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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 March 31, 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: 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

 

None

 

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 May 10, 2024, there were 2,147,497 shares of the registrant’s common stock issued and outstanding.

MARATHON BANCORP, INC.

INDEX

    

PAGE NO.

PART I - FINANCIAL INFORMATION

2

 

 

Item 1.

Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and June 30, 2023

2

 

Consolidated Statements of Income (Loss) for the Three and Nine Months ended March 31, 2024 and 2023 (Unaudited)

3

 

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended March 31, 2024 and 2023 (Unaudited)

4

 

Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months ended March 31, 2024 and 2023 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2024 and 2023 (Unaudited)

7

 

Notes to Consolidated Financial Statements (Unaudited)

8

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

56

 

 

Item 4.

Controls and Procedures

56

 

 

PART II - OTHER INFORMATION

57

 

 

Item 1.

Legal Proceedings

57

Item 1A.

Risk Factors

57

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

57

Item 3.

Defaults upon Senior Securities

57

Item 4.

Mine Safety Disclosures

57

Item 5.

Other information

57

Item 6.

Exhibits

58

 

 

SIGNATURES

59

1

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MARATHON BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

    

Unaudited

    

June 30, 

March 31, 2024

2023

Assets

Cash and due from banks

$

2,637,108

$

2,272,088

Federal funds sold

 

5,445,000

 

9,503,000

Cash and cash equivalents

 

8,082,108

 

11,775,088

Interest bearing deposits held in other financial institutions

 

419,154

 

3,762,139

Debt securities available for sale

 

6,919,040

 

8,921,715

Debt securities held to maturity, at amortized cost (fair value $386,037 and $378,046)

 

511,024

 

516,089

Loans, net of allowance of $1,769,585 and $2,158,590, respectively

 

191,925,385

197,713,756

Interest receivable

 

594,427

 

612,724

Foreclosed assets (OREO), net

 

1,397,460

 

2,312,240

Investment in restricted stock, at cost

 

1,329,413

 

770,273

Cash surrender value life insurance

 

8,908,478

 

8,724,198

Premises and equipment, net

 

4,116,247

 

2,128,392

Deferred tax assets

 

500,221

 

486,916

Other assets

 

1,113,381

 

1,055,069

Total assets

$

225,816,338

$

238,778,599

Liabilities and Stockholders' Equity

Liabilities

Deposits

Non-interest bearing

$

24,375,447

$

26,180,842

Interest bearing

 

145,305,143

 

171,073,464

Total deposits

169,680,590

197,254,306

Federal Home Loan Bank (FHLB) advances

 

23,000,000

 

8,000,000

Other liabilities

 

1,858,199

 

2,244,775

Total liabilities

 

194,538,789

 

207,499,081

Commitments and Contingent Liabilities ( see note 14)

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 March 31, 2024 and June 30, 2023

21,141

21,141

Additional paid-in capital

7,369,030

7,252,506

Retained earnings

 

25,437,845

 

25,577,300

Unearned ESOP shares, at cost

(760,353)

(786,572)

Accumulated other comprehensive loss

 

(790,114)

 

(784,857)

Total stockholders' equity

 

31,277,549

 

31,279,518

Total liabilities and stockholders' equity

$

225,816,338

$

238,778,599

See accompanying notes to the consolidated financial statements.

2

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Unaudited

    

 Three Months

    

Three Months

    

Nine Months

    

Nine Months

Ended March 31, 

Ended March 31, 

Ended March 31, 

Ended March 31, 

2024

2023

2024

2023

Interest Income

Loans, including fees

$

2,135,417

$

2,065,387

$

6,505,760

$

5,998,925

Debt securities

 

50,605

 

60,172

 

165,609

 

190,261

Other

 

135,274

 

161,225

 

457,447

 

370,203

Total interest income

 

2,321,296

 

2,286,784

 

7,128,816

 

6,559,389

Interest Expense

Deposits

 

703,877

 

630,640

 

2,226,068

 

1,461,648

Borrowings and other

 

212,493

 

6,187

 

448,655

 

45,038

Total interest expense

 

916,370

 

636,827

 

2,674,723

 

1,506,686

Net Interest Income

 

1,404,926

 

1,649,957

 

4,454,093

 

5,052,703

Provision for (Recovery of) Credit Losses

 

(122,000)

 

 

(216,000)

 

Net Interest Income After Provision for (Recovery of) Credit Losses

 

1,526,926

 

1,649,957

 

4,670,093

 

5,052,703

Non-Interest Income

 

  

 

  

 

  

 

  

Service charges on deposit accounts

 

28,743

 

32,744

 

92,565

 

117,692

Mortgage banking income

 

49,230

 

72,285

 

254,632

 

208,528

Increase in cash value of life insurance

 

63,092

 

59,792

 

184,280

 

179,208

Gain on proceeds from life insurance death benefit

88,029

261,297

Net gain on securities transactions

 

 

 

 

24,000

Other income

 

6,055

 

6,646

 

20,395

 

22,437

Total non-interest income

 

147,120

 

259,496

 

551,872

 

813,162

Non-Interest Expenses

 

  

 

  

 

  

 

  

Salaries and employee benefits

 

804,470

 

832,532

 

2,337,957

 

2,496,076

Occupancy and equipment expenses

 

239,599

 

208,147

 

621,644

 

556,848

Data processing and office

 

121,826

 

110,656

 

338,220

 

297,190

Professional fees

 

171,847

 

159,867

 

559,670

 

533,775

Marketing expenses

 

15,165

 

18,445

 

55,086

 

69,800

Foreclosed assets, net

970,396

1,007,037

Other expenses

 

184,826

 

155,882

 

605,855

 

467,533

Total non-interest expenses

 

2,508,129

 

1,485,529

 

5,525,469

 

4,421,222

Income (Loss) Before Income Taxes (Benefit)

 

(834,083)

 

423,924

 

(303,504)

 

1,444,643

Provision for (Benefit from) Income Taxes

 

(202,956)

 

58,228

 

(30,674)

 

266,394

Net Income (Loss)

$

(631,127)

$

365,696

$

(272,830)

$

1,178,249

Net income (loss) per common share-basic

($0.31)

$0.17

($0.13)

$0.55

Net income (loss) per common share-diluted

($0.31)

$0.17

($0.13)

$0.55

Weighted average number of common shares outstanding-basic

2,045,044

2,100,058

2,044,170

2,132,381

Weighted average number of common shares outstanding-diluted

2,046,707

2,105,104

2,044,170

2,135,043

See accompanying notes to the consolidated financial statements.

3

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

    

Three Months Ended

March 31, 

2024

2023

Net Income (Loss)

$

(631,127)

$

365,696

Other comprehensive income (loss)

Unrealized gains on available for sale debt securities

Unrealized holding gains arising during the period

 

36,582

 

19,644

Tax effect

 

(7,684)

 

(5,351)

Net amount

 

28,898

 

14,293

Reclassification adjustment for amortization of stranded tax effect from change in tax legislation (b)

(3,476)

Amortization of unrealized losses on debt securities transferred from available for sale to held to maturity (a)

 

1,065

 

1,528

Other comprehensive income

 

26,487

 

15,821

Comprehensive Income (Loss)

$

(604,640)

$

381,517

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

(b) The reclassification adjustment is included in the Consolidated Statements of Income (Loss) as Other Expenses.

See accompanying notes to the consolidated financial statements.

4

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

    

Nine Months Ended

March 31, 

2024

2023

Net Income (Loss)

$

(272,830)

$

1,178,249

Other comprehensive loss

Unrealized losses on available for sale debt securities

Unrealized holding losses arising during the period

 

(2,201)

 

(432,993)

Tax effect

 

453

 

118,548

Net amount

 

(1,748)

 

(314,445)

 

  

 

  

Reclassification adjustment for gains included in net income (a)

 

 

(24,000)

Tax effect

 

 

6,538

Net amount

 

 

(17,462)

Reclassification adjustment for amortization of stranded tax effect from change in tax legislation (c)

 

(7,291)

 

Amortization of unrealized losses on debt securities transferred from available for sale to held to maturity (b)

 

3,782

 

4,334

Other comprehensive loss

 

(5,257)

 

(327,573)

Comprehensive Income (Loss)

$

(278,087)

$

850,676

(a) The reclassification adjustment is included in the Consolidated Statements of Income (Loss) as Net Gain on Securities Transactions.

(b) The reclassification adjustment is reflected in the Consolidated Statements of Income (Loss) as Interest Income-Debt Securities.

(c) The reclassification adjustment is included in the Consolidated Statements of Income (Loss) as Other Expenses.

See accompanying notes to the consolidated financial statements.

5

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

Net income

272,100

272,100

Other comprehensive income

60,196

60,196

ESOP shares committed to be released (874 shares)

(6,265)

8,740

2,475

Stock based compensation

39,775

39,775

Balance, December 31, 2023

21,141

7,327,507

26,068,972

(769,092)

(816,601)

31,831,927

Net loss

(631,127)

(631,127)

Other comprehensive income

26,487

26,487

ESOP shares committed to be released (874 shares)

1,748

8,739

10,487

Stock based compensation

39,775

39,775

Balance, March 31, 2024

$

$

21,141

$

7,369,030

$

25,437,845

$

(760,353)

$

(790,114)

$

31,277,549

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

Net income

301,400

301,400

Other comprehensive loss

(215,584)

(215,584)

ESOP shares committed to be released (874 shares)

798

8,740

9,538

Stock based compensation

30,727

30,727

Purchase and retirement of common stock (6,781 shares)

(68)

(76,557)

(76,625)

Balance, December 31, 2022

22,227

8,477,862

24,235,985

(804,051)

(712,423)

31,219,600

Net income

365,696

365,696

Other comprehensive income

15,821

15,821

ESOP shares committed to be released (874 shares)

1,748

8,739

10,487

Stock based compensation

29,573

29,573

Purchase and retirement of common stock (106,704 shares)

(1,067)

(1,257,905)

(1,258,972)

Balance, March 31, 2023

$

$

21,160

$

7,251,278

$

24,601,681

$

(795,312)

$

(696,602)

$

30,382,205

See accompanying notes to the consolidated financial statements.

6

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

Nine Months Ended

March 31, 

    

2024

    

2023

Operating Activities

Net income (loss)

$

(272,830)

$

1,178,249

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

175,229

153,411

Provision for (recovery of) credit losses

(216,000)

Provision for valuation allowance on foreclosed assets (OREO), net

937,100

Stock based compensation

119,325

94,920

ESOP expense

23,418

29,639

Net amortization of discounts and premiums on debt securities

59,917

77,524

Amortization of deferred loan fees, net

(26,003)

(36,542)

Net gain on sale of loans

(120,191)

(85,853)

Net gain on securities transactions

(24,000)

Net change in deferred taxes

(55,067)

201,683

Gain on proceeds from life insurance death benefit

(261,297)

Earnings on cash value of life insurance

(184,280)

(179,208)

Decrease (increase) in interest receivable

18,297

(22,490)

Originations of loans held for sale

(4,392,500)

(2,143,200)

Proceeds from loans held for sale

4,512,691

2,229,053

Net change in operating leases

1,945

(7,542)

Net change in other assets

(80,632)

2,892

Net change in other liabilities

(312,902)

48,862

Net Cash Provided by Operating Activities

187,517

1,256,101

Investing Activities

  

  

Net change in interest-bearing deposits in other financial institutions

3,342,985

(1,833,732)

Proceeds from life insurance death benefit

966,833

Proceeds from maturities, calls and repayments of debt securities available for sale

1,939,900

869,164

Proceeds from maturities and calls of debt securities held to maturity

9,504

20,139

Increase in restricted stock

(559,140)

(447,273)

Net (increase) decrease in loans

6,205,374

(16,394,687)

Purchases of property and equipment

(2,245,404)

(65,364)

Net Cash Provided by (Used in) Investing Activities

8,693,219

(16,884,920)

Financing Activities

  

  

Net change in deposits

(27,573,716)

12,972,430

Proceeds from FHLB advances

15,000,000

5,000,000

Purchase and retirement of common stock

(1,335,597)

Net Cash Provided by (Used in) Financing Activities

(12,573,716)

16,636,833

Net Change in Cash and Cash Equivalents

(3,692,980)

1,008,014

Cash and Cash Equivalents, Beginning of Year

11,775,088

8,428,041

Cash and Cash Equivalents, End of Period

$

8,082,108

$

9,436,055

Supplemental Disclosure of Cash Flow Information

  

  

Cash payments for

  

  

Interest

$