Business Context and Reporting Period
Company: Marathon Bancorp, Inc. (MBBC)
Reporting Period: Fiscal Year Ended June 30, 2025 (10-K)
Business Overview: Marathon Bancorp is the holding company for Marathon Bank, a Wisconsin-chartered savings bank headquartered in Wausau, Wisconsin. The bank operates five branches across Marathon, Ozaukee, and Waukesha Counties, focusing on commercial real estate, multifamily, and residential lending.
Material Event: On April 21, 2025, the Company completed a conversion from a mutual holding company to a stock holding company. This transaction generated gross proceeds of $16.9 million (net of $1.7 million in expenses) and resulted in the Company's common stock beginning to trade on the Nasdaq Capital Market under the symbol "MBBC."
Key Financial Metrics
| Metric | June 30, 2025 | June 30, 2024 |
|---|---|---|
| Total Assets | $238.8 million | $219.3 million |
| Total Loans (Gross) | $202.6 million | $185.3 million |
| Total Deposits | $175.2 million | $173.0 million |
| Stockholders' Equity | $45.7 million | $31.3 million |
| Net Interest Income | $6.0 million | $5.8 million |
| Net Income (Loss) | $42,000 | ($187,000) |
| Return on Average Assets | 0.02% | (0.08%) |
| Return on Average Equity | 0.14% | (0.62%) |
| Net Interest Margin | 2.84% | 2.75% |
| Allowance for Credit Losses | $1.7 million (0.84% of loans) | $1.8 million (0.97% of loans) |
| Non-Performing Assets | $1.1 million (0.45% of assets) | $1.4 million (0.63% of assets) |
Material Changes vs. Prior Period
- Profitability Turnaround: The Company reported a net income of $42,000 for 2025, reversing a net loss of $187,000 in 2024. This improvement was driven by a $203,000 increase in net interest income and a $128,000 decrease in non-interest expenses.
- Capital Strength: Stockholders' equity increased by $14.4 million (46.1%) primarily due to the $15.2 million in net proceeds from the Conversion offering.
- Loan Portfolio Growth: Gross loans increased by $17.3 million (9.5%), led by a $17.6 million increase in commercial real estate loans and a $2.7 million increase in multifamily loans. One-to-four-family residential loans decreased by $1.5 million.
- Asset Quality Improvement: Non-performing assets decreased to $1.1 million from $1.4 million. The decrease was largely due to the acceptance of a $1.1 million offer for a foreclosed construction property, resulting in a $379,000 valuation allowance provision.
- Provision for Credit Losses: The Company recorded a recovery of credit losses of $94,000 in 2025, compared to a recovery of $190,000 in 2024. The reduction in recovery was attributed to loan portfolio growth.
Outlook, Risks, and Management Commentary
- Strategic Focus: Management continues to focus on originating commercial real estate and multifamily loans to increase portfolio yield and manage interest rate risk. The bank recently opened a branch in Brookfield, Wisconsin, to expand into the Southeastern Wisconsin market.
- Capital Framework: The Bank elected to use the Community Bank Leverage Ratio (CBLR) framework and is classified as "well capitalized" with a Tier 1 capital to average assets ratio of 15.21% (minimum required 9.0%).
- Key Risks:
- Interest Rate Risk: Fluctuations in interest rates could impact net interest margins and the fair value of financial instruments.
- Credit Risk: Concentration in commercial real estate (45.4% of loans) exposes the bank to economic conditions affecting commercial property values and borrower cash flows.
- Foreclosure Resolution: The sale of a foreclosed construction property is pending customary due diligence; delays could impact liquidity or valuation.
- Regulatory Changes: Changes in tax laws (specifically Wisconsin state tax law) have impacted deferred tax assets, leading to a valuation allowance of $665,000.
- Liquidity: The Company maintains strong liquidity with $14.6 million in cash and cash equivalents and $54.8 million in available borrowing capacity from the Federal Home Loan Bank.
Investor Verification Checklist
- Conversion Proceeds: Verify the utilization of the $15.2 million net proceeds from the April 2025 Conversion and the impact on the balance sheet.
- Foreclosed Asset Sale: Monitor the closing status of the $1.1 million sale of the foreclosed construction property and any potential valuation adjustments.
- Commercial Real Estate Concentration: Review the performance of the $91.9 million commercial real estate portfolio, particularly non-owner-occupied properties, given the 45.4% concentration.
- Wisconsin Tax Impact: Confirm the long-term implications of the Wisconsin tax law change on future deferred tax assets and net operating loss carryforwards.
- Deposit Stability: Assess the stability of the $175.2 million deposit base, noting that $64.9 million is uninsured and $12.0 million consists of brokered deposits.