Company: MGNO
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000927089-25-000061
Chunk: 16

Company: Magnolia Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 16
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Risks Related to Operational Matters

Our funding sources may prove insufficient to replace deposits at maturity and support our future growth.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we primarily use certificates of deposit as a funding source in addition to core deposit growth, repayments and maturities of loans, and interest-bearing deposits in other banks. We use a passive deposit listing service to obtain certificates of deposit, and these certificates of deposit were $4.7 million or 16.0% of total deposits at December 31, 2024, compared to $3.7 million or 17.9% of total deposits at December 31, 2023 and $7.6 million or 30.5% of total deposit at December 31, 2022. The certificates of deposit obtained through this listing service are not brokered deposits under FDIC rules, but these deposits are more interest rate sensitive than our other deposits as competitive rates from other financial institutions are also posted on this listing service. If we manage to grow in the future, we are likely to depend more on advances from the Federal Home Loan Bank of Dallas. In addition to our ability to obtain advances from the Federal Home Loan Bank of Dallas, an additional funding source includes borrowing capacity through the Federal Reserve Bank of Atlanta, as well as federal funds. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In that case, our operating margins and profitability would be adversely affected.

Our largest depositor held 14% of our total deposits at December 31, 2024, and a loss or material reduction in this deposit relationship could adversely affect our liquidity and results of operations.

At December 31, 2024, our largest depositor held 14% of our total deposits in multiple accounts, compared to 23% of total deposits at December 31, 2023 and 18% of total deposits at December 31, 2022. The decrease in the percentage of total deposits held by this depositor as of the end of 2024 is primarily due to subscriptions for $8