Greenish blue spotty Mold spores on Magnolia tree trunk identity & help
The spots on the trunk are lichens and they are not the reason for decline. Lichen grows harmlessly on tree trunks and no control is necessary. See our website for more information http://extension.umd.edu/hgic/lichens-trees-and-shrubs
There is trunk damage on the magnolia but we cannot say for sure what caused it. May have been lawn mower damage, canker (causes the bark to crack and fall away exposing dead wood underneath), planting too deeply, etc. Symptoms can include branch dieback. There are no chemical controls or pruning paint recommended.
We cannot see what the canopy of the tree looks like. All you can do is prevent additional damage. Remove the grass and weeds from around the base of the trunk to prevent additional damage. Mulch with several inches of mulch and keep away from the base of the trunk. Water during dry periods and prune dead wood. Monitor the health of the plant. You will have to decide if you want to replant.