Magnolia Bancorp nine-month loss widens to $189K
The quarter's disclosures identify a material weakness in credit-loss review controls and show deposits down 10% since year-end.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Magnolia Bancorp, Inc. (MGNO) reported a $189,000 net loss for the nine months ended September 30, 2026, compared with a $114,000 loss in 2025. Noninterest expense increased 5.8% to $1.229 million, while net interest income rose 2.6% to $1.020 million. Third-quarter net loss was $55,000, compared with $48,000.
At September 30, 2026, deposits were $15.161 million and cash was $2.601 million, down from $16.852 million and $4.513 million, respectively, at December 31, 2025. Net loans were $31.269 million. The Association was categorized as well-capitalized; three loans totaling $152,000 were on nonaccrual, and the $185,000 allowance for credit losses equaled 122% of nonperforming assets.
Management said lower demand for fixed-rate mortgages pressured originations and expects the trend to continue until market conditions improve homeownership affordability. Controls were ineffective at September 30, 2026, after management identified a material weakness because it lacked sufficient evidence of an independent review of its credit-loss estimate. The weakness is not considered fully remediated until controls operate long enough for management to test effectiveness.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Major pointMaterial weakness in allowance review left controls ineffective at September 30, 2026.
- Moderate pointNine-month net loss reached $189,000, versus $114,000 a year earlier.
- Moderate pointNoninterest expense rose 5.8% to $1.229 million for the nine months.
Filing Explained
The trust’s four-thousand-share purchase used existing stock, not new issuance, and the company’s separate repurchase program had expired.
In
The approximately
At
Key Figures
Key Terms
net interest margin financial
nonaccrual financial
allowance for credit losses financial
prompt corrective action regulatory
valuation allowance financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was MGNO's net loss for the first nine months of 2026?
How much were MGNO's deposits at September 30, 2026?
What material weakness did MGNO report in its internal controls?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
Magnolia Bancorp, Inc.
Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | | ||
| (Address of principal executive offices) | (Zip Code) | ||
| |
| (Registrant’s telephone number, including area code) |
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Number of shares of common stock outstanding as of November 3, 2026:
| Index |
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| Page # |
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| Part I. - Financial Information |
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| Item 1. |
Financial Statements (Unaudited) |
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| Consolidated Statements of Financial Condition |
2 |
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| Consolidated Statements of Operations |
3 |
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| Consolidated Statements of Changes in Stockholders' Equity |
4 |
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| Consolidated Statements of Cash Flows |
5 |
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| Notes to Consolidated Financial Statements |
6 |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
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| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
23 |
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| Item 4. |
Controls and Procedures |
23 |
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| Part II. - Other Information |
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| Item 1. |
Legal Proceedings |
24 |
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| Item 1A. |
Risk Factors |
24 |
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| Item 2. |
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
24 |
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| Item 3. |
Defaults Upon Senior Securities |
24 |
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| Item 4. |
Mine Safety Disclosures |
24 |
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| Item 5. |
Other Information |
24 |
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| Item 6. |
Exhibits |
25 |
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| Signatures |
26 |
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Item 1. Financial Statements
| MAGNOLIA BANCORP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION |
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| (dollars in thousands) |
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | $ | ||||||
| Loans receivable | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Loans receivable, net | ||||||||
| Accrued interest receivable | ||||||||
| Property and equipment, net | ||||||||
| Federal Home Loan Bank stock, at cost | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| Deposits: | ||||||||
| Interest bearing deposits | $ | $ | ||||||
| Noninterest bearing deposits | ||||||||
| Total deposits | ||||||||
| Advance payments by borrowers for insurance and taxes | ||||||||
| Accrued expense and other liabilities | ||||||||
| Total Liabilities | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, $.01 par value - 2,000,000 shares authorized, none issued | ||||||||
| Common stock, $.01 par value - 6,000,000 shares authorized; 832,288 and 833,750 issued and outstanding at September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Unearned Recognition and Retention Plan Stock – 4,000 and 0 shares at September 30, 2026 and December 31, 2025, respectively. | ( | ) | ||||||
| Unearned ESOP stock- 62,809 and 64,476 shares at September 30, 2026 and December 31,2025, respectively | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Total Stockholders' Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
| The accompanying notes are an integral part of these consolidated financial statements. |
|||||
| MAGNOLIA BANCORP, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
| (dollars in thousands) |
| Three Months Ended |
Nine Months Ended |
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| September 30, |
September 30, |
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| 2026 |
2025 |
2026 |
2025 |
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| Interest Income |
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| Interest and fees on loans |
$ | $ | $ | $ | ||||||||||||
| Other |
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| Total interest income |
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| Interest Expense |
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| Deposits |
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| Total interest expense |
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| Net interest income |
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| Provision for credit losses |
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| Net interest income after provision for credit losses |
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| Noninterest Income |
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| Service charges on deposit accounts |
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| Other income |
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| Total noninterest income |
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| Noninterest Expense |
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| Salaries and employee benefits |
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| Occupancy and equipment |
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| Data processing |
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| Accounting and auditing expenses |
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| General insurance |
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| Legal fees |
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| Advertising |
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| Automobile depreciation and expense |
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| Correspondent charges |
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| Other expenses |
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| Total noninterest expense |
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| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax benefit |
( |
) | ( |
) | ||||||||||||
| Net Loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Loss per share - basic and diluted |
$ | (. |
) | $ | (. |
) | $ | (. |
) | $ | (. |
) | ||||
| Weighted average shares outstanding |
||||||||||||||||
| The accompanying notes are an integral part of these consolidated financial statements. |
| MAGNOLIA BANCORP, INC. |
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) |
| (dollars in thousands) |
| Common Shares Issued | Common Stock | Additional paid-in capital | Unearned Recognition and Retention Plan Stock | Unearned ESOP Stock | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Issuance cost of common stock | - | |||||||||||||||||||||||||||
| ESOP shares committed to be released | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| ESOP shares committed to be released | - | |||||||||||||||||||||||||||
| Stock purchased to fund the 2025 Recognition and Retention Plan | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Stock compensation | - | - | - | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Common Shares Issued | Common Stock | Additional paid-in capital | Unearned Recognition and Retention Plan Stock | Unearned ESOP Stock | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||
| Purchase of common shares ESOP, 66,700 shares | - | ( | ) | ( | ) | |||||||||||||||||||||||
| ESOP shares committed to be released | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| ESOP shares committed to be released | - | |||||||||||||||||||||||||||
| Stock purchased to fund the 2025 Recognition and Retention Plan | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Stock compensation | - | - | - | |||||||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| The accompanying notes are an integral part of these consolidated financial statements.
|
| MAGNOLIA BANCORP, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
| (dollars in thousands) |
| Nine Months Ended September 30, |
||||||||
| 2026 |
2025 |
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| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation |
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| ESOP expense |
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| Stock based compensation |
||||||||
| FHLB stock dividends |
( |
) | ( |
) | ||||
| Net change in: |
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| Deferred taxes |
( |
) | ||||||
| Accrued interest receivable and other assets |
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| Accrued expenses and other liabilities |
( |
) | ||||||
| Net cash provided by (used in) operating activities |
( |
) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Increase in loans receivable, net |
( |
) | ( |
) | ||||
| Purchases of property and equipment |
( |
) | ||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Decrease in deposits, net |
( |
) | ( |
) | ||||
| Refund of stock subscriptions |
( |
) | ||||||
| Proceeds from stock conversion deposited |
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| Increase in advances by borrowers for insurance and taxes |
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| Purchase of stock to fund the 2025 Recognition and Retention Plan |
( |
) | ||||||
| Payments to repurchase common stock |
( |
) | ||||||
| Stock issuance costs paid |
( |
) | ||||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Net change in cash and cash equivalents |
( |
) | ( |
) | ||||
| Cash and cash equivalents, beginning of period |
||||||||
| Cash and cash equivalents, end of period |
$ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION: |
||||||||
| Cash paid during the period for interest |
$ | $ | ||||||
| Proceeds from stock issuance, net of offering costs |
||||||||
| The accompanying notes are an integral part of these consolidated financial statements.
|
||||
MAGNOLIA BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of Magnolia Bancorp, Inc. (the “Company”) were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, general practices within the financial services industry, and instructions for Regulation S-X. Accordingly, these interim financial statements do not include all of the information or footnotes required by GAAP for annual financial statements. However, in the opinion of management, all adjustments necessary for a fair presentation of the financial statements have been included. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto, included in the Company’s Form 10-K for the year ended December 31, 2025.
Description of Business
The Company is a holding company for Mutual Savings and Loan Association (the “Association”). Mutual Savings and Loan Association was formed in 1885 and is a federally chartered savings and loan. The Association provides financial services primarily to individuals, mainly through the origination of loans for one-to-four family residences through its two branches located in the metropolitan New Orleans area. The Association also accepts deposits in the form of checking, savings and certificates of deposit.
The Company was incorporated as a Louisiana corporation in May 2024 in connection with the Association’s conversion from mutual to stock form. On January 14, 2025, the Association completed its conversion from a mutual savings and loan association to a stock savings and loan association and became a wholly owned subsidiary of Magnolia Bancorp.
Use of Estimates
In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
The determination of the adequacy of the allowance for credit losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. The Company’s loans are generally secured by specific items of collateral including real property and consumer assets. While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Based on such reviews, the Company may determine to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.
Deferred income tax assets and liabilities are determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and give current recognition to changes in tax rates and laws. The Company provides a valuation allowance for deferred tax assets if it is more likely than not that the Company will be unable to realize the benefit of the future deductibility of the item. During 2025, the Company established a valuation allowance against its net deferred tax asset due to recent operating losses. Since 2024, the Company has experienced higher noninterest expenses primarily related to additional costs since its mutual to stock conversion and becoming a public company. The Company will continue to evaluate the need for a valuation allowance against these deferred items and will adjust the valuation allowance as deemed appropriate. Both positive and negative information is included in the evaluation which includes a history of recent cumulative losses and near-term expectations, and risks associated with estimates of future income. An objective history of recent losses generally provides better evidence in the evaluation than a subjective estimate of future income.
Recent Accounting Pronouncements
Accounting Standards Issued But Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40),” to improve the disclosures about a public business entity’s expenses in commonly presented expense captions. The amendments in this update require disclosure of specified information about certain costs and expenses in the notes to consolidated financial statements. Disclosure requirements also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, among other items. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. This update, as amended, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update, or retroactively to any or all prior periods presented in the consolidated financial statements. The Company is currently assessing the provisions of this guidance. As the update contains only amendments to disclosure requirements, adoption will have no impact on the Company’s consolidated results of operations or financial condition.
In December 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements" to clarify the current interim disclosure requirements and create a comprehensive list of interim disclosures required under GAAP. ASU 2025-11 also incorporates a disclosure principle that requires interim period disclosures of material events or changes that have occurred since the previous year-end. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 with early adoption permitted. As the update contains only amendments to disclosure requirements, adoption will have no impact on the Company’s consolidated results of operations or financial condition.
Note 2. Loans Receivable
A summary of the balances of loans as of September 30, 2026 and December 31, 2025 is as follows.
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (dollars in thousands) | ||||||||
| Residential real estate | $ | $ | ||||||
| Construction | ||||||||
| Commercial real estate | ||||||||
| Total real estate loans | ||||||||
| Share loans | ||||||||
| Total loans | ||||||||
| Unamortized, net deferred loan costs | ||||||||
| Less allowance for credit losses | ( | ) | ( | ) | ||||
| Loans receivable, net | $ | $ | ||||||
Loans are stated at the amount of unpaid principal net of unamortized loan costs and exclude accrued interest. Accrued interest is reflected in the accrued interest line item on the consolidated statements of financial condition.
The following tables present an analysis of past due loans as of September 30, 2026 and December 31, 2025.
| As of September 30, 2026 | ||||||||||||||||||||
| 30 to 89 days past due | 90 days and over past due | Current Loans | Total | Past due greater than 90 days accruing | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Residential real estate | $ | $ | $ | $ | $ | |||||||||||||||
| Construction | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Share loans | ||||||||||||||||||||
| Loans receivable, total | $ | $ | $ | $ | $ | |||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||
| 30 to 89 days past due | 90 days and over past due | Current Loans | Total | Past due greater than 90 days accruing | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Residential real estate | $ | $ | $ | $ | $ | |||||||||||||||
| Construction | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Share loans | ||||||||||||||||||||
| Loans receivable, total | $ | $ | $ | $ | $ | |||||||||||||||
Nonaccrual loans for which no related allowance for loan losses was recorded totaled $
Credit Quality Indicators
The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company's primary credit quality indicators use an internal credit risk rating system that categorizes loans into pass, special mention, substandard or doubtful categories. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. The following are the definitions of the Company's credit quality indicators:
Pass: Loans that comply in all material respects with the Company's loan policies, which are adequately secured with conforming collateral, and are extended to borrowers with documented cash flow and/or liquidity to safely cover their total debt service requirements.
Watch: Loans that are above the FNMA limits are monitored on a routine basis. In addition, loans that become delinquent are initially identified as watch list loans for further monitoring. These loans do not currently expose the institution to sufficient risk to warrant adverse classification.
Special Mention: Loans that have potential weaknesses that, if left uncorrected, may result in deterioration of repayment prospects for the asset or in the Company's credit position at some future date.
Classified Loans Credit Quality Indicators
Substandard: Loans that are inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged. These assets have a well-defined weakness or weaknesses. The Company has a distinct possibility to sustain some loss if the deficiencies are not corrected.
Doubtful: Loans that have the weaknesses of those classified Substandard, with the added characteristic that the weaknesses make the collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The Company’s credit quality indicators are periodically updated on a case-by-case basis.
The following table reflects loans by credit quality indicator and origination year at September 30, 2026.
| September 30, 2026 (dollars in thousands) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Total | |||||||||||||||||||||
| Residential Real Estate: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Construction: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Commercial Real Estate: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Share Loans: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Total Loans: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
The following table reflects loans by credit quality indicator and origination year at December 31, 2025.
| December 31, 2025 (dollars in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Total | |||||||||||||||||||||
| Residential Real Estate: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Construction: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Commercial Real Estate: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Share Loans: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | ||||||||||||||||||||||||||||
| Total Loans: | ||||||||||||||||||||||||||||
| Pass/Watch | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
The allowance for credit loss represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the statement of financial condition date. The following tables summarize the activity in the allowance for credit losses for the three months and nine months ended September 30, 2026, and 2025.
| Three Months Ended September 30, 2026 | Residential Real Estate | Construction | Commercial Real Estate | Share Loans | Total | |||||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | $ | |||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Recoveries | ||||||||||||||||||||
| Provision for credit losses | ( | ) | ||||||||||||||||||
| Ending Balances | $ | $ | $ | $ | $ | |||||||||||||||
| Ending Balances Allocated to: | ||||||||||||||||||||
| Individually Evaluated for Impairment | $ | $ | $ | $ | $ | |||||||||||||||
| Collectively Evaluated for Impairment | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Three Months Ended September 30, 2025 | Residential Real Estate | Construction | Commercial Real Estate | Share Loans | Total | |||||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | $ | |||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Recoveries | ||||||||||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ||||||||||||||||
| Ending Balances | $ | $ | $ | $ | $ | |||||||||||||||
| Ending Balances Allocated to: | ||||||||||||||||||||
| Individually Evaluated for Impairment | $ | $ | $ | $ | $ | |||||||||||||||
| Collectively Evaluated for Impairment | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Nine Months Ended September 30, 2026 | Residential Real Estate | Construction | Commercial Real Estate | Share Loans | Total | |||||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | $ | |||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Recoveries | ||||||||||||||||||||
| Provision for credit losses | ( | ) | ||||||||||||||||||
| Ending Balances | $ | $ | $ | $ | $ | |||||||||||||||
| Ending Balances Allocated to: | ||||||||||||||||||||
| Individually Evaluated for Impairment | $ | $ | $ | $ | $ | |||||||||||||||
| Collectively Evaluated for Impairment | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Nine Months Ended September 30, 2025 | Residential Real Estate | Construction | Commercial Real Estate | Share Loans | Total | |||||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | $ | |||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Recoveries | ||||||||||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ||||||||||||||||
| Ending Balances | $ | $ | $ | $ | $ | |||||||||||||||
| Ending Balances Allocated to: | ||||||||||||||||||||
| Individually Evaluated for Impairment | $ | $ | $ | $ | $ | |||||||||||||||
| Collectively Evaluated for Impairment | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
In the ordinary course of business, the Company has granted loans to principal officers and directors, and entities in which they have significant ownership or management positions. An analysis of the changes in loans to such borrowers for the nine months ended September 30, 2026 and 2025 follows:
| 2026 | 2025 | |||||||
| (dollars in thousands) | ||||||||
| Balance, Beginning | $ | $ | ||||||
| Additions | ||||||||
| Payments | ( | ) | ( | ) | ||||
| Balance, Ending | $ | $ | ||||||
Note 3. Deposits
A summary of deposit balances by type as of September 30, 2026 and December 31, 2025 is as follows:
| September 30, 2026 | December 31, 2025 | |||||||
| (dollars in thousands) | ||||||||
| Noninterest-bearing deposits | $ | $ | ||||||
| Interest-bearing demand deposits | ||||||||
| Savings deposits | ||||||||
| Certificates of deposit | ||||||||
| Total deposits | $ | $ | ||||||
Certificates of deposit that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $250,000 at September 30, 2026 and December 31, 2025, were $
At September 30, 2026, the scheduled maturities of certificates of deposit were as follows:
| Year Ending | Amount | |||
| (dollars in thousands) | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
During the normal course of business, the Company accepts deposits from members of the Board of Directors and officers. As of September 30, 2026 and December 31, 2025, these deposits totaled $
Note 4. Earnings (Loss) Per Share
Earnings (loss) per share (“EPS”) represents income available or loss attributable to common shareholders divided by the weighted average number of common shares outstanding during the period. Unallocated common shares held by the ESOP and the trust are shown as a reduction in stockholders’ equity and are excluded from the weighted-average common shares outstanding for both basic and diluted earnings per share calculations until they are committed to be released.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Denominator | ||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Less average unearned unallocated shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average shares | ||||||||||||||||
As of September 30, 2026, the Company had
Note 5. Commitments and Contingencies
In the normal course of business, the Company has outstanding commitments and contingent liabilities, such as commitments to extend credit, which are not included in the accompanying financial statements. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the Company's consolidated statements of financial condition. The Company's exposure to credit loss is represented by the contractual amount of those commitments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the consolidated statements of financial condition.
As of September 30, 2026 and December 31, 2025, the Company had commitments to extend credit of $
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation.
Note 6. Segment Reporting
The Company determined that all of its banking operations serve a similar customer base, offer similar products and services, and are managed through similar processes. Therefore, the Company’s banking operations are aggregated into one reported operating segment, which generates income principally from interest on loans as well as from fees charged in connection with various loan and deposit services. The chief operating decision maker (“CODM”) is the Executive Committee, which for the purposes of assessing performance, making operating decisions, and allocating Company resources, regularly reviews net income as reported in the accompanying consolidated statements of operations. The level of disaggregation and amounts of significant segment income and expenses that are regularly provided to the CODM are the same as those presented in the accompanying consolidated statements of operations. Likewise, the measure of segment assets is reported on the accompanying consolidated statements of financial condition as total assets.
Note 7. Regulatory Matters
The Association is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of Currency (“OCC”). Failure to meet the minimum regulatory capital requirements can result in certain mandatory, and possible additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Association’s financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines involving quantitative measures of the Association's assets, liabilities, and certain off-financial condition items, as calculated under regulatory accounting practices. The Association's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
As of September 30, 2026, the most recent notification from the OCC categorized the Association as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Association must maintain minimum total risk based, Tier I risk-based, and Tier I leverage ratios as disclosed in the table below. There are no conditions or events since the notification that management believes have changed the Association’s prompt corrective action category.
The Association's actual capital amounts and ratios as of September 30, 2026 and December 31, 2025 are presented in the following tables:
| Actual | Required for Capital Adequacy Purposes | Required to be Well-Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||
| September 30, 2026 (dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
| Tier 1 Leverage Ratio | $ | % | $ | % | $ | % | ||||||||||||||||||
| Common Equity Tier 1 | $ | % | $ | % | $ | % | ||||||||||||||||||
| Tier 1 Risk-Based Capital | $ | % | $ | % | $ | % | ||||||||||||||||||
| Total Risk-Based Capital | $ | % | $ | % | $ | % | ||||||||||||||||||
| Actual | Required for Capital Adequacy Purposes | Required to be Well-Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||
| December 31, 2025 (dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
| Tier 1 Leverage Ratio | $ | % | $ | % | $ | % | ||||||||||||||||||
| Common Equity Tier 1 | $ | % | $ | % | $ | % | ||||||||||||||||||
| Tier 1 Risk-Based Capital | $ | % | $ | % | $ | % | ||||||||||||||||||
| Total Risk-Based Capital | $ | % | $ | % | $ | % | ||||||||||||||||||
Note 8. Fair Value Measures
Accounting guidance establishes a fair value hierarchy to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.
| Level 1 | – | Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. | |
| Level 2 | – | Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |
| Level 3 | – | Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
|
Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring basis.
Loans individually evaluated for credit loss are Level 2 assets measured at the fair value of the underlying collateral based on independent third-party appraisals on a nonrecurring basis.
The following presents the financial assets that are measured at fair value on a non-recurring basis for each of the fair value hierarchy levels:
| September 30, 2026 | Level 1 | Level 2 | Level 3 | |||||||||
| (dollars in thousands) | ||||||||||||
| Loans individually evaluated | $ | $ | $ | |||||||||
| December 31, 2025 | Level 1 | Level 2 | Level 3 | |||||||||
| (dollars in thousands) | ||||||||||||
| Loans individually evaluated | $ | $ | $ | |||||||||
The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.
Cash and cash equivalents – The carrying value approximates fair value.
FHLB stock – The carrying value approximates fair value based on the redemption provisions of the Federal Home Loan Bank.
Loans receivable, net – Fair value is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit rating and for the same remaining maturity.
Deposits - For checking and savings accounts, fair value is equal to the amount payable on demand or carrying value. For certificates of deposit, fair value is estimated using a discounted cash flow method.
The carrying value and estimated fair value of financial instruments are as follows.
| September 30, 2026 | Fair Value Measures | |||||||||||||||
| (dollars in thousands) | Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Financial assets: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Loans receivable, net | ||||||||||||||||
| FHLB stock | ||||||||||||||||
| Financial liabilities: | ||||||||||||||||
| Deposits | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | Fair Value Measures | |||||||||||||||
| (dollars in thousands) | Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Financial assets: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Loans receivable, net | ||||||||||||||||
| FHLB stock | ||||||||||||||||
| Financial liabilities: | ||||||||||||||||
| Deposits | $ | $ | $ | $ | ||||||||||||
Note 9. Employee Benefit Plans
In September 2025, the Company’s shareholders approved the adoption of two employee benefit plans, the 2025 Stock Option Plan (Stock Plan) and the 2025 Recognition and Retention Plan (Retention Plan) and related Trust Agreement.
Under the Retention Plan, the Company will contribute sufficient funds to the trust for it to acquire
During the nine-month period ended September 30, 2026, the Company purchased
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis is intended to assist in understanding our financial condition and results of operations. The information in this section should be read in conjunction with the unaudited consolidated financial statements of Magnolia Bancorp, Inc. and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Form 10-K filed with the SEC for the year ended December 31, 2025.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning, include but are not limited to:
| ● |
statements of our goals, intentions and expectations; |
| ● |
statements regarding our business plans, prospects, growth and operating strategies; |
| ● |
statements regarding the quality of our loans and other assets; and |
| ● |
estimates of our risks and future costs and benefits. |
These forward-looking statements are based on the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this report.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim, any obligation to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of this statement or to reflect the occurrence of anticipated or unanticipated events.
Overview
Magnolia conducts its operations primarily through its wholly owned subsidiary, Mutual Savings and Loan Association. The Company’s loan portfolio consists primarily of fixed-rate one-to-four family residential mortgage loans that we have originated. The Company intends to continue our focus on originating fixed-rate one-to-four family residential mortgage loans, and to a lesser extent residential construction loans and home equity lines of credit. The Company also originates commercial real estate loans and multi-family residential loans which represent approximately 1.9% of our loan portfolio at September 30, 2026. We also originate share loans, which are loans secured by deposit accounts at the Company. We generally do not purchase or sell loans. We offer a variety of deposit accounts including checking, savings and certificates of deposit. The Company is subject to regulation and examination by the Office of the Comptroller of the Currency, the FDIC and the Federal Reserve Board.
Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations are also affected by our provisions for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of rental income and service charges and other fees on deposit accounts. Noninterest expense consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, audit and regulatory examination fees, insurance premiums, and other expenses.
Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities. Demand for our loan products is susceptible to changes in overall market lending rates. Markets rates for our fixed rate loan products have generally risen in recent months as the Federal Reserve increased rates during its September meeting in reaction to continued higher levels of inflation than its target rate of inflation. While we have experienced a reduction in our overall cost of funds which has resulted in an increase in our net interest income, we expect this recent rise in rates by the Federal Reserve will increase our overall cost of funds in the future. We have also experienced lower demand for our fixed rate mortgage loans during 2026, which has resulted in continued pressure on loan origination volume. Reduced volume in loan originations has the impact of reducing our net interest income as we generally do not achieve a comparable interest rate for the cash received and invested from loan repayments. In addition, we incur higher noninterest expenses due to fewer deferrals of direct loan origination costs from loans being originated during the period. We expect this trend of reduced loan demand to continue until overall market conditions improve the affordability of homeownership.
Critical Accounting Policies and Estimates
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical estimates are included in our Annual Report on Form 10-K for the year ended December 31, 2025. Our accounting policies for the allowance for credit losses and income taxes comprise those that management believes involve the most critical estimates.
There were no other material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as previously disclosed in its Form 10-K for the year ended December 31, 2025.
Comparison of Financial Condition at September 30, 2026 and December 31, 2025
Total Assets. Total assets were $35.8 million at September 30, 2026, a decrease of $1.6 million, or 4.2%, from $37.4 million at December 31, 2025.
Cash and Cash Equivalents. Cash and cash equivalents decreased by $1.9 million, or 42.4%, to $2.6 million at September 30, 2026, from $4.5 million at December 31, 2025. The decrease was primarily due to a decrease in deposits.
Loans Receivable, Net. Loans receivable, net, increased by $550,000, or 1.8%, to $31.3 million at September 30, 2026, from $30.7 million at December 31, 2025. Loans increased due to higher loan origination volumes before the more recent increase in market rates for our loan products. We anticipate, given the current market rates, for there to be pressure on loan origination volume.
Deposits. Total deposits decreased by $1.7 million, or 10%, to $15.2 million at September 30, 2026, from $16.8 million at December 31, 2025.
Management continued its strategy of pursuing growth in demand accounts and lower cost core deposits, but market conditions have affected this strategy. Management intends to continue its efforts to increase core deposits, with an emphasis on growth in consumer deposits.
Total Equity. Total equity decreased by $200,000, or 1%. The decrease was primarily due to our net loss of $189,000 for the first nine months of 2026. In addition, the trust for our 2025 Recognition and Retention Plan purchased 4,000 shares of common stock in August 2026 to partially fund the plan. The purchased shares are shown as a reduction of stockholders’ equity until the restricted stock grants under the plan are earned and distributed.
Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. As we did not own any tax-exempt securities during the periods presented, no yield adjustments were made. All average balances are based on daily balances.
| Three Months Ended September 30, |
||||||||||||||||||||||||
| 2026 |
2025 |
|||||||||||||||||||||||
| Average Balance |
Interest |
Average Yield/ Rate |
Average Balance |
Interest |
Average Yield/ Rate |
|||||||||||||||||||
| (dollars in thousands) |
(dollars in thousands) |
|||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||
| Loans receivable(1) |
$ | 30,803 | $ | 354 | 4.60 | % | $ | 31,195 | $ | 340 | 4.36 | % | ||||||||||||
| FHLB stock |
375 | 3 | 3.20 | 361 | 4 | 4.43 | ||||||||||||||||||
| Other interest-earning assets |
3,462 | 31 | 3.58 | 3,261 | 34 | 4.17 | ||||||||||||||||||
| Total interest-earning assets |
34,640 | 388 | 4.48 | 34,817 | 378 | 4.34 | ||||||||||||||||||
| Noninterest-earning assets |
1,387 | 1,511 | ||||||||||||||||||||||
| Total assets |
$ | 36,027 | $ | 36,328 | ||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Savings and NOW accounts(2) |
$ | 8,024 | 3 | 0.15 | $ | 8,773 | 2 | 0.09 | ||||||||||||||||
| Certificates of deposit |
6,212 | 45 | 2.90 | 5,942 | 45 | 3.03 | ||||||||||||||||||
| Total interest-bearing liabilities |
14,236 | 48 | 1.35 | 14,715 | 47 | 1.28 | ||||||||||||||||||
| Noninterest-bearing liabilities |
1,989 | 1,561 | ||||||||||||||||||||||
| Total liabilities |
16,225 | 16,276 | ||||||||||||||||||||||
| Total equity |
19,802 | 20,052 | ||||||||||||||||||||||
| Total liabilities and equity |
$ | 36,027 | $ | 36,328 | ||||||||||||||||||||
| Net interest-earning assets |
$ | 20,404 | $ | 20,102 | ||||||||||||||||||||
| Net interest income; average interest spread |
$ | 340 | 3.13 | % | $ | 331 | 3.07 | % | ||||||||||||||||
| Net interest margin(3) |
3.93 | % | 3.80 | % | ||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
243.33 | % | 236.61 | % | ||||||||||||||||||||
_______________________________
| (1) |
Includes nonaccrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for credit losses. |
| (2) |
Includes interest-bearing demand accounts. |
| (3) |
Equals net interest income divided by average interest-earning assets. |
| Nine Months Ended September 30, |
||||||||||||||||||||||||
| 2026 |
2025 |
|||||||||||||||||||||||
| Average Balance |
Interest |
Average Yield/ Rate |
Average Balance |
Interest |
Average Yield/ Rate |
|||||||||||||||||||
| (dollars in thousands) |
(dollars in thousands) |
|||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||
| Loans receivable(1) |
$ | 30,575 | $ | 1,043 | 4.55 | % | $ | 30,951 | $ | 1,005 | 4.33 | % | ||||||||||||
| FHLB stock |
372 | 10 | 3.58 | 357 | 12 | 4.48 | ||||||||||||||||||
| Other interest-earning assets |
4,120 | 114 | 3.69 | 4,973 | 167 | 4.48 | ||||||||||||||||||
| Total interest-earning assets |
35,067 | 1,167 | 4.44 | 36,281 | 1,184 | 4.35 | ||||||||||||||||||
| Noninterest-earning assets |
1,464 | 2,062 | ||||||||||||||||||||||
| Total assets |
$ | 36,531 | $ | 38,343 | ||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Savings and NOW accounts(2) |
$ | 8,440 | 7 | 0.11 | $ | 8,825 | 6 | 0.09 | ||||||||||||||||
| Certificates of deposit |
6,149 | 140 | 3.04 | 7,190 | 184 | 3.41 | ||||||||||||||||||
| Total interest-bearing liabilities |
14,589 | 147 | 1.34 | 16,015 | 190 | 1.58 | ||||||||||||||||||
| Noninterest-bearing liabilities |
2,047 | 1,864 | ||||||||||||||||||||||
| Total liabilities |
16,636 | 17,879 | ||||||||||||||||||||||
| Total equity |
19,895 | 20,464 | ||||||||||||||||||||||
| Total liabilities and equity |
$ | 36,531 | $ | 38,343 | ||||||||||||||||||||
| Net interest-earning assets |
$ | 20,478 | $ | 20,266 | ||||||||||||||||||||
| Net interest income; average interest spread |
$ | 1,020 | 3.09 | % | $ | 994 | 2.77 | % | ||||||||||||||||
| Net interest margin(3) |
3.88 | % | 3.65 | % | ||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
240.37 | % | 226.54 | % | ||||||||||||||||||||
_______________________________
| (1) |
Includes nonaccrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for credit losses. |
| (2) |
Includes interest-bearing demand accounts. |
| (3) |
Equals net interest income divided by average interest-earning assets. |
Rate/Volume Analysis. The following table shows the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities affected our interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, and (2) changes in volume, which is the change in volume multiplied by prior year rate. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.
| Three Months Ended September 30, 2026 vs 2025 |
Nine Months Ended September 30, 2026 vs 2025 |
|||||||||||||||||||||||
| Increase (Decrease) Due to |
Total Increase |
Increase (Decrease) Due to |
Total Increase |
|||||||||||||||||||||
| Rate |
Volume |
(Decrease) |
Rate |
Volume |
(Decrease) |
|||||||||||||||||||
| (dollars in thousands) |
(dollars in thousands) |
|||||||||||||||||||||||
| Interest income: |
||||||||||||||||||||||||
| Loans receivable |
$ | 19 | $ | (5 | ) | $ | 14 | $ | 51 | $ | (13 | ) | $ | 38 | ||||||||||
| FHLB stock |
(1 | ) | - | (1 | ) | (2 | ) | - | (2 | ) | ||||||||||||||
| Other interest-earning assets |
(5 | ) | 2 | (3 | ) | (30 | ) | (23 | ) | (53 | ) | |||||||||||||
| Total interest income |
13 | (3 | ) | 10 | 19 | (36 | ) | (17 | ) | |||||||||||||||
| Interest expense: |
||||||||||||||||||||||||
| Savings and NOW accounts |
1 | - | 1 | 1 | - | 1 | ||||||||||||||||||
| Certificates of deposit |
(2 | ) | 2 | - | (20 | ) | (24 | ) | (44 | ) | ||||||||||||||
| Total interest expense |
(1 | ) | 2 | 1 | (19 | ) | (24 | ) | (43 | ) | ||||||||||||||
| Increase (decrease) in net interest income |
$ | 14 | $ | (5 | ) | $ | 9 | $ | 38 | $ | (12 | ) | $ | 26 | ||||||||||
Comparison of Operating Results for the Three Months Ended September 30, 2026 and 2025
General. We had a net loss of $55,000 for the three months ended September 30, 2026, compared to a net loss of $48,000 for the comparable period of 2025. This $7,000 increase in the net loss was due to an increase of $2,000 in total noninterest expense, a $12,000 effect of income taxes, and a decrease of $2,000 in noninterest income, which items were partially offset by an increase of $9,000 in net interest income.
Interest Income. Interest income increased by $10,000 or 2.6% to $388,000 in the three months ended September 30, 2026, from $378,000 in the comparable period of 2025. The increase was primarily due to an increase of $14,000 in loan interest and fee income, which was partially offset by a $4,000 decrease in other interest income.
Loan income increased $14,000 due primarily to the average yield on loans increasing from 4.36% in 2025 to 4.60% in 2026 due to new loan originations having higher rates than on loans that have paid off. The higher yield on the loan portfolio was partially offset by a decline of $392,000 in the average outstanding loan balance
Other interest income decreased by $4,000 due primarily to interest earned on deposits with other banks decreasing by $3,000 as the average yield on these deposits decreased from 4.17% in 2025 to 3.58% in 2026. The Federal Reserve reduced the federal funds rate three times in 2025 starting in September 2025.
Interest Expense. Total interest expense increased by $1,000 or 2.1% to $48,000 for the three months ended September 30, 2026, from $47,000 the comparable period of 2025. The increase was due to the increase in the average balance of certificates of deposit during the three months ended September 30, 2026, compared to 2025, offset in part by the reduction in the average rate paid between the periods as we continued to elect not to renew higher rate certificates that matured during the period. The average balance of certificates of deposit increased during the three months ended September 30, 2026, by $270,000, while the average rate paid declined 13 basis points, from 3.03% for the three months ended September 30, 2025, to 2.90% in the three months ended September 30, 2026.
Net Interest Income. Net interest income increased by $9,000, or 2.7%, to $340,000 for the three months ended September 30, 2026, compared to $331,000 for the comparable period of 2025. The increase was primarily due to an increase in the average interest rate spread to 3.13% for the three months ended September 30, 2026, from 3.07% for the three months ended September 30, 2025, as increased yield on our loan portfolio offset the reduction in other interest earning assets and the increase in interest expense incurred on our deposit products.
Provision for Credit Losses. We made no provision for credit losses in either the three months ended September 30, 2026 or 2025. Our total non-performing assets as of September 30, 2026 and 2025 were $152,000 and $72,000, respectively. The allowance for credit losses was $185,000 at September 30, 2026, representing 122% of non-performing assets at September 30, 2026. As of September 30, 2026, we had three loans totaling $152,000 that were on nonaccrual. No additional provision for credit losses was deemed necessary in the loan portfolio.
Noninterest Income. Noninterest income decreased $2,000, or 22%, to $7,000 for the three months ended September 30, 2026. Noninterest income is comprised of customer service charges and rental income.
Noninterest Expense. Noninterest expense increased by $2,000, or 0.5%, to $402,000 for the three months ended September 30, 2026, compared to $400,000 for the comparable period of 2025. The increase in noninterest expense was due to an increase of $14,000 or 6.7% in salary and employee benefit expenses, partially offset by a reduction in general insurance of $10,000 and advertising expenses of $2,000.
Salaries and employee benefits increased $14,000 primarily due to an increase in stock compensation expense and officer salaries. Stock compensation expense increased due to incurring stock compensation expense of $12,000 from stock awards granted. The Company granted equity awards under the 2025 Stock Option Plan and the 2025 Recognition and the Retention Plan in November 2025 and started recording expenses at that time. Officer salaries increased $2,000 due to changes in executive personnel throughout the period.
Accounting and auditing expenses increased $4,000 due to additional auditing and compliance reports completed during the period.
Advertising expense decreased during the three months ended September 30, 2026. The Company incurred approximately $4,000 of advertising expense during the three months ended September 30, 2025 as it continued to wind down its social media advertising campaign. The Company has since resumed its social media advertising program in the current quarter.
Other expenses decreased $4,000 for the three months ended September 30, 2026, from the three months ended September 30, 2025.
Income Tax Provision (Benefit). We had no income taxes recorded for the three months ended September 30, 2026, compared to an income tax benefit of $12,000 for the comparable period of 2025. The Company provided a valuation allowance at December 31, 2025, for the net deferred tax asset recorded. This is due to recent operating losses. Since 2024, the Company has experienced higher noninterest expenses primarily related to additional costs since its mutual to stock conversion and becoming a public company. The Company will continue to evaluate the need for a valuation allowance against these deferred items and will adjust the valuation allowance as deemed appropriate. Both positive and negative information is included in the evaluation which includes a history of recent cumulative losses and near-term expectations, and risks associated with estimates of future income. An objective history of recent losses generally provides better evidence in the evaluation than a subjective estimate of future income.
Comparison of Operating Results for the Nine Months Ended September 30, 2026 and 2025
General. We had a net loss of $189,000 for the nine months ended September 30, 2026, compared to a net loss of $114,000 for the comparable period of 2025. This $75,000 increase in the net loss was due to an increase of $67,000 in total noninterest expense and a $28,000 effect of income taxes offset partially by an increase of $26,000 in net interest income.
Interest Income. Interest income decreased by $17,000 or 1.4% to $1,167,000 in the nine months ended September 30, 2026, from $1,184,000 in the comparable period of 2025. The decrease was primarily due to a decrease of $55,000 in other interest income offset by an increase of $38,000 in loan interest and fee income.
Other interest income decreased by $55,000 primarily due to earning less interest on deposits with other banks. The due from bank average balance decreased by $853,000 due to conversion proceeds held on deposit during the prior year. Interest on deposits with other banks also decreased as the average yield on deposits decreased from 4.48% in 2025 to 3.69 % in 2026. The Federal Reserve reduced the federal funds rate three times in 2025 starting in September 2025.
Loan income increased $38,000 as the average yield on loans increased from 4.33% in 2025 to 4.55% in 2026 due to new loan originations having higher rates than on loans that were paid off.
Interest Expense. Total interest expense decreased by $43,000 or 22.6% to $147,000 for the nine months ended September 30, 2026, from $190,000 for the comparable period of 2025. The decrease was primarily due to the decrease in the amount of and the yield on certificates of deposit during the nine months ended September 30, 2026 compared to 2025. The average balance of certificates of deposit declined during the nine months ended September 30, 2026 by $1.0 million as we elected not to renew higher average rate term deposits that matured during the period. The average rate paid on certificates of deposit decreased to 3.04% in the nine months ended September 30, 2026 from 3.41% for the nine months ended September 30, 2025, reflecting the roll-off of higher rate certificates of deposit.
Net Interest Income. Net interest income increased by $26,000, or 2.6%, to $1,020,000 for the nine months ended September 30, 2026, compared to $994,000 for the comparable period of 2025. The increase was primarily due to an increase in the average interest rate spread to 3.09% for the nine months ended September 30, 2026 from 2.77% for the nine months ended September 30, 2025, as the cost of funds decreased as higher paying certificates of deposit that matured were not renewed. The ability to shift our funding mix and rates was due to the completion of our stock offering and conversion in January of 2025.
Provision for Credit Losses. We made no provision for credit losses in either the nine months ended September 30, 2026 or 2025. Our total non-performing assets as of September 30, 2026 and 2025 were $152,000 and $72,000, respectively. The allowance for credit losses was $185,000 at September 30, 2026, representing 122% of non-performing assets at September 30, 2026. As of September 30, 2026, we had three loans totaling $152,000 that were on nonaccrual. No additional provision for credit losses was deemed necessary in the loan portfolio.
Noninterest Income. Noninterest income decreased $6,000 to $20,000 for the nine months ended September 30, 2026. Noninterest income is comprised of customer service charges and rental income.
Noninterest Expense. Noninterest expense increased by $67,000, or 5.8%, to $1,229,000 for the nine months ended September 30, 2026, compared to $1,162,000 for the comparable period of 2025. The increase in noninterest expense was due to additional salary and employee benefit expenses of $101,000 and higher other expenses of $14,000 offset partially by a $20,000 decrease in advertising expenses and a $17,000 decrease in general insurance.
Salaries and employee benefits increased $101,000 primarily due to an increase in officer salaries and stock compensation expense. Stock compensation expense increased due to incurring stock compensation expense of $29,000 from stock awards granted. The Company granted equity awards under the 2025 Stock Option Plan and the 2025 Recognition and Retention Plan in November 2025 and started recording expenses at that time. Officer salaries increased $72,000 due to changes in executive personnel throughout the period.
Advertising expense decreased during the nine months ended September 30, 2026. The Company incurred approximately $22,000 of advertising expense during the nine months ended September 30, 2025 as the Company ran promotional ads and participated in social media advertising which winded down in the third quarter of 2025. The Company has since resumed its social media advertising program in the current quarter.
Other expenses increased $14,000 for the nine months ended September 30, 2026 from the nine months ended September 30, 2025, due to incurring membership fees in the OTC Market for the first year.
Income Tax Provision (Benefit). We had no income taxes recorded for the nine months ended September 30, 2026, compared to an income tax benefit of $28,000 for the comparable period of 2025. The Company provided a valuation allowance at December 31, 2025 for the net deferred tax asset recorded. This is due to recent operating losses. Since 2024, the Company has experienced higher noninterest expenses primarily related to additional costs since its mutual to stock conversion and becoming a public company. The Company will continue to evaluate the need for a valuation allowance against these deferred items and will adjust the valuation allowance as deemed appropriate. Both positive and negative information is included in the evaluation which includes a history of recent cumulative losses and near-term expectations, and risks associated with estimates of future income. An objective history of recent losses generally provides better evidence in the evaluation than a subjective estimate of future income.
Liquidity and Capital Resources
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans, and to a lesser extent borrowings. We have the ability to borrow from the Federal Home Loan Bank of Dallas. We did not utilize any FHLB advances in 2026 or 2025.
While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing and lending activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. For further information, see the accompanying statements of cash flows that appear in Item 1 of this Form 10-Q.
We are committed to maintaining a strong liquidity position. We monitor our liquidity on a daily basis and anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits can be retained. At September 30, 2026, certificates of deposit that are scheduled to mature within the next 12 months totaled $5.6 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may raise interest rates on deposits to attract new accounts or utilize Federal Home Loan Bank of Dallas advances, which may result in higher levels of interest expense.
At September 30, 2026, the Association was categorized as well-capitalized under regulatory capital guidelines. Management is not aware of any conditions or events since the most recent notification that would change our category. For further information, see Note 7 of the notes to the unaudited consolidated financial statements as of and for the nine months ended September 30, 2026.
At September 30, 2026, we had $1.7 million of outstanding commitments to originate loans, which included $1.1 million in revolving lines of credit, and $.6 million in residential construction loans. At September 30, 2026, none of our revolving lines of credit related to commercial real estate loans.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2026. Based on such evaluation, management concluded that the Company’s controls and procedures were not effective at September 30, 2026 and December 31, 2025, due to identifying a material weakness in internal controls over the allowance for credit losses as management did not maintain sufficient evidence of an independent review of the estimate.
During the quarter ended September 30, 2026, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Management continues to document its independent review of the allowance for credit losses and believes the processes are sufficient to ensure its accuracy. However, the weakness will not be considered fully remediated until the controls operate for a sufficient period of time for management to test the results for operating effectiveness. We continue to test the process periodically to ensure continued compliance.
Part II – Other Information
Item 1. Legal Proceedings
The Company is not subject to any pending legal proceedings. From time to time, the Association is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Association’s or the Company’s financial condition or results of operations.
Item 1A. Risk Factors
Not applicable, as the Company is a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
On November 20, 2025, the Company's board of directors authorized a share repurchase program that authorizes the Company to repurchase up to 33,350 shares, or 4.0%, of its then outstanding common stock. The table below sets forth information regarding purchases of our common stock made during the three months ended September 30, 2026, under that program. The program expired on May 20, 2026, and the Company did not repurchase any shares of its common stock under that program during the three months ended September 30, 2026.
| For the Month Ended |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares that May Yet be Purchased Under Plans or Programs |
||||||||||||
| July 2026 |
- | $ | - | - | 31,888 | |||||||||||
| August 2026 |
- | - | - | 31,888 | ||||||||||||
| September 2026 |
- | - | - | 31,888 | ||||||||||||
| Total |
- | $ | - | |||||||||||||
While the Company did not repurchase any shares of common stock during the three months ended September 30, 2026, the trust for our 2025 Recognition and Retention Plan purchased 4,000 shares of common stock in August 2026 from an executive officer to partially fund the plan at a price of $13.71 per share.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended September 30, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as such term is defined in Item 408 of SEC Regulation S-K).
Item 6. Exhibits
| 3.1 |
Articles of Incorporation of Magnolia Bancorp, Inc. (1) |
|
| 3.2 |
Bylaws of Magnolia Bancorp, Inc. (1) |
|
| 3.3 |
Amendment No. 1 to Bylaws of Magnolia Bancorp, Inc. (2) |
|
| 4.1 |
Form of Stock Certificate of Magnolia Bancorp, Inc. (1) |
|
| 4.2 |
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (3) |
|
| 10.1 |
Employment Agreement by and between Magnolia Bancorp, Inc. and Mutual Savings and Loan Association and Michael L. Hurley* (1) |
|
| 10.2 |
Employment Agreement by and between Magnolia Bancorp, Inc. and Mutual Savings and Loan Association and Anita C. Cambre* (1) |
|
| 10.3 |
Resignation of Positions and Termination of Employment Agreement by and among Magnolia Bancorp, Inc., Mutual Savings and Loan Association and Anita C. Cambre dated September 18, 2025* (4) |
|
| 10.4 |
2025 Stock Option Plan* (5) |
|
| 10.5 |
2025 Recognition and Retention Plan and Trust Agreement* (5) |
|
| 31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
| 31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
| 32.0 |
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS |
Inline XBRL Instance Document. |
|||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
|||
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|||
| 101.DEF |
Inline XBRL Taxonomy Extension Definitions Linkbase Document. |
|||
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document. |
|||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|||
| 104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
__________________________
| * |
Denotes management compensation plan or arrangement. |
| (1) |
Incorporated by reference from the Company’s Registration Statement on Form S-1, filed on August 27, 2024, as amended, and declared effective on November 8, 2024 (Commission File No. 333-281796). |
| (2) |
Incorporated by reference from the Company’s Current Report on Form 8-K, filed on July 29, 2025 (Commission File No. 000-56719). |
| (3) |
Incorporated by reference from the Company’s Registration Statement on Form 8-A, filed on January 14, 2025 (File (Commission File No. 000-56719). |
| (4) |
Incorporated by reference from the Company’s Current Report on Form 8-K, filed on September 19, 2025 (Commission File No. 000-56719). |
| (5) |
Incorporated by reference from the Company’s definitive proxy statement on DEF 14A, filed on August 14, 2025 (Commission File No. 000-56719) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Magnolia Bancorp, Inc |
|
| (Registrant) |
| Date: November 6, 2026 |
/s/ Michael L. Hurley |
| Michael L. Hurley |
|
| Executive Chair and Chief Executive Officer |
|
| Date: November 6, 2026 |
/s/ Robert W. Kimbro |
| Robert W. Kimbro |
|
| President and Chief Financial Officer |