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Equibles

10-Q

Magnolia Bancorp, Inc. (MGNO)

10-Q 2024-12-20 For: 2024-09-30
View Original
Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission File Number: 333-281796

Magnolia Bancorp, Inc.

Exact name of registrant as specified in its charter)

Louisiana 99-2913448
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
2900 Clearview Parkway Metairie, LA 70006
(Address of principal executive offices) (Zip Code)
504-455-2444
---
(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.         ☐ Yes         ☒ No

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).         ☐ Yes         ☐ No

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 ☐
Non-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).

☐ Yes ☒ No

Indicate the number of shares outstanding of each of the Issuer's classes of common stock, as of the latest practicable date. No shares outstanding.

Magnolia Bancorp, Inc (the “Company,”) was incorporated in May 2024, to serve as the savings and loan holding company for Mutual Savings and Loan Association (the “Association”) upon consummation of the Association’s conversion from the mutual form of origination to the stock form of organization. As of September 30, 2024, the conversion has not yet been consummated and the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the financial statements, related notes, and other financial information included in this report relate primarily to the Association.

The unaudited financial statements and other financial information contained in this report should be read in conjunction with the audited financial statements, and related notes, of the Association for the year ended December 31, 2023, contained in the Company’s definitive prospectus dated November 8, 2024, as filed with the Securities and Exchange Commission (“SEC”) on November 18, 2024.

2

Index
Part I. - Financial Information Page #
Item 1. Financial Statements 4
Statements of Financial Condition 4
Statements of Operations 5
Statements of Changes in Returned Earnings 6
Statements of Cash Flows 7
Notes to Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures about Market Risk 40
Item 4. Controls and Procedures 40
Part II. - Other Information
Item 1. Legal Proceedings 40
Item 1A. Risk Factors 40
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 40
Item 3. Defaults Upon Senior Securities 40
Item 4. Mine Safety Disclosures 40
Item 5. Other Information 40
Item 6. Exhibits 41
Signature Page 42

3

Item 1. Financial Statements.

MUTUAL SAVINGS AND LOAN ASSOCIATION
STATEMENTS OF FINANCIAL CONDITION
AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023
September 30, December 31,
2024 2023
(unaudited)
ASSETS (dollars in thousands)
Cash and cash equivalents $ 1,613 $ 1,694
Interest-bearing deposits with banks 14 15
Federal Home Loan Bank stock, at cost 347 333
- -
Loans receivable 30,992 32,181
Allowance for credit losses (185 ) (200 )
Loans receivable, net 30,807 31,981
Property and equipment, net 1,525 1,583
Accrued interest receivable loans 52 61
Other assets 748 136
TOTAL ASSETS $ 35,105 $ 35,803
LIABILITIES AND RETAINED EARNINGS **** **** **** **** **** ****
LIABILITIES **** **** **** **** **** ****
Deposits
Interest-bearing deposits $ 19,313 $ 20,001
Non-interest bearing deposits 1,045 855
Advances from Federal Home Loan Bank - 500
Advance payments by borrowers for insurance and taxes 673 318
Accrued interest payable 2 4
Accrued expense and other liabilities 67 60
Deferred tax liability, net 48 48
Total Liabilities 21,149 21,787
RETAINED EARNINGS **** **** **** **** **** ****
Retained earnings 13,956 14,016
Accumulated other comprehensive income - -
Total Retained Earnings 13,956 14,016
TOTAL LIABILITIES AND RETAINED EARNINGS $ 35,105 $ 35,803
The accompanying notes are in integral part of these financial statements.

4

MUTUAL SAVINGS AND LOAN ASSOCIATION
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
For the Three Months ended For the Nine Months ended
--- --- --- --- --- --- --- --- --- --- ---
SEPTEMBER 30. SEPTEMBER 30,
2024 2023 2024 2023
****** ****** ****** (dollars in thousands) ****** ******
INTEREST AND DIVIDEND INCOME **** **** **** **** **** **** **** **** **** ****
Interest and fees on loans $ 337 $ 331 $ 1,010 $ 1,000
Dividends from Federal Home Loan Bank stock 5 4 13 11
Interest on deposits with other banks and cash equivalents 26 36 70 110
Total interest and dividend income 368 371 1,093 1,121
INTEREST EXPENSE **** **** **** **** **** **** **** **** **** ****
Interest on deposits 100 46 265 80
Interest on Federal Home Loan Bank advances 7 5 26 6
Total interest expense 107 51 291 86
NET INTEREST INCOME 261 320 802 1,035
PROVISION FOR CREDIT LOSSES - - - -
NET INTEREST INCOME AFTER PROVISION **** **** **** **** **** **** **** **** **** ****
FOR CREDIT LOSSES 261 320 802 1,035
NON-INTEREST INCOME **** **** **** **** **** **** **** **** **** ****
Service charges on deposit accounts 2 2 5 6
Rental income 6 5 17 16
Other income - - 2 2
Total non-interest income 8 7 24 24
NON-INTEREST EXPENSE **** **** **** **** **** **** **** **** **** ****
Salaries and employee benefits 202 200 574 605
Occupancy and equipment 25 24 69 70
Data processing 14 14 41 41
Automobile depreciation and expense 6 6 18 26
Audit and regulatory examination fees 12 10 41 44
Advertising 1 - 2 13
FHLB and DDA charges 10 9 29 29
Other general and administrative 45 44 129 129
Total non-interest expense 315 307 903 957
INCOME (LOSS) BEFORE INCOME TAXES (46 ) 20 (77 ) 102
INCOME TAXES **** **** **** **** **** **** **** **** **** ****
Income tax provision (benefit) (10 ) 4 (17 ) 22
NET INCOME (LOSS) $ (36 ) $ 16 $ (60 ) $ 80
The accompanying notes are in integral part of these financial statements.

5

MUTUAL SAVINGS AND LOAN ASSOCIATION
STATEMENTS OF CHANGES IN RETAINED EARNINGS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
For the Three Months ended September 30, For the Nine Months ended September 30,
--- --- --- --- --- --- --- --- --- --- ---
2024 2023 2024 2023
(dollars in thousands)
RETAINED EARNINGS, BEGINNING OF THE PERIOD $ 13,992 $ 13,994 $ 13,956 $ 13,930
Net Income (loss) (36 ) 16 (60 ) 80
RETAINED EARNINGS, END OF THE PERIOD $ 13,956 $ 14,010 $ 13,896 $ 14,010
The accompanying notes are an integral part of these financial statements.

6

STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
2024 2023
--- --- --- --- --- --- ---
CASH FLOWS FROM OPERATING ACTIVITIES: (dollars in thousands)
Net income (loss) $ (60 ) $ 80
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation 58 60
Stock dividends (14 ) (11 )
(Increase) decrease in:
Accrued interest receivable and other assets (586 ) (44 )
Increase (decrease) in:
Income tax payable (17 ) 22
Accrued expenses and other liabilities 5 (56 )
Net cash provided by (used in) operating activities (614 ) 51
CASH FLOWS FROM INVESTING ACTIVITIES: **** **** **** **** **** ****
Decrease in loans receivable, net 1,174 1,577
Purchases of property and equipment - (67 )
Net cash provided by investing activities 1,174 1,510
CASH FLOWS FROM FINANCING ACTIVITIES: **** **** **** **** **** ****
Decrease in deposits (497 ) (1,996 )
Increase in advances by borrowers for insurance and taxes 354 297
Proceeds (payments) on Federal Home Loan Bank advances, net (500 ) 500
Net cash used in financing activities (643 ) (1,199 )
Net change in cash and cash equivalents (83 ) 362
Cash and cash equivalents, beginning of period 1,710 3,603
Cash and cash equivalents, end of period $ 1,627 $ 3,965
SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION: **** **** **** **** **** ****
Cash paid during the period for interest $ 293 $ 84
Cash paid during the period for income taxes $ - $ -
RECONCILIATION TO THE STATEMENTS OF FINANCIAL CONDITION **** **** **** **** **** ****
Cash and cash equivalents $ 1,613 $ 3,944
Interest-bearing deposits with banks $ 14 $ 21
$ 1,627 $ 3,965
The accompanying notes are an integral part of these financial statements.

7

Notes to Financial Statements

1.        Summary of S ig nificant Accounting Policies

Basis of Presentation

The accompanying unaudited financial statements of Mutual Savings and Loan Association (“the Association”) 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 Association’s audited financial statements and notes thereto for the year ended December 31, 2023.

Critical Accounting Policies and Estimates

In preparing the financial statements, the Association is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Association’s financial condition, results of operations, changes in equity, and cash flows for the interim period presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

On January 1, 2023, the Association adopted Accounting Standards Codification (“ASC”) 326, “Financial Instruments – Credit Losses,” more commonly referred to as CECL, on a modified retrospective basis. The provisions of this guidance required changes to the manner in which the estimated and reported losses on financial instruments, including loans and unfunded lending commitments, select securities and other assets carried at amortized cost. Under CECL, the allowance for credit losses (ACL) is a valuation account, measured as the difference between the Association’s amortized cost basis and the net amount expected to be collected on the financial assets (i.e., lifetime credit losses). The CECL methodology described in FASB Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326), applies to financial assets measured at amortized cost, and off-balance-sheet credit exposures (collectively, financial assets) including: financing receivables such as loans held for investment, held to maturity debt securities, off-balance-sheet credit exposures (unfunded commitments) including off- balance sheet loan commitments, standby letters of credit, and other similar instruments.

Recent Accounting Pronouncements

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance issued in this update requires improvement to the disclosures about a public entity’s reportable segments and more detailed information about a reportable segment’s expenses and other segment items. Even though the Company has a single reportable segment, all the disclosures required by this update are required. Under this guidance, public entities are required to disclose segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment that are currently required annually. The goal of these disclosures is to enable investors to develop more decision-useful financial analyses. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update should be applied retrospectively to all previous periods presented. The Association does not expect the adoption of this standard to have a material impact on the Association’s financial statements.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance in this update provides enhanced transparency and decision usefulness of income tax disclosures. The amendment addresses investor requests for income tax information through improvements to income tax disclosures related to the rate reconciliation and income taxes paid information. The guidance requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. Investors anticipate these disclosures will provide an understanding of an entity’s exposures to changes in tax legislation and allow investors to better assess income tax information that affects cash flow forecasts and capital allocation decisions, as well as identify opportunities to increase future cash flows. The standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis, but retrospective application is permitted. The Association does not expect the adoption of this standard to have a material impact on the Association’s financial statements.

8

1.        Summary of S ig nificant Accounting Policies (continued)

ASU No. 2024-02, Codification Improvements - Amendments to Remove References to the Concept Statements. The guidance issued in this update amends the codification to remove references to various Financial Accounting Standards Board Concept Statements. The codification will be updated to clarify or correct unintended application of guidance that is not expected to have any significant effect on current accounting practice or cost to most entities. The standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Association does not expect the adoption of this guidance to have a material impact on the Association’s financial statements.

2.         Loans Receivable

A summary of the balances of loans as of September 30, 2024 and December 31, 2023 is as follows:

2024 2023
Real estate loans
Residential $ 29,926,433 $ 30,988,366
Construction - 18,400
Commercial 624,041 706,651
30,550,474 31,713,417
Share Loans 303,673 325,587
30,854,147 32,039,004
Unamortized, Net deferred loan costs 137,769 141,729
Less allowance for credit losses (185,408 ) (200,000 )
Loans receivable, net $ 30,806,508 $ 31,980,733
Weighted average yield 4.36 % 4.05 %

Loans are stated at the amount of unpaid principal net of discounts and premiums on acquired loans before allowance for credit losses. Interest on loans is calculated using the effective interest method. There were loan charge offs of $15,000 in the allowance for the nine months ended September 30, 2024; and no loan charge offs were recorded for the year ended December 31, 2023.

Loan Origination/Risk Management/Credit Concentration – The Association has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Association’s Board of Directors reviews and approves these policies and procedures on a regular basis. Although the Association has a diversified loan portfolio, the Association has concentrations of credit risks related to the real estate market, including residential, commercial, and construction lending. Most of the Association’s lending activity occurs within the greater New Orleans, Louisiana metropolitan area. The Association has certain loans for which repayment is dependent upon the operation or sale of collateral, based on the borrower’s financial difficulties. The underlying collateral can vary based on type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans and the risk characteristics:

9

2.         Loans Receivable (continued)

Real estate loans - consist primarily of residential loans for single and multifamily properties. Residential loans are generally secured by the first mortgage, and in some cases second mortgage, of owner occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers and can be impacted by economic conditions within their market area. Residential mortgage loans are generally secured by 1-4 family residential properties and residential lots. Declines in market value can result in residential mortgages with outstanding balances in excess of the collateral value of the property securing the loan. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Construction Loans – Construction loans include loans secured by real estate. Construction loans are usually based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, or an interim loan commitment from the Association until permanent financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions, the cost of construction and the availability of long-term financing. Residential construction loans can experience 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.

Commercial Loans – Commercial real estate loans include loans secured by real estate. Repayment of these loans are primarily dependent on cash flows from the operations of the property and personal income of the borrower, which can be impacted by economic conditions of the market. A decrease in demand for commercial real estate in our market area could result in decreases in the underlying collateral values and make repayment of the outstanding loans more difficult for our borrowers. Loans secured by non-residential properties and multi-family housing are dependent upon the ability of the property to produce cash flow sufficient to cover debt service and other operating expenses. These property types are susceptible to weak economic conditions which can result in high vacancy rates.

Home Equity Loans - Home equity loans and lines of credit loans are secured by first or junior liens on residential real estate making such loans susceptible to deterioration in residential real estate values. 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.

Share Loans – The share loan portfolio consists of loans secured by savings or certificate of deposit accounts of customers. Risk is mitigated by the fact that the loans are of smaller individual amounts and secured by deposit accounts.

The following tables present a summary by loan class to past due and non-accrual loans as of September 30, 2024 and December 31, 2023 (dollars in thousands):

September 30, 2024 30 to 90 days past due Greater than 90 days past due Current Loans Total Past due greater than 90 days accruing
Real estate loans
Loan Secured by Real Estate
Adjustable Rate - home equity $ - $ - $ - $ 684 $ -
Fixed Rate:
Land Loan - - 289 289 -
Multi family - - 292 292 -
1-4 Family residential 216 - 28,445 28,661 -
216 - 29,026 29,926 -
Construction residential - - - - -
Commercial - - 624 624 -
Total Real Estate Loans 216 - 29,650 30,550 -
Share Loans - - 304 304 -
Total $ 216 $ - $ 29,954 $ 30,854 $ -

10

2.       Loans Receivable (continued)

September 30, 2024 Nonaccrual loans with no allowance Nonaccrual loans with an allowance Total nonaccrual loans
Real estate loans
Loan Secured by Real Estate
Adjustable Rate - home equity $ - $ - $ -
Fixed Rate:
Land Loan - - -
Multi family - - -
1-4 Family residential - - -
- - -
Construction residential - - -
Commercial - - -
Total Real Estate Loans - - -
Share Loans - - -
Total $ - $ - $ -
December 31, 2023 30 to 90 days past due Greater than 90 days past due Current Loans Total Past due greater than 90 days accruing
--- --- --- --- --- --- --- --- --- --- ---
Real estate loans
Loan Secured by Real Estate
Adjustable Rate - home equity $ - $ - $ 575 $ 575 $ -
Fixed Rate:
Land Loan - 34 113 147 -
Multi family - - 302 302 -
1-4 Family residential - - 29,964 29,964 -
- 34 30,954 30,988 -
Construction residential - - 18 18 -
Commercial - - 707 707 -
Total Real Estate Loans - 34 31,679 31,713 -
Share Loans - - 326 326 -
Total $ - $ 34 $ 32,005 $ 32,039 $ -
December 31, 2023 Nonaccrual loans with no allowance Nonaccrual loans with an allowance Total nonaccrual loans
--- --- --- --- --- --- ---
Real estate loans
Loan Secured by Real Estate
Adjustable Rate - home equity $ - $ - $ -
Fixed Rate:
Land Loan 34 - 34
Multi family - - -
1-4 Family residential - - -
34 - 34
Construction residential - - -
Commercial - - -
Total Real Estate Loans 34 - 34
-
Share Loans - - -
Total $ 34 $ - $ 34

11

Loans receivable as of September 30, 2024 and December 31, 2023 are scheduled to mature and adjustable-rate loans are scheduled to reprice as follows: (dollars in thousands):

September 30, 2024 Less than one year One to five years Six to ten years More than ten years Total
Real estate loans
Loan Secured by Real Estate
Adjustable Rate - home equity $ 727 $ - $ - $ - $ 727
Fixed Rate:
Land Loan - 22 211 56 289
Multi family - - - 292 292
1-4 Family residential 22 327 3,719 24,550 28,618
749 349 3,930 24,898 29,926
Construction residential - - - - -
Commercial - 82 542 - 624
Total Real Estate Loans 749 431 4,472 24,898 30,550
Share Loans - - - 304 304
Total $ 749 $ 431 $ 4,472 $ 25,202 $ 30,854
December 31, 2023 Less than one year One to five years Six to ten years More than ten years Total
--- --- --- --- --- --- --- --- --- --- ---
Real estate loans
Loan Secured by Real Estate
Adjustable Rate - home equity $ 575 $ - $ - $ - $ 575
Fixed Rate:
Land Loan 34 30 24 59 147
Multi family - - - 302 302
1-4 Family residential - 280 3,239 26,445 29,964
609 310 3,263 26,806 30,988
Construction residential - - - 18 18
Commercial - 101 606 - 707
Total Real Estate Loans 609 411 3,869 26,824 31,713
Share Loans 326 - - - 326
Total $ 935 $ 411 $ 3,869 $ 26,824 $ 32,039

During the period and years ended September 30, 2024 and December 31, 2023, the Association sold no mortgage loans. The Association had no loan modifications to borrowers experiencing financial difficulty in the nine months ended September 30, 2024 and September 30, 2023. As of January 1, 2023, the Association did not have any troubled debt restructured loans.

Credit Quality Indicators

The Association uses several credit quality indicators to manage credit risk in an ongoing manner. The Association's primary credit quality indicators are to use an internal credit risk rating system that categorizes loans into pass/watch, 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. Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively.

The following are the definitions of the Association's credit quality indicators:

Pass: Loans that comply in all material respects with the Association'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. These grades include loans to borrowers of solid credit quality with no higher-than-normal risk of loss. Borrowers in these categories have satisfactory financial strength and adequate cash flow coverage to service debt requirements. Collateral type and quality, as well as protection, are adequate. The borrower is strong and capable, financial information is timely and accurate, and guarantor support is strong.

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 Association's credit position at some future date. The Association’s special mention rating aligns with the regulatory definition. A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of repayment prospects. These weaknesses may include deteriorating balance sheets, strained liquidity and elevated leverage ratios. Cash flow and profitability are marginally sufficient to service debt and collateral is exhibiting signs of decline in value; however, protection is currently sufficient. Limited management experience or weaknesses have emerged requiring more than normal supervision and uncertainties regarding the quality of the financials are not explained. Guarantor has very limited ability and willingness to provide short-term support. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

12

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 Association 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 likelihood of loss on an asset is high.

2.         Loans Receivable (continued)

Classified Loans Credit Quality Indicators (continued)

The following presents, by class and by credit quality indicator, the recorded investment in the Association's loans as of September 30, 2024 and December 31, 2023 (dollars in thousands):

The Association’s credit quality indicators are periodically updated on a case-by-case basis.

September 30, 2024 Pass/ Watch Special Mention Substandard Doubtful Total
Real estate loans
Residential $ 29,926 $ - $ - $ - $ 29,926
Construction - - - - -
Commercial 624 - - - 624
Share Loans 304 - - - 304
$ 30,854 $ - $ - $ - $ 30,854
December 31, 2023 Pass/ Watch Special Mention Substandard Doubtful Total
--- --- --- --- --- --- --- --- --- --- ---
Real estate loans
Residential $ 30,954 $ - $ 34 $ - $ 30,988
Construction 18 - - - 18
Commercial 707 - - - 707
Share Loans 326 - - - 326
Total $ 32,005 $ - $ 34 $ - $ 32,039

13

2.         Loans Receivable (continued)

The following table reflects loans by credit quality indicator and origination year at September 30, 2024 (dollars in thousands):

September 30, 2024 **** **** **** **** **** **** **** **** **** **** **** **** **** ****
2024 2023 2022 2021 2020 Prior Total
Residential real estate:
Loans Secured by 1-4 Family Residential **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch $ 686 $ 2,021 $ 5,261 $ 5,247 $ 4,051 $ 12,660 $ 29,926
Special Mention - - - - - - -
Classified - - - - - - -
Total 686 2,021 5,261 5,247 4,051 12,660 29,926
Current period gross write offs - - - - - 15 15
Loans Secured by 1-4 Family Residential - Construction **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch - - - - - - -
Special Mention - - - - - - -
Classified - - - - - - -
Total - - - - - - -
Current period gross write offs - - - - - - -
Loans Secured by Commercial Real Estate **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch - - - - - 624 624
Special Mention - - - - - - -
Classified - - - - - - -
Total - - - - - 624 624
Current period gross write offs - - - - - - -
Share Loans **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch - - 194 - - 110 304
Special Mention - - - - - - -
Classified - - - - - - -
Total - - - - - 110 304
Current period gross write offs - - - - - - -
All Loans **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch 686 2,021 5,455 5,247 4,051 13,394 30,854
Special Mention - - - - - - -
Classified - - - - - - -
Total $ 686 $ 2,021 $ 5,455 $ 5,247 $ 4,051 $ 13,394 $ 30,854
Current period gross write offs $ - $ - $ - $ - $ - $ 15 $ 15

14

2.         Loans Receivable (continued)

The following table reflects loans by credit quality indicator and origination year at December 31, 2023 (dollars in thousands):

2023 2022 2021 2020 2019 Prior Total
Residential real estate: **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Loans Secured by 1-4 Family Residential **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch $ 1,358 $ 5,369 $ 5,430 $ 4,764 $ 1,721 $ 12,312 $ 30,954
Special Mention - - - - - - -
Classified - - - - - 34 34
Total 1,358 5,369 5,430 4,764 1,721 12,346 30,988
Current period gross write offs - - - - - - -
Loans Secured by 1-4 Family Residential - Construction
Pass/Watch 18 - - - - - 18
Special Mention - - - - - - -
Classified - - - - - - -
Total 18 - - - - - 18
Current period gross write offs - - - - - - -
Loans Secured by Commercial Real Estate **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch - - - - - 707 707
Special Mention - - - - - - -
Classified - - - - - - -
Total - - - - - 707 707
Current period gross write offs - - - - - - -
Share Loans **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch - 212 - - 50 64 326
Special Mention - - - - - - -
Classified - - - - - - -
Total - 212 - - 50 64 326
Current period gross write offs - - - - - - -
All Loans **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Pass/Watch 1,377 5,581 5,430 4,764 1,771 13,082 32,005
Special Mention - - - - - - -
Classified - - - - - 34 34
Total $ 1,377 $ 5,581 $ 5,430 $ 4,764 $ 1,771 $ 13,116 $ 32,039
Current period gross write offs $ - $ - $ - $ - $ - $ - $ -

15

2.         Loans Receivable (continued)

Allowance for Credit Losses on Loans Receivable

The allowance for credit loss (loan losses) 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 table summarizes the activity by loan categories as of September 30, 2024 and December 31, 2023 (dollars in thousands):

Residential Real Estate Loans
September 30, 2024 Mortgage Construction Commercial Real Estate Share Loans Total
Allowance for Credit Losses
Beginning Balance $ 175 $ 15 $ 10 $ - $ 200
Charge-offs (15 ) - - - (15 )
Recoveries - - - - -
Provision for credit losses 15 (15 ) - - -
Ending Balances $ 175 $ - $ 10 $ - $ 185
Ending Balances Allocated to:
Individually Evaluated for Impairment $ - $ - $ - $ - $ -
Collectively Evaluated for Impairment 175 - 10 - 185
$ 175 $ - $ 10 $ - $ 185
Residential Real Estate Loans
--- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 Mortgage Construction Commercial Real Estate Share Loans Total
Allowance for Credit Losses
Beginning Balance $ 198 $ 2 $ - $ - $ 200
Charge-offs - - - - -
Recoveries - - - - -
Provision for credit losses (23 ) 13 10 - -
Ending Balances $ 175 $ 15 $ 10 $ - $ 200
Ending Balances Allocated to:
Individually Evaluated for Impairment $ - $ - $ - $ - $ -
Collectively Evaluated for Impairment 175 15 10 - 200
$ 175 $ 15 $ 10 $ - $ 200

16

2.         Loans Receivable (continued)

Allowance for Credit Losses on Unfunded Loan Commitments

The Association considered an allowance for credit losses on unfunded loan commitments as of September 30, 2024 and 2023 to be insignificant.

Related-Party Loans

In the ordinary course of business, the Association 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, 2024 and December 31, 2023 as follows:

Related-Party Loans 2024 2023
Balance, Beginning $ 914,683 $ 850,993
Additions 425,175 127,128
Payments (40,504 ) (63,438 )
Balance, Ending $ 1,299,354 $ 914,683

3.         Deposits

Certificates of deposit and other time deposits issued in denominations that exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000 totaled $1,654,951 and $1,593,144 at September 30, 2024 and December 31, 2023, respectively, and are included in interest-bearing deposits in the statements of financial condition.

A summary of deposit balances by type as of September 30, 2024 and December 31, 2023 is as follows:

Interest Rates as of Sept 30, 2024 2024 2023
Now Accounts 0.00-0.20 % $ 7,956,713 $ 8,528,352
Passbook Accounts 0.01 % 2,198,209 2,797,529
10,154,922 11,325,881
Certificates of Deposit 0.00-0.99 % 1,587,222 3,802,746
1.00-1.99 % 248,000 248,512
2.00-2.99 % - -
3.00-3.99 % 4,147,482 3,306,302
4.00-4.99 % 996,000 436,657
5.00-5.99 % 3,225,000 1,736,000
10,203,704 9,530,217
Total $ 20,358,626 $ 20,856,098

17

3.         Deposits (continued)

Time Deposits

At September 30, 2024 and December 31, 2023, the scheduled maturities of time deposits were as follows:

2024 2023
Period of Maturity Amount Percentage of Total Amount Percentage of Total
Within 12 months $ 9,668,698 94.76 % $ 6,986,923 73.31 %
13 months - 24 months 480,829 4.71 % 243,4595 25.55 %
25 months - 36 months 44,464 0.44 % 104,134 1.09 %
37 months - 48 months 1,004 0.01 % 4,565 0.05 %
49 months - 60 months 8,709 0.09 % - -
Total $ 10,203,704 100.00 % $ 9,530,217 100.00 %

Deposits with Related Parties and Concentrations

During the normal course of business, the Association accepts deposits from members of the Board of Directors and officers. As of September 30, 2024 and December 31, 2023, these deposits totaled $4,820,328 and $4,907,657 respectively. As of September 30, 2024 and December 31, 2023, one customer represented 22% and 23% of the total deposits outstanding, respectively.

Interest-Bearing Deposits

Interest expense on deposits during the nine months ended September 30, 2024 and September 30, 2023 are as follows:

September 30, September 30,
2024 2023
Now Accounts $ 7,118 $ 8,171
Passbook Accounts 192 231
Certificates of Deposit 257,965 72,063
Total $ 265,275 $ 80,465
Weighted Average Interest Rate 1.73 % 0.47 %

The weighted average interest rate on NOW accounts was .11%, on passbook accounts was .01%, and on certificates of deposit was 3.86% as of September 30, 2024.The weighted average interest rate on NOW accounts was .11%, on passbook savings accounts was .01%, and on certificates of deposit was 2.20% as of September 30, 2023.

4.         Advances from Federal Home Loan Bank (FHLB)

The Association has a line of credit with the FHLB through which advances are drawn. The total available line of credit at September 30, 2024 is $12.3 million. The unused portion of the line of credit as of September 30, 2024 was approximately $12.3 million. Pursuant to collateral agreements with the FHLB, advances are secured by a blanket-floating lien on first mortgage loans. During 2024, the Association obtained FHLB advances of $3.2 million, all of which matured and were paid prior to September 30, 2024.

18

5.         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 initiate 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.

Quantitative measures established by regulation to ensure capital adequacy require the Association to maintain minimum amounts and ratios (set forth in the table below) of total risk-based and Tier I risk-based capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier I core capital (as defined) to adjusted total assets (as defined), and tangible capital to adjusted total assets (as defined). The final rules implementing Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became fully effective for the Association on January 1, 2019. Management believes, as of September 30, 2024 and December 31, 2023, that the Association meets all capital adequacy requirements to which it is subject.

As of September 30, 2024 and December 31, 2023 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 Associations prompt corrective action category. The Association's actual capital amounts and ratios as of September 30, 2024 and December 31, 2023 are presented in the table (dollars in thousands):

**** **** Actual Required for Capital Adequacy Purposes Required to be Well-Capitalized Under Prompt Corrective Action Provisions
2024 **** **** Amount Ratio Amount Ratio Amount Ratio
Tier 1 Leverage Ratio (1 ) $ 13,956 38.98 % $ 1,432 4.00 % $ 1,790 5.00 %
Common Equity Tier 1 (2 ) 13,956 72.61 % $ 865 4.50 % $ 1,249 6.50 %
Tier 1 Risk-Based Capital (2 ) 13,956 72.61 % $ 1,153 6.00 % $ 1,538 8.00 %
Total Risk-Based Capital (2 ) 14,141 73.57 % $ 1,538 8.00 % $ 1,922 10.00 %
**** **** Actual Required for Capital Adequacy Purposes **** Required to be Well-Capitalized Under Prompt Corrective Action Provisions **** **** **** ****
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023 **** **** Amount Ratio Amount Ratio Amount Ratio
Tier 1 Leverage Ratio (1 ) $ 14,016 38.40 % $ 1,459 4.00 % $ 1,824 5.00 %
Common Equity Tier 1 (2 ) 14,016 72.99 % 864 4.50 % 1,247 6.50 %
Tier 1 Risk-Based Capital (2 ) 14,016 72.99 % 1,151 6.00 % 1,535 8.00 %
Total Risk-Based Capital (2 ) 14,216 74.03 % 1,535 8.00 % 1,919 10.00 %

______________________________________

(1) Amounts and ratios to adjusted total assets.

(2) Amounts and ratios to total risk weighted assets.

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6. Fair Value Measures

Under the FASB's authoritative guidance for fair value measurements, the Association must determine the appropriate level in the fair value hierarchy for each fair value measurement. To increase consistency and comparability in fair value measurements, the guidance established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. It gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The levels are as follows:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Financial assets and liabilities utilizing Level 1 inputs include active exchange-traded equity securities, exchange-based derivatives, mutual funds, and money market funds.

Level 2 Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, commingled investment funds not subject to purchase and sale restrictions, and fair-value hedges.

Level 3 Unobservable inputs, such as internally developed pricing models for the asset or liability due to little or no market activity for the asset or liability. Financial assets and liabilities utilizing Level 3 inputs include infrequently traded non-exchange-based derivatives and commingled investment funds subject to purchase and sale restrictions.

Assets and Liabilities Measured on a Non-Recurring Basis

The following describes the hierarchy designation, valuation methodologies, and key inputs for those assets that are measured at fair value on a non-recurring basis:

Collateral Dependent Loans

For collateral dependent loans, fair value is measured based on the value of the collateral securing these loans and is classified at a Level 3 in the fair value hierarchy. The collateral dependent loan consists of one one-to-four family mortgage secured by residential property. The value of residential property collateral is determined based on appraisal by qualified licensed appraisers hired by the Association. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Techniques used in the measure of value that follows (in thousands) includes third-party appraisals and discounted cash flows, including estimates of costs to sell.

September 30, 2024 Level 1 Level 2 Level 3 Total Estimated Fair Value
Assets **** **** **** **** **** **** **** ****
Collateral dependent loan $ - $ - $ - $ -
Total $ - $ - $ - $ -
December 31, 2023 Level 1 Level 2 Level 3 Total Estimated Fair Value
--- --- --- --- --- --- --- --- ---
Assets **** **** **** **** **** **** **** ****
Collateral dependent loan $ - $ - $ 34 $ 34
Total $ - $ - $ 34 $ 34

20

6. Fair Value Measures

The following methods and assumptions were used by the Association to estimate fair value of financial instruments:

Cash and cash equivalents - Fair value approximates carrying value.

FHLB stock - Consists of stock held as required by the Federal Home Loan Bank for membership and is carried at cost. While a fixed stock amount is required, the Federal Home Loan Bank stock requirement increases or decreases with the level of borrowing activity.

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. The fair value of loans is measured using an exit price notion.

Deposits - For NOW, passbook and certificates of deposit accounts, fair value is equal to the amount payable on demand or carrying value. For time deposits, fair value is estimated using a discounted cash flow method.

Advance, short-term - Fair value approximates carrying value.

The carrying amount and estimated fair value of the Association’s financial instruments are as follows (in thousands):

Carrying Value Fair Value Measures
September 30, 2024 **** Level 1 Level 2 Level 3
Financial assets: **** **** **** **** **** **** **** ****
Cash and cash equivalents $ 1,613 $ 1,613 $ - $ -
FHLB stock $ 347 - 347 $ -
Loans receivable, net $ 30,807 - - $ 29,600
Financial liabilities: **** **** **** **** **** **** **** ****
Deposits $ 20,359 - - $ 18,707
Advances, short-term $ - - - $ -
Carrying Value Fair Value Measures
--- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 **** Level 1 Level 2 Level 3
Financial assets: **** **** **** **** **** **** **** ****
Cash and cash equivalents $ 1,694 $ 1,694 $ - $ -
FHLB stock $ 333 - 333 -
Loans receivable, net $ 31,981 - - $ 30,309
Financial liabilities: **** **** **** **** **** **** **** ****
Deposits $ 20,856 - - $ 18,787
Advances, short-term $ 500 500 - -

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7.         Plan of Conversion

On February 1, 2024, the Board of Directors of the Association adopted a plan of conversion (the “Plan”) pursuant to which the Association will convert from the mutual form of organization to the stock form of organization and establish a stock holding company, Magnolia Bancorp, Inc. (the “Company”), as the parent of the Association. The Plan is subject to the approval of the Office of the Comptroller of Currency and must be approved by the affirmative vote of at least a majority of the votes eligible to be cast by the voting members of the Association at a special meeting scheduled to be held on December 23, 2024. In addition, the Federal Reserve Bank must approve a related holding company application.

Upon completion of the conversion, the Association will convert to the stock form of ownership and issue all of its outstanding common stock to the Company. Pursuant to the Plan, the Association will determine the total offering value and number of shares of common stock to be offered for sale by the Company based upon an independent appraiser’s valuation. The stock will be priced at $10.00 per share. In addition, the Company’s Board of Directors has adopted an employee stock ownership plan which will subscribe for up to 8% of the common stock sold in the offering. The Company has been organized as a corporation under the laws of the State of Louisiana and will own all of the outstanding common stock of the Association upon completion of the conversion. The conversion will be accounted for as a change in corporate form with the historic basis of the Association’s assets, liabilities and equity unchanged as a result.

The costs of issuing the common stock will be deferred and deducted from the sales proceeds of the stock offering. If the conversion is unsuccessful, all deferred costs will be charged to operations. The Association had $619,069 and $61,000 of deferred conversion costs as of September 30, 2024 and December 31, 2023, respectively, included in other assets in the balance sheets. The Association incurred approximately $157,399 in additional deferred conversion costs subsequent to September 30, 2024 through the date the financial statements were available to be issued. Upon the completion of the conversion, the Association will establish a liquidation account in the amount of its retained earnings contained in the latest financial statements included in the final prospectus. The liquidation account will be maintained for the benefit of eligible depositors who maintain deposit accounts in the Association at the time of the conversion.

22

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis reflects our financial statements and other relevant statistical data and is intended to enhance your understanding of our financial condition and results of operations. You should read the information in this section in conjunction with the business and financial information regarding Magnolia Bancorp and Mutual Savings and Loan Association, which appear elsewhere in this document.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10Q that are not historical facts may be considered 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. These forward-looking statements 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 take 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

Upon completion of the conversion, Magnolia Bancorp will conduct its operations primarily through Mutual Savings and Loan Association. Mutual Savings and Loan Association’s loan portfolio consists primarily of fixed-rate one- to four-family residential mortgage loans that we have originated. After the conversion, we intend to continue our focus on originating fixed-rate one- to four-family residential mortgage loans, residential construction loans and home equity lines of credit. In prior years, we have also originated commercial real estate loans and multi-family residential loans, and we intend to hire new loan officers to increase our emphasis on these loans. We also originate share loans, which are loans secured by deposit accounts at Mutual Savings and Loan Association. We generally do not purchase or sell loans. We offer a variety of deposit accounts including checking accounts, NOW accounts and certificates of deposit. Mutual Savings and Loan Association is subject to comprehensive regulation and examination by the Office of the Comptroller of the Currency (“OCC”).

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 also are affected by our provisions for credit losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of rental income, service charges on deposit accounts and other service charges and fees. Non-interest expense currently consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, audit and regulatory examination fees, director fees, FDIC deposit 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.

23

The Federal Reserve Board began increasing its federal funds rate in March 2022 to combat inflation, with 11 increases aggregating 5.25% occurring between March 2022 and July 2023. These increases resulted in substantial increases in market interest rates, including the rates we pay on our certificates of deposit. As interest rates rose during this period, our cost of funds increased and the demand for our fixed-rate loans decreased, resulting in declines in our net interest income. We elected not to match the highest market rates being paid on longer term certificates of deposit in light of the substantial increases in market interest rates, and we shortened the average maturity of our certificates of deposit. In an effort to offset the declines in net interest income during this period, we took steps to control our total non-interest expenses, which decreased in 2023 from 2022 and decreased further in the first nine months of 2024 from the first nine months of 2023. However, we incurred a net loss in the first nine months of 2024 as net interest income decreased by a greater amount than the decrease in total non-interest expense.

In September 2024, the Federal Reserve Board decreased its federal funds rate by 0.50%, which was the first decrease in four years. Additional rate reductions in the coming months by the Federal Reserve Board are widely expected by the market. We expect these rate reductions will eventually result in declines in our cost of funds. At September 30, 2024, we had $9.7 million of certificates of deposit scheduled to mature within 12 months, with $3.2 million of such short-term certificates of deposit bearing an interest rate of 5.00% or more and with $4.1 million of such short-term certificates having an interest rate between 3.00% and 3.99%. We also expect the demand for our fixed-rate loans will begin to increase as market interest rates decline. However, we expect our total non-interest expenses to increase following the conversion due to our need to hire additional lending and accounting personnel and the increased expenses associated with being a public company.

Business Strategy

Our principal objective is to build long-term value for our shareholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of our customers by emphasizing personalized and efficient customer service.

Highlights of our current business strategy include:

● Continue to focus on originating fixed-rate one- to four-family residential mortgage loans and residential construction loans for retention in our portfolio. We are primarily a fixed-rate one- to four-family residential mortgage loan lender for borrowers in our primary market area. Our residential construction loans typically convert to a permanent residential mortgage loan upon completion of the construction. We do not offer adjustable rate residential mortgage loans, other than home equity loans. At September 30, 2024, $28.7 million or 92.9% of our total loan portfolio consisted of fixed-rate one- to four-family residential mortgage loans. We expect residential mortgage lending to remain our primary lending activity.
● Modestly increase our commercial real estate loan portfolio. To a limited extent, we have originated commercial real estate loans. At September 30, 2024, $624,000 or 2.0% of our total loan portfolio consisted of commercial real estate loans. Commercial real estate loans are higher-yielding and have shorter terms, which helps to mitigate interest rate risk, than one- to four-family residential mortgage loans.
--- ---
● Modestly increase our multi-family residential loan portfolio. To a limited extent, we have originated multi-family residential loans. At September 30, 2024, $292,000 or 1.0% of our total loan portfolio consisted of multi-family residential loans. Multi-family residential loans are higher-yielding and have shorter terms, which helps to mitigate interest rate risk, than one- to four-family residential mortgage loans.
--- ---
● Maintain our strong asset quality through conservative loan underwriting. We intend to maintain strong asset quality through what we believe are our conservative underwriting standards and credit monitoring processes. At September 30, 2024, we had no nonperforming assets, and we had only two loans aggregating $216,000 that were 30 days or more delinquent.
--- ---
● Continue efforts to grow low-cost “core” deposits. We consider our core deposits to include all deposits other than certificates of deposit. We will continue our efforts to increase our core deposits to provide a stable source of funds to support loan growth at costs consistent with improving our interest rate spread and net interest margin. Core deposits totaled $10.1 million or 49.9% of total deposits at September 30, 2024. Of this amount, $1.1 million or 5.3% of total deposits consisted of non-interest-bearing NOW accounts.
--- ---

24

● Remain a community-oriented institution and rely on high quality service to maintain and build a loyal local customer base . We were established in 1885. By servicing all loans we originate, our loan customers are able to deal directly with us when questions may arise about their loans. Through the goodwill we have developed over years of providing timely, efficient banking services, we believe that we have been able to attract a loyal base of local retail customers on which we expect to continue to build our banking business.
● Grow organically and through opportunistic branching opportunities. We intend to grow our balance sheet organically on a managed basis, and the capital we are raising in the stock offering will enable us to increase our lending capacity. In addition to organic growth, we may also consider expansion opportunities in our market area or in contiguous markets that we believe would enhance both our franchise value and shareholder returns. These opportunities may include establishing loan production offices, establishing new branch offices, and/or acquiring branch offices. The capital we are raising in the stock offering would help us fund any such opportunities that may arise. We have no current plans or intentions regarding any such expansion activities.
--- ---

We expect these strategies to guide our investment of the net proceeds of the stock offering. We intend to continue to pursue these business strategies after the conversion, subject to changes necessitated by future market conditions, regulatory restrictions and other factors.

There are risks associated with our plans to increase our commercial real estate loans and multi-family residential loans. While we intend to mitigate these risks by updating our loan underwriting policies with respect to such loans and by hiring additional loan officers who are experienced in this area, there can be no assurance that we can hire additional loan officers with such experience or that such loan officers will be able to generate a sufficient volume of new loans to cover their compensation. In addition, we expect our commercial real estate loan portfolio and our multi-family residential loan portfolio to each account for less than 5% of our total loan portfolio for the foreseeable future.

Anticipated Increase in Noninterest Expense

Following the completion of the conversion, our noninterest expense is expected to increase because of the increased costs associated with operating as a public company, our need to hire additional personnel, and the increased compensation expenses associated with the purchase of shares of common stock by our employee stock ownership plan and the expected implementation of stock-based benefit plans, if approved by our shareholders, no earlier than six months after the completion of the conversion.

Critical Accounting Policies and Use of Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with Generally Accepted Accounting Principles (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policy discussed below to be our critical accounting policy. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The Jumpstart Our Business Startups (“JOBS”) Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

We consider the accounting policy for the allowance for credit losses to be our critical accounting policy. Effective January 1, 2023, we adopted Current Expected Credit Losses (“CECL”). Under the CECL methodology, the allowance for credit losses represents management’s estimate of lifetime credit losses on loans as of the balance sheet date using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. For reporting periods before January 1, 2023 and the adoption of CECL, we used the incurred loss impairment method to estimate the allowance for credit losses on loans receivable. Under the incurred loss impairment methodology, the allowance for credit losses was based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, and other factors, and consisted of allocated and unallocated components. See note 1 of the notes to financial statements appearing elsewhere in this report for a detailed discussion of this critical accounting policy.

25

The following tables set forth selected historical financial and other data of Mutual Savings and Loan Association for the periods and at the dates indicated. The information at September 30, 2024, and for the three months and nine months ended September 30, 2024 and 2023, is not audited, but in the opinion of management includes all adjustments necessary for a fair presentation. All of these adjustments are normal and recurring. The results of operations for the three months and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected or realized for the entire year. The information at December 31, 2023 is derived in part from, and should be read together with, the audited financial statements and related notes beginning at page F-1 of our prospectus dated November 8, 2024.

At September 30, At December 31,
2024 2023
(dollars in thousands)
Selected Financial Condition Data: **** **** **** ****
Total assets $ 35,105 $ 35,803
Cash and cash equivalents 1,627 1,710
Mortgage-backed securities - -
FHLB stock 347 333
Loans receivable, net 30,807 31,981
Total deposits 20,359 20,856
FHLB advances - 500
Total equity 13,956 14,016
For the Three Months Ended September 30, For the Nine Months Ended September 30,
--- --- --- --- --- --- --- --- --- --- ---
2024 2023 2024 2023
(dollars in thousands)
Selected Operating Data: **** **** **** **** **** **** **** **** **** ****
Total interest income $ 368 $ 371 $ 1,093 $ 1,121
Total interest expense 107 51 291 86
Net interest income 261 320 802 1,035
Provision for loan losses - - - -
Net interest income after provision for loan losses 261 320 802 1,035
Total non-interest income 8 7 24 24
Total non-interest expense 315 307 903 957
Income (loss) before income taxes (46 ) 20 (77 ) 102
Income tax provision (benefit) (10 ) 4 (17 ) 22
Net income (loss) $ (36 ) $ 16 $ (60 ) $ 80

26

At or For the At or For the
Three Months Ended Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
Selected Performance Ratios:^(1)^ **** **** **** **** **** **** **** **** **** **** **** ****
Average yield on interest-earning assets 4.36 % 4.17 % 4.29 % 4.11 %
Average rate on interest-bearing liabilities 2.03 % 0.91 % 1.84 % 0.50 %
Average interest rate spread^(2)^ 2.34 % 3.26 % 2.45 % 3.62 %
Net interest margin^(2)^ 3.09 % 3.60 % 3.15 % 3.80 %
Average interest-earning assets to average interest-bearing liabilities 159.77 % 157.92 % 161.18 % 157.09 %
Net interest income after provision for loan losses to non-interest expense 82.86 % 104.25 % 88.91 % 108.12 %
Total non-interest expense to average assets 0.88 % 0.83 % 2.52 % 2.52 %
Efficiency ratio^(3)^ 83.78 % 81.00 % 80.84 % 83.57 %
Return on average assets (ratio of net income to average total assets) (0.40 )% 0.17 % (0.22 )% 0.28 %
Return on average equity (ratio of net income to average equity) (1.03 )% 0.46 % (0.57 )% 0.76 %
Asset Quality Ratios: ^(4)^ **** **** **** **** **** **** **** **** **** **** **** ****
Non-performing loans as a percent of total loans receivable^(5)^ 0.00 % 0.11 % 0.00 % 0.11 %
Non-performing assets as a percent of total assets^(5)^ 0.11 % 0.09 % 0.11 % 0.09 %
Non-performing assets and troubled debt restructurings as a percent of total assets^(5)^ 0.11 % 0.09 % 0.11 % 0.09 %
Allowance for loan losses as a percent of total loans outstanding 0.60 % 0.62 % 0.60 % 0.62 %
Allowance for loan losses as a percent of non-performing loans N/A 589.95 % N/A 589.95 %
Net charge-offs to average loans receivable 0.19 % 0.00 % 0.06 % 0.00 %
Capital Ratios: ^(4)^ **** **** **** **** **** **** **** **** **** **** **** ****
Common equity Tier 1 capital (to risk-weighted assets) 72.61 % 72.31 % 72.61 % 72.31 %
Tier 1 leverage (core) capital (to adjusted tangible assets) 72.61 % 72.31 % 72.61 % 72.31 %
Tier 1 risk-based capital (to risk-weighted assets) 73.57 % 73.35 % 73.57 % 73.35 %
Average equity to average assets 39.06 % 37.72 % 39.02 % 36.80 %
Other Data:
Banking offices 2 2 2 2
Full-time equivalent employees 8 7 8 7

__________________________________

(1) With the exception of end of period ratios, all ratios are based on average **** weekly balances during the indicated periods. Ratios for the three and nine months ended September 30, 2024 and 2023 have been annualized.
(2) Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest-earning assets.
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(3) The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income.
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(4) Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable.
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(5) Non-performing assets consist of non-performing loans. Mutual Savings and Loan Association did not have any real estate owned as of the dates indicated. Non-performing loans consist of all loans 90 days or more past due. It is our policy to cease accruing interest on all loans 90 days or more past due. Real estate owned consists of real estate acquired through foreclosure, real estate acquired by acceptance of a deed-in-lieu of foreclosure.
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27

Comparison of Financial Condition at September 30, 2024 and December 31, 2023

Total Assets. Total assets were $35.1 million at September 30, 2024, a decrease of $700,000, or 2.0%, from $35.8 million at December 31, 2023. This decrease is primarily due to decreases of $1.2 million or 3.7% in net loans receivable and $83,000 or 4.8% in cash and cash equivalents. In September 2024, Hurricane Francine hit the New Orleans area but did not cause major damage in our market area.

Cash and Cash Equivalents. Cash and cash equivalents decreased by $83,000, or 4.8%, to $1.627 million at September 30, 2024 from $1.710 million at December 31, 2023. As market interest rates continued to remain at relatively high rates and in light of the reduced demand for our fixed-rate mortgage loans, we elected not to match the highest market rates being paid on longer term deposits, which led to deposit outflows. We used our excess liquidity to fund the decrease in deposits. Our cash and cash equivalents were 4.6% of total assets at September 30, 2024 compared to 4.7% of total assets at December 31, 2023.

Loans Receivable, Net. Loans receivable, net, decreased by $1.2 million, or 3.7%, to $30.8 million at September 30, 2024 from $32.0 million at December 31, 2023. During the first nine months of 2024, our total loan originations decreased by $684,000, or 49.8%, from $1.4 million during the first nine months of 2023. Our originations of one- to-four family residential loans decreased by $684,000 in the first nine months of 2024 from the first nine months of 2023, as the demand for our fixed-rate loans declined in the current interest rate environment. In addition, our chief loan officer resigned in May 2023. In October 2024, we hired an additional loan officer. We originated $280,000 of home equity lines of credit in the first nine months of 2024 compared to $21,000 of such originations in the first nine months of 2023. These home equity lines of credit mature or reprice within one year.

Deposits. Total interest-bearing deposits decreased by $688,000, or 3.4%, to $19.3 million at September 30, 2024 from $20.0 million at December 31, 2023. Core deposits (defined as deposits other than certificates of deposit) decreased by $1.1 million, or 9.7%, to $10.2 million at September 30, 2024 from $11.3 million at December 31, 2023. Certificates of deposit increased by $674,000, or 7.0%, to $10.2 million at September 30, 2024 from $9.5 million at December 31, 2023. The decline in core deposits was primarily due to our lower-cost savings accounts and NOW accounts being less attractive in the current high interest rate environment. Certificates of deposit increased to fund the decrease in core deposits and to maintain sufficient liquidity.

Management continued its strategy of pursuing growth in demand accounts and lower cost core deposits, but market conditions affected this strategy during the first nine months of 2024. Non-interest-bearing deposits, which are part of our total core deposits, increased by $190,700, or 22.3%, to $1,045,300 at September 30, 2024 from $854,600 at December 31, 2023. Management intends to continue its efforts to increase core deposits, with an emphasis on growth in consumer deposits.

Borrowings. We had no FHLB advances at September 30, 2024, compared to $500,000 at December 31, 2023. Our average outstanding FHLB advances during the nine months ended September 30, 2024 were $622,000, compared to $503,000 during the nine months ended September 30, 2023. The maximum amount outstanding at any month-end during the nine months ended September 30, 2024 was $850,000. We increased our short-term FHLB advances in lieu of paying higher rates on longer term certificates of deposit in anticipation of the Federal Reserve Board reducing interest rates. All of our outstanding FHLB advances were repaid upon maturity prior to September 30, 2024.

Total Equity. Total equity decreased by $60,000, or 0.4%, to $13.96 million at September 30, 2024 from $14.02 million at December 31, 2023. The decrease was due to our net loss for the first nine months of 2024. Because we do not have any investment securities other than our FHLB stock, we do not have any accumulated other comprehensive income or loss.

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Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following tables show 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 Mutual Savings and Loan Association owned no tax-exempt securities during the periods presented, no yield adjustments were made. All average balances are based on weekly balances. Management does not believe that the weekly averages differ significantly from what the daily averages would be.

For the Nine Months Ended September 30,
2024 2023
Yield/Rate<br>  at <br>  September 30, 2024 Average<br><br> <br>Balance Interest Average<br><br> <br>Yield/<br><br> <br>Rate^(1)^ Average<br><br> <br>Balance Interest Average<br><br> <br>Yield/<br><br> <br>Rate
(dollars in thousands)
Interest-earning assets:
Loans receivable^(1)^ 4.36 % $ 31,823 $ 1,010 4.23 % $ 32,915 $ 1,000 4.05 %
Investment securities^(2)^ 5.39 % 341 13 5.08 % 325 11 4.51 %
Other interest-earning assets 5.33 % 1,816 70 5.14 % 3,111 110 4.71 %
Total interest-earning assets 4.44 % 33,980 1,093 4.29 % 36,351 1,121 4.11 %
Non-interest-earning assets 1,867 1,660
Total assets $ 35,847 $ 38,011
Interest-bearing liabilities:
Savings and NOW accounts^(3)^ 0.09 % 10,620 7 0.09 % 11,471 8 0.09 %
Certificates of deposit 3.86 % 9,840 258 3.50 % 11,165 72 0.86 %
Total deposits 1.98 % 20,460 265 1.73 % 22,636 80 0.47 %
FHLB advances - 622 26 5.56 % 503 6 1.59 %
Total interest-bearing liabilities 1.98 % 21,082 291 1.84 % 23,139 86 0.50 %
Non-interest-bearing liabilities 776 884
Total liabilities 21,858 24,023
Retained earnings 13,989 13,988
Total liabilities and retained earnings $ 35,847 $ 38,011
Net interest-earning assets $ 12,898 $ 13,212
Net interest income; average interest rate spread 2.46 % $ 802 2.45 % $ 1,035 3.61 %
Net interest margin^(4)^ 3.15 % 3.80 %
Average interest-earning assets to average interest-bearing liabilities 161.18 % 157.09 %

(Footnotes on next page)

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For the Three Months Ended September 30,
2024 2023
Average Average
Average Yield/ Average Yield/
Balance Interest Rate^(1)^ Balance Interest Rate
(dollars in thousands)
Interest-earning assets:
Loans receivable^(1)^ $ 31,338 $ 337 4.30 % $ 32,212 $ 331 4.11 %
Investment securities^(2)^ 347 5 5.76 % 329 4 4.86 %
Other interest-earning assets 2,060 26 5.05 % 3,031 36 4.75 %
Total interest-earning assets 33,745 $ 368 4.36 % 35,572 $ 371 4.17 %
Non-interest-earning assets 2,060 1,588
Total assets $ 35,805 $ 37,160
Interest-bearing liabilities:
Savings and NOW accounts^(3)^ 10,263 2 0.09 % 11,544 2 0.08 %
Certificates of deposit 10,362 98 3.78 % 10,662 44 1.65 %
Total deposits 20,625 $ 100 1.94 % 22,206 $ 46 0.84 %
FHLB advances 496 7 5.65 % 319 5 5.71 %
Total interest-bearing liabilities 21,121 $ 107 2.03 % 22,525 51 0.91 %
Non-interest-bearing liabilities 697 619
Total liabilities 21,818 23,144
Retained earnings 13,987 14,016
Total liabilities and retained earnings 35,805 37,160
Net interest-earning assets $ 12,624 $ 13,047
Net interest income; average interest rate spread $ 261 2.33 % $ 320 3.26 %
Net interest margin^(4)^ 3.09 % 3.60 %
Average interest-earning assets to average interest-bearing liabilities 159.77 % 157.92 %

_______________________________

(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 FHLB Stock.
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(3) Includes non-interest-bearing NOW amounts, which amounted to $1,045,300 at September 30, 2024, $854,634 at December 31, 2023 and $806,422 at December 31, 2022.
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(4) Equals net interest income divided by average interest-earning assets
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30

Rate/Volume Analysis. The following table shows the extent to which changes in interest rates and changes in 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.

Nine Months Ended Three Months Ended
September 30, 2024 September 30, 2024
compared to compared to
Nine Months Ended Three Months Ended
September 30, 2023 September 30, 2023
Increase (Decrease) Due to Increase (Decrease) Due to
Rate Volume Total Increase (Decrease) Rate Volume Total Increase (Decrease)
(In thousands)
Interest income:
Loans receivable $ 44 $ (34 ) $ 10 $ 15 $ (9 ) $ 6
Investment securities 1 1 2 1 - 1
Other interest-earning assets 11 (51 ) (40 ) 2 (12 ) (10 )
Total interest income 56 (84 ) (28 ) 18 (21 ) (3 )
Interest expense:
Savings and NOW accounts - (1 ) (1 ) - - -
Certificates of deposit 196 (10 ) 186 55 (1 ) 54
Total deposits 196 (11 ) 185 55 (1 ) 54
FHLB advances 18 2 20 - 2 2
Total interest expense 214 (9 ) 205 55 1 56
Increase (decrease) in net interest income $ (158 ) $ (75 ) $ (233 ) $ (37 ) $ (22 ) $ (59 )

Comparison of Operating Results for the Nine Months Ended September 30, 2024 and 2023

General*.* We had a net loss of $60,000 for the first nine months of 2024 compared to net income of $80,000 for the first nine months of 2023. This $140,000 decline was primarily due to a decrease of $232,700 in net interest income, which was partially offset by decreases of $54,000 in total noninterest expense and $39,000 in income tax expense. With the high level of interest rates in recent periods, our cost of funds increased and the demand for our fixed-rate loans decreased, resulting in declines in our net interest income and a net loss in the three and nine months ended September 30, 2024. On September 18, 2024, the Federal Reserve Board decreased its federal funds rate by 0.50%, which was the first decrease in four years. Additional rate reductions in the coming months by the Federal Reserve Board are widely expected by the market. We expect these rate reductions will eventually result in declines in our cost of funds and improvement in our net interest income. We also expect the demand for our fixed-rate loans will begin to increase as market interest rates decline. However, we expect our total non-interest expenses to increase following the conversion due to our need to hire additional lending and accounting personnel and the increased expenses associated with being a public company.

Interest Income. Interest income decreased by $28,000 or 2.5% to $1.09 million in the first nine months of 2024 from $1.12 million in the first nine months of 2023. The decrease in interest income was due to a decrease of $40,000 or 36.4% in other interest on deposits with other banks and cash equivalents, as we used a portion of our excess liquidity to fund deposit outflows. This decrease was partially offset by increases of $10,000 or 1.0% in interest on loans and $2,000 or 18.2% in dividends on FHLB stock.

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The increased interest on loans was due to an increase in the average yield to 4.23% in the first nine months of 2024 compared to 4.05% in the first nine months of 2023, as the average yield on new loan originations exceeded the average yield on repayments of older loans. The increase in the average loan yield was mostly offset by a decrease of $1.1 million or 3.3% in the average loan balance in the first nine months of 2024 compared to the first nine months of 2023. Our total loan originations decreased by $684,000 or 49.8% from $1.4 million in the first nine months of 2023, as the demand for our fixed-rate loans declined. We hired an additional loan officer in October 2024, and we expect the demand for our fixed-rate loans will begin to increase as market interest rates decline. Market interest rates for fixed-rate loans currently exceed the average yield on our loan portfolio.

The increased dividends on our FHLB stock were primarily due to an increase in the average yield on such stock to 5.14% in the first nine months of 2024 compared to 4.71% in the first nine months of 2023. In addition, the average outstanding balance increased by $16,000 or 4.9% in the first nine months of 2024 compared to the first nine months of 2023, as we were required to purchase additional FHLB stock in connection with our increase in FHLB advances.

Interest Expense*.* Total interest expense increased by $205,000 or 238.4% to $291,000 for the nine months ended September 30, 2024 from $86,000 for the nine months ended September 30, 2023. The increase was primarily due to the increase in the average cost of deposits to 1.73% for the first nine months of 2024 from 0.47% for the first nine months of 2023, reflecting the higher market interest rate environment during this period. The higher cost of deposits was partially offset by a $2.2 million or 9.6% decrease in the average outstanding balance of deposits to $20.46 million in the first nine months of 2024 from $22.64 million in the first nine months of 2023. The decrease in average deposits was due to decreases of $1.3 million or 11.9% in the average balance of certificates of deposit and $851,000 or 7.4% in the average balance of core deposits. At September 30, 2024, $9.7 million or 95% of our total certificates of deposit were scheduled to mature within the following 12 months. Approximately 99.5% of our certificates of deposit at September 30, 2024 had a remaining maturity of less than 24 months. We shortened the average maturity of our certificates of deposit in anticipation of market interest rates beginning to decline. If the Federal Reserve Board continues to reduce its federal funds rate and market interest rates on new certificates of deposit decrease from current levels, we expect these rate reductions will eventually result in declines in our cost of funds.

The interest on our certificates of deposit increased to $258,000 in the first nine months of 2024 from $72,000 in the first nine months of 2023. This substantial increase of $186,000 was due to the average rate paid on certificates of deposit increasing to 3.50% in the first nine months of 2024 from 0.86% in the first nine months of 2023, reflecting higher market rates of interest. The higher rate paid in 2024 was partially offset by a $1.3 million or 11.9% decrease in the average balance of certificates of deposit in the first nine months of 2024 from the first nine months of 2023, as we used short-term FHLB advances to a greater extent in the first nine months of 2024. The non-interest-bearing deposits included in our core deposits increased to $1,045,300 at September 30, 2024 from $855,000 at December 31, 2023.

Interest on FHLB advances was $26,000 during the first nine months of 2024 compared to $6,000 in the first nine months of 2023, as the average balance of outstanding FHLB advances was $622,000 in the first nine months of 2024 compared to $503,000 in the first nine months of 2023. We increased our short-term FHLB advances in lieu of paying higher rates on longer term certificates of deposit in anticipation of the Federal Reserve Board cutting interest rates. All of our outstanding FHLB advances were repaid upon maturity prior to September 30, 2024.

Net Interest Income*.* Net interest income decreased by $232,700, or 22.5%, to $802,300 for the nine months ended September 30, 2024 compared to $1,035,000 for the nine months ended September 30, 2023. The decrease was primarily due to our average interest rate spread declining to 2.45% in the first nine months of 2024 from 3.62% in the first nine months of 2023, as the average rates paid on our deposits and FHLB advances increased substantially faster than the average yield on our loan portfolio. Although the average yield on interest-earning assets increased from 4.11% in the first nine months of 2023 to 4.29% in the first nine months of 2024, it was more than offset by an increase in the average rate paid on interest-bearing liabilities, which increased from 0.50% in the first nine months of 2023 to 1.84% in the first nine months of 2024. In addition, our net interest-earning assets decreased by $314,000 or 2.4% in the first nine months of 2024 from the first nine months of 2023.

Provision for Credit Losses*.* We had no provision for credit losses in both the first nine months of 2024 and the first nine months of 2023. In September 2024, we foreclosed on our one loan that was 90 days or more delinquent. The foreclosed property was recorded at the market value as determined by an appraisal, less estimated selling costs, resulting in a $15,000 write-off which reduced our allowance for credit losses from $200,000 as of December 31, 2023 to $185,000 at September 30, 2024. The allowance for credit losses on loans represented 0.60% of total loans at September 30, 2024 and 0.62% of total loans at September 30, 2023. We had no loan charge-off in the first nine months of 2023. Our total non-performing assets and our total classified loans as of September 30, 2024 and September 30, 2023 were $39,000 and $34,000 respectively. As a percentage of non-performing assets, the allowance for credit losses was 469.6% at September 30, 2024 and 590.0% at September 30, 2023. As of September 30, 2024, we had two loans totaling $216,000 that were 30 days or more delinquent, compared to one loan for $34,000 that was 30 days or more delinquent at December 31, 2023. No additional provision for credit losses was deemed necessary in light of the overall decrease in the loan portfolio.

32

Non-interest Income*.* Non-interest income totaled $24,000 for both the first nine months of 2024 and the first nine months of 2023. This nominal decrease in deposit service charges and fees was offset by a nominal increase in rental income, as we rent out a portion of the parking lot at our main office building.

Non-interest Expense*.* Non-interest expense decreased by $55,000, or 5.7%, to $902,000 for the first nine months of 2024 compared to $957,000 for the first nine months of 2023. The decrease in noninterest expense in the first nine months of 2024 was primarily due to deceases of $30,000 or 5.0% in salaries and employee benefits, $10,600 or 82.1% in advertising expense, $8,700 or 32.9% in automobile depreciation and expense, and $3,700 or 8.3% in audit and regulatory examination fees. The decrease in salaries and employee benefits in the first nine months of 2024 was primarily due to the resignation of our former chief financial officer/chief loan officer in May 2023. We hired an additional loan officer in October 2024, and we believe we will need to hire additional personnel following completion of the conversion. These new hires will increase our salaries and employee benefits expenses. Advertising expense decreased in the first nine months of 2024 as we were not actively seeking new certificates of deposit in the current interest rate environment. The decrease in automobile expense in the first nine months of 2024 was primarily due to the absence of the automobile allowance and related automobile costs paid to our former chief financial officer in the first nine months of 2023.

Income Tax Provision (Benefit). We had an income tax benefit of $16,667 for the first nine months of 2024 compared to a provision for income taxes of $22,000 for the first nine months of 2023. The tax benefit in the first nine months of 2024 represented an effective tax rate of 21.8% on our pre-tax loss of $76,000 for such period, while the tax provision for the first nine months of 2023 represented an effective tax rate of 21.5% on our pre-tax income of $102,000 for such period. At September 30, 2024 and December 31, 2023, we had a net deferred tax liability of $48,000.

Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023

General*.* We had a net loss of $36,000 for the quarter ended September 30, 2024 compared to net income of $16,000 for the quarter ended September 30, 2023. This $52,000 decline was primarily due to a decrease of $59,000 in net interest income, which was partially offset by a $14,000 decrease in income tax expense.

Interest Income. Interest income decreased by $3,000 or 0.8% to $368,000 in the quarter ended September 30, 2024 from $371,000 in the quarter ended September 30, 2023. The decrease in interest income was due to a decrease of $10,000 or 27.0% in other interest on deposits with other banks and cash equivalents, as we used a portion of our excess liquidity to fund deposit outflows. This decrease was partially offset by nominal increases of $6,000 in interest on loans and $1,000 in dividends on FHLB stock.

The increased interest on loans was due to an increase in the average yield to 4.30% in the quarter ended September 30, 2024 compared to 4.11% in the quarter ended September 30, 2023, as the average yield on new loan originations exceeded the average yield on repayments of older loans. The increase in the average loan yield was mostly offset by a decrease of $874,000 or 2.7% in the average loan balance in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023. Our total loan originations were $190,000 in the quarter ended September 30, 2024 compared to no loan originations in the quarter ended September 30, 2023.

The increased dividends on our FHLB stock were primarily due to an increase in the average yield on this stock to 5.76% in the quarter ended September 30, 2024 compared to 4.86% in the quarter ended September 30, 2023. In addition, the average outstanding balance increased by $18,000 or 5.5% in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, as we were required to purchase additional FHLB stock in connection with our increase in FHLB advances.

33

Interest Expense*.* Total interest expense increased by $56,000 or 109.8% to $107,000 for the three months ended September 30, 2024 from $51,000 for the three months ended September 30, 2023. The increase was primarily due to the increase in the average cost of deposits to 1.94% for the quarter ended September 30, 2024 from 0.84% for the quarter ended September 30, 2023, reflecting the higher market interest rate environment. The higher cost of deposits was partially offset by a $1.6 million or 7.1% decrease in the average outstanding balance of deposits to $20.6 million in the quarter ended September 30, 2024 from $22.2 million in the quarter ended September 30, 2023. The decrease in average deposits was due to decreases of $300,000 or 2.8% in the average balance of certificates of deposit and $1.3 million or 11.1% in the average balance of core deposits. At September 30, 2024, $9.7 million or 95% of our total certificates of deposit were scheduled to mature within the following 12 months. Approximately 99.5% of our certificates of deposit at September 30, 2024 had a remaining maturity of less than 24 months. We shortened the average maturity of our certificates of deposit in anticipation of market interest rates beginning to decline.

The interest on our certificates of deposit increased to $98,000 in the quarter ended September 30, 2024 from $44,000 in the quarter ended September 30, 2023. This increase of $54,000 was due to the average rate paid on certificates of deposit increasing to 3.78% in the quarter ended September 30, 2024 from 1.65% in the quarter ended September 30, 2023, reflecting higher market rates of interest. On September 18, 2024, the Federal Reserve Board decreased its federal funds rate by 0.50%, which was the first decrease in four years. Additional rate reductions in the coming months by the Federal Reserve Board are widely expected by the market. If the Federal Reserve Board continues to reduce its federal funds rate and market interest rates on new certificates of deposit decrease from current levels, we expect these rate reductions will eventually result in declines in our cost of funds. The higher rate paid in 2024 was partially offset by a $300,000 or 2.8% decrease in the average balance of certificates of deposit in the quarter ended September 30, 2024 from the quarter ended September 30, 2023, as we used short-term FHLB advances to a greater extent in the quarter ended September 30, 2024. The non-interest-bearing deposits included in our core deposits decreased to $1,045,300 at September 30, 2024 from $855,000 at December 31, 2023.

Interest on FHLB advances was $7,000 during the quarter ended September 30, 2024 compared to $5,000 in the quarter ended September 30, 2023, as the average balance of outstanding FHLB advances was $496,000 in the quarter ended September 30, 2024 compared to $319,000 in the quarter ended September 30, 2023. We increased our short-term FHLB advances in lieu of paying higher rates on longer term certificates of deposit in anticipation of the Federal Reserve Board cutting interest rates. All of our outstanding FHLB advances during the period were repaid upon maturity prior to September 30, 2024.

Net Interest Income*.* Net interest income decreased by $59,000, or 18.4%, to $261,000 for the quarter ended September 30, 2024 compared to $320,000 for the quarter ended September 30, 2023. The decrease was primarily due to our average interest rate spread declining to 2.34% in the quarter ended September 30, 2024 from 3.26% in the quarter ended September 30, 2023, as the average rates paid on our deposits and FHLB advances increased substantially faster than the average yield on our loan portfolio. Although the average yield on interest-earning assets increased from 4.17% in the quarter ended September 30, 2023 to 4.36% in the quarter ended September 30, 2024, it was more than offset by an increase in the average rate paid on interest-bearing liabilities, which increased from 0.91% in the quarter ended September 30, 2023 to 2.03% in the quarter ended September 30, 2024. In addition, our net interest-earning assets decreased by $423,000 or 3.2% in the quarter ended September 30, 2024 from the quarter ended September 30, 2023.

Provision for Credit Losses*.* We had $0 provision for credit losses in both the quarter ended September 30, 2024 and the quarter ended September 30, 2023. In September 2024, we foreclosed on our one loan that was 90 days or more delinquent. The foreclosed property was recorded at the market value as determined by an appraisal, less estimated selling costs, resulting in a $15,000 write-off which reduced our allowance for credit losses from $200,000 as of December 31, 2023 to $185,000 at September 30, 2024. The allowance for credit losses on loans represented 0.60% of total loans at September 30, 2024 and 0.62% of total loans at September 30, 2023. We had no loan charge-offs in the quarter ended September 30, 2023. Our total non-performing assets and our total classified loans as of September 30, 2024 and September 30, 2023 were $39,000 and $34,000, respectively. As a percentage of non-performing assets, the allowance for credit losses was 469.6% at September 30, 2024 and 590.0% at September 30, 2023. As of September 30, 2024, we had two loans totaling $216,000 that were 30 days or more delinquent, compared to one loan for $34,000 that was 30 days or more delinquent at December 31, 2023. While loan delinquencies increased slightly in the first nine months of 2024, no additional provision for credit losses was deemed necessary in light of the overall decrease in the loan portfolio.

34

Non-interest Income*.* Non-interest income totaled $8,000 for the quarter ended September 30, 2024 compared to $7,000 for the quarter ended September 30, 2023. This increase was due to a nominal increase in rental income, as we rent out a portion of the parking lot at our main office building.

Non-interest Expense*.* Non-interest expense increased by $8,000, or 2.6%, to $315,000 for the quarter ended September 30, 2024 compared to $307,000 for the quarter ended September 30, 2023. The increase in non-interest expense in the quarter ended September 30, 2024 was primarily due to increases of $2,500 or 1.3% in salaries and employee benefits and $2,400 or 24.1% in audit and regulatory examination fees.

Income Tax Provision (Benefit). We had an income tax benefit of $10,000 for the quarter ended September 30, 2024 compared to a provision for income taxes of $4,000 for the quarter ended September 30, 2023. The tax benefit in the quarter ended September 30, 2024 represented an effective tax rate of 22.2% on our pre-tax loss of $45,000 for this period, while the tax provision for the quarter ended September 30, 2023 represented an effective tax rate of 20.0% on our pre-tax income of $20,000 for this period. At September 30, 2024 and December 31, 2023, we had a net deferred tax liability of $48,000.

Management of Market Risk

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

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

● maintaining capital levels that substantially exceed the thresholds for well-capitalized status under federal regulations;
● maintaining a high liquidity level; and
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● growing our core deposits accounts
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By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

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

Economic Value of Equity . We compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 50, 100, 200, 300 and 400 basis point increments or decreases instantaneously by 50, 100, 200 and 300 basis point increments, with changes in interest rates representing immediate and permanent parallel shifts in the yield curve.

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The following table sets forth, as of September 30, 2024, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve. All estimated changes presented in the table are within the policy limits established by the board of directors.

At September 30, 2024
**** Estimated Increase (Decrease) in EVE as a Percentage of Present
**** **** **** EVE Value of Assets ^(3)^
Change in Interest **** **** Increase
Rates Estimated **** **** **** **** **** **** **** **** (Decrease)
(basis points) (1) EVE ^(2)^ **** Amount **** Percent **** **** EVE Ratio ^(4)^ **** (basis points)
(Dollars in thousands)
400 $ 9,810 $ (4,543 ) (31.65 )% 34.46 % (796.38 )
300 $ 10,952 $ (3,401 ) (23.69 )% 36.77 % (565.47 )
200 $ 12,145 $ (2,208 ) (15.38 )% 38.97 % (345.23 )
100 $ 13,331 $ (1,022 ) (7.12 )% 40.96 % (145.83 )
50 $ 13,890 $ (463 ) (3.23 )% 41.83 % (59.21 )
Level $ 14,353 $ - - % 42.42 %
(50) $ 14,737 $ 384 2.67 % 42.84 % 41.28
(100) $ 15,035 $ 681 4.75 % 43.08 % 65.90
(200) $ 15,363 $ 1,010 7.04 % 43.09 % 66.63
(300) $ 15,252 $ 899 6.26 % 42.34 % (8.31 )

_______________________

(1) Assumes an immediate uniform change in interest rates at all maturities.
(2) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
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(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
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(4) EVE Ratio represents EVE divided by the present value of assets.
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The table above indicates that as of September 30, 2024, we would have experienced a 15.38% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 7.04% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

Net Interest Income Analysis. In addition to modeling changes in EVE, we also analyze potential changes to net interest income (“NII”) for a twelve-month period under rising and falling interest rate scenarios. The following table shows our NII model as of September 30, 2024.

Change in Interest Rates in Basis
Points (Rate Shock) Net Interest Income Change % Change
(Dollars in thousands)
300bp $ 963 $ (58 (5.69 )%
200 $ 987 $ (34 (3.36 )%
100 $ 1,008 $ (13 (1.29 )%
Static $ 1,021 $ - -- %
(100) $ 1,012 $ (10 (0.94 )%
(200) $ 977 $ (45 (4.37 )%
(300) $ 888 $ (133 (13.04 )%

All values are in US Dollars.

The above table indicates that as of September 30, 2024, in the event of an immediate and sustained 300 basis point increase in interest rates, our net interest income for the 12 months ending September 30, 2025 would be expected to decrease by $58,000 or 5.69% to $963,000.

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Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. For instance, the EVE and NII tables presented above assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. However, the shape of the yield curve changes constantly and the value and pricing of our assets and liabilities, including our deposits, may not closely correlate with changes in market interest rates. Accordingly, although the EVE and NII tables may provide an indication of our interest rate risk exposure at a particular point in time and in the context of a particular yield curve, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and NII and will differ from actual results. EVE and net interest NII calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

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. At September 30, 2024 all advances outstanding during the period matured and were paid.

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 the nine months ended September 30, 2024, cash flows from operating, investing and financing activities resulted in a net decrease in cash and cash equivalents of $83,000 or 4.8% from December 31, 2023. This decrease was due to financing activities using $643,000 of cash, operating activities using $614,000 of cash offset by $1,174,000 of cash provided by investing activities. Financing activities used $497,000 of cash to fund deposit outflows and by a $500,000 decrease in FHLB advances offset by a $354,000 increase in advances from borrowers for insurance and taxes. The cash used by operating activities primarily related to a $586,000 increase in other assets, of which $558,000 was deferred conversion costs incurred in the nine months ended September 30, 2024. Investing activities provided $1,174,000 of cash in the first nine months of 2024 due to a decrease in our net loan portfolio. The net decrease in cash and cash equivalents in the nine months ended September 30, 2024 was consistent with our overall decline in total assets, as our total assets declined by $698,000 in the first nine months of 2024 compared to December 31, 2023.

We believe we maintain a strong liquidity position, and we are committed to maintaining it. We monitor our liquidity position on a daily basis. We 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 will be retained. At September 30, 2024, certificates of deposit that are scheduled to mature on or before September 30, 2025 totaled $9.7 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, 2024, Mutual Savings and Loan 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 5 of the notes to the unaudited financial statements for the nine months ended September 30, 2024.

Commitments. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at September 30, 2024.

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Amount of Commitment Expiration - Per Period
Total<br><br> <br>Amounts
Committed at To Over 1 to Over 3 to 5 After 5
Sept 30, 2024 1 Year 3 Years Years Years
(In thousands)
Letters of credit $ - $ - $ - $ - $ -
Unused lines of credit 1,286 - - - 1,286
Undisbursed portion of loans in process - - - - -
Commitments to originate loans - - - - -
Total commitments $ 1,286 $ - $ - $ - $ 1,286

Recent Accounting Pronouncements

See “Item 1. Financial Statements – Note 1. Summary of Significant Accounting Policies – Recent Accounting Pronouncements.”

Impact of Inflation and Changing Prices

The financial statements and related data presented in this prospectus have been prepared according to GAAP which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Internal Control Over Financial Reporting

We have identified material weaknesses in our internal control over financial reporting with respect to our allowance for credit losses that existed as of December 31, 2023 and 2022. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements may not be prevented or detected on a timely basis. We concluded that our procedures were not effective as of December 31, 2023 and 2022, and that we had, as of such dates, identified the following material weaknesses in our internal control over financial reporting:

● We did not maintain an effective control environment as there was an insufficient complement of personnel to provide for adequate segregation of duties within the finance and accounting function to maintain effective controls over the financial close and reporting process.
● The insufficient complement of personnel adversely impacted our ability to design and maintain policies, procedures and controls that operate at a sufficient level of precision over our significant accounts, classes of transactions and disclosures, including the allowance for credit losses on loans held for investment, to ensure that policies and procedures designed to mitigate the risks to the achievement of our financial reporting objectives are carried out.
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● We did not have an effective and formally documented risk assessment process that defined clear financial reporting objectives and elevated risks, including fraud risks, and risks resulting from changes in the external environment and business operations at a sufficient level of detail to identify all relevant risks of material misstatement.
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● We did not design and maintain an effective monitoring program for evaluating and monitoring compliance with established accounting policies, procedures and controls. This weakness included the failure to design and operate effective procedures and controls whose purpose is to evaluate and monitor the effectiveness of individual control activities including the loan review function.
● We did not have an effective information and communication process to ensure that the processes and controls were effectively documented and disseminated to enable financial personnel to effectively carry out their roles and responsibilities.
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The above material weaknesses in our control environment, risk assessment, information and communication, and monitoring controls contributed to the following additional material weaknesses.

● We did not design and maintain effective controls regarding significant accounts, transaction cycles and disclosures to ensure policies and procedures designed to mitigate the risks to the achievement of objectives are carried out; and
● We did not design and maintain effective information technology general controls ("ITGC") which could result in misstatements potentially impacting all financial statement accounts and disclosures. Specifically, user access controls were not appropriately designed and maintained to adequately restrict user and privileged access to financial applications and data to the appropriate personnel, segregation of duties over preparation and review of journal entries, and access to critical spreadsheets and similar end-user data files is not restricted and is accessible by all personnel of Mutual Savings and Loan Association.
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These material weaknesses could result in a misstatement in our financial statements that would result in a material misstatement in the annual or interim financial statements that would not be prevented or detected. In addition, in 2022 we incurred non-interest expenses related to a loss of vault cash and to a write-off resulting from our data processing conversion when certain accounts could not be reconciled. These expenses were related to the weaknesses in our internal controls and contributed to a net loss in 2022.

We have taken steps to remediate these material weaknesses, including hiring a Director of Compliance and Internal Audit in May 2023 with over 25 years of experience as a compliance director and internal auditor in several financial institutions and with a bank consulting practice. The Compliance Director is responsible for evaluating policies and procedures, has direct access to the board of directors and does not have direct duties relating to financial accounting and reporting. We currently are assessing and improving our processes and control procedures to ensure they will operate at an acceptable level of assurance, including implementing a more formal risk assessment process and revising our monitoring programs relating to financial accounting and reporting. As part of our remedial measures to address these material weaknesses, we have (a) implemented a robust internal control environment that is appropriate for the size and operational complexity of Mutual Savings and Loan Association, (b) written or revised 90% of our policies, including compliance, bank secrecy, information security, liquidity, audit and loan policies, (c) performed an enterprise risk management assessment, including an assessment of cash, employee integrity, branch security, loan and deposit accounts, website, wires, information security and compliance management systems, (d) provided training to all employees in the areas of general banking, safety and soundness, loans, deposits, compliance and bank secrecy, as well as training to the board of directors on banking laws and regulations (including the bank secrecy act), overall banking and privacy, and (e) revised our monitoring programs to focus on areas of higher risk, with an increased emphasis in the areas relating to financial accounting and reporting. In addition, our Director of Compliance and Internal Audit has completed audits of compliance laws and operations while maintaining her independence, with her findings discussed at the monthly meetings of our board of directors.

We believe these actions and any other that we may determine need to be implemented, when complete, will remediate the control weaknesses. However, the weaknesses will not be considered fully remediated until the applicable controls operate for a sufficient period of time for management to test the results for operating effectiveness. Once implemented, we intend to continue periodic testing and reporting of the internal controls to ensure continuity of compliance.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management of Market Risk” is incorporated in this Item 3 by reference.

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including Chief Executive Officer and 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, 2024. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s controls and procedures were not effective. due to the material weaknesses disclosed above in Item 2 under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Internal Control Over Financial Reporting."

During the quarter ended September 30, 2024, 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, except as follows to address the material weaknesses disclosed above in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Internal Control Over Financial Reporting.” We currently are assessing and improving our processes and control procedures to ensure they will operate at an acceptable level of assurance.  Re-assessment of segregation of duties has been performed including formalizing controls and procedures.  Technology controls are under review including re-assessing of access rights and related processes.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the nine months ended September 30, 2024, 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).

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Item 6. Exhibits

1.2 Agency Agreement dated November 8, 2024
3.1 Articles of Incorporation of Magnolia Bancorp, Inc. (1)
3.2 Bylaws of Magnolia Bancorp, Inc. (2)
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
32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

__________________________________________

(1) Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-281796), initially filed on August 27, 2024.
(2) Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-281796), initially filed on August 27, 2024.

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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)
December 19, 2024 /s/  Michael L. Hurley
--- ---
Date Michael L. Hurley
President and Chief Executive Officer
December 19, 2024 /s/ Anita C. Cambre
Date Anita C. Cambre
Vice President and Chief Financial Officer

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ex_756517.htm

Exhibit 1.2

EXECUTION COPY

Magnolia Bancorp, Inc.

(a Louisiana corporation)

Up to 833,750 Shares of Common Stock

(Subject to Increase to 958,813 Shares of Common Stock)

COMMON STOCK

(Par Value $0.01 Per Share)

Subscription Price $10.00 Per Share

AGENCY AGREEMENT

November 8, 2024

Keefe, Bruyette & Woods, Inc.

70 West Madison Street

Suite 2401

Chicago, Illinois 60602

Ladies and Gentlemen:

Magnolia Bancorp, Inc., a Louisiana corporation (“Magnolia Bancorp”) and Mutual Savings and Loan Association, a federally-chartered mutual savings and loan association (“Mutual Savings”) (collectively Magnolia Bancorp and Mutual Savings are the “Mutual Savings Parties”) hereby confirm, jointly and severally, their agreement with Keefe, Bruyette & Woods, Inc. (“KBW” or the “Agent”), as follows:

Section 1.The Offering . In accordance with that certain Plan of Conversion of Mutual Savings and Loan Association, dated February 1, 2024 (the “Plan”), Magnolia Bancorp is offering shares of common stock, $0.01 par value per share (the “Common Stock” or the “Shares”), for sale at $10.00 per share (the “Purchase Price”) in connection with the conversion of Mutual Savings from the mutual to stock form of organization (the “Conversion”). All capitalized terms used in this Agency Agreement (this “Agreement”) and not defined in this Agreement shall have the meanings set forth in the Plan. The Conversion is being conducted in accordance with the laws of the United States and the applicable regulations of the Office of the Comptroller of the Currency (the “OCC”), and the Board of Governors of the Federal Reserve System (the “Federal Reserve”) (such laws and regulations are referred to herein as the “Conversion Regulations”).

In connection with the Conversion, Magnolia Bancorp will offer for sale shares of its Common Stock in a subscription offering (the “Subscription Offering”) to: (i) first, depositors of Mutual Savings with $50.00 or more on deposit as of the close of business on December 31, 2022 (“Eligible Account Holders”); (ii) second, tax-qualified employee plans of Mutual Savings, including the employee stock ownership plan; (iii) third, each depositor of Mutual Savings with $50.00 or more on deposit as of the close of business on September 30, 2024 who is not an Eligible Account Holder (“Supplemental Eligible Account Holders”); and (iv) fourth, each depositor of Mutual Savings at the close of business on the Voting Record Date who is not an Eligible Account Holder, Tax-Qualified Employee Plan or Supplemental Eligible Account Holder, as of specified eligibility dates (“Other Members”) , in each case other than depositors residing in those states in which the Offering (as defined below) will not be made. Shares not purchased in the Subscription Offering may be offered for sale to the general public in a community offering (the “Community Offering”), with a preference given to: (i) natural persons (including trusts of natural persons) residing in Jefferson and St. Tammany parishes and the adjacent parishes in Louisiana, namely Lafourche Parish, Orleans Parish, Plaquemines Parish, St. Charles Parish, St. John the Baptist Parish, Tangipahoa Parish and Washington Parish in the State of Louisiana; and thereafter (ii) other members of the general public. Depending on market conditions, Shares available for sale but not subscribed for in the Subscription Offering or purchased in the Community Offering may be offered to certain members of the general public on a best efforts basis through a selected dealers agreement (the “Syndicated Community Offering”) as described in subsection 4(a)(iii) below.

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Pursuant to the Plan, Magnolia Bancorp is offering for sale a minimum of 616,250 Shares and a maximum of 833,750 Shares (subject to an increase up to 958,813 Shares) in the Subscription Offering, and, if necessary, in the Community Offering and/or the Syndicated Community Offering (collectively, the “Offering”).

Upon completion of the Conversion, Mutual Savings will be organized as a federal stock savings and loan association and a wholly-owned subsidiary of Magnolia Bancorp. Magnolia Bancorp will sell the Shares in the Offering at the Purchase Price. If the number of Shares offered for sale is increased or decreased in accordance with the Plan, the term “Shares” shall mean such greater or lesser number, as applicable.

Magnolia Bancorp has filed with the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”) a Registration Statement on Form S-1 (File No. 333-281796) in order to register the Shares under the Securities Act of 1933, as amended (the “1933 Act”), and has filed such amendments thereto as have been required to the date hereof (the “Registration Statement”). The prospectus, as amended, included in the Registration Statement at the time it initially became effective is hereinafter called the “Prospectus,” except that if any prospectus is filed by Magnolia Bancorp pursuant to Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933 Act (the “1933 Act Regulations”) differing from the prospectus included in the Registration Statement at the time it initially becomes effective, the term “Prospectus” shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed with the Commission and shall include any supplements and amendments thereto from and after their dates of effectiveness or use, respectively.

In connection with the Conversion, Mutual Savings has filed with the OCC an Application to Convert From Mutual to Stock Form on Form AC (together with any other required ancillary applications and/or notices and amendments thereto, the “Conversion Application”) as required by the OCC in accordance with the Conversion Regulations. Magnolia Bancorp has also filed with the Federal Reserve an Application to Become a Savings and Loan Holding Company or to Acquire a Savings Association or Savings and Loan Holding Company on Form FR LL-10(e) (together with any other required ancillary applications and/or notices and amendments thereto, the “Holding Company Application”) to become a savings and loan holding company under Section 10 of the Home Owners’ Loan Act, as amended (the “HOLA”) and the regulations promulgated thereunder.

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Section 2.         Retention of Agent . Subject to the terms and conditions herein set forth, the Mutual Savings Parties hereby appoint the Agent as their exclusive financial advisor and Agent hereby agrees to utilize its best efforts to solicit subscriptions for the Shares and to advise and assist the Mutual Savings Parties with respect to Magnolia Bancorp’s sale of the Shares in the Offering.

On the basis of the representations, warranties, and agreements herein contained, but subject to the terms and conditions herein set forth, the Agent accepts such appointment and agrees to consult with and advise the Mutual Savings Parties as to the matters set forth in (i) the letter agreement, dated August 23, 2023, between Mutual Savings and the Agent (the “Engagement Letter”) and (ii) the matters set forth in the letter agreement, dated August 23, 2023, regarding Services of Conversion Agent and Data Processing Records Management Agent, between Mutual Savings and the Agent (the “Conversion Agent Engagement Letter”). It is acknowledged by the Mutual Savings Parties that the Agent shall not be required to purchase any Shares or be obligated to take any action that is inconsistent with any applicable law, regulation, decision or order.

Except as described in Section 14 of this Agreement, the obligations of the Agent pursuant to this Agreement shall terminate upon the completion, termination or abandonment of the Plan by the Mutual Savings Parties or upon termination of the Offering, but in no event later than 45 days after the completion of the Community Offering, unless extended as provided for in the Plan (as may be extended the “End Date”). All fees or expenses due to the Agent hereunder but unpaid will be payable to the Agent in next day funds at the earlier of the Closing Date (as hereinafter defined) or the End Date. In the event the Offering is extended beyond the End Date, the Mutual Savings Parties and the Agent may agree to renew this Agreement under mutually acceptable terms and subject to the approval of any governmental agency having jurisdiction over such matters.

In the event Magnolia Bancorp is unable to sell a minimum of 616,250 Shares by the End Date, this Agreement shall terminate and Magnolia Bancorp shall refund to any persons who have subscribed for any of the Shares the full amount that it may have received from them plus accrued interest or cancel their deposit withdrawal authorizations, as set forth in the Prospectus, and none of the parties to this Agreement shall have any obligation to the other parties hereunder, except as set forth in Sections 4(a), 10, 12, 13 and 14 hereof.

Section 3.Sale and Delivery of Shares . If all conditions precedent to the consummation of the Conversion, including, without limitation, the sale of all Shares required by the Plan to be sold, are satisfied, Magnolia Bancorp agrees to issue, or have issued, the Shares sold in the Offering on the Closing Date (as hereinafter defined) the Shares sold in the Offering and to release for delivery statements of book-entry ownership for such shares against payment to Magnolia Bancorp by any means authorized by the Plan; provided, however, that no funds shall be released to Magnolia Bancorp until the conditions specified in Section 11 hereof shall have been complied with to the reasonable satisfaction of the Agent and its counsel. The release of Shares against payment therefor shall be made on a date and at a place mutually acceptable to the Mutual Savings Parties and the Agent. Statements of ownership for Share, shall be delivered directly to the purchasers in accordance with their directions. The date upon which Magnolia Bancorp shall release or deliver the Shares sold in the Offering, in accordance with the terms herein, is called the “Closing Date.”

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Section 4.Compensation . (a) The Agent shall receive the following compensation for its services hereunder:

(i)    A non-refundable cash fee of $30,000 (the “Management Fee”), payable as follows: (i) $15,000 payable upon the execution of the Engagement Letter, which has been paid in full, and (ii) $15,000 payable upon the initial filing of the Registration Statement, which has been paid in full. Such fee was earned in full when due and paid. Should this Agreement be terminated for any reason, the Agent shall have earned in full, and be entitled to be paid in full, all fees then due and payable as of such date of termination.

(ii)    A success fee of $300,000 which is payable upon the completion of the Offering (the “Success Fee”). The Success Fee described in this Section 4(a)(ii) shall be reduced by the Management Fee described in Section 4(a)(i).

(iii)    If any of the Shares remain available after the completion of the Subscription Offering and any Community Offering, at the request of Magnolia Bancorp, KBW will seek to form a syndicate of registered broker-dealers (“Selected Dealers”) to assist in the sale of such Shares on a best efforts basis in the Syndicated Community Offering, subject to the terms and conditions set forth in a selected dealers agreement to be entered into by and between the Mutual Savings Parties and KBW. KBW will endeavor to distribute the Shares among the Selected Dealers in a fashion which best meets the distribution objectives of the Mutual Savings Parties and the Conversion. In the event of a Syndicated Community Offering, KBW will be paid upon completion of the Offering a transaction fee not to exceed 6.0% of the aggregate purchase price of the Shares sold in the Syndicated Community Offering. From this fee, KBW will pass on to the Selected Dealers, if any, who assist in such offering an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases effected with the assistance of Selected Dealers other than KBW shall be transmitted by KBW to such Selected Dealers.

(iv)    In connection with the Subscription Offering, if, as a result of any re-solicitation of subscribers undertaken by the Mutual Savings Parties, KBW reasonably determines that it is required or requested to provide significant services, KBW will be entitled to additional compensation for such services, which additional compensation will not exceed $25,000.

(v)    A non-refundable cash fee of $30,000 (the “Services Fee”) in connection with KBW’s provision of services as conversion agent and data processing records management agent, pursuant to the Conversion Agent Engagement Letter. The Services Fee shall be payable as follows: (A) $15,000 was previously paid upon the signing of the Conversion Agent Engagement Letter, and (B) all remaining amounts shall be payable immediately upon the completion of the Offering. The Services Fee may be increased up to an additional $10,000 if there are material changes in applicable regulations or the Plan, or there are delays requiring duplicate or replacement processing.

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(b)    To the extent required under applicable rules and regulations of the Financial Industry Regulatory Authority (“FINRA”), the payment of compensation by the Mutual Savings Parties to KBW pursuant to this Section 4 is subject to FINRA’s prior review and non-objection thereof.

(c)    The Mutual Savings Parties will reimburse KBW for its reasonable out-of-pocket expenses, not to exceed $30,000 (subject to the provisions of this paragraph), related to the Offering, including, but not limited to, costs of temporary staff, travel, meals and lodging, clerical assistance, photocopying, telephone, facsimile, and couriers. KBW will also be reimbursed for fees and expenses of its counsel not to exceed $75,000 (subject to the provisions of this paragraph). These expense caps assume no unusual circumstances or delays, and no re-solicitation in connection with the Offering. The Mutual Savings Parties acknowledge and agree that, in the event unusual circumstances arise or a delay or re-solicitation occurs (including, but not limited to, a delay in the Offering which would require an update of the financial information in tabular form to reflect a period later than that set forth in the original filing of the offering documents), such expense caps may be increased by additional amounts, not to exceed an additional $15,000 in the case of additional out-of-pocket expenses of KBW and an additional $25,000 in the case of additional fees and expenses of KBW’s legal counsel. In no event shall out-of-pocket expenses, including fees and expenses of counsel, exceed $145,000. The provisions of this paragraph shall not apply to or in any way impair or limit the indemnification or contribution provisions contained herein.

(d)    The Mutual Savings Parties will also reimburse KBW for its reasonable out-of-pocket expenses incurred in connection with the services provided pursuant to the Conversion Agent Engagement Letter, regardless of whether the Offering is consummated, provided that such out-of-pocket expenses shall not exceed $10,000. Not later than two days before the closing of the Offering, KBW will provide the Mutual Savings Parties with documentation of all reimbursable expenses of KBW to be paid at the Closing (as hereinafter defined). The provisions of this paragraph shall not apply to or in any way impair the indemnification, contribution or liability limitation provisions set forth in this Agreement.

(e)    Except for the Management Fee and a portion of the Services Fee as set forth in Section 4(a)(v) above, each of which has been paid in full before the date of this Agreement, full payment of Agent’s other fees and expenses, as described above, shall be made in next day funds on the earlier of the Closing Date or the date of a determination by the Mutual Savings Parties to terminate or abandon the Plan.

Section 5.Closing . The closing for the sale of the Shares shall take place on the Closing Date at such location as mutually agreed upon by the Agent and the Mutual Savings Parties (the “Closing”). At the Closing, the Mutual Savings Parties shall deliver to the Agent in next day funds the commissions, fees and expenses due and owing to the Agent as set forth in Sections 4 and 10 hereof and the opinions and certificates required hereby and other documents deemed reasonably necessary by the Agent shall be executed and delivered to effect the sale of the Shares as contemplated hereby and pursuant to the terms set forth in the Prospectus.

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Section 6.Representations and Warranties of the Mutual Savings Parties.

The Mutual Savings Parties jointly and severally represent and warrant to the Agent that:

(a)    Each of the Mutual Savings Parties has, or will have as of the Closing Date, all such power, authority, authorizations, approvals and orders as may be required for them to enter into this Agreement, and, as of the Closing Date, each of the Mutual Savings Parties will have all such power, authority, authorizations, approvals and orders as may be required for them to carry out the provisions and conditions hereof and to issue and sell the Shares to be sold by Magnolia Bancorp as provided herein and as described in the Prospectus. The consummation of the Conversion, the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated herein have been, or will be as of the Closing Date, duly and validly authorized by all necessary corporate action on the part of each of the Mutual Savings Parties. This Agreement has been validly executed and delivered by each of the Mutual Savings Parties, and is a valid, legal and binding obligation of each of the Mutual Savings Parties, in each case enforceable in accordance with its terms, except as the legality, validity, binding nature and enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium, reorganization, conservatorship, receivership or other similar laws relating to or affecting the enforcement of creditors’ rights generally, or the rights of creditors of insured financial institutions and their holding companies, (ii) general equity principles regardless of whether such enforceability is considered in a proceeding in equity or at law, and (iii) the extent, if any, that the provisions of Sections 12 or 13 hereof may be unenforceable as against public policy.

(b)    The Registration Statement was declared effective by the Commission on November __, 2024. No stop order has been issued with respect to the Registration Statement. No proceedings related to the Registration Statement have been initiated or, to the knowledge of the Mutual Savings Parties, threatened by the Commission. At the time the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), became effective, the Registration Statement complied as to form in all material respects with the 1933 Act and the 1933 Act Regulations, and the Registration Statement and the Prospectus did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. At the time any Rule 424(b) or (c) Prospectus is filed with the Commission and at the Closing Date, the Registration Statement, including the Prospectus (including any amendment or supplement thereto) and, when taken together with the Prospectus, any Blue Sky Application or Sales Information (as such terms are defined in Section 12 hereof) authorized by any of the Mutual Savings Parties for use in connection with the Offering, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this Section 6(b) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Mutual Savings Parties by the Agent expressly regarding the Agent or its counsel for use in the Prospectus under the caption “The Conversion and Offering—Plan of Distribution; Selling Agent and Underwriter Compensation” and “The Conversion and Offering —Records Management” or in any Sales Information.

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(c)    Any statistical and market related data contained in any Permitted Free Writing Prospectus (as hereinafter defined), the Prospectus and the Registration Statement are based on or derived from sources which the Mutual Savings Parties believe were reliable and accurate at the time they were filed with the SEC. No forward-looking statement (within the meaning of Section 27A of the 1933 Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”) contained in the Registration Statement, the Prospectus, or any Permitted Free Writing Prospectus has been made or reaffirmed without a reasonable basis by the Mutual Savings Parties or has been disclosed other than in good faith by the Mutual Savings Parties.

(d)    No Mutual Savings Party has directly or indirectly distributed or otherwise used, and will not, without the prior consent of the Agent (which consent shall not be unreasonably withheld, conditioned or delayed), directly or indirectly distribute or otherwise use, any prospectus, any “free writing prospectus” (as defined in Rule 405 of the 1933 Act Regulations) or other offering material (including, without limitation, content on any Mutual Savings Party’s website that may be deemed to be a prospectus, free writing prospectus or other offering material) in connection with the Offering and the sale of the Shares.

(e)    At the time of filing the Registration Statement and at the date hereof, Magnolia Bancorp was not, and is not, an ineligible issuer, as defined in Rule 405. At the time of the filing of the Registration Statement and at the time of the use of any issuer free writing prospectus, as defined in Rule 433(h), Magnolia Bancorp met the conditions required by Rules 164 and 433 for the use of a free writing prospectus. If required to be filed, Magnolia Bancorp has filed any issuer free writing prospectus related to the offered Shares at the time it is required to be filed under Rule 433 and, if not required to be filed, will retain such free writing prospectus in Magnolia Bancorp’s records pursuant to Rule 433(g) and if any issuer free writing prospectus is used after the date hereof in connection with the offering of the Shares Magnolia Bancorp will file or retain such free writing prospectus as required by Rule 433.

(f)    The Conversion Application, including the Plan, the Prospectus, the proxy statement for the solicitation of proxies from the Voting Members (as defined in the Plan) for the special meeting to approve the Plan (the “Proxy Statement”) was approved by the OCC on November __, 2024, and no approval or authorization of any other regulatory or supervisory or other public authority is required in connection with the distribution of the Proxy Statement. At the time of its use, the Proxy Statement and any other proxy solicitation or informational materials will comply as to form in all material respects with the applicable provisions of the Conversion Regulations except to the extent waived or otherwise approved by the OCC, the Federal Reserve or any other applicable regulator. No order has been issued by the OCC, the Federal Reserve and any other applicable regulators preventing or suspending the use of the Prospectus or the Proxy Statement, and no action by or before the Federal Reserve or any other applicable regulator to revoke any approval, authorization or order of effectiveness related to the Offering is pending or, to the knowledge of the Mutual Savings Parties, threatened. At the time of the approval of the Conversion Application, including the Plan, the Prospectus, and the Proxy Statement (including any amendments or supplements thereto), by the OCC, the Federal Reserve or any other applicable regulator and at all times subsequent thereto until the Closing Date, the Conversion Application, including the Plan, the Prospectus, and the Proxy Statement (including any amendments or supplements thereto), will comply as to form in all material respects with the Conversion Regulations, except to the extent waived or otherwise approved by the OCC, the Federal Reserve or any other applicable regulator. The Conversion Application, including the Plan, the Prospectus, and the Proxy Statement (including any amendments or supplements thereto), does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this Section 6(f) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to Magnolia Bancorp by the Agent or its counsel expressly regarding the Agent for use in the Prospectus contained in the Conversion Application under the captions “The Conversion and Offering – Plan of Distribution; Selling Agent and Underwriter Compensation” and “The Conversion and Offering – Records Management.”

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(g)    The Holding Company Application complies as to form in all material respects with the requirements of the Federal Reserve, and it is anticipated that the Holding Company Application will be approved by the Federal Reserve on November __, 2024.

(h)    No order has been issued by the OCC, the Federal Reserve, or any state securities administrator preventing or suspending the use of the Prospectus or any supplemental sales literature authorized by the Mutual Savings Parties for use in connection with the Offering, and no action by or before any such government entity to revoke any approval, authorization or order of effectiveness related to the Conversion is pending or, to the knowledge of the Mutual Savings Parties, threatened.

(i)    Pursuant to the Conversion Regulations, the Plan has been, or prior to the Closing Date will be, approved by the Board of Directors of each of the Mutual Savings Parties, and the Plan is subject to approval by the members of Mutual Savings. At the Closing Date, the offer and sale of the Shares will have been conducted in all material respects in accordance with the Plan, the Conversion Regulations, and all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Conversion imposed upon the Mutual Savings Parties by the OCC, the Federal Reserve, the Commission or any other regulatory authority, other than those which the regulatory authority permits to be completed after the Conversion, and in the manner described in the Prospectus. To the knowledge of the Mutual Savings Parties, no person has sought to obtain review of the final action of either the OCC or the Federal Reserve in approving the Conversion Application or the Holding Company Application pursuant to the applicable regulations of the OCC and the Federal Reserve.

(j)    RP Financial, LC., which prepared an independent valuation of the Common Stock of Magnolia Bancorp as of August 2, 2024 (as amended or supplemented, if so amended or supplemented) (the “Appraisal”), has advised the Mutual Savings Parties in writing that it is independent with respect to each of the Mutual Savings Parties within the meaning of the Conversion Regulations, and the Mutual Savings Parties believe RP Financial, LC. to be expert in preparing appraisals of savings institutions and the Mutual Savings Parties believe that the Appraisal was prepared in accordance with the requirements of the Conversion Regulations.

(k)    EisnerAmper LLP, which certified the audited financial statements filed as part of the Registration Statement and the Conversion Application, has advised the Mutual Savings Parties that it is an independent certified public accountant within the meaning of the Code of Ethics of the American Institute of Certified Public Accountants, the applicable rules of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and the SEC, and EisnerAmper LLP is registered with the PCAOB and is, with respect to the Mutual Savings Parties, an independent registered public accountant as required by the 1933 Act and the 1933 Act Regulations.

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(l)    The financial statements, schedules and notes related thereto that are included in the Prospectus fairly present in all material respects the financial condition, results of operations, retained earnings and cash flows of Mutual Savings at the respective dates indicated and for the respective periods covered thereby and comply as to form in all material respects with the applicable accounting requirements of Title 12 of the Code of Federal Regulations, Regulation S-X of the SEC and generally accepted accounting principles in the United States of America (“GAAP”) (including those requiring the recording of certain assets at their current market value). Such financial statements, schedules and notes related thereto have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as noted in the Notes to the financial statements), present fairly in all material respects the information required to be stated therein and are consistent with the most recent financial statements and other reports filed with the OCC, and any other applicable regulatory authority, except that accounting principles employed in such regulatory filings conform to the requirements of such authorities and not necessarily to GAAP. The other financial, statistical and pro forma information and related notes included in the Prospectus present fairly the information shown therein on a basis consistent with the audited and unaudited financial statements of Mutual Savings included in the Prospectus, and as to the pro forma adjustments, the adjustments made therein have been consistently applied on the basis described therein.

(m)    Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein: (i) there has not been any material adverse change in the financial condition, results of operations, capital, assets, properties, business affairs or prospects of Mutual Savings, whether or not arising in the ordinary course of business; (ii) there has not been any material increase in the long-term debt of Mutual Savings or in the principal amount of Mutual Savings’ assets that are classified by Mutual Savings as substandard, doubtful or loss or in loans past due 90 days or more or real estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed in-substance foreclosure or any material decrease in equity capital or total assets of Mutual Savings, nor have the Mutual Savings Parties issued any securities or incurred any liability or obligation for borrowing other than in the ordinary course of business; (iii) there have not been any material transactions entered into by the Mutual Savings Parties that have not been disclosed in the Prospectus; (iv) there has not been any material adverse change in the aggregate dollar amount of Mutual Savings’ deposits or its net worth; (v) there has been no material adverse change in the Mutual Savings Parties’ relationship with their insurance carriers, including, without limitation, cancellation or other termination of the Mutual Savings Parties fidelity bond or any other type of insurance coverage; (vi) there has been no material change in executive management of any of the Mutual Savings Parties; (vii) Mutual Savings has not sustained any material loss or interference with its respective business or properties from fire, flood, windstorm, earthquake, hurricane, accident or other calamity, whether or not covered by insurance; (viii) Mutual Savings is not in default in the payment of principal or interest on any outstanding debt obligations; (ix) the capitalization, liabilities, assets, properties and business of the Mutual Savings Parties conform in all material respects to the descriptions thereof contained in the Prospectus; (x) none of the Mutual Savings Parties has any material contingent or other liabilities, except as set forth in the Prospectus; and (xi) there has been no dividend or distribution of any kind declared, paid or made by the Mutual Savings Parties.

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(n)    Magnolia Bancorp is a stock corporation duly organized and validly existing under the laws of the State of Louisiana, with corporate power and authority to own its properties and to conduct its business, as described in the Prospectus, and, at the Closing Date, will be qualified to transact business and will be in good standing in Louisiana and in each jurisdiction in which the conduct of business requires such qualification, unless the failure to qualify in one or more of such jurisdictions would not have a material adverse effect on the conduct of the business, financial condition, results of operations, capital, assets, properties, business affairs or prospects of the Mutual Savings Parties, taken as a whole (a “Material Adverse Effect”). On the Closing Date, the Mutual Savings Parties will have obtained all licenses, permits and other governmental authorizations then required for the conduct of their business, except those that individually or in the aggregate would not be reasonably expected to have a Material Adverse Effect; and as of the Closing Date, all such licenses, permits and governmental authorizations will be in full force and effect, and the Mutual Savings Parties will be in compliance therewith in all material respects, and the Mutual Savings Parties will be in compliance in all material respects with all laws, rules, regulations and orders applicable to the operation of its business. Except as disclosed in the audited financial statements included in the Prospectus, Magnolia Bancorp does not own equity securities or any equity interest in any other business enterprise other than Mutual Savings.

(o)    Except as disclosed in the Prospectus with respect to material weaknesses in internal controls, the Mutual Savings Parties maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accounts or assets are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(p)    The books, records and accounts and systems of internal accounting control of the Mutual Savings Parties comply in all material respects with the requirements of Section 13(b)(2) of 1934 Act, except as disclosed in the Prospectus with respect to material weaknesses in internal controls. The Mutual Savings Parties maintain “disclosure controls and procedures” (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) that are effective in ensuring that the information they will be required to disclose in the reports filed or submitted under the 1934 Act is accumulated and communicated to Magnolia Bancorp’s management (including the chief executive officer and chief financial officer) in a timely manner and recorded, processed, summarized and reported within the periods specified in the SEC’s rules and forms under the 1934 Act, in each case except as disclosed in the Prospectus with respect to material weaknesses in internal controls. To the knowledge of the Mutual Savings Parties, EisnerAmper LLP and the Audit Committee of the Board of Directors have been advised of: (i) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which could adversely affect the Mutual Savings Parties’ ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Mutual Savings Parties’ internal accounting controls. Since the date of the most recent evaluation of such disclosure controls and procedures, there have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Mutual Savings Parties’ internal control over financial reporting.

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(q)    Mutual Savings carries, or is covered by, insurance in such amounts and covering such risks as are prudent and customary in the business in which it is engaged, and all policies of insurance insuring Mutual Savings are in full force and effect. Mutual Savings is in compliance with the terms of such insurance policies and instruments in all material respects and there are no claims by any of them under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause. Within the past five years, Mutual Savings has not been refused any insurance coverage sought or applied for, nor has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

(r)    Mutual Savings is duly organized and is a validly existing federally-chartered mutual savings and loan association and upon completion of the Conversion will become a federally-chartered stock savings and loan association and wholly-owned subsidiary of Magnolia Bancorp, in both instances duly authorized to conduct its business and own its property as described in the Registration Statement and the Prospectus. Mutual Savings has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business, except those that individually or in the aggregate would not be reasonably expected to have a Material Adverse Effect, all such licenses, permits and governmental authorizations are in full force and effect and Mutual Savings is in compliance with all laws, rules, regulations and orders applicable to the operation of its business, except where failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as described in the Prospectus, Mutual Savings does not own equity securities or any equity interest in any other active business enterprise except the Federal Home Loan Bank of Dallas (the “FHLB-Dallas”), or as would not be material to the operations of Mutual Savings. Mutual Savings is a “qualified thrift lender” within the meaning of 12 U.S.C. § 1467a (m). Upon completion of the Conversion, (i) all of the authorized and outstanding capital stock of Mutual Savings will be duly authorized, validly issued, fully paid and non-assessable, and owned by Magnolia Bancorp free and clear of any mortgage, pledge, lien, encumbrance, claim or restriction of any kind and (ii) Magnolia Bancorp will have no direct subsidiaries other than Mutual Savings. At the Closing Date, the Conversion will have been effected in all material respects in accordance with all applicable statutes, regulations, decisions and orders; and, except with respect to the filing of certain post-sale, post-Conversion reports and documents in compliance with the 1933 Act Regulations, the Conversion Regulations or letters or orders of approval, all terms, conditions, requirements and provisions with respect to the Conversion imposed by the OCC, the SEC, the Federal Reserve or any other governmental agency, if any, will have been complied with by the Mutual Savings Parties in all material respects or appropriate waivers will have been obtained and all notice and waiting periods will have been satisfied, waived or elapsed.

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(s)    Except as described in the Prospectus, there are no encumbrances or restrictions or requirements or material legal restrictions or requirements required to be described therein, on the ability of any Mutual Savings Party (i) to pay dividends or make any other distributions on its capital stock or to pay any indebtedness owed to another party, (ii) to make any loans or advances to, or investments in, another party or (iii) to transfer any of its property or assets to another party.

(t)    Mutual Savings has properly administered all accounts for which it acts as a fiduciary, including but not limited to accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable state and federal law and regulation, except where the failure to do so would not be reasonably expected to have a Material Adverse Effect. Neither Mutual Savings, nor any of its directors, officers or employees has committed any material breach of trust with respect to any such fiduciary account, and the accountings for each such fiduciary account are true and correct in all material respects and accurately reflect the assets of such fiduciary account in all material respects.

(u)    The authorized capital stock of Magnolia Bancorp consists of 6,000,000 shares of Common Stock and 2,000,000 shares of preferred stock (“Preferred Stock”) of which no shares of Common Stock and no shares of Preferred Stock are issued and outstanding.

(v)    Mutual Savings is a member of the FHLB-Dallas. The deposit accounts of Mutual Savings are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the maximum limits, and no proceedings for the termination or revocation of such insurance are pending or, to the knowledge of the Mutual Savings Parties, threatened.

(w)    Upon consummation of the Conversion, the authorized, issued and outstanding capital stock of Magnolia Bancorp will be within the range set forth in the Prospectus under the caption “Capitalization” and no shares of Common Stock have been or will be issued and outstanding prior to the Closing Date; the Shares will have been duly and validly authorized and when issued and delivered by Magnolia Bancorp pursuant to the Plan against payment of the consideration calculated as set forth in the Plan and the Prospectus, will be duly and validly issued and fully paid and nonassessable and will be owned free and clear of any security interest, mortgage, pledge, lien, encumbrance or legal or equitable claim. Upon consummation of the Conversion, there will be no outstanding warrants or options to purchase any securities of Magnolia Bancorp. The Shares will have been issued in compliance with federal and state securities laws. The issuance of the Shares is not subject to preemptive rights, except for the subscription rights granted pursuant to the Plan. The terms and provisions of the Shares will conform in all material respects to the description thereof contained in the Prospectus. Upon issuance of the Shares, good title to the Shares will be transferred from Magnolia Bancorp to the purchasers of the Shares against payment therefor, as set forth in the Plan and the Prospectus, subject to such claims as may be asserted against the purchasers thereof by third party claimants.

(x)    None of the Mutual Savings Parties is or at the Closing Date will be (i) in violation of their respective articles of incorporation, charters, bylaws, or other governing documents, as applicable or (ii) in default in the performance or observance of any obligation, agreement, covenant, or condition contained in any contract, lease, loan agreement, indenture or other instrument to which it is a party or by which it or any of its property may be bound, which, in the case of clause (ii) only, would be reasonably expected to result in a Material Adverse Effect. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated will not: (i) violate or conflict with the articles, charter, bylaws or other governing documents of any of the Mutual Savings Parties; (ii) conflict with, or constitute a breach of or default under, any material contract, lease or other instrument to which any of the Mutual Savings Parties is a party or by which any of the properties of the Mutual Savings Parties may be bound, or any applicable law, rule, regulation or order, except for such violations, conflicts, breaches or defaults that would not individually or in the aggregate result in a Material Adverse Effect; (iii) violate any authorization, approval, judgment, decree, order, statute, rule or regulation applicable to the Mutual Savings Parties, except for such violations which would not be reasonably expected to have a Material Adverse Effect; or (iv) result in the creation of any lien, charge or encumbrance upon any property of the Mutual Savings Parties, except for such liens, charges or encumbrances that would not individually or in the aggregate be reasonably expected to have a Material Adverse Effect.

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(y)    All documents made available to or delivered or to be made available to or delivered by the Mutual Savings Parties or their representatives in connection with the issuance and sale of the Shares, including records of account holders and depositors of Mutual Savings, or in connection with the Agent’s exercise of due diligence, except for those documents which were prepared by parties other than the Mutual Savings Parties or their representatives, to the knowledge of the Mutual Savings Parties, were on the dates on which they were delivered, or will be on the dates on which they are to be delivered, true, complete and correct in all material respects.

(z)    No default exists, and no event has occurred which with notice or lapse of time, or both, would constitute a default on the part of any of the Mutual Savings Parties, in the due performance and observance of any term, covenant or condition of any indenture, mortgage, deed of trust, note, bank loan or credit agreement or any other instrument or agreement to which any of the Mutual Savings Parties is a party or by which any of their property is bound or affected in any respect which, in any such case, would be reasonably expected to have a Material Adverse Effect, and such agreements are in full force and effect; and no other party to any such agreement has instituted or, to the knowledge of any of the Mutual Savings Parties, threatened any action or proceeding wherein any of the Mutual Savings Parties is alleged to be in default thereunder under circumstances where such action or proceeding, if determined adversely to any of the Mutual Savings Parties, would be reasonably expected to have a Material Adverse Effect.

(aa)    The Mutual Savings Parties have good and marketable title to all real property and good title to all other assets which are material to the businesses of the Mutual Savings Parties, free and clear of all liens, charges, encumbrances, restrictions or other claims, except such as are described in the Prospectus, the pledging of assets to secure advances from the FHLB-Dallas, or where the absence of good and marketable title, or good title, as the case may be, or the existence of such liens, charges, encumbrances, restrictions or other claims would not be reasonably expected to have a Material Adverse Effect; and all of the leases and subleases which are material to the businesses of the Mutual Savings Parties, taken as a whole, including those described in the Registration Statement or Prospectus, are in full force and effect.

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(bb)    The Mutual Savings Parties are not in violation of any directive from the Federal Reserve or the OCC, or any other agency, to make any material change in the method of conducting their respective businesses so as to comply in all material respects with all applicable statutes and regulations (including, without limitation, regulations, decisions, directives and orders of the Federal Reserve or the OCC); the Mutual Savings Parties have conducted and are conducting their respective businesses so as to comply in all respects with all applicable statutes and regulations (including, without limitation, regulations, decisions, directives and orders of the Commission, Federal Reserve or the OCC), except where the failure to so comply would not be reasonably expected to have a Material Adverse Effect, and there is no charge, investigation, action, suit or proceeding before or by any court, regulatory authority or governmental agency or body pending or, to the knowledge of any of the Mutual Savings Parties, threatened, which might materially and adversely affect the Conversion, the performance of this Agreement by the Mutual Savings Parties, or the consummation of the transactions contemplated in the Plan as described in the Registration Statement, or which might be reasonably expected to result in a Material Adverse Effect.

(cc)    The Mutual Savings Parties have received opinions of their special counsel, Silver, Freedman, Taff & Tiernan LLP, with respect to the federal and Louisiana state income tax consequences of the Conversion; all material aspects of the opinions of Silver, Freedman, Taff & Tiernan LLP are accurately summarized in the Registration Statement and Prospectus, and the facts upon which such opinions are based are truthful, accurate and complete in all material respects, and none of the Mutual Savings Parties will intentionally take any action inconsistent therewith.

(dd)    The Mutual Savings Parties have filed all required federal and state tax returns, paid all taxes that have become due and payable, except where permitted to be extended or where the failure to pay such taxes would not be reasonably expected to have a Material Adverse Effect, and made adequate reserves for similar future tax liabilities to the extent required by GAAP, and no deficiency has been asserted with respect thereto by any taxing authority. There are no transfer taxes or other similar fees or charges under Federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement by the Mutual Savings Parties or with the issuance or sale by Magnolia Bancorp of the Shares.

(ee)    No approval, authorization, consent or other order of any regulatory or supervisory or other public authority is required by the Mutual Savings Parties for the execution and delivery by the Mutual Savings Parties of this Agreement, or the issuance of the Shares, except for the approvals of the Federal Reserve, the OCC, and the Commission, such approvals as may be required under the rules of FINRA or the OTCQB Market, and any necessary qualification, notification, or registration or exemption under the securities or blue sky laws of the various states in which the Shares are to be offered.

(ff)    None of the Mutual Savings Parties has: (i) issued any securities within the last 18 months except for notes to evidence bank loans or other liabilities in the ordinary course of business or as described in the Prospectus; (ii) had any dealings with respect to sales of securities within the 12 months prior to the date hereof with any member of FINRA, or any person related to or associated with such member, other than discussions and meetings relating to the Offering and purchases and sales of U.S. government and agency and other securities in the ordinary course of business; or (iii) engaged any intermediary between the Agent and the Mutual Savings Parties in connection with the Offering and no person is being compensated in any manner for such services. Appropriate arrangements have been made for placing the funds received from subscriptions for Shares in a special interest-bearing account with Mutual Savings until all Shares are sold and paid for, with provision for refund to the purchasers in the event that the Conversion is not completed for whatever reason or for delivery to Magnolia Bancorp if all Shares are sold.

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(gg)    To the knowledge of the Mutual Savings Parties, the Mutual Savings Parties have not made any payment of funds of the Mutual Savings Parties as a loan to any person for the purchase of Shares, except for Magnolia Bancorp’s loan to the employee stock ownership plan, the proceeds of which shall be used to purchase Shares, or has made any other payment or loan of funds prohibited by law, and no funds have been set aside to be used for any payment prohibited by law.

(hh)    The Mutual Savings Parties are in compliance in all material respects with the applicable financial record keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and the regulations and rules thereunder. Mutual Savings has established compliance programs and is in compliance in all material respects with the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Interrupt and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) and all applicable regulations promulgated thereunder, and, except as disclosed in the Prospectus, there is no charge, investigation, action, suit or proceedings before any governmental authority pending or, to the knowledge of Mutual Savings, threatened regarding Mutual Savings’ compliance with the USA PATRIOT Act or any regulations promulgated hereunder.

(ii)    All Sales Information (as defined in Section 12(a)) used by Magnolia Bancorp in connection with the Offering that is required by the Federal Reserve, the OCC or the Commission to be filed has been filed with the Federal Reserve, the OCC, or the Commission, as applicable.

(jj)    None of the Mutual Savings Parties nor any properties owned or operated by any of them is in violation of or liable under any Environmental Law (as defined below), except for such violations or liabilities that, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. There are no actions, suits or proceedings, or demands, claims, notices or investigations (including, without limitation, notices, demand letters or requests for information from any environmental agency) instituted or pending or, to the knowledge of any of the Mutual Savings Parties, threatened relating to the liability of any property owned or operated by any of the Mutual Savings Parties under any Environmental Law, except for such actions, suits or proceedings, or demands, claims, notices or investigations that, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect. For purposes of this subsection, the term “Environmental Law” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any regulatory authority relating to (i) the protection, preservation or restoration of the environment (including, without limitation, air, water, vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (ii) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive, whether by type or by quantity, including any material containing any such substance as a component.

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(kk)    The Mutual Savings Parties own, or have valid, binding, enforceable and sufficient licenses or other rights to use the patents and patent applications, copyrights, trademarks, service marks, trade names, technology, know-how (including trade secrets and other unpatented and/or unpatentable proprietary rights) and other intellectual property necessary or used in any material respect to conduct their business in the manner in which it is being conducted and in the manner in which it is contemplated as set forth in the Prospectus (collectively, the “Mutual Savings Parties’ Intellectual Property”). The Mutual Savings Parties’ Intellectual Property is valid, subsisting and enforceable, and none of the patents owned or licensed by the Mutual Savings Parties is unenforceable or invalid. To the Mutual Savings Parties’ knowledge, no Mutual Savings Party has infringed or otherwise violated any intellectual property rights of any third person nor is obligated to pay a royalty, grant a license, or provide other consideration to any third party in connection with any of the Mutual Savings Parties’ Intellectual Property. No person has asserted in writing, or to the Mutual Savings Parties’ knowledge, threatened to assert any claim against, or notified, the Mutual Savings Parties that (i) the Mutual Savings Parties have infringed or otherwise violated any intellectual property rights of any third person, (ii) the Mutual Savings Parties are in breach or default of any contract under which any of the Mutual Savings Parties’ Intellectual Property is provided, (iii) such person will terminate a contract described in clause (ii) or adversely alter the scope of the rights provided thereunder or (iv) otherwise concerns the ownership, enforceability, validity, scope, registerability, interference, use or the right to use, any of the Mutual Savings Parties’ Intellectual Property. To the knowledge of each Mutual Savings Party, no third party is infringing or otherwise violating any of the Mutual Savings Parties’ Intellectual Property.

(ll)    The Mutual Savings Parties have not relied upon Agent or its counsel for any legal, tax or accounting advice in connection with the Conversion.

(mm)    The records used by Mutual Savings to determine the identity of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are accurate and complete in all material respects.

(nn)    None of the Mutual Savings Parties is required to be registered as an investment company under the Investment Company Act of 1940.

(oo)    Any certificates signed by an officer of any of the Mutual Savings Parties and delivered to the Agent or its counsel that refer to this Agreement shall be deemed to be a representation and warranty by the Mutual Savings Parties to the Agent as to the matters covered thereby with the same effect as if such representation and warranty were set forth herein.

(pp)    No Mutual Savings Party maintains any “pension plan,” as defined in the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), except as may be disclosed in the Registration Statement and the Prospectus. In addition, (i) the employee benefit plans, including any pension plans and employee welfare benefit plans, of the Mutual Savings Parties (the “Employee Plans”) have been operated in compliance with the applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended (the “Code”), all regulations, rulings and announcements promulgated or issued thereunder and all other applicable laws and governmental regulations, (ii) no reportable event under Section 4043(c) of ERISA has occurred with respect to any Employee Plan of the Mutual Savings Parties for which the reporting requirements have not been waived by the Pension Benefit Guaranty Corporation, (iii) no prohibited transaction under Section 406 of ERISA, for which an exemption does not apply, has occurred with respect to any Employee Plan of the Mutual Savings Parties and (iv) all Employee Plans of the Mutual Savings Parties that are group health plans have been operated in compliance with the group health plan continuation coverage requirements of Section 4980B of the Code to the extent applicable, except, in each case as to subsections (i), (ii), (iii) and (iv), to the extent such noncompliance, reportable event or prohibited transaction would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. There are no pending or, to the knowledge of the Mutual Savings Parties, threatened, claims by or on behalf of any Employee Plan of the Mutual Savings Parties, by any employee or beneficiary covered under any such Employee Plan or by any governmental authority, or otherwise involving such Employee Plans or any of their respective fiduciaries (other than for routine claims for benefits).

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(qq)    No Mutual Savings Party or, to their knowledge, any director, officer, agent, employee or affiliate of any Mutual Savings Party, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and Magnolia Bancorp will not directly or indirectly use the proceeds of the Offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

(rr)    To the extent applicable, all disclosures contained in the Registration Statement and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the 1933 Act) comply in all material respects with Regulation G of the 1934 Act and Item 10 of Regulation S-K under the 1933 Act.

(ss)    As of the date hereof and as of the Closing Date, except as may be described in the Prospectus, no Mutual Savings Party is subject to, or has received any notice that any of them may become subject or party to any cease-and-desist order, written agreement, consent agreement, memorandum of understanding or other regulatory enforcement action, proceeding or order with or by, or has adopted any board resolutions at the request of, any regulatory authority that currently relates to or restricts in any material respect the conduct of their business or that in any manner relates to their capital adequacy, credit policies or management (other than management succession plans) (each, a “Regulatory Agreement”), nor has any Mutual Savings Party been advised by any regulatory authority that such regulatory authority is considering issuing or requesting any such Regulatory Agreement; provided, however, that notwithstanding anything to the contrary contained in this subsection (ss), the term “Regulatory Agreement” does not include any confidential supervisory information or communication (including confidential supervisory information as defined in 12 C.F.R. § 261.2(c) and as identified in 12 C.F.R. § 309.5(g)(8)) of a regulatory authority the disclosure of which would be prohibited by such regulatory authority.

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(tt)    Magnolia Bancorp has submitted or will have submitted prior to the Closing Date all notices required to have the Shares quoted on the OTCQB Market effective as of the Closing Date.

(uu)    At or prior to the Closing Date, Magnolia Bancorp will file a Form 8-A for the Common Stock to be registered under Section 12(g) of the 1934 Act as from time to time amended or supplemented pursuant to the 1934 Act.

(vv)    To the extent applicable, no Mutual Savings Party nor any affiliate or person acting on their behalf has taken, nor will take, directly or indirectly, any action which is designed to or which has constituted or which would be expected to cause or result in any unlawful stabilization or manipulation of the price of any security of Magnolia Bancorp.

(ww)    No relationship, direct or indirect, exists between or among any Mutual Savings Party, on the one hand, and the directors, officers, stockholders, customers or suppliers of such Mutual Savings Party, on the other, that is required by the 1933 Act and the 1933 Act Regulations to be described in the Registration Statement or Prospectus and that is not so described.

(xx)    Except as described in the Prospectus, there are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), or any other relationships with unconsolidated entities or other persons, that may have a material current or future effect on the Mutual Savings Parties’ financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses.

(yy)    As of the Closing Date, Magnolia Bancorp will be in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the rules and regulations of the Commission thereunder and will comply with those provisions of the Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder that will become effective in the future upon their effectiveness.

(zz)    All of the loans represented as assets of Mutual Savings in the Registration Statement or Prospectus meet or are exempt from all requirements of federal, state and local law pertaining to lending, including, without limitation, truth in lending (including the requirements of Regulation Z and 12 C.F.R. Part 226), real estate settlement procedures, consumer credit protection, equal credit opportunity and all disclosure laws applicable to such loans, except for violations which, if asserted, would not be reasonably expected to have a Material Adverse Effect.

(aaa)    To the Mutual Savings Parties’ knowledge, there are no affiliations or associations between the Agent and any of the Mutual Savings Parties’ officers or directors.

(bbb)    Magnolia Bancorp has taken all actions necessary to obtain at the Closing Date a blue sky memorandum from Silver, Freedman, Taff & Tiernan LLP.

Section 7.Representations and Warranties of the Agent . The Agent represents and warrants to the Mutual Savings Parties that:

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(a)    The Agent is a corporation validly existing in good standing under the laws of the State of New York and licensed to conduct business in the State of New York and all states in which the Shares will be offered for sale with full power and authority to provide the services to be furnished to the Mutual Savings Parties hereunder.

(b)    The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of the Agent, and this Agreement has been duly and validly executed and delivered by the Agent and is a legal, valid and binding agreement of the Agent, enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally, or by general equity principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and except to the extent, if any, that the provisions of Sections 12 and 13 hereof may, with respect to the Agent, be unenforceable as against public policy).

(c)    Each of the Agent and its employees, agents and representatives who shall perform any of the services hereunder shall be duly authorized and empowered, and shall have all licenses, approvals and permits necessary to perform such services; and the Agent is a registered selling agent in each of the jurisdictions in which the Shares are to be offered by Magnolia Bancorp in reliance upon the Agent as a registered selling agent as set forth in the blue sky memorandum prepared with respect to the Offering.

(d)    The execution and delivery of this Agreement by the Agent, the consummation of the transactions contemplated hereby and compliance with the terms and provisions hereof will not conflict with, or result in a breach of, any of the terms, provisions or conditions of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, the Certificate of Incorporation or Bylaws of the Agent or any material agreement, indenture or other instrument to which the Agent is a party or by which it or its property is bound.

(e)    No approval of any regulatory or supervisory or other public authority is required in connection with the Agent’s execution and delivery of this Agreement, except as may have been received.

(f)    No action, suit, charge or proceeding before the Commission, FINRA, any state securities commission or any court is pending or, to the knowledge of Agent, threatened, against Agent which, if determined adversely to Agent, would have a material adverse effect upon the ability of Agent to perform its obligations under this Agreement.

Section 8.Covenants of the Mutual Savings Parties.

The Mutual Savings Parties hereby jointly and severally covenant with the Agent as follows:

(a)    Magnolia Bancorp will not, at any time after the date the Registration Statement is initially filed, file any amendment or supplement to the Registration Statement without providing the Agent and its counsel a reasonable opportunity to review and comment on such amendment or supplement. Magnolia Bancorp will furnish promptly to the Agent and its counsel copies of all correspondence from the Commission with respect to the Registration Statement and Magnolia Bancorp’s responses thereto.

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(b)    Magnolia Bancorp represents and agrees that it has not made and, unless it obtains the prior written consent of the Agent (which consent shall not be unreasonably withheld, conditioned or delayed), will not make any offer relating to the Shares that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the 1933 Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the 1933 Act, required to be filed with the SEC. Any such free writing prospectus consented to by Magnolia Bancorp and the Agent is hereinafter referred to as a “Permitted Free Writing Prospectus.” Magnolia Bancorp represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the SEC where required, legending and record keeping. Magnolia Bancorp represents that it has satisfied the conditions in Rule 433 to avoid a requirement to file with the SEC any electronic road show.

(c)    If at any time following issuance of a Permitted Free Writing Prospectus there occurred or occurs an event or development as a result of which such Permitted Free Writing Prospectus conflicted or would conflict in any material respect with the information contained in the Registration Statement or Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, Magnolia Bancorp will promptly notify the Agent that any use of such Permitted Free Writing Prospectus may cease until it is amended or supplemented, and Magnolia Bancorp will promptly amend or supplement such Permitted Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

(d)    The Mutual Savings Parties will not, at any time after the date the Conversion Application and the Holding Company Application are approved, file any amendment or supplement to either application without providing the Agent and its counsel a reasonable opportunity to review and comment on the non-confidential portions of such amendment or supplement. The Mutual Savings Parties will furnish promptly to the Agent and its counsel copies of all correspondence from the Federal Reserve, the OCC, or any other regulator with respect to the Applications.

(e)    The Mutual Savings Parties will use their best efforts to cause the OCC and the Federal Reserve to respectively approve the Conversion Application and the Holding Company Application and will use their best efforts to cause any post-effective amendment to the Registration Statement to be declared effective by the Commission and any post-approval amendment to the Conversion Application or the Holding Company Application to be approved by the OCC and/or the Federal Reserve, as applicable, and will promptly upon receipt of any information concerning the events listed below notify the Agent (i) when the Registration Statement has become effective; (ii) when the Conversion Application has been approved by the OCC; (iii) when the Holding Company Application has been approved by the Federal Reserve; (iv) of the receipt of any comments from the Federal Reserve or any other governmental entity with respect to the Conversion or the transactions contemplated by this Agreement; (v) of any request by the Commission, the OCC, the Federal Reserve, or any other governmental entity for any amendment or supplement to the Registration Statement or the Applications or for additional information; (vi) of the issuance by the Commission or the Federal Reserve, or any other governmental agency of any order or other action suspending the Offering or the use of the Registration Statement or the Prospectus or any other filing of the Mutual Savings Parties under the Conversion Regulations or other applicable law, or the threat of any such action; or (vii) of the issuance by the Commission, the OCC or the Federal Reserve, or any other state authority of any stop order suspending the effectiveness of the Registration Statement or of the initiation or threat of initiation or threat of any proceedings for that purpose. The Mutual Savings Parties will make every reasonable effort to prevent the issuance by the Commission, the OCC, the Federal Reserve, or any other state authority of any order referred to in (vi) and (vii) above and, if any such order shall at any time be issued, to obtain the lifting thereof at the earliest possible time.

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(f)    Magnolia Bancorp will make generally available to its security holders as soon as practicable, but in any event not later than 18 months after the effective date of the Registration Statement (as defined in Rule 158(c) under the 1933 Act), an earnings statement of Magnolia Bancorp and its subsidiaries (which need not be audited) complying with Section 11(a) of the 1933 Act and the 1933 Act Regulations.

(g)    Magnolia Bancorp will deliver to the Agent and to its counsel two conformed copies of the Registration Statement, as originally filed and each amendment thereto. Further, Magnolia Bancorp will deliver such additional copies of the Registration Statement to counsel to the Agent as may be required for any FINRA filings. The filing of the Registration Statement on the Commission’s EDGAR system shall constitute delivery for this purpose.

(h)    Magnolia Bancorp will furnish to the Agent, from time to time during the period when the Prospectus (or any later prospectus related to this Offering) is required to be delivered under the 1933 Act or the 1933 Act Regulations, such number of copies of such Prospectus (as amended or supplemented) as the Agent may reasonably request for the purposes contemplated by the 1933 Act and the 1933 Act Regulations. Magnolia Bancorp authorizes the Agent to use the Prospectus (as amended or supplemented, if amended or supplemented) in any lawful manner contemplated by the Plan in connection with the sale of the Shares in the Offering.

(i)    The Mutual Savings Parties will comply in all material respects with any and all terms, conditions, requirements and provisions with respect to the Conversion and the transactions contemplated thereby imposed by the Commission, the OCC, and the Federal Reserve, and by applicable state law and regulations, and by the 1933 Act, the 1934 Act, the 1933 Act Regulations and the rules and regulations of the Commission under the 1934 Act (the “1934 Act Regulations”), to be complied with prior to the Closing Date; and when the Prospectus is required to be delivered, the Mutual Savings Parties will comply in all material respects, at their own expense, with all requirements imposed upon them by the Commission, the OCC and the Federal Reserve, the Conversion Regulations (except as modified or waived in writing by the OCC or the Federal Reserve), by applicable state law and regulations and by the 1933 Act, the 1934 Act, the 1933 Act Regulations and the 1934 Act Regulations, in each case as from time to time in force, so far as is necessary to permit the continuance of sales or dealing in shares of Common Stock during such period in accordance with the provisions hereof and the Prospectus.

(j)    Magnolia Bancorp will file the Prospectus pursuant to Rule 424(b) under the 1933 Act not later than the SEC’s close of business on the second business day following the date such Prospectus is first used.

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(k)    During any period when the Prospectus is required to be delivered, each of the Mutual Savings Parties will inform the Agent of any event or circumstance of which it is or becomes aware as a result of which the Registration Statement and/or Prospectus, as then supplemented or amended, would include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading. If it is necessary, in the reasonable opinion of counsel for the Mutual Savings Parties, to amend or supplement the Registration Statement or the Prospectus in order to correct such untrue statement of a material fact or to make the statements therein not misleading in light of the circumstances existing at the time of their use, the Mutual Savings Parties will, at their expense, prepare, file with the Commission and to the extent required the OCC and the Federal Reserve, and furnish to the Agent, a reasonable number of copies of an amendment or amendments of, or a supplement or supplements to, the Registration Statement and the Prospectus (after a reasonable time for review by counsel for the Agent) which will amend or supplement the Registration Statement and/or the Prospectus so that as amended or supplemented it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time, not misleading. For the purpose of this subsection, each of the Mutual Savings Parties will furnish such information with respect to itself as the Agent may from time to time reasonably request.

(l)    Pursuant to the terms of the Plan, Magnolia Bancorp will endeavor in good faith, in cooperation with the Agent, to register or to qualify the Shares, to the extent applicable, for offering and sale or to exempt such Shares from registration and to exempt Magnolia Bancorp and its officers, directors and employees from registration as broker-dealers, under the applicable securities laws of the jurisdictions in which the Offering will be conducted; provided, however, that Magnolia Bancorp shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation to do business in any jurisdiction in which it is not so qualified, or to register its directors or officers as brokers, dealers, salespersons or agents in any jurisdiction. In each jurisdiction where any of the Shares shall have been registered or qualified as above provided, Magnolia Bancorp will make and file such statements and reports as are required by the applicable regulatory authority in connection with such registration or qualification.

(m)    The Mutual Savings Parties will not sell or issue, contract to sell or otherwise dispose of, for a period of 90 days after the date hereof, any shares of their capital stock or securities convertible into or exercisable for shares of their capital stock, without the Agent’s prior written consent other than the Shares or in connection with any plan or arrangement described in the Prospectus, including existing stock benefit plans.

(n)    The Mutual Savings Parties will use the net proceeds from the sale of the Common Stock in the manner set forth in the Prospectus under the caption “How We Intend to Use the Proceeds from the Offering.”

(o)    The Mutual Savings Parties will distribute the Prospectus or other offering materials in connection with the offering and sale of the Common Stock only in accordance with the Conversion Regulations, the 1933 Act and the 1933 Act Regulations, and the laws of any state in which the Shares are qualified for sale.

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(p)    On or prior to the Closing Date, Magnolia Bancorp shall register its Common Stock under Section 12(g) of the 1934 Act. Magnolia Bancorp shall maintain the effectiveness of such registration for not less than three years or such shorter period as may be required by applicable law.

(q)    During the period during which Shares are registered under the 1934 Act, Magnolia Bancorp will furnish to its stockholders as soon as practicable after the end of each fiscal year an annual report of Magnolia Bancorp (including a consolidated balance sheet and statements of consolidated income, stockholders’ equity and cash flows of Magnolia Bancorp and its subsidiaries as at the end of and for such year, certified by independent public accountants in accordance with Regulation S-X under the 1933 Act and the 1934 Act). During the period of three years from the date hereof, Magnolia Bancorp will furnish to the Agent unless available on the Commission’s EDGAR system: (i) as soon as practicable after such information is publicly available, a copy of each report of Magnolia Bancorp furnished to or filed with the Commission under the 1934 Act or any national securities exchange or system on which any class of securities of Magnolia Bancorp is listed or quoted (including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and all proxy statements and annual reports to stockholders), (ii) a copy of each other non-confidential report of Magnolia Bancorp mailed to its stockholders or filed with the Commission, the Federal Reserve or any other supervisory or regulatory authority or any national securities exchange or system on which any class of securities of Magnolia Bancorp is listed or quoted, each press release, and material news items and additional documents and information with respect to Magnolia Bancorp or Mutual Savings as the Agent may reasonably request; and (iii) from time to time, such other non-confidential information concerning the Mutual Savings Parties as the Agent may reasonably request.

(r)    Magnolia Bancorp will maintain appropriate arrangements for depositing with Mutual Savings all funds received from persons submitting subscriptions for or orders to purchase Shares in the Offering, on an interest bearing basis at the rate described in the Prospectus until the Closing Date and satisfaction of all conditions precedent to the release of Magnolia Bancorp’s obligation to refund payments received from persons subscribing for or ordering Shares in the Offering, in accordance with the Plan as described in the Prospectus, or until refunds of such funds have been made to the persons entitled thereto or withdrawal authorizations canceled in accordance with the Plan and as described in the Prospectus. The Mutual Savings Parties will maintain such records of all funds received to permit the funds of each subscriber to be separately insured by the FDIC (to the maximum extent allowable) and to enable the Mutual Savings Parties to make the appropriate refunds of such funds in the event that such refunds are required to be made in accordance with the Plan and as described in the Prospectus.

(s)    Magnolia Bancorp will register as a savings and loan holding company under the HOLA.

(t)    The Mutual Savings Parties will take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to ensure compliance with Rule 5110 and Rule 5130 of FINRA.

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(u)    Until the Closing Date, the Mutual Savings Parties will conduct their businesses in compliance in all material respects with all applicable federal and state laws, rules, regulations, decisions, directives and orders, including all decisions, directives and orders of the Commission, the Federal Reserve, and the OCC.

(v)    The Mutual Savings Parties shall comply with any and all terms, conditions, requirements and provisions with respect to the Conversion and the transactions contemplated thereby imposed by the Federal Reserve, OCC, the Conversion Regulations, the Commission, the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations to be complied with subsequent to the Closing Date. Magnolia Bancorp will comply with all provisions of all undertakings contained in the Registration Statement.

(w)    The Mutual Savings Parties will not amend the Plan without notifying the Agent prior thereto.

(x)    The Mutual Savings Parties will take all actions necessary to ensure that, immediately upon completion of the sale by Magnolia Bancorp of the Shares and the completion of certain transactions necessary to implement the Plan, all terms, conditions, requirements and provisions with respect to the Conversion (except those that are conditions subsequent) imposed on the Mutual Savings Parties by the OCC, the Federal Reserve, the SEC, or any other governmental authority, if any, shall have been complied with by the Mutual Savings Parties in all material respects or appropriate waivers shall have been obtained and all notice and waiting periods shall have been satisfied, waived or elapsed.

(y)    Magnolia Bancorp shall provide the Agent with any information necessary to allow the Agent to manage the allocation process in order to permit Magnolia Bancorp to carry out the allocation of the Shares in the event of an oversubscription, and such information shall be accurate and reliable in all material respects.

(z)    Prior to the Closing Date, the Mutual Savings Parties will inform the Agent of any event or circumstances of which it is aware as a result of which the Registration Statement and/or Prospectus, as then amended or supplemented, would contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading.

(aa)    Magnolia Bancorp will not deliver the Shares until the Mutual Savings Parties have satisfied or caused to be satisfied each condition set forth in Section 11 hereof, unless such condition is waived in writing by the Agent.

(bb)    Prior to the Closing Date, the Plan shall have been approved by the members of Mutual Savings, in accordance with the Plan and the applicable provisions of the Conversion Regulations and the applicable provisions, if any, of the charter and bylaws or other governing documents of Mutual Savings.

(cc)    Subsequent to the date the Registration Statement is declared effective by the Commission and prior to the Closing Date, except as otherwise may be indicated or contemplated therein or set forth in an amendment or supplement thereto, none of the Mutual Savings Parties will: (i) issue any securities or incur any liability or obligation, direct or contingent, for borrowed money, except borrowings from the same or similar sources disclosed in the Prospectus in the ordinary course of its business, or (ii) enter into any transaction which is material in light of the business and properties of the Mutual Savings Parties, taken as a whole.

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(dd)    The facts and representations provided to Breyer & Associates PC and Silver, Freedman, Taff & Tiernan LLP by the Mutual Savings Parties and upon which Silver, Freedman, Taff & Tiernan LLP will base its opinion under Section 11(c)(1) of this Agreement are and will be truthful, accurate and complete.

(ee)    Other than as permitted by the Conversion Regulations, the 1933 Act, the 1933 Act Regulations and the laws of any jurisdiction in which the Shares are qualified for sale, Magnolia Bancorp will not distribute any offering material in connection with the Offering except for the Prospectus and the Sales Information (as defined in Section 12 hereof) that has been filed with the Registration Statement and the Conversion Application. The Sales Information will not conflict in any material respect with the information contained in the Registration Statement and the Prospectus.

(ff)    Magnolia Bancorp will report the use of proceeds of the Offering in accordance with Rule 463 of the 1933 Act Regulations.

(gg)    Until the completion of all actions required in connection with the Conversion and this Agreement, the Mutual Savings Parties will comply, and use its best efforts to cause its directors and officers, in their capacities as such, to comply, in all material respects, with all effective applicable provisions of federal and state securities laws and the rules and regulations thereunder.

(hh)    The Mutual Savings Parties shall notify the Agent when funds shall have been received for the minimum number of Shares set forth in the Prospectus.

Section 9.Covenants of the Agent . The Agent hereby covenants with the Mutual Savings Parties as follows:

(a)    During the Offering, the Agent shall comply, in all material respects, with all requirements imposed upon it by the Federal Reserve and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations with respect to the Offering.

(b)    The Agent shall distribute the Prospectus in connection with the sales of the Common Stock in accordance with the Conversion Regulations, the 1933 Act and the 1933 Act Regulations.

(c)    During the Offering, each of the Agent and its employees, agents and representatives who shall perform any of the services hereunder shall be duly authorized and empowered, and shall have all licenses, approvals and permits necessary to perform such services; and the Agent shall be a registered selling agent in each of the jurisdictions in which the Shares are to be offered by Magnolia Bancorp in reliance upon the Agent as a registered selling agent as set forth in the blue sky memorandum prepared with respect to the Offering.

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Section 10.Payment of Expenses . Whether or not the Conversion is completed or the sale and issuance of the Shares by Magnolia Bancorp is consummated, the Mutual Savings Parties will pay for all their expenses incident to the performance of this Agreement customarily borne by issuers, including without limitation: (a) the preparation and filing of the Conversion Application and the Holding Company Application; (b) the preparation, printing, filing, delivery and mailing of the Registration Statement, including the Prospectus, and all documents related to the Offering and proxy solicitation; (c) all filing fees and expenses in connection with the qualification or registration of the Shares for offer and sale by Magnolia Bancorp under the securities or blue sky laws, including without limitation filing fees, reasonable legal fees and disbursements of counsel in connection therewith, and in connection with the preparation of a blue sky law survey; (d) the filing fees of FINRA related to the Agent’s fairness filing under FINRA Rule 5110; (e) fees and expenses related to the preparation of the Appraisal; (f) fees and expenses related to auditing and accounting services; (g) expenses relating to advertising, temporary personnel, investor meetings and stock information center; (h) transfer agent fees and costs of preparation and distribution of stock certificates; and (i) any fees or expenses associated with quoting the Shares on the OTCQB Market. In the event that the Agent incurs any expenses on behalf of the Mutual Savings Parties, the Mutual Savings Parties will pay or reimburse the Agent for such expenses regardless of whether the Conversion is successfully completed, and such reimbursements will not be included in the expense limitations set forth above.

Section 11.Conditions to the Agent’s Obligations . The obligations of the Agent hereunder are subject, to the extent not waived in writing by the Agent, to the condition that all representations and warranties of the Mutual Savings Parties herein contained are, at and as of the commencement of the Offering and (except to the extent such representations and warranties speak as of an earlier date) at and as of the Closing Date, true and correct in all material respects (except to the extent such representations or warranties are qualified as to materiality, in which case they shall be true and correct in all respects), the condition that the Mutual Savings Parties shall have performed, in all material respects, all of their obligations hereunder to be performed on or before such dates and to the following further conditions:

(a)    At the Closing Date, the Mutual Savings Parties shall have conducted the Conversion in all material respects in accordance with the Plan, the Conversion Regulations and all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Conversion imposed upon them by the OCC, the Federal Reserve and the Commission or any other government authority.

(b)    The Registration Statement shall have been declared effective by the Commission and the Conversion Application and Holding Company Application shall have been approved by the OCC and the Federal Reserve, respectively and, at the Closing Date, no stop order or other action suspending the effectiveness of the Registration Statement shall have been issued by the Commission under the 1933 Act or proceedings therefor initiated or, to the knowledge of the Mutual Savings Parties, threatened by the Commission or any state authority and no order or other action suspending the authorization for use of the Prospectus or the consummation of the Conversion shall have been issued, or proceedings therefor initiated or, to the knowledge of the Mutual Savings Parties, threatened by the Federal Reserve, the Commission, or any other governmental authority. The Shares shall have been registered for offering and sale or contribution, or exempted therefrom under the securities or blue sky laws of the jurisdictions as the Agent shall have reasonably requested and as agreed to by Magnolia Bancorp.

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(c)    At the Closing Date, the Agent shall have received:

(1)    The opinion dated as of the Closing Date, of Silver, Freedman, Taff & Tiernan LLP, in form and substance satisfactory to the Agent and counsel for the Agent, to the effect as attached hereto as Exhibit A; and

(2)    The letter, dated as of the Closing Date, of Silver, Freedman, Taff & Tiernan LLP, in form and substance satisfactory to the Agent and counsel for the Agent, to the effect as set forth in the last paragraph of Exhibit A.

(d)         Concurrently with the execution of this Agreement, the Agent shall receive a letter from EisnerAmper LLP dated the date hereof and addressed to the Agent, such letter (i) confirming that EisnerAmper LLP is a firm of independent registered public accountants within the meaning of the 1933 Act and the 1933 Act Regulations and the PCAOB, and stating in effect that in the opinion of EisnerAmper LLP, the financial statements of Mutual Savings included in the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1934 Act and the related rules and regulations of the Commission thereunder; (ii) stating in effect that, on the basis of certain agreed upon procedures (but not an audit examination in accordance with generally accepted auditing standards) consisting of a review of the latest available unaudited interim financial statements prepared by Mutual Savings, a reading of the minutes of the meetings of the Boards of Directors of the Mutual Savings Parties and committees thereof and consultations with officers of the Mutual Savings Parties responsible for financial and accounting matters, nothing came to their attention which caused them to believe that: (A) such unaudited financial statements included in the Prospectus are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in the Prospectus; or (B) except as stated in such letter, during the period from the date of the latest unaudited financial statements included in the Prospectus to a specified date not more than three business days prior to the date of the Prospectus, there was any increase in borrowings, non-performing loans or special mention loans, or decrease in the deposits, total assets, total loans, the allowance for loan losses or equity of Mutual Savings, or there was any decrease in total interest income, net interest income, net interest income after provision for loan losses, income (loss) before income taxes or in total net income (loss) of Mutual Savings for the period commencing immediately after the period covered by the latest unaudited income statement included in the Prospectus and ended not more than three business days prior to the date of the Prospectus as compared to the corresponding period in the preceding year; and (iii) stating that, in addition to the audit examination referred to in its opinion included in the Prospectus and the performance of the procedures referred to in clause (ii) of this subsection (d), they have compared with the general accounting records of Mutual Savings, which are subject to the internal controls of the accounting system of Mutual Savings and other data prepared by Mutual Savings from accounting records, to the extent specified in such letter, such amounts and/or percentages set forth in the Prospectus as the Agent may reasonably request, and they have found such amounts and percentages to be in agreement therewith (subject to rounding).

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(e)    At the Closing Date, the Agent shall receive a letter from EisnerAmper LLP dated the Closing Date, addressed to the Agent, confirming the statements made by its letter delivered pursuant to subsection (d) of this Section 11, the “specified date” referred to in clause (ii)(B) thereof to be a date specified in such letter, which shall not be more than three business days prior to the Closing Date.

(f)    At the Closing Date, counsel to the Agent shall have been furnished with such documents as counsel for the Agent may reasonably require for the purpose of enabling them to advise the Agent with respect to the issuance and sale of the Shares as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations and warranties, or the fulfillment of any of the conditions herein contained.

(g)    At the Closing Date, the Agent shall receive a certificate of the Chief Executive Officer and Chief Financial Officer of each of the Mutual Savings Parties, dated the Closing Date, to the effect that:

(i)    they have examined the Registration Statement and at the time the Registration Statement became effective, the Prospectus did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

(ii)    there has not been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any Material Adverse Effect otherwise than as set forth or contemplated in the Registration Statement and the Prospectus;

(iii)    the representations and warranties contained in Section 6 of this Agreement are true and correct with the same force and effect as though made at and as of the Closing Date;

(iv)    the Mutual Savings Parties have complied in all material respects with all material agreements and satisfied all conditions on their part to be performed or satisfied at or prior to the Closing Date, including the conditions on their part contained in this Section 11;

(v)    no stop order has been issued or, to their knowledge, is threatened, by the Commission or any other governmental body;

(vi)    no order suspending the Offering, the Conversion, or the effectiveness of the Registration Statement has been issued and to their knowledge, no proceedings for any such purpose have been initiated or threatened by the OCC or the Federal Reserve, the Commission, or any other federal or state authority; and

(vii)    to their knowledge, no person has sought to obtain regulatory or judicial review of the action of the OCC or the Federal Reserve in approving the Applications or to enjoin the Conversion.

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(h)    At the Closing Date, the Agent shall receive a letter from RP Financial LC., dated as of the Closing Date:

(i)    confirming that said firm is independent of the Mutual Savings Parties and is experienced and expert in the area of corporate appraisals,

(ii)    stating in effect that the Appraisal complies in all material respects with the applicable requirements of the Conversion Regulations, and

(iii)    further stating that its opinion of the aggregate pro forma market value of the Mutual Savings Parties expressed in the Appraisal as most recently updated, remains in effect.

(i)    None of the Mutual Savings Parties shall have sustained, since the date of the latest financial statements included in the Registration Statement and Prospectus, any material loss or interference with its business from fire, explosion, flood, earthquake, hurricane, or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the Registration Statement and the Prospectus, and since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall not have been any Material Adverse Effect, otherwise than as set forth in the Registration Statement and Prospectus, that is in the Agent’s reasonable judgment sufficiently material and adverse as to make it impracticable or inadvisable to proceed with the Offering or the delivery of the Shares on the terms and in the manner contemplated in the Prospectus.

(j)    Prior to and at the Closing Date, in the reasonable opinion of the Agent there shall have been no material adverse change in the financial condition or in the earnings or business from and as of the latest dates as of which such condition is set forth in the Prospectus, except as referred to therein.

(k)    At or prior to the Closing Date, the Agent shall receive (i) a copy of the letter from the OCC approving the Conversion Application, (ii) a copy of the order from the Commission declaring the Registration Statement effective, (iii) a copy of the letter from the Federal Reserve approving the Holding Company Application, (iv) a certificate from the FHLB-Dallas evidencing Mutual Savings’ membership therein, (v) a certificate from the FDIC evidencing Mutual Savings’ insurance of accounts, and (vi) any other documents that Agent shall reasonably request.

(l)    Subsequent to the date hereof, there shall not have occurred any of the following:

(i)    a suspension or limitation in trading in securities generally on the New York Stock Exchange (the “NYSE”) or in the over-the-counter market, or quotations halted generally on the NASDAQ Stock Market, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by either of such exchanges or by order of the Commission or any other governmental authority other than temporary trading halts;

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(ii)    a general moratorium on the operations of federally insured financial institutions or a general moratorium on the withdrawal of deposits from commercial banks or other federally insured financial institutions declared by either federal or state authorities; or

(iii)    a material adverse change in the financial markets in the United States or elsewhere or any outbreak of hostilities or escalation thereof or other calamity or crisis, including, without limitation, terrorist activities after the date hereof, the effect of which, in the reasonable judgment of the Agent, is so material and adverse as to make it impracticable to market the Shares or to enforce contracts, including subscriptions or purchase orders, for the sale of the Shares.

(m)    Prior to and at the Closing Date, none of the Mutual Savings Parties will have received from the Federal Reserve, the OCC, or the FDIC any direction (oral or written) to make any material change in the method of conducting their business with which it has not complied which direction, if any, shall have been disclosed to the Agent, only if such information is not considered confidential supervisory information as defined in 12 C.F.R. §309.5(g)(8).

(n)    All such opinions, certificates, letters and documents delivered pursuant to this Section 11 will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Agent and to counsel for the Agent. Any certificate signed by an officer of a Mutual Savings Party and delivered to the Agent or to counsel for the Agent shall be deemed a representation and warranty by such Mutual Savings Party to the Agent as to the statements made therein.

(o)    A blue sky memorandum from Silver, Freedman, Taff & Tiernan LLP relating to the Offering, including Agent’s participation therein, shall have been furnished prior to the mailing of the Prospectus, to Magnolia Bancorp with a copy thereof addressed to Agent or upon which Silver, Freedman, Taff & Tiernan LLP shall state the Agent may rely. The blue sky memorandum will relate to the necessity of obtaining or confirming exemptions, qualifications or the registration of the Shares under applicable state securities law.

(p)    At the Closing Date, the Shares shall have been approved for quotation on the OTCQB Market.

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Section 12.Indemnification.

(a)    The Mutual Savings Parties jointly and severally agree to indemnify and hold harmless the Agent, each person, if any, who controls the Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, and their respective partners, officers, directors, agents, attorneys, servants, employees, successors and assigns (each, a “Related Person”), against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses, subject to the limitation set forth in the last sentence of subsection (c) below), joint or several, that the Agent or any of its Related Persons may suffer or to which the Agent or any of its Related Persons may become subject under all applicable federal and state laws or otherwise, and reasonably related to or arising out of the Conversion or the Offering or the engagement of the Agent pursuant to, or the performance by the Agent of, the services contemplated by this Agency Agreement, and to promptly reimburse the Agent or any of its Related Persons upon written demand for any reasonable expenses (including reasonable fees and disbursements of counsel according to normal hourly rates) incurred by the Agent or any of its Related Persons in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities, expenses or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Applications, or other instrument or document executed by any of the Mutual Savings Parties or based upon written information supplied by any of the Mutual Savings Parties filed in any state or jurisdiction to register or qualify any or all of the Shares under the securities laws thereof (collectively, the “Blue Sky Applications”), or any application or other document, advertisement, or communication (“Sales Information”) prepared, made or executed by or on behalf of any of the Mutual Savings Parties with its consent or based upon information furnished by or on behalf of any of the Mutual Savings Parties, in order to qualify or register the Shares under the securities laws thereof, (ii) arise out of or are based upon the omission or alleged omission to state in any of the foregoing documents or information, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iii) arise from any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Applications, any Blue Sky Applications or Sales Information or other documentation distributed in connection with the Offering; or (iv) result from any claims made with respect to the accuracy, reliability and completeness of the records identifying the Eligible Account Holders and Supplemental Eligible Account Holders or Other Members or for any denial or reduction of a subscription or order to purchase Common Stock, whether as a result of a properly calculated allocation pursuant to the Plan or otherwise, based upon such records; provided, however, that no indemnification is required under this subsection (a) to the extent such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue material statements or alleged untrue material statements in, or material omission or alleged material omission from, the Registration Statement (or any amendment or supplement thereto) or the Prospectus (or any amendment or supplement thereto), the Applications, the Blue Sky Applications or Sales Information or other documentation distributed in connection with the Conversion made in reliance upon and in conformity with information furnished to the Mutual Savings Parties by the Agent or its representatives (including counsel) with respect to the Agent expressly for use in such documents. As of the date of this Agreement, the only such information about the Agent provided for such use is contained in the Prospectus in the last sentence of the first paragraph under the caption “Market for the Common Stock” and under the captions “The Conversion and Offering—Plan of Distribution; Selling Agent and Underwriter Compensation” and “The Conversion and Offering—Records Management.” Provided further, that the Mutual Savings Parties will not be responsible for any loss, liability, claim, damage or expense to the extent a court of competent jurisdiction finds they result primarily from material oral misstatements by the Agent to a purchaser or prospective purchaser of Shares which are not based upon information in the Registration Statement or Prospectus, or from actions taken or omitted to be taken by the Agent in bad faith, or from the Agent’s gross negligence or willful misconduct, and the Agent agrees to repay promptly to the Mutual Savings Parties any amounts advanced to it by the Mutual Savings Parties in connection with matters as to which it is found by a court of competent jurisdiction not to be entitled to indemnification hereunder.

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(b)    The Agent agrees to indemnify and hold harmless the Mutual Savings Parties and their Related Persons against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses, subject to the limitation set forth in the last sentence of subsection (c) below), joint or several, which the Mutual Savings Parties or any of their Related Persons may suffer or to which the Mutual Savings Parties or any of their Related Persons may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the Mutual Savings Parties and their Related Persons upon written demand for any reasonable expenses (including reasonable out-of-pocket expenses, fees and disbursements of counsel) incurred by them in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), the Applications or any Blue Sky Applications or Sales Information or are based upon the omission or alleged omission to state in any of the foregoing documents a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Agent’s obligations under this Section 12(b) shall exist only if and only to the extent that such untrue statement or alleged untrue statement was made in, or such material fact or alleged material fact was omitted from, the Applications, Registration Statement (or any amendment or supplement thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with information furnished to the Mutual Savings Parties by the Agent or its representatives (including counsel) expressly for use in such documents. As of the date of this Agreement, the only such information about the Agent provided for such use is contained in the Prospectus in the last sentence of the first paragraph under the caption “Market for the Common Stock” and under the captions “The Conversion and Offering – Plan of Distribution; Selling Agent and Underwriter Compensation” and “The Conversion and Stock Offering – Records Management.

(c)    Each indemnified party shall give prompt written notice to each indemnifying party of any action, proceeding, claim (whether commenced or threatened), or suit instituted against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have on account of this Section 12, Section 13 or otherwise, unless the failure to give such notice promptly results in material prejudice to the indemnifying party. An indemnifying party may participate at its own expense in the defense of such action. In addition, if it so elects within a reasonable time after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume the defense of such action with counsel chosen by it reasonably acceptable to the indemnified parties that are defendants in such action, unless such indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them that are different from or in addition to those available to such indemnifying party. If an indemnifying party assumes the defense of such action, the indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action, proceeding or claim, other than reasonable costs of investigation. In no event shall the indemnifying parties be liable for the fees and expenses of more than one separate firm of attorneys (unless an indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or in addition to those of other indemnified parties) for all indemnified parties in connection with any one action, proceeding or claim or separate but similar or related actions, proceedings or claims in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall be liable for any settlement of any action, proceeding or suit, which settlement is effected without its prior written consent. Neither the Mutual Savings Parties nor the Agent shall, without the written consent of the other, settle or compromise any claim against them or it based upon circumstances giving rise to an indemnification claim against the other party hereunder unless such settlement or compromise provides that the indemnified party shall be unconditionally and irrevocably released from all liability in respect to such claim.

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(d)    The agreements contained in this Section 12 and in Section 13 hereof and the representations and warranties of the Mutual Savings Parties set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Agent or its officers, directors, controlling persons, agents, attorneys, servants or employees or by or on behalf of any of the Mutual Savings Parties or any officers, directors, controlling persons, agents, attorneys, servants or employees of any of the Mutual Savings Parties; (ii) delivery of and payment hereunder for the Shares; or (iii) any termination of this Agreement. Notwithstanding the prior sentence, Sections 12 and 13 hereof are subject to and limited by all applicable securities and banking laws and regulations including Section 23A and 23B of the Federal Reserve Act and Part 359 of the Regulations of the FDIC.

Section 13.Contribution . In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 12 is due in accordance with its terms but is found in a final judgment by a court to be unavailable from the Mutual Savings Parties or the Agent, the Mutual Savings Parties and the Agent shall contribute to the aggregate losses, claims, damages and liabilities of the nature contemplated by such indemnification (including any investigation, legal and other expenses incurred in connection therewith and any amount paid in settlement of any action, suit, or proceeding of any claims asserted, but after deducting any contribution received by the Mutual Savings Parties or the Agent from persons other than the other party thereto, who may also be liable for contribution) in such proportion so that (i) the Agent is responsible for that portion represented by the percentage that the fees paid to the Agent pursuant to Section 4 of this Agreement (not including expenses) (“Agent’s Fees”), less any portion of Agent’s Fees paid by Agent to Selected Dealers, bears to the total proceeds received by the Mutual Savings Parties from the sale of the Shares in the Offering, net of all expenses of the Offering, except Agent’s Fees and (ii) the Mutual Savings Parties shall be responsible for the balance. If, however, the allocation provided above is not permitted by applicable law or if the indemnified party failed to give the notice required under Section 12 above, then each indemnifying party shall contribute to such amount paid or payable to such indemnified party in such proportion as is appropriate to reflect not only such relative benefits received by the Mutual Savings Parties on the one hand and the Agent on the other from the Offering, but also the relative fault of the Mutual Savings Parties on the one hand and the Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Mutual Savings Parties on the one hand and the Agent on the other hand shall be deemed to be in the same proportion as the total proceeds from the Offering, except Agent’s fees, net of all expenses of the Offering, received by the Mutual Savings Parties bear, with respect to the Agent, to the total fees (not including expenses) received by the Agent less the portion of such fees paid by the Agent to Selected Dealers. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Mutual Savings Parties on the one hand or the Agent on the other and the parties’ relative intent, good faith, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Mutual Savings Parties and the Agent agree that it would not be just and equitable if contribution pursuant to this Section 13 were determined by pro-rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 13. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or action, proceedings or claims in respect thereof) referred to above in this Section 13 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. It is expressly agreed that the Agent shall not be liable for any loss, liability, claim, damage or expense or be required to contribute any amount which in the aggregate exceeds the amount paid (excluding reimbursable expenses) to the Agent under this Agreement, less the portion of such fees paid by the Agent to Selected Dealers. It is understood and agreed that the above-stated limitation on the Agent’s liability is essential to the Agent and that the Agent would not have entered into this Agreement if such limitation had not been agreed to by the parties to this Agreement. No person found guilty of any fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution with respect to any loss or liability arising from such misrepresentation from any person who was not found guilty of such fraudulent misrepresentation. The duties, obligations and liabilities of the Mutual Savings Parties and the Agent under this Section 13 and under Section 12 shall be in addition to any duties, obligations and liabilities which the Mutual Savings Parties and the Agent may otherwise have. For purposes of this Section 13, each of the Agent’s and the Mutual Savings Parties’ officers, directors and controlling persons within the meaning of the 1933 Act and the 1934 Act shall have the same rights to contribution as the Mutual Savings Parties and the Agent. Any party entitled to contribution, promptly after receipt of notice of commencement of any action, suit, claim or proceeding against such party in respect of which a claim for contribution may be made against another party under this Section 13, will notify such party from whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any other obligation it may have hereunder or otherwise than under this Section 13. Notwithstanding anything to the contrary in this Agreement, none of the Mutual Savings Parties shall provide any contribution under this Agreement to the extent prohibited by applicable securities and banking laws and regulations, including Section 23A and 23B of the Federal Reserve Act and Part 359 of the Regulations of the FDIC.

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Section 14.Survival.

(a)    All representations, warranties and indemnities and other statements contained in this Agreement, or contained in certificates of officers of the Mutual Savings Parties or the Agent submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of the Agent or its controlling persons, or by or on behalf of the Mutual Savings Parties and shall survive the issuance of the Shares, and any legal representative, successor or assign of the Agent, any of the Mutual Savings Parties, and any indemnified person shall be entitled to the benefit of the respective agreements, indemnities, warranties and representations.

(b)    The provisions of Paragraph 5 of the Engagement Letter, “Additional Services,” shall survive the issuance of the Shares (but not any termination or cancellation of this Agreement) for a period of three years from the Closing Date, and any legal representative, successor or assign of the Agent and any of the Mutual Savings Parties shall be entitled during such period to the benefit of the agreements contained therein.

Section 15.Termination.

(a)    Agent may terminate this Agreement by giving the notice indicated below in this Section at any time after this Agreement becomes effective as follows:

(i)    In the event (a) the Plan is abandoned or terminated by Mutual Savings; (b) Magnolia Bancorp fails to consummate the sale of the minimum number of Shares by the date on which such sale must be completed, in accordance with the provisions of the Plan or as required by the Conversion Regulations and applicable law; or (c) immediately prior to commencement of the Offering, the Agent terminates this relationship because such material adverse changes in the financial condition of Mutual Savings or the prospective market for Magnolia Bancorp’s Common Stock as in the Agent’s good faith opinion would make it inadvisable to proceed with the Offering, sale or delivery of the Shares, this Agreement shall terminate and Magnolia Bancorp shall refund to each person who has subscribed for or ordered any of the Shares the full amount which it may have received from such person, together with interest in accordance with Section 2 hereof, and any such termination shall be without liability of any party to any other party except as otherwise provided in Sections 2, 4 (excluding the fees set forth in Sections 4(a)(ii) and (iii)), 10, 12, 13 and 14 hereof.

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(ii)    If any of the conditions specified in Section 11 hereof shall not have been fulfilled when and as required by this Agreement or waived in writing by the Agent, this Agreement and all of the Agent’s obligations hereunder may be canceled by the Agent by notifying Magnolia Bancorp of such cancellation in writing at any time at or prior to the Closing Date, and any such cancellation shall be without liability of any party to any other party except as otherwise provided in Sections 4(a) and 10 (relating to the reimbursement of expenses) and Sections 12, 13 and 14 hereof.

(iii)    If Agent elects to terminate this Agreement as provided in this Section 15(a), Magnolia Bancorp shall be notified by the Agent as provided in Section 16 hereof.

(iv)    If this Agreement is terminated in accordance with the provisions of this Section 15(a), the Agent shall retain the advisory and management fee paid to it pursuant to Section 4(a) and the Mutual Savings Parties shall reimburse the Agent for any of its other actual, accountable, reasonable out-of-pocket expenses pursuant to Section 10, including, without limitation, communication, legal and travel expenses.

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(b)    Either Agent or the Mutual Savings Parties may terminate this Agreement in the event any of the Mutual Savings Parties (in the event of a termination initiated by Agent) or Agent (in the event of a termination initiated by the Mutual Savings Parties) is in material breach of the representations and warranties or covenants in this Agreement and such breach has not been cured within 15 days after the party initiating termination provides notice of such breach to the breaching party. If this Agreement is terminated by Agent under circumstances that would permit termination under Section 15(a) of this Agreement, then the provisions of Section 15(a) shall apply, regardless of whether this Agreement could also be terminated by Agent under this Section 15(b).

(c)    This Agreement may be terminated by the mutual written consent of the parties hereto.

(d)    This Agreement may be terminated by the Mutual Savings Parties if the Plan of Conversion is terminated, and the Mutual Savings Parties shall refund to each person who has subscribed for or ordered any of the Shares the full amount which it may have received from such person, together with interest in accordance with Section 2 hereof, and any such termination shall be without liability of any party to any other party except as otherwise provided in Sections 2, 4, 10, 12, 13 and 14 hereof.

Section 16.Notices . All communications hereunder, except as herein otherwise specifically provided, shall be mailed in writing and if sent to the Agent shall be mailed, delivered or emailed and confirmed to Keefe, Bruyette & Woods, Inc., 70 West Madison Street, Suite 2401, Chicago, Illinois 60602, Attention: Patricia A. McJoynt (with a copy to Breyer & Associates PC, 8180 Greensboro Drive, Suite 785, McLean, Virginia 22102, Attention: John F. Breyer, Jr., Esq. and to Keefe, Bruyette & Woods, Inc., 787 Seventh Avenue, 4^th^ Floor, New York, New York 10019, Attention: Chief Counsel – Investment Banking), and, if sent to the Mutual Savings Parties, shall be mailed, delivered or emailed and confirmed to Magnolia Bancorp and Mutual Savings at Mutual Savings, 2900 Clearview Parkway, Metairie, Louisiana 70006, Attention: Michael L. Hurley, President and Chief Executive Officer (with a copy to Silver, Freedman, Taff & Tiernan LLP, 3299 K Street, N.W. Suite 100, Washington D.C. 20007, Attention: Gerald F. Heupel, Jr, Esq.).

Section 17.Parties . This Agreement shall inure to the benefit of and be binding upon the Agent and the Mutual Savings Parties, and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 12 and 13 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provisions herein contained. It is understood and agreed that this Agreement is the exclusive agreement among the parties pertaining to the subject matter hereof, supersedes any prior Agreement among the parties and may not be varied except by a writing signed by all parties (except for specific references to the Engagement Letter and Conversion Agent Engagement Letter) and may not be varied except in writing signed by all the parties.

Section 18.Partial Invalidity . In the event that any term, provision or covenant herein or the application thereof to any circumstances or situation shall be invalid or unenforceable, in whole or in part, the remainder hereof and the application of said term, provision or covenant to any other circumstance or situation shall not be affected thereby, and each term, provision or covenant herein shall be valid and enforceable to the full extent permitted by law.

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Section 19.Construction . This Agreement shall be construed in accordance with the laws of the State of New York, except to the extent federal law shall apply.

Section 20.Counterparts. This Agreement may be executed in separate counterparts and by facsimile or electronic delivery, including by e-mail delivery of a pdf or scan of a manual signature, each of which so executed and delivered shall be an original, and all of which together shall constitute but one and the same instrument.

[Remainder of page intentionally blank. Signatures to follow]

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and us in accordance with its terms.

Very truly yours,

Mutual Savings and Loan Association<br> (a federally-chartered mutual savings and loan association)<br> <br> <br> By:   Its Authorized<br>          Representative:<br><br> <br><br><br> <br>/s/ Michael L. Hurley                                   <br> Name: Michael L. Hurley<br> Title: President and Chief Executive Officer Magnolia Bancorp, Inc.<br> (a Louisiana corporation)<br> <br> <br> By:   Its Authorized<br>          Representative:<br><br> <br><br><br> <br>/s/ Michael L. Hurley                                            <br> Name: Michael L. Hurley<br> Title: President and Chief Executive Officer
Accepted as of the date first above written<br><br> <br>Keefe, Bruyette & Woods, Inc.<br> <br> <br> By:   Its Authorized<br>          Representative:<br><br> <br><br><br> <br>/s/ Patricia A. McJoynt                                            <br> Name: Patricia A. McJoynt<br> Title: Director

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Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael L. Hurley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Magnolia Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
--- ---
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
Date: December 19, 2024 /s/ Michael L. Hurley
--- ---
Michael L. Hurley
President and Chief Executive Officer

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Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Anita C. Cambre, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Magnolia Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
--- ---
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
Date: December 19, 2024 /s/ Anita C. Cambre
--- ---
Anita C. Cambre
Vice President and Chief Financial Officer

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Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Michael L. Hurley, President and Chief Executive Officer of Magnolia Bancorp, Inc. (the “Company”), certify in my capacity as an officer of the Company that he has reviewed the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “Report”) and that to the best of my knowledge:

1. the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
--- ---
Date: December 19, 2024 /s/ Michael L. Hurley
--- ---
Michael L. Hurley<br><br> <br>President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Anita C. Cambre, Chief Financial Officer and Treasurer of Magnolia Bancorp, Inc. (the “Company”), certify in my capacity as an officer of the Company that he has reviewed the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “Report”) and that to the best of my knowledge:

1. the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
--- ---
Date: December 19, 2024 /s/ Anita C. Cambre
--- ---
Anita C. Cambre
Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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