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What changed in Marathon Bancorp, Inc. /MD/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Marathon Bancorp, Inc. /MD/'s 2023 and 2024 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 2024 report.

+300 added−267 removedSource: 10-K (2024-09-26) vs 10-K (2023-09-20)

Top changes in Marathon Bancorp, Inc. /MD/'s 2024 10-K

300 paragraphs added · 267 removed · 194 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

121 edited+49 added−22 removed205 unchanged
Biggest changeMarathon 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.
Biggest changeThe 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.
In addition, we are committed to developing our staff through continuing education and specialty education within banking, which may include using universities that offer banking management programs, when applicable. TAXATION Marathon Bank, Marathon MHC and Marathon Bancorp are subject to federal and state income taxation in the same general manner as other corporations, with some exceptions discussed below.
In addition, we are committed to developing our staff through continuing education and specialty education within banking, which may include using universities that offer banking management programs, when applicable. Marathon Bank, Marathon MHC and Marathon Bancorp are subject to federal and state income taxation in the same general manner as other corporations, with some exceptions discussed below.
The Interagency Guidelines, among other things, require a depository institution to establish internal loan-to-value limits for real estate loans that are not in excess of the following supervisory limits: ​ · for loans secured by raw land, 65% of the value of the collateral; · for land development loans (i.e., loans for the purpose of improving unimproved property prior to the erection of structures), the supervisory loan-to-value limit is 75%; 25 Table of Contents · for loans for the construction of commercial, over four-family or other non-residential property, the supervisory limit is 80%; · for loans for the construction of one- to four-family properties, the supervisory limit is 85%; and · for loans secured by other improved property (e.g., farmland, completed commercial property and other income-producing property, including non-owner occupied, one- to four-family property), the supervisory limit is 85%. ​ Although no supervisory loan-to-value limit has been established for permanent mortgages on owner-occupied, one- to four-family or home equity loans, the Interagency Guidelines state that for any such loan with a loan-to-value ratio that equals or exceeds 90% at origination, an institution should require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral.
The Interagency Guidelines, among other things, require a depository institution to establish internal loan-to-value limits for real estate loans that are not in excess of the following supervisory limits: ​ · for loans secured by raw land, 65% of the value of the collateral; · for land development loans (i.e., loans for the purpose of improving unimproved property prior to the erection of structures), the supervisory loan-to-value limit is 75%; · for loans for the construction of commercial, over four-family or other non-residential property, the supervisory limit is 80%; · for loans for the construction of one- to four-family properties, the supervisory limit is 85%; and · for loans secured by other improved property (e.g., farmland, completed commercial property and other income-producing property, including non-owner occupied, one- to four-family property), the supervisory limit is 85%. 27 Table of Contents Although no supervisory loan-to-value limit has been established for permanent mortgages on owner-occupied, one- to four-family or home equity loans, the Interagency Guidelines state that for any such loan with a loan-to-value ratio that equals or exceeds 90% at origination, an institution should require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral.
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.
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.
An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation; however, Marathon Bancorp, Inc. will also not be subject to the auditor attestation requirement or additional executive compensation disclosure so long as it remains a “non-accelerated filer” and a “smaller reporting company,” respectively, under Securities and Exchange Commission regulations (generally less than $75 million and $250 million, respectively, of voting and non-voting equity held by non-affiliates or less than $100 million in annual revenue and less than $700 million in public float).
An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation; however, Marathon Bancorp, Inc. will also not be subject to the auditor attestation requirement or additional executive compensation disclosure so long as it remains a “non-accelerated filer” and a “smaller reporting 36 Table of Contents company,” respectively, under Securities and Exchange Commission regulations (generally less than $75 million and $250 million, respectively, of voting and non-voting equity held by non-affiliates or less than $100 million in annual revenue and less than $700 million in public float).
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.
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 14 Table of Contents loans secured by certain assets.
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.
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, 2024 and 2023.
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.
At June 30, 2024, 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.
Any company that acquires such control becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board. In March 2020, the Federal Reserve Board adopted a final rule, effective September 30, 2020, that revises its framework for determining whether a company has a “controlling influence” over a bank holding company for that purpose.
Any company that acquires such control becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board. In March 2020, the Federal Reserve Board adopted a final rule, effective September 30, 2020, that revised its framework for determining whether a company has a “controlling influence” over a bank holding company for that purpose.
Founded in 1902, we conduct our business from our main office and three branch offices, which are located in Marathon and Ozaukee Counties, Wisconsin. Our primary market area for deposits includes the communities in which we maintain our banking office locations, while our primary lending market area is broader and includes select businesses and customers in Southeastern Wisconsin.
Founded in 1902, we conduct our business from our main office and four branch offices, which are located in Marathon and Ozaukee Counties, Wisconsin. Our primary market area for deposits includes the communities in which we maintain our banking office locations, while our primary lending market area is broader and includes select businesses and customers in Southeastern Wisconsin.
Market Area We conduct our business from our main office and three branch offices, which are located in Marathon and Ozaukee Counties, Wisconsin. Our primary market area is broadly defined as the Wausau, Wisconsin metropolitan area, including Marathon and Ozaukee Counties. In recent years, we have expanded our operations into Southeastern Wisconsin, primarily Milwaukee and Waukesha counties.
Market Area We conduct our business from our main office and four branch offices, which are located in Marathon and Ozaukee Counties, Wisconsin. Our primary market area is broadly defined as the Wausau, Wisconsin metropolitan area, including Marathon and Ozaukee Counties. In recent years, we have expanded our operations into Southeastern Wisconsin, primarily Milwaukee and Waukesha counties.
As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any unutilized loss carryforward remaining after the five-year carryover period is not deductible. At June 30, 2023, the Company had no capital loss carryovers. Corporate Dividends.
As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any unutilized loss carryforward remaining after the five-year carryover period is not deductible. At June 30, 2024, the Company had no capital loss carryovers. Corporate Dividends.
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.
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, 2024, were taxable securities.
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.
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. 13 Table of Contents Balloon Loans.
All of our corporate debt securities are investment grade and have 20 Table of Contents maturities not in excess of ten years. These securities generally provide slightly higher yields than U.S. government and agency securities and mortgage-backed securities. State and Political Subdivision (“Municipal”) Securities.
All of our corporate debt securities are investment grade and have maturities not in excess of ten years. These securities generally provide slightly higher yields than U.S. government and agency securities and mortgage-backed securities. 22 Table of Contents State and Political Subdivision (“Municipal”) Securities.
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.
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, 2024.
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 .
Government agencies or the state of Wisconsin or a subdivision thereof, and cash. At June 30, 2024, 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 .
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.
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, 2024, Marathon Bank had $8.0 million of advances from the Federal Home Loan Bank of Chicago.
A savings bank’s loans to its executive officers, directors, any owner of more than 10% of its stock (each, an insider) and any of certain entities affiliated with any such person (an insider’s related interest) are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and the Federal Reserve Board’s Regulation O thereunder.
A savings bank’s loans to its executive officers, directors, any owner of more than 10% of its stock (each, an insider) and any of certain entities affiliated with any such person (an insider’s related interest) are subject to the 31 Table of Contents conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and the Federal Reserve Board’s Regulation O thereunder.
In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. Deposits.
In addition, 23 Table of Contents we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. Deposits.
Net operating loss carryfowards arising from tax years beginning after 2018 are limited to offset a maximum of 80% of a future year’s taxable income. At June 30, 2023, the Company had no federal net operating loss carryforwards. Capital Loss Carryovers. A corporation cannot recognize capital losses in excess of capital gains generated.
Net operating loss carryforwards arising from tax years beginning after 2018 are limited to offset a maximum of 80% of a future year’s taxable income. At June 30, 2024, the Company had no federal net operating loss carryforwards. Capital Loss Carryovers. A corporation cannot recognize capital losses in excess of capital gains generated.
Investment Activities General . Our board of directors is responsible for approving and overseeing our investment policy. The investment policy is reviewed at least annually by management and any changes to the policy are recommended to the board of directors and are subject to its approval.
Our board of directors is responsible for approving and overseeing our investment policy. The investment policy is reviewed at least annually by management and any changes to the policy are recommended to the board of directors and are subject to its approval.
Marathon Bancorp may generally exclude from its income 100% of dividends received from Marathon Bank as a member of the same affiliated group of corporations. 23 Table of Contents State Taxation As a Maryland business corporation, Marathon Bancorp is required to file an annual report with and pay franchise taxes to the state of Maryland.
Marathon Bancorp may generally exclude from its income 100% of dividends received from Marathon Bank as a member of the same affiliated group of corporations. State Taxation As a Maryland business corporation, Marathon Bancorp is required to file an annual report with and pay franchise taxes to the state of Maryland.
The Community Reinvestment Act does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act.
The Community Reinvestment Act does not establish specific lending requirements or 32 Table of Contents programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act.
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.
Lending Activities General. 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.
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 .
At June 30, 2024 and 2023, Marathon Bank’s net worth ratio, as calculated under Wisconsin law, was 12.67% and 13.17%, respectively. Federal Law and Regulation .
For example, the regulations specify that a bank’s Community 30 Table of Contents Reinvestment Act performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application.
For example, the regulations specify that a bank’s Community Reinvestment Act performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application.
At June 30, 2023, Marathon Bank did not have any loans which exceeded the “loans-to-one borrower” limitations. Federal Law and Regulation .
At June 30, 2024, Marathon Bank did not have any loans which exceeded the “loans-to-one borrower” limitations. Federal Law and Regulation .
Subject to market conditions, we expect to continue our focus on originating more commercial real estate and multifamily real estate loans in an effort to further diversify our overall loan portfolio, increase the overall yield earned on our loans and assist in managing interest rate risk.
Subject to market conditions, we expect to continue our focus on originating more commercial real estate and multifamily real estate loans in an effort to further increase the overall yield earned on our loans and assist in managing interest rate risk.
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.
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, 2024 was $766,550 for single-family homes in our market area.
Federal regulations require FDIC insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.
Federal regulations require FDIC insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk- 28 Table of Contents based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.
The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2023 ​ 2022 ​ ​ 30-59 ​ 60-89 ​ 90 Days ​ 30-59 ​ 60-89 ​ 90 Days ​ ​ Days ​ Days ​ or More ​ Days ​ Days ​ or More ​ Past Due Past Due Past Due Past Due Past Due Past Due ​ ​ (In thousands) Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ One- to four-family residential ​ $ 27 ​ $ — ​ $ — ​ $ 70 ​ $ — ​ $ 115 Multifamily ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial and industrial loans ​ ​ 16 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Consumer loans ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ Total ​ $ 43 ​ $ — ​ $ — ​ $ 70 ​ $ — ​ $ 115 ​ Non-Performing Assets.
The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2024 ​ 2023 ​ ​ 30-59 ​ 60-89 ​ 90 Days ​ 30-59 ​ 60-89 ​ 90 Days ​ ​ Days ​ Days ​ or More ​ Days ​ Days ​ or More ​ Past Due Past Due Past Due Past Due Past Due Past Due ​ ​ (In thousands) Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ One- to four-family residential ​ $ 68 ​ $ — ​ $ — ​ $ 27 ​ $ — ​ $ — Multifamily ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial and industrial loans ​ ​ — ​ ​ — ​ ​ — ​ ​ 16 ​ ​ — ​ ​ — Consumer loans ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ Total ​ $ 68 ​ $ — ​ $ — ​ $ 43 ​ $ — ​ $ — ​ Non-Performing Assets.
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.
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.
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.
The following tables set forth the contractual maturities of our total loan portfolio at June 30, 2024. 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. Actual maturities may differ.
There were no borrowings under these arrangements at June 30, 2023. ​ Personnel and Human Capital Resources As of June 30, 2023, we had 35 full-time equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.
There were no borrowings under these arrangements at June 30, 2024. 24 Table of Contents Personnel and Human Capital Resources As of June 30, 2024, we had 35 full-time equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.
Continued uncertainty or weakness in economic conditions may impair a borrower’s business operations and lead to existing lease turnover. Vacancy rates for retail, office and industrial space may increase which could result in 11 Table of Contents rents falling.
Continued uncertainty or weakness in economic conditions may impair a borrower’s business operations and lead to existing lease turnover. Vacancy rates for retail, office and industrial space may increase which could result in rents falling.
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.
At June 30, 2024, based on the 20% limitation, our loans-to-one-borrower limit was approximately $6.2 million. At June 30, 2024, our largest loan relationship with one borrower was for $5.8 million, which was secured by commercial real estate properties, with the underlying loans performing in accordance with their original terms on that date.
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.
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, 2024, $3.0 million of commercial and industrial loans were unsecured. Construction Loans.
Dividends Under Wisconsin law and applicable regulations, a Wisconsin savings bank that meets its regulatory capital requirements may declare dividends on capital stock based upon net profits, provided that its paid-in surplus equals its capital stock.
Dividends Under Wisconsin law and applicable regulations, a Wisconsin savings bank that meets its regulatory capital requirements may declare dividends on capital stock based upon net profits, provided that its paid-in surplus equals its 30 Table of Contents capital stock.
These persons are not separately compensated by Marathon Bancorp. Marathon Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future. The Company files interim, quarterly and annual reports with the Securities and Exchange Commission (the “SEC”).
These persons are not separately compensated by Marathon Bancorp. Marathon Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future. The directors of Marathon Bancorp consist of the current directors of Marathon Bank. The Company files interim, quarterly and annual reports with the Securities and Exchange Commission (the “SEC”).
Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets.
Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets. 15 Table of Contents Delinquent Loans .
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.
Savings banks deemed by the FDIC to be “critically undercapitalized” would be subject to the appointment of a receiver or conservator. As noted above, Marathon Bank is considered “well capitalized” for regulatory capital purposes as of June 30, 2024 and 2023.
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.
At June 30, 2024, we had $20.1 million in jumbo loans, which represented 36.8% of our one- to four-family residential real estate loans. Our average loan size for jumbo loans was $1.3 million at June 30, 2024. Virtually all of our one- to four-family residential real estate loans are secured by properties located in Marathon County, Wisconsin.
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.
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, 2024, we had participated out portions of seven loans with an aggregate amount of $8.8 million. Historically, we have not purchased whole loans.
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.
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. 29 Table of Contents As of June 30, 2024, Marathon Bank elected to use the community bank leverage ratio.
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, 2024, 34.0% of our one- to four-family residential real estate loans were fixed-rate loans, and 66.0% of such loans were adjustable-rate loans. At June 30, 2024, $3.3 million of our loans secured by one- to four-family residential real estate were in a junior lien position.
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.
The Federal Home Loan Bank of Chicago common stock is carried at cost. 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, 2024, are summarized in the following table.
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.
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, 2024, $67.1 million of our commercial real estate portfolio was secured by non-owner-occupied commercial real estate.
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.
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, 2024, our consumer loan portfolio totaled $1.6 million, or 0.9% of our total loan portfolio.
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.
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, 2024, we had $13.4 million in brokered deposits.
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.
At June 30, 2024, the average loan size of our commercial and industrial loans was $72,000, and our largest outstanding commercial and industrial loan balance was a $456,000 loan to a trucking company. This loan was performing in accordance with its repayment terms at June 30, 2024.
Virtually all of our multifamily real estate loans are secured by properties located within our primary lending markets in Wisconsin. 9 Table of Contents At June 30, 2023, the average loan size of our multifamily real estate loans was $1.1 million and the largest of such loans was a $3.4 million loan secured by multiple non-owner-occupied rental properties.
Virtually all of our multifamily real estate loans are secured by properties located within our primary lending markets in Wisconsin. At June 30, 2024, the average loan size of our multifamily real estate loans was $1.0 million and the largest of such loans was a $4.8 million loan secured by multiple non-owner-occupied rental properties.
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.
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 $1.3 million and $770,000 at June 30, 2024 and 2023, respectively.
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.
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, 2024, we had corporate debt securities totaling $4.6 million, which constituted 70.0% of our securities portfolio.
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.
As of June 30, 2024, we had a master contract agreement with the Federal Home Loan Bank of Chicago pursuant to which we could borrow up to $79.5 million subject to providing additional collateral.
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.
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 $1.3 million at June 30, 2024.
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.
At June 30, 2024, we had $57.8 million of loans secured by one- to four-family residential real estate, representing 31.2% 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.
At June 30, 2023, construction loans totaled $1.9 million, or 1.0% of our total loan portfolio. We also have undrawn amounts on construction loans totaling $215,000 at June 30, 2023. Most of these loans are with local developers for the construction of commercial real estate developments and are secured by properties located in our primary market areas.
At June 30, 2024, construction loans totaled $1.3 million, or 0.7% of our total loan portfolio. We have no undrawn amounts on construction loans at June 30, 2024. Most of these loans are with local developers for the construction of commercial real estate developments and are secured by properties located in our primary market areas.
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.
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, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ $ — ​ — ​ $ — ​ — ​ $ 420 ​ 0.15 % $ 90 ​ — ​ $ 510 ​ $ 394 ​ 0.15 % Total ​ $ — ​ — ​ $ — ​ — ​ $ 420 ​ 0.15 % $ 90 ​ — ​ $ 510 ​ $ 394 ​ 0.15 % ​ Sources of Funds General.
A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report.
The community bank leverage ratio was established at 9.0%. A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report.
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.
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.
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.
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.
We expect further growth in the Southeastern Wisconsin market area, including the Milwaukee metropolitan area. The following discusses the demographics of the counties in which we operate. 6 Table of Contents Marathon County’s total population for 2023 is estimated at 139,198, approximately 3.83% growth since 2010.
We expect further growth in the Southeastern Wisconsin market area, including the Milwaukee metropolitan area. The following discusses the demographics of the counties in which we operate. Marathon County’s total population for 2024 is estimated at 139,269, approximately 3.88% growth since 2010.
As of June 30, 2022 (the most recent date for which data is available), our market share of deposits represented 3.68% of FDIC-insured deposits in Marathon County, ranking us eighth in market share of deposits out of 18 institutions operating in the county.
As of June 30, 2023 (the most recent date for which data is available), our market share of deposits represented 3.63% of FDIC-insured deposits in Marathon County, ranking us ninth in market share of deposits out of 17 institutions operating in the county.
During the year ended June 30, 2023, we originated $3.9 million of one- to four-family residential real estate loans and sold $4.0 million, and during the year ended June 30, 2022, we originated $16.8 million of one- to four-family residential real estate loans and sold $17.1 million.
During the year ended June 30, 2024, we originated $4.4 million of one- to four-family residential real estate loans and sold $4.6 million, and during the year ended June 30, 2023, we originated $3.9 million of one- to four-family residential real estate loans and sold $4.0 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.
We borrow funds, primarily from the Federal Home Loan Bank of Chicago, to fund our operations as necessary. At June 30, 2024, we had total consolidated assets of $219.2 million, total deposits of $173.0 million and total stockholders’ equity of $31.3 million.
Multifamily Real Estate Loans. At June 30, 2023, multifamily real estate loans were $44.2 million, or 22.1%, of our total loan portfolio, which was partly due to our purchases of participation interests in multifamily real estate loans totaling $8.4 million.
Multifamily Real Estate Loans. At June 30, 2024, multifamily real estate loans were $45.1 million, or 24.3%, of our total loan portfolio, which was partly due to our purchases of participation interests in multifamily real estate loans totaling $8.2 million.
It currently utilizes the specific charge-off method under Section 582(a) of the Internal Revenue Code. Net Operating Loss Carryovers. Effective with the passage of the Tax Cuts and Jobs Act, net operating loss carrybacks are no longer permitted, and net operating losses are allowed to be carried forward indefinitely.
It currently utilizes the experience method of deducting bad debts under Section 585 of the Internal Revenue Code. Net Operating Loss Carryovers. Effective with the passage of the Tax Cuts and Jobs Act, net operating loss carrybacks are no longer permitted, and net operating losses are allowed to be carried forward indefinitely.
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%.
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.
Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools of mortgages. Certain types of mortgage-backed securities are commonly referred to as “pass-through” certificates because the principal and interest of the underlying loans is “passed through” to investors, net of certain costs, including servicing and guarantee fees.
Certain types of mortgage-backed securities are commonly referred to as “pass-through” certificates because the principal and interest of the underlying loans is “passed through” to investors, net of certain costs, including servicing and guarantee fees.
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.
A relatively high percentage of Marathon County’s non-farm, non-government workforce is in the education, healthcare 6 Table of Contents and manufacturing sectors, estimated at over 35% of the labor force. Other significant employer industries in the county include wholesale/retail trade, finance/insurance/real estate and leisure and hospitality. Median household income for 2024 in Marathon County is estimated to be $73,248.
At June 30, 22 Table of Contents 2023 and 2022, we had $8.0 million and $0, respectively of Federal Home Loan Bank of Chicago advances (see Note 9 of the Notes to the Consolidated Financial Statements).
At June 30, 2024 and 2023, we had $13.0 million and $8.0 million, respectively of Federal Home Loan Bank of Chicago advances (see Note 10 of the Notes to the Consolidated Financial Statements).
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.
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.
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 June 30, 2024, our core deposits, which are deposits other than certificates of deposit, were $105.3 million, representing 60.9% of total deposits. Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis.
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.
Consistent with our strategy to grow our loan portfolio and increase our yield, we are focused on increasing our origination of commercial real estate loans. At June 30, 2024, we had $74.3 million in commercial real estate loans, representing 40.1% of our total loan portfolio.
Wisconsin savings 24 Table of Contents banks also may lend funds on a secured or unsecured basis for business, commercial or agricultural purposes, provided the total of all such loans does not exceed 20% of the savings bank’s total assets, unless the WDFI authorizes a greater amount.
Wisconsin savings banks also may lend funds on a secured or unsecured basis for business, commercial or agricultural purposes, provided the total of all such loans does not exceed 20% of the savings bank’s total assets, unless the WDFI authorizes a greater amount. Loans are subject to certain other limitations, including percentage restrictions based on total assets.
In underwriting multifamily real estate loans, we consider a number of factors, which include the projected net cash flow to the loan’s debt service requirement (generally requiring a minimum of 125%), the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties.
This loan was performing in accordance with its repayment terms at June 30, 2024. 10 Table of Contents In underwriting multifamily real estate loans, we consider a number of factors, which include the projected net cash flow to the loan’s debt service requirement (generally requiring a minimum of 125%), the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties.
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.
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 34 Table of Contents 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.
Ozaukee County’s total population for 2023 is estimated at 93,036, approximately 7.69% growth since 2010. Leisure and hospitality, education and healthcare represent over 26% of the labor force. Other significant employer industries in Ozaukee County include retail trade and services and manufacturing. Median household income for 2023 in Ozaukee County is estimated to be $86,915.
Ozaukee County’s total population for 2024 is estimated at 93,889, approximately 8.71% growth since 2010. Manufacturing, education and healthcare represent over 37% of the labor force. Other significant employer industries in Ozaukee County include retail trade and services, construction and leisure and hospitality. Median household income for 2024 in Ozaukee County is estimated to be $92,258.
Milwaukee County’s total population for 2023 is estimated at 937,014, an approximately 1.13% decrease since 2010. Milwaukee County’s most significant employers are in the manufacturing, education, healthcare, retail trade and finance/insurance/real estate industries. Median household income for 2023 in Milwaukee County is estimated to be $56,347.
Milwaukee County’s total population for 2024 is estimated at 914,332, an approximately 3.52% decrease since 2010. Milwaukee County’s most significant employers are in the manufacturing, education, healthcare, retail trade and finance/insurance/real estate industries. Median household income for 2024 in Milwaukee County is estimated to be $59,319.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCedurburg 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. ​
Biggest changeCapitol Dr., Brookfield, WI ​ Owned ​ 2024 ​ ​ 2,026 ​ ​ ​ ​ ​ ​ ​ ​ Land, Weston, WI ​ Owned ​ 2024 ​ ​ 158 ​ We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion. ​
See 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.
See 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 ​ $ 1,035 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Properties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1133 E Grand Avenue, Rothschild, WI ​ Leased ​ 2009 ​ ​ 40 ​ ​ ​ ​ ​ ​ ​ ​ 307 Third Street, Mosinee, WI ​ Owned ​ 1974 ​ ​ 41 ​ ​ ​ ​ ​ ​ ​ ​ 11315 N.
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 2: PROPERTIES As of June 30, 2024, the net book value of our office properties was $3.6 million (excluding right-to-use-assets). The following table sets forth information regarding our offices.
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Cedurburg Rd, Mequon, WI ​ Leased ​ 2018 ​ ​ 256 ​ ​ ​ ​ ​ ​ ​ ​ 19105 W.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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
Biggest changeAt June 30, 2024, 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. ​ ​ 38 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 changeSet 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 ​
Biggest changeAll shares of common stock repurchased will be retired. 39 Table of Contents Set forth below is the share repurchase activity for the three months ended June 30, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ Per Share Or Programs Programs April 1-30, 2024 ​ 10,000 ​ ​ $ 9.35 ​ 10,000 ​ 97,875 May 1-31, 2024 ​ 200 (1) ​ $ 8.85 ​ — ​ 97,875 June 1-30, 2024 ​ 6,882 (1) ​ $ 8.40 ​ 5,000 ​ 92,875 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ 17,082 ​ ​ ​ ​ ​ 15,000 ​ ​ (1) This column includes the deemed surrender to us of 2,082 shares of common stock to satisfy tax withholding obligations in connection with the vesting of employee restricted stock. ​ ITEM 6: RESERVED ​
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.
The following table sets forth the quarterly high and low prices for a share of the Company’s common stock for fiscal years 2024 and 2023. 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.
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.
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 189 shareholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms) as of September 25, 2024 and 2,135,412 shares of common stock outstanding.
No 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.
No dividends were paid in fiscal 2024 or 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Market Value of Common Stock ​ High Low Quarter Ended September 30, 2023 ​ $ 10.25 ​ $ 8.50 Quarter Ended December 31, 2023 ​ ​ 9.68 ​ ​ 6.75 Quarter Ended March 31, 2024 ​ ​ 9.90 ​ ​ 9.14 Quarter Ended June 30, 2024 ​ ​ 9.59 ​ ​ 8.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ Dividends We do not currently intend to pay cash dividends to our stockholders.
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 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.
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.
Shares are to be 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
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
Purchase of Equity Securities by the Issuer and Affiliated Purchasers On December 22, 2023, the Company announced it had adopted a stock repurchase program. Under the repurchase program, the Company could repurchase up to 107,875 shares of its common stock, or approximately 5.0% of the then outstanding shares.

Item 7. Management's Discussion & Analysis

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

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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.
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 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2024 2023 ​ (In thousands) Selected Financial Condition Data: ​ ​ ​ ​ ​ ​ Total assets ​ $ 219,234 ​ $ 238,779 Cash, cash equivalents and interest-bearing deposits in other financial institutions ​ ​ 10,672 ​ ​ 15,537 Debt securities available for sale ​ ​ 6,607 ​ ​ 8,922 Debt securities held to maturity ​ ​ 510 ​ ​ 516 Loans receivable, net ​ ​ 183,448 ​ ​ 197,714 Foreclosed assets (OREO), net ​ ​ 1,397 ​ ​ 2,335 Federal Home Loan Bank stock, at cost ​ ​ 1,329 ​ ​ 770 Bank owned life insurance ​ ​ 8,973 ​ ​ 8,724 Premises and equipment, net ​ ​ 4,086 ​ ​ 2,128 Deferred tax asset ​ ​ 580 ​ ​ 487 Deposits ​ ​ 172,981 ​ ​ 197,254 Federal Home Loan Bank (FHLB) advances ​ ​ 13,000 ​ ​ 8,000 Stockholders' Equity ​ ​ 31,295 ​ ​ 31,280 ​ 44 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ​ ​ Ended June 30, ​ 2024 2023 ​ ​ ​ (In thousands) Selected Operating Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 9,431 ​ $ 8,978 Interest expense ​ ​ 3,591 ​ ​ 2,278 Net interest income ​ ​ 5,840 ​ ​ 6,700 Provision for (recovery of) credit losses ​ ​ (190) ​ ​ — Net interest income after provision for (recovery of) credit losses ​ ​ 6,030 ​ ​ 6,700 Non-interest income ​ ​ 726 ​ ​ 1,301 Non-interest expense ​ ​ 7,002 ​ ​ 5,884 Income (loss) before income taxes (benefit) ​ ​ (246) ​ ​ 2,117 Provision for (benefit from) income taxes ​ ​ (59) ​ ​ 445 Net income (loss) ​ $ (187) ​ $ 1,672 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years ​ ​ ​ Ended June 30, ​ ​ 2024 ​ 2023 ​ Performance Ratios: ​ ​ ​ ​ ​ ​ ​ ​ Return (loss) on average assets ​ ​ (0.08) % ​ ​ 0.71 % Return (loss) on average equity ​ ​ (0.62) % ​ ​ 5.91 % Interest rate spread (1) ​ ​ 2.40 % ​ ​ 2.81 % Net interest margin (2) ​ ​ 2.75 % ​ ​ 3.04 % Non-interest expenses to average assets ​ ​ 3.00 % ​ ​ 2.50 % Efficiency ratio (3) ​ ​ 106.64 % ​ ​ 73.54 % Average interest-earning assets to average interest-bearing liabilities ​ ​ 120.56 % ​ ​ 122.66 % Book value per share ​ $ 14.62 ​ ​ $ 14.50 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (4): ​ ​ ​ ​ ​ ​ ​ ​ Average equity to average assets ​ ​ 13.00 % ​ ​ 12.01 % Tier 1 capital to average assets ​ ​ 13.04 % ​ ​ 12.02 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset Quality Ratios: ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses as a percentage of total loans ​ ​ 0.97 % ​ ​ 1.17 % Allowance for credit losses as a percentage of non-performing loans ​ ​ — % ​ ​ — % Net (charge-offs) recoveries to average outstanding loans during the year ​ ​ — % ​ ​ (0.02) % Non-performing loans as a percentage of total loans ​ ​ — % ​ ​ — % Non-performing loans as a percentage of total assets ​ ​ — % ​ ​ — % Total non-performing assets as a percentage of total assets ​ ​ 0.63 % ​ ​ 0.97 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Other: ​ ​ ​ ​ ​ ​ ​ ​ Number of offices ​ ​ 5 ​ ​ ​ 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.
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 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.
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.
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 (Benefit).
Our income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between the carrying amounts and the tax basis of assets and liabilities, computed using enacted tax rates.
Our income tax expense (benefit) is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between the carrying amounts and the tax basis of assets and liabilities, computed using enacted tax rates.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized, upon ultimate settlement with the relevant tax authority. We recognize interest and penalties accrued or released related to uncertain tax positions in current income tax expense or benefit. Debt Securities.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized, upon ultimate settlement with the relevant tax authority. We recognize interest and penalties accrued or released related to uncertain tax positions in current income tax expense or benefit.
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.
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 60 for a description of recent accounting pronouncements that may affect our financial condition and results of operations.
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.
At June 30, 2024, 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.
The information in this section has been derived from the audited consolidated financial statements, which appear beginning on page 51 of this Form 10-K. Overview Net Interest Income. Our primary source of income is net interest income.
The information in this section has been derived from the audited consolidated financial statements, which appear beginning on page 53 of this Form 10-K. Overview Net Interest Income. Our primary source of income is net interest income.
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.
A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized. 40 Table of Contents 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.
Based on our deposit retention experience, current pricing strategy and regulatory restrictions, we anticipate that a substantial portion of maturing time deposits will be retained, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity.
Based on our deposit 51 Table of Contents retention experience, current pricing strategy and regulatory restrictions, we anticipate that a substantial portion of maturing time deposits will be retained, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity.
The average rate paid on demand, NOW and money market accounts and certificates of deposit also increased with the average rate paid on demand, NOW and money market accounts increasing by 55 basis points and the average rate paid on certificates of deposit increasing by 96 basis points.
The average rate paid on demand, NOW and money market accounts and certificates of deposit increased with the average rate paid on demand, NOW and money market accounts increasing by 46 basis points and the average rate paid on certificates of deposit increasing 96 basis points.
The increase in the average rate paid on all deposit categories excluding savings deposits was due to the Bank raising the interest rates on these deposit categories to maintain customers and keep the rates in line with what our competitors were offering and to attract new funds to the Bank. ​ Net Interest Income.
The increase in the average rate paid on all deposit categories except savings deposits was due to the Bank raising the interest rates on these deposit categories to maintain customers and keep the rates in line with what competitors were offering and to attract new funds to the Bank.
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.
Such commitments are subject to the same credit policies and approval process accorded to loans we make. At June 30, 2024, we had outstanding commitments to originate loans of $1.3 million, and outstanding commitments to sell loans of $418,000. We anticipate that we will have sufficient funds available to meet our current lending commitments.
In addition, the WDFI and the FDIC, as an integral part of their examination process, will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Interest Income.
In addition, the WDFI and the FDIC, as an integral part of their examination process, will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses.
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.
Net cash provided by (used in) financing activities, consisting of activity in deposit accounts and borrowings was $19.4 million used in financing activities compared to $15.8 million provided by financing activities for the years ended June 30, 2024 and 2023, respectively. We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis.
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.
Net cash flows provided by (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 $17.7 million provided by investing activities for the year ended June 30, 2024 compared to $14.4 million used in investing activities for the year ended June 30, 2023.
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.
Time deposits that are scheduled to mature in one year or less from June 30, 2024 totaled $44.8 million. Management expects that a substantial portion of the maturing time deposits will be renewed.
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.
We also have the ability to borrow from the Federal Home Loan Bank of Chicago. At June 30, 2024, we had a $79.5 million line of credit with the Federal Home Loan Bank of Chicago, which had $13.0 million in borrowings outstanding as of that date.
Net interest income is the difference between interest income, which is the income we earn on our loans and investments, and interest expense, which is the interest we pay on our deposits and borrowings. Provision for Loan Losses. The allowance for loan losses is a valuation allowance for probable incurred credit losses.
Net interest income is the difference between interest income, which is the income we earn on our loans and investments, and interest expense, which is the interest we pay on our deposits and borrowings. Provision for Credit Losses on Loans.
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.
Net interest rate spread decreased by 41 basis points to 2.40% for the year ended June 30, 2024 from 2.81% for the year ended June 30, 2023, reflecting a 77 basis points increase in the average rate paid on interest-bearing liabilities offset by a 36 basis points increase in the average yield on interest-earning assets.
The increase in the average interest rate paid on interest-bearing liabilities was due to the Bank raising the interest rates on all deposit categories excluding savings accounts to maintain customers and keep the rates in line with what our competitors were offering and to attract new funds to the Bank. ​ Provision for Loan Losses.
The increase in the average interest rate paid on interest-bearing liabilities was due to the Bank raising the interest rates on all deposit categories to maintain customers and keep the rates in line with what competitors were offering, to attract new funds to the Bank and an increase in market interest rates on borrowings. Provision for (Recovery of) Credit Losses.
As an integral part of their examination process, various regulatory agencies review the allowance for loan losses as well. Such agencies may require that changes in the allowance for loan losses be recognized when such regulatory credit evaluations differ from those of management based on information available to the regulators at the time of their examinations. Income Taxes .
Such agencies may require that changes in the allowance for credit losses on loans be recognized when such regulatory credit evaluations differ from those of management based on information available to the regulators at the time of their examinations. Income Taxes .
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.
Interest expense increased $1.3 million, or 57.6%, to $3.6 million for the year ended June 30, 2024 from $2.3 million for the year ended June 30, 2023, due to an increase of $766,000 in interest paid on deposits and an increase of $546,000 in interest paid on borrowings.
The Bank also has $25.0 million available to borrow from the Federal Reserve Bank when pledging acceptable assets and an unsecured Federal Funds purchasing limit of $5.0 million with the Bank’s correspondent bank.
The Bank also has $25.0 million available to borrow from the Federal Reserve Bank when pledging acceptable assets and an unsecured Federal Funds purchasing limit of $5.0 million with the Bank’s correspondent bank. There were no borrowings under these arrangements at June 30, 2024.
Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards. The following represent our significant accounting estimates: 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.
Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards. The following represent our significant accounting estimates: Allowance for Credit Losses on Loans. The allowance for credit losses on loans is established through charges to earnings in the form of a provision for credit losses.
The net interest margin decreased five basis points to 3.04% for the year ended June 30, 2023 from 3.09% for the year ended June 30, 2022.
The net interest margin decreased 29 basis points to 2.75% for the year ended June 30, 2024 from 3.04% for the year ended June 30, 2023.
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.
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.
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.
As of June 30, 2024 and 2023, the Bank elected to adopt the Community Bank Leverage Ratio Framework. 45 Table of Contents Comparison of Financial Condition at June 30, 2024 and June 30, 2023 Total Assets. Total assets decreased $19.6 million, or 8.2%, to $219.2 million at June 30, 2024 from $238.8 million at June 30, 2023.
(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).
(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. 47 Table of Contents Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
The average balance of certificates of deposit increased by $18.0 million, or 30.2% to $77.7 million for the year ended June 30, 2023 from $59.7 million for the year ended June 30, 2022 while the average balance of interest-bearing demand, NOW and money market accounts decreased slightly to $54.1 million, or 0.03% for the year ended June 30, 2023 from $55.7 million for the year ended June 30, 2022.
The average balance of certificates of deposit decreased slightly by $2.7 million, or 3.3%, from $77.7 million for the year ended June 30, 2023 to $75.1 million for the year ended June 30, 2024. The average balance of interest-bearing demand, NOW and money market and savings accounts decreased by $10.1 million and $4.4 million, respectively.
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.
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. 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.
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.
Loan interest income increased by $455,000, or 5.6%, to $8.6 million for the year ended June 30, 2024 from $8.2 million for the year ended June 30, 2023.
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.
The average yield on the loan portfolio increased by 28 basis points from 4.18% for the year ended June 30, 2023 to 4.46% for the year ended June 30, 2024 as a result of the high interest rate environment.
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.
To the best of our knowledge, we have recorded our best estimate of expected losses in the loan portfolio and for unfunded commitments at June 30, 2024. 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 credit losses.
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.
Non-interest income information is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ Change ​ 2024 2023 Amount Percent ​ (Dollars in thousands) ​ Service charges on deposit accounts ​ $ 125 ​ $ 153 ​ $ (28) (18.3) % Mortgage banking ​ 325 ​ 351 ​ (26) (7.4) % Increase in cash surrender value of BOLI ​ 249 ​ 236 ​ 13 5.5 % Gain on proceeds from life insurance death benefit ​ ​ — ​ ​ 261 ​ ​ (261) ​ 100.0 % Gain on acquisition of foreclosed assets ​ — ​ 247 ​ (247) 100.0 % Net gain on securities transactions ​ ​ — ​ ​ 24 ​ ​ (24) ​ (100.0) % Other ​ 27 ​ 30 ​ (3) (10.0) % Total non-interest income ​ $ 726 ​ $ 1,302 ​ $ (576) (44.2) % ​ Non-interest income decreased by $576,000 to $726,000 for the year ended June 30, 2024 from $1.3 million for the year ended June 30, 2023 due primarily to a gain on proceeds from a life insurance death benefit, a gain on the acquisition of foreclosed assets, and net gain on securities transactions of $261,000, 247,000 and $24,000, respectively, being recognized during the year ended June 30, 2023 compared to no such amounts being recognized during the year ended June 30, 2024.
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.
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 $417,000 and $2.0 million for the years ended June 30, 2024 and 2023, respectively.
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.
Net interest-earning assets decreased by $4.5 million, or 11.0%, to $36.2 million for the year ended June 30, 2024 from $40.7 million for the year ended June 30, 2023.
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).
Interest income increased by $453,000, or 5.0%, to $9.4 million for the year ended June 30, 2024 compared to $9.0 million for the year ended June 30, 2023 primarily due to an increase in loan interest income associated with an increase in the average yield on loans offset by a slight decrease in the average balance of the loan portfolio.
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.
Interest expense on deposits increased $766,000, or 35.2%, to $2.9 million for the year ended June 30, 2024 from $2.2 million for the year ended June 30, 2023 due to an increase in interest expense on all deposit categories except savings deposits as a result of an increase in the average rates paid on all deposit categories except savings deposits offset by a decrease in the average balances of all deposit categories.
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 yield on interest earning assets for the year ended June 30, 2024 compared to the year ended June 30, 2023 was primarily due to an increase in market interest rates.
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.
Net loss was $187,000 for the year ended June 30, 2024, a decrease of $1.9 million, or 111.2%, from net income of $1.7 million for the year ended June 30, 2023.
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.
Deferred loan fees accreted to interest income totaled $42,000 and $50,000 for the years ended June 30, 2024 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended June 30, ​ ​ 2024 ​ 2023 ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ Average ​ ​ Outstanding ​ ​ ​ ​ Yield/Rate ​ Outstanding ​ ​ ​ ​ Yield/Rate ​ Balance Interest ​ Balance Interest ​ ​ ​ (Dollars in thousands) ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 193,501 ​ $ 8,637 4.46 % $ 195,680 ​ $ 8,182 4.18 % Debt securities ​ 10,751 ​ 345 3.21 % 11,102 ​ 292 2.63 % Cash and cash equivalents ​ 7,017 ​ 370 5.27 % 12,853 ​ 480 3.73 % Other ​ 1,097 ​ 79 7.20 % 666 ​ 24 3.60 % Total interest-earning assets ​ 212,366 ​ 9,431 4.44 % 220,301 ​ 8,978 4.08 % Noninterest-earning assets ​ 21,215 ​ ​ ​ 15,146 ​ ​ Total assets ​ $ 233,581 ​ ​ ​ ​ $ 235,447 ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ Demand, NOW and money market deposits ​ $ 44,036 ​ 612 1.39 % $ 54,130 ​ 506 0.93 % Savings deposits ​ 40,109 ​ 58 0.14 % 44,501 ​ 61 0.14 % Certificates of deposit ​ 75,133 ​ 2,273 3.03 % 77,707 ​ 1,609 2.07 % Total interest-bearing deposits ​ 159,278 ​ 2,943 1.85 % 176,338 ​ 2,176 1.23 % FHLB advances and other borrowings ​ 16,865 ​ 648 3.84 % 3,272 ​ 103 3.15 % Total interest-bearing liabilities ​ 176,143 ​ 3,591 2.04 % 179,610 ​ 2,279 1.27 % Non-interest-bearing demand deposits ​ 25,048 ​ ​ ​ 25,829 ​ ​ Other non-interest-bearing liabilities ​ 2,018 ​ ​ ​ 1,726 ​ ​ Total liabilities ​ 203,209 ​ ​ ​ 207,165 ​ ​ Total stockholders' equity ​ 30,372 ​ ​ ​ 28,282 ​ ​ Total liabilities and stockholders' equity ​ $ 233,581 ​ ​ ​ ​ $ 235,447 ​ ​ Net interest income ​ ​ ​ ​ $ 5,840 ​ ​ ​ $ 6,699 ​ Net interest rate spread (1) ​ ​ ​ ​ ​ 2.40 % ​ ​ 2.81 % Net interest-earning assets (2) ​ $ 36,223 ​ ​ ​ ​ ​ $ 40,691 ​ Net interest margin (3) ​ ​ ​ ​ ​ 2.75 % ​ ​ 3.04 % Average interest-earning assets to interest-bearing liabilities ​ 120.56 % ​ ​ ​ 122.66 % ​ (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.
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.
Non-interest expenses information is as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ Change ​ 2024 2023 Amount Percent ​ (Dollars in thousands) ​ Salaries and employee benefits ​ $ 3,082 ​ $ 3,296 ​ $ (214) (6.5) % Occupancy and equipment ​ 858 ​ 731 ​ 127 17.4 % Data processing and office ​ 449 ​ 401 ​ 48 12.0 % Professional fees ​ 755 ​ 712 ​ 43 6.0 % Marketing expenses ​ 61 ​ 87 ​ (26) (29.9) % Debit card expenses ​ ​ 96 ​ ​ 90 ​ ​ 6 ​ 6.7 % Directors fees ​ ​ 108 ​ ​ 89 ​ ​ 19 ​ 21.3 % Foreclosed assets, net ​ ​ 1,035 ​ ​ — ​ ​ 1,035 ​ 100.0 % Other ​ 558 ​ 478 ​ 80 16.7 % Total non-interest expenses ​ $ 7,002 ​ $ 5,884 ​ $ 1,118 19.0 % 50 Table of Contents Non-interest expenses were $7.0 million for the year ended June 30, 2024 compared to $5.9 million for the year ended June 30, 2023.
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 .
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, ​ ​ 2024 vs. 2023 ​ ​ Increase (Decrease) Due to ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Increase ​ Volume Rate (Decrease) ​ (In thousands) Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans $ (91) $ 546 $ 455 Debt securities ​ (9) ​ 62 ​ 53 Cash and cash equivalents ​ (218) ​ 108 ​ (110) Other ​ 16 ​ 39 ​ 55 Total interest-earning assets ​ (302) ​ 755 ​ 453 Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand, NOW and money market deposits ​ (94) ​ 200 ​ 106 Savings deposits ​ (6) ​ 2 ​ (4) Certificates of deposit ​ (53) ​ 717 ​ 664 Total interest-bearing deposits ​ (153) ​ 919 ​ 766 FHLB advances and other borrowings ​ — ​ 546 ​ 546 Total interest-bearing liabilities ​ (153) ​ 1,465 ​ 1,312 Change in net interest income ​ $ (149) ​ $ (710) ​ $ (859) ​ Comparison of Operating Results for the Years Ended June 30, 2024 and 2023 General.
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.
Debt securities interest income increased by $53,000, or 18.2%, to $345,000 for the year ended June 30, 2024 from $292,000 for the year ended June 30, 2023 due to a 58 basis points increase in the average yield on the debt securities portfolio to 3.21% for the year ended June 30, 2024 from 2.63% for the year ended June 30, 2023 offset in part by a $351,000 decrease in the average balance of debt securities to $10.8 million for the year ended June 30, 2024 due to 48 Table of Contents securities paydowns.
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 cash and cash equivalents decreased $1.3 million, or 11.1%, to $10.5 million at June 30, 2024 from $11.8 million at June 30, 2023, primarily due to a decrease in total deposits of $24.3 million offset by an increase in FHLB borrowings of $5.0 million, a decrease in net loans of $14.3 million, a decrease in interest bearing deposits held in other financial institutions of $3.6 million, and finally, a decrease in debt securities available for sale of $2.3 million.
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.
The decrease was primarily due to a decrease of $1.3 million, or 11.1%, in cash and cash equivalents, a decrease in net loans of $14.3 million, or 7.2%, a decrease in interest bearing deposits held in other financial institutions of $3.6 million, or 94.7%, a decrease in debt securities available for sale of $2.3 million, or 25.9% and finally, a decrease in foreclosed assets, net of $914,780, or 39.6%.
The decrease was primarily due to paydowns and maturities and a decrease in the fair value of a corporate bond. Debt securities available for sale are carried at fair value with the unrealized gain or loss reflected in accumulated other comprehensive income (loss). Net Loans and Foreclosed Assets.
Debt securities available for sale are carried at fair value with the unrealized gain or loss reflected in accumulated other comprehensive income (loss). Loans. Gross loans decreased $14.6 million, or 7.3%, to $185.3 million at June 30, 2024 from $199.9 million at June 30, 2023.
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.
The increase in the average yield on debt securities was related to previous purchases of new securities at higher interest rates. Interest Expense.
Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.
Loan losses are charged against the allowance for credit losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.
The allowance 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.
Loan losses are charged against the allowance for credit losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. Non-interest Income.
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.
The decrease was primarily due to a decrease in all categories of loans with the exception of multi-family real estate loans which increased by $0.9 million, or 2.1%, to $45.1 million at June 30, 2024 from $44.2 million at June 30, 2023.
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.
The decrease in the average balance of certificates of deposit accounts was due to the maturity of two brokered certificates of deposit totaling $8.7 million during the year ended June 30, 2024 offset by the offering of higher rate certificate of deposit balances due to higher market interest rates.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired.
This includes forecasts that are reasonable and supportable concerning expectations of future economic conditions. The reasonable and supportable forecast period is 24 months. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. These qualitative risk factors include: 1.
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.
During the year ended June 30, 2023, the Company foreclosed on collateral supporting a construction loan which was valued at $2.3 million and was included in foreclosed assets. The valuation was based on independent appraisals subject to certain discounts less estimated costs to sell.
The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.
In determining the level of the allowance for credit losses, we consider our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions, and the levels of non-performing and other classified loans.
The increase in net income for the year ended June 30, 2023 was primarily attributable to an increase of $490,000 in net interest income, a gain on proceeds from life insurance of $261,000 and a gain on the acquisition of foreclosed real estate of $247,000, offset by a $329,000 increase in non-interest expenses. Mortgage banking income also declined by $338,000.
The decrease in net income (loss) for the year ended June 30, 2024 was primarily attributable to an increase in expenses associated with foreclosed assets of $1.0 million, a decrease of $859,000 in net-interest income, and a decrease of $576,000 in non-interest income.
Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb known and inherent losses in our loan portfolio that are both probable and reasonably estimable at the date of the financial statements.
We charge (credit) provisions for (recovery of) credit losses to operations in order to maintain our allowance for credit losses on loans and reserve for unfunded commitments at a level that is considered reasonable and necessary to absorb expected credit losses inherent in the loan portfolio and expected losses on commitments to grant loans that are expected to be advanced at the consolidated balance sheet date.
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.
Existence and effect of any concentrations of credit and changes in the level of such concentrations. 6. Experience, ability, and depth of lending management and other relevant staff. 7. Quality of loan review and Board of Director oversight. 8. The effect of other external factors such as competition, legal and regulatory requirements. 9.
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.
The average balance of the loan portfolio decreased by $2.2 million, or 1.1%, from $195.7 million for the year ended June 30, 2023 to $193.5 million for the year ended June 30, 2024. The decrease in the average balance of the loan portfolio was primarily due to repayments exceeding new loan growth.
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.
A summary of income tax expense (benefit) compared to the federal income tax statutory rate is set forth in Note 12 to the Notes to the Audited Consolidated Financial Statements. Liquidity and Capital Resources Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business.
Federal Home Loan Bank (FHLB) advances increased $8.0 million to $8.0 million at June 30, 2023 compared to no borrowings at June 30, 2022 to provide additional funding for new loan originations and to increase balance sheet liquidity. Stockholders’ Equity.
FHLB advances increased $5.0 million to $13.0 million at June 30, 2024 compared to $8.0 million in FHLB advances at June 30, 2023 to provide additional funding associated with the decrease in deposits and the acquisition of a building for a new branch location.
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.
These predictions align with the Bank’s historic charge-off history over the past 8-10 years. The allowance for credit losses was $1.8 million, or 0.97%, of loans outstanding at June 30, 2024 and $2.2 million, or 1.08%, of loans outstanding at June 30, 2023.
Removed
For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.
Added
The allowance for credit losses on loans is established through charges to earnings in the form of a provision for credit losses.
Removed
General components cover non-impaired loans and are based on historical loss rates for each portfolio segment, adjusted for the effects of qualitative or environmental factors that are likely to cause estimated credit losses as of the evaluation date to differ from the portfolio segment’s historical loss experience.
Added
The allowance represents management’s current estimate of expected credit losses over the contractual term of loans, and is recorded at an amount that, in management’s judgment, reduces the recorded investment in loans to the net amount expected to be collected.
Removed
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.
Added
No allowance for credit loss is recorded on accrued interest receivable and amounts written-off are reversed by an adjustment to interest income. Management’s judgment in determining the level of the allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans.
Removed
A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement.
Added
Loans that share common risk characteristics are evaluated collectively using a weighted-average remaining maturity methodology. The weighted-average remaining maturity methodology uses an average annual charge-off rate as a foundation for estimating the credit loss for the remaining balances of all loan pools.
Removed
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.
Added
The average annual charge-off rate is applied to the contractual term, further adjusted for estimated prepayments to determine the unadjusted historical charge-off rate. Management’s estimate of the allowance for credit losses on loans that are collectively evaluated also includes a qualitative assessment of available information relevant to assessing collectability that is not captured in the loss estimation process.
Removed
Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reason for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Added
Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices. 2. Changes in the value of underlying collateral for collateral dependent loans. 3. Nature and volume of the portfolio and terms of loans. 4. Volume and severity of past due, classified and nonaccrual loans as well as other loan modifications. 41 Table of Contents 5.
Removed
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.
Added
Changes in national and local economic conditions related to unemployment, house price index, and gross domestic product. Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.
Removed
Available-for-sale and held-to-maturity debt securities are reviewed by management on a quarterly basis, and more frequently when economic or market conditions warrant, for possible other-than-temporary impairment.
Added
Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for credit losses calculation for our loan portfolio.
Removed
In determining other-than-temporary impairment, management considers many factors, including the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, whether the market decline was affected by macroeconomic conditions and whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.

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