**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**


(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF 1934





For
      the
      quarterly period
      ended September
      30,
      2007


OR





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from ____________ to _______________





Commission
      File Number ***:*** 000-52964





**QUAINT
      OAK BANCORP, INC.**


(Exact
      name of small business issuer as specified in its charter)





Pennsylvania
            
            35-2293957(State
                or other jurisdiction of
            
            (IRS
                Employer Identification No.)incorporation
                or organization)





607
      Lakeside Drive, Southampton, Pennsylvania 18966


(Address
      of principal executive offices)





(215)
      364-4059


(Issuer’s
      telephone number)







(Former
      name, former address and former fiscal year, if changed since last
      report)




Check
        whether the issuer (1) filed all
        reports required to be filed by Section 13 or 15(d) of the Securities Exchange
        Act of 1934 during the past 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  x    No 
o
 
 Indicate
        by check mark whether the
        registrant is a shell company (as defined in Rule 12b-2 of the Exchange
        Act)   Yes  o   No 
x
 
 **APPLICABLE
        ONLY TO CORPORATE ISSUERS**
 
 State
        the number of shares outstanding
        of each of the issuer's classes of common stock, as of the latest practicable
        date:  As of October 31, 2007, 1,388,625 shares of the Issuer's common
        stock were issued and outstanding.
 
 Transitional
        Small Business Disclosure
        Format:   Yes  o   No 
x











**INDEX**





PagePART I
            -
            FINANCIAL
                INFORMATIONItem 1:
            
            Financial
                Statements (Unaudited)
            1Item 2:
            
            Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
            9Item 3:
            
            Controls
                and Procedures
            16PART II
            -
            OTHER
                INFORMATIONItem 1:
            
            Legal
                Proceedings
            17Item 2:
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            17Item 3:
            
            Defaults
                upon Senior Securities
            18Item 4:
            
            Submission
                of Matters to a Vote of Security Holders
            18Item 5:
            
            Other
                information
            18Item 6:
            
            Exhibits
            18SIGNATURES













**PART
        I**
 
 **ITEM
        1. CONSOLIDATED FINANCIAL STATEMENTS**
 ***Quaint
                  Oak Bancorp,
                  Inc.***
 
 **Consolidated
              Balance Sheets (Unaudited)**


At
                  September 30,
              
              
              At
                  December 31,2007
              
              
              2006**ASSETS**
              
              (In
                  thousands)Cash
                  and cash equivalents
              
              $
              12,685
              
              
              $
              4,197Investment
                  in interest-earning time deposits
              
              
              1,816
              
              
              
              1,711Investment
                  securities held to maturity (fair value of $1,003)
              
              
              1,004
              
              
              
              -Investment
                  in Federal Home Loan Bank stock
              
              
              232
              
              
              
              263Loans
                  receivable, net of allowance for loan lossesSeptember 30, 2007: $606; December 31, 2006: $575
              
              
              56,589
              
              
              
              54,553Premises
                  and equipment, net
              
              
              52
              
              
              
              46Accrued
                  interest receivable and other assets
              
              
              502
              
              
              
              436**Total
                  Assets**
              
              $
              72,880
              
              
              $
              61,206**LIABILITIES
                  AND **STOCKHOLDERS'
                  EQUITY******LIABILITIES**Deposits,
                  interest-bearing
              
              $
              54,318
              
              
              $
              55,750Advances
                  from borrowers for taxes and insurance
              
              
              345
              
              
              
              587Accrued
                  interest payable and other liabilities
              
              
              289
              
              
              
              132**Total
                  Liabilities**
              
              
              54,952
              
              
              
              56,469Commitments
                  and contingencies
              
              
              -
              
              
              
              -**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; 1,388,625 issued
                  and
                  outstandingat
                  September 30, 2007, and none issued or outstanding at December
                  31,
                  2006
              
              
              14
              
              
              
              -Additional
                  paid-in capital
              
              
              13,337
              
              
              
              -Retained
                  earnings
              
              
              5,091
              
              
              
              4,737Unallocated
                  common stock held by Employee Stock Ownership Plan (ESOP)
              
              
              (514
              )
              
              
              -**Total
                  Stockholders' Equity**
              
              
              17,928
              
              
              
              4,737**Total
                  Liabilities and Stockholders’ Equity**
              
              $
              72,880
              
              
              $
              61,206
  *See
            accompanying notes toconsolidatedfinancial
            statements.*
 1
  ***Quaint
                    Oak Bancorp,
                    Inc.***
 For
                  the Three
                Months
                  Ended
              
              
              For
                  the Nine
                Months
                  EndedSeptember
                    30,
              
              
              September
                    30,2007
              
              
              2006
              
              
              2007
              
              
              2006**Interest
                  Income**
              
              (In
                  thousands, except per share data)Loans
                  receivable, including fees
              
              $
              999
              
              
              $
              979
              
              
              $
              2,875
              
              
              $
              2,805Short-term
                  investments and investment securities held
                  to maturity
              
              
              192
              
              
              
              27
              
              
              
              335
              
              
              
              90Dividends
              
              
              4
              
              
              
              4
              
              
              
              11
              
              
              
              10**Total
                  Interest Income**
              
              
              1,195
              
              
              
              1,010
              
              
              
              3,221
              
              
              
              2,905**Interest
                  Expense**Deposits
              
              
              586
              
              
              
              536
              
              
              
              1,767
              
              
              
              1,464Short-term
                  borrowings
              
              
              --
              
              
              
              11
              
              
              
              --
              
              
              
              49**Total
                  Interest Expense**
              
              
              586
              
              
              
              547
              
              
              
              1,767
              
              
              
              1,513**Net
                  Interest Income**
              
              
              609
              
              
              
              463
              
              
              
              1,454
              
              
              
              1,392**Provision
                  for Loan Losses**
              
              
              14
              
              
              
              36
              
              
              
              32
              
              
              
              108**Net
                  Interest Income after Provision for Loan Losses**
              
              
              595
              
              
              
              427
              
              
              
              1,422
              
              
              
              1,284**Non-Interest
                  Income – Fees and service charges**
              
              
              9
              
              
              
              7
              
              
              
              26
              
              
              
              18**Non-Interest
                  Expense**Salaries
              
              
              174
              
              
              
              107
              
              
              
              507
              
              
              
              317Directors'
                  fees and expenses
              
              
              44
              
              
              
              36
              
              
              
              124
              
              
              
              105Occupancy
                  and equipment
              
              
              19
              
              
              
              14
              
              
              
              58
              
              
              
              39Professional
                  fees
              
              
              26
              
              
              
              11
              
              
              
              69
              
              
              
              32Other
              
              
              44
              
              
              
              36
              
              
              
              112
              
              
              
              103**Total
                  Non-Interest Expense**
              
              
              307
              
              
              
              204
              
              
              
              870
              
              
              
              596**Income
                  before Income Taxes**
              
              
              297
              
              
              
              230
              
              
              
              578
              
              
              
              706**Income
                  Taxes**
              
              
              115
              
              
              
              89
              
              
              
              224
              
              
              
              273**Net
                  Income**
              
              $
              182
              
              
              $
              141
              
              
              $
              354
              
              
              $
              433**Earnings
                  per share - basic**
              
              $
              0.14
              
              
              
              NA
              
              
              $
              0.14
              
              
              
              NA
  *See
          accompanying notes toconsolidatedfinancial
          statements.*
 2
  ***Quaint
                    Oak Bancorp,
                    Inc.***
 **NineMonths EndedSeptember30, 2007and 2006**
 **(In
                  thousands, except per share data)**
              
              **Common**
                  **Stock**
              
              
              **Additional**
                **Paid-in**
                **Capital**
              
              
              **Unallocated**
                  **Common**
                  **Stock
                    Held by**
                  **ESOP**
              
              
              **Retained**
                **Earnings**
              
              
              **Total**
                **Stockholders’**
                **Equity****BALANCE
                  – DECEMBER 31, 2006**
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              4,737
              
              
              $
              4,737**Net
                  Income**
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              354
              
              
              
              354**Issuance
                  of 1,388,625 shares of common stock at $10 per share,
                  net**
              
              
              14
              
              
              
              13,337
              
              
              
              -
              
              
              
              -
              
              
              
              13,351**of
                  offering costs of $535****Common
                  stock acquired by ESOP**
              
              
              -
              
              
              
              -
              
              
              
              (514
              )
              
              
              -
              
              
              
              (514
              )**BALANCE
                  – SEPTEMBER 30, 2007**
              
              $
              14
              
              
              $
              13,337
              
              
              $
              (514
              )
              
              $
              5,091
              
              
              $
              17,928
 
 
 3
 ***Quaint
                    Oak Bancorp,
                    Inc.***
 **Consolidated
          Statements of Cash Flows
          (Unaudited)**
 
 Nine
                  Months EndedSeptember
                  30,2007
              
              
              2006**Cash
                  Flows from Operating Activities**
              
              (In
                  thousands)Net
                  Income
              
              $
              354
              
              
              $
              433Adjustments
                  to reconcile net income to net cash provided byoperating
                  activities:Provision
                  for loan losses
              
              
              32
              
              
              
              108Depreciation
                  expense
              
              
              11
              
              
              
              8Amortization
                  of deferred loan fees and costs
              
              
              7
              
              
              
              (20
              )Increase
                  in accrued interest receivable and other assets
              
              
              (66
              )
              
              
              (82
              )Increase
                  (decrease) in accrued interest payable and other
                  liabilities
              
              
              157
              
              
              
              (25
              )**Net
                  Cash Provided by Operating Activities**
              
              
              495
              
              
              
              422**Cash
                  Flows from Investing Activities**Net
                  (increase) decrease in investment in interest-earning time
                  deposits
              
              
              (105
              )
              
              
              514Purchase
                  of investment securities held to maturity
              
              
              (1,004
              )
              
              
              -Purchase
                  of property and equipment
              
              
              (17
              )
              
              
              (17
              )Net
                  decrease (increase) in Federal Home Loan Bank stock
              
              
              31
              
              
              
              (5
              )Net
                  increase in loans receivable
              
              
              (2,075
              )
              
              
              (3,795
              )**Net
                  Cash Used in Investing Activities**
              
              
              (3,170
              )
              
              
              (3,303
              )**Cash
                  Flows from Financing Activities**Net
                  (decrease) increase in deposits
              
              
              (1,432
              )
              
              
              3,184Decrease
                  in short-term borrowings
              
              
              -
              
              
              
              (500
              )Proceeds
                  from issuance of common stock, net
              
              
              13,351
              
              
              
              -Acquisition
                  of shares for ESOP
              
              
              (514
              )
              
              
              -Decrease
                  in advances from borrowers for taxes and insurance
              
              
              (242
              )
              
              
              (199
              )**Net
                  Cash Provided by Financing Activities**
              
              
              11,163
              
              
              
              2,485**Net
                  Increase (Decrease) in Cash and Cash Equivalents**
              
              
              8,488
              
              
              
              (396
              )**Cash
                  and Cash Equivalents - Beginning**
              
              
              4,197
              
              
              
              1,791**Cash
                  and Cash Equivalents – Ending**
              
              $
              12,685
              
              
              $
              1,395**Supplementary
                  Cash Flows Information**Income
                  taxes paid
              
              $
              296
              
              
              $
              334Interest
                  paid
              
              $
              1,756
              
              
              $
              1,436
   *See
          accompanying notes toconsolidatedfinancial
          statements.*
 4
  ***Quaint
                    Oak Bancorp,
                    Inc.***
 **Note
        1–Basis
        of
        Presentation**
  On
        July
        3, 2007, Quaint Oak Savings Bank completed its conversion from a Pennsylvania
        chartered mutual savings bank to a Pennsylvania chartered stock savings bank
        and
        changed its name to Quaint Oak Bank (“Bank”).  In connection with the
        conversion Quaint Oak Bank formed Quaint Oak Bancorp, Inc., a Pennsylvania
        chartered corporation (the "Company" or "Quaint Oak Bancorp"), which offered
        and
        sold 1,388,625 shares of its common stock at a price of $10.00 per share
        to
        eligible depositors of the Bank.  Upon completion of the conversion
        and the offering, all of Quaint Oak Bank's stock is owned by Quaint Oak Bancorp,
        and all of Quaint Oak Bancorp's stock is, in turn, owned by the
        public.  The Company sold 1,388,625 shares of its common stock,
        raising $13,886,250 of gross proceeds.  Costs incurred in connection
        with the conversion and offering totaled $535,000 and were recorded as a
        reduction of the proceeds from the entire offering.    The
        Company invested approximately $7.1 million of the net proceeds in Quaint
        Oak
        Bank.  All remaining proceeds were retained by Quaint Oak Bancorp for
        future capital needs.  The consolidated financial statements include
        the accounts of the Company and its wholly owned subsidiary, Quaint Oak
        Bank.  All significant intercompany balances and transactions have
        been eliminated.
 
 Prior
        to conversion,Quaint Oak Savings
        Bank (the "Bank")
        operatedunder a state bank charter as a mutual
        savings bank.Upon completion of
        the
        conversionand the
        offering, the Bankchanged
        its name to Quaint Oak Bankand began to operate as a stock savings bank.The Bank is subject
        to regulation of the
        Pennsylvania Department of Banking 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 Office of Thrift
        Supervision.The
        area served by the Bank is principallyBucks County,Pennsylvania.The
        principal deposit products offered
        by the Bank are passbook savings accounts,statement savingsaccounts, and certificates of
        deposit.  Loan products offered are fixed and adjustable rate
        mortgages, home equity loans, and lines of credit.
  The
        accompanying consolidated financial
        statementshave been
        prepared in conformity with accounting principles generally accepted in theUnitedStateof America (GAAP) for interim
        information and with the instructions to Form 10-QSB.  Accordingly,
        they do not include all the information and footnotes required by 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 ofDecember 31, 2006have 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 Savings Bank’s 2006 Financial Statements included in Quaint Oak Bancorp,
        Inc.’s Registration Statement on Form SB-2, as amended.  The
        results of operations
        for the three months and nine months endedSeptember 30, 2007are not necessarily indicative of the
        results that may be expected for the full year.
  **Note
        2–Earnings per
        Share**
  Basic
        earnings per share for the three
        and nine months ended September 30, 2007 has been calculated based on net
        income
        of $182,000 from July 3, 2007 to September 30, 2007 (the period during which
        the
        common stock was outstanding) and 1,344,018 weighted average common shares
        outstanding fromJuly 3,
        2007 to September 30, 2007.  The number of shares outstanding for this
        calculation excludes unallocated ESOP shares.  Because the initial
        public offering was completed onJuly 3, 2007,
        per share results for the three and
        nine months endedSeptember
        30, 2006would not be
        meaningful.
  5
  **Note
        3 –Recent Accounting
        Pronouncements**
  In
        February 2006, the Financial
        Accounting Standards Board (FASB) issued Statement No. 155, “Accounting for
        Certain Hybrid Financial Instruments”.  Statement No. 155 amends FASB
        Statement No. 133 and FASB Statement No. 140, and improves the financial
        reporting of certain hybrid financial instruments by requiring more consistent
        accounting that eliminates exemptions and provides a means to simplify the
        accounting for these instruments.Specifically,
        Statement No. 155 allows
        financial instruments that have embedded derivatives to be accounted for
        as a
        whole (eliminating the need to bifurcate the derivative from its host) if
        the
        holder elects to account for the whole instrument on a fair value
        basis.Statement
        No. 155 is effective for all
        financial instruments acquired or issued after the beginning of an entity’s
        first fiscal year that begins afterSeptember 15, 2006.  TheCompanywasrequired to adopt the provisions of
        Statement No. 155, as applicable, beginning in fiscal year 2007.The
        adoption of Statement No. 155did not have
        any impact on theCompany’sconsolidatedfinancial
        position and results of
        operations.
  In
        March 2006, the FASB issued Statement
        No. 156, “Accounting for Servicing of Financial Assets – An Amendment of FASB
        Statement No. 140.”  Statement No. 156 requires that all separately
        recognized servicing assets and servicing liabilities be initially measured
        at
        fair value, if practicable.  The statement permits, but does not
        require, the subsequent measurement of servicing assets and servicing
        liabilities at fair value.  Statement No. 156 is effective as of the
        beginning of an entity’s first fiscal year that begins afterSeptember 15, 2006,
        which for theCompanywasJanuary 1,2007.The
        adoption of Statement No. 156did nothave any effect on theCompany’sconsolidatedfinancial
        statements.
  EffectiveJanuary
        1, 2007, the Company adopted
        the provisions ofFASB Interpretation
        No. 48,
“Accounting for Uncertainty in Income Taxes”. The Interpretation
        providesclarification
        onthe accounting for
        uncertainty inincome taxes recognized
        in
        an enterprise’s financial statements in accordance with FASB Statement of
        Financial Accounting Standards No. 109, Accounting for Income
        Taxes”.  TheInterpretationprescribes a
        recognition threshold and measurement attribute for financial statement
        recognition and measurement of a tax position taken or expected to be taken
        in a
        tax return.  As a result of the Company’s evaluation of the
        implementation of FIN 48, no significant income tax uncertainties were
        identified.  Therefore, the Company recognized no adjustment for
        unrecognized tax benefits during the nine months endedSeptember 30, 2007.Corporate
        tax returns for the years 2003
        through 2006 remain open to examination by the taxing
        authorities.
  In
        May 2007, the FASB issued FAS Staff
        Position (“FSB”) FIN 48-1 “Definition of Settlement in FASB Interpretation No.
        48 (FSP FIN 48-1).  FSP FIN 48-1 provides guidance on how to determine
        whether a tax position is effectively settled for the purpose of recognizing
        previously unrecognized tax benefits.  FSP FIN 48-1 is effective
        retroactively toJanuary 1,
        2007.  The
        implementation of this standard did not have any impact on the Company’s
        consolidated financial position or results of operations.
  In
        September 2006, the FASB issued
        Statement No. 157, “Fair Value Measurements,” which defines fair value,
        establishes a framework for measuring fair value under GAAP, and expands
        disclosures about fair value measurements.  The new guidance is
        effective for financial statements issued for fiscal years beginning afterNovember 15,
        2007, and for interim
        periods within those fiscal years.Management iscurrently
        evaluating the potential
        impact, if any, of the adoption of FASB Statement No. 157 on theCompany’sconsolidatedfinancial
        position, results of
        operations and cash flows.
  In
        February 2007, the FASB issued
        StatementNo.159,
“The
        Fair Value Option for
        Financial Assets and Financial Liabilities-Including an amendment of FASB
        Statement No.115”.  Statement
        No.159
        permits entities to choose to
        measure many financial instruments and certain other items at fair
        value.  Unrealized gains and losses on items for which the fair value
        option has been elected will be recognized in earnings at each subsequent
        reporting date.  StatementNo.
        159 is effective for the CompanyJanuary
        1,2008.
  6
  Managementis evaluating the impact that the
        adoption of StatementNo. 159 will have on theCompany’sconsolidatedfinancial
        statements.
  **Note4–Cash and Cash
        Equivalents**
  Cash
        and cash equivalents includenon-interest
        and interest-earningdemand depositsand money market accountswith
        various commercial financialinstitutions.
  **Note5–Investment
        Securities**
  The
        amortized cost and estimatedfairvalue
        of investment securities held to
        maturityatSeptember
        30, 2007are
        summarized below(in thousands):
  **Amortized**
                  **Cost**
              
              
              **Gross**
                  **Unrealized**
                  **Gains**
              
              
              **Gross**
                  **Unrealized**
                  **Losses**
              
              
              **Estimated**
                  **Fair
                    Value**Debt
                  securities:U.S.
                  government agency securities, held to maturity
              
              $
              1,004
              
              
              $
              -
              
              
              $
              1
              
              
              $
              1,003
 
 **Note
        6 - Loan Receivable, net and Allowance for Loan Losses**
 
 Loans
        receivable, net consist of the following (in thousands):
 
 **September
                    30,**
                  **2007**
              
              
              **December
                    31,**
                  **2006**Real
                  estate loans:One-to
                  four-family residential:Owner
                  occupied
              
              $
              17,655
              
              
              $
              19,163Non-owner
                  occupied
              
              
              12,695
              
              
              
              11,800Total
                  one-to-four family residential
              
              
              30,350
              
              
              
              30,963Multi-family
                  residential
              
              
              4,443
              
              
              
              4,522Commercial
                  real estate
              
              
              16,239
              
              
              
              14,404Construction
              
              
              615
              
              
              
              288Commercial
                  lines of  credit
              
              
              1,260
              
              
              
              1,242Total
                  real estate loans
              
              
              52,907
              
              
              
              51,419Consumer
                  and other loans:Loans
                  secured by deposits
              
              
              22
              
              
              
              11Home
                  equity loans
              
              
              4,149
              
              
              
              3,535Total
                  consumer loans
              
              
              4,171
              
              
              
              3,546Total
                  loans
              
              
              57,078
              
              
              
              54,965Plus
                  (less):Deferred
                  loan fees and
                  costs
              
              
              117
              
              
              
              163Allowance
                  for loan losses
              
              
              (606
              )
              
              
              (575
              )Net
                  loans
              
              $
              56,589
              
              
              $
              54,553
   7
 
 Following
        is a summary of changes in the allowance for loan losses for the nine months
        ended September 30, 2007 and 2006 (in thousands):
 
 **September
                    30,**
                  **2007**
              
              
              **September
                    30,**
                  **2006**Balance,
                  beginning of the year
              
              $
              575
              
              
              $
              491Provision
                  for loan losses
              
              
              32
              
              
              
              108Charge-offs
              
              
              (1
              )
              
              
              (65
              )Recoveries
              
              
              -
              
              
              
              -(Charge-offs)/recoveries,
                  net
              
              
              (1
              )
              
              
              (65
              )Balance,
                  end of period
              
              $
              606
              
              
              $
              534
 
 **Note
        7 – Deposits**
 
 Deposits
        consist of the following classifications (in thousands):
 
 **September
                    30,**
                  **2007**
              
              
              **December
                    31,**
                  **2006**Passbooks
              
              $
              3,989
              
              
              $
              4,702Statement
                  savings
              
              
              5,866
              
              
              
              6,752Certificates
                  of deposit
              
              
              44,463
              
              
              
              44,296Total
                  deposits
              
              $
              54,318
              
              
              $
              55,750
 
 **Note
        8 – Employee Stock Ownership Plan**
 
 The
        Company has an Employee Stock Ownership Plan (ESOP) for the benefit of employees
        who meet the eligibility requirements.****The ESOP is
        authorized to purchase 111,090 shares of common stock in the open-market
        which
        is 8% of the common stock issued in the public offering completed July 3,
        2007,
        in an amount not to exceed the $1.1 million line of credit established by
        the
        Company for such purchases.  As of September 30, 2007, the ESOP
        purchased 57,000 shares of common in the open market for an aggregate price
        of
        $514,000 using the line of credit from the Company.The
        ESOP expects to purchase the remaining shares in the open-market over time
        depending upon, among other things, market conditions.  After all the
        shares have been purchased, the line of credit will be converted to a term
        loan.  The line of credit bears an interest rate equal to the Prime
        Rate as published in the Wall Street Journal, with principal and interest
        to be
        paid in equal quarterly installments over 15 years, after the line of credit
        converts to a term loan.  The line of credit is and the loan will be
        secured by the unallocated shares of common stock held by the ESOP.
 
 Shares
        of
        the Company’s common stock purchased by the ESOP are held in a suspense account
        and reported as unallocated common stock held by the ESOP in the Consolidated
        Balance Sheet until released for allocation to
        participants.  Unallocated shares will only be released after the line
        of credit converts to a term loan.  As the loan is repaid, shares are
        released from collateral and are allocated to each eligible participant based
        on
        the ratio of each such participant’s compensation to the total compensation of
        eligible plan participants.  As the unearned shares are committed to
        be released and allocated among participants, the Company recognizes
        compensation expense equal to the average fair market value of the shares,
        and
        the shares become outstanding for earnings per share computations.  As
        of September 30, 2007 the ESOP held 57,000 unallocated shares of Company
        common
        stock with an aggregate fair value of $514,000 and no shares were committed
        to
        be allocated among eligible participants.
  8
  
 **ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS**
 
 **Forward-Looking
        Statements**
 
 We
        make certain statements in this
        document as to what we expect may happen in the future. These statements
        usually
        contain the words "believe,""estimate,""project,""expect,""anticipate,""intend"
        or similar expressions. Because
        these statements look to the future, they are based on our current expectations
        and beliefs. Actual results or events may differ materially from those reflected
        in the forward-looking statements. You should be aware that our current
        expectations and beliefs as to future events are subject to change at any
        time,
        and we can give you no assurances that the future events will actually
        occur.
 
 **General**
 
 The
        Company was formed in connection
        with the Bank’s conversion to a stock savings bank completed on July 3,
        2007.  The Company’s results of operations initially are dependent
        primarily on the results of the Bank, which is now a wholly owned subsidiary
        of
        the Company.  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, professional fees 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 conditions and results
        of operations.
 
 **Critical
        Accounting Policies**
 
 The
        accounting and financial reporting
        policies of the Company conform to accounting principles generally accepted
        in
        the United States of America and to general practices within the banking
        industry. Accordingly, the consolidated financial statements require certain
        estimates, judgments, and assumptions, which are believed to be reasonable,
        based upon the information available. These estimates and assumptions affect
        the
        reported amounts of assets and liabilities at the date of the financial
        statements and the reported amounts of income and expenses during the periods
        presented. The following 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.
 
 *Allowance
        for Loan Losses*.  The allowance for loan losses is established
        through a provision for loan losses charged to expense. Loans are charged
        against the allowance for loan losses when management believes that the
        collectibility of the principal is unlikely. Subsequent recoveries are added
        to
        the allowance. The allowance is an amount that management believes will cover
        known and inherent losses in the loan portfolio, based on evaluations of
        the
        collectibility of loans. The evaluations take into consideration such factors
        as
        changes in the types and amountof loans in the loan
        portfolio, historical loss experience, adverse situations that may affect
        the
        borrower's ability to repay, estimated value of any underlying collateral,
        estimated losses relating to specifically identified loans, and current economic
        conditions. This evaluation is inherently subjective as it requires material
        estimates including, among others, exposure at default, the amount and timing
        of
        expected future cash flows on impaired loans, value of
        collateral, estimated losses on our commercial and residential loan portfolios
        and general amounts for historical loss experience.  All of these
        estimates may be susceptible to significant change.
  9
  While
        management uses the best
        information available to make loan loss allowance evaluations, adjustments
        to
        the allowance may be necessary based on changes in economic and other conditions
        or changes in accounting guidance. Historically, our estimates of the allowance
        for loan losses have not required significant adjustments from management's
        initial estimates. In addition, the Pennsylvania Department of Banking and
        the
        Federal Deposit Insurance Corporation, as an integral part of their examination
        processes, periodically review our allowance for loan losses.  The
        Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation
        may require the recognition of adjustments to the allowance for loan losses
        based on their judgment of information available to them at the time of their
        examinations. To the extent that actual outcomes differ from management's
        estimates, additional provisions to the allowance for loan losses may be
        required that would adversely impact earnings in future periods.
 
 *Income
        Taxes*.  Deferred income tax assets and liabilities are determined
        using the liability (or balance sheet) method.  Under this method, the
        net deferred tax asset or liability is determined based on the tax effects
        of
        the temporary differences between the book and tax bases of the various assets
        and liabilities and gives current recognition to changes in tax rates and
        laws.  The realization of our deferred tax assets principally depends
        upon our achieving projected future taxable income.  We may change our
        judgments regarding future profitability due to future market conditions
        and
        other factors.  We may adjust our deferred tax asset balances if our
        judgments change.
 
 **Comparison
        of Financial Condition at September 30, 2007 and December 31,
        2006**
 
 The
        Company’s total assets increased
        $11.7 million or 19.1% to $72.9 million at September 30, 2007 compared to
        $61.2
        million at December 31, 2006.  This increase was due primarily to
        $13.4 million in net proceeds received from the Company’s stock offering
        completed on July 3, 2007.  Cash and cash equivalents increased $8.5
        million, investment securities increased $1.0 million and loans receivable,
        net
        of allowance for loan losses increased 2.0 million during the first nine
        months
        of 2007.
 
 Cash
        and cash equivalents increased
        $8.5 million or 202.2% to $12.7 million at September 30, 2007 compared to
        $4.2
        million at December 31, 2006.  This increase, along with the $1.0
        million increase in U.S. government agency securities, was driven by the
        net
        proceeds received from the Company’s stock offering completed July 3,
        2007.  The company has invested most of these funds in
        interest-earning demand deposits and money market accounts with various
        commercial financial institutions.
 
 Loans
        receivable, net, increased $2.0 million or 3.7% to $56.6 million at September
        30, 2007 from $54.6 million at December 31, 2006. The increase was due primarily
        to a $1.8 million or 12.7% increase in commercial real estate loans, and
        a
        $614,000 or 17.4% increase in home equity loans, partially offset by a $613,000
        or 2.0% decrease in one-to-four family residential loans.  The decline
        in residential mortgages was primarily driven by a $1.5 million decrease
        in
        one-to-four family owner occupied loans offset by an $895,000 increase in
        one-to-four family non-owner occupied loans.  The decrease in
        one-to-four family owner occupied loans is consistent with Quaint Oak's strategy
        of diversifying its loan portfolio into higher yielding commercial loans
        products.
  Total
        deposits decreased $1.4 million
        or 2.6% to $54.3 million at September 30, 2007 compared to $55.8 million
        at
        December 31, 2006.  The decrease in interest-bearing deposits was
        primarily attributed to a $713,000 or 15.2% decrease in passbook savings
        accounts and an $886,000 or 13.1% decrease in statement savings accounts,
        as
        management set interest rates at a level to control deposit growth as a result
        of moderate loan demand.
  10
  Total stockholders’ equity increased $13.2 million or 278.5% to $17.9 million at
        September 30, 2007 compared to $4.7 million at December 31, 2006.  The
        increase was due primarily to the $13.4 million of net proceeds received
        in the
        stock offering and net income of $354,000 for the nine months ended September
        30, 2007, offset by the purchase of 57,000 shares of common stock in the
        open-market to fund our Employee Stock Ownership Plan (ESOP) for an aggregate
        purchase price of $514,000.  The ESOP is authorized to purchase in the
        open-market up to 8%, or 111,090 shares of the common stock issued in the
        public
        offering completed July 3, 2007, not to exceed the $1.1 million line of credit
        established by the Company for such purchases.  The ESOP expects to
        purchase the remaining shares in the open-market over time depending upon,
        among
        other things, market conditions.
 
 **Comparison
        of Operating Results for the Three Months Ended September 30, 2007 and
        2006**
 
 Net
        income amounted to $182,000 for the
        three months ended September 30, 2007, an increase of $41,000 or 29.1% compared
        to net income of $141,000 for the three months ended September 30,
        2006.  The increase was primarily due to an increase in net interest
        income of $146,000 and a decrease in the provision for loan losses of $22,000,
        partially offset by an increase in non-interest expense of $103,000 and a
        $26,000 increase in income taxes.
 
 The
        $146,000, or 31.5%, increase in net interest income for the three months
        ended
        September 30, 2007 over the comparable period in 2006 was due to an increase
        in
        interest income of $185,000 attributable to the growth in average
        interest-earning assets of $12.9 million, as the proceeds from the Company’s
        stock offering were invested primarily into short-term
        investments.  This increase in interest income was offset by a $39,000
        increase in the interest expense on average interest-bearing
        liabilities.  The average net interest margin improved from 3.15% for
        the three months ended September 30, 2006 to 3.40% for the three months ended
        September 30, 2007 as average net interest-earning assets increased from
        $4.2
        million to $17.9 million for the same periods.
 
 The
        average interest rate spread
        declined from 2.87% for the three months ended September 30, 2006 to 2.32%
        for
        the three months ended September 30, 2007. The decrease in the average interest
        rate spread reflects the combination of an increase in average rate paid
        on
        interest bearing liabilities from 4.01% for the three months ended September
        30,
        2006 to 4.35% for the three months ended September 30, 2007 and a decrease
        in
        the average yield on interest-earning assets from 6.88% to 6.67% during the
        same
        periods.
 
 Interest
        income increased by $185,000
        or 18.3% to $1.2 million for the three months ended September 30, 2007 compared
        to $1.0 million for the three months ended September 30, 2006.  The
        increase for the quarter was due primarily to the growth in the average balance
        of short-term investments and investment securities from $2.1 million for
        the
        three months ended September 30, 2006 to $15.4 million for the three months
        ended September 30, 2007 and to a lesser extent to an increase in the yield
        on
        average balance of net loans receivable from 6.95% to 7.13% for the same
        periods.
 
 Interest
        expense increased by $39,000
        or 7.1% to $586,000 for the three months ended September 30, 2007 compared
        to
        $547,000 for the three months ended September 30, 2006.  The increase
        in interest expense resulted primarily from an increase in the average rate
        paid
        on deposits from 3.98% for the three months ended September 30, 2006 to 4.35%
        for the same period ended September 30, 2007.  The increase in the
        average rate is reflective of the competition for deposits in a rising interest
        rate environment.
  11
 
 **Average
        Balances, Net Interest Income, and Yields Earned and Rates Paid.** The
        following table shows for the periods indicated the total dollar amount of
        interest from average interest-earning assets and the resulting yields, as
        well
        as the interest expense on average interest-bearing liabilities, expressed
        both
        in dollars and rates, and the net interest margin.  All average
        balances are based on daily balances.
 
 **Three
                    Months Ended September 30,****2007**
              
              
              **2006****Average**
                **Balance**
              
              
              **Interest**
              
              
              **Average**
                **Yield/**
                **Rate**
              
              
              **Average**
                **Balance**
              
              
              **Interest**
              
              
              **Average**
                **Yield/**
                **Rate**Interest-earning
                  assets:
              
              (Dollars
                  in thousands)Short-term
                  investments and investmentsecurities
                  held to maturity
              
              $
              15,393
              
              
              $
              192
              
              
              
              4.99
              %
              
              $
              2,066
              
              
              $
              27
              
              
              
              5.23
              %Loans
                  receivable, net (1)
              
              
              56,062
              
              
              
              999
              
              
              
              7.13
              
              
              
              56,364
              
              
              
              979
              
              
              
              6.95Other
                  interest-earning assets
              
              235
              
              
              4
              
              
              
              6.81
              
              
              328
              
              
              4
              
              
              
              4.88Total
                  interest-earning assets
              
              
              71,690
              
              
              
              1,195
              
              
              
              6.67
              %
              
              
              58,758
              
              
              
              1,010
              
              
              6.88
              %Non-interest-earning
                  assets
              
              971
              
              
              
              
              
              
              
              
              
              
              1,065Total
                  assets
              
              $
              72,661
              
              
              
              
              
              
              
              
              
              
              $
              59,823Interest-bearing
                  liabilities:Passbook
                  accounts
              
              $
              4,123
              
              
              
              14
              
              
              
              1.36
              %
              
              $
              5,809
              
              
              
              20
              
              
              
              1.38
              %Statement
                  savings accounts
              
              
              6,040
              
              
              
              42
              
              
              
              2.78
              
              
              
              7,100
              
              
              
              50
              
              
              
              2.82Certificate
                  of deposit accounts
              
              
              43,662
              
              
              
              530
              
              
              
              4.86
              
              
              
              40,917
              
              
              
              466
              
              
              
              4.56Total
                  deposits
              
              
              53,825
              
              
              
              586
              
              
              
              4.35
              
              
              
              53,826
              
              
              
              536
              
              
              
              3.98FHLB
                  advances
              
              -
              
              
              -
              
              
              
              -
              
              
              695
              
              
              11
              
              
              
              6.33Total
                  interest-bearing liabilities
              
              
              53,825
              
              
              586
              
              
              
              4.35
              %
              
              
              54,521
              
              
              
              547
              
              
              
              4.01
              %Non-interest-bearing
                  liabilities
              
              669
              
              
              
              
              
              
              
              
              
              
              736Total
                  liabilities
              
              
              54,494
              
              
              
              
              
              
              
              
              
              
              
              55,257Retained
                  earnings
              
              18,167
              
              
              
              
              
              
              
              
              
              
              
              4,567Total
                  liabilities and retained earnings
              
              $
              72,661
              
              
              
              
              
              
              
              
              
              
              $
              59,824Net
                  interest-earning assets
              
              $
              17,865
              
              
              
              
              
              
              
              
              
              
              $
              4,237Net
                  interest income; average interest ratespread
              
              
              
              
              
              $
              609
              
              
              
              2.32
              %
              
              
              
              
              
              $
              463
              
              
              
              2.87
              %Net
                  interest margin (2)
              
              
              
              
              
              
              
              
              
              
              3.40
              %
              
              
              
              
              
              
              
              
              
              
              3.15
              %Average
                  interest-earning assets to averageinterest-bearing
                  liabilities
              
              
              
              
              
              
              
              
              
              
              133.19
              %
              
              
              
              
              
              
              
              
              
              
              107.77
              %
 
 (1)
              Includes
                  non-accrual loans during the respective periods.  Calculated net
                  of deferred fees and discounts, loans in process and allowance
                  for loan
                  losses.
 
 (2)
              Equals
                  net interest income divided by average interest-earning
                  assets.
 
 The
        Company reduced the provision for
        loan losses from $36,000 for the quarter ended September 30, 2006 to $14,000
        for
        the same period in 2007 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, 2007.  No loans were charged off
        during the three months ended September 30, 2007.  Non-performing
        loans amounted to $2.0 million or 3.53% of net loans receivable at September
        30,
        2007, consisting of nine loans, four of which are 90 days or more past due
        and
        still accruing interest and five of which are on non-accrual
        status.  The non-performing loans are primarily one-to-four family
        owner occupied residential loans and all are
        well-collateralized.  Management does not anticipate any significant
        losses on these loans.  One of the five loans was placed on
        non-accrual status during the quarter ended September 30, 2007, resulting
        in the
        reversal of $3,000 of previously accrued interest income. The allowance for
        loan
        losses as a percent of total loans receivable was 1.06% at September 30,
        2007
        and 1.04% at December 31, 2006.
  12
  Non-interest income, which consists of fees and service charges, amounted
        to
        $9,000 and $7,000 for the three months ended September 30, 2007 and 2006,
        respectively.
 
 Non-interest
        expense increased $103,000
        or 50.5% from $204,000 for the three months ended September 30, 2006 to $307,000
        for the three months ended September 30, 2007.  Salaries expense
        accounted for $67,000 of the change as this expense increased 62.6% from
        $107,000 for the three months ended September 30, 2006 to $174,000 for the
        three
        months ended September 30, 2007, due primarily to increases in salary for
        the
        President and Chief Executive Officer and the hiring of a chief lending officer
        in the first quarter of 2007.  Also contributing to the quarter over
        quarter increase in non-interest expense were increases in director fees
        and
        expenses, occupancy and equipment expenses and professional fees and other
        expenses of $8,000, $5,000, $15,000 and $8,000, respectively.
 
 The
        provision for income tax increased
        $26,000 from $89,000 for the three months ended September 30, 2006 to $115,000
        for the three months ended September 30, 2007 due to the increase in pre-tax
        income.  The Company’s effective tax rate, including federal and state
        income taxes, was 38.7% for the three months ended September 30, 2007 and
        2006.
 
 **Comparison
        of Operating Results for the Nine Months Ended September 30, 2007 and
        2006**
 
 Net
        income amounted to $354,000 for the
        nine months ended September 30, 2007, a decrease of $79,000 or 18.2% compared
        to
        net income of $433,000 for the nine months ended September 30,
        2006.  The decline was primarily due to an increase in non-interest
        expense of $274,000, offset by an increase in net interest income of $62,000,
        a
        decrease in the provision for loan losses of $76,000, an increase in
        non-interest income of $8,000 and a decrease in income taxes of
        $49,000.
 
 Net
        interest income amounted to $1.5
        million for the nine months ended September 30, 2007 compared to $1.4 million
        for the nine months ended September 30, 2006.  The $62,000 or 4.5%
        increase was due primarily to a $316,000 increase in interest income on interest
        earning assets, offset by a $254,000 increase in interest expense on
        interest-bearing liabilities.
 
 The
        average interest rate spread declined from 2.95% for the nine months ended
        September 30, 2006 to 2.31% for the nine months ended September 30, 2007
        while
        average net interest-earning assets grew from $4.0 million to $10.2 million
        for
        the same periods.  Average interest-earning assets to average
        interest-bearing liabilities was 118.57% for the nine months ended September
        30,
        2007 compared to 107.39% for the nine months ended September 30,
        2006.  The decrease in the average interest rate spread reflects the
        combination of an increase in average rate paid on interest bearing liabilities
        from 3.74% for the nine months ended September 30, 2006 to 4.29% for the
        nine
        months ended September 30, 2007 and the decrease in the average yield on
        interest-earning assets from 6.69% to 6.60% during the same
        periods.  Net interest margin was 2.98% and 3.21% for the nine months
        ended September 30, 2007 and 2006, respectively.
 
 Interest
        income increased by $316,000
        or 10.9% to $3.2 million for the nine months ended September 30, 2007 compared
        to $2.9 million for the nine months ended September 30, 2006.  The
        increase resulted primarily from the growth in the average balance of short-term
        investments and investment securities from $2.4 million for the nine months
        ended September 30, 2006 to $9.9 million for the nine months ended September
        30,
        2007, and an increase in the yield on the loan portfolio from 6.78% to 6.98%
        during the same periods.
 
 Interest
        expense increased by $254,000
        or 16.8% to $1.8 million for the nine months ended September 30, 2006 compared
        to $1.5 million for the nine months ended September 30, 2006. The increase
        in
        interest expense resulted primarily from the growth in the average balance
        of
        interest-bearing deposits from $52.6 million to $54.9 million for the nine
        months ended September 30, 2006 and September
        30, 2007, respectively, and an increase in the average rate paid on deposits
        from 3.71% to 4.29% for the same periods.  The increase in the average
        rate is reflective of the competition for deposits in a rising interest rate
        environment.
 
 13
 **Average
        Balances, Net Interest Income, and Yields Earned and Rates Paid.** The
        following table shows for the periods indicated the total dollar amount of
        interest from average interest-earning assets and the resulting yields, as
        well
        as the interest expense on average interest-bearing liabilities, expressed
        both
        in dollars and rates, and the net interest margin.  All average
        balances are based on daily balances.
 
 **Nine
                    Months Ended September 30,****2007**
              
              
              **2006****Average**
                **Balance**
              
              
              **Interest**
              
              
              **Average**
                **Yield/**
                **Rate**
              
              
              **Average**
                **Balance**
              
              
              **Interest**
              
              
              **Average**
                **Yield/**
                **Rate**Interest-earning
                  assets:
              
              (Dollars
                  in thousands)Short-term
                  investments and investmentsecurities
                  held to maturity
              
              $
              9,945
              
              
              $
              335
              
              
              
              4.49
              %
              
              $
              2,371
              
              
              $
              90
              
              
              
              5.06
              %Loans
                  receivable, net (1)
              
              
              54,920
              
              
              
              2,875
              
              
              
              6.98
              
              
              
              55,202
              
              
              
              2,805
              
              
              
              6.78Other
                  interest-earning assets
              
              246
              
              
              11
              
              
              
              5.96
              
              
              299
              
              
              10
              
              
              
              4.46Total
                  interest-earning assets
              
              
              65,111
              
              
              
              3,221
              
              
              
              6.60
              %
              
              
              57,872
              
              
              
              2,905
              
              
              6.69
              %Non-interest-earning
                  assets
              
              726
              
              
              
              
              
              
              
              
              
              
              1,219Total
                  assets
              
              $
              65,837
              
              
              
              
              
              
              
              
              
              
              $
              59,091Interest-bearing
                  liabilities:Passbook
                  accounts
              
              $
              4,427
              
              
              
              46
              
              
              
              1.39
              %
              
              $
              6,427
              
              
              
              67
              
              
              
              1.39
              %Statement
                  savings accounts
              
              
              6,423
              
              
              
              133
              
              
              
              2.76
              
              
              
              7,549
              
              
              
              159
              
              
              
              2.81Certificate
                  of deposit accounts
              
              
              44,064
              
              
              
              1,588
              
              
              
              4.81
              
              
              
              38,660
              
              
              
              1,238
              
              
              
              4.27Total
                  deposits
              
              
              54,914
              
              
              
              1,767
              
              
              
              4.29
              
              
              
              52,636
              
              
              
              1,464
              
              
              
              3.71FHLB
                  advances
              
              -
              
              
              -
              
              
              
              -
              
              
              1,255
              
              
              49
              
              
              
              5.21Total
                  interest-bearing liabilities
              
              
              54,914
              
              
              1,767
              
              
              
              4.29
              %
              
              
              53,891
              
              
              
              1,513
              
              
              3.74
              %Non-interest-bearing
                  liabilities
              
              1,582
              
              
              
              
              
              
              
              
              
              
              782Total
                  liabilities
              
              
              56,496
              
              
              
              
              
              
              
              
              
              
              
              54,673Retained
                  earnings
              
              9,341
              
              
              
              
              
              
              
              
              
              
              
              4,418Total
                  liabilities and retained earnings
              
              $
              65,837
              
              
              
              
              
              
              
              
              
              
              $
              59,091Net
                  interest-earning assets
              
              $
              10,197
              
              
              
              
              
              
              
              
              
              
              $
              3,981Net
                  interest income; average interest ratespread
              
              
              
              
              
              $
              1,454
              
              
              
              2.31
              %
              
              
              
              
              
              $
              1,392
              
              
              
              2.95
              %Net
                  interest margin (2)
              
              
              
              
              
              
              
              
              
              
              2.98
              %
              
              
              
              
              
              
              
              
              
              
              3.21
              %Average
                  interest-earning assets to
                  averageinterest-bearing
                  liabilities
              
              
              
              
              
              
              
              
              
              
              118.57
              %
              
              
              
              
              
              
              
              
              
              
              107.39
              %
  
 (1)
              Includes
                  non-accrual loans during the respective periods.  Calculated net
                  of deferred fees and discounts, loans in process and allowance
                  for loan
                  losses.
 
 (2)
              Equals
                  net interest income divided by average interest-earning
                  assets.
 
 The
        Company reduced the provision for loan losses from $108,000 for the nine
        months
        ended September 30, 2006 to $32,000 for the same period in 2007 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,
        2007.  No loans were charged off during the nine months ended
        September 30, 2007.  Five loans were placed on non-accrual status
        during the nine month period ended September 30, 2007, resulting in the reversal
        of $42,000 of previously accrued interest income. See additional discussion
        under “Comparison of Operating Results for the Three Months Ended September 30,
        2007 and 2006.”
 
 Non-interest
        income, which consists of fees and service charges, amounted to $26,000 for
        the
        nine months ended September 30, 2007, an increase of $8,000 compared to
        non-interest income of $18,000 for the nine months ended September 30,
        2006.
  14
  Non-interest
        expense increased $274,000
        or 46.0% from $596,000 for the nine months ended September 30, 2006 to $870,000
        for the nine months ended September 30, 2007.  Salaries expense
        accounted for $190,000 of the increase as this expense increased 59.9% from
        $317,000 for the nine months ended September 30, 2006 to $507,000 for the
        nine
        months ended September 30, 2007, due primarily to increases in salary for
        the
        President and Chief Executive Officer and the hiring of a chief lending officer
        at the beginning of the first quarter of 2007.  Also contributing to
        the period over period increase in non-interest expense were increases in
        director fees and expenses, occupancy and equipment expenses, professional
        fees
        and other expenses of $19,000, $19,000, $37,000 and $9,000,
        respectively.
 
 The
        provision for income tax declined
        $49,000 from $273,000 as of September 30, 2006 to $224,000 for the nine months
        ended September 30, 2007 due to the decrease in pre-tax income.  The
        Company’s effective tax rate, including federal and state income taxes, was
        38.8% and 38.7% for the nine months ended September 30, 2007 and 2006,
        respectively.
 
 **Liquidity
        and Capital Resources**
 
 The
        Company’s primary sources of funds
        are deposits, amortization and prepayment of loans and to a lesser extent,
        loan
        sales and other funds provided from operations.  While scheduled
        principal repayments 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
        September 30, 2007, the Company's cash and cash equivalents amounted to $12.7
        million.  At such date the Company also had $1.8 million invested in
        interest-earning time deposits.
 
 The
        Company uses its liquidity to fund
        existing and future loan commitments, to fund deposit outflows, to invest
        in
        other interest-earning assets and to meet operating expenses.  At
        September 30, 2007, the Company had commitments to originate loans of $432,000
        and commitments under unused lines of credit of $723,000.
 
 At
        September 30, 2007, certificates of deposit scheduled to mature in less than
        one
        year totaled $32.0 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, Quaint Oak Bank has significant borrowing
        capacity available to fund liquidity needs.  If the Bank requires
        funds beyond its ability to generate them internally, borrowing agreements
        exist
        with the Federal Home Loan Bank of Pittsburgh, which provide an additional
        source of funds.  At September 30, 2007, the Bank had no advances from
        the Federal Home Loan Bank of Pittsburgh and had $36.5 million in borrowing
        capacity.
 
 Our
        stockholders’ equity amounted to
        $17.9 million at September 30, 2007, an increase of $13.2 million from
        stockholders’ equity at December 31, 2006.  The increase was due
        primarily to the $13.4 million in net proceeds received from the Company’s
        initial public stock offering which was completed on July 3,
        2007.  Approximately 53%, or $7.1 million, of these net proceeds were
        invested in Quaint Oak Bank.  The Bank has initially invested these
        proceeds in short-term, liquid investments to earn a market rate of
        return.  The net proceeds received by the Bank have further
        strengthened its capital position, which already exceeded all regulatory
        requirements.  The Bank’s long-term plan continues to be to leverage
        our capital through deposit and loan growth.
  15
  A portion of the net proceeds from the stock offering retained by the Company
        have been used to fund a line of credit to the Company’s employee stock
        ownership plan (“ESOP”) to fund the purchase of shares.  As
        of September 30, 2007, $514,000 of a total of $1.1 million allocated for
        the
        purchase of shares for the ESOP has been funded.  The remaining net
        proceeds held by the Company have been invested in short-term, liquid
        investments and government agency securities to be held to
        maturity.
  Quaint Oak Bank is required to maintain regulatory capital sufficient to
        meet
        tier 1 leverage, tier 1 risk-based and total risk-based capital ratios of
        at
        least 4.00%, 4.00% and 8.00%, respectively.  At September 30, 2007,
        the Bank exceeded each of its capital requirements with ratios of 17.51%,
        25.38%
        and 26.65%, respectively. As a savings and loan holding company, the Company
        is
        not subject to any regulatory capital requirements.
 
 **Off-Balance
        Sheet Arrangements**
 
 In
        the normal course of operations, the
        Company engages in a variety of financial transactions that, in accordance
        with
        generally accepted accounting principles are not recorded in our consolidated
        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.  The Company’s
        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.  The Company uses the same credit policies in
        making commitments and conditional obligations as it does for on-balance
        sheet
        instruments.  In general, the Company requires collateral or other
        security to support financial instruments with off–balance sheet credit
        risk.  At September 30, 2007 and December 31, 2006, the Company had
        commitments to originate loans of $432,000 and $977,000, respectively, and
        commitments under unused lines of credit of $723,000 and $410,000,
        respectively.
 
 **Impact
        of Inflation and Changing Prices**
 
 The
        consolidated financial statements
        and related financial data presented herein have been prepared in accordance
        with accounting principles generally accepted in the United States of America
        which generally require the measurement of financial position and operating
        results in terms of historical dollars, without considering changes in relative
        purchasing power over time due to inflation. Unlike most industrial companies,
        virtually all of Company’s assets and liabilities are monetary in nature. As a
        result, interest rates generally have a more significant impact on the Company’s
        performance than does the effect of inflation. Interest rates do not necessarily
        move in the same direction or in the same magnitude as the prices of goods
        and
        services, since such prices are affected by inflation to a larger extent
        than
        interest rates.
 
 
 **ITEM
        3. CONTROLS AND PROCEDURES**
 
 Under
        the supervision and with the
        participation of our management, including our Chief Executive Officer and
        our
        principal financial officer, we evaluated the effectiveness of the design
        and
        operation of our disclosure controls and procedures (as defined in Rules
        13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of
        the end
        of the period covered by this report. Based upon that evaluation, the Chief
        Executive Officer and the principal financial officer have concluded that,
        as of
        the end of the period covered by this report, our disclosure controls and
        procedures are effective to ensure that information required to be disclosed
        in
        the reports that the Company files or submits under the Securities Exchange
        Act
        of 1934, is recorded, processed, summarized and reported within the applicable
        time periods specified by the Securities and Exchange Commission’s rules and
        forms. There has been no change in the Company’s internal control over financial
        reporting during the Company’s most recent fiscal quarter that has materially
        affected, or is reasonably likely to materially affect, the Company’s internal
        control over financial reporting.
  16
 **PART
        II**
 
 
 **ITEM
        1. LEGAL PROCEEDINGS**
 
 The
        Company is not involved in any
        pending legal proceedings other than routine legal proceedings occurring
        in the
        ordinary course of business, which involve amounts in the aggregate believed
        by
        management to be immaterial to the financial condition and operating results
        of
        the Company.
 
 **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
 
 (a)           Not
        applicable.
 
 (b)           Not
        applicable.
 
 (c)           Purchases
        of Equity
        Securities
 
 The
        following table represents the purchasing activity of the Employee Stock
        Ownership Plan during the third quarter of fiscal 2007:
 
 **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**Month
                  #1 July 1, 2007 – July 31, 2007
              
              
              -
                  -
              
              
              $
              -
                  -
              
              
              
              -
                  -
              
              
              
              111,090Month
                  #2 August 1, 2007 – August 31, 2007
              
              
              11,000
              
              
              
              8.80
              
              
              
              11,000
              
              
              
              100,090Month
                  #3 September 1, 2007 – September 30, 2007
              
              
              46,000
              
              
              
              9.07
              
              
              
              46,000
              
              
              
              54,090Total
              
              
              57,000
              
              
              $
              9.02
              
              
              
              57,000
              
              
              
              54,090
 
 *Notes
        to this table:*
 
 (a)
              The
                  Company's Employee Stock Ownership Plan is authorized to purchase
                  up to a
                  maximum of 111,090 shares of common stock, or 8.0% of the common
                  stock
                  sold in the initial public offering completed on July 3, 2007,
                  as
                  disclosed in the Company's prospectus dated May 14,
                  2007.
 
 (b)
              On
                  July 27, 2007, the Company issued a press release announcing, among
                  other
                  items, that the aggregate purchase price of the 111,090 shares
                  of common
                  stock would not exceed $1,110,900.
 
 
 17
 
 **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES**
 
 Not
        applicable.
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 Not
        applicable.
 
 **ITEM
        5. OTHER INFORMATION**
 
 Not
        applicable.
 
 **ITEM
        6. EXHIBITS**
 
 The
        following Exhibits are filed as
        part of this report:
 
 No.
              
              Description2.1
              
              Plan
                  of Conversion of Quaint Oak Savings Bank (1)3.1
              
              Articles
                  of Incorporation of Quaint Oak Bancorp, Inc. (1)3.2
              
              Bylaws
                  of Quaint Oak Bancorp, Inc. (1)4.1
              
              Form
                  of Stock Certificate of Quaint Oak Bancorp, Inc. (1)10.1
              
              Employment
                  Agreement by and between Robert T. Strong and Quaint Oak Savings
                  Bank, as
                  amended (1)31.1
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive
                  Officer31.2
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial
                  Officer32.0
              
              Certification
                  Pursuant to 18 U.S.C Section 1350
 __________________
 (1)
              Incorporated
                  by reference from the Company’s Registration Statement on Form SB-2, filed
                  on March 21, 2007, as amended, and declared effective on May 14,
                  2007
                  (File No. 333-141474).
 
 18




**SIGNATURES**
 
 
 In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
  
 Date:
              November 14,
                  2007
              
              By:
              /s/
Robert
                T. StrongRobert
                  T. StrongPresident
                  and Chief Executive OfficerDate:
              November 14,
                      2007
              
              By:
              /s/
Diane
                J. ColyerDiane
                  J. ColyerOperations
                  Officer(principal
                  financial officer)