Company: MGNO
Filing Date: 2025-01-03
Form Type: 10-Q/A
Source: 0000927089-25-000009
Chunk: 40

Company: Magnolia Bancorp, Inc.
Filing Date: 2025-01-03
Form: 10-Q/A
Chunk 40
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 of $10,000 for the quarter ended September 30, 2024 compared to a provision for income taxes of $4,000 for the quarter ended September 30, 2023. The tax benefit in the quarter ended September 30, 2024 represented an effective tax rate of 22.2% on our pre-tax loss of $45,000 for this period, while the tax provision for the quarter ended September 30, 2023 represented an effective tax rate of 20.0% on our pre-tax income of $20,000 for this period. At September 30, 2024 and December 31, 2023, we had a net deferred tax liability of $48,000.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. All directors participate in discussions during the regular board meetings evaluating the interest rate risk inherent in our assets and liabilities, and the level of risk that is appropriate. These discussions take into consideration our business strategy, operating environment, capital, liquidity and performance objectives consistent with the policy and guidelines approved by them. The board of directors establishes policies and guidelines for managing interest rate risk.

Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we use to manage interest rate risk are:

| ● | maintaining capital levels that substantially exceed the thresholds for well-capitalized status under federal regulations; |

| ● | maintaining a high liquidity level; and |

| ● | growing our core deposits accounts |

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

We have not engaged in hedging activities, such as investing in futures or options. We do not anticipate entering into hedging transactions in the future.

Economic Value of Equity. We compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability