On March 2, 2023, Quaint Oak Bancorp, Inc. entered into a Subordinated Note Purchase Agreement with qualified institutional buyers under which the Company issued an aggregate of $12.0 million of fixed rate subordinated notes due March 15, 2025 in a private placement. The Notes bear interest at a fixed annual rate of 8.50%, payable semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2023. The Notes' maturity date is March 15, 2025.

The Company is entitled to redeem the Notes, in whole or in part, on or after March 15, 2024, and to redeem the Notes at any time in whole upon certain other events, at a redemption price equal to 100% of the outstanding principal amount of the Notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date. If certain events of default occur, such as the bankruptcy of the Company, the holder of a Note may declare the principal amount of the Note to be due and immediately payable. Except under such limited circumstances, there is no right of acceleration in the case of a default under the Purchase Agreement or the Notes.

The Notes are unsecured obligations subordinate and junior in right of payment to all of the Company's existing and future senior indebtedness, whether secured or unsecured, including claims of depositors and general creditors, and rank equally in right of payment with any unsecured, subordinated indebtedness that is existing or the Company may incur in the future that rank equally with the Notes. The Company expects to use the net proceeds from the sale of the Notes for general corporate purposes.