

Accrued interest receivable
362 (523 )
Prepaid expenses and other assets
1,002 808
Accrued interest payable
124 133
Accrued expenses and other liabilities
2,354 285
Net Cash Provided by (Used in) Operating Activities
58,066 (8,737 )
Cash Flows from Investing Activities

Purchase of interest-earning time deposits
(590 ) 0
Redemption of interest-earning time deposits
1,553 1,499
Principal repayments on investment securities available for sale
0 250
Proceeds from the sale of investment securities available for sale
236 4,323
Net increase in loans receivable
(33,056 ) (51,645 )
Purchase of Federal Home Loan Bank stock
(920 ) 0
Redemption of Federal Home Loan Bank stock
0 400
Acquisition, net of cash acquired
0 1,259
Capitalized expenditures on other real estate owned
0 (30 )
Purchase of premises and equipment
(139 ) (147 )
Net Cash Used in Investing Activities
(32,916 ) (44,091 )
Cash Flows from Financing Activities

Net increase in demand deposits, money markets, and savings accounts
6,507 95,064
Net increase (decrease) in certificate accounts
4,962 (10,192 )
Decrease in advances from borrowers for taxes and insurance
(359 ) (706 )
Repayments of Federal Home Loan Bank short-term borrowings
(26,000 ) (10,000 )
Proceeds from Federal Home Loan Bank short-term borrowings
23,000 0
Repayments of Federal Reserve Bank long-term borrowings
(546 ) (4,608 )
Proceeds from other borrowings
916 0
Repayments of other borrowings
0 (7,832 )
Dividends paid
(221 ) (179 )
Noncontrolling interest capital distribution
(117 ) 0
Purchase of treasury stock
(14 ) (5 )
Proceeds from the reissuance of treasury stock
18 20
Proceeds from the exercise of stock options
13 16
Net Cash Provided by Financing Activities
8,159 61,578
Net Increase in Cash and Cash Equivalents
33,309 8,750
Cash and Cash Equivalents – Beginning of Year
10,705
33,913

Cash and Cash Equivalents – End of Year
$ 44,014 $ 42,663

See accompanying notes to the unaudited consolidated financial statements.

For the Nine Months Ended September , 2021												Unallocated
												Common			Accumulated
	*Number of*					*Additional*						*Stock Held*			*Other*								*Total*
	*Shares*					*Paid-in*			*Treasury*			*by Benefit*			*Comprehensive*			*Retained*			*Noncontrolling*		*Stockholders'*
	*Outstanding*			*Amount*		*Capital*			*Stock*			*Plans*			*Income*			*Earnings*			*Interest*		*Equity*
									(In thousands, except share and per share data)
BALANCE – DECEMBER 31, 2020	1,986,528		$	28	$	15,282		$	(5,114	)	$	(51	)	$	118		$	18,465		$	-	$	28,728

Common stock allocated by ESOP (10,821 shares)						136						51											187

Treasury stock purchase	(1,398	)							(25	)													(25	)

Reissuance of treasury stock under 401(k) Plan	3,044					35			18														53

Reissuance of treasury stock under stock incentive plan	9,421					(58	)		58														-

Reissuance of treasury stock for exercised stock options	7,500					40			47														87

Stock based compensation expense						126																	126

Noncontrolling interest initial contribution																					2,236		2,236

Cash dividends declared ($0.31 per share)																		(618	)				(618	)

Net income																		4,321			12		4,333

Other comprehensive loss, net															(84	)							(84	)
BALANCE – SEPTEMBER 30, 2021	2,005,095		$	28	$	15,561		$	(5,016	)	$	-		$	34		$	22,168		$	2,248	$	35,023

	For the Nine Months
	Ended September 30,
	2022			2021
	(In Thousands)
Cash Flows from Operating Activities
Net income	$	9,205		$	4,333
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		1,933			1,259
Depreciation of premises and equipment		244			228
Amortization of operating right-of-use assets		151			122
Amortization of subordinated debt issuance costs		25			25
Amortization of other intangible		36			36
Net amortization of securities premiums		-			6
Accretion of deferred loan fees and costs, net		(1,629	)		(3,482	)
Stock-based compensation expense		385			313
Gain on the sale of investment securities available for sale		-			(362	)
Net gain on loans held for sale		(11,349	)		(4,416	)
Loans held for sale-originations		(377,608	)		(276,705	)
Loans held for sale-proceeds		408,381			238,398
Gain on the sale of SBA loans		(225	)		(636	)
Increase in the cash surrender value of bank-owned life insurance		(66	)		(61	)
Changes in assets and liabilities which provided (used) cash:
Accrued interest receivable		(519	)		(284	)
Prepaid expenses and other assets		(493	)		1,093
Accrued interest payable		238			(52	)
Accrued expenses and other liabilities		3,540			(224	)
Net Cash Provided by (Used in) Operating Activities		32,249			(40,409	)
Cash Flows from Investing Activities
Purchase of interest-earning time deposits		(2,132	)		(2,141	)
Redemption of interest-earning time deposits		4,487			3,712
Principal repayments on investment securities available for sale		787			801
Proceeds from the sale of investment securities available for sale		-			5,862
Net increase in loans receivable		(175,266	)		(21,335	)
Purchase of Federal Home Loan Bank stock		(8,331	)		(913	)
Redemption of Federal Home Loan Bank stock		6,556			560
Acquisition of Oakmont Capital Holdings, net of cash acquired		-			1,259
Capitalized expenditures on other real estate owned		-			(203	)
Purchase of premises and equipment		(507	)		(400	)
Net Cash Used in Investing Activities		(174,406	)		(12,798	)
Cash Flows from Financing Activities
Net increase in demand deposits, money markets, and savings accounts		103,630			111,258
Net decrease in certificate accounts		(3,682	)		(30,596	)
Increase (decrease) in advances from borrowers for taxes and insurance		756			(423	)
Repayments of Federal Home Loan Bank short-term borrowings		(131,300	)		(10,000	)
Proceeds from Federal Home Loan Bank short-term borrowings		115,300			21,000
Repayments of Federal Home Loan Bank long-term borrowings		(20,171	)		(4,000	)
Proceeds from Federal Home Loan Bank long-term borrowings		80,000			-
Repayments of Federal Reserve Bank long-term borrowings		(3,895	)		(43,170	)
Repayments of other borrowings		-			(9,956	)
Dividends paid		(751	)		(618	)
Noncontrolling interest capital distribution		(279	)		-
Purchase of treasury stock		(46	)		(25	)
Proceeds from the reissuance of treasury stock		48			53
Proceeds from the exercise of stock options		181			87
Net Cash Provided by Financing Activities		139,791			33,610
Net Decrease in Cash and Cash Equivalents		(2,366	)		(19,597	)
Cash and Cash Equivalents – Beginning of Year		10,705			33,913
Cash and Cash Equivalents – End of Year	$	8,339		$	14,316

~~Notes~~See accompanying notes to ~~Unaudited Consolidated Financial Statements~~the 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 ~~March 31,~~September 30, 2022, the Bank has 6six wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Real Estate, LLC, Quaint Oak Abstract, LLC, QOB Properties, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, each a Pennsylvania limited liability company. The mortgage, ~~company offers mortgage banking in the Lehigh Valley, Delaware Valley and Philadelphia County regions of Pennsylvania. The~~ real estate and abstract companies offer mortgage banking, real estate sales and title abstract services, respectively, primarily in the Lehigh Valley, ~~region~~Delaware Valley and Philadelphia County regions of Pennsylvania. These companies began operation in July 2009. In February, 2019, Quaint Oak Mortgage opened a mortgage banking office in Philadelphia, Pennsylvania. 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 multi-state specialty commercial real estate financing company. On April 29, 2022, Oakmont Commercial, LLC, a wholly owned subsidiary of Quaint Oak Bank, purchased all the stock of KCMI Capital, Inc., a Pennsylvania corporation and subsidiary of Wilmington Savings Fund Society, FSB. The purchase price for the shares totaled approximately $55.5 million, which represented the unpaid principal balance of the loan portfolio, the primary asset of KCMI Capital, Inc. As of January 4, 2021, the Bank holds a majority equity position in Oakmont Capital Holdings, LLC, a multi-state equipment finance company based in West Chester, Pennsylvania with a second significant facility located in Albany, Minnesota. 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 and the Lehigh Valley area in Pennsylvania. The Bank has three banking locations: the main office location in Southampton, Pennsylvania and regional banking offices in the Lehigh Valley and Philadelphia. The Bank also has a mortgage office in Philadelphia and an insurance agency office in New Britain Township, Pennsylvania. The principal deposit products offered by the Bank are certificates of deposit, money market accounts, 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, 2021 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 2021 Annual Report on Form 10-K. The results of operations for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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 loan 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 ~~March 31,~~September 30, 2022 have remained unchanged from the disclosures presented in our Annual Report on Form 10~~-K, except for the following:~~

~~Goodwill and Intangible Assets. Intangible assets on the consolidated balance sheets represent the acquisition by Quaint Oak Insurance Agency of the renewal rights to a book of business on~~ ~~August 1, 2016~~ at a total cost of $1.0 million. 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 an other intangible asset. The renewal rights are being amortized over a ~~ten~~ ~~year period based upon the annual retention rate of the book of business. Also included in goodwill is $2.1 million recognized as part of the acquisition of Oakmont Capital Holdings, LLC.~~

~~The Company will complete a goodwill and other intangible asset analysis at least on an annual basis or more often if events and circumstances indicate that there~~ ~~may~~ ~~be impairment.~~

Recent Accounting Pronouncements Not Yet Adopted. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We expect to recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is ~~effective but cannot yet determine~~effective.

The Company has contracted with a third-party software vendor to assist with the ~~magnitude~~implementation of ~~any such~~ ~~one~~~~-time adjustment or~~CECL. The Company is actively working on preliminary test calculations, data validation, as well as process and procedural documentation. The Company is currently conducting runs of the ~~overall~~CECL model and the incurred-loss model in parallel. The new model will include additional assumptions used to calculate credit losses over the estimated life of financial assets and will include the impact of forecasted economic conditions. While the ~~new guidance on~~total impact of CECL to the ~~consolidated~~Company’s financial ~~statements.~~statements is unknown at this time, the Company recognizes it may be material.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (“SEC”) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This ~~update~~Update is not expected to have a significant impact on the Company’s financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for the applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. In November, 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which deferred the effective date for ASC 944, Financial Services – Insurance, for public business entities that are SEC filers, except for smaller reporting companies, to fiscal years beginning after December 15, 2021, and interim periods within those fiscal years and for all other entities, including smaller reporting companies, to fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are

~~Note~~ 1– ~~Financial Statement Presentation and Significant Accounting Policies (Continued)~~

effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

Note 1– Financial Statement Presentation and Significant Accounting Policies (Continued)

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to re-measure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides optional temporary guidance for entities transitioning away from the London Interbank Offered Rate (LIBOR) and other interbank offered rates (IBORs) to new references rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic 848. ASU 2021-01 clarifies that the derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. ASU 2021-01 is effective immediately for all entities. Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The amendments in this update do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross ~~writeoffs~~write-offs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

Note 1 – Financial Statement Presentation and Significant Accounting Policies (Continued)

Reclassifications. Certain items in the 2021 consolidated financial statements have been reclassified to conform to the presentation in the 2022 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.

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 have been purchased with the proceeds from the exercise of stock options, as well as unvested restricted 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 have been purchased with the proceeds from the exercise of stock options, as well as unvested restricted stock awards. Common stock equivalents which are considered antidilutive are not included for the purposes of this calculation. For the three and ninemonths ended ~~March 31,~~September 30, 2022 and 2021, all outstanding stock options granted under the 2008 Stock Option Plan, the 2013 Stock Incentive Plan and the 2018 Stock Incentive Plan representing shares were dilutive.

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computations.

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

The following table presents the changes in accumulated other comprehensive income (loss) by component, net of tax, for the three and ninemonths ended ~~March 31,~~September 30, 2022 and 2021 (in thousands):

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive (loss) income for the three and ninemonths ended ~~March 31,~~September 30, 2022 and 2021 (in thousands):

The investment in interest-earning time deposits as of ~~March 31,~~September 30, 2022 and December 31, 2021, by contractual maturity, are shown below (in thousands):

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

The amortized cost, gross unrealized gains and losses, and fair value of investment securities available for sale at ~~March 31,~~September 30, 2022 and December 31, 2021 are summarized below (in thousands):

The amortized cost and fair value of mortgage-backed securities at ~~March 31,~~September 30, 2022, 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):

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 ~~March 31,~~September 30, 2022 (in thousands):

At December 31, 2021, there were 0no securities in an unrealized loss position. There were 0no impairment charges recognized during the three or ninemonths ended ~~March 31,~~September 30, 2022 or 2021.

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

⁽¹⁾Includes ~~$23.0~~$3.0 million and $42.6 million of PPP loans at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of ~~March 31,~~September 30, 2022 as well as the average recorded investment and related interest income for the period then ended (in thousands):

	March 31, 2022										September 30, 2022
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One-to-four family residential owner occupied	$	0	$	0	$	-	$	0	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		9		9		-		9		-		8		9		-		9		-
Multi-family residential		1,723		1,723		-		1,723		36		1,708		1,723		-		1,723		-
Commercial real estate		131		131		-		131		3		130		130		-		130		9
Construction		0		0		-		0		-		-		-		-		-		-
Home equity		0		0		-		0		-		-		-		-		-		-
Commercial business		0		0		-		0		-		-		-		-		-		-
Other consumer		0		0		-		0		-		-		-		-		-		-
								-										-
With an allowance recorded:
One-to-four family residential owner occupied	$	0	$	0	$	-	$	0	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		0		0		-		0		-		-		-		-		-		-
Multi-family residential		0		0		-		0		-		-		-		-		-		-
Commercial real estate		0		0		-		0		-		-		-		-		-		-
Construction		0		0		-		-		-		-		-		-		-		-
Home equity		0		0		-		-		-		-		-		-		-		-
Commercial business		0		0		-		-		-		-		-		-		-		-
Other consumer		0		0		-		-		-		-		-		-		-		-

Total:
One-to-four family residential owner occupied	$	0	$	0	$	-	$	0	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		9		9		-		9		-		8		9		-		9		-
Multi-family residential		1,723		1,723		-		1,723		36		1,708		1,723		-		1,723		-
Commercial real estate		131		131		-		131		3		130		130		-		130		9
Construction		0		0		-		-		-		-		-		-		-		-
Home equity		0		0		-		-		-		-		-		-		-		-
Commercial business		0		0		-		0		-		-		-		-		-		-
Other consumer		0		0		-		-		-		-		-		-		-		-
Total	$	1,863	$	1,863	$	-	$	1,863	$	39	$	1,846	$	1,862	$	-	$	1,862	$	9

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of December 31, 2021 as well as the average recorded investment and related interest income for the year then ended (in thousands):

	December 31, 2021										December 31, 2021
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One-to-four family residential owner occupied	$	0	$	0	$	-	$	66	$	0	$	-	$	-	$	-	$	66	$	-
One-to-four family residential non-owner occupied		9		9		-		9		0		9		9		-		9		-
Multi-family residential		-		-		-		-		-		-		-		-		-		-
Commercial real estate		131		131		-		131		12		131		131		-		131		12
Construction		-		-		-		-		-		-		-		-		-		-
Home equity		-		-		-		-		-		-		-		-		-		-
Commercial business		-		-		-		18		-		-		-		-		18		-
Other consumer		-		-		-		-		-		-		-		-		-		-

With an allowance recorded:
One-to-four family residential owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		-		-		-		-		-		-		-		-		-		-
Multi-family residential		-		-		-		-		-		-		-		-		-		-
Commercial real estate		-		-		-		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-		-		-		-
Home equity		-		-		-		-		-		-		-		-		-		-
Commercial business		-		-		-		-		-		-		-		-		-		-
Other consumer		-		-		-		-		-		-		-		-		-		-

Total:
One-to-four family residential owner occupied	$	0	$	0	$	-	$	66	$	0	$	-	$	-	$	-	$	66	$	-
One-to-four family residential non-owner occupied		9		9		-		9		0		9		9		-		9		-
Multi-family residential		-		-		-		-		-		-		-		-		-		-
Commercial real estate		131		131		-		131		12		131		131		-		131		12
Construction		-		-		-		-		-		-		-		-		-		-
Home equity		-		-		-		-		-		-		-		-		-		-
Commercial business		-		-		-		18		-		-		-		-		18		-
Other consumer		-		-		-		-		-		-		-		-		-		-
Total	$	140	$	140	$	-	$	224	$	12	$	140	$	140	$	-	$	224	$	12

The loan portfolio also includes certain loans that have been modified in a troubled debt restructuring, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from loss mitigation activities and could include reductions in the interest rate, payment extensions, forbearance, or other actions. At ~~March 31,~~September30,2022, the Company had two loans totaling $138,000 that were identified as troubled debt restructurings. One of these loans was performing in accordance with its modified terms and one was on non-accrual as of September 30, 2022. During the nine month period ended September 30, 2022, ~~and~~no new loans were identified as TDRs. At December 31, 2021, the Company had 2two loans totaling $140,000 that were identified as troubled debt restructurings. One of these loans was performing in accordance with its modified terms and one was on non-accrual as of ~~March~~December 31, ~~2022.~~2021. ~~During the period ended~~ ~~March 31, 2022,~~ no ~~new loans were identified as TDRs.~~ If a TDR is placed on non-accrual it is not reverted back to accruing status until the borrower makes timely payments as contracted for at least six months and future collection under the revised terms is probable.

~~The following tables present the Company’s TDR loans as of~~ ~~March 31, 2022~~ ~~and~~ ~~December 31, 2021 (~~~~dollar amounts in thousands):~~

~~The contractual aging of the TDRs in the table above as of~~ ~~March 31, 2022~~ ~~and~~ ~~December 31, 2021~~ ~~is as follows (in thousands):~~

~~Note~~ 6 ~~- Loans Receivable, Net and Allowance for Loan Losses (Continued)~~

Any reserve for an impaired TDR loan is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate or upon the fair value of the collateral less costs to sell, if the loan is deemed collateral dependent. At ~~March 31,~~September 30, 2022 there were 0no commitments to lend additional funds to debtors whose loan terms have been modified as TDRs.

The general practice of the Bank is to work with borrowers so that they are able to pay back their loan in full. If a borrower continues to be delinquent or cannot meet the terms of a TDR modification and the loan is determined to be uncollectible, the loan will be charged off.

Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the three and nine months ended September 30, 2022 and recorded investment in loans receivable as of September 30, 2022 (in thousands):

The Bank allocated increased allowance for loan loss provisions to the commercial real estate loan portfolio class for the three and nine months ended September 30, 2022, due primarily to changes in quantitative factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the commercial business loan portfolio class for the nine months ended September 30, 2022, due primarily to changes in quantitative factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the multi-family residential loan portfolio class for the nine months ended September 30, 2022, due primarily to changes in qualitative and quantitative factors in this portfolio class.

Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the three and ninemonths ended ~~March 31, 2022~~September 30, 2021 and recorded investment in loans receivable as of ~~March 31, 2022~~September 30, 2021 (in thousands):

		March 31, 2022																				September 30, 2021
		1-4 Family Residential Owner Occupied		1-4 Family Residential Non-Owner Occupied		Multi-Family Residential		Commercial Real Estate		Construction		Home Equity			Commercial Business and Other Consumer		Unallocated		Total			1-4 Family Residential Owner Occupied			1-4 Family Residential Non-Owner Occupied		Multi-Family Residential		Commercial Real Estate		Construction			Home Equity			Commercial Business and Other Consumer			Unallocated			Total

*For the Three Months Ended September 30, 2021*																					*For the Three Months Ended September 30, 2021*
Allowance for loan losses:	Allowance for loan losses:																				*Allowance for loan losses:*
Beginning balance		$	73	$	292	$	249	$	2,475	$	119	$	29		$	1,625	$	400	$	5,262		$	72		$	356	$	242	$	1,617	$	163		$	26		$	970		$	300		$	3,746
Charge-offs			0		0		0		0		0		0			-		0		0			-			-		-		-		-			-			-			-			-
Recoveries			0		0		0		0		0		0			0		0		0			-			-		-		-		-			-			-			-			-
Provision			26		13		215		162		13		(1	)		251		0		679			-			22		5		407		(28	)		(4	)		205			(50	)		557
Ending balance		$	99	$	305	$	464	$	2,637	$	132	$	28		$	1,876	$	400	$	5,941		$	72		$	378	$	247	$	2,024	$	135		$	22		$	1,175		$	250		$	4,303

Ending balance evaluated for impairment:
*For the Nine Months Ended September 30, 2021*																					*For the Nine Months Ended September 30, 2021*
*Allowance for loan losses:*																					*Allowance for loan losses:*
Beginning balance																						$	88		$	362	$	229	$	1,287	$	62		$	20		$	763		$	250		$	3,061
Charge-offs																							-			-		-		-		-			-			(17	)		-			(17	)
Recoveries																							-			-		-		-		-			-			-			-			-
Provision																							(16	)		16		18		737		73			2			429			-			1,259
Ending balance																						$	72		$	378	$	247	$	2,024	$	135		$	22		$	1,175		$	250		$	4,303
*Ending balance evaluated*																					*Ending balance evaluated*
for impairment:
Individually		$	0	$	0	$	0	$	0	$	0	$	0		$	0	$	0	$	0		$	-		$	-	$	-	$	-	$	-		$	-		$	-		$	-		$	-
Collectively		$	99	$	305	$	464	$	2,637	$	132	$	28		$	1,876	$	400	$	5,941		$	72		$	378	$	247	$	2,024	$	135		$	22		$	1,175		$	250		$	4,303

Loans receivable:
Ending balance:		$	12,319	$	38,035	$	41,331	$	197,761	$	17,617	$	4,581		$	133,439			$	445,083

Ending balance evaluated for impairment:

Individually		$	0	$	9	$	1,723	$	131	$	0	$	0		$	0			$	1,863
Collectively		$	12,319	$	38,026	$	39,608	$	197,630	$	17,617	$	4,581		$	133,439			$	443,220

The Bank ~~allocated increased allowance for loan loss provisions to the commercial business loan portfolio class for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022,~~ due primarily to changes in qualitative and quantitative factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the multi-family residential loan portfolio class for the ~~three~~ ~~months ended~~ ~~March 31, 2022~~ ~~due primarily to qualitative and quantitative factors in this portfolio class. The Bank also~~ allocated increased allowance for loan loss provisions to the commercial real estate loan portfolio class for the three months ended ~~March 31, 2022,~~September 30, 2021, due primarily to changes in quantitative ~~factors in this portfolio class.~~

~~Note~~ 6 ~~- Loans Receivable, Net~~ and ~~Allowance for Loan Losses (Continued)~~

~~Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2021~~ ~~and recorded investment in loans receivable as of~~ ~~March 31, 2021 (~~~~in thousands):~~

~~The Bank allocated increased allowance for loan loss provisions to the commercial business loan portfolio class for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2021,~~ ~~due primarily to changes in~~ qualitative ~~and quantitative~~ factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the commercial real estate loan portfolio class for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, due primarily to changes in quantitative factors in this portfolio class The Bank allocated increased allowance for loan loss provisions to the commercial business loan portfolio class for the three and nine months ended September 30, 2021, due primarily to changes in qualitative and quantitative factors in this portfolio class. In general, the primary driver of the increase in qualitative factors was the economic trends factor associated with the COVID-19 pandemic.

Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the year ended December 31, 2021 and recorded investment in loans receivable based on impairment evaluation as of December 31, 2021 (in thousands):

~~Note~~ 6 ~~- Loans Receivable, Net and Allowance for Loan Losses (Continued)~~

The Bank allocated increased allowance for loan loss provisions to the commercial real estate loan portfolio class for the year ended December 31, 2021, due primarily to changes in volume and qualitative factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the commercial business loan portfolio class for the year ended December 31, 2021, due primarily to changes in qualitative factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the multi-family loan portfolio class for the year ended December 31, 2021, due primarily to changes in qualitative factors in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the construction loan portfolio class for the year ended December 31, 2021, due primarily to changes in quantitative and qualitative factors in this portfolio class. In general, the primary driver of the increase in qualitative factors was the economic trends factor associated with the COVID-19 pandemic. In this regard, the Bank increased the unallocated component of the allowance for the year ended December 31, 2021 to cover uncertainties that could affect management’s estimate of probable losses primarily associated with the COVID-19 pandemic.

The following table presents non-accrual loans by classes of the loan portfolio as of ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):

	December 31, 2021
	30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable 90 Days or More Past Due and Accruing		September 30, 2022
													30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable 90 Days or More Past Due and Accruing
One-to-four family residential owner occupied	$	809	$	0	$	809	$	8,970	$	9,779	$	-	$	556	$	-	$	556	$	16,868	$	17,424	$	-
One-to-four family residential non- owner occupied		285		9		294		38,458		38,752		-
One-to-four family residential non-owner occupied														57		8		65		39,345		39,410		-
Multi-family residential		-		-		-		29,344		29,344		-		873		1,708		2,581		45,887		48,468		-
Commercial real estate		-		-		-		183,822		183,822		-		2,133		-		2,133		311,027		313,160		-
Construction		-		-		-		15,843		15,843		-		-		-		-		25,838		25,838		-
Home equity		-		-		-		4,706		4,706		-		40		-		40		5,225		5,265		-
Commercial business		367		-		367		129,241		129,608		-		2,129		-		2,129		136,004		138,133		-
Other consumer		-		-		-		12		12		-		-		-		-		3		3		-
Total	$	1,461	$	9	$	1,470	$	410,396	$	411,866	$	-	$	5,788	$	1,716	$	7,504	$	580,197	$	587,701	$	-

													*December 31, 2021*
													30-89 Days Past Due		90 Days or More Past Due		Total Past Due		*Current*		Total Loans Receivable		Loans Receivable 90 Days or More Past Due and Accruing
One-to-four family residential owner occupied													$	809	$	-	$	809	$	8,970	$	9,779	$	-
One-to-four family residential non-owner occupied														285		9		294		38,458		38,752		-
Multi-family residential														-		-		-		29,344		29,344		-
Commercial real estate														-		-		-		183,822		183,822		-
Construction														-		-		-		15,843		15,843		-
Home equity														-		-		-		4,706		4,706		-
Commercial business														367		-		367		129,241		129,608		-
Other consumer														-		-		-		12		12		-
Total													$	1,461	$	9	$	1,470	$	410,396	$	411,866	$	-

Non-performing loans, which consist of non-accruing loans plus accruing loans 90 days or more past due, amounted to $1.7 million at ~~March 31,~~September 30, 2022 and $9,000 at December 31, 2021. 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.

For the three months ended ~~March 31,~~September 30, 2022 and 2021 there was 0no interest income recognized on non-accrual loans on a cash basis. There was 0$43,000 and $122,000 of interest income foregone on non-accrual loans for the three and ninemonths ended ~~March 31,~~September 30, 2022, ~~and $3,000~~respectively. There was $1,000 of interest income foregone on non-accrual loans for both the three and ninemonths ended ~~March 31,~~September 30, 2021.

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

On January 4, 2021, the Bank acquired a majority ownership interest in Oakmont Capital Holdings, LLC, a multi-state equipment finance company based in West Chester, Pennsylvania with a second significant facility located in Albany, Minnesota. The Bank recognized $2.1 million of goodwill as part of the acquisition of Oakmont Capital Holdings, LLC. 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 ~~March 31,~~September 30, 2022 was ~~$210,000,~~$186,000, which is net of accumulated amortization of ~~$275,000.~~$299,000. Amortization expense for the three and ninemonths ended ~~March 31,~~September 30, 2022 and 2021 amounted to approximately $12,000 and $36,000, respectively.

Federal Home Loan Bank advances consist of the following at ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):

Federal Reserve Bank long-term borrowings decreased ~~$546,000,~~$3.9 million, or ~~14.0%~~100.0%, to ~~$3.3 million~~none at ~~March 31,~~September 30, 2022 from $3.9 million at December 31, 2021 as the Company paid offfirst round PPP loans pledged as collateral under the FRB’s Paycheck Protection Program Liquidity Facility (PPPLF). The Company did not utilize the FRB’s PPPLF to fund second round PPP loans. Under the PPPLF the Company pledged certain PPP loans as collateral and borrowed from the Federal Reserve at a rate of 0.35% that iswas fixed for two years.

~~Other~~There were no other short-term borrowings ~~of $916,000 represents~~representing outstanding balances on two lines of credit that Oakmont Capital Holdings, LLC has with a credit union which are used to fund equipment loans. Borrowing capacity on the two lines of credit total ~~$11.0~~$15.0 million at ~~March 31,~~September 30, 2022.

The Company maintains an Employee Stock Ownership Plan (ESOP) for the benefit of employees who meet the eligibility requirements of the plan. Using proceeds from a loan from the Company, the ESOP purchased 8%, or 222,180 shares of the Company’s then outstanding common stock in the open market during 2007. The Bank made cash contributions to the ESOP on a quarterly basis sufficient to enable the ESOP to make the required loan payments to the Company until the loan was repaid in full as of September 30, 2021. The loan bore an interest rate of 7.75% per annum, with principal and interest paid quarterly in equal installments over 15 years pursuant to the terms of the original note. The loan was secured by the unallocated shares of common stock held by the ESOP. The Bank made cash contributions to the ESOP on a quarterly basis sufficient to enable the ESOP to make the required loan payments to the Company until the loan was repaid in full as of September 30, 2021.

During the ~~first~~third quarter of 2022, the Company made a discretionary contribution of 4,000 shares to the ESOP. These shares were released from Treasury Stock at a cost of approximately $84,000. During the three and ninemonths ended ~~March 31,~~September 30, 2022, ~~and~~ ~~2021,~~the Company recognized ~~$91,000~~$84,000 and ~~$59,000~~$259,000 of ESOP expense, respectively. During the three and nine months ended September 30, 2021, the Company recognized $65,000 and $187,000 of ESOP expense, respectively.

In May 2013, the shareholders of Quaint Oak Bancorp approved the adoption of the 2013 Stock Incentive Plan (the “2013 Stock Incentive Plan”). The 2013 Stock Incentive Plan approved by shareholders in May 2013 covered a total of 195,000 shares, of which 48,750, or 25%, may be restricted stock awards, for a balance of 146,250 stock options assuming all the restricted shares are awarded. 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.

As of ~~March 31,~~September 30, 2022 a total of ~~18,845~~9,122 share awards were unvested under the 2013 and 2018 Stock Incentive Plans and up to 11,750 share awards were available for future grant under the 2018 Stock Incentive Plan and ~~1,200~~1,800 share awards under the 2013 Stock Incentive Plan. The 2013 and 2018 Stock Incentive Plan share awards have vesting periods of five years.

A summary of the status of the share awards under the 2013 and 2018 Stock Incentive Plans as of ~~March 31,~~September 30, 2022 and 2021 and changes during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 is as follows:

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 ~~March 31,~~September 30, 2022 and 2021, the Company recognized approximately $31,000 ~~and $32,000~~ of compensation ~~expense, respectively.~~expense. A tax benefit of approximately $7,000 was recognized during each of these periods. During both the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and ~~2021.~~2021, the Company recognized approximately $93,000 of compensation expense. A tax benefit of approximately $20,000 was recognized during each of these periods. As of ~~March 31,~~September 30, 2022, approximately ~~$137,000~~$74,000 in additional compensation expense will be recognized over the remaining service period of approximately ~~1.2~~0.6 years.

In May 2008, the shareholders of Quaint Oak Bancorp approved the adoption of the 2008 Stock Option Plan (the “Option Plan”). The Option Plan authorized the grant of stock options to officers, employees and directors of the Company to acquire 277,726 shares of common stock with an exercise price no less than the fair market value on the date of the grant. The Option Plan expired February 13, 2018, however, outstanding options granted in 2013 remain valid and existing for the remainder of their 10 year terms. As described above under “Stock Incentive Plans – Share Awards”, the 2013 Stock Incentive Plan approved by shareholders in May 2013 covered a total of 195,000 shares, of which 146,250 may be stock options assuming all the restricted shares are awarded. 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.

All incentive stock options issued under the Option Plan and the 2013 and 2018 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.

As of ~~March 31,~~September 30, 2022, a total of ~~232,136~~205,936 grants of stock options were outstanding under the Option Plan and 2013 and 2018 Stock Incentive Plans and ~~37,250~~40,250 stock options were available for future grant under the 2018 Stock Incentive Plan, ~~3,200~~7,400 stock options under the 2013 Stock Incentive Plan and ~~NaN~~none under the Option Plan. 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.

Stock Option and Stock Incentive Plans – Stock Options (Continued)

A summary of option activity under the Company’s Option Plan and 2013 and 2018 Stock Incentive Plans as of ~~March 31,~~September 30, 2022 and 2021 and changes during the three months ended ~~March 31,~~September 30, 2022 and 2021 is as follows:

During both the three months ended ~~March 31,~~September 30, 2022 and 2021, approximately $11,000 in compensation expense on stock options was recognized. A tax benefit of approximately $1,000, was recognized during each of these periods. During both the nine months ended September 30, 2022 and 2021, approximately $33,000 in compensation expense on stock options was recognized. A tax benefit of approximately $2,000, was recognized during each of these periods. As of ~~March 31,~~September 30, 2022, approximately ~~$50,000~~$28,000 in additional compensation expense will be recognized over the remaining service period of approximately ~~1.1~~0.6 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.

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.

Note 11– Fair Value Measurements and Fair Values of Financial Instruments (Continued)

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.

~~Note~~ 11– ~~Fair Value Measurements and Fair Values of Financial Instruments (Continued)~~

Level III: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 19 of the Company’s 2021 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.

Impaired Loans: Impaired loans are carried at the lower of cost or the fair value of the collateral for collateral-dependent loans less estimated costs to sell. Collateral is primarily in the form of real estate. 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.

Other Real Estate Owned: Other real estate owned is carried at the lower of the investment in the real estate or the fair value of the real estate less estimated selling costs. The use of independent appraisals and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral and therefore other real estate owned is classified within Level 3 of the fair value hierarchy.

Note 11 – Fair Value Measurements and Fair Values of Financial Instruments (Continued)

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 ~~March 31,~~September 30, 2022 (in thousands):

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, 2021 (in thousands):

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 ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):

The estimated fair values of the Company’s financial instruments that are not required to be measured or reported at fair value were as follows at ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):

~~Notes to Unaudited Consolidated Financial Statements~~

Quaint Oak Bancorp, Inc.

Notes to Unaudited Consolidated Financial Statements

Note 11 – Fair Value Measurements and Fair Values of Financial Instruments (Continued)

For cash and cash equivalents, accrued interest receivable, investment in FHLB stock, bank-owned life insurance, FHLB short-term borrowings, accrued interest payable, 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.

The Company's operations currently consist of 2two reportable operating segments: Banking and ~~Mortgage Banking.~~Oakmont Capital Holdings, LLC. 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 Real Estate, LLC, Quaint Oak Abstract, LLC, Quaint Oak Insurance Agency, ~~LLC, Oakmont Capital Holdings,~~ LLC, and Oakmont Commercial, LLC, which are included in the Banking Segment for segment reporting purposes. 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 loan and lease 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.

The ~~Mortgage Banking~~Oakmont Capital Holdings, LLC Segment originates ~~residential mortgage~~equipment loans which are generally sold ~~into the secondary market along~~to third party institutions with the loans’ servicing ~~rights.~~rights retained. The profitability of this segment’s operations depends primarily on the gains realized from the sale of loans, processing fees, and ~~processing~~service fees. The ~~Mortgage Banking~~Oakmont Capital Holdings, LLC Segment is also subject to an extensive system of laws and regulations that are intended primarily for the protection of ~~consumers.~~

The following table presents summary financial information for the reportable segments (in thousands):

	As of or for the Three Months Ended March 31,														As of or for the Three Months Ended September 30,
	2022							2021							2022							2021
	Quaint Oak Bank(1)		Quaint Oak Mortgage			Consolidated		Quaint Oak Bank(1)		Quaint Oak Mortgage			Consolidated		Quaint Oak Bank(1)		Oakmont Capital Holdings, LLC			Consolidated		Quaint Oak Bank(1)		Oakmont Capital Holdings, LLC			Consolidated
Net Interest Income (Loss)	$	5,773	$	(26	)	$	5,747	$	3,742	$	(114	)	$	3,628	$	6,766	$	(109	)	$	6,657	$	5,022	$	(8	)	$	5,014
Provision for Loan Losses		679		0			679		254		0			254		655		-			655		557		-			557
Net Interest Income after Provision for Loan Losses		5,094		(26	)		5,068		3,488		(114	)		3,374
Net Interest Income (Loss) after Provision for Loan Losses																6,111		(109	)		6,002		4,465		(8	)		4,457

Non-Interest Income
Mortgage banking, equipment lending and title abstract fees		621		16			637		436		95			531		173		587			760		332		272			604
Real estate sales commissions, net		61		0			61		31		0			31		88		-			88		79		-			79
Insurance commissions		116		0			116		107		0			107		152		-			152		133		-			133
Other fees and services charges		171		0			171		345		0			345		57		74			131		36		2			38
Net loan servicing income																6		474			480		62		413			475
Income from bank-owned life insurance		21		0			21		19		0			19		23		-			23		21		-			21
Net gain on loans held for sale		3,579		522			4,101		624		591			1,215		891		3,390			4,281		843		1,023			1,866
Gain on sale of investment securities available for sale		0		0			0		317		0			317
Gain on the sale of SBA loans		133		0			133		201		0			201		58		-			58		369		-			369
Total Non-Interest Income		4,702		538			5,240		2,080		686			2,766		1,448		4,525			5,973		1,875		1,710			3,585

Non-Interest Expense
Salaries and employee benefits		4,088		503			4,591		2,928		472			3,400		3,547		1,788			5,335		2,867		1,233			4,100
Directors’ fees and expenses		71		0			71		68		0			68		67		-			67		58		-			58
Occupancy and equipment		352		68			420		298		79			377		323		154			477		295		84			379
Data processing		158		39			197		130		75			205		140		-			140		234		-			234
Professional fees		158		26			184		146		17			163		240		17			257		67		40			107
FDIC deposit insurance assessment		116		0			116		51		0			51		225		-			225		97		-			97
Other real estate owned expenses		0		0			0		9		0			9		-		-			-		2		-			2
Advertising		176		32			208		91		14			105		95		74			169		75		35			110
Amortization of other intangible		12		0			12		12		0			12		12		-			12		12		-			12
Other		366		18			384		309		20			329		314		322			636		288		38			326
Total Non-Interest Expense		5,497		686			6,183		4,042		677			4,719		4,963		2,355			7,318		3,995		1,430			5,425

Pretax Segment Profit	$	4,299	$	(174	)	$	4,125	$	1,526	$	(105	)	$	1,421	$	2,596	$	2,061		$	4,657	$	2,345	$	272		$	2,617

Segment Assets	$	549,967	$	18,168		$	568,135	$	530,047	$	30,943		$	560,990	$	683,882	$	23,378		$	707,260	$	520,005	$	15,861		$	535,866

On ~~April 29, 2022,~~ Quaint Oak Commercial, LLC, a wholly owned subsidiary of Quaint Oak Bank, purchased all the stock of KCMI Capital, Inc., a Pennsylvania corporation and subsidiary of Wilmington Savings Fund Society, FSB. The purchase price for the shares totaled approximately $55.5 million, which represented the unpaid principal balance of the loan portfolio, the primary asset of KCMI Capital, Inc.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 loan 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; (7) the impact of the current outbreak of the novel coronavirus (COVID-19) or (8) 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.

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 loan 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.

At ~~March 31,~~September 30, 2022, the Bank has six wholly-owned subsidiaries, Quaint Oak Mortgage, LLC, Quaint Oak Real Estate, LLC, Quaint Oak Abstract, LLC, QOB Properties, LLC, Quaint Oak Insurance Agency, LLC, and Oakmont Commercial, LLC, each a Pennsylvania limited liability company. The mortgage company offers mortgage banking primarily in the Lehigh Valley, Delaware Valley and Philadelphia County regions of Pennsylvania. The real estate and abstract companies offer real estate sales and title abstract services, respectively, primarily in the Lehigh Valley region of Pennsylvania. These companies began operation in July 2009. In February, 2019, Quaint Oak Mortgage opened a mortgage banking office in Philadelphia, Pennsylvania. 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 multi-state specialty commercial real estate financing company. As of January 4, 2021, the Bank holds a majority equity position in Oakmont Capital Holdings, LLC, a multi-state equipment finance company based in West Chester, Pennsylvania with a second significant facility located in Albany, Minnesota. All significant intercompany balances and transactions have been eliminated.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The effects of COVID-19 did not have a material impact on the financial results of the Company as of ~~March 31,~~September 30, 2022. Due to orders issued by the governor of Pennsylvania and for the health of our customers and employees, the Bank closed lobbies to all three branch offices but remained fully operational. Other immediate responses to the pandemic included some of the following actions by the Company:

In response to the COVID-19 crisis, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion of economy-wide financial stimulus to combat the pandemic and stimulate the economy in the form of financial aid to individuals, businesses, nonprofits, states, and municipalities through loans, grants, tax changes, and other types of relief.

The following describes some of our responses to COVID-19 relative to the CARES Act, and other effects of the pandemic on our business.

Paycheck Protection Program. The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program called the Paycheck Protection Program (“PPP”). As a qualified SBA lender, we were automatically authorized to originate PPP loans and chose to participate. Since March 2020, the Company has continued to work diligently to help support its existing and new customers through the SBA Paycheck Protection Program (“PPP”), loan modifications, loan deferrals and fee waivers. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) became law. The Economic Aid Act opened a new PPP loan period for first loans and implemented a second loan draw for certain PPP borrowers, each through May 31, 2021. Under the first round, the Company funded 854 PPP loans totaling $95.1 million. As of ~~March 31,~~September 30, 2022, ~~850~~853 of these first round PPP loans totaling ~~$91.3~~$95.1 million were forgiven under the SBA forgiveness program. Under the second round of PPP the Company funded 985 PPP loans totaling $88.4 million. As of ~~March 31,~~September 30, 2022, ~~831~~922 of the second round PPP loans totaling ~~$69.2~~$85.4 million have been forgiven under the SBA forgiveness program. ~~For the year ended December 31, 2021, the~~The Company recognized approximately ~~$661,000~~$1.1 million and $4.4 million of deferred loan fees amortization related to PPP loans for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and the year ended December 31, 2021, respectively.

Paycheck Protection Program Liquidity Facility. The CARES Act also allocated a limited amount of funds to the Federal Reserve Board (FRB) with a broad mandate to provide liquidity to eligible businesses, states or municipalities in light of COVID-19. On April 9, 2020, the U.S. Department of the Treasury announced several new or expanded lending programs to provide relief for businesses and governments. One of these programs was the Paycheck Protection Program Liquidity Facility (PPPLF). Under the PPPLF, all depository institutions that originate PPP loans are eligible to borrow on a non-recourse basis from their regional Federal Reserve Bank using SBA PPP loans as collateral. The principal amount of loans will be equal to the PPP loans pledged as collateral. There are no fees associated with these loans and the interest rate is 35 basis points. The maturity date of PPPLF loans will be the same as the maturity date of the PPP loans pledged as collateral. The PPPLF loan maturity date will be accelerated if the underlying PPP loan goes into default and the lender sells the PPP loan to the SBA under the SBA guarantee. The PPPLF loan maturity date also will be accelerated for any loan forgiveness reimbursement received by the lender from the SBA.

In April 2020, the Bank received approval to borrow from the FRB under the PPPLF program to assist in funding PPP loans. Through ~~March 31,~~September 30, 2022, the Bank used the FRB program to fund $52.1 million of PPP loans. The Bank paid ~~off approximately $48.8 million of~~all PPP loans pledged as collateral under the PPPLF program and had ~~$3.3 million of~~no outstanding advances with the FRB at ~~March 31,~~September 30, 2022. Through ~~March 31,~~September 30, 2022 the Bank has not used the PPPLF program to fund any round two PPP loans.

Loan Modifications/Troubled Debt Restructurings. Under the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 modifications. A financial institution can then suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring (“TDR”), and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either January 1, 2022 or the 60th day after the end of the COVID-19 national emergency. Quaint Oak Bank has made that election. Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a good-faith basis in response to COVID-19 to loan customers who were current prior to any relief will not be considered TDRs.

Prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013 of the CARES Act.

The Bank addresses loan payment modification requests on a case-by-case basis considering the effects of the COVID-19 pandemic, related economic slow-down and stay-at-home orders on our customer and their current and projected cash flows through the term of the loan. Through ~~March 31,~~September 30, 2022, the Bank modified 231 loans with principal balances totaling $90.6 million representing approximately ~~20.4%~~15.6% of our ~~March 31,~~September 30, 2022 loan balances. A majority of deferrals are two-month payment deferrals of principal and interest, with payments after deferral increased to collect amounts deferred. In some cases, certain loans were granted additional deferrals. ~~None~~As of ~~the~~September 30, 2022 there are no loans ~~granted loan payment deferrals through March 31, 2022~~that are still on ~~deferral as of March 31, 2022.~~deferral.

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 believes 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 period or in future periods.

Our critical accounting policies involving significant judgments and assumptions used in the preparation of the unaudited consolidated financial statements as of ~~March 31,~~September 30, 2022 have remained unchanged from the disclosures presented in our Annual Report on Form 10-K.

Comparison of Financial Condition at ~~March~~September ~~31,~~30, 2022 and December 31, 2021

General. The Company’s total assets at ~~March 31,~~September 30, 2022 were ~~$568.1~~$707.3 million, an increase of ~~$14.0~~$153.1 million, or ~~2.5%~~27.6%, from $554.1 million at December 31, 2021. This growth in total assets was primarily due to a ~~$33.3~~$175.2 million, or ~~8.3%~~43.4%, increase in loans receivable, ~~net, a $33.3 million, or 311.2%,~~net. This increase ~~in cash and cash equivalents, and a $920,000, or 42.2%, increase in investment in Federal Home Loan Bank stock, at cost. These increases were~~was partially offset by a ~~$51.0~~$19.4 million, or ~~47.3%~~18.0%, decrease in loans held for ~~sale, a $963,000, or 12.2%, decrease in investment in interest-earning time deposits, and a $259,000, or 6.4%, decrease in investment securities available for sale at fair value.~~sale. The largest increases within the loan portfolio occurred in commercial real estate loans which increased ~~$13.9~~$129.3 million, or ~~7.6%~~70.4%, ~~and~~ multi-family residential loans which increased ~~$12.0~~$19.1 million, or ~~40.9%.~~ 65.2%, construction loans which increased $10.0 million, or 63.1%, commercial business loans which increased $8.5 million, or 6.6%, and one-to-four family owner occupied loans which increased $7.6 million, or 78.2%, The increase in commercial real estate loans was primarily due to the purchase of a $55.5 million loan portfolio by the Bank’s wholly-owned subsidiary, Oakmont Commercial, LLC in April, 2022.

Cash and Cash Equivalents. Cash and cash equivalents ~~increased $33.3~~decreased $2.4 million, or ~~311.2%~~22.1%, from $10.7 million at December 31, 2021 to ~~$44.0~~$8.3 million at ~~March 31,~~September 30, 2022, ~~with the expectation that~~as excess liquidity ~~will be~~was used primarily to fund loans. ~~The increase in cash and cash equivalents was primarily due to the proceeds from the sale of a large pool of equipment loans at the end of March 2022.~~

Investment in Interest-Earning Time Deposits. Investment in interest-earning time deposits decreased ~~$963,000,~~$2.4 million, or ~~12.2%~~29.7%, from $7.9 million at December 31, 2021 to ~~$7.0~~$5.6 million at ~~March 31,~~September 30, 2022 as ~~four~~14 interest-earning time deposits matured and were not renewed and six interest-earning time deposits were purchased during the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

Investment Securities Available for Sale. Investment securities available for sale decreased ~~$259,000,~~$840,000, or ~~6.4%~~20.8%, from $4.0 million at December 31, 2021 to ~~$3.8~~$3.2 million at ~~March 31,~~September 30, 2022, due primarily to the principal repayments on these securities during the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

Loans Held for Sale. Loans held for sale decreased ~~$51.0~~$19.4 million, or ~~47.3%~~18.0%, from $107.8 million at December 31, 2021 to ~~$56.9~~$88.4 million at ~~March 31,~~September 30, 2022 as ~~Oakmont Capital Holdings, LLC~~the Bank originated ~~$67.8~~$277.6 million in equipment loans held for sale ~~during the period ended March 31, 2022. During the period ended March 31, 2022 Oakmont Capital Holdings, LLC~~and sold ~~$107.9~~$274.4 million of equipment ~~loans.~~loans during the nine months ended September 30, 2022. Also contributing to the decrease in loans held for sale is $11.2 million of loan amortization and prepayments. Additionally, the Bank’s mortgage banking subsidiary, Quaint Oak Mortgage, LLC, originated ~~$34.5~~$100.0 million of one-to-four family residential loans during the ~~period~~nine months ended ~~March 31,~~September 30, 2022 and sold ~~$45.3~~$111.4 million of loans in the secondary market during this same period.

Loans Receivable, Net. Loans receivable, net, increased ~~$33.3~~$175.2 million, or ~~8.3%~~43.4%, to ~~$437.3~~$579.2 million at ~~March 31,~~September 30, 2022 from $404.0 million December 31, 2021. This increase was funded primarily from deposits. Increases within the portfolio occurred in commercial real estate which increased ~~$13.9~~$129.3 million, or ~~7.6%~~70.4%, multi-family residential loans which increased ~~$12.0~~$19.1 million, or ~~40.9%~~65.2%, construction loans which increased $10.0 million, or 63.1%, commercial business loans which increased ~~$3.8~~$8.5 million, or ~~2.9%~~6.6%, ~~one-to-four~~and one -to-four family owner occupied loans which increased ~~$2.5 million, of 26.0%, and construction loans which increased $1.8~~$7.6 million, or ~~11.2%~~78.2%. However, by excluding PPP loans from commercial business loans, the balance of commercial business loans increased $46.3 million, or 52.1%. The ~~increases within~~increase in commercial real estate loans was primarily due to the purchase of a $55.5 million loan portfolio ~~were partially offset~~ by ~~decreases~~the Bank's wholly-owned subsidiary, Oakmont Commercial, LLC in ~~one-to-four family non-owner occupied loans, which decreased $717,000, or 1.9%, and home equity loans which decreased $125,000, or 2.7%.~~April, 2022. The Company continues its strategy of diversifying its loan portfolio with higher yielding and shorter-term loan products and selling substantially all of its newly originated one-to-four family owner-occupied loans into the secondary market.

Deposits. Total deposits increased ~~$11.5~~$99.9 million, or ~~2.6%~~22.4%, to ~~$458.6~~$547.1 million at ~~March 31,~~September 30, 2022 from $447.2 million at December 31, 2021. This increase in deposits was primarily attributable to increases of ~~$11.6~~$88.7 million, or ~~17.9%~~44.2%, in money market accounts, and $15.1 million, or 23.3%, in non-interest bearing checking ~~accounts, and $5.0 million, or 2.8%, in certificates of deposit.~~accounts. The increase in deposits was partially offset by a ~~$5.1~~$3.7 million, or ~~2.6%~~2.0%, decrease in certificates of deposit, a $166,000, or 9.0%, decrease in savings accounts and a $6,000, or 60.0%, decrease in passbook accounts. The increase in money market ~~accounts.~~accounts was primarily due to a $150.0 million deposit in May, 2022 through a deposit placement agreement with a third party bank.

Borrowings. Total Federal Home Loan Bank (FHLB) borrowings ~~decreased $3.0~~increased $43.8 million, or ~~6.1%~~89.1%, to ~~$46.2~~$93.0 million at ~~March 31,~~September 30, 2022 from $49.2 million at December 31, 2021. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company borrowed ~~$23.0~~$115.3 million of FHLB short-term borrowings and ~~paid down $26.0~~$80.0 million of FHLB long-term borrowings and paid down $131.3 million of FHLB short-term borrowings and $20.2 million of FHLB long-term borrowings. Federal Reserve Bank (FRB) long-term borrowings decreased ~~$546,000,~~$3.9 million, or ~~14.0%~~100.0%, to ~~$3.3 million~~none at ~~March 31,~~September 30, 2022 from $3.9 million at December 31, 2021 as the Company paid off first round PPP loans pledged as collateral under the FRB’s Paycheck Protection Program Liquidity Facility (PPPLF). The Company did not utilize the FRB’s PPPLF to fund second round PPP loans. Other short-term borrowings increased to $916,000 at March 31, 2022 from none at December 31, 2021, representing outstanding balances on two lines of credit that Oakmont Capital Holdings, LLC has with a credit union which are used to fund equipment loans.

Accrued Expenses and Other Liabilities. Accrued expenses and other liabilities increased ~~$2.4~~$3.5 million, or ~~39.3%~~59.2%, to ~~$8.3~~$9.5 million at ~~March 31,~~September 30, 2022 from $6.0 million at December 31, 2021, due primarily to an increase in tax and other expense accruals.

Stockholders’ Equity. Total stockholders’ equity increased ~~$3.1~~$8.7 million, or ~~8.3%~~23.6%, to ~~$40.0~~$45.6 million at ~~March 31,~~September 30, 2022 from $36.9 million at December 31, 2021. Contributing to the increase was net income for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 of ~~$2.2~~$6.7 million, net income attributable to noncontrolling interest of ~~$1.0~~$2.6 million, common stock earned by participants in the employee stock ownership plan of ~~$91,000,~~$259,000, amortization of stock awards and options under our stock compensation plans of ~~$42,000,~~$126,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of ~~$18,000~~$48,000 and the reissuance of treasury stock for exercised stock options of ~~$13,000.~~$181,000. These increases were partially offset by dividends paid of ~~$221,000,~~$751,000, noncontrolling interest distribution of ~~$117,000, other comprehensive loss, net of $21,000, and~~$279,000, the purchase of treasury stock of ~~$14,000.~~$46,000, and other comprehensive loss, net of $42,000.

Comparison of Operating Results for the Three Months Ended ~~March 31,~~September 30, 2022 and 2021

General. Net income amounted to ~~$2.2~~$2.6 million for the three months ended ~~March 31,~~September 30, 2022, an increase of ~~$1.2 million,~~$853,000, or ~~118.3%~~47.9%, compared to net income of ~~$1.0~~$1.8 million for the three months ended ~~March 31,~~September 30, 2021. The increase in net income on a comparative quarterly basis was primarily the result of an increase in ~~net interest~~non-interest income of ~~$2.1~~$2.4 million, and an increase in ~~non-interest~~net interest income of ~~$2.5~~$1.6 million, partially offset by an increase in non-interest expense of ~~$1.5~~$1.9 million, an increase in the provision for loan losses of $98,000, and an increase in the provision for income taxes of ~~$437,000, and an increase in the provision for loan losses of $425,000.~~$310,000.

Net Interest Income. Net interest income increased ~~$2.1~~$1.6 million, or ~~58.4~~32.8% to ~~$5.7~~$6.7 million for the three months ended ~~March 31,~~September 30, 2022 from ~~$3.6~~$5.0 million for the three months ended ~~March 31,~~September 30, 2021. The increase was driven by a ~~$1.8~~$3.0 million, or ~~35.9%~~49.5%, increase in interest income. This increase in net interest income ~~and~~was partially offset by a ~~$365,000,~~$1.3 million, or ~~29.0%~~133.2%, ~~decrease~~increase in interest expense.

Interest Income. The ~~$1.8~~$3.0 million, or ~~35.9%~~49.5%, increase in interest income was primarily due to a $178.0 million increase in average loans receivable, net, including loans held for sale, which increased from an average balance of $488.5 million for the three months ended ~~March 31, 2022 over the comparable period in~~September 30, 2021 ~~was primarily due~~ to an 85average balance of $666.5 million for the three months ended September 30, 2022, and had the effect of increasing interest income $2.2 million. Also contributing to the increase in interest income was a 33 basis point increase in the yield on average loans receivable, net, including loans held for sale, which increased from ~~4.12%~~4.87% for the three months ended ~~March 31,~~September 30, 2021 to ~~4.97%~~5.20% for the three months ended ~~March 31,~~September 30, 2022, and had the effect of increasing interest income ~~$1.1 million. Also contributing to the~~$561,000.

Interest Expense. The $1.3 million, or 133.2%, increase in interest ~~income was a $68.3 million increase in average loans receivable, net, including loans held for sale, which increased from an average balance of $460.0 million~~expense for the three months ended ~~March 31,~~September 30, 2022 over the comparable period in 2021 was primarily attributable to ana 95 basis point increase in the rate on average ~~balance of $528.3 million~~money market accounts, which increased from 0.55% for the three months ended ~~March 31,~~September 30, 2021 to 1.50% for the three months ended September 30, 2022, and had the effect of increasing interest ~~income $704,000.~~

~~Interest Expense.~~ ~~The $365,000, or 28.9%, decrease~~expense by $736,000. Also contributing to the increase in money market interest expense was ~~primarily attributable to~~ a 40 basis point decrease in the rate on average certificate of deposit accounts, which decreased from 1.30% for the three months ended March 31, 2021 to 0.90% for the three months ended March 31, 2022, and had the effect of decreasing interest expense by $180,000. Interest expense on deposits continues to be actively managed to lower our cost of funds. This decrease was also partially attributable to a $12.8 million decrease in average certificate of deposit accounts which decreased from an average balance of $196.0 million for the three months ended March 31, 2021 to an average balance of $183.1 million for the three months ended March 31, 2022, and had the effect of decreasing interest expense $42,000. This decrease in interest expense was partially offset by a $68.9$117.2 million increase in average money market accounts which increased from ~~an average balance of $129.1~~$192.5 million for the three months ended ~~March 31,~~September 30, 2021 to an average balance of ~~$198.0~~$309.7 million for the three months ended ~~March 31,~~September 30, 2022, and had the effect of increasing interest expense by ~~$128,000. This~~$160,000. Both the increase in money market average balance and rate was impacted by a $150.0 million deposit in May, 2022 through a deposit placement agreement with a third party bank. Also contributing to the increase in interest expense was ~~partially offset by~~ a ~~33 basis point decrease~~$64.1 million increase in ~~the rate on~~ average ~~money market accounts,~~FHLB long-term borrowings which ~~decreased~~increased from ~~0.74%~~an average balance of $24.2 million for the three months ended ~~March 31,~~September 30, 2021 to ~~0.41%~~an average balance of $88.3 million for the three months ended ~~March 31,~~September 30, 2022, and had the effect of ~~decreasing~~increasing interest expense by ~~$161,000.~~$329,000. The average interest rate spread ~~increased~~decreased from ~~2.55%~~3.62% for the three months ended ~~March 31,~~September 30, 2021 to ~~4.00%~~3.50% for the three months ended ~~March 31,~~September 30, 2022 while the net interest margin ~~increased~~decreased from ~~2.78%~~3.82% for the three months ended ~~March 31,~~September 30, 2021 to ~~4.15%~~3.75% for the three months ended ~~March 31,~~September 30, 2022.

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.

(2) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for loan losses.

Provision for Loan Losses. The Company’s provision for loan losses increased ~~$425,000,~~$98,000, or ~~167.3%~~17.6%, to ~~$679,000~~$655,000 for the three months ended ~~March 31,~~September 30, 2022 from ~~$254,000~~$557,000 for the three months ended ~~March 31,~~September 30, 2021. The increase in the provision for loan losses for the three months ended ~~March 31,~~September 30, 2022 over the three months ended ~~March 31,~~September 30, 2021 was based on an evaluation of the allowance relative to such factors as volume of the loan portfolio, concentrations of credit risk, prevailing economic conditions, prior loan loss experience and amount of non-performing loans at ~~March 31,~~September 30, 2022.

Non-performing loans ~~amounted to $1.7 million, or 0.45%,~~at September 30, 2022 consisted of ~~net~~two loans ~~receivable at March 31, 2022, one loan of which was~~ on non-accrual status ~~and one loan was 90 days or more past due and accruing interest. Comparably, non-performing loans amounted to $9,000 at December 31, 2021 consisting~~in the aggregate amount of one loan on non-accrual status . The non-performing loan at December 31, 2021 consisted of one one-to-four family non-owner occupied residential loan, and is generally well-collateralized or adequately reserved for.$1.7 million. The non-performing loans at ~~March 31,~~September 30, 2022 ~~include one one-to-four family residential non-owner occupied loan and one multi-family residential loan, and both~~ are generally well-collateralized or adequately reserved for. The allowance for loan losses as a percent of total loans receivable, net was ~~1.30%~~1.22% at ~~March 31,~~September 30, 2022 and ~~1.29%~~1.30% at December 31, 2021. Non-performing assets amounted to $1.7 million, or 0.24% of assets at September 30, 2022 compared to $9,000 at December 31, 2021.

Non-Interest Income. Non-interest income increased ~~$2.5~~$2.4 million, or ~~89.4%~~66.6%, from ~~$2.8~~$3.6 million for the three months ended ~~March 31,~~September 30, 2021 to ~~$5.2~~$6.0 million for the three months ended ~~March 31,~~September 30, 2022. The increase was primarily attributable to a ~~$2.9~~$2.4 million, or ~~237.5%~~129.4%, increase in net gain on loans held for sale, a ~~$106,000,~~$156,000, or ~~20.0%~~25.8%, increase in mortgage banking, equipment lending, and title abstract fees, a $93,000, or 244.7%, increase in other fees and service charges, a $19,000, or 14.3%, increase in insurance commissions, and a ~~$30,000,~~$9,000, or ~~96.8%~~11.4%, increase in real estate sales commissions, net. The increase in net gain on loans held for sale was primarily due to the sale of ~~$107.9~~$97.5 million of equipment loans during the three months ended ~~March 31,~~September 30, 2022. These increases were partially offset by a ~~$317,000,~~$311,000, or ~~100.0%, decrease in gain on sale of investment securities available for sale, a $174,000, or 50.4%, decrease in other fees and service charges, and a $68,000, or 33.8%~~84.3%, decrease in gain on sale of SBA loans.

Non-Interest Expense. Total non-interest expense increased ~~$1.5~~$1.9 million, or ~~31.0%~~34.9%, from ~~$4.7~~$5.4 million for the three months ended ~~March 31,~~September 30, 2021 to ~~$6.2~~$7.3 million for the three months ended ~~March 31,~~September 30, 2022, primarily due to a $1.2 million, or ~~35.0%~~30.1%, increase in salaries and employee benefits expense, a ~~$103,000,~~$310,000, or ~~98.1%~~95.1%, increase in ~~advertising~~other expense, a ~~$65,000,~~$150,000, or ~~127.5%~~140.2%, increase in professional fees, a $128,000, or 132.0%, increase in FDIC deposit insurance assessment, a ~~$55,000,~~$98,000, or ~~16.7%, increase in other expense, a $43,000, or 11.4%~~25.9%, increase in occupancy and equipment expense, a ~~$21,000,~~$59,000, or ~~12.9%~~53.6%, increase in ~~professional fees,~~advertising expense, and a ~~$3,000,~~$9,000, or ~~4.4%~~15.5%, increase in Directors’ fees and expenses. The increase in salaries and employee benefits expense is primarily due to ~~generally~~ expanding and improving the level of staff at the Bank and its subsidiary companies, including ~~Oakmont. Oakmont’s~~Oakmont Capital Holdings, LLC. Oakmont Capital Holdings, LLC’s results for the three months ended ~~March 31,~~September 30, 2022 also contributed to the increases in occupancy and equipment expense, professional fees, advertising expense, and other expense. The increase in non-interest expense was partially offset by a ~~$9,000,~~$94,000, or 40.2%, decrease in data processing expense, and a $2,000, or 100.0%, decrease in other real estate owned ~~expense, and an $8,000, or 3.9%, increase in data processing expense.~~expenses.

Provision for Income Tax. The provision for income tax increased ~~$437,000,~~$310,000, or ~~103.1%~~44.2%, from ~~$424,000~~$702,000 for the three months ended ~~March 31,~~September 30, 2021 to ~~$861,000~~$1.0 million for the three months ended ~~March 31,~~September 30, 2022 due primarily to the increase in pre-tax income.

Comparison of Operating Results for the Nine Months Ended September 30, 2022 and 2021

General. Net income amounted to $6.7 million for the nine months ended September 30, 2022, an increase of $2.3 million, or 54.0%, compared to net income of $4.3 million for the nine months ended September 30, 2021. The increase in net income on a comparative nine-month basis was primarily the result of an increase in non-interest income of $6.9 million, and an increase in net interest income of $4.6 million, partially offset by an increase in non-interest expense of $5.1 million, an increase in the provision for income taxes of $838,000, and an increase in the provision for loan losses of $674,000.

Net Interest Income. Net interest income increased $4.6 million, or 34.1% to $17.9 million for the nine months ended September 30, 2022 from $13.4 million for the nine months ended September 30, 2021. The increase was driven by a $5.9 million, or 35.4%, increase in interest income, partially offset by a $1.4 million, or 40.4%, increase in interest expense.

Interest Income. The $5.9 million, or 35.4%, increase in interest income was primarily due to a $116.5 million increase in average loans receivable, net, including loans held for sale, which increased from an average balance of $478.9 million for the nine months ended September 30, 2021 to an average balance of $595.4 million for the nine months ended September 30, 2022, and had the effect of increasing interest income $4.0 million. Also contributing to the increase in interest income was a 40 basis point increase in the yield on average loans receivable, net, including loans held for sale, which increased from 4.57% for the nine months ended September 30, 2021 to 4.97% for the nine months ended September 30, 2022, and had the effect of increasing interest income $1.8 million. Contributing to both the increase in average balance of loans receivable, net and yield was the purchase of a $55.5 million commercial real estate loan portfolio by the Bank’s wholly-owned subsidiary, Oakmont Commercial, LLC in April, 2022.

Interest Expense. The $1.4 million, or 40.4%, increase in interest expense was primarily attributable to a 33 basis point increase in the rate on average money market accounts, which increased from 0.63% for the nine months ended September 30, 2021 to 0.96% for the nine months ended September 30, 2022, and had the effect of increasing interest expense by $633,000. Also contributing to the increase in interest expense was an $87.9 million increase in average money market accounts which increased from an average balance of $166.8 million for the nine months ended September 30, 2021 to an average balance of $254.7 million for the nine months ended September 30, 2022, and had the effect of increasing interest expense by $417,000. The increase in money market average balance was impacted by a $150.0 million deposit in May, 2022 through a deposit placement agreement with a third party bank. Also contributing to the increase in interest expense was a $37.5 million increase in average FHLB long-term borrowings which increased from $26.3 million for the nine months ended September 30, 2021 to $63.7 million for the nine months ended September 30, 2022, and had the effect of increasing interest expense by $560,000. This increase in interest expense was partially offset by a 19 basis point decrease in the rate on average certificate of deposit accounts, which decreased from 1.17% for the nine months ended September 30, 2021 to 0.98% for the nine months ended September 30, 2022, and had the effect of decreasing interest expense by $259,000. The average interest rate spread increased from 3.20% for the nine months ended September 30, 2021 to 3.54% for the nine months ended September 30, 2022, while the net interest margin increased from 3.41% for the nine months ended September 30, 2021 to 3.73% for the nine months ended September 30, 2022.

(2) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for loan losses.

Provision for Loan Losses. The Company’s provision for loan losses increased $674,000, or 53.5%, to $1.9 million for the nine months ended September 30, 2022 from $1.3 million for the nine months ended September 30, 2021. The increase in the provision for loan losses for the nine months ended September 30, 2022 over the nine months ended September 30, 2021 was based on an evaluation of the allowance relative to such factors as volume of the loan portfolio, concentrations of credit risk, prevailing economic conditions, prior loan loss experience and amount of non-performing loans at September 30, 2022.

Non-performing loans at September 30, 2022 consisted of two loans on non-accrual status in the aggregate amount of $1.7 million. The non-performing loans at September 30, 2022 are generally well-collateralized or adequately reserved for. The allowance for loan losses as a percent of total loans receivable, net was 1.22% at September 30, 2022 and 1.30% at December 31, 2021. Non-performing assets amounted to $1.7 million, or 0.24% of assets at September 30, 2022 compared to $9,000 at December 31, 2021.

Non-Interest Income. Non-interest income increased $6.9 million, or 78.0%, from $8.9 million for the nine months ended September 30, 2021 to $15.8 million for the nine months ended September 30, 2022. The increase was primarily attributable to a $6.9 million, or 157.0%, increase in net gain on loans held for sale, a $564,000, or 34.0%, increase in mortgage banking, equipment lending, and title abstract fees, a $168,000, or 79.6%, increase in other fees and service charges, a $70,000, or 49.0%, increase in real estate commissions, net, and a $34,000, or 9.1%, increase in insurance commissions. The increase in net gain on loans held for sale was primarily due to the sale of $274.4 million of equipment loans during the nine months ended September 30, 2022. These increases were partially offset by a $411,000, or 64.6%, decrease in gain on sale of SBA loans, a $362,000, or 100.0%, decrease in gain on sale of investment securities available for sale, and a $72,000, or 7.0%, decrease in net loan servicing income.

Non-Interest Expense. Total non-interest expense increased $5.1 million, or 34.1%, from $15.0 million for the nine months ended September 30, 2021 to $20.1 million for the nine months ended September 30, 2022, primarily due to a $3.9 million, or 35.5%, increase in salaries and employee benefits expense, a $535,000, or 54.9%, increase in other expense, a $233,000, or 105.4%, increase in FDIC deposit insurance assessment, a $220,000, or 19.2%, increase in occupancy and equipment expense, a $194,000, or 57.6%, increase in advertising expense, a $181,000, or 37.1%, increase in professional fees, and a $24,000, or 12.9%, increase in Directors’ fees and expenses. The increase in salaries and employee benefits is primarily due to expanding and improving the level of staff at the Bank and its subsidiary companies, including Oakmont Capital Holdings, LLC. Oakmont Capital Holdings, LLC’s results for the nine months ended September 30, 2022 also contributed to the increases in occupancy and equipment expense, professional fees, advertising expense, and other expense. The increase in non-interest expense was partially offset by a $141,000, or 22.0%, decrease in data processing expense, and a $14,000, or 100.0%, decrease in other real estate owned expenses.

Provision for Income Tax. The provision for income tax increased $838,000, or 49.5%, from $1.7 million for the nine months ended September 30, 2021 to $2.5 million for the nine months ended September 30, 2022 due primarily to the increase in pre-tax income.

The Company's operations consist of two reportable operating segments: Banking and ~~Mortgage Banking.~~Oakmont Capital Holdings, LLC. Our Banking Segment generates revenues primarily from its lending, deposit gathering and fee business activities. Our ~~Mortgage Banking~~Oakmont Capital Holdings, LLC Segment originates ~~residential mortgage~~equipment loans which are generally sold ~~into the secondary market along~~to third party institutions with the loans’ servicing ~~rights.~~rights retained. Detailed segment information appears in Note 12 in the Notes to Unaudited Consolidated Financial Statements.

Our Banking Segment reported a pre-tax segment profit (“PTSP”) for the three months ended ~~March 31,~~September 30, 2022 of ~~$4.3~~$2.6 million, a ~~$2.8 million,~~$251,000, or ~~181.7%~~10.7%, increase from the same period in 2021. This increase in PTSP was primarily due to a ~~$2.6~~$1.7 million or ~~126.1%, increase in non-interest income, and a $2.0 million, or 54.3%~~34.7%, increase in net interest income. ~~These increases were~~This increase was partially offset by a ~~$1.5 million,~~$968,000, or ~~36.0%~~24.2%, increase in non-interest expense, a $427,000, or 22.8%, decrease in non-interest income and ~~a $425,000,~~$98,000, or ~~167.3%~~17.6%, increase in the provision for loan losses. The increase in non-interest income was primarily due to a $3.0 million gain on the sale of equipment loans, and a $185,000, or 42.4%, increase in equipment lending and title abstract fees, partially offset by a $174,000, or 50.4%, decrease in other fees and service charges. The increase in non-interest expense was primarily due to a $1.2 million, or 39.6%, increase in salaries and employee benefits expense, an $85,000, or 93.4%, increase in advertising expense, a $57,000, or 18.4% increase in other expenses, and a $54,000, or 18.1%, increase in occupancy and equipment expense.

Our Mortgage Banking Segment reported a pre-tax segment loss (“PTSL”) for the three months ended March 31, 2022 of $174,000, a $69,000, or 65.7%, increase from the same period in 2021. The increase in PTSL was primarily due to a $148,000, or 21.6%, decrease in non-interest income and a $9,000, or 1.3%, increase in non-interest expense, partially offset by an $88,000, or 77.2%, increase in net interest income . The decrease in non-interest income was primarily due to a ~~$79,000,~~$311,000, or ~~83.2%~~84.3%, decrease in the gain on sale of SBA loans, and a $159,000, or 47.9%, decrease in mortgage banking and title abstract fees, ~~and~~partially offset by a ~~$69,000,~~$48,000, or ~~11.7% decrease net~~5.7%, increase in gain on loans held for sale. The increase in non-interest expense was primarily due to a ~~$31,000, 6.6%~~$680,000, or 23.7%, increase in salaries and employee benefits ~~and an $18,000,~~expense, a $173,000, or ~~128.6%~~258.2%, increase in ~~advertising~~professional fees, a $128,000, or 132.0%, increase in FDIC deposit insurance assessment expense, and a $28,000, or 9.5%, increase in occupancy and equipment expense.

Our Oakmont Capital Holdings, LLC Segment reported a pre-tax segment profit (“PTSP”) for the three months ended September 30, 2022 of $2.1 million, a $1.8 million, or 657.7%, increase from the same period in 2021. The increase in PTSP was primarily due to a $2.8 million, or 164.6%, increase in non-interest income partially offset by a $925,000, or 64.7%, increase in non-interest expense, and a $101,000, or 1,262.5%, decrease in net interest income. The increase in non-interest income was primarily due to a $2.4 million, or 231.4%, increase net gain on loans held for sale, and a $315,000, or 115.8%, increase in equipment lending fees. The increase in non-interest expense was primarily due to a $555,000, 45.0%, increase in salaries and employee benefits expense, a $284,000, or 747.4%, increase in other non-interest expenses, and a $70,000, or 83.3%, increase in occupancy and equipment expense.

Our Banking Segment reported a pre-tax segment profit (“PTSP”) for the nine months ended September 30, 2022 of $6.5 million, a $528,000, or 8.9%, increase from the same period in 2021. This increase in PTSP was primarily due to a $4.7 million, or 34.8%, increase in net interest income. This increase was partially offset by a $2.9 million, or 25.5%, increase in non-interest expense, a $674,000, or 53.5% increase in the provision for loan losses, and a $587,000, or 11.4%, decrease in non-interest income. The increase in non-interest expense was primarily due to a $2.3 million, or 28.6%, increase in salaries and employee benefits expense, a $269,000, or 75.6%, increase in professional fees, a $233,000, or 105.4%, increase in FDIC deposit insurance assessment, a $132,000, or 15.4%, increase in other non-interest expenses, and an $80,000, or 8.9%, increase in occupancy and equipment expense. The decrease in non-interest income was primarily due to a $411,000, or 64.6%, decrease in gain on the sale of SBA loans, a $390,000, or 39.4%, decrease in mortgage banking and title abstract fees, and a $362,000, or 100.0%, decrease in gain on sale of investment securities available for sale, partially offset by a $545,000, or 23.9%, increase in gain on loans held for sale.

Our Oakmont Capital Holdings, LLC Segment reported a pre-tax segment profit (“PTSP”) for the nine months ended September 30, 2022 of $5.2 million, a $5.2 million, increase from the same period in 2021. The increase in PTSP was primarily due to a $7.5 million, or 201.7%, increase in non-interest income, partially offset by a $2.2 million, or 61.4%, increase in non-interest expense, and a $119,000, or 122.7%, decrease in net interest income. The increase in non-interest income was primarily due to a $6.4 million, or 299.5%, increase in net gain on loans held for sale, and a $954,000, or 143.0%, increase in equipment lending fees. The increase in non-interest expense was primarily due to a $1.6 million, or 53.6%, increase in salaries and employee benefits expense, a $403,000, or 347.4%, increase in other non-interest expense, a $153,000, or 135.4%, increase in advertising expense, and a $140,000, or 56.5%, increase in occupancy and equipment expense, partially offset by an $88,000, or 66.7%, decrease in professional fees.

The Company’s primary sources of funds are deposits, amortization and prepayment of loans and to a lesser extent, loan sales and other funds provided from operations. While scheduled principal and interest payments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company sets the interest rates on its deposits to maintain a desired level of total deposits. In addition, the Company invests excess funds in short-term interest-earning assets that provide additional liquidity. At ~~March 31,~~September 30, 2022, the Company's cash and cash equivalents amounted to ~~$44.0~~$8.3 million. At such date, the Company also had ~~$4.5~~$3.1 million invested in interest-earning time deposits maturing in one year or less.

The Company uses its liquidity to fund existing and future loan commitments, to fund deposit outflows, to invest in other interest-earning assets and to meet operating expenses. At ~~March 31,~~September 30, 2022, Quaint Oak Bank had outstanding commitments to originate loans of ~~$21.7~~$20.3 million, commitments under unused lines of credit of ~~$44.9~~$49.0 million, and ~~$4.9~~$3.3 million under standby letters of credit.

At ~~March 31,~~September 30, 2022, certificates of deposit scheduled to mature in one year or less totaled ~~$72.1~~$85.8 million. Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case.

In addition to cash flow from loan payments and prepayments and deposits, the Company has 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 ~~March 31,~~September 30, 2022, we had ~~$46.2~~$93.0 million of borrowings from the FHLB and had ~~$276.9~~$344.2 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 ~~March 31,~~September 30, 2022 Quaint Oak Bank had ~~$458,000~~$5.3 million in borrowing capacity with the Federal Reserve Bank of Philadelphia. There were no borrowings under this facility at March 31, 2022. The Bank also has borrowing capacity with the FRB under the PPPLF program in the amount of the outstanding pledged PPP loans that totaled $23.0 million at March 31, 2022. Quaint Oak Bank’s outstanding advances with the FRB under the PPPLF program were $3.3 million as of March 31,September 30, 2022. Oakmont Capital Holdings, LLC has two lines of credit with a credit union which are used to fund equipment loans totaling ~~$11.0~~$15.0 million at ~~March 31,~~September 30, 2022. As of ~~March 31,~~September 30, 2022, there were ~~$916,000 of~~no outstanding balances on these two lines of credit.

Total stockholders’ equity increased ~~$3.1~~$8.7 million, or ~~8.3%~~23.6%, to ~~$40.0~~$45.6 million at ~~March 31,~~September 30, 2022 from $36.9 million at December 31, 2021. Contributing to the increase was net income for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 of ~~$2.2~~$6.7 million, net income attributable to noncontrolling interest of ~~$1.0~~$2.6 million, common stock earned by participants in the employee stock ownership plan of ~~$91,000,~~$259,000, amortization of stock awards and options under our stock compensation plans of ~~$42,000,~~$126,000, the reissuance of treasury stock under the Bank’s 401(k) Plan of ~~$18,000~~$48,000 and the reissuance of treasury stock for exercised stock options of ~~$13,000.~~$181,000. These increases were partially offset by dividends paid of ~~$221,000,~~$751,000, noncontrolling interest distribution of ~~$117,000, other comprehensive loss, net of $21,000, and~~$279,000, the purchase of treasury stock of ~~$14,000.~~$46,000, and other comprehensive loss, net of $42,000. 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 ~~March 31,~~September 30, 2022, Quaint Oak Bank exceeded each of its capital requirements with ratios of ~~7.71%~~6.82%, ~~10.18%~~8.45%, ~~10.18%~~8.45% and ~~11.44%~~9.67%, respectively. As a small savings and loan holding company eligible for exemption, the Company is not currently subject to any regulatory capital requirements.

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 ~~March 31,~~September 30, 2022, we had unfunded commitments under lines of credit of ~~$44.9~~$49.0 million, ~~$21.7~~$20.3 million of commitments to originate loans, and ~~$4.9~~$3.3 million under standby letters of credit. We had no commitments to advance additional amounts pursuant to outstanding lines of credit or undisbursed construction loans.

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.

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 ~~March 31,~~September 30, 2022. 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 ~~first~~third fiscal quarter of fiscal 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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.

The COVID-19 pandemic has adversely impacted our ability to conduct business and is expected to adversely impact our financial results and those of our customers. The ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic has significantly adversely affected our operations and the way we provide banking services to businesses and individuals, most of whom are currently under government issued stay-at-home orders. As an essential business, we continue to provide banking and financial services to our customers in an environment compliant with federal and state COVID-19 guidelines. In addition, we continue to provide access to banking and financial services through online banking, ATMs and by telephone. If the COVID-19 pandemic worsens it could limit or disrupt our ability to provide banking and financial services to our customers.

In response to the stay-at-home orders, the majority of our employees currently are working remotely to enable us to continue to provide banking services to our customers. Heightened cybersecurity, information security and operational risks may result from these remote work-from-home arrangements. We also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to the effects and restrictions of the COVID-19 pandemic. We also rely upon our third-party vendors to conduct business and to process, record and monitor transactions. If any of these vendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers. Although we have business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective.

There is pervasive uncertainty surrounding the future economic conditions that will emerge in the months and years following the start of the pandemic. As a result, management is confronted with a significant and unfamiliar degree of uncertainty in estimating the impact of the pandemic on credit quality, revenues and asset values. To date, the COVID-19 pandemic has resulted in declines in loan demand and loan originations, other than through government sponsored programs such as the Paycheck Protection Program, deposit availability, market interest rates and negatively impacted many of our business and consumer borrower’s ability to make their loan payments. Because the length of the pandemic and the efficacy of the extraordinary measures being put in place to address its economic consequences are unknown, including recent reductions in the targeted federal funds rate, until the pandemic subsides, we expect our net interest income and net interest margin will be adversely affected. Many of our borrowers have become unemployed or may face unemployment, and certain businesses are at risk of insolvency as their revenues decline precipitously, especially in businesses related to travel, hospitality, leisure and physical personal services. Businesses may ultimately not reopen as there is a significant level of uncertainty regarding the level of economic activity that will return to our markets over time, the impact of governmental assistance, the speed of economic recovery, the resurgence of COVID-19 in subsequent seasons and changes to demographic and social norms that will take place.

The impact of the pandemic is expected to continue to adversely affect us during 2020 and possibly longer as the ability of many of our customers to make loan payments has been significantly affected. Although the Company makes estimates of loan losses related to the pandemic as part of its evaluation of the allowance for loan losses, such estimates involve significant judgment and are made in the context of significant uncertainty as to the impact the pandemic will have on the credit quality of our loan portfolio. It is likely that increased loan delinquencies, adversely classified loans and loan charge-offs will increase in the future as a result of the pandemic. Consistent with guidance provided by banking regulators, we have modified loans by providing various loan payment deferral options to our borrowers affected by the COVID-19 pandemic. Notwithstanding these modifications, these borrowers may not be able to resume making full payments on their loans once the COVID-19 pandemic is resolved. Any increases in the allowance for credit losses will result in a decrease in net income and, most likely, capital, and may have a material negative effect on our financial condition and results of operations.

Even after the COVID-19 pandemic subsides, the U.S. economy will likely require some time to recover from its effects, the length of which is unknown, and during which we may experience a recession. As a result, we anticipate our business may be materially and adversely affected during this recovery.Not applicable.

The Company’s repurchases of its common stock made during the quarter ended ~~March 31,~~September 30, 2022 including stock-for-stock option exercises of outstanding stock options, are set forth in the table below:

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.

	For the Three Months
	Ended March 31,
	2022		2021
	(In Thousands)
Supplementary Disclosure of Cash Flow and Non-Cash Information:
Cash payments for interest	$	771	$	1,054
Cash payments for income taxes	$	107	$	85
Initial recognition of operating lease right-of use assets	$	0	$	670
Initial recognition of operating lease obligations	$	0	$	670

	For the Nine Months
	Ended September 30,
	2022		2021
	(In Thousands)
Supplementary Disclosure of Cash Flow and Non-Cash Information:
Cash payments for interest	$	4,496	$	3,348
Cash payments for income taxes	$	2,892	$	2,405
Initial recognition of operating lease right-of use assets	$	560	$	670
Initial recognition of operating lease obligations	$	502	$	670

	For the Three Months Ended March 31,
	2022		2021
Net Income Attributable to Quaint Oak Bancorp, Inc.	$	2,248,000	$	1,030,000

Weighted average shares outstanding – basic		2,013,638		1,980,007
Effect of dilutive common stock equivalents		123,484		86,403
Adjusted weighted average shares outstanding – diluted		2,137,122		2,066,411

Basic earnings per share	$	1.12	$	0.52
Diluted earnings per share	$	1.05	$	0.50

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income Attributable to Quaint Oak Bancorp, Inc.	$	2,635,000	$	1,782,000	$	6,654,000	$	4,321,000

Weighted average shares outstanding – basic		2,050,650		2,002,816		2,034,153		1,991,336
Effect of dilutive common stock equivalents		118,082		97,211		116,791		93,950
Adjusted weighted average shares outstanding – diluted		2,168,732		2,100,026		2,150,944		2,085,286

Basic earnings per share	$	1.29	$	0.89	$	3.27	$	2.17
Diluted earnings per share	$	1.22	$	0.85	$	3.09	$	2.07

Details About Other Comprehensive Income	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (1)					Affected Line Item in the Statement of Income
	For the Three Months Ended March 31,
	2022		2021
Sale of securities available for sale	$	0	$	317		Gain on sales of investment securities
Tax effect		0		(67	)	Income taxes
Total reclassification for the period	$	0	$	250

	At March 31,			At December 31,
	2022			2021
Assets	*(In thousands, except share data)*
Due from banks, non-interest-bearing	$	427		$	854
Due from banks, interest-bearing		43,587			9,851
Cash and cash equivalents		44,014			10,705
Investment in interest-earning time deposits		6,961			7,924
Investment securities available for sale		3,774			4,033
Loans held for sale		56,867			107,823
Loans receivable, net of allowance for loan losses (2022 $5,941; 2021 $5,262)		437,307			403,966
Accrued interest receivable		2,776			3,139
Investment in Federal Home Loan Bank stock, at cost		3,098			2,178
Bank-owned life insurance		4,158			4,137
Premises and equipment, net		2,703			2,653
Goodwill		2,573			2,573
Other intangible, net of accumulated amortization		210			222
Prepaid expenses and other assets		3,694			4,762
Total Assets	$	568,135		$	554,115
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Non-interest bearing	$	76,309		$	64,731
Interest-bearing		382,326			382,435
Total deposits		458,635			447,166
Federal Home Loan Bank short-term borrowings		23,000			26,000
Federal Home Loan Bank long-term borrowings		23,193			23,193
Federal Reserve Bank long-term borrowings		3,349			3,895
Subordinated debt		7,941			7,933
Other short-term borrowings		916			0
Accrued interest payable		298			174
Advances from borrowers for taxes and insurance		2,497			2,856
Accrued expenses and other liabilities		8,342			5,989
Total Liabilities		528,171			517,206
Stockholders’ Equity
Preferred stock – $0.01 par value, 1,000,000 shares authorized; none issued or outstanding		0			0
Common stock – $0.01 par value; 9,000,000 shares authorized; 2,777,250 issued; 2,016,517 and 2,011,313 outstanding at March 31, 2022 and December 31, 2021, respectively		28			28
Additional paid-in capital		15,813			15,685
Treasury stock, at cost: 760,733 and 765,937 shares at March 31, 2022 and December 31, 2021, respectively		(4,955	)		(4,977	)
Accumulated other comprehensive income		2			23
Retained earnings		26,057			24,030
Total Quaint Oak Bancorp, Inc. Stockholders' Equity		36,945			34,789
Noncontrolling Interest		3,019			2,120
Total Stockholders' Equity	$	39,964		$	36,909
Total Liabilities and Stockholders’ Equity	$	568,135		$	554,115

See accompanying notes to the unaudited consolidated financial statements.

	For the Three Months Ended
	March 31,
	2022		2021
	(In thousands)
Interest Income
Interest on loans, including fees	$	6,570	$	4,743
Interest and dividends on time deposits, investment securities, interest-bearing deposits with others, and Federal Home Loan Bank stock		73		146
Total Interest Income		6,643		4,889

Interest Expense
Interest on deposits		620		876
Interest on Federal Home Loan Bank short-term borrowings		22		6
Interest on Federal Home Loan Bank long-term borrowings		112		139
Interest on Federal Reserve Bank long-term borrowings		3		40
Interest on subordinated debt		130		130
Interest on other short-term borrowings		9		70
Total Interest Expense		896		1,261
Net Interest Income		5,747		3,628
Provision for Loan Losses		679		254
Net Interest Income after Provision for Loan Losses		5,068		3,374

Non-Interest Income
Mortgage banking, equipment lending and title abstract fees		637		531
Real estate sales commissions, net		61		31
Insurance commissions		116		107
Other fees and services charges		171		345
Income from bank-owned life insurance		21		19
Net gain on loans held for sale		4,101		1,215
Gain on the sale of SBA loans		133		201
Gain on the sale of investment securities available for sale		0		317
Total Non-Interest Income		5,240		2,766

Non-Interest Expense
Salaries and employee benefits		4,591		3,400
Directors' fees and expenses		71		68
Occupancy and equipment		420		377
Data processing		197		205
Professional fees		184		163
FDIC deposit insurance assessment		116		51
Other real estate owned expenses		0		9
Advertising		208		105
Amortization of other intangible		12		12
Other		384		329
Total Non-Interest Expense		6,183		4,719

	Three Months Ended
	March 31,
	2022			2021
	(In thousands)
Net Income	$	3,264		$	997

Other Comprehensive Income (Loss):
Unrealized (losses) gains on investment securities available-for-sale		(27	)		244
Income tax effect		6			(52	)
Reclassification adjustment for gain on sale of investment securities included in net income		0			(317	)
Income tax effect		0			67
Other comprehensive loss		(21	)		(58	)

Total Comprehensive Income	$	3,243		$	939
Comprehensive Income (Loss) Attributable to Noncontrolling Interest	$	1,016		$	(33	)
Comprehensive Income Attributable to Quaint Oak Bancorp, Inc.	$	2,227		$	972

	Unrealized Gains (Losses) on Investment Securities Available for Sale (1)						Unrealized Gains (Losses) on Investment Securities Available for Sale (1)
	For the Three Months Ended March 31,						For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2022			2021			2022			2021		2022			2021
Balance at the beginning of the period	$	23		$	118		$	(18	)	$	34	$	23		$	118
Other comprehensive income (loss) before classifications		(21	)		192			(1	)		-		(42	)		202
Amount reclassified from accumulated other comprehensive income (loss)		0			(250	)
Amount reclassified from accumulated other comprehensive loss								-			-		-			(286	)
Total other comprehensive loss		(21	)		(58	)		(1	)		-		(42	)		(84	)
Balance at the end of the period	$	2		$	60		$	(19	)	$	34	$	(19	)	$	34

Details About Other Comprehensive Loss	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income (1)									Affected Line Item in the Statement of Income
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Unrealized losses on investment securities available for sale	$	-	$	-	$	-	$	362		Gain on sales of investment securities available for sale
		-		-		-		(76	)	Income taxes
	$	-	$	-	$	-	$	286

	March 31, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Due in one year or less	$	4,474	$	4,487	$	3,111	$	4,487
Due after one year through five years		2,487		3,437		2,458		3,437
Total	$	6,961	$	7,924	$	5,569	$	7,924

	March 31, 2022									September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Available for Sale:
Mortgage-backed securities:
Government National Mortgage Association securities	$	3,631	$	4	$	(6	)	$	3,629	$	3,100	$	-	$	(26	)	$	3,074
Federal National Mortgage Association securities		140		5		0			145		117		2		-			119
Total available-for-sale-securities	$	3,771	$	9	$	(6	)	$	3,774	$	3,217	$	2	$	(26	)	$	3,193

	Available for Sale				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due after five years through ten years	$	0	$	0	$	-	$	-
Due after ten years	$	3,771	$	3,774	$	3,217	$	3,193
Total	$	3,771	$	3,774	$	3,217	$	3,193

	March 31, 2022
		Less than Twelve Months					Twelve Months or Greater				Total
	Number of Securities	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Government National Mortgage Association securities	7	$	2,220	$	(6	)	$	0	$	0	$	2,220	$	(6	)

		September 30, 2022
		Less than Twelve Months					Twelve Months or Greater				Total
					Gross					Gross				Gross
	*Number of*				*Unrealized*					*Unrealized*				*Unrealized*
	*Securities*		*Fair Value*		*Loss*			*Fair Value*		*Losses*		*Fair Value*		*Losses*
Government National Mortgage Association securities	11	$	3,074	$	(26	)	$	-	$	-	$	3,074	$	(26	)

	September 30, 2022			December 31, 2021
Real estate loans:
One-to-four family residential:
Owner occupied	$	17,424		$	9,779
Non-owner occupied		39,410			38,752
Total one-to-four family residential		56,834			48,531
Multi-family (five or more) residential		48,468			29,344
Commercial real estate		313,160			183,822
Construction		25,838			15,843
Home equity		5,265			4,706
Total real estate loans		449,565			282,246

Commercial business⁽¹⁾		138,133			129,608
Other consumer		3			12
Total Loans		587,701			411,866

Deferred loan fees and costs		(1,406	)		(2,638	)
Allowance for loan losses		(7,141	)		(5,262	)
Net Loans	$	579,154		$	403,966

	March 31, 2022										September 30, 2022
	Pass		Special Mention		Substandard		Doubtful		Total		Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family residential owner occupied	$	12,319	$	0	$	0	$	0	$	12,319	$	17,014	$	410	$	-	$	-	$	17,424
One-to-four family residential non-owner occupied		38,026		0		9		0		38,035		39,402		-		8		-		39,410
Multi-family residential		39,608		1,723		0		0		41,331		46,760		-		1,708		-		48,468
Commercial real estate		195,853		0		1,908		0		197,761		312,163		-		997		-		313,160
Construction		17,617		0		0		0		17,617		25,838		-		-		-		25,838
Home equity		4,581		0		0		0		4,581		5,265		-		-		-		5,265
Commercial business		131,682		0		1,747		0		133,429		136,310		103		1,720		-		138,133
Other consumer		10		0		0		0		10		3		-		-		-		3
Total	$	439,696	$	1,723	$	3,664	$	0	$	445,083	$	582,755	$	513	$	4,433	$	-	$	587,701

	March 31, 2022
	Number of Contracts		Recorded Investment		Non- Accrual		Accruing		Related Allowance
One-to-four family residential owner occupied		0	$	0	$	0	$	0	$	0
One-to-four family residential non-owner occupied		1		9		9		0		0
Multi-family residential		0		0		0		0		0
Commercial real estate		1		131		0		131		0
Construction		0		0		0		0		0
Home equity		0		0		0		0		0
Commercial business		0		0		0		0		0
Other consumer		0		0		0		0		0
Total		2	$	140	$	9	$	131	$	0

	March 31, 2022
	Current		Past Due 30-89 Days		90 Days or More Past Due		Non- Accrual		Total
One-to-four family residential owner occupied	$	0	$	0	$	0	$	0	$	0
One-to-four family residential non-owner occupied		0		0		0		9		9
Multi-family residential		0		0		0		0		0
Commercial real estate		131		0		0		0		131
Construction		0		0		0		0		0
Home equity		0		0		0		0		0
Commercial business		0		0		0		0		0
Other consumer		0		0		0		0		0
Total	$	131	$	0	$	0	$	9	$	140

	March 31, 2021
	1-4 Family Residential Owner Occupied		1-4 Family Residential Non-Owner Occupied		Multi-Family Residential		Commercial Real Estate		Construction			Home Equity		Commercial Business and Other Consumer		Unallocated		Total
*Allowance for loan losses:*
Beginning balance	$	88	$	362	$	229	$	1,287	$	62		$	20	$	763	$	250	$	3,061
Charge-offs		0		0		0		0		0			0		0		0		0
Recoveries		0		0		0		0		0			0		0		0		0
Provision		19		14		3		92		(5	)		7		124		0		254
Ending balance	$	107	$	376	$	232	$	1,379	$	57		$	27	$	887	$	250	$	3,315

*Ending balance evaluated for impairment:*
Individually	$	0	$	0	$	0	$	0	$	0		$	0	$	0	$	0	$	0
Collectively	$	107	$	376	$	232	$	1,379	$	57		$	27	$	887	$	250	$	3,315

	December 31, 2021
	1-4 Family Residential Owner Occupied			1-4 Family Residential Non-Owner Occupied			Multi-Family Residential		Commercial Real Estate		Construction		Home Equity		Commercial Business and Other Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	88		$	362		$	229	$	1,287	$	62	$	20	$	763		$	250	$	3,061
Charge-offs		--			--			--		--		--		--		(17	)		--		(17	)
Recoveries		--			--			--		--		--		--		17			--		17
Provision		(15	)		(70	)		20		1,188		57		9		862			150		2,201
Ending balance	$	73		$	292		$	249	$	2,475	$	119	$	29	$	1,625		$	400	$	5,262

Ending balance evaluated for impairment:
Individually	$	--		$	--		$	--	$	--	$	--	$	--	$	--		$	--	$	-
Collectively	$	73		$	292		$	249	$	2,475	$	119	$	29	$	1,625		$	400	$	5,262

Loans receivable:
Ending balance	$	9,779	$	38,752	$	29,344	$	183,822	$	15,843	$	4,706	$	129,620	$	411,866

*Ending balance evaluated for impairment:*
Individually	$	0	$	9	$	0	$	131	$	0	$	0	$	0		140
Collectively	$	9,779	$	38,743	$	29,344	$	183,691	$	15,843	$	4,706	$	129,620	$	411,726

	2022							2021
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding at the beginning of the period		233,136		$	10.96		4.2		240,636		$	10.98		5.2
Granted		0			0		-		0			0		-
Exercised		(1,000	)		13.30		-		(2,000	)		8.10		-
Forfeited		0			0		-		0			0		-
Outstanding at end of period		232,136		$	10.95		4.1		238,636		$	11.00		5.0
Exercisable at end of period		179,081		$	10.26		5.6		159,054		$	9.86		5.5

	March 31, 2022								September 30, 2022
	Fair Value Measurements Using:										Fair Value Measurements Using:
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Recurring fair value measurements:
Investment securities available for sale
Government National Mortgage Association mortgage-backed securities	$	3,629	$	0	$	3,629	$	0	$	3,074	$	-	$	3,074	$	-
Federal National Mortgage Association mortgage- backed securities		145		0		145		0		119		-		119		-
Total investment securities available for sale	$	3,774	$	0	$	3,774	$	0	$	3,193	$	-	$	3,193	$	-
Total recurring fair value measurements	$	3,774	$	0	$	3,774	$	0	$	3,193	$	-	$	3,193	$	-

Nonrecurring fair value measurements
Impaired loans	$	1,863	$	0	$	0	$	1,863	$	1,846	$	-	$	-	$	1,846
Total nonrecurring fair value measurements	$	1,863	$	0	$	0	$	1,833	$	1,846	$	-	$	-	$	1,846

	March 31, 2022
	Quantitative Information About Level 3 Fair Value Measurements
	Total Fair Value		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	1,863	Appraisal of collateral (1)	Appraisal adjustments (2)		8% (8%)

	December 31, 2021
	Quantitative Information About Level 3 Fair Value Measurements
	Total Fair Value		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	140	Appraisal of collateral (1)	Appraisal adjustments (2)		8% (8%)

					Fair Value Measurements at										Fair Value Measurements at
					March 31, 2022										September 30, 2022
	Carrying Amount		Fair Value Estimate		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Carrying Amount		Fair Value Estimate		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Financial Assets
Investment in interest-earning time deposits	$	6,961	$	7,076	$	0	$	0	$	7,076	$	5,569	$	5,635	$	-	$	-	$	5,635
Loans held for sale		56,867		59,517		0		59,517		0		88,400		95,437		-		95,437		-
Loans receivable, net		437,307		443,068		0		0		443,068		579,154		553,379		-		-		553,379

Financial Liabilities
Deposits		458,635		460,275		273,762		0		186,513		547,114		547,151		370,886		-		176,265
FHLB long-term borrowings		23,193		23,160		0		0		23,160		83,022		82,791		-		-		82,791
FRB long-term borrowings		3,349		3,349		0		0		3,349
Subordinated debt		7,941		8,207		0		0		8,207		7,958		7,911		-		-		7,911

	As of or for the Nine Months Ended September 30,
	2022							2021
	Quaint Oak Bank(1)		Oakmont Capital Holdings, LLC			Consolidated		Quaint Oak Bank(1)		Oakmont Capital Holdings, LLC			Consolidated
Net Interest Income (Loss)	$	18,160	$	(216	)	$	17,944	$	13,476	$	(97	)	$	13,379
Provision for Loan Losses		1,933		-			1,933		1,259		-			1,259
Net Interest Income (Loss) after Provision for Loan Losses		16,227		(216	)		16,011		12,217		(97	)		12,120

Non-Interest Income
Mortgage banking, equipment lending and title abstract fees		600		1,621			2,221		990		667			1,657
Real estate sales commissions, net		213		-			213		143		-			143
Insurance commissions		407		-			407		373		-			373
Other fees and services charges		221		158			379		182		29			211
Net loan servicing income		11		943			954		128		898			1,026
Income from bank-owned life insurance		66		-			66		61		-			61
Net gain on loans held for sale		2,828		8,521			11,349		2,283		2,133			4,416
Gain on sale of investment securities available for sale		-		-			-		362		-			362
Gain on the sale of SBA loans		225		-			225		636		-			636
Total Non-Interest Income		4,571		11,243			15,814		5,158		3,727			8,885

Non-Interest Expense
Salaries and employee benefits		10,213		4,604			14,817		7,942		2,997			10,939
Directors’ fees and expenses		210		-			210		186		-			186
Occupancy and equipment		975		388			1,363		895		248			1,143
Data processing		500		-			500		641		-			641
Professional fees		625		44			669		356		132			488
FDIC deposit insurance assessment		454		-			454		221		-			221
Other real estate owned expenses		-		-			-		14		-			14
Advertising		265		266			531		224		113			337
Amortization of other intangible		36		-			36		36		-			36
Other		990		519			1,509		858		116			974
Total Non-Interest Expense		14,268		5,821			20,089		11,373		3,606			14,979
Pretax Segment Profit	$	6,530	$	5,206		$	11,736	$	6,002	$	24		$	6,026
Segment Assets	$	683,882	$	23,378		$	707,260	$	520,005	$	15,861		$	535,866

	Three Months Ended March 31,
	2022							2021
	Average Balance		Interest		Average Yield/ Rate			Average Balance		Interest		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Due from banks, interest-bearing	$	12,319	$	3		0.10	%	$	42,675	$	11		0.10	%
Investment in interest-earning time deposits		7,441		34		1.83			8,588		59		2.75
Investment securities available for sale		3,935		10		1.02			9,152		53		2.32
Loans receivable, net (1) (2)		528,325		6,570		4.97			460,010		4,743		4.12
Investment in FHLB stock		2,443		26		4.26			1,523		23		6.04
Total interest-earning assets		554,463		6,643		4.79	%		521,948		4,889		3.75	%
Non-interest-earning assets		15,932							15,210
Total assets	$	570,395						$	537,158
Interest-bearing liabilities:
Passbook accounts	$	9	$	-		*	%	$	9	$	-		*	%
Savings accounts		1,858		1		0.22			1,511		1		0.26
Money market accounts		198,003		205		0.41			129,111		239		0.74
Certificate of deposit accounts		183,127		414		0.90			195,959		636		1.30
Total deposits		382,997		620		0.65			326,590		876		1.07
FHLB short-term borrowings		35,678		22		0.25			3,000		6		0.80
FHLB long-term borrowings		23,193		112		1.93			28,193		139		1.97
FRB long-term borrowings		3,580		3		0.34			46,390		40		0.34
Subordinated debt		7,936		130		6.55			7,902		130		6.58
Other short-term borrowings		458		9		7.86			6,973		70		4.02
Total interest-bearing liabilities		453,842		896		0.79	%		419,048		1,261		1.20	%
Non-interest-bearing liabilities		80,761							92,958
Total liabilities		534,603							512,006
Stockholders' Equity		35,792							25,152
Total liabilities and Stockholders' Equity	$	570,395							537,158
Net interest-earning assets	$	100,621						$	102,900
Net interest income; average interest rate spread			$	5,747		4.00	%			$	3,628		2.55	%
Net interest margin (3)						4.15	%						2.78	%
Average interest-earning assets to average interest-earning liabilities						122.17	%						124.56	%

	Three Months Ended September 30,
	2022							2021
	Average Balance		Interest		Average Yield/ Rate			Average Balance		Interest		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Due from banks, interest-bearing	$	29,437	$	196		2.66	%	$	23,162	$	5		0.09	%
Investment in interest-earning time deposits		7,202		46		2.55			7,917		46		2.32
Investment securities available for sale		3,357		19		2.26			4,487		7		0.62
Loans receivable, net (1) (2)		666,501		8,671		5.20			488,518		5,944		4.87
Investment in FHLB stock		4,348		64		5.89			1,648		15		3.64
Total interest-earning assets		710,845		8,996		5.06	%		525,732		6,017		4.58	%
Non-interest-earning assets		21,988							15,013
Total assets	$	732,833						$	540,745

Non-interest-bearing liabilities		92,048						94,725
Total liabilities		693,019						512,546
Stockholders’ Equity		39,814						28,199
Total liabilities and Stockholders’ Equity	$	732,833					$	540,745
Net interest-earning assets	$	109,874					$	107,911
Net interest income; average interest rate spread			$	6,657	3.50	%			$	5,014	3.62	%
Net interest margin (3)					3.75	%					3.82	%
Average interest-earning assets to average interest-bearing liabilities					118.28	%					125.83	%

	Nine Months Ended September 30,
	2022							2021
	Average Balance		Interest		Average Yield/ Rate			Average Balance		Interest		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Due from banks, interest-bearing	$	30,668	$	241		1.05	%	$	27,624	$	23		0.11	%
Investment in interest-earning time deposits		7,237		107		1.97			8,154		155		2.53
Investment securities available for sale		3,656		35		1.28			6,553		92		1.87
Loans receivable, net (1) (2)		595,354		22,171		4.97			478,864		16,422		4.57
Investment in FHLB stock		3,751		123		4.37			1,483		57		5.12
Total interest-earning assets		640,666		22,677		4.72	%		522,678		16,749		4.27	%
Non-interest-earning assets		19,225							15,232
Total assets	$	659,891							537,910

Non-interest-bearing liabilities		86,585						89,534
Total liabilities		622,037						510,912
Stockholders’ Equity		37,854						26,998
Total liabilities and Stockholders’ Equity	$	659,891					$	537,910
Net interest-earning assets	$	105,214					$	101,300
Net interest income; average interest rate spread			$	17,944	3.54	%			$	13,379	3.20	%
Net interest margin (3)					3.73	%					3.41	%
Average interest-earning assets to average interest-bearing liabilities					119.65	%					124.04	%

Period	Total Number of Shares 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)
January 1, 2022 – January 31, 2022		357	$	22.00		-		24,375
February 1, 2022 – February 28, 2022		-		-		-		24,375
March 1, 2022 – March 31, 2022		281		22.00		-		24,375
Total		638	$	22.00		-		24,375

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).