Company: MGNO
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000927089-25-000061
Chunk: 7

Company: Magnolia Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 7
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 appraise, may fluctuate in value, and may depreciate over time. As a result, the availability of funds for the repayment of commercial real estate loans may depend substantially on the success of the business itself.

We will experience significant competition with respect to new commercial real estate loans, as larger institutions have greater financial capability to make these loans, more experienced lenders, existing relationships with borrowers and higher visibility in this area. We expect our commercial real estate loans will primarily be to small businesses located in our market area. In addition, we expect our commercial real estate loan portfolio to increase only modestly and to account for less than 5% of our total loan portfolio for the foreseeable future.

Our intent to increase our multi-family residential loans involves credit risks that could adversely affect our financial condition and results of operations.

At December 31, 2024, multi-family residential loans totaled $288,000 or 0.9% of our total loan portfolio. All of our multi-family residential loans as of December 31, 2024 were originated prior to 2019. We intend to modestly increase our multi-family residential loan portfolio, which may necessitate the hiring of additional loan officers who are experienced in this area. Because we have not originated these types of loans in recent years, there are risks associated with hiring additional loan officers for this type of lending.

Unlike one- to four family residential loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, multi-family residential loans are of higher risk and typically are made based on the borrower’s ability to make repayment from the cash flows of the borrower’s business, and any collateral securing these loans may be difficult to appraise, may fluctuate in value, and may depreciate over time. As a result, the availability of funds for the repayment of multi-family residential loans may depend substantially on the success of the business itself.

If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease.

We maintain an allowance for credit losses, which is established through a provision for credit losses that represents management’s best estimate of the current expected losses within the loan portfolio. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the