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What changed in Marathon Bancorp, Inc. /MD/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Marathon Bancorp, Inc. /MD/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+235 added−266 removedSource: 10-K (2023-09-20) vs 10-K (2022-09-28)

Top changes in Marathon Bancorp, Inc. /MD/'s 2023 10-K

235 paragraphs added · 266 removed · 187 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

114 edited+14 added−25 removed220 unchanged
Biggest changeAn institution’s determination as to the 16 Table of Contents classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific loss allowances.
Biggest changeAn institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific loss allowances. 16 Table of Contents On the basis of our review of our loans our classified and special mention or watch loans at the dates indicated were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2023 2022 ​ ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ Classification of Loans: ​ ​ ​ ​ ​ ​ Substandard ​ $ — ​ $ — Doubtful ​ ​ — ​ ​ — Loss ​ ​ — ​ ​ — Total Classified Loans ​ $ — ​ $ — Special Mention/Watch ​ $ — ​ $ 1,389 ​ During the year ended June 30, 2023, $1.4 million in commercial real estate loans previously rated special mention/watch were paid off in full by the respective borrower. ​ Allowance for Loan Losses The allowance for loan losses established as losses is estimated to have occurred through a provision for loan losses charged to earnings.
In the future, Marathon MHC may convert from the mutual to capital stock form of ownership, in a transaction commonly referred to as a “second-step conversion.” Any second-step conversion of Marathon MHC would require the approval of the WDFI and the Federal Reserve Board.
Possible Conversion of Marathon MHC to Stock Form. In the future, Marathon MHC may convert from the mutual to capital stock form of ownership, in a transaction commonly referred to as a “second-step conversion.” Any second-step conversion of Marathon MHC would require the approval of the WDFI and the Federal Reserve Board.
The FDIC has the authority to establish higher capital requirements for individual institutions where deemed necessary due to a determination that an institution’s capital level is, or is likely to become, inadequate in light of particular circumstances. Marathon Bank exceeds all regulatory capital requirements and is deemed “well capitalized” for regulatory capital purposes as of June 30, 2022 and 2021.
The FDIC has the authority to establish higher capital requirements for individual institutions where deemed necessary due to a determination that an institution’s capital level is, or is likely to become, inadequate in light of particular circumstances. Marathon Bank exceeds all regulatory capital requirements and is deemed “well capitalized” for regulatory capital purposes as of June 30, 2023 and 2022.
Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at June 30, 2022. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments.
Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at June 30, 2023. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments.
At June 30, 2022, Marathon Bank’s Required Liquidity Ratio was 8%, and Marathon Bank was in compliance with this requirement. In addition, 50% of the liquid assets maintained by a Wisconsin savings bank must consist of “primary liquid assets,” which are defined to include securities issued by the U.S. Government, U.S.
At June 30, 2023, Marathon Bank’s Required Liquidity Ratio was 8%, and Marathon Bank was in compliance with this requirement. In addition, 50% of the liquid assets maintained by a Wisconsin savings bank must consist of “primary liquid assets,” which are defined to include securities issued by the U.S. Government, U.S.
Savings banks deemed by the FDIC to be “critically undercapitalized” would be subject to the appointment of a receiver or conservator. 28 Table of Contents As noted above, Marathon Bank is considered “well capitalized” for regulatory capital purposes as of June 30, 2022 and 2021.
Savings banks deemed by the FDIC to be “critically undercapitalized” would be subject to the appointment of a receiver or conservator. 28 Table of Contents As noted above, Marathon Bank is considered “well capitalized” for regulatory capital purposes as of June 30, 2023 and 2022.
A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates). ​ 34 Table of Contents ITEM 1A: RISK FACTORS Not required of a smaller reporting company. ​ ITEM 1B: UNRESOLVED STAFF COMMENTS None. ​
A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates). ​ ITEM 1A: RISK FACTORS Not required of a smaller reporting company. ​ ITEM 1B: UNRESOLVED STAFF COMMENTS None. ​
Maturities are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. All of our debt securities in this table at June 30, 2022, were taxable securities.
Maturities are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. All of our debt securities in this table at June 30, 2023, were taxable securities.
We may be required to purchase additional Federal Home Loan Bank of Chicago stock if we increase borrowings in the future. Portfolio Maturities and Yields. The composition and maturities of the debt securities held to maturity portfolio at June 30, 2022, are summarized in the following table.
We may be required to purchase additional Federal Home Loan Bank of Chicago stock if we increase borrowings in the future. Portfolio Maturities and Yields. The composition and maturities of the debt securities held to maturity portfolio at June 30, 2023, are summarized in the following table.
For federal income tax purposes, Marathon Bank currently reports its income and expenses on the accrual method of accounting and uses a tax year ending June 30 for filing its federal income tax returns. Marathon Bancorp and Marathon Bank intend to file a consolidated federal income tax return beginning with the taxable year ended June 30, 2022.
For federal income tax purposes, Marathon Bank currently reports its income and expenses on the accrual method of accounting and uses a tax year ending June 30 for filing its federal income tax returns. Marathon Bancorp and Marathon Bank intend to file a consolidated federal income tax return beginning with the taxable year ended June 30, 2023.
Government agencies or the state of Wisconsin or a subdivision thereof, and cash. At June 30, 2022, Marathon Bank was in compliance with this requirement. Federal Law and Regulation . The Federal Reserve Board currently has no reserve requirement for Marathon Bank. Transactions with Affiliates and Insiders Wisconsin Law and Regulation .
Government agencies or the state of Wisconsin or a subdivision thereof, and cash. At June 30, 2023, Marathon Bank was in compliance with this requirement. Federal Law and Regulation . The Federal Reserve Board currently has no reserve requirement for Marathon Bank. Transactions with Affiliates and Insiders Wisconsin Law and Regulation .
Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” Marathon Bancorp, Inc. qualifies as an emerging growth company under the JOBS Act.
Under the JOBS Act, a company with total annual gross revenues of less than $1.235 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” Marathon Bancorp, Inc. qualifies as an emerging growth company under the JOBS Act.
Our fixed-rate one- to four-family residential real estate loans typically have terms of 10 to 30 years and are generally underwritten according to Fannie Mae guidelines when the loan balance meets such guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed- and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which as of June 30, 2022 was $647,200 for single-family homes in our market area.
Our fixed-rate one- to four-family residential real estate loans typically have terms of 10 to 30 years and are generally underwritten according to Fannie Mae guidelines when the loan balance meets such guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed- and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which as of June 30, 2023 was $726,200 for single-family homes in our market area.
Failure to meet the qualifying criteria within the grace period or maintain the required leverage ratio requires the institution to comply with the generally applicable capital requirements. As of June 30, 2022, Marathon Bank elected to use the community bank leverage ratio.
Failure to meet the qualifying criteria within the grace period or maintain the required leverage ratio requires the institution to comply with the generally applicable capital requirements. As of June 30, 2023, Marathon Bank elected to use the community bank leverage ratio.
At June 30, 2022, the Company had no Wisconsin net operating loss carryforwards. REGULATION AND SUPERVISION General As a state savings bank, Marathon Bank is subject to examination, supervision and regulation, primarily by the WDFI and by the FDIC.
At June 30, 2023, the Company had no Wisconsin net operating loss carryforwards. REGULATION AND SUPERVISION General As a state savings bank, Marathon Bank is subject to examination, supervision and regulation, primarily by the WDFI and by the FDIC.
Loan Approval Procedures and Authority Pursuant to applicable law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 20% of our capital. This limit may be increased to 50% of capital for loans secured by certain assets.
Loan Approval Procedures and Authority Pursuant to applicable law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 20% of our capital. This limit may be increased to 50% of capital for 13 Table of Contents loans secured by certain assets.
This usually includes a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due.
This usually included a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due.
When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method. When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned.
When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method. When we acquire real estate as a result of foreclosure, the real estate is classified as foreclosed assets.
Impairment is measured on a loan-by-loan basis for commercial and commercial real estate loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.
Impairment is measured on a loan-by-loan basis for commercial and commercial real estate loans by either the present value of expected future cash 17 Table of Contents flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.
If a Wisconsin savings bank’s 26 Table of Contents capital ratio falls below the required level, the WDFI may direct the savings bank to adhere to a specific written plan established by the WDFI to correct the savings bank’s capital deficiency, as well as a number of other restrictions on the savings bank’s operations, including a prohibition on the payment of dividends.
If a Wisconsin savings bank’s capital ratio falls below the required level, the WDFI may direct the savings bank to adhere to a specific written plan established by the WDFI to correct the savings bank’s capital deficiency, as well as a number of other restrictions on the savings bank’s operations, including a prohibition on the payment of dividends.
These loans often involve the disbursement of substantial funds with repayment primarily dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, 12 Table of Contents rather than the ability of the borrower or guarantor to repay principal and interest.
These loans often involve the disbursement of substantial funds with repayment primarily dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.
Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant 17 Table of Contents payment delays and payment shortfalls generally are not classified as impaired.
Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.
All such loans were performing in accordance with their original repayment terms. We also have participated out portions of loans that exceeded our loans-to-one borrower legal lending limit and for risk diversification. At June 30, 2022, we had participated out portions of eight loans with an aggregate amount of $8.7 million. Historically, we have not purchased whole loans.
All such loans were performing in accordance with their original repayment terms. We also have participated out portions of loans that exceeded our loans-to-one borrower legal lending limit and for risk diversification. At June 30, 2023, we had participated out portions of eight loans with an aggregate amount of $9.7 million. Historically, we have not purchased whole loans.
Current prepayment speeds determine whether prepayment estimates require modification that could cause amortization or accretion adjustments. Other Securities. We held common stock of the Federal Home Loan Bank of Chicago in connection with our borrowing activities totaling $323,000 and $262,000 at June 30, 2022 and 2021, respectively. The Federal Home Loan Bank of Chicago common stock is carried at cost.
Current prepayment speeds determine whether prepayment estimates require modification that could cause amortization or accretion adjustments. Other Securities. We held common stock of the Federal Home Loan Bank of Chicago in connection with our borrowing activities totaling $770,000 and $323,000 at June 30, 2023 and 2022, respectively. The Federal Home Loan Bank of Chicago common stock is carried at cost.
Currently, assessments for institutions of less than $10 billion of total assets are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. Assessment rates (inclusive of possible adjustments) currently range from 1.5 to 30 basis points of each institution’s total assets less tangible capital.
Currently, assessments for institutions of less than $10 billion of total assets are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. Assessment rates (inclusive of possible adjustments) currently range from 1.5 to 30 basis points of each institution’s total assets less tangible capital through December 31, 2022.
When a loan is determined to be impaired, the measurement of 14 Table of Contents the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.
When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.
At June 30, 2022, Marathon Bank did not have any loans which exceeded the “loans-to-one borrower” limitations. Federal Law and Regulation .
At June 30, 2023, Marathon Bank did not have any loans which exceeded the “loans-to-one borrower” limitations. Federal Law and Regulation .
To a much lesser extent, we offer a variety of consumer loans to individuals who reside or work in our market area, including home equity lines of credit, new and used automobile loans, and loans secured by certificates of deposit. At June 30, 2022, our consumer loan portfolio totaled $2.1 million, or 1.1% of our total loan portfolio.
To a much lesser extent, we offer a variety of consumer loans to individuals who reside or work in our market area, including home equity lines of credit, new and used automobile loans, and loans secured by certificates of deposit. At June 30, 2023, our consumer loan portfolio totaled $2.8 million, or 1.4% of our total loan portfolio.
At June 30, 2022, based on the 20% limitation, our loans-to-one-borrower limit was approximately $5.8 million. At June 30, 2022, our largest loan relationship with one borrower was for $5.6 million, which was secured by commercial real estate properties, with the underlying loans performing in accordance with their original terms on that date.
At June 30, 2023, based on the 20% limitation, our loans-to-one-borrower limit was approximately $6.1 million. At June 30, 2023, our largest loan relationship with one borrower was for $5.1 million, which was secured by commercial real estate properties, with the underlying loans performing in accordance with their original terms on that date.
Control, as defined 33 Table of Contents under the Change in Bank Control Act and applicable regulations, means the power, directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company.
Control, as defined under the Change in Bank Control Act and applicable regulations, means the power, directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company.
If the WDFI determines that the financial condition, history, management or earning prospects of a savings bank are not adequate, the WDFI may require a higher minimum capital level for the savings bank.
If the WDFI determines that the financial condition, history, management or earning prospects of a savings bank are not 26 Table of Contents adequate, the WDFI may require a higher minimum capital level for the savings bank.
As a result, the Federal Reserve Board’s consolidated holding company regulatory capital requirements do not presently apply to Marathon Bancorp, Inc. or Marathon MHC. 32 Table of Contents Source of Strength.
As a result, the Federal Reserve Board’s consolidated holding company regulatory capital requirements do not presently apply to Marathon Bancorp, Inc. or Marathon MHC. Source of Strength.
As a result, consumer loan collections are primarily dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Balloon Loans.
As a result, consumer loan collections are primarily dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. 12 Table of Contents Balloon Loans.
Institutions with capital meeting or exceeding the ratio and otherwise complying with the specified requirements (including off-balance sheet exposures of 25% or less of total assets and trading assets and liabilities of 5% or less of total assets) and electing the alternative framework are considered to comply with the applicable regulatory capital requirements, including the risk-based requirements. 27 Table of Contents The community bank leverage ratio was established at 8.5% for calendar 2021 and 9% thereafter.
Institutions with capital meeting or exceeding the ratio and otherwise complying with the specified requirements (including off-balance sheet exposures of 25% or less of total assets and trading assets and liabilities of 5% or less of total assets) and electing the alternative framework are considered to comply with the applicable regulatory capital requirements, including the risk-based requirements. 27 Table of Contents The community bank leverage ratio was established at 9.0%.
At June 30, 2022, the average loan size of our commercial real estate loans was $970,000, and the largest of such loans was a $3.3 million loan secured by a commercial retail rental property. This loan was performing in accordance with its repayment terms at June 30, 2022. We consider a number of factors in originating commercial real estate loans.
At June 30, 2023, the average loan size of our commercial real estate loans was $843,000, and the largest of such loans was a $3.2 million loan secured by a commercial retail rental property. This loan was performing in accordance with its repayment terms at June 30, 2023. We consider a number of factors in originating commercial real estate loans.
Our lending activity consists of originating commercial and multifamily real estate loans, one- to four-family residential real estate loans and, to a lesser extent, commercial and industrial loans, construction loans and 7 Table of Contents consumer loans.
Our lending activity consists of originating commercial and multifamily real estate loans, one- to four-family residential real estate loans and, to a lesser extent, commercial and industrial loans, construction loans and consumer loans.
Zillges, we have begun the process of developing a commercial real estate lending infrastructure, with a particular focus on expanding into Southeastern Wisconsin, including the Milwaukee metropolitan area, to diversify our balance sheet, which included reducing our investment portfolio and using those funds to grow our commercial loan portfolio.
Zillges, we have developed a commercial real estate lending infrastructure, with a particular focus on expanding into Southeastern Wisconsin, including the Milwaukee metropolitan area, to diversify our balance sheet, which included reducing our investment portfolio and using those funds to grow our commercial loan portfolio.
Unemployment rates as of June 30, 2022 and June 30, 2021 are set forth in the following table. ​ ​ ​ ​ ​ ​ ​ Region June 2022 June 2021 United States 3.6 % 5.9 % Wisconsin 2.9 % 3.9 % Marathon County 3.0 % 3.5 % Ozaukee County 3.0 % 3.9 % Milwaukee County 4.7 % 6.7 % Waukesha County 3.0 % 3.8 % ​ Major employers in Marathon Bank’s market area are United Medical Resources, Aspirus, Columbia-St.
Unemployment rates as of June 30, 2023 and June 30, 2022 are set forth in the following table. ​ ​ ​ ​ ​ ​ ​ Region June 2023 June 2022 United States 3.6 % 3.6 % Wisconsin 2.5 % 2.9 % Marathon County 3.2 % 3.0 % Ozaukee County 3.1 % 3.0 % Milwaukee County 4.3 % 4.7 % Waukesha County 3.1 % 3.0 % ​ Major employers in Marathon Bank’s market area are United Health Group, United Medical Resources, Aspirus, Columbia-St.
Our commercial and industrial loans are generally lines of credit with terms of one to two years. Our commercial and industrial lines of credit are generally priced on an adjustable-rate basis tied to The Wall Street Journal Prime Rate. We generally obtain personal guarantees with commercial and industrial loans.
Our commercial and industrial lines of credit are generally priced on an adjustable-rate basis tied to The Wall Street Journal Prime Rate. We generally obtain personal guarantees with commercial and industrial loans.
At June 30, 2022, we had mortgage-backed securities totaling $3.3 million, which constituted 29.3% of our securities portfolio, including $1.2 million of agency collateralized mortgage obligations (CMOs). Of the $2.1 million of non-CMO mortgage-backed securities, $74,000 were commercial-backed and $2.0 million were residential mortgage-backed securities.
At June 30, 2023, we had mortgage-backed securities totaling $2.4 million, which constituted 25.0% of our securities portfolio, including $1.2 million of agency collateralized mortgage obligations (CMOs). Of the $2.1 million of non-CMO mortgage-backed securities, $74,000 were commercial-backed and $1.3 million were residential mortgage-backed securities.
We currently sell a significant majority of the conforming fixed-rate one- to four-family residential real estate loans we originate on the secondary market. We typically sell our conforming fixed-rate one- to four-family residential 13 Table of Contents real estate loans to Fannie Mae, Freddie Mac and through the Federal Home Loan Bank’s Mortgage Partnership Finance Program.
We currently sell a significant majority of the conforming fixed-rate one- to four-family residential real estate loans we originate on the secondary market. We typically sell our conforming fixed-rate one- to four-family residential real estate loans to Fannie Mae, Freddie Mac and through the Federal Home Loan Bank’s Mortgage Partnership Finance Program. We service all the loans that we sell.
An “emerging growth company” may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay” votes) or executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes).
An “emerging growth company” may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay” votes), executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes) or disclose pay versus performance information.
Our commercial real estate loans are generally secured by office and industrial buildings, warehouses, small retail facilities and other special purpose commercial properties, primarily in Southeastern Wisconsin. At June 30, 2022, $72.7 million of our commercial real estate portfolio was secured by non-owner-occupied commercial real estate.
Our commercial real estate loans are generally secured by office and industrial buildings, warehouses, small retail facilities and other special purpose commercial properties, primarily in Southeastern Wisconsin. At June 30, 2023, $76.9 million of our commercial real estate portfolio was secured by non-owner-occupied commercial real estate.
At June 30, 2022 and 2021, the qualitative loan portfolio risk factors were slightly reduced in all loan categories except commercial real estate which we believe exhibits the most credit risk related to local and national economic conditions as well as industry conditions and concentrations.
At June 30, 2023, the qualitative loan portfolio risk factors were reduced in all loan categories except commercial and multi-family real estate which we believe exhibits the most credit risk related to local and national economic conditions as well as industry conditions and concentrations.
Consistent with our strategy to diversify our loan portfolio and increase our yield, we are focused on increasing our origination of commercial real estate loans. At June 30, 2022, we had $80.6 million in commercial real estate loans, representing 42.9% of our total loan portfolio.
Consistent with our strategy to diversify our loan portfolio and increase our yield, we are focused on increasing our origination of commercial real estate loans. At June 30, 2023, we had $84.6 million in commercial real estate loans, representing 42.3% of our total loan portfolio.
Marathon Bank, as a member of the Federal Home Loan Bank of Chicago, is required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Chicago in specified amounts. Marathon Bank is in compliance with this requirement with an investment in Federal Home Loan Bank of Chicago stock of $323,000 at June 30, 2022.
Marathon Bank, as a member of the Federal Home Loan Bank of Chicago, is required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Chicago in specified amounts. Marathon Bank is in compliance with this requirement with an investment in Federal Home Loan Bank of Chicago stock of $770,273 at June 30, 2023.
Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. At June 30, 2022, we had $19.8 million in brokered deposits.
Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. At June 30, 2023, we had $22.2 million in brokered deposits.
Troubled debt restructurings include loans for which either a portion of interest or principal has been forgiven, or loans modified at interest rates materially less than current market rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2022 2021 ​ ​ ​ ​ (Dollars in thousands) ​ Non-accrual loans: ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ One- to four-family residential ​ $ 64 ​ $ 178 ​ Multifamily ​ ​ — ​ ​ — ​ Commercial ​ ​ — ​ ​ — ​ Construction ​ ​ — ​ ​ — ​ Commercial and industrial loans ​ ​ — ​ ​ — ​ Consumer loans ​ ​ — ​ ​ — ​ Total non-accrual loans ​ ​ 64 ​ ​ 178 ​ ​ ​ ​ ​ ​ ​ ​ ​ Accruing loans past due 90 days or more ​ ​ 51 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate owned: ​ ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — ​ Multifamily ​ ​ — ​ ​ — ​ Commercial ​ ​ — ​ ​ — ​ Construction ​ ​ — ​ ​ — ​ Commercial and industrial ​ ​ — ​ ​ — ​ Consumer loans ​ ​ — ​ ​ — ​ Total real estate owned ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-performing assets ​ $ 115 ​ $ 178 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total accruing troubled debt restructured loans ​ $ 130 ​ $ 468 ​ Total non-performing loans to total loans ​ ​ 0.06% ​ ​ 0.12% ​ Total non-performing loans to total assets ​ ​ 0.05% ​ ​ 0.08% ​ Total non-performing assets to total assets ​ ​ 0.05% ​ ​ 0.08% ​ ​ Classified Assets .
Troubled debt restructurings include loans for which either a portion of interest or principal has been forgiven, or loans modified at interest rates materially less than current market rates. 15 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2023 2022 ​ ​ ​ ​ (Dollars in thousands) ​ Non-accrual loans: ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ One- to four-family residential ​ $ — ​ $ 64 ​ Multifamily ​ ​ — ​ ​ — ​ Commercial ​ ​ — ​ ​ — ​ Construction ​ ​ — ​ ​ — ​ Commercial and industrial loans ​ ​ — ​ ​ — ​ Consumer loans ​ ​ — ​ ​ — ​ Total non-accrual loans ​ ​ — ​ ​ 64 ​ ​ ​ ​ ​ ​ ​ ​ ​ Accruing loans past due 90 days or more ​ ​ — ​ ​ 51 ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate owned: ​ ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — ​ Multifamily ​ ​ — ​ ​ — ​ Commercial ​ ​ — ​ ​ — ​ Construction ​ ​ 2,312 ​ ​ — ​ Commercial and industrial ​ ​ — ​ ​ — ​ Consumer loans ​ ​ — ​ ​ — ​ Total real estate owned ​ ​ 2,312 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-performing assets ​ $ 2,312 ​ $ 115 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total accruing troubled debt restructured loans ​ $ 117 ​ $ 130 ​ Total non-performing loans to total loans ​ ​ — ​ ​ 0.06% ​ Total non-performing loans to total assets ​ ​ — ​ ​ 0.05% ​ Total non-performing assets to total assets ​ ​ 0.97% ​ ​ 0.05% ​ ​ Classified Assets .
It makes advances to members in accordance with policies and procedures established by the Federal Housing Finance Board and the board of directors of the Federal Home Loan Bank of Chicago. At June 30, 2022, Marathon Bank had no advances from the Federal Home Loan Bank of Chicago.
It makes advances to members in accordance with policies and procedures established by the Federal Housing Finance Board and the board of directors of the Federal Home Loan Bank of Chicago. At June 30, 2023, Marathon Bank had $8.0 million of advances from the Federal Home Loan Bank of Chicago.
At June 30, 2022 and 2021, Marathon Bank’s net worth ratio, as calculated under Wisconsin law, was 13.15% and 13.12%, respectively. Federal Law and Regulation .
At June 30, 2023 and 2022, Marathon Bank’s net worth ratio, as calculated under Wisconsin law, was 12.67% and 13.17%, respectively. Federal Law and Regulation .
Depending on the collateral used to secure the loans, commercial and industrial loans are made in amounts generally of up to 75% of the value of the collateral securing the loan. At June 30, 2022, $5.1 million of commercial and industrial loans were unsecured.
Depending on the collateral used to secure the loans, commercial and industrial loans are made in amounts generally of up to 75% of the value of the collateral securing the loan. At June 30, 2023, $3.8 million of commercial and industrial loans were unsecured. Construction Loans.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
We cannot predict what deposit insurance assessment rates will be in the future. Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Please refer to Note 3 to the financial statements for the composition and maturities of the debt securities available for sale portfolio at June 30, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ More than One Year ​ More than Five Years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ One Year or Less ​ through Five Years ​ through Ten Years ​ More than Ten Years ​ Total ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ ​ Amortized ​ Average ​ Amortized ​ Fair ​ Average ​ ​ Cost Yield Cost Yield Cost Yield Cost Yield Cost Value Yield ​ ​ ​ ​ (Dollars in thousands) ​ Debt securities held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities ​ $ — ​ — ​ $ 442 ​ 2.84% ​ $ — ​ — ​ $ 90 ​ 3.28% ​ $ 532 ​ $ 419 ​ 2.91 % Total ​ $ — ​ — ​ $ 442 ​ 2.84% ​ $ — ​ — ​ $ 90 ​ 3.28% ​ $ 532 ​ $ 419 ​ 2.91 % ​ 21 Table of Contents Sources of Funds General.
Please refer to Note 3 of the notes to consolidated financial statements for the composition and maturities of the debt securities available for sale portfolio at June 30, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ More than One Year ​ More than Five Years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ One Year or Less ​ through Five Years ​ through Ten Years ​ More than Ten Years ​ Total ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ ​ Amortized ​ Average ​ Amortized ​ Fair ​ Average ​ ​ Cost Yield Cost Yield Cost Yield Cost Yield Cost Value Yield ​ ​ ​ ​ (Dollars in thousands) ​ Debt securities held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities ​ $ — ​ — ​ $ — ​ — ​ $ 516 ​ 0.2 % $ — ​ — ​ $ 516 ​ $ 376 ​ 0.2 % Total ​ $ — ​ — ​ $ — ​ — ​ $ 516 ​ 0.2 % $ — ​ — ​ $ 516 ​ $ 376 ​ 0.2 % ​ 21 Table of Contents Sources of Funds General.
Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Marathon Bancorp, Inc. has elected to comply with new or amended accounting pronouncements in the same manner as a private company.
Finally, an emerging growth company may elect to comply with new 34 Table of Contents or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement.
Marathon Bank’s operations are also subject to federal laws applicable to credit transactions, such as the: ​ · Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; · Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; · Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; · Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; · Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; · Truth in Savings Act; and · rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. ​ 31 Table of Contents The operations of Marathon Bank also are subject to the: ​ · Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; · Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; · Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and · The USA PATRIOT Act, which requires depository institutions to, among other things, establish broadened anti-money laundering compliance programs, and due diligence policies and controls to ensure the detection and reporting of money laundering.
Marathon Bank’s operations are also subject to federal laws applicable to credit transactions, such as the: ​ · Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; · Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; · Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; · Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; · Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; · Truth in Savings Act; and · rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. ​ 31 Table of Contents The operations of Marathon Bank also are subject to the: ​ · Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; · Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; · Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; ● Banking organizations are required to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that arises to the level of a “notification incident” has occurred.
At June 30, 2022, we had $26.0 million in jumbo loans, which represented 50.2% of our one- to four-family residential real estate loans. Our average loan size for jumbo loans was $1.2 million at June 30, 2022. Virtually all of our one- to four-family residential real estate loans are secured by properties located in Marathon County, Wisconsin.
At June 30, 2023, we had $22.8 million in jumbo loans, which represented 38.3% of our one- to four-family residential real estate loans. Our average loan size for jumbo loans was $1.3 million at June 30, 2023. Virtually all of our one- to four-family residential real estate loans are secured by properties located in Marathon County, Wisconsin.
Those persons are not separately compensated by Marathon MHC. The directors of Marathon MHC consist of the current directors of Marathon Bank. BUSINESS OF MARATHON BANK General Marathon Bank is a Wisconsin-chartered savings bank headquartered in Wausau, Wisconsin. The Bank is subject to comprehensive regulation and examination by the Federal Deposit Insurance Corporation (“FDIC”) and the WDFI.
The directors of Marathon MHC consist of the current directors of Marathon Bank. 5 Table of Contents BUSINESS OF MARATHON BANK General Marathon Bank is a Wisconsin-chartered savings bank headquartered in Wausau, Wisconsin. The Bank is subject to comprehensive regulation and examination by the Federal Deposit Insurance Corporation (“FDIC”) and the WDFI.
At June 30, 2022, our core deposits, which are deposits other than certificates of deposit, were $128.1 million, representing 68.1% of total deposits. Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis.
At June 30, 2023, our core deposits, which are deposits other than certificates of deposit, were $113.4 million, representing 57.5% of total deposits. Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis.
At all dates below, we had a portfolio of debt securities held to maturity at amortized cost and a portfolio of debt securities available for sale which is reported at fair value. 20 Table of Contents Corporate Debt Securities. At June 30, 2022, we had corporate debt securities totaling $6.8 million, which constituted 61.1% of our securities portfolio.
At all dates below, we had a portfolio of debt securities held to maturity at amortized cost and a portfolio of debt securities available for sale which is reported at fair value. Corporate Debt Securities. At June 30, 2023, we had corporate debt securities totaling $6.2 million, which constituted 65.6% of our securities portfolio.
Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.
Interest income on restructured loans was accrued after the borrower demonstrated the ability to pay under the restructured terms through a sustained period of repayment performance, which was generally six consecutive months. 14 Table of Contents Delinquent Loans .
Marathon Bancorp, Inc. and Marathon MHC did not elect “financial holding company” status. Capital. Consolidated regulatory capital requirements identical to those applicable to subsidiary banks generally apply to bank holding companies.
Such activities can include insurance underwriting and investment banking. Marathon Bancorp, Inc. and Marathon MHC did not elect “financial holding company” status. Capital. Consolidated regulatory capital requirements identical to those applicable to subsidiary banks generally apply to bank holding companies.
In addition, the WDFI and the FDIC periodically review our allowance for loan losses and as a result of such reviews, we may have to adjust our allowance for loan losses or recognize further loan charge-offs. 18 Table of Contents The following table sets forth activity in our allowance for loan losses for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ June 30, ​ 2022 2021 ​ (Dollars in thousands) Allowance at beginning of year ​ $ 2,186 ​ $ 1,700 Provision for loan losses ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ Charge offs: ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — Multifamily ​ ​ — ​ ​ — Commercial ​ ​ — ​ ​ — Construction ​ ​ — ​ ​ — Commercial and industrial loans ​ ​ — ​ ​ — Paycheck Protection Program loans ​ ​ — ​ ​ — Consumer loans ​ ​ — ​ ​ — Total charge-offs ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ 1 Multifamily ​ ​ — ​ ​ — Commercial ​ ​ — ​ ​ 65 Construction ​ ​ — ​ ​ 73 Commercial and industrial loans ​ ​ — ​ ​ 341 Paycheck Protection Program loans ​ ​ — ​ ​ — Consumer loans ​ ​ 9 ​ ​ 6 Total recoveries ​ ​ 9 ​ ​ 486 ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) recoveries ​ ​ 9 ​ ​ 486 ​ ​ ​ ​ ​ ​ ​ Allowance at end of year ​ $ 2,195 ​ $ 2,186 ​ ​ ​ ​ ​ ​ ​ Allowance to non-performing loans ​ ​ 1908.7% ​ ​ 1228.1% Allowance to total loans outstanding at the end of the year ​ ​ 1.17% ​ ​ 1.49% Net recoveries to average loans outstanding during the year ​ ​ 0.01% ​ ​ 0.38% ​ ​ ​ ​ ​ ​ ​ Net recoveries to average loans outstanding during the year ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — Multifamily ​ ​ — ​ ​ — Commercial ​ ​ — ​ ​ 0.05% Construction ​ ​ — ​ ​ 0.06% Commercial and industrial loans ​ ​ — ​ ​ 0.27% Paycheck Protection Program loans ​ ​ — ​ ​ — Consumer loans ​ ​ 0.01% ​ ​ — Total net recoveries to average loans outstanding during the year ​ ​ 0.01% ​ ​ 0.38% ​ ​ ​ ​ ​ ​ ​ ​ 19 Table of Contents Allocation of Allowance for Loan Losses.
In addition, the WDFI and the FDIC periodically review our allowance for loan losses and as a result of such reviews, we may have to adjust our allowance for loan losses or recognize further loan charge-offs. 18 Table of Contents The following table sets forth activity in our allowance for loan losses for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ June 30, ​ 2023 2022 ​ (Dollars in thousands) Allowance at beginning of year ​ $ 2,195 ​ $ 2,186 Provision for loan losses ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ Charge offs: ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — Multifamily ​ ​ — ​ ​ — Commercial ​ ​ (137) ​ ​ — Construction ​ ​ — ​ ​ — Commercial and industrial loans ​ ​ — ​ ​ — Consumer loans ​ ​ — ​ ​ — Total charge-offs ​ ​ (137) ​ ​ — ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — Multifamily ​ ​ — ​ ​ — Commercial ​ ​ 98 ​ ​ — Construction ​ ​ — ​ ​ — Commercial and industrial loans ​ ​ — ​ ​ — Consumer loans ​ ​ 3 ​ ​ 9 Total recoveries ​ ​ 101 ​ ​ 9 ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) recoveries ​ ​ (36) ​ ​ 9 ​ ​ ​ ​ ​ ​ ​ Allowance at end of year ​ $ 2,159 ​ $ 2,195 ​ ​ ​ ​ ​ ​ ​ Allowance to non-performing loans ​ ​ — ​ ​ 1908.7% Allowance to total loans outstanding at the end of the year ​ ​ 1.08% ​ ​ 1.17% Net (charge-offs) recoveries to average loans outstanding during the year ​ ​ (0.02)% ​ ​ 0.01% ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) recoveries to average loans outstanding during the year: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ One- to four-family residential ​ ​ — ​ ​ — Multifamily ​ ​ — ​ ​ — Commercial ​ ​ (0.02)% ​ ​ — Construction ​ ​ — ​ ​ — Commercial and industrial loans ​ ​ — ​ ​ — Consumer loans ​ ​ — ​ ​ 0.01% Total net (charge-offs) recoveries to average loans outstanding during the year ​ ​ (0.02)% ​ ​ 0.01% ​ ​ ​ ​ ​ ​ ​ ​ 19 Table of Contents Allocation of Allowance for Loan Losses.
At June 30, 2022, we had $51.9 million of loans secured by one- to four-family residential real estate, representing 27.6% of our total loan portfolio, which included $78,000 of residential mortgages held for sale. We originate both fixed-rate and adjustable-rate one- to four-family residential real estate loans.
At June 30, 2023, we had $59.6 million of loans secured by one- to four-family residential real estate, representing 29.8% of our total loan portfolio, which included no residential mortgages held for sale. We originate both fixed-rate and adjustable-rate one- to four-family residential real estate loans.
A relatively high percentage of Marathon County’s non-farm, non-government workforce is in the education, healthcare and social services sector, estimated at over 25% of the labor force. Other significant employer industries in the county include wholesale/retail trade and finance/insurance/real estate. Median household income in Marathon County for 2022 is estimated to be $63,029.
A relatively high percentage of Marathon County’s non-farm, non-government workforce is in the education, healthcare and manufacturing sectors, estimated at over 36% of the labor force. Other significant employer industries in the county include wholesale/retail trade and finance/insurance/real estate. Median household income for 2023 in Marathon County is estimated to be $72,997.
At June 30, 2022, we had $141,000 in unsecured consumer loans. At June 30, 2022, home equity lines of credit (which we categorize as consumer loans) totaled $1.0 million in outstanding balances.
At June 30, 2023, we had $114,315 in unsecured consumer loans. At June 30, 2023, home equity lines of credit (which we categorize as consumer loans) totaled $1.1 million in outstanding balances.
Loans where the borrower obtains private mortgage insurance may be made with loan-to-value ratios up to 100%. We generally do not offer “interest only” mortgage loans on permanent one- to four-family residential real estate loans (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan).
We generally do not offer “interest only” mortgage loans on permanent one- to four-family residential real estate loans (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan).
BUSINESS OF MARATHON MHC Marathon MHC was formed as a Wisconsin-chartered mutual holding company and will at all times own a majority of the outstanding shares of Marathon Bancorp’s common stock.
BUSINESS OF MARATHON MHC Marathon MHC was formed as a Wisconsin-chartered mutual holding company and will at all times own a majority of the outstanding shares of Marathon Bancorp’s common stock. Depositors of Marathon Bank are members of Marathon MHC and have voting rights in the affairs of Marathon MHC.
As of June 30, 2021, the aggregate amount of uninsured deposits was $36.3 million, of which $4.6 million was the aggregate amount of our uninsured certificates of deposit.
As of June 30, 2022, the aggregate amount of uninsured deposits was $46.7 million, of which $3.4 million was the aggregate amount of our uninsured certificates of deposit.
At June 30, 2022, 33.0% of our one- to four-family residential real estate loans were fixed-rate loans, and 67.0% of such loans were adjustable-rate loans. At June 30, 2022, $2.4 million of our loans secured by one- to four-family residential real estate were in a junior lien position.
At June 30, 2023, 34.5% of our one- to four-family residential real estate loans were fixed-rate loans, and 65.5% of such loans were adjustable-rate loans. At June 30, 2023, $3.0 million of our loans secured by one- to four-family residential real estate were in a junior lien position.
At June 30, 2022, the outstanding balances of our loan participations where we are not the lead lender totaled $19.3 million, or 10.2% of our loan portfolio, of which $9.0 million were commercial real estate loans, $5.6 million were multifamily real estate loans, $3.5 million were construction loans and $1.2 million were commercial and industrial loans.
At June 30, 2023, the outstanding balances of our loan participations where we are not the lead lender totaled $16.6 million, or 8.3% of our loan portfolio, of which $6.4 million were commercial real estate loans, $8.4 million were multifamily real estate loans, and $1.8 million were commercial and industrial loans.
Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.
Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies. 32 Table of Contents The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed,” to opt to become a “financial holding company” and thereby engage in a broader array of financial activities than previously permitted.
As of June 30, 2022, we had a master contract agreement with the Federal Home Loan Bank of Chicago pursuant to which we could borrow up to $77.4 million subject to providing additional collateral. At June 30, 2022 and 2021, we had no Federal Home Loan Bank of Chicago advances.
As of June 30, 2023, we had a master contract agreement with the Federal Home Loan Bank of Chicago pursuant to which we could borrow up to $84.0 million subject to providing additional collateral.
We borrow funds, primarily from the Federal Home Loan Bank of Chicago, to fund our operations as necessary. At June 30, 2022, we had total consolidated assets of $220.0 million, total deposits of $188.1 million and total stockholders’ equity of $30.7 million.
We borrow funds, primarily from the Federal Home Loan Bank of Chicago, to fund our operations as necessary. At June 30, 2023, we had total consolidated assets of $238.8 million, total deposits of $197.3 million and total stockholders’ equity of $31.3 million.
All borrowers are required to obtain title insurance for the benefit of Marathon Bank. We also require homeowner’s insurance and fire and casualty insurance and, where circumstances warrant, flood insurance on properties securing real estate loans. Commercial and Industrial Loans.
All borrowers are required to obtain title insurance for the benefit of Marathon Bank. We also require homeowner’s insurance and fire and casualty insurance and, where circumstances warrant, flood insurance on properties securing real estate loans. Commercial and Industrial Loans. At June 30, 2023, we had $6.9 million of commercial and industrial loans, representing 3.4% of our total portfolio.
At June 30, 2022, the average loan size of our commercial and industrial loans was $92,000, and our largest outstanding commercial and industrial loan balance was a $1.2 million loan to a commercial concrete contractor. This loan was performing in accordance with its repayment terms at June 30, 2022.
At June 30, 2023, the average loan size of our commercial and industrial loans was $83,000, and our largest outstanding commercial and industrial loan balance was a $578,000 loan to a trucking company. This loan was performing in accordance with its repayment terms at June 30, 2023.
Our multifamily real estate loans generally have fixed rates, initial terms of five years and amortization periods of up to 20 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.
Our 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 20 years, with a balloon payment due at the end of the initial term.
The following table sets forth the distribution of total deposits by account type at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ ​ 2022 ​ 2021 ​ ​ Amount Percent Amount Percent ​ ​ ​ (Dollars in thousands) ​ Non-interest-bearing demand accounts ​ $ 23,698 ​ 12.60% ​ $ 23,633 ​ 13.74% ​ Demand, NOW and money market accounts ​ ​ 57,797 ​ 30.73% ​ ​ 44,400 ​ 25.82% ​ Savings deposits ​ ​ 46,602 ​ 24.78% ​ ​ 44,689 ​ 25.99% ​ Certificates of deposit ​ ​ 60,003 ​ 31.90% ​ ​ 59,234 ​ 34.45% ​ Total ​ $ 188,100 ​ 100.00% ​ $ 171,956 ​ 100.00% ​ ​ As of June 30, 2022, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $46.7 million, of which $3.4 million was the aggregate amount of our uninsured certificates of deposit.
The following table sets forth the distribution of total deposits by account type at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ ​ 2023 ​ 2022 ​ ​ Amount Percent Amount Percent ​ ​ ​ (Dollars in thousands) ​ Non-interest-bearing demand accounts ​ $ 26,181 ​ 13.27% ​ $ 23,698 ​ 12.60% ​ Demand, NOW and money market accounts ​ ​ 44,663 ​ 22.64% ​ ​ 57,797 ​ 30.73% ​ Savings deposits ​ ​ 42,555 ​ 21.57% ​ ​ 46,602 ​ 24.78% ​ Certificates of deposit ​ ​ 83,855 ​ 42.51% ​ ​ 60,003 ​ 31.90% ​ Total ​ $ 197,254 ​ 100.00% ​ $ 188,100 ​ 100.00% ​ ​ As of June 30, 2023, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $47.9 million, of which $15.7 million was the aggregate amount of our uninsured certificates of deposit.
We generally sell the fixed-rate conforming one- to four-family residential real estate loans that we originate, generally on a servicing-retained basis, while holding in our portfolio adjustable-rate one- to four-family residential real estate loans in order to manage the duration and time to repricing of our loan portfolio. Loan Portfolio Composition.
Subject to market conditions, we intend to increase originations of commercial real estate loans and multifamily real estate loans in order to increase the overall yield earned on our loans and manage interest rate risk. 7 Table of Contents We generally sell the fixed-rate conforming one- to four-family residential real estate loans that we originate, generally on a servicing-retained basis, while holding in our portfolio adjustable-rate one- to four-family residential real estate loans in order to manage the duration and time to repricing of our loan portfolio.
The maximum amount by which the initial interest rate may be increased is up to 1.0% per year during the adjustment period, with a lifetime interest rate cap of 15% over the initial interest rate of the loan.
The maximum amount by which the initial interest rate may be increased is up to 1.0% per year during the adjustment period, with a lifetime interest rate cap of 15% over the initial interest rate of the loan. We typically hold in our loan portfolio our adjustable-rate one- to four-family residential real estate loans.
We generally require a debt service ratio of at least 1.25x. All commercial real estate loans of $500,000 or more are appraised by outside independent appraisers. 9 Table of Contents Personal guarantees are generally obtained from the principals of commercial real estate loans.
We generally require a debt service ratio of at least 1.25x. All commercial real estate loans of $500,000 or more are appraised by outside independent appraisers. Personal guarantees are generally obtained from the principals of commercial real estate loans. We require property and casualty insurance and flood insurance if the property is determined to be in a flood zone area.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth information regarding our offices. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased or ​ Year Acquired ​ Net Book Value of Location Owned or Leased Real Property ​ ​ ​ ​ ​ ​ (In thousands) Main Office: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 500 Scott Street, Wausau, WI 54403 ​ Owned ​ 1963 ​ $ 1,305 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Properties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1133 E Grand Avenue, Rothschild, WI ​ Leased ​ 2009 ​ ​ 50 ​ ​ ​ ​ ​ ​ ​ ​ 307 Third Street, Mosinee, WI ​ Owned ​ 1974 ​ ​ 60 ​ ​ ​ ​ ​ ​ ​ ​ 11315 N.
Biggest changeSee Note 5 to the Consolidated Financial Statements for additional information regarding the Company’s property and equipment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased or ​ Year Acquired ​ Net Book Value of Location Owned or Leased Real Property ​ ​ ​ ​ ​ ​ (In thousands) Main Office: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 500 Scott Street, Wausau, WI 54403 ​ Owned ​ 1963 ​ $ 1,172 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Properties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1133 E Grand Avenue, Rothschild, WI ​ Leased ​ 2009 ​ ​ 48 ​ ​ ​ ​ ​ ​ ​ ​ 307 Third Street, Mosinee, WI ​ Owned ​ 1974 ​ ​ 40 ​ ​ ​ ​ ​ ​ ​ ​ 11315 N.
Cedurburg Rd, Mequon, WI ​ Leased ​ 2018 ​ ​ 261 ​ We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion. ​
Cedurburg Rd, Mequon, WI ​ Leased ​ 2018 ​ ​ 276 ​ We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion. ​
ITEM 2: PROPERTIES As of June 30, 2022, the net book value of our office properties was $1.7 million.
ITEM 2: PROPERTIES As of June 30, 2023, the net book value of our office properties was $1.5 million (excluding right-to-use-assets). The following table sets forth information regarding our offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt June 30, 2022, we were not involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations. ​ ITEM 4: MINE SAFETY DISCLOSURE Not applicable. ​ PART II
Biggest changeAt June 30, 2023, we were not involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations. ​ ITEM 4: MINE SAFETY DISCLOSURE Not applicable. 35 Table of Contents ​ PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNo dividends were paid in fiscal 2022 or 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Market Value of Common Stock ​ High Low ​ ​ ​ ​ ​ ​ ​ Quarter Ended September 30, 2021 ​ $ 10.65 ​ $ 10.40 Quarter Ended December 31, 2021 ​ ​ 10.95 ​ ​ 10.50 Quarter Ended March 31, 2022 ​ ​ 11.05 ​ ​ 10.75 Quarter Ended June 30, 2022 ​ ​ 11.16 ​ ​ 10.67 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended June 30, 2021 (beginning April 15, 2021) ​ $ 10.65 ​ $ 10.00 ​ ​ ​ ​ ​ ​ ​ ​ The Company did not repurchase any shares of its common stock during its fourth fiscal quarter ended June 30, 2022.
Biggest changeNo dividends were paid in fiscal 2023 or 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Market Value of Common Stock ​ High Low ​ ​ ​ ​ ​ ​ ​ Quarter Ended September 30, 2022 ​ $ 11.25 ​ $ 10.80 Quarter Ended December 31, 2022 ​ ​ 11.54 ​ ​ 10.56 Quarter Ended March 31, 2023 ​ ​ 11.85 ​ ​ 10.15 Quarter Ended June 30, 2023 ​ ​ 10.85 ​ ​ 8.90 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended September 30, 2021 ​ $ 10.65 ​ $ 10.40 Quarter Ended December 31, 2021 ​ ​ 10.95 ​ ​ 10.50 Quarter Ended March 31, 2022 ​ ​ 11.05 ​ ​ 10.75 Quarter Ended June 30, 2022 ​ ​ 11.16 ​ ​ 10.67 ​ Dividends We do not currently intend to pay cash dividends to our stockholders.
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is quoted on the OTC Pink Marketplace operated by the OTC Markets Group under the symbol “MBBC.” There were 198 shareholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms) as of September 26, 2022 and 2,269,700 shares of common stock outstanding.
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is quoted on the OTC Pink Marketplace operated by the OTC Markets Group under the symbol “MBBC.” There were 197 shareholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms) as of September 19, 2023 and 2,157,497 shares of common stock outstanding.
The payment and amount of any dividend payments will be subject to statutory and regulatory limitations, and will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; the ability of mutual holding companies to waive dividends; and general economic conditions. ​ ITEM 6: RESERVED ​
The payment and amount of any dividend payments will be subject to statutory and regulatory limitations, and will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; the ability of mutual holding companies to waive dividends; and general economic conditions. ​ ​ ​ Purchase of Equity Securities by the Issuer and Affiliated Purchasers ​ ​ On November 16, 2022, the Company announced it had adopted a stock repurchase program.
The following table sets forth the quarterly high and low prices for a share of the Company’s common stock since the stock became quoted on the OTC Pink Market Place on April 15, 2021. The information was obtained from 35 Table of Contents the OTC Pink Marketplace.
The following table sets forth the quarterly high and low prices for a share of the Company’s common stock for fiscal years 2023 and 2022. The information was obtained from the OTC Pink Marketplace. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Removed
The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Added
Under the repurchase program, the Company could repurchase up to 113,485 shares of its common stock, or approximately 5.0% of the then outstanding shares. Shares were repurchased in open market or private transactions, through block trades, or pursuant to any trading plan that may have been adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission.
Removed
Dividends We do not currently intend to pay cash dividends to our stockholders.
Added
All shares of common stock repurchased were retired. On May 10, 2023, the stock repurchase program was completed. The average price paid per share under the stock repurchase program was $11.886 which included the new stock excise tax which was paid in June 2023.
Added
Set forth below is the share repurchase activity for the three months ended June 30, 2023. ​ ​ 36 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Number ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ of Shares That ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Repurchased as Part of ​ May Yet Be Purchased ​ ​ ​ Total Number of Shares ​ Average Price Paid ​ Publicly Announced Plans ​ Under the Plans or ​ Period ​ Repurchased (1) ​ Per Share ​ Or Programs ​ Programs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 1-30, 2023 ​ ​ ​ ​ $ ​ ​ ​ ​ — ​ ​ ​ — ​ ​ May 1-31, 2023 ​ ​ ​ ​ $ ​ ​ ​ ​ — ​ ​ ​ — ​ ​ June 1-30, 2023 ​ ​ 1,920 ​ $ ​ 10.25 ​ ​ — ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) This column reflects the deemed surrender to us of 1,920 shares of common stock to satisfy tax withholding obligations in connection with the vesting of employee restricted stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ITEM 6: RESERVED ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+31 added−52 removed39 unchanged
Biggest changeSelected Financial Data The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2022 2021 ​ (In thousands) Selected Financial Condition Data: ​ ​ ​ ​ ​ ​ Total assets ​ $ 220,019 ​ $ 213,627 Cash, cash equivalents and interest-bearing deposits in other financial institutions ​ ​ 10,373 ​ ​ 48,111 Debt securities available for sale ​ ​ 10,617 ​ ​ 10,910 Debt securities held to maturity ​ ​ 532 ​ ​ 709 Loans receivable, net ​ ​ 185,630 ​ ​ 144,169 Federal Home Loan Bank stock, at cost ​ ​ 323 ​ ​ 262 Bank owned life insurance ​ ​ 9,193 ​ ​ 5,969 Premises and equipment, net ​ ​ 1,676 ​ ​ 1,850 Deferred tax asset ​ ​ 97 ​ ​ 270 Deposits ​ ​ 188,100 ​ ​ 171,956 PPPLF Funding ​ ​ — ​ ​ 10,372 Stockholders' Equity ​ ​ 30,743 ​ ​ 29,849 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ​ ​ Ended June 30, ​ 2022 2021 ​ ​ ​ (In thousands) Selected Operating Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 7,157 ​ $ 6,484 Interest expense ​ ​ 948 ​ ​ 1,091 Net interest income ​ ​ 6,209 ​ ​ 5,393 Provision for loan losses ​ ​ — ​ ​ — Net interest income after provision for loan losses ​ ​ 6,209 ​ ​ 5,393 Non-interest income ​ ​ 1,118 ​ ​ 1,896 Non-interest expense ​ ​ 5,555 ​ ​ 5,438 Income before income taxes ​ ​ 1,772 ​ ​ 1,851 Income tax expense ​ ​ 437 ​ ​ 478 Net income ​ $ 1,335 ​ $ 1,373 ​ 41 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years ​ ​ ​ Ended June 30, ​ ​ 2022 2021 ​ Performance Ratios: ​ ​ ​ ​ ​ Return on average assets ​ 0.62 % 0.73 % Return on average equity ​ 4.90 % 6.14 % Interest rate spread (1) ​ 2.99 % 2.99 % Net interest margin (2) ​ 3.09 % 3.10 % Non-interest expenses to average assets ​ 2.59 % 2.90 % Efficiency ratio (3) ​ 75.82 % 74.61 % Average interest-earning assets to average interest-bearing liabilities ​ 123.40 % 117.93 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (4): ​ ​ ​ ​ ​ Average equity to average assets ​ 12.69 % 11.88 % Tier 1 capital to average assets ​ 12.17 % 12.47 % ​ ​ ​ ​ ​ ​ Asset Quality Ratios: ​ ​ ​ ​ ​ Allowance for loan losses as a percentage of total loans ​ 1.17 % 1.49 % Allowance for loan losses as a percentage of non-performing loans ​ 1,908.70 % 1,228.09 % Net recoveries to average outstanding loans during the year ​ 0.01 % 0.38 % Non-performing loans as a percentage of total loans ​ 0.06 % 0.12 % Non-performing loans as a percentage of total assets ​ 0.05 % 0.08 % Total non-performing assets as a percentage of total assets ​ 0.05 % 0.08 % ​ ​ ​ ​ ​ ​ Other: ​ ​ ​ ​ ​ Number of offices ​ 4 ​ 4 ​ Number of full-time equivalent employees ​ 35 ​ 36 ​ ​ (1) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.
Biggest changeFinancial statements for each individual prior period presented shall be adjusted to reflect correction of the period-specific effects of the error. ​ Please see Note 1 to the notes to the audited consolidated financial statements for more information regarding the Restatement. ​ ​ Selected Financial Data The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ ​ ​ ​ Restated ​ 2023 2022 ​ (In thousands) Selected Financial Condition Data: ​ ​ ​ ​ ​ ​ Total assets ​ $ 238,779 ​ $ 220,500 Cash, cash equivalents and interest-bearing deposits in other financial institutions ​ ​ 15,537 ​ ​ 10,373 Debt securities available for sale ​ ​ 8,922 ​ ​ 10,617 Debt securities held to maturity ​ ​ 516 ​ ​ 532 Loans receivable, net ​ ​ 197,714 ​ ​ 185,630 Foreclosed assets (OREO) ​ ​ 2,312 ​ ​ - Federal Home Loan Bank stock, at cost ​ ​ 770 ​ ​ 323 Bank owned life insurance ​ ​ 8,724 ​ ​ 9,193 Premises and equipment, net ​ ​ 2,128 ​ ​ 1,676 Deferred tax asset ​ ​ 487 ​ ​ 579 Deposits ​ ​ 197,254 ​ ​ 188,100 Stockholders' Equity ​ ​ 31,280 ​ ​ 31,224 ​ 41 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ​ ​ Ended June 30, ​ 2023` 2022 ​ ​ ​ (In thousands) Selected Operating Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 8,978 ​ $ 7,157 Interest expense ​ ​ 2,278 ​ ​ 948 Net interest income ​ ​ 6,700 ​ ​ 6,209 Provision for loan losses ​ ​ — ​ ​ — Net interest income after provision for loan losses ​ ​ 6,700 ​ ​ 6,209 Non-interest income ​ ​ 1,301 ​ ​ 1,118 Non-interest expense ​ ​ 5,884 ​ ​ 5,555 Income before income taxes ​ ​ 2,117 ​ ​ 1,772 Income tax expense ​ ​ 445 ​ ​ 437 Net income ​ $ 1,672 ​ $ 1,335 ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years ​ ​ ​ Ended June 30, ​ ​ 2023 2022 ​ Performance Ratios: ​ ​ ​ ​ ​ Return on average assets ​ 0.71 % 0.62 % Return on average equity ​ 5.91 % 4.90 % Interest rate spread (1) ​ 2.81 % 2.99 % Net interest margin (2) ​ 3.04 % 3.09 % Non-interest expenses to average assets ​ 2.50 % 2.59 % Efficiency ratio (3) ​ 73.54 % 75.82 % Average interest-earning assets to average interest-bearing liabilities ​ 122.66 % 123.40 % Book value per share $ 14.50 $ 13.76 ​ ​ ​ ​ ​ ​ ​ Capital Ratios (4): ​ ​ ​ ​ ​ Average equity to average assets ​ 12.01 % 12.69 % Tier 1 capital to average assets ​ 12.02 % 12.17 % ​ ​ ​ ​ ​ ​ Asset Quality Ratios: ​ ​ ​ ​ ​ Allowance for loan losses as a percentage of total loans ​ 1.08 % 1.17 % Allowance for loan losses as a percentage of non-performing loans ​ - % 1,908.70 % Net (charge-offs) recoveries to average outstanding loans during the year ​ (0.02) % 0.01 % Non-performing loans as a percentage of total loans ​ - % 0.06 % Non-performing loans as a percentage of total assets ​ - % 0.05 % Total non-performing assets as a percentage of total assets ​ 0.97 % 0.05 % ​ ​ ​ ​ ​ ​ Other: ​ ​ ​ ​ ​ Number of offices ​ 4 ​ 4 ​ Number of full-time equivalent employees ​ 35 ​ 35 ​ ​ (1) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.
Our non-interest expenses consist of salaries and employee benefits, net occupancy and equipment, data processing and office, professional fees, marketing expenses and other general and administrative expenses, including premium payments we make to the FDIC for insurance of our deposits. Income Tax Expense.
Non-Interest Expenses. Our non-interest expenses consist of salaries and employee benefits, net occupancy and equipment, data processing and office, professional fees, marketing expenses and other general and administrative expenses, including premium payments we make to the FDIC for insurance of our deposits. Income Tax Expense.
The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns.
The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns.
In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, changes in the 46 Table of Contents nature, volume and terms of loans, the fair value of underlying collateral, changes in lending personnel, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.
In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing 46 Table of Contents review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, changes in the nature, volume and terms of loans, the fair value of underlying collateral, changes in lending personnel, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.
Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities. Recent Accounting Pronouncements Please refer to Note 1 to the financial statements beginning on page 50 for a description of recent accounting pronouncements that may affect our financial condition and results of operations.
Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities. Recent Accounting Pronouncements Please refer to Note 1 of the notes to consolidated the financial statements beginning on page 50 for a description of recent accounting pronouncements that may affect our financial condition and results of operations.
Qualitative factors include consideration of the following: changes in lending policies and procedures; changes in economic conditions, changes in the nature and volume of the portfolio; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due, nonaccrual and other adversely graded loans; changes in the loan review system; changes in the value of the underlying collateral for collateral-dependent loans; concentrations of credit; and the effect of other external factors such as competition and legal and regulatory requirements.
Qualitative factors include consideration of the following: changes in lending policies and procedures; changes in economic conditions, changes in the nature and volume of the portfolio; changes in the experience, ability, and depth of lending management and other relevant staff; 38 Table of Contents changes in the volume and severity of past due, nonaccrual and other adversely graded loans; changes in the loan review system; changes in the value of the underlying collateral for collateral-dependent loans; concentrations of credit; and the effect of other external factors such as competition and legal and regulatory requirements.
The allowance for loan losses is increased through charges to the provision for loan losses. Loans are charged against the allowance when management believes that the collectability of the principal loan amount is not probable. Recoveries on loans previously charged-off, if any, are credited to the allowance for loan losses when realized. Non-interest Income.
The allowance for loan losses is increased through charges to the provision for loan losses. Loans are charged against the allowance when management believes that the collectability of the principal loan amount is not probable. Recoveries on loans previously charged-off, if any, are credited to the allowance for loan losses when realized. 37 Table of Contents Non-interest Income.
At June 30, 2022 and June 30, 2021, the qualitative loan portfolio risk factors were slightly reduced in all loan categories except commercial and multi-family real estate which we believe exhibits the most credit risk related to local and national economic conditions as well as industry conditions and concentrations.
At June 30, 2023, the qualitative loan portfolio risk factors were reduced in all loan categories except commercial and multi-family real estate which we believe exhibits the most credit risk related to local and national economic conditions as well as industry conditions and concentrations.
After an evaluation of these factors, we recorded no provision for loan losses for the years ended June 30, 2022 or 2021. Our allowance for loan losses was $2.2 million at June 30, 2022 and 2021, respectively. The allowance for loan losses to total loans was 1.17% at June 30, 2022 and 1.49% at June 30, 2021.
After an evaluation of these factors, we recorded no provision for loan losses for the years ended June 30, 2023 or 2022. Our allowance for loan losses was $2.2 million and $2.2 million at June 30, 2023 and 2022, respectively. The allowance for loan losses to total loans was 1.08% at June 30, 2023 and 1.17% at June 30, 2022.
At June 30, 2022, Marathon Bank was classified as “well capitalized” for regulatory capital purposes. See Note 15 in the Notes to the Audited Consolidated Financial Statements. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Commitments.
At June 30, 2023, Marathon Bank was classified as “well capitalized” for regulatory capital purposes. See Note 16 in the Notes to the Audited Consolidated Financial Statements. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Commitments.
Net cash used in investing activities, which consists primarily of disbursements for loan originations, the purchase of securities and the purchase of bank owned life insurance, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $44.2 million for the year ended June 30, 2022 compared to $20.8 million for the year ended June 30, 2021.
Net cash used in investing activities, which consists primarily of disbursements for loan originations, the purchase of securities and the purchase of bank owned life insurance, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $14.4 million for the year ended June 30, 2023 compared to $44.2 million for the year ended June 30, 2022.
Also included in net interest income for the year ended June 30, 2022 was the recognition of deferred fee income of $483,000 on the forgiven PPP loans repaid by the SBA compared to $404,000 for the year ended June 30, 2021.
Also included in net interest income for the year ended June 30, 2022 was the recognition of deferred fee income of $483,000 on the forgiven PPP loans repaid by the SBA compared to $0 for the year ended June 30, 2023.
Time deposits that are scheduled to mature in one year or less from June 30, 2022 totaled $25.9 million. Management expects that a substantial portion of the maturing time deposits will be renewed.
Time deposits that are scheduled to mature in one year or less from June 30, 2023 totaled $54.6 million. Management expects that a substantial portion of the maturing time deposits will be renewed.
Our primary sources of non-interest income are mortgage banking income, service charges on deposit accounts and net gains in the cash surrender value of bank owned life insurance. Other sources of non-interest income include net gain on securities transactions, net gain or loss on disposal of foreclosed assets and other income. 36 Table of Contents Non-Interest Expenses.
Our primary sources of non-interest income are mortgage banking income, service charges on deposit accounts and net gains in the cash surrender value of bank owned life insurance. Other sources of non-interest income include net gain on securities transactions, net gain or loss on disposal of foreclosed assets, gain on proceeds from life insurance death benefit, and other income.
In addition, loan interest income was positively impacted by the recognition of deferred fee income of $483,000 during the year ended June 30, 2022 on the forgiven PPP loans repaid by the SBA compared to $404,000 for the year ended June 30, 2021.
Loan interest income from PPP loans was positively impacted by the recognition of deferred fee income of $483,000 during the year ended June 30, 2022 on the forgiven PPP loans repaid by the SBA compared to $0 for the year ended June 30, 2023.
Net cash provided by financing activities, consisting of activity in deposit accounts and borrowings and net proceeds from our common stock offering, was $5.8 million and $41.6 million for the years ended June 30, 2022 and 2021, respectively. We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis.
Net cash provided by financing activities, consisting of activity in deposit accounts and borrowings was $15.8 million and $5.8 million for the years ended June 30, 2023 and 2022, respectively. We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis.
The increase in commercial and multifamily real estate loans was primarily due to our strategy to enhance our commercial lending in Southeastern Wisconsin. The increase in one- to four-family residential mortgage loans was due to additional growth with respect to adjustable-rate one-to four-family residential loans. Construction loans increased due to an increase in our construction loan participations. Deposits.
The increase in commercial and multi-family real estate loans was primarily due to our strategy to enhance our commercial and multi-family real estate lending in Southeastern Wisconsin. One- to four-family residential loans increased due to additional growth with respect to adjustable-rate one- to four-family residential loans.
At June 30, 2022 and 2021, the qualitative loan portfolio risk factors were slightly reduced in all loan categories except commercial real estate which 39 Table of Contents we believe exhibits the most credit risk related to local and national economic conditions as well as industry conditions and concentrations.
At June 30, 2023, the qualitative loan portfolio risk factors were reduced in all loan categories except commercial and multi-family real estate which we believe exhibits the most credit risk related to local and national economic conditions as well as industry conditions and concentrations.
Such commitments are subject to the same credit policies and approval process accorded to 48 Table of Contents loans we make. At June 30, 2022, we had outstanding commitments to originate loans of $10.7 million, and outstanding commitments to sell loans of $696,000. We anticipate that we will have sufficient funds available to meet our current lending commitments.
Such commitments are subject to the same credit policies and approval process accorded to loans we make. At June 30, 2023, we had outstanding commitments to originate loans of $1.2 million, and outstanding commitments to sell loans of $320,000. We anticipate that we will have sufficient funds available to meet our current lending commitments.
Mortgage banking income (consisting primarily of sales of fixed-rate one- to four-family residential real estate loans) decreased by $838,000 as we sold $16.8 million of mortgage loans into the secondary market during the year ended June 30, 2022 compared to $50.6 million of such sales during the year ended June 30, 2021 due to an increase in market rates, which resulted in decreased demand for mortgage loan refinancing.
These increases were offset by a decrease in mortgage banking income (consisting primarily of sales of fixed-rate one- to four-family residential real estate loans) which decreased by $338,000 as we sold $3.9 million of mortgage loans into the secondary market during the year ended June 30, 2023 compared to $16.8 million of such sales during the year ended June 30, 2022 due to an increase in market interest rates, which resulted in decreased demand for mortgage loan refinancing.
The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest 43 Table of Contents income or interest expense, as applicable. Loan balances include loans held for sale.
Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense, as applicable. Loan balances include loans held for sale.
Loan interest income increased by $669,000, or 11.0%, to $6.8 million for the year ended June 30, 2022 from $6.1 million for the year ended June 30, 2021, due to an increase in the average balance of the loan portfolio, offset by a decrease in the average yield on loans (excluding PPP loans).
Loan interest income increased by $1.4 million, or 21.0%, to $8.2 million for the year ended June 30, 2023 from $6.8 million for the year ended June 30, 2022, due to an increase in the average balance of the loan portfolio and a slight increase in the average yield on loans (excluding PPP loans).
In order to determine other-than-temporary impairment for mortgage-backed securities, asset-backed securities and collateralized mortgage obligations, we compare the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. Other-than-temporary impairment is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.
In order to determine other-than-temporary impairment for mortgage-backed securities, asset-backed securities and collateralized mortgage obligations, we compare the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows.
(2) Represents net interest income as a percentage of average interest-earning assets. (3) Represents non-interest expenses divided by the sum of net interest income and non-interest income. (4) Capital ratios are for the Bank only. As of June 30, 2022 and 2021, the Bank elected to adopt the Community Bank Leverage Ratio Framework.
(2) Represents net interest income as a percentage of average interest-earning assets. (3) Represents non-interest expenses divided by the sum of net interest income and non-interest income. (4) Capital ratios are for the Bank only.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets. ​ Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
(3) Net interest margin represents net interest income divided by average total interest-earning assets. ​ Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).
The Standard also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels: ● Level 1 inputs consist of quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. ● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset. ● Level 3 inputs are unobservable inputs related to the asset.
The Standard also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels: ● Level 1 inputs consist of quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. ● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset. ● Level 3 inputs are unobservable inputs related to the asset. ​ Restatement of Previously Issued Financials During fiscal 2023, the Company corrected an accounting error related to $481,798 of deferred taxes recorded in years prior to fiscal 2022 by the Bank.
Summary of Significant Accounting Estimates The discussion and analysis of the financial condition and results of operations are based on our audited consolidated financial statements, which are prepared in conformity with U.S. GAAP.
A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized. Summary of Significant Accounting Estimates The discussion and analysis of the financial condition and results of operations are based on our audited consolidated financial statements, which are prepared in conformity with U.S. GAAP.
We also have the ability to borrow from the Federal Home Loan Bank of Chicago. At June 30, 2022, we had a $77.4 million line of credit (subject to providing additional collateral) with the Federal Home Loan Bank of Chicago, and had no borrowings outstanding as of that date.
We also have the ability to borrow from the Federal Home Loan Bank of Chicago. At June 30, 2023, we had a $84.0 million line of credit with the Federal Home Loan Bank of Chicago, which had $8.0 million in borrowings outstanding as of that date.
Debt securities interest income decreased $31,000, or 8.6%, to $331,000 for the year ended June 30, 2022 from $362,000 for the year ended June 30, 2021 due to a decrease of $1.8 million in the average balance of the debt securities portfolio which was offset by a 12 basis points increase in the average yield on the debt securities portfolio to 2.68% for the year ended June 30, 2022 from 2.56% for the year ended June 30, 2021.
Debt securities interest income decreased $82,000, or 24.6%, to $249,000 for the year ended June 30, 2023 from $331,000 for the year ended June 30, 2022 due to a $1.3 million decrease in the average balance of debt securities due to securities paydowns and a 44 basis points decrease in the average yield on the debt securities portfolio to 2.24% for the year ended June 30, 2023 from 2.68% for the year ended June 30, 2022.
Total stockholders’ equity increased by $893,000, or 3.0%, to $30.7 million at June 30, 2022 from $29.8 million at June 30, 2021.
Total stockholders’ equity increased by $55,000, or 0.2%, to $31.3 million at June 30, 2023 from $31.2 million at June 30, 2022.
The average balance of the loan portfolio (excluding PPP loans) increased by $35.9 million, or 30.1%, from $119.1 million for the year ended June 30, 2021 to $155.0 million for the year ended June 30, 2022.
The average balance of the loan portfolio (excluding PPP loans) increased by $40.7 million, or 26.3%, from $155.0 million for the year ended June 30, 2022 to $195.7 million for 45 Table of Contents the year ended June 30, 2023.
Interest expense decreased $143,000, or 13.2%, to $948,000 for the year ended June 30, 2022 from $1.1 million for the year ended June 30, 2021, due to a decrease of $108,000 in interest paid on deposits and a decrease of $35,000 in interest paid on borrowings.
Interest expense increased $1.3 million, or 140.4%, to $2.3 million for the year ended June 30, 2023 from $948,000 for the year ended June 30, 2022, due to an increase of $1.2 million in interest paid on deposits and an increase of $96,000 in interest paid on borrowings.
Non-interest income information is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ June 30, ​ Change ​ 2022 2021 Amount Percent ​ (Dollars in thousands) ​ Service charges on deposit accounts ​ $ 165 ​ $ 168 ​ $ (3) (1.8) % Mortgage banking ​ 689 ​ 1,527 ​ (838) (54.9) % Increase in cash surrender value of BOLI ​ 225 ​ 165 ​ 60 36.4 % Gain on sale of foreclosed real estate ​ — ​ 11 ​ (11) 100.0 % Net gain on securities transactions ​ ​ 14 ​ ​ — ​ ​ 14 ​ 100.0 % Other ​ 25 ​ 25 ​ — — % Total non-interest income ​ $ 1,118 ​ $ 1,896 ​ $ (778) (41.0) % ​ Non-interest income decreased by $778,000 to $1.1 million for the year ended June 30, 2022 from $1.9 million for the year ended June 30, 2021 due primarily to a decrease in mortgage banking income.
Non-interest income information is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ June 30, ​ Change ​ 2023 2022 Amount Percent ​ (Dollars in thousands) ​ Service charges on deposit accounts ​ $ 153 ​ $ 165 ​ $ (12) (7.3) % Mortgage banking ​ 351 ​ 689 ​ (338) (49.1) % Increase in cash surrender value of BOLI ​ 236 ​ 225 ​ 11 4.9 % Gain on proceeds from life insurance death benefit ​ ​ 261 ​ ​ — ​ ​ 261 ​ 100.0 % Gain on acquisition of foreclosed real estate ​ 247 ​ — ​ 247 100.0 % Net gain on securities transactions ​ ​ 24 ​ ​ 14 ​ ​ 10 ​ 71.4 % Other ​ 30 ​ 25 ​ 5 20.0 % Total non-interest income ​ $ 1,302 ​ $ 1,118 ​ $ 184 16.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest income increased by $184,000, or 16.5% to $1.3 million for the year ended June 30, 2023 from $1.1 million for the year ended June 30, 2022 due primarily to a gain on proceeds from a life insurance death benefit and a gain on the acquisition of foreclosed real estate.
Deferred loan fees accreted to interest income totaled $536,000 and $429,000 for the years ended June 30, 2022 and 2021, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended June 30, ​ ​ 2022 ​ 2021 ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ Average ​ ​ Outstanding ​ ​ ​ ​ Yield/Rate ​ Outstanding ​ ​ ​ ​ Yield/Rate ​ Balance Interest ​ Balance Interest ​ ​ ​ (Dollars in thousands) ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (excluding PPP loans) ​ $ 154,982 ​ $ 6,266 4.04 % $ 119,103 ​ $ 5,700 4.79 % PPP loans ​ 958 ​ 493 51.57 % 7,964 ​ 390 4.90 % Debt securities ​ 12,355 ​ 331 2.68 % 14,122 ​ 362 2.56 % Cash and cash equivalents ​ 32,201 ​ 61 0.19 % 32,394 ​ 20 0.06 % Other ​ 277 ​ 6 2.17 % 262 ​ 12 4.58 % Total interest-earning assets ​ 200,773 ​ 7,157 3.57 % 173,845 ​ 6,484 3.73 % Noninterest-earning assets ​ 13,993 ​ ​ ​ 13,534 ​ ​ Total assets ​ $ 214,766 ​ ​ ​ ​ $ 187,379 ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ Demand, NOW and money market deposits ​ $ 55,676 ​ 213 0.38 % $ 41,737 ​ 146 0.35 % Savings deposits ​ 46,069 ​ 67 0.15 % 41,824 ​ 60 0.14 % Certificates of deposit ​ 59,689 ​ 661 1.11 % 50,233 ​ 843 1.68 % Total interest-bearing deposits ​ 161,434 ​ 941 0.58 % 133,794 ​ 1,049 0.78 % FHLB advances and other borrowings ​ — ​ — — % 6,441 ​ 19 0.29 % PPP Liquidity Facility borrowings ​ 1,272 ​ 7 0.55 % 7,181 ​ 23 0.32 % Total interest-bearing liabilities ​ 162,706 ​ 948 0.58 % 147,416 ​ 1,091 0.74 % Non-interest-bearing demand deposits ​ 23,684 ​ ​ ​ 16,482 ​ ​ Other non-interest-bearing liabilities ​ 1,130 ​ ​ ​ 1,216 ​ ​ Total liabilities ​ 187,520 ​ ​ ​ 165,114 ​ ​ Total stockholders' equity ​ 27,246 ​ ​ ​ 22,265 ​ ​ Total liabilities and stockholders' equity ​ $ 214,766 ​ ​ ​ ​ $ 187,379 ​ ​ Net interest income ​ ​ ​ ​ $ 6,209 ​ ​ ​ $ 5,393 ​ Net interest rate spread (1) ​ ​ ​ ​ ​ 2.99 % ​ ​ 2.99 % Net interest-earning assets (2) ​ $ 38,067 ​ ​ ​ ​ ​ $ 26,429 ​ Net interest margin (3) ​ ​ ​ ​ ​ 3.09 % ​ ​ 3.10 % Average interest-earning assets to interest-bearing liabilities ​ 123.40 % ​ ​ ​ 117.93 % ​ ​ (1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
Deferred loan fees accreted to interest income totaled $50,000 and $536,000 for the years ended June 30, 2023 and 2022, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended June 30, ​ ​ 2023 ​ 2022 ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ Average ​ ​ Outstanding ​ ​ ​ ​ Yield/Rate ​ Outstanding ​ ​ ​ ​ Yield/Rate ​ Balance Interest ​ Balance Interest ​ ​ ​ (Dollars in thousands) ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (excluding PPP loans) ​ $ 195,680 ​ $ 8,182 4.18 % $ 154,982 ​ $ 6,266 4.04 % PPP loans ​ — ​ — — % 958 ​ 493 51.57 % Debt securities ​ 11,102 ​ 250 2.24 % 12,355 ​ 331 2.68 % Cash and cash equivalents ​ 12,853 ​ 522 4.06 % 32,201 ​ 61 0.19 % Other ​ 666 ​ 24 3.60 % 277 ​ 6 2.17 % Total interest-earning assets ​ 220,301 ​ 8,978 4.08 % 200,773 ​ 7,157 3.57 % Noninterest-earning assets ​ 15,146 ​ ​ ​ 13,993 ​ ​ Total assets ​ $ 235,447 ​ ​ ​ ​ $ 214,766 ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ Demand, NOW and money market deposits ​ $ 54,130 ​ 506 0.93 % $ 55,676 ​ 213 0.38 % Savings deposits ​ 44,501 ​ 61 0.14 % 46,069 ​ 67 0.15 % Certificates of deposit ​ 77,707 ​ 1,609 2.07 % 59,689 ​ 661 1.11 % Total interest-bearing deposits ​ 176,338 ​ 2,176 1.23 % 161,434 ​ 941 0.58 % FHLB advances and other borrowings ​ 3,272 ​ 103 3.15 % — ​ — — % PPP Liquidity Facility borrowings ​ — ​ — — % 1,272 ​ 7 0.55 % Total interest-bearing liabilities ​ 179,610 ​ 2,279 1.27 % 162,706 ​ 948 0.58 % Non-interest-bearing demand deposits ​ 25,829 ​ ​ ​ 23,684 ​ ​ Other non-interest-bearing liabilities ​ 1,726 ​ ​ ​ 1,130 ​ ​ Total liabilities ​ 207,165 ​ ​ ​ 187,520 ​ ​ Total stockholders' equity ​ 28,282 ​ ​ ​ 27,246 ​ ​ Total liabilities and stockholders' equity ​ $ 235,447 ​ ​ ​ ​ $ 214,766 ​ ​ Net interest income ​ ​ ​ ​ $ 6,699 ​ ​ ​ $ 6,209 ​ Net interest rate spread (1) ​ ​ ​ ​ ​ 2.81 % ​ ​ 2.99 % Net interest-earning assets (2) ​ $ 40,691 ​ ​ ​ ​ ​ $ 38,067 ​ Net interest margin (3) ​ ​ ​ ​ ​ 3.04 % ​ ​ 3.09 % Average interest-earning assets to interest-bearing liabilities ​ 122.66 % ​ ​ ​ 123.40 % ​ ​ (1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities. 44 Table of Contents (2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $826,000 and $1.0 million for the years ended June 30, 2022 and 2021, respectively.
The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.
Average Balance Sheets The following table sets forth average balances, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances.
Stock based compensation and expense related to the Company’s ESOP also increased stockholders’ equity by $171,000. ​ ​ Average Balance Sheets The following table sets forth average balances, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances.
Non-interest expenses information is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ June 30, ​ Change ​ 2022 2021 Amount Percent ​ (Dollars in thousands) ​ Salaries and employee benefits ​ $ 3,135 ​ $ 3,345 ​ $ (210) 8.7 % Occupancy and equipment ​ 711 ​ 671 ​ 40 6.0 % Data processing and office ​ 394 ​ 463 ​ (69) (14.9) % Professional fees ​ 657 ​ 367 ​ 290 79.0 % Marketing expenses ​ 78 ​ 63 ​ 15 23.8 % Debit card expenses ​ ​ 78 ​ ​ 89 ​ ​ (11) ​ (12.4) ​ Directors fees ​ ​ 68 ​ ​ 78 ​ ​ (10) ​ (12.8) ​ Other ​ 435 ​ 362 ​ 73 20.2 % Total non-interest expenses ​ $ 5,556 ​ $ 5,438 ​ $ 118 2.2 % 47 Table of Contents ​ Non-interest expenses were $5.6 million for the year ended June 30, 2022 as compared to $5.4 million for the year ended June 30, 2021.
Non-interest expenses information is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ June 30, ​ Change ​ 2023 2022 Amount Percent ​ (Dollars in thousands) ​ Salaries and employee benefits ​ $ 3,296 ​ $ 3,135 ​ $ 161 8.7 % Occupancy and equipment ​ 731 ​ 711 ​ 20 2.8 % Data processing and office ​ 401 ​ 394 ​ 7 1.8 % Professional fees ​ 712 ​ 657 ​ 55 8.4 % Marketing expenses ​ 87 ​ 78 ​ 9 11.5 % Debit card expenses ​ ​ 90 ​ ​ 78 ​ ​ 12 ​ 15.4 ​ Directors fees ​ ​ 89 ​ ​ 68 ​ ​ 21 ​ 30.9 ​ Other ​ 478 ​ 435 ​ 43 9.9 % Total non-interest expenses ​ $ 5,884 ​ $ 5,556 ​ $ 328 5.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest expenses were $5.9 million and $5.6 million for the years ended June 30, 2023 and 2022, respectively.
The increase in deposits reflected an increase in demand, NOW and money market accounts of $13.4 million, or 30.2%, to $57.8 million at June 30, 2022 from $44.4 million at June 30, 2021 and an increase in savings accounts of $1.9 million, or 4.3%, to $46.6 million at June 30, 2022 from $44.7 million at June 30, 2021.
Offsetting these increases, was a decrease in demand, NOW and money market accounts of $13.1 million, or 22.7%, to $44.7 million at June 30, 2023 from $57.8 million at June 30, 2022. Savings deposits decreased $4.0 million, or 8.7%, to $42.6 million at June 30, 2023 from $46.6 million at June 30, 2022.
To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at June 30, 2022. However, future changes in the factors described herein, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses.
However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses.
The average yield on the loan portfolio (excluding PPP loans) decreased 75 basis points from 4.79% for the year ended June 30, 2021 to 4.04% for the year ended June 30, 2022.
The average yield on the loan portfolio (excluding PPP loans) increased by 14 basis points from 4.04% for the year ended June 30, 2022 to 4.18% for the year ended June 30, 2023 as a result of rising interest rates.
Net income was $1.3 million for the year ended June 30, 2022, a decrease of $38,000, or 2.8%, from net income of $1.4 million for the year ended June 30, 2021.
Net income was $1.7 million for the year ended June 30, 2023, an increase of $337,000, or 25.3%, from net income of $1.3 million for the year ended June 30, 2022.
The increase was primarily due to net income of $1.3 million offset by an increase in accumulated other comprehensive loss of $490,000 during the year ended June 30, 2022 as a result of an increase in market interest rates.
The increase was primarily due to net income of $1.7 million offset by the repurchase and retirement of common stock of $1.4 million during the year ended June 30, 2023 and an increase in accumulated other comprehensive loss, net of tax of $416,000 which was primarily related to the decrease in fair value of 43 Table of Contents a corporate bond as a result of the increase in interest rates during the year ended June 30, 2023.
For purposes of this table, changes attributable to both rate 44 Table of Contents and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2022 vs. 2021 ​ ​ Increase (Decrease) Due to ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Increase ​ Volume Rate (Decrease) ​ (In thousands) Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (excluding PPP loans) $ 1,717 $ (1,151) $ 566 PPP loans ​ ​ (343) ​ 446 ​ 103 Debt securities ​ (45) ​ 14 ​ (31) Cash and cash equivalents ​ — ​ 41 ​ 41 Other ​ 1 ​ (7) ​ (6) Total interest-earning assets ​ 1,330 ​ (657) ​ 673 Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand, NOW and money market deposits ​ 49 ​ 18 ​ 67 Savings deposits ​ 6 ​ 1 ​ 7 Certificates of deposit ​ 159 ​ (341) ​ (182) Total interest-bearing deposits ​ 214 ​ (322) ​ (108) FHLB advances and other borrowings ​ (19) ​ — ​ (19) PPP Liquidity Facility borrowings ​ (19) ​ 3 ​ (16) Total interest-bearing liabilities ​ 176 ​ (319) ​ (143) Change in net interest income ​ $ 1,154 ​ $ (338) ​ $ 816 ​ Comparison of Operating Results for the Years Ended June 30, 2022 and 2021 General.
For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2023 vs. 2022 ​ ​ Increase (Decrease) Due to ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Increase ​ Volume Rate (Decrease) ​ (In thousands) Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (excluding PPP loans) $ 1,645 $ 271 $ 1,916 PPP loans ​ ​ (493) ​ — ​ (493) Debt securities ​ (34) ​ (47) ​ (81) Cash and cash equivalents ​ (37) ​ 498 ​ 461 Other ​ 8 ​ 10 ​ 18 Total interest-earning assets ​ 1,089 ​ 732 ​ 1,821 Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand, NOW and money market deposits ​ (6) ​ 299 ​ 293 Savings deposits ​ (2) ​ (4) ​ (6) Certificates of deposit ​ 200 ​ 748 ​ 948 Total interest-bearing deposits ​ 192 ​ 1,043 ​ 1,235 FHLB advances and other borrowings ​ — ​ 103 ​ 103 PPP Liquidity Facility borrowings ​ (7) ​ — ​ (7) Total interest-bearing liabilities ​ 185 ​ 1,146 ​ 1,331 Change in net interest income ​ $ 904 ​ $ (414) ​ $ 490 ​ ​ Comparison of Operating Results for the Years Ended June 30, 2023 and 2022 General .
Interest income increased by $673,000, or 10.4%, to $7.2 million for the year ended June 30, 2022 from $6.5 million for the year ended June 30, 2021, primarily due to increases in loan interest income and cash and cash equivalents interest income which was offset by a decrease in debt securities interest income.
Interest Income . Interest income increased by $1.8 million, or 25.4%, to $9.0 million for the year ended June 30, 2023 compared to $7.2 million for the year ended June 30, 2022 primarily due to increases in loan interest income and other interest income (cash and cash equivalents and other).
The Company determines the fair value of certain assets in accordance with the provisions of FASB Accounting Standards Codification Topic Accounting Standards Codification 820, Fair Value Measurements , which provides a framework for measuring fair value under generally accepted accounting principles. 40 Table of Contents Fair value is defined as the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date.
The Company determines the fair value of certain assets in accordance with the provisions of FASB Accounting Standards Codification Topic Accounting Standards Codification 820, Fair Value Measurements , which provides a framework for measuring fair value under generally accepted accounting principles.
The increase in the average yield on the debt securities portfolio was due to higher interest rates on the $3.5 million in corporate bonds purchased partially offset by the decrease in average yield of our collateralized mortgage obligations with inverse floating rates.
The decrease in the average yield was related to paydowns on securities earning higher interest rates and the decrease in the average yield of our collateralized mortgage obligations with inverse floating rates. Interest Expense.
Net interest-earning assets increased by $11.7 million, or 44.0%, to $38.1 million for the year ended June 30, 2022 from $26.4 million for the year ended June 30, 2021. The net interest margin decreased one basis point to 3.09% for the year ended June 30, 2022 from 3.10% for the year ended June 30, 2021.
Net interest-earning assets increased by $2.6 million, or 6.9%, to $40.7 million for the year ended June 30, 2023 from $38.1 million for the year ended June 30, 2022.
The decrease in the effective tax rate was a result of an increase in earnings on bank owned life insurance. Liquidity and Capital Resources Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business.
The effective tax rate declined during the year ended June 30, 2023 as compared to the prior year because the gain on life insurance proceeds was not subject to income taxes. ​ Liquidity and Capital Resources Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business.
Net loans increased $41.4 million, or 28.8%, to $185.6 million at June 30, 2022 from $144.2 million at June 30, 2021.
Net loans increased $12.1 million, or 6.5%, to $197.7 million at June 30, 2023 from $185.6 million at June 30, 2022.
The increase was due to a $28.5 million, or 54.6%, increase in commercial real estate loans to $80.6 million at June 30, 2022 from $52.1 million at June 30, 2021 and an increase in multifamily loans of $16.6 million, or 96.6%, to $33.9 million at June 30, 2022 from $17.3 million at June 30, 2021.
The increase was primarily due to an increase in multi-family real estate loans of $10.2 million, or 30.2%, to $44.2 million at June 30, 2023 from $34.0 million at June 30, 2022, an increase in one-to-four-family residential loans of $7.6 million, or 14.6% to $59.5 million at June 30, 2023 from $51.9 million at June 30, 2022 and a $4.0 million increase in commercial real estate loans, or 5.0% to $84.6 million at June 30, 2023 from $80.6 million at June 30, 2022.
Comparison of Financial Condition at June 30, 2022 and June 30, 2021 Total Assets. Total assets increased $6.4 million, or 3.0%, to $220.0 million at June 30, 2022 from $213.6 million at June 30, 2021.
As of June 30, 2023 and 2022, the Bank elected to adopt the Community Bank Leverage Ratio Framework. 42 Table of Contents Comparison of Financial Condition at June 30, 2023 and June 30, 2022 Total Assets. Total assets increased $18.3 million, or 8.3%, to $238.8 million at June 30, 2023 from $220.5 million at June 30, 2022.
Interest expense on deposits decreased $108,000, or 12.8%, to $941,000 for the year ended June 30, 2022 from $1.0 million for the year ended June 30, 2021 due to a decrease in interest expense on certificates of deposit which was offset by an increase in interest expense on interest-bearing core deposits (consisting of demand, NOW, money market and savings accounts).
Interest expense on deposits increased $1.2 million, or 131.2%, to $2.2 million for the year ended June 30, 2023 from $941,000 for the year ended June 30, 2022 due to an increase in interest expense on all deposit categories excluding savings deposits.
The decrease in net income for the year ended June 30, 2022 was primarily attributed to a decrease in non-interest income of $777,000 and an increase in non-interest expenses of $118,000, offset by an increase in net interest income of $816,000. The provision for income taxes decreased $40,000. Interest Income .
The increase in income tax expense was primarily due to an increase in the income before income taxes of $345,000 offset by a decrease in the Company’s effective tax rate. The effective tax rate for the years ended June 30, 2023 and 2022 was 21.0% and 24.7%, respectively.
The average yield increased to 0.19% for the year ended June 30, 2022 from 0.06% for the year ended June 30, 2021, while the average balance of cash and cash equivalents decreased slightly from $32.4 million for the year ended June 30, 2021 to $32.2 million for the year ended June 30, 2022.
The average balance of savings accounts also decreased slightly to $44.5 million, or 0.03% for the year ended June 30, 2023 from $46.1 million for the year ended June 30, 2022.
Net interest income increased $816,000, or 15.1%, to $6.2 million for the year ended June 30, 2022 from $5.4 million for the year ended June 30, 2021 due to an increase in net interest-earning assets. The net interest rate spread remained the same at 2.99% for the years ended June 30, 2022 and 2021.
Net interest income increased by $490,000, or 7.9%, to $6.7 million for the year ended June 30, 2023 from $6.2 million for the year ended June 30, 2022.
The increase in the average yield on cash and cash equivalents was primarily due to higher average rates earned on federal funds sold, as a result of the increase in market interest rates since June 30, 2021. Interest Expense.
The increase in the average yield on interest earning assets for the year ended June 30, 2023 compared to the year ended June 30, 2022 was primarily due to an increase in the average yield of 387 basis points on our cash and cash equivalents investments due to the increases in the federal funds rate.
The increase in the average balance of loans was due to our continued efforts to increase commercial and multifamily real estate loans in Southeastern Wisconsin. The average balance of PPP loans decreased due to the repayment by the SBA of forgiven PPP loans. There were no outstanding PPP loans as of June 30, 2022.
The increase in the average balance of loans was due to our continued efforts to increase commercial and multi-family real estate loans in Southeastern Wisconsin. The average balance of one-to-four family residential loans also increased. The increase was due to additional growth with respect to adjustable-rate one-to four-family residential loans.
The increase was primarily due to an increase of $41.4 million, or 28.8%, in net loans and an increase in the cash surrender value of life insurance of $3.2 million or 54.0% which was offset by a decrease in cash and cash equivalents of $37.6 million or 81.7%. Cash and Cash Equivalents.
The increase was primarily due to an increase of $12.1 million, or 6.5%, in loans, net of the allowance for loan losses. Cash and cash equivalents, interest bearing deposits held in other financial institutions and foreclosed assets also increased by $3.4 million, $1.8 million and $2.3 million, respectively.
Debt Securities Available for Sale. Total debt securities available for sale decreased $293,000, or 2.7%, to $10.6 million at June 30, 2022 from $10.9 million at June 30, 2021.
A portion of the increased cash flows from the above activity was invested in interest bearing deposits held in other financial institutions which increased by $1.8 million. Debt Securities Available for Sale. Total debt securities available for sale decreased $1.7 million, or 16.0%, to $8.9 million at June 30, 2023 from $10.6 million at June 30, 2022.
Total deposits increased $16.1 million, or 9.4%, to $188.1 million at June 30, 2022 from $172.0 million at June 30, 2021.
The valuation was based on recently obtained independent appraisals subject to certain discounts less estimated costs to sell. Deposits. Total deposits increased $9.2 million, or 4.9%, to $197.3 million at June 30, 2023 from $188.1 million at June 30, 2022.
We recorded net recoveries of $9,000 for the year ended June 30, 2022 and net recoveries of $486,000 for the year ended June 30, 2021. Non-performing assets decreased to $115,000, or 0.05% of total assets, at June 30, 2022, compared to $178,000, or 0.08% of total assets, at June 30, 2021.
There were $2.3 million in non-performing assets, or 0.97% at June 30, 2023, compared to $115,000, or 0.05% of total assets, at June 30, 2022. To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at June 30, 2023.
It is required that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
Fair value is defined as the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. It is required that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
The average balance of certificates of deposit increased by $9.5 million to $59.7 million, for the year ended June 30, 2022 compared to the year ended June 30, 2021 due to the purchase of $15.1 million in brokered certificates of deposit in March 2021 and an increase in new customers added by the Bank.
The increase in the average balance of certificates of deposit was partly due to the purchase of brokered certificates of deposit of $4.5 million with the remaining increase in the average balance of certificates of deposit being due to offering higher rate deposit products during the year ended June 30, 2023.
Total cash and cash equivalents decreased $37.6 million, or 81.7%, to $8.4 million at June 30, 2022 from $46.0 million at June 30, 2021 due to the use of cash to fund loan originations, the purchase of $3.5 million of corporate bonds in our debt securities available for sale portfolio and the purchase of an additional $3.0 million of bank owned life insurance.
Total cash and cash equivalents increased $3.4 million, or 39.7%, to $11.8 million at June 30, 2023 from $8.4 million at June 30, 2022, primarily due to an increase in deposits and FHLB borrowings of $9.2 million and $8.0 million, respectively, offset by an increase in cash used to fund new loan originations of $14.1 million.
Interest expense on certificates of deposit decreased $182,000, or 21.6%, to $661,000 for the year ended June 30, 2022 from $843,000 for the year ended June 30, 2021 due to a decrease in the average rate paid on certificates of deposit which was offset by an increase in the average balance of certificates of deposit.
Net interest rate spread decreased by 18 basis points to 2.81% for the year ended June 30, 2023 from 2.99% for the year ended June 30, 2022, reflecting a 69 basis points increase in the average rate paid on interest-bearing liabilities offset by a 51 basis points increase in the average yield on interest-earning assets.
Removed
A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized. ​ Impact of COVID-19 Outbreak The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020 and provided over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic.
Added
Other-than-temporary impairment is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows. 39 Table of Contents Fair Value Measurements .
Removed
The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program called the Paycheck Protection Program (“PPP”). This was considered Round 1 of the PPP. Although we were not already a qualified SBA lender, we enrolled in the PPP by completing the required documentation.
Added
See Note 1 of the notes to the audited consolidated financial statements. ​ On September 19, 2023, upon recommendation of management, the Audit Committee of the Company determined that the Company erroneously has maintained a deferred tax liability, which it will not be required to recapture as management does not intend to redeem stock, make distributions in excess of earnings and profits, or take other actions that would result in the recapture of this reserve.
Removed
We subsequently obtained approval as a qualified SBA lender. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law and included new funding for the PPP (Round 2). The PPP program ended in May 2021. Commercial and industrial loans include loans originated under the PPP, a specialized low-interest (1%) forgivable loan program funded by the U.S.
Added
The Company previously included a deferred tax liability for its pre-1988 excess tax bad debt deductions because it originally concluded that its 1993 charter conversion resulted in it ceasing to be a “thrift”.
Removed
Treasury Department and administered by the SBA. The SBA guarantees 100% of the PPP loans made to eligible borrowers.
Added
Upon further investigation during fiscal year 2023, the Company determined that the charter conversion from a Mutual Savings and Loan Association to a Mutual Savings Bank charter did not disqualify it from the special provisions provided to “thrift” institutions regarding the ability to forego recognition of a deferred tax liability. ​ ​ As a thrift institution, the Bank is subject to special provisions in the tax laws regarding its allowable tax bad debt deductions and related tax bad debt reserves.
Removed
The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and the loan proceeds are used for other qualifying expenses.
Added
These deductions are determined using methods based on loss experience or a percentage of taxable income. Tax bad debt reserves represent the excess of allowable deductions over actual bad debt losses and include a defined base-year amount.
Removed
As of June 30, 2022, we had originated 109 PPP loans totaling $10.4 million. As of June 30, 2022, all of these PPP loans have been forgiven. As of June 30, 2022, we had no PPP loans outstanding. We have implemented various consumer and commercial loan modification programs to provide our borrowers relief from the economic impacts of COVID-19.
Added
Deferred tax liabilities are required to be recognized with respect to reserves in excess of the base-year amount, as well as any portion of the base-year amount that is expected to become taxable (or “recaptured”) in the foreseeable future. ​ ​ Therefore, as of July 1, 2021, to correct this accounting error, the Company recorded an adjustment to opening retained earnings and deferred tax assets in the amount of $481,798. ​ At June 30, 2023 and 2022, the Company had an unrecaptured pre-1988 federal bad debt reserve of approximately $1.5 million for which no federal income tax provision has been made.
Removed
Based on guidance in the CARES Act and COVID-19 related legislation, COVID-19 related modifications to loans that were current as of December 31, 2019 are exempt from TDR classification under U.S. GAAP through January 1, 2022.
Added
As noted above, a deferred tax liability has not been provided on this amount, as management does not intend to redeem stock, make distributions in excess of earnings and profits, or take other actions that would result in recapture of the reserve. ​ In evaluating whether the previously issued Consolidated Financial Statements were materially misstated for the interim or annual periods June 30, 2023 and June 30, 2022, respectively, the Company applied the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections , SEC Staff Accounting Bulletin (“SAB”) Topic 1.M, Assessing Materiality , and SAB Topic 1.N, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements and concluded that the effect of the errors on prior period annual financial statements was material; and 40 Table of Contents therefore as noted in SAB Topic 1.N. the Company has restated the June 30, 2022 consolidated financial statements in accordance with FASB ASC 250-10-45-23.
Removed
In addition, the bank regulatory agencies issued interagency guidance stating that COVID-19 related short-term modifications (i.e., six months or less) granted to loans that were current as of the loan modification program implementation date are not TDRs. As of June 30, 2022, we had granted short-term payment deferrals on 56 loans, totaling approximately $20.0 million in aggregate principal amount.

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