Marathon Bancorp, Inc. /MD/ [MBBC] Filings

10-Q 1 mara-20230930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	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: 000-56269

MARATHON BANCORP, INC.

(Exact name of registrant as specified in its charter)


Maryland		86-2191258
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



500 Scott Street, Wausau, Wisconsin		54403
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (715) 845-7331

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

None

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, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “small 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 7(a)(2)(B) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

As of November 13, 2023, there were 2,157,497 shares of the registrant’s common stock issued and outstanding.

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MARATHON BANCORP, INC.

INDEX


		PAGE NO.
PART I - FINANCIAL INFORMATION		2

Item 1.	Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and June 30, 2023	2
	Consolidated Statements of Income for the Three Months ended September 30, 2023 and 2022 (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months ended September 30, 2023 and 2022 (Unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months ended September 30, 2023 and 2022 (Unaudited)	5
	Consolidated Statements of Cash Flows for the Three Months ended September 30, 2023 and 2022 (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	46

PART II - OTHER INFORMATION		47

Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other information	47
Item 6.	Exhibits	48

SIGNATURES		49

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PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MARATHON BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


	Unaudited		June 30,
	September 30, 2023		2023
Assets
Cash and due from banks	$	3,258,420	$	2,272,088
Federal funds sold		3,722,000		9,503,000
Cash and cash equivalents		6,980,420		11,775,088
Interest bearing deposits held in other financial institutions		3,941,269		3,762,139
Debt securities available for sale		8,625,718		8,921,715
Debt securities held to maturity, at amortized cost (fair value $388,554 and $378,046)		510,381		516,089
Loans, net of allowance of $2,025,197 and $2,158,590, respectively		197,663,038		197,713,756
Interest receivable		534,187		612,724
Foreclosed assets (OREO)		2,312,240		2,312,240
Investment in restricted stock, at cost		815,842		770,273
Cash surrender value life insurance		8,784,172		8,724,198
Premises and equipment, net		3,703,974		2,128,392
Deferred tax asset		337,033		486,916
Other assets		1,417,718		1,055,069
Total assets	$	235,625,992	$	238,778,599
Liabilities and Stockholders' Equity
Liabilities
Deposits
Non-interest bearing	$	24,455,871	$	26,180,842
Interest bearing		164,152,256		171,073,464
Total deposits		188,608,127		197,254,306
Federal Home Loan Bank (FHLB) advances		13,000,000		8,000,000
Other liabilities		2,560,484		2,244,775
Total liabilities		204,168,611		207,499,081
Commitments and Contingent Liabilities ( see note 11)		—		—
Stockholders' Equity
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued		—		—
Common stock, $.01 par value, 20,000,000 shares authorized, 2,157,497 shares issued and outstanding at September 30, 2023 and June 30, 2023		21,141		21,141
Additional paid-in capital		7,293,997		7,252,506
Retained earnings		25,796,872		25,577,300
Unearned ESOP shares, at cost		(777,832)		(786,572)
Accumulated other comprehensive loss		(876,797)		(784,857)
Total stockholders' equity		31,457,381		31,279,518
Total liabilities and stockholders' equity	$	235,625,992	$	238,778,599

See accompanying notes to the consolidated financial statements.

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MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited



	Three Months		Three Months
	Ended September 30,		Ended September 30,
	2023		2022
Interest Income
Loans, including fees	$	2,180,645	$	1,911,400
Debt securities		57,963		70,217
Other		166,529		45,526
Total interest income		2,405,137		2,027,143
Interest Expense
Deposits		762,801		304,400
Borrowings and other		79,016		9,862
Total interest expense		841,817		314,262
Net Interest Income		1,563,320		1,712,881
Provision for Credit Losses		41,000		—
Net Interest Income After Provision for Credit Losses		1,522,320		1,712,881
Non-Interest Income
Service charges on deposit accounts		31,279		40,866
Mortgage banking income		130,604		81,590
Increase in cash value of life insurance		59,974		57,026
Gain on proceeds from life insurance death benefit		—		173,268
Other income		6,382		7,454
Total non-interest income		228,239		360,204
Non-Interest Expenses
Salaries and employee benefits		772,790		831,867
Occupancy and equipment expenses		169,822		171,521
Data processing and office		109,644		87,050
Professional fees		170,736		185,067
Marketing expenses		15,189		17,806
Foreclosed assets, net		13,620		—
Other expenses		211,082		151,960
Total non-interest expenses		1,462,883		1,445,271
Income Before Income Taxes		287,676		627,814
Provision for Income Taxes		201,479		116,661
Net Income	$	86,197	$	511,153

Net income per common share-basic		$0.04		$0.24
Net income per common share-diluted		$0.04		$0.24
Weighted average number of common shares outstanding-basic		2,043,296		2,147,781
Weighted average number of common shares outstanding-diluted		2,046,349		2,147,781

See accompanying notes to the consolidated financial statements.

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MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited


	Three Months Ended
	September 30,
	2023		2022
Net Income	$	86,197	$	511,153
Other comprehensive loss
Unrealized losses on available for sale debt securities
Unrealized holding loss arising during the period		(118,316)		(177,671)
Tax effect		24,837		48,400
Net amount		(93,479)		(129,271)
Amortization of unrealized losses on debt securities transferred from available for sale to held to maturity (a)		1,539		1,461
Other comprehensive loss		(91,940)		(127,810)
Comprehensive Income (Loss)	$	(5,743)	$	383,343

(a) The reclassification adjustment is reflected in the Consolidated Statement of Income as Interest Income - Debt Securities.

See accompanying notes to the consolidated financial statements.

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MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Unaudited


											Accumulated
					Additional				Unearned		Other
	Preferred		Common		Paid-in		Retained		ESOP		Comprehensive
	Stock		Stock		Capital		Earnings		Shares		Loss		Total
Balance, July 1, 2023	$	—	$	21,141	$	7,252,506	$	25,577,300	$	(786,572)	$	(784,857)	$	31,279,518
Cumulative effect adjustment for ASU 2016-13 Current Expected Credit Losses ( Notes 1 and 4)		—		—		—		133,375		—		—		133,375
Net income		—		—		—		86,197		—		—		86,197
Other comprehensive loss		—		—		—		—		—		(91,940)		(91,940)
ESOP shares committed to be released (874 shares)		—		—		1,716		—		8,740		—		10,456
Stock based compensation		—		—		39,775		—		—		—		39,775
Balance, September 30, 2023	$	—	$	21,141	$	7,293,997	$	25,796,872	$	(777,832)	$	(876,797)	$	31,457,381


												Accumulated
						Additional				Unearned		Other
		Preferred		Common		Paid-in		Retained		ESOP		Comprehensive
		Stock		Stock		Capital		Earnings		Shares		Loss		Total
Balance, July 1, 2022	$	—	$	22,295	$	8,487,400	$	23,423,432	$	(821,531)	$	(369,029)	$	30,742,567
Net income		—		—		—		511,153		—		—		511,153
Other comprehensive loss		—		—		—		—		—		(127,810)		(127,810)
ESOP shares committed to be released (874 shares)		—		—		874		—		8,740		—		9,614
Stock based compensation		—		—		34,620		—		—		—		34,620
Balance, September 30, 2022	$		$	22,295	$	8,522,894	$	23,934,585	$	(812,791)	$	(496,839)	$	31,170,144

See accompanying notes to the consolidated financial statements.

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MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited


	Three Months Ended
	September 30,
	2023		2022
Operating Activities
Net income	$	86,197	$	511,153
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		44,825		50,221
Provision for credit losses		41,000		—
Stock based compensation		39,775		34,620
ESOP expense		10,456		9,614
Net amortization of discounts and premiums on debt securities		24,044		25,855
Amortization of deferred loan fees, net		(11,561)		(10,182)
Net gain on sale of loans		(65,867)		(34,295)
Net change in deferred taxes		139,805		80,049
Gain on proceeds from life insurance death benefit		—		(173,268)
Earnings on cash value of life insurance		(59,974)		(57,026)
Decrease in interest receivable		78,537		11,966
Originations of loans held for sale		(2,601,000)		(871,800)
Proceeds from loans held for sale		2,666,867		906,095
Net change in operating leases		649		(9,403)
Net change in other assets		(362,649)		(28,388)
Net change in other liabilities		335,577		1,031,253
Net Cash Provided by Operating Activities		366,681		1,476,464
Investing Activities
Net change in interest-bearing deposits in other financial institutions		(179,130)		1,638,560
Proceeds from life insurance death benefit		—		641,757
Proceeds from maturities and repayments of debt securities available for sale		153,377		324,406
Proceeds from maturities and calls of debt securities held to maturity		7,509		7,437
Increase in restricted stock		(45,569)		(447,273)
Net (increase) decrease in loans		196,279		(7,759,425)
Purchases of property and equipment		(1,647,636)		(61,671)
Net Cash Used in Investing Activities		(1,515,170)		(5,656,209)
Financing Activities
Net change in deposits		(8,646,179)		(347,733)
Proceeds from FHLB advances		5,000,000		14,000,000
Net Cash Provided by (Used in) Financing Activities		(3,646,179)		13,652,267
Net Change in Cash and Cash Equivalents		(4,794,668)		9,472,522
Cash and Cash Equivalents, Beginning of Year		11,775,088		8,428,041
Cash and Cash Equivalents, End of Period	$	6,980,420	$	17,900,563
Supplemental Disclosure of Cash Flow Information
Cash payments for
Interest	$	771,411	$	318,141
Taxes		191,000		35,000

Supplemental Schedule of Noncash Investing and Financing Activities
Lease liabilities and right-of-use assets arising from adoption of ASC 842	$	—	$	698,837

See accompanying notes to the consolidated financial statements.

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MARATHON BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1- Basis of Presentation

Marathon Bancorp, Inc. (the “Company”) is a Maryland chartered mid-tier stock holding company and was formed in connection with the conversion of Marathon Bank (the “Bank”) from a mutual to the mutual holding company form of organization in April 2021, and it is a subsidiary of Marathon MHC (the “Mutual Holding Company”), a Wisconsin chartered mutual holding company. The Mutual Holding Company received 1,226,223 shares, or 55.0%, of the Company’s issued stock at the time of the reorganization. In connection with the reorganization, Marathon Bancorp, Inc. sold 1,003,274 shares of common stock to the public at $10.00 per share, representing 45.0% of its outstanding shares of common stock at the time of the reorganization. The stock offering resulted in gross proceeds of $10.0 million, net of offering expenses of $1.4 million, resulting in net proceeds of $8.5 million. The Mutual Holding Company activity is not included in the accompanying consolidated financial statements. Marathon Bank is a wholly owned subsidiary of the Company. The same directors and officers, who manage the Bank, also manage the Company and the Mutual Holding Company.

The Bank is a Wisconsin stock savings bank, which conducts its business through four facilities. We expect to open a new branch in Brookfield, Wisconsin in the third quarter of fiscal 2024 subject to the receipt of applicable regulatory approvals. The Bank operates as a full-service financial institution with a primary market area including, but not limited to, Marathon County and Ozaukee County, Wisconsin. Its primary deposit products are demand deposits, savings, and certificates of deposits; and its primary lending products are commercial real estate, commercial and industrial, construction, one-to-four-family residential, multi-family real estate and consumer loans.

The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the financial statements. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses, valuation of deferred tax assets, and fair value of financial assets and liabilities.

In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three month period ended September 30, 2023 are not necessarily indicative of the results for the year ending June 30, 2024 or any other period. For further information, refer to the consolidated financial statements and notes thereto for the years ended June 30, 2023 and 2022 contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on September 20, 2023.

Recent Accounting Pronouncements

This section provides a summary description of recent ASUs issued by the FASB to the ASC that had or that management expects may have an impact on the consolidated financial statements issued upon adoption. The Company is classified as an emerging growth company and has elected 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. Effective dates reflect this election.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”).” The ASU, as amended, requires an entity to measure expected credit losses for financial assets carried at amortized cost based on historical experience, current conditions, and reasonable and supportable forecasts. Among other things, the ASU also

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amended the impairment model for available for sale securities and addressed purchased financial assets with deterioration. ASU 2016-13 was effective for the Company on July 1, 2023. The adjustment recorded at adoption reduced the allowance for credit losses (“ACL”) by $175,000, net of deferred taxes of $36,750 and resulted in the establishment of a reserve for unfunded loan commitments of $6,702, net of deferred taxes of $1,827. These adjustments, net of tax, increased the opening balance of retained earnings of the Company and the Bank by $133,375 as of the date of adoption.

In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-02, “Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. ASU 2022-02 was effective for the Company on July 1, 2023. There was no material impact to the Company at adoption.

The following table illustrates the impact of adopting ASC 326 (in thousands):



		June 30, 2023			July 1, 2023			July 1, 2023
		As Previously						As Reported
		Reported			Impact of			Under
		(Incurred Loss)			ASC 326			ASC 326

Assets:
Loans, net	$		197,713,756	$		175,000	$		197,888,756

Deferred income taxes, net			486,916			(34,923)			451,993

Liabilities:
Reserve for credit losses on
unfunded commitments (included in other liabilities)			—			(6,702)			(6,702)

Total equity:	$		31,279,518	$		133,375	$		31,412,893

The following accounting policies have been updated in connection with the adoption of ASC 326 and apply to periods beginning after June 30, 2023. Accounting policies applying to prior periods are described in the 2023 Annual Report.

Allowance for Credit Losses on Loans: The allowance for credit losses on loans is established through charges to earnings in the form of a provision for credit losses. Loan losses are charged against the allowance for credit losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

The allowance represents management’s current estimate of expected credit losses over the contractual term of loans, and is recorded at an amount that, in management’s judgment, reduces the recorded investment in loans to the net amount expected to be collected. No allowance for credit loss is recorded on accrued interest receivable and amounts written-off are reversed by an adjustment to interest income. Management’s judgment in determining the level of the allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans. Loans that share common risk characteristics are evaluated collectively using a weighted-average remaining maturity methodology. The weighted-average remaining maturity methodology uses an

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average annual charge-off rate as a foundation for estimating the credit loss for the remaining balances of all loan pools. The average annual charge-off rate is applied to the contractual term, further adjusted for estimated prepayments to determine the unadjusted historical charge-off rate.

Management’s estimate of the allowance for credit losses on loans that are collectively evaluated also includes a qualitative assessment of available information relevant to assessing collectability that is not captured in the loss estimation process. This includes forecast that are reasonable and supportable concerning expectations of future economic conditions. The reasonable and supportable forecast period is 24 months. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

These qualitative risk factors include:

Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.

Changes in the value of underlying collateral for collateral dependent loans.

Nature and volume of the portfolio and terms of loans.

Volume and severity of past due, classified and nonaccrual loans as well as other loan modifications.

Existence and effect of any concentrations of credit and changes in the level of such concentrations.

Experience, ability, and depth of lending management and other relevant staff.

Quality of loan review and Board of Director oversight.

The effect of other external factors such as competition, legal and regulatory requirements.

Changes in national and local economic conditions related to unemployment, house price index, and gross domestic product.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for credit losses calculation for our loan portfolio.

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The evaluation also considers the following risk characteristics of each loan portfolio segment:

●

One- to four-family residential real estate loans carry risks associated with the continued creditworthiness of the borrower and changes in the value of the collateral.

●

Commercial real estate loans carry risks associated with the successful operation of a business or a real estate project, in addition to other risks associated with the ownership of real estate, because repayment of these loans may be dependent upon the profitability and cash flows of the business or project.

●

Construction loans carry risks that the project may not be finished according to schedule, the project may not be finished according to budget, and the value of the collateral may, at any point in time, be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be a loan customer, may be unable to finish the construction project as planned because of financial pressure or other factors unrelated to the project.

	●	Commercial and industrial loans carry risks associated with the successful operation of a business because repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much reliability.
	●	Multifamily real estate loans are generally secured by properties consisting of five or more rental units in our market area. Our multifamily real estate loans generally have fixed rates, initial terms of five years and amortization periods of up to 30 years, with a balloon payment due at the end of the initial term. Virtually all of our multifamily real estate loans are secured by properties located within our primary lending markets in Wisconsin.

●

Consumer loans carry risk associated with the continued creditworthiness of the borrower and the value of the collateral, if any. These loans are typically either unsecured or secured by rapidly depreciating assets. They are also likely to be immediately and adversely affected by job loss, divorce, illness, personal bankruptcy, or other changes in circumstances.

Loans that do not share common risk characteristics with other loans are evaluated individually and are not included in the collective analysis. The allowance for credit losses on loans that are individually evaluated may be estimated based on their expected cash flows, or, in the case of loans for which repayment is expected substantially through the operation or sale of collateral when the borrower is experiencing financial difficulty, may be measured based on the fair value of the collateral less estimated costs to sell.

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Allowance for Credit Losses on Unfunded Commitments. The Company records an allowance, reported in other liabilities, for expected credit losses on commitments to extend credit that are not unconditionally cancelable by the Company. The allowance for unfunded commitments is measured based on the principles utilized in estimating the allowance for credit losses on loans and an estimate of the amount of unfunded commitments expected to be advanced. Changes in the allowance for unfunded commitments are recorded through the provision for credit losses.

Allowance for Credit Losses on Available for Sale (“AFS”) Securities. Prior to implementation of CECL, unrealized losses on AFS debt securities caused by a credit event would require the direct write-down of the AFS security through the other-than-temporary impairment approach; however, the new standard requires credit losses to be presented as an ACL. The Company is still required to conduct an impairment evaluation on AFS securities to determine whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If these situations apply, the guidance continues to require the Company to reduce the security's amortized cost basis down to its fair value through earnings. The Company also evaluates the unrealized losses on AFS securities to determine if a security's decline in fair value below its amortized cost basis is due to credit factors. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of a decline in the fair value of the security due to a credit factor. This includes, but is not limited to, the extent to which fair value is less than amortized cost, the current interest rate environment, changes to rating of security or security issuer, and adverse conditions specifically related to the security among other factors. If this assessment indicates that a credit loss exists, the present value of the expected cash flows of the security is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost, an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis under the CECL standard, and declines due to non-credit factors are recorded in AOCI, net of taxes. If a credit loss is recognized in earnings, subsequent improvements to the expectation of collectability will be recognized through the ACL. If the fair value of the security increases above its amortized cost, the unrealized gain will be recorded in accumulated other comprehensive income (“AOCI”), net of taxes, on the unaudited consolidated balance sheets. Accrued interest receivable on AFS securities is excluded from the estimate of credit losses. The Company did not record a cumulative-effect adjustment related to its AFS securities upon adoption of CECL on July 1, 2023. See Note 3, Debt Securities, to the unaudited consolidated financial statements under Part I, Item 1, "Financial Information," for a description of the Company’s investment securities and impairment evaluation.

Allowance for Credit Losses on Held to Maturity (“HTM”) Securities. The Company’s portfolio of held to maturity securities consists of U.S. agency residential mortgage-backed securities which are highly rated by major rating agencies and have a long history of no credit losses. In estimating the net amount expected to be collected for held to maturity securities in an unrealized loss position, a historical loss based method is utilized.

Recently Issued, But Not Yet Effective Accounting Pronouncements

There are no recent ASUs issued by the FASB to the ASC that had or that management expects may have an impact on the consolidated financial statements issued upon adoption.

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Note 2- Earnings Per Share

Basic net income per common share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released. Diluted earnings per share is adjusted for the dilutive effects of stock based compensation and is calculated using the treasury stock method. There were no anti-dilutive effects for the three months ended September 30, 2023 or 2022. Set forth below is the calculation of earnings per share.


	For the Three Months
	Ended September 30,
	2023		2022


Net income applicable to common stock	$	86,197	$	511,153

Average number of shares outstanding		2,121,516		2,229,497
Less: Average unallocated ESOP shares		78,220		81,716

Average number of common shares outstanding used to calculate basic earnings per share		2,043,296		2,147,781
Effect of dilutive restricted stock awards		3,053		—
Average number of common shares outstanding used to calculate diluted earnings per share		2,046,349		2,147,781

Earnings per common share:
Basic	$	0.04	$	0.24
Diluted		0.04		0.24

Note 3- Debt Securities

Debt securities have been classified in the consolidated balance sheet according to management’s intent. The carrying value of securities as of September 30, 2023 and June 30, 2023, consists of the following:


		Unaudited
	September 30, 2023		June 30, 2023
Available for sale debt securities, at fair value	$	8,625,718	$	8,921,715
Held to maturity debt securities, at amortized cost		510,381		516,089
	$	9,136,099	$	9,437,804

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The amortized cost and fair value of debt securities, with gross unrealized gains and losses, are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
September 30, 2023
Available for sale debt securities
States and municipalities	$	904,376	$	8	$	(9,770)	$	894,614
Mortgage-backed		1,777,494		23,698		(127,316)		1,673,876
Corporate bonds		7,079,191		—		(1,021,963)		6,057,228
	$	9,761,061	$	23,706	$	(1,159,049)	$	8,625,718
Held to maturity debt securities
Mortgage-backed	$	510,381	$	—	$	(121,827)	$	388,554


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
June 30, 2023
Available for sale debt securities
States and municipalities	$	904,308	$	503	$	(16,739)	$	888,072
Mortgage-backed		1,935,106		23,125		(111,217)		1,847,014
Corporate bonds		7,099,328		—		(912,699)		6,186,629
	$	9,938,742	$	23,628	$	(1,040,655)	$	8,921,715
Held to maturity debt securities
Mortgage-backed	$	516,089	$	—	$	(138,043)	$	378,046

There is no allowance for credit losses on available for sale and held to maturity debt securities at September 30, 2023. Securities with a carrying value of approximately $355,000 and $415,000 as of September 30, 2023 and June 30, 2023, respectively, were pledged to secure public deposits and debt.

The amortized cost and fair value of debt securities by contractual maturity at September 30, 2023, follows:


	Available for Sale Debt Securities				Held to Maturity Debt Securities
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
September 30, 2023
Due in one year or less	$	502,356	$	496,420	$	—	$	—
Due from more than one to five years		2,851,425		2,782,002		—		—
Due from more than five to ten years		4,629,786		3,673,420		—		—
		7,983,567		6,951,842		—		—
Mortgage-backed securities		1,777,494		1,673,876		510,381		388,554
	$	9,761,061	$	8,625,718	$	510,381	$	388,554

There were no sales of available for sale debt securities during the three month periods ended September 30, 2023 and 2022.

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The following table shows the gross unrealized losses and fair value of the Company’s securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2023 and June 30, 2023:


	Less than 12 Months				12 Months or More				Total
	Gross				Gross				Gross
	Unrealized				Unrealized				Unrealized
	Losses		Fair Value		Losses		Fair Value		Losses		Fair Value
September 30, 2023
Available for sale debt securities
States and municipalities	$	(5,201)	$	319,349	$	(4,569)	$	360,257	$	(9,770)	$	679,606
Mortgage-backed		(996)		24,107		(126,320)		1,521,065		(127,316)		1,545,172
Corporate bonds		—		—		(

Marathon Bancorp, Inc. /MD/ [MBBC] Filings
10-Q	[2023-11-14]
10-K	[2023-09-20]
10-Q	[2023-05-12]
10-Q	[2023-02-14]
10-Q	[2022-11-14]
10-K	[2022-09-28]
10-Q	[2022-05-13]
10-Q	[2022-02-11]
10-Q	[2021-11-12]
10-K	[2021-09-28]
10-Q	[2021-05-13]
10-Q	[2021-03-26]
S-1	[2020-12-11]