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

Company: Magnolia Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 25
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 of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. The evaluation of our allowance for credit losses requires significant estimates and assumptions by management.

Changes in accounting standards could affect reported earnings.

The regulatory bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and others, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

Risks Related to Our Common Stock 

Because we have a high capital level after the completion of the conversion, we expect our return on equity to be low following the conversion, which could negatively affect the trading price of our shares of common stock.

Net income divided by average shareholders’ equity, known as “return on equity,” is a ratio many investors use to compare the relative performance of financial institutions. Our return on average equity was (0.72)% for the 2024, 0.61% for the year ended December 31, 2023 and (0.04)% for the year ended December 31, 2022. Our average equity to average assets was 38% for 2024, 37% for the year ended December 31, 2023 and 32% for the year ended December 31, 2022. Our total equity capital was $13.9 million at December 31, 2024. Our pro forma consolidated shareholders’ equity at December 31, 2024 was $19.8 million. We expect our return on equity to be lower than our peers unless and until we are able to leverage our capital, including the additional capital from the stock offering, and return to profitability. Our return on equity also will be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit plans we intend to adopt after the completion of the conversion. Our lower return on equity may reduce the trading price of our shares of common stock.

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A significant percentage of our common stock is held by our directors and executive officers and benefit plans.

Our directors and executive officers, together with their associates, beneficially own 6.8% of the shares of common stock of Magn