Company: MGNO
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000927089-25-000061
Chunk: 6

Company: Magnolia Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 6
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 delays in construction and cost overruns that can exceed the borrower’s financial ability to complete the construction project, which could result in unmarketable collateral. If the appraised value of a completed project proves to be overstated, the loan may be inadequately secured and we may incur a loss. As our residential construction loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase. At December 31,2024, we had a $160,000 unused construction loan commitment.

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Our home equity lines of credit involve credit risks that could adversely affect our financial condition and results of operations.

At December 31, 2024, home equity lines of credit totaled $711,000 or 2.3% of our total loan portfolio. In addition, we had $1.1 million of unused lines of credit at December 31, 2024 that borrowers could elect to utilize. Home equity loans and home equity lines of credit are secured by first or junior liens on residential real estate, making such loans susceptible to deterioration in residential real estate values. Home equity loans and lines of credit that are secured by junior mortgages have greater risk than one- to four-family residential real estate loans secured by first mortgages. Additional risks include lien perfection deficiencies and the inherent risk that the borrower may draw on the lines in excess of their collateral value, particularly in a deteriorating real estate market.

Our intent to increase our commercial real estate loan portfolio involves credit risks that could adversely affect our financial condition and results of operations.

At December 31, 2024, commercial real estate loans totaled $597,000 or 2.0% of our total loan portfolio. All of our commercial real estate loans as of December 31, 2024 were originated prior to 2019. We intend to modestly increase our commercial real estate 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 residential real estate 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, commercial real estate 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